Section 62 of Companies Act, 2013

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June 2, 2023

This article is written by Monesh Mehndiratta, of Graphic Era Hill University, Dehradun. This article gives an overview of Section 62 of the Companies Act, 2013, which gives provisions for the further issue of share capital in a company. In this article, the author has discussed the meaning, nature and kinds of shares. Further, it outlines the procedure for increasing the subscribed share capital of a company and discusses recent case laws.

It has been published by Rachit Garg.

Table of Contents

Introduction

Have you ever invested in a company or bought its shares?

If the answer to the above question is yes, then you might be aware of the meaning of “shares” and their importance in a company. You must also be aware of the fact that shares and debentures play a significant role in a company, as people holding shares in a company are its members and are known as the shareholders. But if you do not know, you need not worry because this article will help you understand the meaning of shares and how these are issued in a company.

There are two kinds of companies: private and public. Private companies invest their own money in the venture or business. On the other hand, public companies raise funds or capital by way of shares and debentures. They ask the public to invest their money and with the help of that investment, they carry on their business. You might have come across news like ‘X’ company has opened up 100 shares of, say, Rs. 1000 each for the public. In this way, they raise capital for their company. The Companies Act, 2013 (“the Act”) deals with the functioning of companies and their administration. It also deals with the issuance of shares, debentures, and other provisions related to any kind of investment in a company. In the present article, we will learn about the meaning and nature of shares and the procedure for further issuing share capital. The article will specifically explain provisions related to the further issue of share capital.

Meaning and nature of shares

The company’s capital is divided into a number of indivisible units. These units are of a fixed amount and termed as shares. Section 2(84) of the Act gives the definition of the term “shares.” According to the Section, a share is a share in the share capital of the company. The Supreme Court, in the case of CIT v. Standard Vacuum Oil Co. (1966), held that shares in a company mean that interest is measured by a sum of money and is made up of diverse rights that are conferred on the shareholders by the articles of the company, resulting in a contract between them and the company.

In another case, i.e., Bucha F. Guzdar v. Commissioner of Income Tax, Bombay (1954), the Supreme Court defined the term ‘shares’ as a right to participate in the profits made by a company. It can be said that shares represent a bundle of rights and obligations in a company. In India, shares are considered as goods. According to Section 2(7) of the Sale of Goods Act, 1930, goods mean any movable property, which includes stock and shares except actionable claims and money. However, Section 44 of the Act provides that, though shares are considered movable property, they can only be transferred in the manner outlined under the articles of association of the company.

Kinds of shares

The Act under Section 43 specifically provides that there are two kinds of shares in a company. These are:

Equity share capital
- With voting rights or
- With differential rights with respect to dividend or voting in accordance with the prescribed rules.
Preference share capital or preference shares which are further divided into:
- Participating and non-participating shares
- Cumulative and non-cumulative shares
- Redeemable and irredeemable preference shares.

Overview of Section 62 of Companies Act, 2013

Section 62 of the Act deals with the further issue of share capital in the company. A company that is limited by shares can increase its capital by issuing new shares according to the Articles of Association of the company. The companies usually do not issue all of their shares at once. They do so whenever there is a need for additional funds for the expansion, diversification, or modernization of the company. However, the directors of the company cannot issue shares at their discretion. If this power is given to them, they may misuse it by issuing and allotting the shares to their family members and relatives. In order to curtail this misuse, the Act under Section 62 provides certain conditions for the issuance of shares.

This Section provides for the further issue of shares that are to be first offered to the existing members of the company. These are known as right shares, and this right of the members is known as the right of preemption. It also provides the procedure for the issuance of these shares, which is discussed in detail below.

Increase in subscribed capital

According to Section 62(1), when a company having a share capital wants to increase its subscribed capital by issuing further shares, it can be done so following the procedure given therein. It provides a procedure for the issuance of rights shares, shares under the ESOP Scheme and shares that are given on the basis of preference.

Provisions related to right issue or rights shares

Whenever a company wishes to increase its subscribed capital, it can do so by offering the shares first to the existing members of the company or to its members holding equity shares in proportion to the paid-up shares. These are known as “rights shares” and are given under Section 62(1)(a). In order to do so, the following conditions must be satisfied:

The offer must be made by issuing a notice which specifies the number of shares offered.
It must contain a limiting time period which must not be less than 15 days and not exceed 30 days from the date of the offer. If the offer is not accepted within this time period, it will be deemed to have been declined.
The existing shareholder has the right to renounce the shares that are offered to him in favour of any other person unless the articles otherwise provide and so the notice will also contain a statement regarding this right as mentioned under Section 62(1)(a)(ii) of the Act.
After the expiry of the above-mentioned time period or if the shareholder declines to accept the shares offered to him, the board of directors will dispose of them in a manner which is not harmful or disadvantageous to the shareholder and the company. This is provided under Section 62(1)(a)(iii).

Exception

When 90% of the members of the private companies have given their consent either in writing or in electronic mode then the lesser periods shall be applicable than those which are mentioned under these provisions.

In the case of R. Khemka v. Deccan Enterprises (P) Ltd. (1998), it was held by the Andhra High Court that if a member or shareholder does not respond to the offers made by the company, it means that he is not inclined to subscribe to additional shares offered to him and thereby gives implied consent for the allotment of shares to others. Further, in the case of M.S. Madhusoodanan v. Kerala Kaumudi (P.) Ltd. (2003), the Supre Court held that if shareholders are not given the notice to apply for allotment of shares, then subsequent allotment of shares to others is invalid.

Issue of shares under ESOP Scheme

Section 62(1)(b) provides for the issuance of shares under the ESOP Scheme i.e., to employees under a scheme of employees’ stock option. This can be done by passing a special resolution in this regard or by fulfilling the prescribed conditions.

Issue of shares on preferential basis

Section 62(1)(c) provides for the issuance of shares to any persons authorised by a special resolution whether or not it includes those referred to in the above clauses. This is done either for cash or consideration other than cash. The price of such shares is determined with the help of a valuation report prepared by a registered valuer. This report is further subject to prescribed conditions under the Act. This is also provided under Rule 13 of the Companies (Share Capital and Debentures) Rules, 2014.

Modes of dispatching notice issued

Section 62(2) of the Act provides that the notice issued in Section 62(1) must be delivered at least 3 days before the opening of the issue and can be dispatched through the following modes:

Registered post; or
Speed post; or
Electronic mode; or
Courier
Any other mode which can have proof of delivery to the existing shareholders.

Conversion of debentures into shares

The company has the option to issue shares to its lenders and debenture holders as well, who can convert their loans or debentures into shares. According to Section 62(3), the provisions will not apply to the increased subscribed capital that is caused by exercising the option to convert the loans or debentures into shares that are attached to these debentures or loans raised by the company. However, it can be done only if such conversion has been approved before the issuance of debentures or loans by passing a special resolution in the general meeting.

Appeal to tribunal

Section 62(4) further provides that where a company has taken loans from the Central Government by issuing debentures or in any other way, the Government may convert such debentures or loans into shares of the company if it is in the public interest. This conversion will be done on terms and conditions that are reasonable depending upon the circumstances.

It also provides that if the company is not satisfied with the terms and conditions, it may appeal to the tribunal within 60 days from the date of communication of this order. The tribunal then, after hearing the application and the parties, passed the necessary order. Section 62(5) provides that while determining the terms and conditions of conversion, the government must consider the following:

The financial condition of the company.
Terms of issue of such debentures.
Payable rate of interest.
Any other necessary matter.

Share capital to stand increased

Section 62(6) of the Act provides that where the Government has directed to convert the debentures or loans into shares of the company and no appeal has been filed to the tribunal in this regard or it has been dismissed, the memorandum of the company must be changed or altered. It must include the authorised share capital of the company, which is now increased by an amount equal to the amount of value of the share which such debentures or loans converted into shares in the company.

Procedure for issuance of rights shares: a summary

In order to issue rights shares, the companies are bound to follow the procedure given under Section 62 of the Act along with the regulations issued by the Securities and Exchange Board of India (SEBI) in this context. The procedure can be summarised as follows:

The first step is to observe whether the rights issue is within the authorised share capital of the company. If not, then it must be increased to that share capital.
If these are to be issued from unclassified shares, steps must be taken to amend the capital clause in order to classify them as equity or preference shares.
The stock exchange must be notified of the date of the board meeting where rights issues will be proposed and taken into consideration.
If the issue is proposed to be made at a premium, it must be fixed after consulting the lead manager. However, they can charge a differential premium. For example, a higher premium can be charged from a foreign investor in comparison to other shareholders.
The next step is the appointment of a registrar and underwriters. However, the appointment of underwriting according to SEBI regulations is optional.
It must be noted that there can be no preferential allotment with respect to rights issue except in favour of employees but for this, the value of allotment must not exceed two lakh rupees.
Record the date of the proposed issue must be fixed after consulting the stock exchange. If it is proposed that the shares must be offered to persons other than the existing shareholders then a general meeting must be convened and a special resolution be passed in this regard according to Section 62(1)(c).
If the rights shares or issue is withdrawn after the announcement of the record date, no permission will be given by the regional stock exchange for making an application for a minimum period of 12 months from the said date.
Arrangements must be made with the bankers for acceptance of share application forms.
Letters of offers must be dispatched to the shareholder and must comply with the requirements mentioned in the section. It is not required to file a letter of offer with SEBI for review for an amount less than rupees fifty crores. It is only submitted for the purpose of maintaining records.
The company must ensure that the issue is kept open for a minimum period of 15 days to maximum 30 days.
A specific bank account must be opened to keep the subscription received against rights issues. This money cannot be utilised until the company receives approval from the regional stock exchange. Earlier, if the company fails to receive 90% of the issue amount within 60 days from the date of closure, all the received subscription amount must be refunded but the recent amendment has waived this minimum subscription.
A scheme of allotment must be prepared after consulting the stock exchange and a board meeting must be convened to make the allotments.
Return of allotment must be filed with the registrar of the company within 30 days of allotment in the prescribed form. Other formalities like refund of excess application money, issue of allotment letters, etc must be completed.
A report must be given to SEBI within 15 days from the date of finalising the allotment or within 15 days of refund in case the company fails to receive the required amount.

Difference between right issue of shares and preferential allotment of shares

S.no.	Right issue	Preferential allotment
	It is given under Section 62(1)(a) of the Act.	It is given under Section 62(1)(c) of the Act.
	Shares are first offered to the existing members or the shareholders in the company according to their proportional interest in the company.	Shares are offered to both shareholders and people who are authorised by special resolution.
	Approval from the board is necessary.	A special resolution must be passed in this regard, and the approval of the board must be taken.
	The offer is given for a limited time period, which is minimum 15 days and maximum 30 days.	No such time period is specified.
	It is necessary to fill form PAS-3 with the registrar of the company.	Forms like PAS-3, MGT-14, GNL-2 are filled out and submitted to the registrar of the company.
	Shareholders can exercise their right to renounce or reject the shares offered to them.	No such right is available to them.
	There is no need to prepare a valuation report.	It is mandatory for companies to prepare a valuation report.

Recent case laws

The Canning Industries Cochin v. SEBI (2020)

Facts of the case

The appellant in this case was an unlisted company known as Canning Industries Cochin. When the company suffered losses, it proposed to issue 1,92,900 unsecured fully convertible debentures to 1929 shareholders in its 68th Annual General Meeting by passing a special resolution under Section 62(3) and Section 71 of the Act. However, the shareholders were not given the right to renounce the offer to any other person. One of the shareholders raised objections to this proposal and filed an application before the Company Law Board, but no action was taken, and as a result, complaints were filed in SEBI and with the registrar of the company. SEBI issued directions against the directors and the company, which were discharged by another order that stated that the company had not violated any provisions of the Companies Act, 2013. This was, however, appealed by the shareholder.

Issues involved in the case

Whether the company in this case has complied with the provisions of Section 62 of the Act?

Judgement of the case

The appellate tribunal observed in this case that Section 62(1)(c) is applicable in the present case as the case is not related to the issuance of preference shares but deals with an increase in the subscribed capital of the company. The shareholders in the present case passed a special resolution that contained a condition that this right cannot be renounced. This shows that the increase in subscribed capital was caused by exercising an option by way of condition that the debentures issued cannot be renounced in favour of any third person. Thus, the company has complied with the provisions of Section 62(3) of the Act. Moreover, the prospectus clearly states that the said offer was made to the existing members or shareholders of the company. As a result of this, the impugned order passed by the Whole-time member cannot be sustained and so the order and directions issues against the company are quashed.

Proddaturi Malathi v. SRP Logistics Pvt. Ltd. (2018)

Facts of the case

The company or the respondent, in this case, is an incorporated private company having an authorised share capital of five lakh rupees. The appellant was inducted as assistant director in the company. In 2015, a notice was issued to convene a board meeting to further increase the share capital to forty lakh rupees. Further, in 2016 a general and board meeting was conducted to allot the shares. In 2017, a notice was served to conduct an extraordinary general meeting with an agenda to remove the appellant from the post of director in the company. As a result, she moved to a tribunal which passed an interim order against the appellant. Aggrieved by the order, the appellant challenged the allotment of shares on the grounds that Section 62 of the Act has been violated by the company.

Issues involved in the case

Whether there has been a violation of Section 62 of the Act and whether the order passed by the tribunal is correct?

Judgement of the court

While discussing the validity of the order passed by the tribunal, it was observed that earlier Section 62 was not applicable to private companies. But now it is applicable and requires that the offer of shares must be first made to the existing members or shareholders of the company holding equity shares in the company. They must be given time to either accept or reject the offer along with a right to renounce the offer in favour of another person as given under the section. The issuance of shares to any other person will be done at a fair value which is determined by the valuation report of the registered valuers.

In the present case, it was observed that the company was running into profits and increased its authorised share capital twice and paid capital thrice since the time it was incorporated. It was argued by the appellant that the funds were raised again to suppress her by reducing her shareholding to a minority in the company as there was no need to increase the share capital. The appellant has also objected that the order of the tribunal has not dealt with certain acts of the company. The meetings of the company have been challenged and the tribunal failed to deal with it. Further, it has only dealt with the removal of the appellant from the position of director and not any other contentions made by the appellant. The National Company Law Appellate Tribunal (NCLAT) observed that according to Section 62, shares must be first offered to the existing members and when they reject it or the offer declines then only they can be distributed among others. The appellate tribunal thus, ordered to remand back the matter to the tribunal to deal with the case on merits and also hear the other pending issues which have not been dealt with so far.

Conclusion

In order to expand its business, the company has to invest a lot of capital. The private companies do not demand or ask for capital from the public, but the public companies, on the other hand, issue shares to the public and use their money for expansion and modernization in the business. This is because public companies work largely for the benefit and welfare of the public. The funds, or capital, can be raised by issuing rights shares to the existing shareholders according to provisions given under Section 62 of the Act. This Section was available in the Companies Act, 1956, under Section 81 which was earlier not applicable to private companies but now, after the 2013 amendment, the provisions under Section 62 are also applicable to private companies. The Act further provides another option to increase the share capital of a company by issuing bonus shares according to Section 63 of the Act.

Under Section 62, the shares are first offered to the existing shareholders of the company because they are already its members and hold equity shares in the company and thus, must be preferred. These shareholders also have the right to renounce the shares offered to them in favour of any other person. On the other hand, preferential allotment includes the allotment of shares to outsiders or people for whom a special resolution is passed in the company by issuing fresh shares to them. This is done to get experts on the board of directors so that better strategies could be planned for the company.

Frequently Asked Questions (FAQs)

What do you mean by a stock? How is it different from a share in a company?

A stock is a set of shares issued together in a company. It is the aggregate of fully paid-up shares combined and merged into one fund. On the other hand, a company’s capital is divided into small units known as shares. For example, if the share capital of a company is one lakh rupees, which is divided into 100 units of thousand rupees each, then Rs. 1000 is a share of the company and 100 units of thousand rupees each are together known as a stock of the company.

Is there any exemption to private companies under Section 62 of the Act?

Private companies can issue shares to their employees under the Employees stock option scheme by passing an ordinary resolution while public companies have to pass a special resolution in this regard.

What is a share certificate?

It is a document given to the allottee of shares by the company that certifies he is the holder of a specific number of shares of the company. It acts as evidence that the allottee is a member of the company.

References

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A brief about rescinding contracts

By

Sneha Mahawar

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June 1, 2023

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This article is written by Randeep Rana pursuing Crack California Bar Examination – Test Prep Course. This article discusses the various nuances of rescinding contracts in an analytical manner.

This article has been published by Sneha Mahawar.

Table of Contents

Introduction

The word “rescission” is derived from the Latin term ‘rescindere’, which means to cut or tear open. So, when a contract is torn open in a manner that the parties to the contract are restored back to the position that existed prior to the formation of the contract, it is called rescission of the contract. In effect, it may be compared to going back in time as if no contract was formed between the parties. Now there are certain circumstances like misrepresentation, fraud, etc. that may lead to the rescission of the contract between the parties. On the contrary, there are also situations where courts do not permit the contract to be rescinded. In this article, we will discuss analytically what is meant by the rescission of contracts, the usual circumstances when rescission of contracts are granted and situations where they are not granted by the courts and some relevant case laws on the rescission of contracts.

What is rescinding of contracts

Rescinding a contract implies that it is no longer recognized as legally binding on parties to the contract. So, basically, one party makes an effort to void the contract so that they do not need to fulfill the duties under the same. Rescinding of a contract can also be termed as unwinding of an agreement. However, a rescinding contract can be described broadly in two ways, as described below:-

Firstly rescinding a contract by a party manifesting its intention to void a contract. After rescinding a contract, the party which rescinds the contract is no longer bound to perform the contract, but the party may be liable/bound to indemnify the party facing prejudice subject to the relevant clauses of the contract. After the recession, both parties will be at the pre-contract stage as similar to the void contract, where the contract was never signed or entered into. Rescission can be done by law, by mutual consent, or by reasonable cause.
A court of law may also do rescinding of a contract in the interest of fairness and justice if the performance of a contract may be adverse to the interest of society or the public at large. Court of law rescinding a contract must ensure that the parties must be rehabilitated to position as the contract had never been signed or entered into and side by side protecting the rights of any third party to the contract which the rescinded contract may prejudice.

Grounds for rescinding a contract

To have a contract rescinded, the court first determines if there is a valid reason to undo the contract. Just because the parties changed their minds, a contract is never rescinded as the same legally binds the parties. You can rescind a contract for:

Mutual consent – Both parties can mutually agree and apply for rescission of the contract if the performance of the contract will cause irreparable and unwanted loss to the parties to the contract.
Indian Contract Act, 1872 – As per Sections 19 and 19A of the Indian Contract Act, 1872 if the facts presented by the other party were false or misrepresented or unduly influenced or there was non-disclosure with respect to insurance contracts or where the contract is unlawful for one party, then the party at lose can demand rescission and in addition to the above, a party to a contract is can rescind the contract provided the circumstances envisaged in Sections 39, 53, 55 and 64 of the Indian Contract Act, 1872 are fulfilled.
Against the interest of the society or public at large – If the contract goes against the general interests of the society or public at large, then rescission can happen.
Specific Relief Act, 1963 – Sections 27 to 30 of the Specific Relief Act, 1963 deal with the rescission of a contract. It is a type of legal redressal.

Section 27 deals with a situation where the rescission may be adjudged or refused.
Section 28 deals with rescission in cases of contracts for the sale or lease of immovable property, the specific performance of which has been decreed.
Section 29 deals with an alternative prayer for rescission in a suit for a specific performance and
Section 30 envisages that the court may order the rescinding party to act in a manner that would restore equity.

When is the rescission of contracts not granted

It is pertinent to note that it is not always equitable to rescind a contract. Also, the right to rescind a contract is not an immediate right but the same is a discretionary power vested to the court. A court of law may deny a request to rescind a contract based on the below-mentioned circumstances:

Substantial performance – one of the parties has confirmed their willingness to fulfill their obligations by performing the actions.
Protection of Third party’s right – if a third party has received some benefit or acquired some rights from the contract, undoing the contract could cause them harm.
Other defences – some of the other defences that can be used to rescind a contract include unclean hands, which refer to one party filing a breach of contract due to the other party committing a wrong. Another defence is laches, which means one party unnecessarily delayed a filing that caused prejudice to a party.

Case laws on rescission of contracts

Various High Courts of India and the Supreme Court of India have opined various times on the topic through various cases. Some of them are mentioned below:-

Sri Pawan Kumar Dalmia v. Sri Biligowda (2021)

In this case, the plaintiffs claimed that the defendants did not have sufficient title to the property and wanted to rescind the contract while claiming back the earnest money from them. The plaintiffs lost the case at the trial stage but later on at the appellate stage, the Karnataka High Court decided in favour of the plaintiff’s right to rescission of the contract as the defendants had misrepresentation themselves in having proper title to the property and ordered the payment of the earnest money back to the plaintiffs/ appellants.

Bhupinder Kumar v. Angrej Singh (2009)

In this case, the appellant had entered into an agreement to purchase land, but the respondent failed to execute and register the sale deed. The appellant filed a suit for specific performance, and the court decreed the suit in favour of the appellant. However, the appellant failed to deposit the balance sale price within the specified time, and the respondent filed an application for rescission of the contract. The executing court rescinded the contract, and the High Court upheld this decision.

The court referred to Section 28 of the Specific Relief Act, which allows for the rescission of a contract for the sale of immovable property if the purchaser fails to pay the purchase money within the specified time. The court held that the trial court retains its power and jurisdiction even after the decree for specific performance, and it can extend the time for compliance with the decree.

In analyzing the facts of the case, the court found that the appellant had not provided sufficient material to justify an extension of time, and there was no evidence of the appellant’s inability to tender or deposit the balance sale consideration. Therefore, the executing court’s decision to decline an extension of time and rescind the contract was deemed just and equitable by the High Court. The Supreme Court upheld the High Court’s decision.

Conclusion

Thus it can be said that rescission leads to the cancellation of the contract in a manner that erases all the effects of the contract. Anything that was exchanged between the parties like money or goods must be restored in an equitable manner. It acts as a legal remedy when one or both parties wish to undo the contract’s effects and return to their pre-contractual position.

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.

Contract law, social norms and inter firm cooperation : an analysis

By

Sneha Mahawar

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May 31, 2023

0

This article has been written by Pruthvi Ramakant Hegde, 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.

Table of Contents

Introduction

‘From buying vegetables at the market to installing and using apps on our mobile’ we often do thousands of agreements in our day-to-day life, don’t we? But we couldn’t recognize them; apparently, some of those are not even legally enforceable in nature also. In order to legally bind such an agreement it should be enforceable by law. In that regard contract law serves a stagnant role. On the other hand, we live in a society. Hence one needs to abide by the societal norms which are unwritten and are accepted and practised by groups of people. Sometimes it is codified into rules and laws. On the other hand, success and the growth of any firm, organisation, or any institution depend on the trust, promise, and cooperation between them.

This paper will discuss contract law, and how it will serve a significant role in maintaining the long-term relationship between the parties. Further, demonstrate about the modern approaches to the contract about how it is different from the traditional approaches as well. Further discussion about the social contract theory as well as the social norms and how it is well served with inter-firm cooperation. Opinions of the international countries about how firms will maintain better cooperation and trust which would help them to maintain the attention of the customer on a business percept.

In the end marked with criticism and some difficulties as in today’s scenario, those construed rules and practices are not up to the mark as the way it is expected by society. Reasons for this issue would be numerous. It is somewhere affecting inter-firm relationships. Cooperation serves an important key role in the success of the firm whether it may be between or among. Instead of having long-term agreements, it would be better to have long-term relationships between the parties. That aspect has to be reflected by executing those agreements.

Contract law and inter-firm cooperation : conceptual issues

Generally, social norms are not in scripted form. Those are generally accepted by groups of people. Norms can be internalised, which makes an individual conform without external rewards or punishments. Perhaps it needs to be stricter in nature because it can lead to a violation of what we view as moral and ethical behaviour. In order to maintain morality, trust and cooperation in inter-firm as well as between the firm contract laws pays pathway in this regard.

Inter-firm relationships are the key to maintain the reputation of the firm as well as its growth of it. Cooperation serves a major role in keeping their relationship properly. This is what social norms expect too. Without the codified rules and laws, it is not possible to meet their expectations. In that behalf parties often opt for making such contracts for underpinning their commercial relationships, trust for the long duration.

Role of the contract law in keeping cooperation and relationships infirm

In order to maintain long-term relationships between the firms as well in the firm itself;
By making a legally binding agreement the parties can maintain their relationship accurately,
The contract serves the rights and responsibility as well as it puts the obligation on the parties.
Which will also have the option for breach of obligations as well as how to settle amicably by opting for alternative dispute resolution methods. This would help to rebuild such relationships.

Modern approaches to contracts

Traditionally companies have contracts as protection against the possibility that one party will abuse its power to extract benefits at the expense of the other—for example, by unilaterally raising or lowering prices, changing delivery dates, or requiring more-onerous employment terms. In 2008, Oliver, together with economic theorist John Moore, revisited his work on contracts. They have realised the fact that if one party is not cooperative then it ceases to be proactive. At the same time Oliver and others decided to shape up a new methodology to curb these issues by adopting formal contracts called the “what’s in it for we” (It’s called vested because the parties have a vested interest in each other’s success.) Written contracts that are legally enforceable (this is why we call them formal). In my view if this methodology is adopted in the inter-firm it would be better for parties to cope with their commercial relationship, all together can achieve their targets. Cooperation is the sense of owners of different inputs working together.

Social contract theory and inter-firm cooperation : conceptual issues

Social contract theory has different approaches by the authors-

According to Hobbes (Leviathan, 1651), the state of nature was one in which there were no enforceable criteria of right and wrong. People took for themselves all that they could, and human life was “solitary, poor, nasty, brutish and shorts”
Locke (in the second of the Two Treatises of Government, 1690) differed from Hobbes insofar as he conceived of the state of nature not as a condition of complete licence but rather as a state in which humans, though free, equal, and independent, are obliged under the law of nature to respect each other’s rights to life, liberty, and property.

By comparing both different views we can develop the opinion that social contract theory is demonstrating social values and human behaviour to be in accordance with those societal norms. If one goes through with the conceptual analysis of both the term social norms as well as inter-firm cooperation, if any firm means its owners likewise human beings one who is running it must embed the social norms, values i.e., morality, trust, cooperation it will add high value to that firm.

Criticism about social norms

“Eric Posner” argues that social norms are sometimes desirable yet sometimes odious, and that the law is critical to enhancing good social norms and undermining bad ones. But he also argues that the proper regulation of social norms is a delicate and complex task, and that the current understanding of social norms is inadequate for guiding judges and lawmakers. What is needed, and what this book offers, is a model of the relationship between law and social norms. The model shows that people’s concern with establishing cooperative relationships leads them to engage in certain kinds of imitative behaviour. The resulting behavioural patterns are called social norms. An empirical study on social norms has divergent opinions, because of its informal way of expressing its contents, and moreover, it is as simply as applied and accepted by a community or group of people. But in order to add value to it must be metamorphosed in a formal manner, i.e., it must be codified into rules and laws. Those laws must be equipped as per the needs of the society.

Interfirm cooperation position in international countries

A commonly expressed view was the success of the firm is not dependent upon the form of long-term agreement but instead upon long-term relationship on how well the exchange proceeded from the point of view of the party.

UK mining suppliers expressed that ‘we don’t have long term agreement but have long term relationship’.
Italy mining suppliers held that ‘long term relationships are spontaneously established, if both parties are satisfied’. The majority of the firms expressed the view that long-term relationships are principally well and good to get opportunities from the customer point of view.

Dispute resolution and legal enforcement

In the modern era ADR methods are having most demandable methods which try to resolve the disputes which may arise in the contract meanwhile parties are in the contractual relationship. Role of dispute resolution in maintaining long-term relationships in firm:

Because of its amicable settlement of the dispute where parties can rebuild, restore as well as maintain their long-term relationships.
Compared to court proceedings which is time-saving and cost-saving- in business risks are uncertain terms hence if any possibility of disputes it is better to resolve them by opting for these methods otherwise owner has to bear long-term loss.

Conclusion

In the end, it is submitted that this paper has highlighted the interlink between contract law, social norms and inter-firm cooperation. Inter-firm cooperation depends upon the various senses of the parties working in the particular area. Cooperation hence plays a very significant role in maintaining the long-term relationships of the party. This is possible through trust between the parties. In order to build such trust there shall be some binding contracts that protect the trust and long-term relationships also.

It is not easy to maintain such long-term relationships as the way it is expected by the parties. Due to some disputes, conflicts are often common in any business. But in order to protect those relationships it is better to curb those disputes by adopting some dispute resolution methods, in the modern day’s scope of dispute resolution is increasing. Due to these possibilities nowadays every commercial contract ends its dispute by opting for this methodology. Either by opting for arbitration, negotiation, as well mediation clauses in their long-term agreement. Here parties can afford to have mutually agreeable solutions. Hence long-term relationships will definitely be protected here. And dispute resolution is the perfect example that interlinks term contract law, social norms thus maintaining cooperation in inter firms also

Finally, this topic can be concluded by stating that even though there are practical difficulties in maintaining cooperation between the firms or in inter firms, the contract laws codify some of the social norms which seem to be informal but by converting them as formal agreements by making legally binding and enforceable contracts as well.

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Qamar Ghani Usmani v. The State of Gujarat (2023) : case analysis

By

Sneha Mahawar

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May 31, 2023

0

This article is written by Vikram Singh, Advocate on Record (AOR) in Supreme Court, Insolvency Professional and Legal Aid Counsel (LAC) in Senior Sessions Panel of DLSA South, Saket Courts, New Delhi pursuing a Diploma in M&A, Institutional Finance and Investment Laws. This article discusses the recent Qamar Ghani Usmani vs The State of Gujarat from a critical point of view.

This article has been published by Sneha Mahawar.

Table of Contents

Introduction

A few days back, the Hon’ble Supreme Court led by our erudite Chief Justice of India gave its pronouncement on 05.04.2023 in Madhyamam Broadcasting Limited vs Union of India, which not only negated the high-handedness of the Government functionary but also gave a ray of hope to the common man living all across the country that there is an institution who would not only listen to them but also give relief even though the other side is a mighty Union government represented by equally powerhouse lawyers. This moment of joy and hope was short-lived when the same Supreme Court led by another equally erudite Hon’ble Judge delivered its judgment on 10.04.2023 titled Qamar Ghani Usmani vs The State of Gujarat.

Brief facts of the case

With due respect to the Learned Judges, the judgment of Qamar Usmani in my humble opinion, is not only per-incuriam but also bad in law. In order to understand the situation better, the following dates and events are relevant:-

Date	Event
29.01.2022	Date of Arrest of the accused.
22.04.2022	Prayer for an extension of time to complete the investigation made by Investigating Officer (IO) and the Learned Subordinate Court granted time of 30 days *in the absence of the accused*.
23.04.2022	The accused was informed about the extension.
10.05.2022	Application for default bail u/s 167 (2) was filed by the accused, alleging that the 1^st extension on 22.04.2022 was granted in his absence and hence, bad in law but the same was rejected.
22.05.2022	IO again sought an extension of time for investigation and again, it was allowed by the court on the same day but this time, it was in the presence of the accused.

Analysis of the judgment

It is of utmost relevance that the Hon’ble Supreme Court, while deciding Qamar Ghani though, cited and considered many judgments relied upon by the parties but chose not to extract any single relevant paras of those judgments. Had it been done, many illegalities could have been easily avoided. To my mind, the non-inclusion of the following paras of Sanjay Dutt vs State through C.B.I., Bombay (1994) has been utterly hazardous:-

“…..(2)(a) Section 20(4)(bb) of the TADA Act only requires production of the accused before the court in accordance with Section 167(1) of the CrPC and this is how the requirement of notice to the accused before granting extension beyond the prescribed period of 180 days in accordance with the further proviso to Clause (bb) of Sub-section (4) of Section 20 of the TADA Act has to be understood in the judgment of the Division Bench of this Court in Hitendra Vishnu Thakur. The requirement of such notice to the accused before granting the extension for completing the investigation is not a written notice to the accused giving reasons therein. Production of the accused at that time in the court informing him that the question of extension of the period for completing the investigation is being considered is alone sufficient for the purpose.”

The Constitution bench of Hon’ble Supreme Court in Sanjay Dutt (supra) was very much categorical in observing that:-

Notice to the accused while considering the extension of time for investigation is a must though it may not be in writing;
Only notice in writing has been done away with and not the oral notice;
Production of the accused before the court when an extension application is considered would be construed as a valid notice;
Notice has to be given “before” granting the extension by the Court.

In my respectful submission, none of the aforesaid four ingredients were fulfilled in this case when the extension of time in completing the investigation was granted by the subordinate court. The lower court has committed this grave illegality and the same has been totally ignored by the High Court as also Supreme Court.

The accused in the present case was admittedly not present in the Court when the extension was granted on 22.04.2022. It is startling to note that all the courts, including the apex court, put a premium on the incompetency and illegality of the investigative agency in the matter. Has anybody bothered to ask why the IO or the prosecutor chose to make an application for an extension without serving a copy to the accused or his lawyer? What prevented the learned subordinate judge from informing the Superintendent/officials of jail to put the accused on notice qua the extension application? No one has put these basic questions to the investigative agencies or the lawyers representing them.

It is common knowledge that the accused in India engage full-fledged lawyers only when the Police report u/s 173 (2) of Cr. PC, 1973 are filed. In the present case, illegalities of the investigative agency have been conveniently ignored and the choice or ignorance of the accused in not challenging the Order dated 22.04.2022 granting an extension of time has been put forth against him by the Hon’ble Supreme Court so as to deny the indefeasible right available to him u/s 167 (2) CrPC, 1973. In the present case, the mighty State chose not to follow the Constitution Bench judgment in Sanjay Dutt (supra) and the accused has lost his valuable statutory right of default bail.

Another unfortunate part of Qamar Ghani is that though in Para 6.4 of the Judgment, Hon’ble Supreme Court correctly summarizes the law laid down in Sanjay Dutt and Jigar but in the very next subsequent paras gave the finding which is totally contrary to the summary. Hon’ble Supreme Court, in my humble view, was completely wrong in giving a finding ignoring the prophetic conclusions of the Sanjay Dutt judgment.

Moreover, denying the benefit of default bail only on the ground that the accused has not challenged the extension order of the learned subordinate court goes against all cannons of jurisprudence and a sense of justice. In fact, all the courts in the present case have forced the accused to consume the fruits of the poisonous tree planted by the IO and the learned subordinate judge. When government functionaries and judicial officers ignore the basic principle of natural justice, like giving a formal notice which has also been confirmed by the 5 Hon’ble judges of the Supreme Court (in the Sanjay Dutt case), there is no occasion for the constitutional Courts to ignore these blatant illegalities and perpetuate the illegal incarceration of the accused persons.

Criticism of the judgment

To summarize, Hon’ble Supreme Court has been patently illegal in:-

Ignoring the illegality of the IO and Learned subordinate judge in not confirming the presence of the accused or his counsel on 22.04.2022 when the extension application is being filed and decided;
Ignoring the word “before” in Para 57 2(a) of the Sanjay Dutt Judgment;
Not commented anything about the conduct of IO and the learned subordinate judge in not following the conclusions of the Constitution Bench decision in the Sanjay Dutt case pertaining to the presence of the accused before the court when the extension application is being filed or decided;
Allowing the IO and the Learned subordinate judge to continue enjoying their salary and perks despite admittedly not following the Constitution Bench decision of the Supreme Court and at the same time, declining to grant default bail to the accused on the ground that he has not challenged the extension order;
Giving the finding which is contrary to the letter and spirit of the larger bench decisions;
Not commenting upon the incompetency, illegality and injustice caused by the IO and the Learned subordinate judge and elaborately commenting upon the choice made by the accused person in not challenging the extension of the investigation order and
Setting a wrong precedent which would give sweeping power to the investigative agencies to find modes and methods to deny the indefeasible relief of statutory bail to the accused persons.

Conclusion

Judgments of the Hon’ble Supreme Court have far-reaching consequences. Qamar Ghani’s pronouncement of the Hon’ble Supreme Court is regressive in nature and totally alien to the magnanimity of our beloved Supreme Court. It cannot be the judgment that can be celebrated like Madhyamam Broadcasting (supra). After this judgment, the adage that is going to be popular is “Default bail is default jail only”.

References

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Security for keeping peace and behaviour under 109, 110, 111 of CrPC

By

Rachit Garg

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May 31, 2023

0

This article was written by Mahesh P. Sudhakaran and briefly covers all aspects pertaining to security for good behaviour under Sections 109, 110, and 111 of the CrPC and also examines the procedure for the same.

It has been published by Rachit Garg.

Table of Contents

Introduction

“Prevention is better than cure” is a proverb which is in common parlance and well known. Sir William Blackstone believed that ‘‘preventive justice is preferable in all respects to punishing justice”. Rather than merely being a popular quote, this proverb is deeply embedded in various legal systems as well. Indian criminal law is not completely unwary of the jurisprudential norm of preventive justice. Substantive law states that crime is to be prevented, and procedural law provides a mechanism for the same. The Code of Criminal Procedure, 1973, has enacted several provisions, as seen in the previous chapters, for investigation, inquiry, and trial with regard to every crime alleged to have been committed. Furthermore, in order to prevent crime, it was essential to include a few preventive measures. Provisions were also enacted in the form of other precautionary measures for the protection of society as a whole.

These matters are contained in Sections 106 to 124 and Sections 129 to 153. Part VIII seeks to create a stable society by enforcing the aforementioned proverb and ensuring peace and good behaviour. Security means providing a guarantee consistent with the court’s satisfaction that a certain form of conduct is to be upheld for a specified period by a certain person who is concerned with such a thing. Executing a bond is the prescribed mode of creating the security that is required in order to ensure peace and good behaviour. The bond therein can be executed with or without sureties. This whole procedure is a judicial one and not an administrative one that is within the discretionary power of the court.

In the Australian legal system, a “good behaviour bond” is one of the prominent non-custodial sentences that is concerned with imposing certain conditions to guarantee the offender’s “good behaviour” for a stipulated period of time. Similarly, Sections 108, 109, and 110 of the Code contain provisions pertaining to taking security for good behaviour from persons likely to commit offences.

How can “good behaviour” be determined

These provisions are enforced against any suspected persons or habitual persons who are likely to commit offences. It is not a punitive measure but a preventive measure to ensure that a person who is likely to commit such offences is bound by a bond to not display such behaviour, which would be contrary to the bond executed therein. This behaviour is determined based on the accused’s previous conduct and other surrounding factors. The jurisdiction conferred under the ambit of Section 108 is preventive and not punitive in nature.

The test under this Section is whether the person proceeded against has been disseminating or circulating seditious matter or such other matter as prescribed in Section 108, and whether there is a possibility with respect to a repetition of such an offence in the future. In each similar case, it is important to understand this particular question of fact with reference to the background of the person and other key surrounding circumstances. It may be noticed that when it comes to cases falling under clause (2) of Section 108, the dissemination must be intentional, but when it comes to cases falling under clause (ii) of Section 108, the dissemination need not be intentional with regard to there being any reason to believe that such a person is doing so in order to commit a cognizable offence.

Under Section 108, the magistrate may order such a person to show cause why he should not be ordered to execute a bond, to assure good behaviour for a stipulated period, which does not exceed one year, as the magistrate deems fit. Similarly, in order to ensure good behaviour under the purview of Sections 109 and 110, a person may be asked to prove and show why such a person should not be ordered to execute a bond, with or without sureties, to ensure such a person’s good behaviour for such a period, not exceeding a year, as the Magistrate deems fit. The purpose of this part is to determine and ensure the good behaviour of persons who might commit an offence through bond execution.

Benefits under Section 109

Section 109 of the Code deals with security for good behaviour by suspected persons. It can be enforced when a person takes precautions to cloak his presence in order to commit a cognizable offence. The magistrate may demand that such a person show why he should not be ordered to post a bond for good behaviour for a period not exceeding one year. This is a preventive measure designed to stop a person from carrying out a cognizable offence in the future.

This Section restricts or curtails the liberty of a person who is concealing himself to commit a crime and must be applied only when it’s needed to uphold the fundamental rights guaranteed under the Indian Constitution. This Section upholds the very essence of preventive justice as it gives effect to the rational ideology of preventing crime, thereby eliminating any damage it could cause in all probability. The words ‘‘concealing his presence” have to be interpreted widely as per this Section and are sufficiently wide to cover not only mere concealment or cloaking of bodily presence in a house or any other place, etc., but also any concealment of appearance through a mask or covering the face or disguising themselves using any other means. This form of preventive justice doesn’t just exist in India but is also prevalent across various legal systems.

As per Canadian jurisprudence, a peace bond is an order issued by a criminal court that forces a person to keep the peace and be on good behaviour for a specified period. In simpler terms, this means that any person signing a peace bond cannot be charged with any additional criminal offences during the duration of the peace bond. Peace bonds have other conditions as well; the person may be restrained from possessing any weapons or asked to stay away from a particular person or region by the court.

Whereas in Australia, a good behaviour bond falls under the ambit of non-custodial sentences, which includes the assurance regarding the offender’s “good behaviour” for a set period. The condition of “good behaviour” ensures that the offender obeys the law, and may also include other conditions like probation, supervision by an officer appointed by the court, mandatory medical treatment, rehabilitation, counselling, and certain intervention programs. These are some of the advantages of Section 109.

Incapacitation of a potential offender.
Deters occurrence of crime.
Rehabilitation of potential offenders.
Restitution of offenders into society.
Consistent with the better safe than sorry ideology thereby preventing any damage that could possibly be inflicted.
Creation of a safer society.

Security for good behaviour of habitual offenders under Section 110 CrPC

This Section is concerned with keeping habitual criminals under control when there is a possibility of repetition. It intends to incapacitate ex-convicts or habitual criminals who are dangerous and who are incorrigible. These offenders are potentially so dangerous that the ordinary provisions within penal law and the usual fear of judiciary-enforced punishments do not deter such persons from committing further crimes. As per this provision, the executive magistrate can initiate proceedings if information pertaining to the following persons is received:

A person who is a habitual offender, robber, house-breaker, thief or forger.
A person who is a habitual receiver of stolen property.
A person who is a habitual protector or harbourer of thieves or habitual abettor in the concealment or disposal of stolen property.
A person who is a habitual kidnapper, abductor, extortioner, cheat or a person habitually committing mischief, offences relating to coin stamps, etc.
A person who is a habitual offender or abettor of a breach of the peace.
Habitual offenders committing or attempting to commit or abetting the commission of offences under the Acts like –

Such a magistrate may instruct or order him to show cause as to why he should be ordered to execute a bond with sureties for his good behaviour for a period not exceeding three years. This Section does not aim to provide an indirect mode of securing a conviction in cases where a prosecution is likely to fail. This Section is purely enforced to curb the heinous atrocities by habitual criminals and to protect the community from any damage they are likely to cause. However, if it is not used with caution and consideration, it might easily become a tool for arbitrary decision-making. It may further be noted that proceedings under this Section are judicial in nature and not executive, and hence, the court is mandated to follow the procedure strictly to avoid any form of arbitrariness. When action against a person is initiated under this section, that person should be cordially informed of the charges. A mere suspicion that a person possesses criminal tendencies is not sufficient, the charge against such a person should be definite and unambiguous.

What does Section 111 of the CrPC say

As per Section 111, when a magistrate exercises powers under Sections 107, 108, 109, or 110 against a person, that person has to compulsorily show cause under the same section, and the magistrate having jurisdiction shall make an order in writing, representing the substance of the information received, the amount of the bond that has to be executed, the period of time for which it is to be in force, and the number, character, and class of sureties if any are required.

Ingredients of Section 111 of CrPC

This Section prescribes the procedure for passing a preliminary order, and the magistrate shall make an order:

1. Mentioning the substance of the information received,

2. The amount of bond to be executed to ensure peace or good behaviour,

3. The term for which the bond is to be in force,

4. Any number, character, and class of securities if provided.

The reason why the substance of the information is mentioned in the notice is to provide a reasonable opportunity for the accused to come prepared to meet the accusations.

Preliminary procedure of initiating action under Section 107-110

Order requiring the respondent to show cause

When a magistrate acting under the ambit of Sections 107, 108, 109, or 110 deems it necessary to order a person to show cause under these Sections, the magistrate can make an order in writing the following:

Setting forth the basis or the source of the information received,
The rate of the bond that has to be set, the term for which it is to be in force,
And the number, character, and class of sureties if required.

It is paramount that the person against whom this action is to be initiated be informed of the grounds for the same and why the court deems it fit to do so.

Communication of the order

If the person against whom such an order is made is present in court, the order should be read and explained to him. If the order is not read out and explained as required by Section 112 above, it is an illegality that vitiates the proceedings. If such a person is absent from court, the magistrate can issue a summons compelling him to appear, or when the person is in custody, a warrant can be issued directing the officer in charge to bring him before the court. However, as per Section 113, if the magistrate, based on the report of a police officer or any other information received, has reason to believe that there is reason to fear the commission of a breach of peace and the only way to prevent such a crime is arrest, then he can initiate action as per the aforementioned proviso.

Personal attendance is not always compulsory

As per Section 115, the Magistrate may, based on valid grounds, dispense with the personal attendance of any person called upon to show cause why he should not be ordered to execute a bond that ensures he wouldn’t undertake any illegal act, which forms the basis of the show cause against such a person.

Landmark case laws

These are some of the significant judgements regarding this topic:

Navin v. State of UP( 2021)

Herein it was held that the words habit and habitual have been defined, and the word habit has a close correlation with the character of a person when it comes to invoking provisions related to keeping peace and good behaviour. It was also held that the words “habit and habitually” have been used in the sense of depravity of character as evidenced by the frequent repetition or commission of the offences mentioned in the Section.

Zahir Ahmad v. Ganga Prasad (1962)

In this case, it was held that the procedure under Section 111 is mandatory in all criminal cases and that non-compliance wouldn’t be treated as a mere irregularity. Hence, it was deemed by the Court that action under the ambit of this Section could not be invoked if the procedure prescribed wasn’t adhered to by the authorities.

Abdui Ghafoor v. Emperor(1943)

In this case, it was held that the words “conceal presence” in Section 109 are wide enough to cover not only the concealment of bodily presence in a house or grove, etc., but also the concealment of appearance by wearing a mask or covering the face, or disguising by wearing a uniform, etc.

Nikka Ram v. State (1954)

Herein it was observed that the information received by the magistrate under Section 108 should not be vague and must clearly establish that the person against whom the information is given is by habit a robber, housebreaker, etc. The police report, by reproducing the words of the section and merely considering the bad name of a person, does not really give information about the meaning of this section.

Criticism

Sections 109 and 110 of the Code are concerned with security for good behaviour from vagrants, suspicious persons, persons who have no definite means of living, habitual offenders or criminals, etc. The existence of a certain class of persons known as vagrants, vagabonds, rogues, etc., has perpetually threatened civilised societies all across the globe. But judicial compliance with this sigma would hinder societal growth and development. Since criminal sanctions deprive people of personal liberties and dignity, they should be carefully exercised. Criminal liability arises out of an act or intention, and these provisions deviate from this well-established rule and could possibly create a status-driven contrast. The practice of using mere previous status as the sole basis of prosecution is carried out in order to prevent anti-social elements, and it might even have an effect to some extent, but if not exercised carefully, the presumption of guilt without any evidence can be repugnant to ethical boundaries, destabilise the philosophy behind justice, and curtail a person’s right to live with dignity irrespective of status or any other parameter.

Conclusion

Sections 109 and 110 of the code personify pre-emptive action against crime that is yet to happen, thereby eliminating any harm that would occur in the future and creating a narrative of safety. Being a preemptive measure, this provision also has certain social implications, as if they aren’t used fairly, these provisions can result in an arbitrary exercise of judicial discretion. Hence, it is important to remember that this provision is not punitive by any means and cannot be exercised in a manner that causes prejudice to any Section of the society.

References

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Deadwood trademark : all you need to know

By

Sneha Mahawar

-

May 30, 2023

0

This article has been written by Pranali Shetye pursuing a Diploma in Intellectual Property, Media and Entertainment Laws.

This article has been published by Sneha Mahawar.

Table of Contents

Introduction

Initially, the manufacturers identified their products with certain symbols, marks, or devices so as to distinguish their goods from similar goods manufactured and marketed by others. Manufacturers also began to advertise their goods by using their trademarks on them. This built goodwill and the reputation of the trademark among consumers. The main function of a trademark is to identify and distinguish the goods of one manufacturer from those sold by competitors. A trademark indicates that all the goods bearing a particular trademark originate from a single source and are of the same quality. A trademark has greater importance in advertising and selling goods. All these functions of a trademark made it necessary to adopt trademark law.

What is meant by a deadwood trademark

The purpose of trademark law is to protect the public from confusion and deception by identifying the source and origin of products and services distinguished from other similar products; and to protect trade, business, and goodwill attached to the trademarks of their owners. A trademark includes any word, name, symbol, configuration, device, shape of goods, packaging, combination of colours, or any combination thereof that one adopts and uses to identify and distinguish his goods from those of others. It is important to point out the requirement of a trademark that one adopts or uses to identify and distinguish his goods from those of others. It signifies that the use of a trademark in the course of trade and business by the owner is crucial. However, there are several instances where either the applicant does not timely respond to office actions, registered trademarks are not renewed, or non-use of trademarks. Such trademarks are termed dead or deadwood trademarks. The trademark registry no longer recognises abandoned trademarks, and as such, the trademark lacks protection under the trademark law.

Reasons for the death of the trademarks

The use of a trademark in the course of trade and business is of utmost importance. However, there are other reasons that might lead the trademark to die, such as-

Abandonment of trademark- When the owner of the trademark discontinues the use of the trademark and does not intend to reuse it in the course of trade and business in the future. However, in a case where the owner has discontinued the use but can effectively demonstrate that he intends to use it in the future, he can continue to own such trademarks.
Failure to respond- On the filing of an application for registration of a trademark, there are several questions asked regarding the registration. Failure on the part of the applicant to provide satisfactory answers or to reply to such an inquiry will be deemed an abandonment of the application.
Lapse of registration– The trademark registration is valid for a term of ten years, which is to be renewed on the payment of fees. Certain jurisdiction requires the submission of documents evidencing the use and the intent of continuing the use of the mark with the trademark registry such as the United States Patent and Trademark Office (USPTO).
Generic trademarks- Such trademarks with constant use become popular amongst the public that it assumes the meaning of particular goods or services. A trademark that was registered for its distinctive character is used by the public in a general sense to identify the goods or services and will no longer be associated with a specific brand or the registered owner of such trademark. In such a situation the trademark registry may decide to remove or cancel the generic trademark.
Licensing and assignment of the trademark- The owner of a trademark often licences or assigns their trademark to a third party. In the case of licensing the owner of the trademark is required to ensure that the licensee is producing the goods or services as per the standards as that of the original goods or services provided by the owner. Similarly, the assignment of a trademark must be accompanied by the transfer of the right of sale of products or services with respect to which the trademark was registered. Transfer of mere trademark or failure to transfer the rights of sale will result in non-representation of the original products by the registered trademark. As the important requirement of the trademark law is a continuous active use of marks on goods or services during the course of business will result in the cancellation or removal of a trademark from the records of the registry.
Opposition and cancellation- There are provisions to file opposition during the registration process of the trademark. It is to be noted that a trademark is a statutory right as such is subject to revocation. Hence, the application can be filed before the registry for cancellation of a registered trademark. Similarly, a trademark can also be revoked as a result of trademark litigation.

Consequences of dead or deadwood trademark

The non-use or abandonment of a trademark has consequences for the protection granted under the trademark law. Following are some of the consequences-

The owner will no longer seek action for trademark infringement under trademark law. However, one can take action for passing off under common law;
The cease-and-desist letter will lack force;
The holder of a trademark can no longer use the registered symbol; and
Competitors cannot be restrained from using similar trademarks in a different geographical area.

Provisions in the USA for the dead or deadwood trademark

For protection, every trademark must be in use or there must be an intent to put such a mark to use. To put it simply, a deadwood trademark refers to marks that are not actively used in any given jurisdiction. The term is pejorative and implies that such marks are useless and block the registration of new marks.

Trademark rights extinguish when the trademark is not used for a consecutive term of three years. Deadwood trademarks are an issue before the USPTO. In order to deal with the issue of the deadwood trademark, the US Trademark Modernization Act of 2020 (TMA) was enacted on December 20, 2020. Individuals, businesses, and the USPTO are empowered to take action for the removal of unused registered trademarks from the trademark register. This will further accelerate the efficient processing of the registration process by the USPTO.

Owners of registered trademarks must regularly prove that they’re using the trademark in commerce with all of the goods or services listed in the registration.

The new procedures incorporated in the efficient functioning of the USPTO and accurate maintenance of the records are as follows –

Letter of protest

A third party may file a letter of protest against an application for trademark registration at any time before publication. A third party is permitted to submit evidence relevant to a ground for refusal in an examination prior to registration. Evidence supporting any ground for potential refusal of the application may be submitted by the party along with the letter of protest.

Ex-parte re-examination

Any party may request cancellation of some or all of the goods or services in a use-based registration on the basis that the trademark was not in use in commerce with those goods or services on or before a particular relevant date. Any party is permitted to place a request within the initial five years of the trademark’s registration.

Ex-parte expungement

Any party may request cancellation of some or all of the goods or services in registration because the registrant never used the trademark in commerce with those goods or services. Expungement is available for registration based on use in commerce, a foreign registration, or the Madrid Protocol. The request must be made within the third and tenth years from the date of registration.

Just like cybersquatting, there are instances where the squatters register trademarks to block registration by the true owners and to profit from such marks. Similarly, the counterfeiters register trademarks that are deceptively similar, lack distinctive character, deceive, or cause confusion amongst the public to promote their illicit activities. Such instances can be curbed with the implementation of the process of re-examination and expungement.

The Trademark Act of 1999

In India, trademarks are governed by the Trademark Act of 1999. The Trademark Act provides for the registration of the trademark, which confers monopoly rights over the use of the mark on the registered proprietor. A registered trademark, unless used in relation to goods or services has no meaning. Non-use of a trademark leads to its death.

Section 28 of the Trademark Act deals with the exclusive rights conferred upon registration. The registration of a trademark bestows exclusive rights on the registered proprietor to use the trademark in relation to the goods or services for which the trademark is registered. The registered proprietor is also entitled to seek relief in respect of trademark infringement. However, it must be noted that the exclusive right to use a trademark is subject to any conditions and limitations to which the registration is subject.

The Trademark Act provides for the removal or cancellation of a trademark for non-use or abandonment.

Section 47 of the Trademark Act provides for the removal of registered trademarks. It states that any aggrieved person can request cancellation of a registered trademark if the owner of the trademark registered the mark of identity without the bona fide intention to use it, has not used the trademark for 3 months before the date of application for registration, or has not used it for 5 years from the exact date of registration. Section 47 of the Trademark Act, 1999 corresponds to Section 46 of the Trade and Merchandise Marks Act, 1958. It provides for the removal of a trademark from the register on the grounds of non-use. A trademark not used within five years of its registration is liable for removal either completely or in relation to those goods or services for which the mark has not been actively used. A request for the removal of a trademark may be refused on the basis of a demonstration of bona fide use of the trademark for goods or services of the same description or associated goods or services.

The Indian economy is witnessing high growth and is estimated to increase exponentially in the coming years. Several new businesses are incorporated, further accelerating the competition in the market. Realising the potential of a trademark, businesses are taking steps to register their trademark and enforce against infringement. As a result, the rate of trademark registration will be higher. It must be considered that not all trademarks will be utilised in the course of trade and business. There will be instances of unsuccessful products and services that will lead to the non-usage of the registered trademarks. Piling such abandoned or unused trademarks in the registers of the trademark registry will block the registration of new marks. The presence of such marks in the trademark register will act as grounds for the refusal of applications for the registration of marks. Provision for the removal of unused or abandoned trademarks and effective monitoring of such marks will declutter the register, making room for new marks.

Conclusion

It is a known fact that trademarks are territorial. Today, businesses have a multinational presence and, as such, register trademarks to seek protection in such jurisdictions. At the same time, the fame of successful businesses reaches all corners of the world in no time, which results in demand for the products and services of such brands. The expansion of business also promotes the registration of trademarks in multiple territories. In order to promote healthy competition in the global economy, it is crucial for all jurisdictional registries to maintain accurate records. Hence, it is of utmost importance to eliminate deadwood or fraudulent trademarks from the records of the trademark registry. At the same time, businesses must be proactive in protecting their trademarks. The trademark owners must ensure that their trademarks are in active use in order to avoid their death and removal from the records of the registry.

References

V. K. Ahuja, Law Relating to Intellectual Property Rights Third Edition (Reprint 2021),
https://www.upcounsel.com/dead-trademark#:~:text=A%20dead%20trademark%20is%20a%20trademark%20that%20was,longer%20use%20and%20seek%20protection%20for%20that%20trademark.
https://www.americanbar.org/groups/litigation/committees/intellectual-property/articles/2021/clearing-the-deadwood/
https://www.uspto.gov/
https://www.khuranaandkhurana.com/2022/12/05/deadwood-trademark/

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Manslaughter vs homicide

By

Rachit Garg

-

May 30, 2023

0

The article is written by Srushti Khule, a student of NALSAR, University of Law, Hyderabad. In this article, the author has extensively discussed the difference between homicide and manslaughter. The various case laws explaining the further heads are discussed in the article.

It has been published by Rachit Garg.

Introduction

Every time we hear the word ‘crime’ it shocks our conscience, and we come to know how brutal humans are becoming day by day. A single criminal act affects not only the victim but also the entire society. One such gruesome crime is an offence against the human body. Rape, kidnapping, abduction, dowry deaths, and homicides are some of them.

This article will look extensively at the offence of homicide. It will differentiate homicide from manslaughter, which is the term used in common law jurisdictions. Homicide and manslaughter are two distinct legal concepts that revolve around the unlawful killing of another person. In layman’s terms, both terms are often regarded as synonyms and used interchangeably. But, under the realm of criminal law, they carry different implications and consequences. Understanding the nuances between homicide and manslaughter is essential for legal professionals as well as individuals seeking to comprehend the intricacies of these offences.

Definition of crime

A crime is defined as any unlawful act committed that is forbidden by the law and injurious or harmful to the public at large, which makes the offender guilty and liable for the legal punishment. Our Indian law does not define crime in definite terms, instead, the word “offence” is used under Section 3 of the General Clauses Act 1897, which defines offence as an act committed or omitted punishable by the law for the time being. There are various forms of offences defined under the Indian Penal Code of 1860, and one of them includes offences against the human body. A homicide, which is the killing of a person by another person, is one of the gravest forms of offence against the human body.

What is homicide

Homo means “man” and cide means “killing,” which gives us the term homicide which means killing a man.

What is manslaughter

The term ‘manslaughter’ is not defined under the Indian Penal Code, but it is a term used in common law jurisdiction. It is one of the types of homicide where a person unlawfully kills another person, but his liability is not extended as for murder due to the presence of partial defences.

Nature of crime

The nature of crime is difficult to define because what was categorised as a crime yesterday may not be a crime tomorrow. It changes from place to place and from time to time. For example, Sati was a ritualistic Hindu practice, but now it is a crime. Adultery was a crime until 2018, but now it only remains as the ground for divorce.

Homicide

A homicide may be intentional or unintentional, which includes recklessness, negligence, or accident. There are two kinds of homicide-

Unlawful homicide; and
Lawful homicide;

Lawful homicide means a death is caused by the person but is justified or excused by the law due to a lack of intention on the part of the accused. This homicide is not punishable by the law. General exceptions given under Chapter 4 of the Indian Penal Code 1860, which includes mistake of fact, and the right to private defence, etc.

Unlawful homicide also known as culpable (blameworthy) homicide, as defined under Section 299 of the Indian Penal Code 1860 occurs when death is caused by a person with the intention or knowledge of the occurrence of that death. It can be divided into 2 categories namely-

Culpable homicide not amounting to Murder (Five exceptions under Section 300 of IPC, 1860); and
Culpable homicide amounting to Murder (Section 300 of IPC, 1860);

Manslaughter

Manslaughter is one of the four categories of homicide in English law, the other three being murder, infanticide, and death caused while driving. Manslaughter is a less serious form of homicide than murder. It can be divided into four categories-

Voluntary manslaughter; and
Involuntary manslaughter;

The definitions do not depend on what the name suggests. Voluntary manslaughter means killing a person with criminal intent. This is different from murder because here the defences of loss of control, diminished responsibility, or killing under a suicide pact apply, and thus offence is considered less grave and categorized as manslaughter. Involuntary manslaughter, on the other hand, means the accused causes death without criminal intent but due to reasons such as recklessness or criminal negligence.

Essentials of crime

There are four essential elements of crime.

Human being– The crime should be committed by the human only. Earlier there was the concept of “Deodand” in which inanimate objects, animals, or dead men were prosecuted and punished. No one could escape from liability but now there is a shift from crime to criminal, therefore only unlawful acts committed by the human being are considered.
Mens rea- The presence of a guilty mind is required to constitute a crime. There are some offences such as strict liability which do not require mens rea.
Actus reus- It means the actual commission of a crime. An act committed or omitted should be such which is forbidden or prescribed by the law respectively. There is some human conduct that the law seeks to prevent because they result in injury to the other person. Mere thinking of committing a crime is not a punishable offence.
Injury- Injury must be caused to another person or society at large. Section 44 of the IPC defines “injury” as harm caused to a person in mind, body, reputation, or property.

Manslaughter

Manslaughter occurs when a death is caused without the presence of the necessary intent to cause it. The death caused here is not the intended outcome.

In voluntary manslaughter, though the intent is present, it is perceived to be defective because the act is done under loss of control, diminished responsibility, or killing pursuant to a suicide pact. It should be noted that these three are defences only for the murder, and if successful, then liability can be reduced to manslaughter.

Loss of control in English law is on similar lines to the one given in exception 1 of Section 300 of IPC which means that the act was done in sudden and grave provocation. Here the person may take this defence when self-control is lost due to a “qualifying trigger”.
Diminished responsibility defined under Section 2(1) of the Homicide Act of 1957 means the accused must show that he or she suffered from such mental impairment in which there was a total loss of ability to understand the nature of the conduct.
A suicide pact is defined under Section 4 of the Homicide Act 1957 which makes a common agreement between two or more persons with the objective of death of all of them as manslaughter and not murder. This can be compared with exception 5 of Section 300 IPC which talks about death by consent where this defence is taken under culpable homicide not amounting to murder.

In involuntary manslaughter, there is no intent to cause death, but the death is caused due to other reasons such as gross negligence or recklessness. It consists of the following forms-

Constructive manslaughter- This is also known as unlawful act manslaughter, in which a person is punished for the offence of manslaughter if he causes death while committing the crime. In DPP vs. Newbury (1977), it was stated that the act must be unlawful and so dangerous that it is likely to cause physical injury to another person.
Gross negligence manslaughter- In R vs. Adomako (1995) this was extensively discussed and it was established that there must be the presence of duty, breach of that duty causation and injury must be so gross as to constitute criminal liability.
Subjective reckless manslaughter- The death is caused by the defendant foreseeing the risk of serious injury or death. Though it is a form of manslaughter, these situations are generally considered under constructive or gross negligence manslaughter thus no cases under the exact definition.

Homicide

In Indian law, the essential elements of homicide are the presence of mens rea, actus reus, causation, and the result of death. Two kinds of guilty minds are considered when applying Section 299 and Section 300 of the IPC. One is the intention which can be derived from the weapon use, place of injuries, manner of commission of the act, etc. Another is knowledge, which is based on objective and reasoned inference. Causation here means the link between an act and death. It is necessary to prove that the act of the accused was the operative cause of the death. Earlier, the principle of ‘corpus delicti’ that is, the body has to be present to prove death, was strictly followed, but this is no longer followed, as observed by the Supreme Court in Ram Gulam Chaudhury vs. State of Bihar (2001).

Punishment for crime

As we have discussed earlier, every crime is different in the manner in which it is committed, the motive behind it, and the extent and severity of the injury, and thus there are different punishments for each one of them.

Manslaughter (English law)

The maximum sentence is imprisonment for life. The judge may also give other sentences, such as to serve the sentence immediately, suspended imprisonment, or community service. The judge, taking into account the interests of the public, may pass either a life sentence or an extended sentence of imprisonment. The sentence is given by taking into account the seriousness of the harm, the history or previous character of the accused, sentencing guidelines, etc., among others.

Homicide

In Indian law jurisdictions, lawful homicide is not punishable. Punishment for culpable homicide amounting to murder is given under Section 302 of the IPC as death or life imprisonment and a fine. Culpable homicide not amounting to murder is punished under Section 304 of the IPC as imprisonment, which may extend to two years, a fine, or both.

Judicial pronouncements

Manslaughter

There are various case laws that further explain the heads under manslaughter. In R vs. Acott (1997), the defence of provocation was not provided, and the defendant was held liable for murder. In this case, the defendant killed his mother in a frenzied attack. Though there was evidence that he had lost his self-control, that was not sufficient, as there was no evidence of him provoking the incident.

The defence of mental impairment can only be taken now if the defendant has a recognised medical condition. This is unlike old law, such as in the case of R v. Vinagre (1979), where the defendant got the defence when he killed his wife while suffering from “Othello syndrome”, but not under the new law.

In DPP vs. Newbury (1977), two teenage boys threw stones from a railway bridge toward the moving train travelling beneath them. It hit the guard and caused his death. Lord Salmon held that it is sufficient to prove the act of manslaughter if the defendant has the intention to cause an unlawful and dangerous act, and it is not necessary that the defendant at the time of the commission of offence knew the act was unlawful or dangerous.

Homicide

KM Nanavati vs. State of Maharashtra (1960) is one of the landmark cases in Indian history. In this case, KM Nanvati was a naval officer who came to know about the affair of his wife and, as a result of it, killed him in his bathroom with three continuous bullet shots. He later told this to the police himself and surrendered. He pleaded the defence of sudden and grave provocation, but the Bombay High Court and the Supreme Court declined it and convicted him of the murder.

State vs. Jasbir Singh and Kuljeet (1978), also known as the “Ranga Billa case,” in which children were kidnapped for ransom but later murdered by the two accused because they believed that the father of the children was not wealthy, being a naval officer. Both of them were convicted under Sections 302 read with Section 34 of the Indian Penal Code and sentenced to death.

Summary of differences

Homicide is a genus, and manslaughter is a species. Manslaughter is one of the categories of homicide. The homicide may be culpable, unlawful, or lawful. Manslaughter is a type of unlawful homicide. It is considered less grave when compared with other categories, such as murder. Manslaughter is a term used in common law jurisdictions and is not defined under the Indian Penal Code. In Indian law, culpable homicide not amounting to murder is more or less similar to manslaughter. Homicide, being a broader term, has different punishments depending on the type of homicide, such as death or life imprisonment for murder. On the other hand, manslaughter has been punished under English law, which may extend to life imprisonment. There is no minimum punishment prescribed for it; rather, it depends on the judge’s consideration of the facts and circumstances of the case.

Conclusion

Sometimes it may be confusing to understand terms such as culpable homicide, manslaughter, diminished responsibility, etc., but it becomes easier if we understand different minds. Offences against the human body are one of the serious crimes that are on the rise. Homicide, rape, kidnapping, and abduction are among them. Homicide has a broader spectrum; it encompasses every act of killing, ranging from the most severe crimes like murder to relatively less serious crimes like manslaughter. The key differentiating factor lies in the degree of intent and the presence of mitigating circumstances (for example, exceptions). Manslaughter is considered less serious. It carries less harsh punishment than some other types of homicide. Thus, we can conclude that all manslaughters are homicides, but all homicides are not manslaughter. It is a common law legal term used in countries like the US, the UK, and Australia, to name a few. Its closest Indian alternative can be culpable homicide not amounting to murder as IPC doesn’t use the term manslaughter

Frequently Asked Questions (FAQs)

Where is manslaughter defined under the Indian Penal Code?

This term is not used under Indian law but in common law jurisdictions such as the US, the UK, and Australia, to name a few.

Is manslaughter the same as homicide?

No, manslaughter is not a synonym for homicide. Manslaughter is one of the categories of homicide. The homicide may be culpable/ unlawful, or lawful. Manslaughter is a type of unlawful homicide.

Why is it called manslaughter?

It is made up of two words: man and slaughter. Man- human; slaughter- killing. Thus, it means killing humans.

What are the different types of manslaughter?

Primarily, manslaughter is divided into two categories –

1. Involuntary manslaughter

2. Voluntary manslaughter

What is the difference between manslaughter and murder?

Murder is the intentional killing of another human being, whereas manslaughter is the unlawful but unintentional killing of a human being. Murder is a more grave offence than manslaughter. The punishment for murder is more serious than for manslaughter.

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.

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Statement of co-accused under Section 25 of Indian Evidence Act, 1872

By

Sneha Mahawar

-

May 29, 2023

0

This article has been written by Simrat, pursuing Diploma in Labour, Employment and Industrial Laws for HR Managers and has been edited by Oishika Banerji (Team Lawsikho).

This article has been published by Sneha Mahawar.

Table of Contents

Introduction

Confession is a voluntary acknowledgement of guilt by the accused. In the decision of Pakala Narayana Swami v. Emperor (1939), it was observed by Lord Atkin that a confession means either the admission of the offence or the admission of all the facts which constitute the offence. Confession given to a police officer or while in the custody of such a police officer is inadmissible in law as provided under Sections 25 and 26 of the Indian Evidence Act,1872. This article serves as a discussion about Section 25 of the Indian Evidence Act, 1872 and its aligned aspects.

Section 25 of the Indian Evidence Act, 1872

As per Section 25 of the Indian Evidence Act, 1872, a confession made to a police officer is inadmissible in law. The idea that a police officer may subject an arrested person to severe torture and force him to confess to the guilt of a crime that he may not have committed, serves as the fundamental principle underlying this provision.

The Hon’ble Apex Court while deciding on the case of Raj Kumar Karwal v. Union of India (1990), has observed that the officers of the Department of Revenue Intelligence who were given the authority of an officer-in-charge of a police station under Section 53 of the NDPS Act are not “police officers” under the meaning of Section 25 of the Evidence Act, 1872, and as a result, confessions made to them are not hit by the bar of Section 25.

Further while deciding on the case of Abdul Rashid v. State of Bihar (2001), the Apex Court had observed that the confessional statement given to the Superintendent of Excise was inadmissible since, according to Section 25 of the Evidence Act, the Excise Officer was a “police officer”.

Section 26 of the Indian Evidence Act, 1872

An extension of the aforementioned provision is couched in Section 26 of the Indian Evidence Act, 1872 which lays down that a confession made by a person, who is under the custody of a police officer, is inadmissible, except when it is made in the immediate presence of a Magistrate.

The Hon’ble Supreme Court in the case of Kishore Chand v. The State of Himachal Pradesh (1990) has observed that the purpose of Section 26 is to avoid the misuse of authority by the police officer. As a result, confessions made by the accused while in police custody cannot be used against him if they are not made in front of a magistrate. The rationale is that a person in police custody is thought to be under their influence, which creates a potential for bribery and extortion of confessions. The only situation in which this rule is not applicable is when a magistrate is present because the magistrate ensures that the confession is given voluntarily, without being restrained by any fear of the police.

Confession under Section 27 of the Indian Evidence Act, 1872 relating to the discovery of a fact

Section 27 of the Indian Evidence Act, 1872, states that a confession relating to the discovery of a fact is admissible in court. The exception to Section 25 and Section 26 is carved out in Section 27, which lays down that such a confession made in police custody, which leads to the discovery of a fact, shall be admissible.

The notion of confirmation by subsequent evidence forms the foundation of Section 27 of the Evidence Act, 1872. This theory is premised on the idea that if any fact is found as a result of the information given by an accused person, then such discovery of fact serves as a confirmation that the information provided by the accused is accurate. According to the notion of confirmation by subsequent facts, statements made while under arrest are admissible to the extent that they can be supported by the facts later discovered.

Upon careful perusal of the provision, the following requirements are seen to be essential for exercising the provision of Section 27:-

The information obtained from the accused must have led to the discovery of the fact.
The information must be supplied by a person accused of an offence.
A police officer must be in charge of the accused.
Only the information that directly relates to the fact discovered can be proven; the remaining information is not admissible.
As a result of the information provided by an accused, a specific article or weapon that was used at the time of the crime must be found.
The newly found information must be pertinent to the commission of a crime in question.

An interesting thing to note is according to Section 27, the facts uncovered must be those that only the accused and no one else has access to. If an Investigating Officer, after recording information from an accused person in his custody, collects some incriminating material from a public area that is open to everyone, then such information and the discovery lose significance and shall no longer be admissible against the accused under Section 27.

Conclusion

Sections 25 and 26 of the Indian Evidence Act, 1872 serve as a safeguard against the abuse of police authority. These rules provide that any confession given to a police officer or while in the custody of a police officer are inadmissible in law and cannot be proved against the accused. This is due to the possibility that the police may use excessive force to coerce accused persons into confessing to crimes they did not commit. An exception to the aforementioned restriction is provided by Section 27, which permits those portions of confessional remarks to be admitted insofar as they pertain to the discovery of a fact related to the commission of a crime. Section 27 of the Evidence Act is founded on the premise that if the confession of an accused person is corroborated by the discovery of a fact, it may be assumed to be true and not to have been fabricated.

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Private military contractors and their relation with International Law

By

Sneha Mahawar

-

May 29, 2023

0

This article has been written by Sowbhagyalaxmi S Hegde, 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.

Table of Contents

Introduction

A rise in global conflicts and the engagement of military forces, the modern world has a propensity to respond to all international and intranational problems. Internal issues can occasionally cause disturbance to the maintained international peace, but in order to prevent this, international laws need follow-up. Governments, global businesses, and international organisations are therefore very interested in growing the private military industry. Although Private Military Contract (PMC) members vary from conventional mercenaries and are employed by legitimate corporate businesses, they are nonetheless engaged in accordance with the law. As PMCs conduct business globally and is permitted to operate autonomously, their main disadvantage is a lack of paperwork that seriously undermines the effectiveness of the whole contract. This article is owed to the concept of PMC and its scope in international law.

All you need to know about private military contractors

A Private Military Contract, commonly referred to as Private Military Companies, is a legitimate business that pursues financial benefit rather than political ends. PMCs ranges widely from small consulting firms to significant international conglomerates. A large & lucrative global security has emerged as a result of the reform of the state military strategy and budget, which has been encouraged by a larger trend of economic globalisation. The first PMC was formed during World War II, specifically in 1939, from the private military, which in fact has grown rapidly due to the change in geopolitical structure. Seeing the growth of private military and security firms, even the government made the key choice to privatise security and defence-related tasks.

If we now take a closer look at private military companies, we will see that they are the businesses that offer specialised services for use during times of war and conflict, such as military training exercises, strategic planning, information gathering, administrative and logistical support, as well as training and maintenance.

Are private military contractors more cost-effective than the military

It has a contradictory claim that the PMC is more cost-effective than the standing army because:

The government does not have to provide housing, healthcare, or pensions;
The PMC is paid less than the standing army is;
There are no costs associated with long-term military capacity, maintenance, or the “Buyouts” that frequently occur when the military is subject to further cuts.
The capacity to grow the size of the military while carrying out crucial non-combat duties.

Although PMCs commonly serves in national militaries, they obtain a state-funded education, but when they go on to higher-paying positions, this education essentially serves as money for PMC operations rather than serving the interests of the country. Notwithstanding the fact that PMC is a party to the contract and has the power to alter any meaningful advantages. So, it is quite challenging to assess how much more cost-effective PMC is than standing armies.

Why are international laws necessary to be applied to private military contractors

PMC also has relations to several treaties and customary laws, some of which include;

Human Rights: When establishing any law to safeguard its citizens from human rights breaches perpetrated by domestic or foreign PMCs, a nation may use the authority afforded to it by international human rights treaties to report and register individual complaints.
Criminal law: The International Criminal Courts (ICC) only have worldwide jurisdiction over a small number of crimes, and even then, only against specific individuals, not against the organisations they are employed by. Hence, its authority is severely constrained to the identified parties & the offence.
State Accountability: According to the International Law Commission’s Articles on State Accountability, states are held liable under international customary law for any acts committed by non-state actors acting on their behalf. Therefore, the state is held accountable for all of the PMC’s actions. The only difficulty, though, is that governmental responsibility does not include personal accountability.
International Humanitarian Law (IHL): IHL lays forth similar principles that are highly specific to the position of some PMC employees in a conflict, but only when there is an interstate or civil war. If the needs of the citizens have been met together with those of the military troops, this PMC personnel have the same status as official soldiers when it comes to becoming prisoners of war. As a result, they are not afforded the same protections as regular citizens and may face legal action from the enemy state.
Mercenaries: To be incorporated into national legislation, the terms of the 1989 international agreement prohibiting the recruitment, use, funding, and training of mercenaries must be adopted by the states. Just a few states have ratified the treaty because it provides an imprecise definition of mercenaries.

An overview of international regulations for private military contractors

Generally, a number of suggestions to regulate PMC’s behaviour have been made. The same has been said that it has been forbidden for those specific behaviours. Opponents countered that since PMC often satisfies government demands, the state is not keen to forbid any of its operations. It also implies that nations can end their long-standing monopoly on the export of goods connected to the armed forces. Others have also suggested a convention that would be more clear about the need for monitoring and controlling, and that convention would include things like:

Ø Legislative & independent supervision of PMC services.

Ø Licensing of the descriptive services provided by PMC.

Ø Notification before bidding.

Ø Registration of PMC workers.

Ø Minimal regulatory framework with regard to the issue are all required.

Although it would be difficult to police such programs because they are voluntary, the national authorities, who would be held accountable for their own PMCS, are the ones who provide the guarantee. Thus, it may be useful in controlling the national concerns that, if not regulated, would pose difficulties for international agreements.

India and private military contractors : an insight

Recently, a new recruiting program for the Indian military services, named, Agniveers has been unveiled. This squad has been carefully chosen for the army services and is well-trained, disciplined, and motivated with expertise using weapons, etc. They won’t have a job for long, have to be at least 21 years, and have no pension plans, but when we compare them to workers with similar potentials, such as Agniveer, they retire at age 35 and have a pension in their possession.

If 4500 Agniveers are hired per year, then the market will have 3 lakhs Agniveers who are on average 27 years old after 10 years. As there would be no alternative employment opportunities, these trained individuals, who are virtually all beyond the age of 21, cannot be reinstated as security guards. Due to their high potential and existing military training, as well as their physical and mental stability, they have access to a new market known as the private military contract.

In the long term, India, which has corporate influence over the government, may choose to hire an outside provider of military services, where this Agniveer will be of maximum use. This announcement should thus be viewed as the. Therefore, it is important to view this declaration as a proactive first step in avoiding the dangerous idea of outsourcing military functions.

Conclusion

Private military contract services are provided by a private company that charges a fee for security or armed defence services. Typically, military services have been provided on a private contract. Due to the fact that it is a private force that has operated for commercial ends and has potential on a global scale. The demand for a force is growing quickly. As the PMC in recent armed conflict develops, the perception that public armed forces are more efficient and suitable for the military and security is developing. Nonetheless, the current private military corporations are in the same position as their militaries in this global peacekeeping mission. However, even though this might make it more difficult for a nation to put an end to violent crimes and ensure that they are punished, increasing the outsourcing of military and security responsibilities to PMC hasn’t made it impossible for governments to put an end to violent crimes in the open or rendered international law irrelevant in any governmental framework. In order to oversee the private military contract while utilising them in conflicts, the government. So, it is the duty of every state to serve as a middleman for the regulation of PMC under international law.

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.

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Machinery for settlement of industrial disputes

By

Rachit Garg

-

May 29, 2023

0

The article is written by Tushar Singh Samota, from the University Five Year Law College, Rajasthan University. It gives a detailed description of the machinery for the settlement of industrial disputes under the Industrial Disputes Act, of 1947, along with the relevant case laws.

It has been published by Rachit Garg.

Table of Contents

Introduction

Working 40 hours per week used to imply a subsistence level of living and a rung on the economic ladder to the middle class. – Jackie Speier

Regardless of a country’s level of economic development, regulations controlling dispute settlement are an integral component of any labour law system. This is because complaints and disputes are unavoidable in every working relationship, and the goal of the policy is to provide procedures for successfully and speedily resolving these issues. Voluntary processes like arbitration, conciliation, and mediation have recently been fundamental to conflict resolution policy. This is because they lack the adversarial aspect that traditional legal processes entail, and hence have proved effective in sustaining relationships throughout the dispute settlement process.

As a result, the Industrial Disputes Act of 1947 (“the Act”) establishes a process for resolving industrial disputes as the industrial sector is exposed to a variety of pressures and strains. Thus, one of the primary goals of the Act is to balance the competing interests of employers and employees. It also includes tools for conciliation, arbitration, and adjudication to encourage actions that foster mutually beneficial relationships between employers and employees. In this article, the author has tried to discuss the mechanism for resolving industrial disputes by addressing several methods of resolving disputes. The article will additionally address the numerous committees and their duties in each method of conflict resolution.

Industrial disputes

Industrialisation in a country has always impacted employment, national income, per capita income, exports, and economic progress of a nation on the one side as well as industrial disputes on the other. Industrial disputes are caused by a conflict of interest between employer and employee. As a result, the individuals who control the factors of production and those who create products have distinct or competing interests, giving rise to industrial disputes.

The Industrial Dispute Act, of 1947 defines the term industrial disputes under its Section 2(gg)(k) as “Industrial Disputes mean any dispute or difference between employers and employers or between employers and workmen or between workmen and workmen, which is connected with the employment or non – employment or terms of employment or with the conditions of labour of any person”.

As a result, industrial disputes can be classified into two types: individual disputes and collective disputes. Individual disputes relate to reinstatement, compensation for wrongful termination, and so on. Whereas, Collective dispute relates to conditions of pay, bonus, profit sharing, working hours etc.

The results of industrial disputes

Industrial disputes are a part of all industrialised economies, whether they are capitalist, socialist, or mixed economies. Industry and labour disputes are inextricably linked; in fact, they are two sides of the same coin. Hence, the following are the outcomes of an industrial dispute:

Strike

A strike occurs when workers in an industry collectively refuse to work. It is defined as a planned absence from work by a group of workers in protest, usually to get some sort of concession from their employer. For labour unions, the most potent tool for pressuring management to adopt their demands is a strike.

Boycott

Employees may elect to boycott the firm by refusing to use its products. A similar appeal might be made to the broader population with regard to boycotts.

Picketing

Picketing occurs when workers are discouraged from working by stationing particular personnel at factory gates. Picketing is lawful if there is no violence involved.

Lockout

It is a circumstance in which an employer refuses to allow employees inside their workplace, particularly the manufacturing unit, until they agree to specific criteria. It is the inverse of a strike and is an extremely strong tool in the hands of an employer to compel people to return to work. According to the Industrial Disputes Act of 1947, a lockout is defined under Section 2(l) as the shutting of a workplace or the suspension of work, or the refusal of an employer to continue to employ any number of people.

Termination of Service of Striking Employees

A company may also terminate the services of those workers who are on strike by blacklisting them. Their lists are also distributed to other employers to limit or diminish their prospects of being hired by other employers.

Machinery for settlement of industrial disputes

The Industrial Disputes Act of 1947 establishes a complex and effective mechanism for the peaceful and amicable resolution of industrial disputes. They are as follows:

Conciliation
Arbitration
Adjudication

Conciliation method

Conciliation is a form of conversation or negotiation in which disputing parties voluntarily find an agreeable conclusion acceptable to both sides. The parties’ conversations and negotiations may be begun by the parties themselves or by the efforts of a third party impartial to the issue. This third impartial person works as a conciliator, mediating and promoting the resolution of the issue.

Conciliation is distinguished by the fact that the parties to the disagreement reach an agreement willingly, without any force or compulsion from the conciliator or anybody else. Conciliation is useful as a technique for resolving industrial disputes since it preserves amity and good ties between the employer and the workers because it is an out-of-court settlement of the problem.

Reconciliation authorities

The authorities for conciliation under the Industrial Disputes Act are listed below.

Works Committees (Section 3)
Conciliation officers (Section 4)
Board of conciliation (Section 5)

Works committee

The Works Committee was the first group to negotiate and resolve industrial disputes through conciliation. According to Section 3(1), the Works Committee is formed by the employer who employs or has employed one hundred or more workers on any day in the previous twelve months. Workmen’s representatives are chosen from among the workers in cooperation with their Trade Union if one exists. As a result, there are equal numbers of members from the employer and the workforce on the Works Committee.

According to Rule 39 of the Industrial Disputes (Central) Regulations Rules, 1957, the number of members composing the works committee is fixed to afford representation to the different types, groups, and classes of workers employed in and to the sections, shops, or departments of the establishment. But the overall number, however, does not reach twenty. The officials in direct contact with or related to the operation of the business are the representatives of the employer who are nominated by the employer as far as practicable. The workmen’s representatives on the Works Committee are to be chosen from one of two categories, according to Industrial Disputes (Central) Regulations Rules, 1957, Rule 42. These categories are as follows:

Category one will include the employees of the firm who are members of a recognised Trade Union.
The other category consists of establishment workers who are not members of a registered trade union.

It was decided by the Punjab Haryana High Court in the case of Bharat Petroleum Company Ltd. vs. Bharat Pal (2015) that it is obvious that the Act’s goal is to promote peace in the workplace and excellent working relationships between employees and their employees. The formation of the Works Committee, whose job it is to advocate measures for insuring and sustaining amity and good relations between employers and employees, is contemplated by Section 3 of the Act with this goal in mind. Conciliation officers and conciliation boards help the parties resolve their issues if the Works Committee cannot resolve disputes between the employer and his employees.

After conducting the necessary inquiries, the appropriate Government or any officer of the authority appointed under Section 39 of the Act may dissolve any Works Committee at any time by order in writing, provided the officer is satisfied that the committee was not formed in accordance with the rules or that not less than two-thirds of the number of representatives of workmen has failed to attend three consecutive meetings without reasonable justification.

Duties of the Works Committee

The work committee’s responsibilities or duties are as follows:

The Works Committee’s duty is fairly straightforward, and its primary function is to ensure that industrial peace is maintained and that minor issues do not escalate into major industrial disputes.
The Works Committee must support efforts to secure and maintain amity and good relations between the employer and his employees in matters of mutual interest.
They are also expected to remark on such topics while keeping in mind the ultimate goal of achieving industrial peace and calmly resolving any conflict between employers and employees. If the Works Committee fails to perform its obligations, it may seek help from the other authorities provided under the I.D. Act.

Conciliation officer

Conciliation is an attempt by a third party to help competing opponents find a resolution to a dispute by employing various types of mediation, recommendations, or guidance. This is especially true when the competitive foes are an employer and an employee. Conciliation is derived from the term “to reconcile,” which implies resolving or settling by bringing together. It is the process of seeking official mediation and attempting to resolve a conflict.

The Act establishes a conciliation officer to mediate and encourage the resolution of workplace disputes through conciliation. Section 2(d) of the Act defines a conciliation officer as “a conciliation officer appointed under Section 4(1) of the Act.”

Section 4 of the Act states that the appropriate government may appoint a such number of people as it sees right to be conciliation officers, tasked with the responsibility of mediating in and encouraging the resolution of industrial disputes by the notification in the Official Gazette. The officer so appointed acts as a friend, philosopher, mentor, and advisor for both parties, assisting them in reaching an agreeable conclusion by resolving their disputes. The conciliation officer may be appointed for certain industries in a specific area or for one or more specific industries, either permanently or temporarily.

According to Section 11(6) of the Act, a conciliation officer is considered a public servant under the meaning of Section 21 of the Indian Penal Code, 1860.

Duties of conciliation officers (Section 12)

The conciliation officer must conduct the conciliation processes in the manner stipulated in every industrial dispute, whether it is ongoing or anticipated.
The conciliation officer will investigate the issue and take all necessary action to encourage a swift and equitable resolution of the conflict between the parties.
The conciliation officer must provide a report on the settlement of the dispute to the relevant authorities, together with a memorandum of the settlement signed by the parties to the dispute.
If no such resolution is reached, the conciliation officer should provide a comprehensive report to the appropriate government as soon as possible after the conclusion of the enquiry. This report should outline the steps he took to ascertain the facts and circumstances of the dispute and bring it to a conclusion, along with a detailed statement of such facts and circumstances. Along with it, the officer should also cite the reasons as to why, in his opinion, a settlement could not be reached.
If the appropriate government determines after considering the failure report mentioned above that there is a need to send the matter to a Board, Labor Court, Tribunal, or National Tribunal, it does so. When the appropriate government declines to make such a referral, it must document and notify the parties involved of its decision.
A report under Section 12 shall be submitted within 14 days of the start of the conciliation proceedings, or within any shorter time frame that the appropriate government may specify. Whereas Section 12(6) provides that all parties to the dispute may agree in writing on the time for submitting the report.

The duties assigned to the conciliation officer were also discussed in the case of the Workers of Buckingham and Carnatic vs. Commissioner of Labour and Ors. (1963), it was held by the Madras High Court in this case that Conciliation is essentially a negotiation between the parties. A conciliator’s role is to bring together employers and employees to address the issues at hand and to find a solution that is acceptable to all the parties to the dispute. The conciliation officer is an independent institution established by the Industrial Disputes Act to foster industrial peace by making Governmental facilities accessible during the collective bargaining process. His presence and involvement in discussions frequently facilitate objectivity of approach in the matter of the bargain between management and labour.

The Board of conciliation

Under Section 5 of the Act, the appropriate Government establishes the Board of Conciliation by the notification in the official Gazette to facilitate the resolution of an industrial dispute whenever the opportunity or occasion arises. The Board is made up of a Chairman and two or four additional members chosen by the appropriate government. The Chairman is an independent person, while the other members are individuals nominated in equal numbers to represent the disputing parties. Each individual nominated to represent a party is appointed at the party’s recommendation.

However, if any party fails to submit the aforementioned recommendation within a reasonable period, the appropriate Government chooses such people as it deems proper to represent that party. The Board, if it has the required quorum, may act despite the absence of the Chairman or any of its members, or any vacancy in its membership.

However, if the appropriate government tells the Board that the Chairman’s or other members’ services are no longer available, the Board does not act until a new Chairman or member, as the case may be, is appointed. The Board’s functions are comparable to those of the conciliation officer, but members of the Board operate in a judicial capacity and have more authority than a conciliation officer.

Filling of vacancies

According to Section 8, if a vacancy (other than a temporary absence) occurs in the office of the Chairman or any other members of the Board of Conciliation, the appropriate Government shall select another person to fill the vacancy in accordance with the requirements of the Act. Section 8 provides that the procedure may be resumed before the Board from the point at which the vacancy is filled.

Finality of orders constituting the Board

Section 9(1) states that no order of the appropriate Government or the Central Government designating someone as the Chairman or any other member of a Board of Conciliation will be brought into a dispute in any way. It also states that no act or procedure before the Board shall be brought into question in any way only because of the presence of a vacancy or flaw in the constitution of such Board or Court.

Duties of the Board of conciliation (Section 13):

When a dispute has been referred to a Board under Section 13(1) of the Act, it is the Board’s responsibility to attempt to resolve it. To this end, the Board shall, in the manner it deems appropriate and without delay, investigate the dispute and all matters affecting it thereof. The Board may also take any other actions it deems appropriate with the aim of persuading the parties to reach an amicable and fair settlement.
The Board should transmit a report of the proceedings to the appropriate Government together with a memorandum of the settlement signed by the parties to the dispute if a settlement of the disagreement or any of the issues in dispute is reached during the conciliation processes as provided under Section 13(2) of the Act.
If no such settlement is reached, then under Section 13(3) of the Act the Board shall send a full report on the steps it took to ascertain the facts and circumstances surrounding the dispute and to bring about a settlement thereto to the appropriate Government as soon as practically possible after the conclusion of the investigation. The report must also provide a thorough explanation of the relevant facts and circumstances, as well as the reasons, on account of which, in its opinion, a settlement could not be reached.
The Board must provide its findings within two months of the day it was tasked with handling the dispute, or within any shorter time frame that the appropriate government may specify as provided under Section 13(5) of the Act. As a result, the board of conciliation assumes control when conciliation fails and their duties are also identical to each other. The establishment of boards of conciliation is done to resolve industrial disputes.

Arbitration method

Arbitration is a procedure in which the parties to a disagreement agree to send the matter voluntarily to a third impartial person known as an Arbitrator for resolution. After hearing both parties to the disagreement, the Arbitrator issues a binding award determining the rights and responsibilities of the parties to the dispute. Arbitration is an out-of-court technique of resolving disputes and is a low-cost and quick method of resolving disputes. It is used to resolve industrial disputes under Section 10A of the Industrial Disputes Act of 1947.

Under Section 10A(1) of the Act, the parties to an industrial dispute may voluntarily submit an industrial dispute to an Arbitrator by a written agreement.

Arbitration Authorities

The authorities for arbitration under the Industrial Disputes Act of 1947 are as follows:

Arbitrator
The umpire

Arbitrator

The Arbitrator is the person named as such in the arbitration agreement between the employer and the workers under Section 10A of the Act. The presiding officer of the Labour Court, Tribunal, or National Tribunal may be nominated as an Arbitrator under this Act. The term “arbitrator” includes an “umpire,” according to Section 2(aa) of the Industrial Disputes Act of 1947.

The umpire

According to Subsection 10(1-A) of Section 10A, if an arbitration agreement allows for the referral of industrial disputes to an even number of arbitrators, the agreement must also provide for the appointment of another person as an umpire. If the arbitrators are evenly divided in their opinions then this umpire has the authority to hear industrial disputes.

Section 10A(1), states that the award made by the umpire in an industrial dispute is assumed to constitute the arbitration award for the Industrial Disputes Act of 1947.

Adjudication method

The adjudication of an industrial dispute is a mandatory procedure for resolving the issue. After hearing both parties and examining the merits of the disagreement and information on record, the adjudicatory authority assesses the rights and responsibilities of the parties to the dispute and makes its award. If the aggrieved party who is dissatisfied with the verdict does not appeal to the appellate authority, the adjudicatory authority’s award is final and binding on the parties.

According to Section 10 of the Industrial Disputes Act of 1947, when a disagreement or dispute is reported to adjudicatory authority by the appropriate Government, it can be resolved by adjudication. Even if the parties to the dispute have not requested a referral to the adjudicatory authority from the relevant Government, the appropriate Government can do so at its discretion. Under Section 10(1) of the Act, the appropriate Government has the jurisdiction to submit industrial disputes to the adjudicatory body at its discretion if the appropriate Government believes that an industrial dispute exists or is suspected. The appropriate government may send a labour dispute to an adjudicatory authority without first referring it to a conciliatory authority.

Adjudication authorities

The authorities for adjudication under the Industrial Disputes Act of 1947 are as follows:

Labour Court
Industrial Tribunal
National Tribunal

Labour courts

The appropriate Government has been empowered to form the ‘Labor Court‘ by the notification in the Official Gazette under Section 7 of the Act. A Labor Court is one of the adjudication agencies established by the I.D.Act. It consists of only one person who is to be selected by the appropriate government to function as the presiding officer if he meets the requirements outlined in the Act. This officer will be the sole member of the Labour Court.

The appropriate government may establish one or more Labour Courts as per the need and circumstances of the case. This Court was established to hear industrial disputes involving any of the matters listed in the Second Schedule of the Act. This Court can also conduct any additional tasks delegated to it by the Industrial Disputes Act of 1947. A person chosen as the Presiding Officer of the Labour Court under Section 7(3) must have the following qualifications:

He is or has been a High Court Judge; or
He has served as a District Judge or an Additional District Judge for at least three years; or
Omitted: or
He has served in a judicial capacity in India for at least seven years, or
He has served as the Presiding Officer of a Labour Court established under any Provincial Act or State Act for at least five years; or
He is or has been a Deputy Chief Labour Commissioner (Central) or Joint Commissioner of the State Labour Department, with a law degree and at least seven years of labour department experience, including three years as a Conciliation Officer.

Provided, however, that no such Deputy Chief Labour Commissioner or Joint Labour Commissioner may be appointed unless he resigns from the Central Government or the State Government, as the case may be before being appointed as the presiding officer.

He is an Indian Legal Service officer in Grade III with three years of experience.

Section 11(6) of the Act declares the presiding officer and members of the Labour Court to be public officials within the meaning of Section 21 of the Indian Penal Code,1860. Whereas Section 11(8) of the Act provides that every Labour Court is presumed to be a Civil Court for Sections 345, 346, and 348 of the Code of Criminal Procedure, 1973.

Jurisdiction of Labour Courts

The Labor Courts have the authority to decide on industrial disputes about any topic stated in the Second Schedule of the Act, as well as conduct any additional responsibilities given to them. The following are the topics under the jurisdiction of the Labor Court, according to the Second Schedule of the Act:

The validity or legality of an order issued by an Employer following the standing orders;
The application and interpretation of standing orders;
Worker discharge or dismissal, including reinstatement or remedy for workers, unfairly dismissed;
The revocation of any customary concession or privilege;
The legality or illegality of a strike or lockout; and
Any items not specifically included in the Third Schedule.

The Labor Court’s jurisdiction under the I.D. Act may only be invoked in the way specified in the Act; parties cannot approach the Labor Court directly. However, due to some recent amendments in some states, a worker can now go directly to the Labor Court to challenge their dismissal or discharge.

Industrial tribunal

The appropriate government may, by publication in the Official Gazette, establish one or more tribunals for the adjudication of industrial disputes concerning any topic stated in the Second or Third schedules. A Tribunal should be composed of only one person, the presiding officer, who is chosen by the appropriate Government under Section 7A(2) of the Act. A person selected as the presiding officer of a Tribunal must meet the following qualifications:

He is or has been a Supreme Court Judge, or
He has served as a District Judge or an Additional District Judge for at least three years.
He is or has been a Deputy Chief Labour Commissioner (Central) or Joint Commissioner of the State Labour Department, with a law degree and at least seven years of labour department experience, including three years as a Conciliation Officer.

Provided, however, that no such Deputy Chief Labour Commissioner or Joint Labour Commissioner may be appointed unless he resigns from the Central Government or the State Government, as the case may be before being appointed as the presiding officer, or

He is an Indian Law Service officer in Grade III with three years of experience.”

Under Section 7A(4) of the Act two individual assessors may be appointed by the appropriate Government to advise the Tribunal in its proceedings if it deems necessary. The appropriate government may also establish one or more Industrial Tribunals by publication in the Official Gazette. These tribunals are established to resolve industrial disputes stated in the Second or Third Schedules of the Act. The Tribunals also carry out any additional duties that may be entrusted to them under the Act. It will also perform judicial responsibilities even though it is not a court.

Industrial tribunals’ jurisdiction

Industrial tribunals have more authority than Labor Courts. It has authority over any item included in the second or third schedules under the Act. The second schedule specifies the following items:

The appropriateness or validity of an order issued by an employer following standing orders;
The use and interpretation of standing orders
Worker discharge or dismissal, including reinstatement or remedy for illegally discharged workers;
The cessation of any customary concession or privilege;
The legality or illegality of a strike or lockout;

Whereas, The third schedule specifies the following items:

Wages, including payment period and mode;
Compensatory and other allowances;
Working hours and rest intervals;
Paid leave and vacations;
Bonuses, profit-sharing plans, provident funds, and gratuities;
Working a shift that is not in conformity with standing orders;
Grade-level classification;
Discipline rules and Rationalization;
Worker retrenchment and establishment closure; and
Any other thing that may be specified.

National tribunal

The Central Government may, by the notification in the Official Gazette, establish one or more National Tribunals for the adjudication of industrial disputes under Section 7B of the Industrial Disputes Act, 1947. The National Tribunal was created to handle industrial disputes that in the eyes of the Central Government, involved issues of national significance or were of a character that would likely interest or influence industrial establishments located in many States.

The National Tribunal is made up of only one person, the Presiding Officer, who is nominated by the Central Government. A National Tribunal’s responsibilities are the same as those of a Labor Court or an Industrial Tribunal. A person is not competent to serve as the presiding officer of a National Tribunal unless he is or has previously served as a judge of a High Court. If the Central Government deems it necessary, it may appoint two assessors to advise the National Tribunal in the action before it under Section 7 (B)(4) of the Act.

Disqualification of presiding officers of Labour Courts, tribunals, and the National Tribunal

Section 7C states that no individual may be nominated to or stay in the position of Presiding Officer of a Labour Court, Tribunal, or National Tribunal if-

He is not self-sufficient, or
He has reached the age of 65 years.

Independent person

According to Section 2(1) of the Act, a person is considered “independent” for the purpose of appointment as the Chairman or other member of a Board, Court, or Tribunal if he is unconnected with the industrial disputes referred to such Board, Court, or Tribunal or with any industry directly affected by such dispute:

Provided, however, that no individual shall lose his independence only because he is a shareholder of an incorporated firm involved in, or expected to be impacted by, such industrial conflicts; Nonetheless, in such a circumstance, he must report to the appropriate government the nature and amount of his holdings in such Business.

Filling of vacancies

Under Section 8 of the Act if a vacancy (other than a temporary absence) occurs in the office of the presiding officer or any member of a Labour Court, Tribunal, or National Tribunal, the Central Government, and in all other cases, the appropriate Government, shall appoint someone to fill the vacancy by the provisions of the Act. Depending on the stage at which the vacancy is filled, the case may be heard by the Labour Court, Tribunal, or National Tribunal.

Duties of national tribunals, labour courts, and tribunals

When a labour court, tribunal, or national tribunal has been asked to decide an industrial issue, It must conduct its proceedings quickly and submit its award to the appropriate government within the time frame outlined in the order referring to the industrial dispute or the additional time allowed under the second proviso of Section 10(2A) of the Act.

Court of inquiry

According to Section 6 of the Industrial Dispute Act, the appropriate Government may establish a Court of Inquiry as needed to investigate any subject that could appear to be linked to or pertinent to an industrial dispute. The concept of a Court of Inquiry was inspired by the British Industrial Court Act of 1919.

The Government may refer any single or more things associated with or relevant to the dispute to the Court, which may be established regardless of the approval of the parties to the dispute. Section 6(2) states that a court may consist of one independent person or as many independent people as the appropriate government deems acceptable, and if a court has two or more members, one of them shall be designated as the chairman.

Whereas Section 6(3) states that if a Court of Inquiry has the required quorum, it may function despite the absence of the chairman or any of its members or any vacancy in its membership. However, if the appropriate Government notifies the Court that the chairman’s services are no longer available, the Court cannot function until a new chairman is appointed.

Duties of the court of inquiry

Section 14 of the I.D.The Act outlines the duties of the Court of Inquiry. It states that the Court of Inquiry shall inquire into the matter brought to it and report thereon to the appropriate government within six months of the start of its investigation. Thus, the Court of Inquiry will investigate matters only if they are referred to it.

Important case laws

The Bombay Union of Journalists vs. The Hindu and another (1961)

The Supreme Court observed that for a disagreement to be claimed under industrial dispute, it must be existent or imminent on the date referred to. As a result of these findings, the Court concluded that if the employees’ demands were not brought before the management under which they work, and comparable claims were made throughout the proceedings, the issue will be treated as an industrial dispute and will proceed with resolution processes. The Court reached a similar conclusion in the case of Shambhu Nath Goel vs. Bank of Baroda (1983) also.

Central Provinces Transport Services Ltd., vs. R.G. Patwardhan (1956)

In the case of Central Provinces Transport Services Ltd. vs. R.G. Patwardhan, the respondent took some of the items from the appellant’s firm. Afterwards, the company performed a domestic investigation in which the responder was found guilty. Following that he was fired because of his wrongdoing and severe negligence. Later, the respondent petitioned the Industrial court for reinstatement, but the appellant objected to the case’s maintainability claiming it to be an individual dispute rather than an industrial dispute. Thus the Industrial court ruled in favour of the respondent, who claimed the issue to be an industrial one.

The Labour Appellate Tribunal also affirmed this view in its decision on the appellant’s appeal. The appellant petitioned the Supreme Court after being dissatisfied with the Labour Appellate Tribunal’s decision. The Supreme Court ruled that if a disagreement emerges between an employer and a worker, it cannot be called an industrial dispute until it is taken up by a trade union or a collective group of workers asserting that a legal conflict has occurred. As a result, in this case, the Supreme Court extended its support to the trade union for an individual disagreement to be considered an industrial issue and a settlement to be reached.

National Tobacco Corporation of India Limited vs.Fourth Industrial Tribunal And others (1959)

In the case of National Tobacco Corporation of India Limited vs.Fourth Industrial Tribunal And others, the Calcutta High Court ruled that the powers delegated to the competent Government are discretionary rather than required. As a result, if the Government takes arbitrary acts that are contradictory to the legislation under which it is intended to function and refuses to bring the matter to the tribunals or the labour court, then such arguments will be sufficient to initiate a writ petition against the Government under Article 226 of the Indian Constitution. From this case, it can be seen that the Act gives no room for any administrative body to abuse the authorities that have been vested in it, which can directly influence the already existing disagreement and exacerbate it, causing further issues.

United Bleachers (P) Ltd. vs. Industrial Tribunals and Others (1961)

In another instance of United Bleachers (P) Ltd. vs. Industrial tribunals and others, the Madras High Court ruled that if the competent government takes too long to submit a referral, the matter would be dismissed. But that will not be a valid reason to deny the relief that is to be offered to the workers who are involved in the dispute and have already suffered from it. If the remedy is denied on this basis, the situation will be considered an unfair labour practice and hence illegal.

D.N Ganguly vs. Bata Shoe Co. Ltd, (1961)

In the case of D.N Ganguly v. Bata Shoe Co. Ltd, there was a disagreement between the Bata company and the workers. The disagreement was resolved through conciliation, in which the disputing parties negotiated and arrived at an amicable solution. However, following the settlement, workers went on strike. The company contended that the strike was unlawful and immaterial in light of the respondent’s settlement and after that, the company conducted an investigation and fired the workers who had gone on strike.

Thus, the issue before the Supreme Court in the present case was whether the settlement reached by the company and the workers followed Sections 12 and Section 18 of the Industrial Disputes Act of 1947. The apex court found that the settlement reached by the parties was following the requirements of the Sections provided under the Industrial Dispute Act and that the settlement was binding on the parties since they could not refute the conditions reached at the time of settlement. However, the Court went on to rule that the second settlement reached by the parties after the first was non-binding since it violated the terms of the Industrial legislation.

Conclusion

Thus it can be concluded that the preservation of peaceful and harmonious industrial relations is critical for every economy and this industrial dispute harms not just the industrial sector but also other stakeholders. The Industrial Disputes Act of 1947 establishes a legal framework for settling industrial disputes between management and labour.

The machines for settling industrial disputes are, without a doubt, the primary machines; nevertheless, there may be alternative ways for settling industrial disputes, such as, For example, the development of regulations that allow the employer-employee relationship to be significantly controlled, another example can be like adding aspects to the model standing orders to ensure harmony between the employer and the employees, resulting in a more pleasant working relationship which will ultimately increase productivity.

Frequently asked questions

What are the methods for resolving disputes?

The most often utilised procedures for settling conflicts outside of official court proceedings are negotiation, mediation, and arbitration. Objectivity, a thorough understanding of the subject matter issue, questioning and listening skills, and patience are all essential traits for such conflict resolution.

Which types of enterprises are covered under the Industrial Disputes Act of 1947?

This Act applies to business establishments that are run with the collaboration of employees, whether the activity of such enterprises is structured for profit or not.

Who has the authority to file a labour dispute?

An industrial dispute can be initiated by any worker engaged in an industry. A worker in an industry can be any individual (including an apprentice) hired in an industry to conduct manual, unskilled, skilled, technical, operational, clerical, or supervisory labour for pay or reward.

References

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