In this blogpost, Sudhi Ranjan Bagri, Student, National Law Institute University, Bhopal writes about who is an independent director, why do we need an independent director, what is corporate governance and the role of independent directors in corporate governance
Table of Contents
Who is an independent director?
As per section 149 (6) of The Companies Act, 2013, Independent Director means any director other than a managing director or whole-time director or a nominee director.
Certain conditions need to be fulfilled, before appointing any person as an independent director.
1.) clause (a) of Section 149(6), of the Act, states that any person who is to be appointed must in the opinion of the Board, be a person of integrity and must possess relevant expertise and experience;
2.) clause (b) along with clause (c) of Section 149(6), states that the person who is to be appointed must neither be a promoter of a company nor must be related to the promoters or directors of that company. Further, clause(d) along with clause(e), states that, he must have no pecuniary relationship with the company, and that none of his relatives must have been having any pecuniary relationship with the company.
3.) clause (e) of the Section talks about his relationship with the company. It states that for a person to be appointed as an independent director, neither he nor any of his relative, must hold following positions in a company:
(i) the position of a key managerial personnel
(ii) employee or proprietor or a partner, in any of the three financial years, proceeding.
(iii) Holds together with his relative two percent or more of the total voting power of the company; or
(iv) Chief Executive or director, of any non-profit organization.
So these were the conditions which need to be followed while appointing any independent director as per The Companies Act, 2013. However, the next question which needs to be answered is that why these independent directors should be appointed and be included in the Board.
Need to have independent directors on the board
There are several distinct benefits that an independent board of directors can bring to a company, the first and foremost is that the internal processes that are can be controlled, and the mismanagement or fraud which is being done by the company can be brought to the knowledge of the shareholders of the company and to the public at large. It has some other benefits also, which include
Offset the management flaws in a company.
Ensure the practice of legal and ethical behavior at the company, and at the same time strengthening accounting controls.
Increase the popularity of the company through his contacts and expertise so as to strengthen the share capital of the company.
Be a part of long-term decisions which need to be taken, for the welfare of the company.
Help a company survive, grow, and prosper over time through improved succession planning through membership in the nomination committee,
What is corporate governance?
Corporate Governance is a term with a very wide connotation, but in its most general sense, it means the system of rules, practices, and processes by which a company is directed and controlled. It essentially involves working in the best interests of the company while balancing the interests of the many stakeholders in a company. Since corporate governance also provides the framework for attaining a company’s objectives, it encompasses practically every sphere of management, from action plans and internal controls to performance measurement and corporate disclosure.[1]
So essentially, Corporate Governance is the application of best management practices, compliance of law in its true spirit and adherence to ethical standards for effective management and distribution of wealth and discharge of social responsibility for sustainable development of all stakeholders.
Composition & structure of board of directors under corporate governance:
For maintaining the unbiassed and objectivity of the decisions taken by the Board, it is necessary to take into consideration the views of all the directors within the boards, which are in a sense representing various groups of the company. Thus, the Corporate Governance regulations provide a basis on the composition and structure of the Board.
By regulating the composition and structure of the Board the objectivity and soundness of the decisions taken by the Board are maintained. It also ensures that no single director can dominate in such decision-making process, and thus reducing the chances of arbitrability of the decisions. This can be done by including a sufficient number of non- executive members with appropriate competencies, who are independent.
Independent directors and corporate governance:
The need for the independent directors can be established by the fact that they are expected to be independent from the management and act as the trustees of shareholders. This implies that they are obligated to be fully aware of the conduct which is going on in the organizations and also to take a stand as and when necessary on relevant issues.
The importance of the role of an Independent Director is of great significance. The guidelines, role and functions and duties and etc. are broadly set out in a code described in Schedule IV of the Companies Act, 2013.
The code lays down certain significant functions like safeguarding the interest of all stakeholders, particularly the minority holders, harmonizing the conflicting interest of the stakeholders, analyzing the performance of management, mediating in situations like the conflict between management and the shareholder’s interest, etc.
The independent directors are also expected to attend the general meetings of the company and to keep themselves aware of the matters which are going on in the company.
Role towards shareholders and stakeholders:
Independent directors have various roles to fulfill in their official capacity. Following, in my opinion, are the most important ones:
They must discharge their duties and must try to bring transparency in the working mechanism of the company. Since shareholders, especially the minority shareholders, are usually not equipped to look into those affairs of the company, and thus they look forward to independent directors so as to provide such transparency.
When the management or Board is taking any decisions which would adversely affect the rights of the shareholders or creditors or employees, then the independent directors must have a significant role in such decisions, and they must act in the welfare of the stakeholders.
Further, they are required to review the related party transactions and also to ensure the efficiency of “Whistle Blower ”
These, essentially, safeguard the interests of the stakeholders.
Role in Committee Membership
The Companies Act, 2013, provides for mandatory appointment of independent directors in following committees so as to meet the corporate governance requirements:
Nomination committee
Remuneration committee
Committee related to investor relations,
Audit committee.
Responsibilities of independent directors for a good corporate governance
Being a member of the Board, their role and responsibilities are very much similar to any other director of the Board. The fiduciary duties of care, diligence and acting in good faith apply equally to independent directors as to other directors.
Role towards the Board
It is the duty of the independent director to ensure that all those concerns that are important for the company are properly addressed by the board of directors. The objectives and duties of the independent directors are same as that of the executive directors. However, as compared to the executive directors the time that is needed to be devoted by the independent director and the degree of skill and care required for the company, both are less.
Liability Of An Independent Director
Under the Act of 2013, the liabilities of the independent directors have been reduced, [2] and are limited:
“only in respect of acts of omission or commission by a company which had occurred with his knowledge, attributable through board processes, and with his consent or where he had not acted diligently”.[3]
Conclusion
The 2013 Act, confers powers on the Independent Director for the fair and smooth functioning of the Board of Directors and the company itself. This article covered the relation of Independent Directors with the Corporate Governance Principles, and also highlighted the duties which they have towards the stakeholders.
References
[1]Corporate Governance Definition, available at http://www.investopedia.com/terms/c/corporategovernance.asp#ixzz3xIakeEkG
[2] S. 149(12) of the Companies act, 2013.
[3] Id.
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The right to die with dignity is a major concern for many terminally ill individuals. This right to die with dignity subsists in the concept of “euthanasia”. Brock refers to euthanasia as “psychological insurance” that can help people who fear experiencing unrestrained agony and suffering before dying, feel less anxious. Article 21 of the Indian Constitution guarantees every citizen a fundamental right to live with dignity. Many other countries of the world also widely encourage the concept of living wills. Living will refers to a written document that a person uses to explicitly state his wishes for the medical care to be provided in the event he becomes incompetent or unable to express them. This article pays an ode to the concept of living will and its association with the right to a dignified death.
Article 21 of the Indian Constitution
Article 21 of the Indian Constitution states that “no person shall be deprived of his life or personal liberty except according to a procedure established by law.” Thus, Article 21 secures two rights:
Right to life, and
Right to personal liberty.
Article 21 of the Indian Constitution was established by the Government of India Act, 1935. It states that no one may be denied of their life or personal freedom until doing so in accordance with the legal process. Article 21 of the Indian Constitution’s Part III lists one of the fundamental liberties to which all people of India are guaranteed.
Expansion of the interpretation of Article 21
The landmark case of Maneka Gandhi vs. Union of India (1978), changed the dimension and significantly expanded the interpretation of the expression- “personal liberty” given in Article 21 of the Constitution of India. In this instance, the court emphasised that the right to life extends beyond simple physical survival and includes the right to live in dignityThe interlinking between the rules of Articles 19, 14, and 21 was the judgment’s most significant aspect. The Supreme Court united these provisions into a single inseparable entity. Now every procedure must satisfy each and every condition outlined in these three articles in order to be considered valid. This decision retained the fundamental and constitutional right to life while also significantly broadening the definition of personal liberty.
The decision opened the door for the Apex Court to include other significant rights in the scope of Article 21, such as the right to clean water, clean air, the right to be free from noise pollution, the right to a standard education, speedy and fair trial, livelihood, legal aid, the right to food, the right to a clean environment, and health care, etc.
Right to life and right to die under Article 21 of the Indian Constitution
In Maruti Sripati Dubal vs. State of Maharashtra, a 1987 matter before the Bombay High Court in which the petitioner after committing a suicide attempt was arrested and an offense was registered against him under Section 309 of the Indian Penal Code, 1860. He was later released on bail. In this particular matter the constitutionality of Section 309 IPC was argued, question arose whether the penalty under Section 309 IPC was inhumane, harsh, unreasonable, or futile. The Bombay High Court held that Section 309 was inserted in IPC to achieve its goal to stop any potential suicides.
Again two years later in 1996, the Hon’ble Supreme Court in the case of Gian Kaur ss State of Punjab, overturned the above judgments and held that the Right to die or right to be killed is not included in the Right to life under Article 21 of the Indian Constitution. The five-judge Constitutional bench of the Supreme Court overruled Ratinam’s case judgment and also held that there is no ground to hold Section 309 of IPC unconstitutional.
Methods of euthanasia
● Active euthanasia- Active euthanasia is when a doctor intentionally ends the life of a patient who is suffering from an incurable or terminal illness by giving them fatal medication.
● Passive euthanasia- The act of withholding or discontinuing life-sustaining care is referred to as passive euthanasia.
Consent for euthanasia
There can be three types of euthanasia on the basis of consent given for the same:
Voluntary euthanasia: Voluntary euthanasia is when a person who is killed has requested to be killed.
Non-voluntary euthanasia: When a person who is killed makes no request and gives no consent as the person is unable to communicate his wishes, being in a vegetative state.
Involuntary euthanasia: When the person who is killed made an express wish not to be killed.
Suicide vs euthanasia
Suicide is the act of purposeful taking one’s own life via self-inflicted means for a variety of reasons, such as disappointment or depression. Euthanasia, sometimes known as “mercy killing,” is when a terminally ill person is killed by someone else who decides that the person’s quality of life is so awful that it would be preferable for them to be dead for medical reasons.
Legal position in other countries
In the Netherlands, both assisted suicide and passive Euthanasia are legal since 2001.
In Belgium also these have been legal since 2002.
In the USA passive Euthanasia is legal.
In England also passive Euthanasia is legal.
India’s legal position of active euthanasia
In India, active Euthanasia is punishable under Section 304 of the IPC and falls under culpable homicide not amounting to murder.
Passive euthanasia In India
A very important case related to Passive Euthanasia was the Aruna Shanbag case where a nurse was strangled and sodomised by a sweeper on 27th November 1973, and the deprivation of oxygen has left her in a vegetative state ever since, and she was kept alive by feeding tubes.
An activist filed a petition in the Supreme Court on behalf of Aruna in 2011, arguing that the “ continued existence of Aruna is in violation of her right to live in dignity. Although the court did not allow Ms. Shanbaug’s medical treatment was withdrawn, it discussed at length on Euthanasia and permitted passive Euthanasia. It was further decided that the High Courts are the ultimate decider of what is best for the patient, invoking the “Parens Patriae principle”, meaning- “Parents of the Nation”, where the court can step in and function as a guardian of a terminally ill patient.
The Supreme Court made several guidelines regarding this and decided that the High Court should issue its decision after hearing all the benches and committees appointed under the guidelines and give its decision until parliament passes laws on the matter, and said that the approach outlined should be followed throughout India.
The Supreme Court issued a major decision on March 9, 2018 in Common Cause vs Union of India, legalising physician-assisted suicide (PAS), often known as passive euthanasia. As previously held by its constitutional bench in the Gian Kaur case, the Court reaffirmed that the right to die with dignity is a fundamental right and ruled that an adult human being who has the mental capacity to make an informed decision has the right to refuse medical treatment, including the removal of life-supporting devices.
Conclusion
It should be kept in mind that a dying man has the right to pass away with dignity when his life is on the verge of ending. Also, speeding death in order to shorten the suffering time for a person who is terminally sick or in a persistent vegetative state (PVS), when there is no chance of recovery, is in accordance with the right to a dignified life. The Supreme Court’s reconsideration of the issue is a welcome step. It’s highly likely that even the recently updated rules may eventually need to be changed, but making things simpler for consent providers without raising the possibility of abuse of this major decision by the Apex Court, must be the guiding principle. As a result, I’ll sum up these lines from the late Japanese author Haruki Murakami, “death is not the antithesis of life; it is a part of it.”
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Appellate jurisdiction, under the Indian Constitution, is defined as the rights of the higher courts to change or cancel the decision of the lower court. Appellate jurisdiction under Indian Constitution is defined under Article 132 to Article 136. A certificate provided by the competent high court can be used to seek the Supreme Court’s appellate jurisdiction. In civil proceedings, there is an appeal right to the Supreme Court if the high court in question certifies that:
There is a significant legal issue at stake in this case that is pertinent to everybody, and
The Supreme Court must decide on the aforesaid issue.
Appeals from the high court in criminal proceedings shall be made to the Supreme Court when the concerned high court:
Has after receiving an appeal overturned an order of acquittal and sentenced defendant to death or to life in prison or for a period of at least 10 years, or
By using its power or authority withdraw any matter from the subordinate courts or lower courts for its own trial and in such trial the high court convicts the defendant and sentence him to death or to life in prison or for a period of at least 10 years, or
Declares and certifies that the matter is appropriate for Supreme Court appeal.
This article discusses the appellate jurisdiction under Indian Constitution which ranges from Article 132 to that of 136 of the Indian Constitution.
Supreme Court’s appellate jurisdiction
The Supreme Court of India can exercise appellate jurisdiction under the following heads:
1. Authority regarding constitutional matters
2. Authority regarding civil matters
3. Authority regarding criminal matters
4. Authority regarding special leave petition.
Appellate Jurisdiction under Indian Constitution
1. Article 132:Supreme Court’s Appellate Jurisdiction over appeals from high courts in certain cases i.e., constitutional matters.
2. Article 133:Supreme Court’s Appellate Jurisdiction over appeals from high courts regarding civil matters.
3. Article 134: Supreme Court’s Appellate Jurisdiction over appeals in criminal matters.
4. Article 135:Supreme Court possesses jurisdiction over the federal court’s legal jurisdiction and can exercise that authority.
5. Article 136: Appeal by Special Leave under the discretion of supreme court | Special Leave Petition.
In simple terms it can also be said that an appeal in the Supreme Court can be made against the order of the high court, but also with the permission of the High Court.
Article 132: Supreme court’s Appellate Jurisdiction over appeals from high courts in certain cases i.e., constitutional matters
According to Article 132 of the Indian Constitution, 1950, it gives power for an appeal to the Supreme Court from any High Court “judgement, decree, or final order”, where case is related to any criminal matter, civil matter, or any other matter and if it is certified by the High Court that the case involves a substantial question of interpretation of the law related to Constitution and Where such a certificate is given by the high court itself. Any party on such grounds can appeal in supreme court on ground that in matter of substantial question, case has been decided.
As observed in SP Sampath Kumar vs. Union Of India (1987), in this case the Supreme Court of India had held that an appeal under Article 132 can only be filed in cases where a certificate is issued by the High Court which mentions that the case involves a substantial question of law. Further, in Keshav Mills Ltd. vs. Commissioner of Income Tax, Bombay (1953), it was concluded that an appeal under Article 132 can only be filed against the final judgement of the High Court.
In the case of the State of Madras vs. Rowjee (1952), it has been held that an appeal under Article 132 cannot be filed against an interlocutory order of the high court and it can be filed only against final judgement. Also, in State of Andhra Pradesh VS. Sree Rama Rao (1963), Supreme court held that a certificate from high court is not merely a formality and that high court must apply its mind before granting such certificate.
Article 133: Supreme Court’s appellate jurisdiction over appeals from high courts regarding civil matters
According to Article 133 clause (1) of the Indian Constitution, 1950, any decision, decree, or final order of a high court in a civil case taking place on Indian soil may be appealed to the Supreme Court. An appeal can be made under this Article if the high court certifies the following conditions under Article 134A:
(a) That the case for which an appeal can be made includes a fundamental legal issue of wide significance; and
(b) That according to the high court’s opinion, the substantial question regarding constitutional law needs to be decided by the Supreme Court.
Despite any provisions mentioned in Article 132, any party appealing to the Supreme Court under clause (1) may assert that a significant or basic legal matter regarding the clarification of this Constitution has been incorrectly decided as one of the reasons in such an appeal and Despite anything mentioned in this article, until and unless the Parliament of India by-law provides that no appeal from the final order may be made to the Supreme Court., judgement, or decree of 1 Judge of a high court.
The Supreme Court of India while deciding the case of M/s. Salem Advocate Bar Association, Tamil Nadu v. Union of India (2005), has observed that the expression “judgement, decree, or final order” in Article 133 of the Constitution must be interpreted broadly to include interlocutory orders as well.
The judgement in the case of State of West Bengal v. Kesoram Industries Ltd. (2004) had clarified that the value of the subject matter in a civil case for determining the appellate jurisdiction of the Supreme Court includes not only the claim made by the plaintiff but also the counter-claim made by the defendant.
In Som Prakash Rekhi v. Union of India (1981), the Supreme Court has held that an appeal under Article 133 of the Constitution lies only if the judgement or order appealed against is a final judgement, decree or order which finally determines the rights of the parties in the suit.
In Union of India v. Deoki Nandan Aggarwal (1992), the Supreme Court held that the test to determine whether an issue raised in a civil suit involves a substantial question of law of general importance is whether the issue is of such a nature that it would affect the rights of a large number of people or a significant section of society.
Article 134: Supreme Court’s Appellate Jurisdiction in criminal matters
Article 134 of the Indian constitution talks about the supreme court’s appellate jurisdiction in criminal matters. According to Article 134 “any judgement, final order, or punishment” issued by a high court in a criminal case taking place on Indian soil, there is a right of appeal to the Supreme Court:
If a high court overturns an accused person’s acquittal following an appeal from the accused and sentenced him to death, i.e., if the high court reverses his decision of acquittal of the accused person upon filing an appeal and sentences that person to death then in that case an appeal can be made to the Supreme Court.
If the high court withdraws any case for trial before itself, from any court subordinate to its authority and if in such trial high court sentences an accused person to death after convicting him, then, in that case, appeal can be made to the Supreme Court and appellate jurisdiction of Supreme Court will come into effect; or
(c) If the High Court certifies that the case is a fit case pursuant to Article 134A for making an appeal to the Supreme Court, provided that high court will have to establish such conditions where an appeal is allowed, it is subject to such provisions which may be made in that behalf under Article 145 clause 1.
Also, in this Article, the Supreme Court can be conferred with any further powers by law through parliament in which supreme court can entertain and hear appeals from “any sentence, judgement or final order” issued by a High Court in a criminal case that must take place on Indian soil. All the matter is subject to such conditions that the law may impose.
Landmark judgments
Lets understand essence of this article with some landmark cases:
K.M. Nanavati vs. State of Maharashtra (1962): This case was a sensitive and sensational murder trial that eventually led to the abolition of the jury system in India. The case was initially tried before a jury, whose verdict was later set aside by the Bombay High Court. The case was then appealed to the Supreme Court under Article 134.
Indira Nehru Gandhi vs. Raj Narain (1975): This case dealt with the election dispute between Indira Gandhi and Raj Narain. The Allahabad High Court declared Indira Gandhi’s election to be null and void, which was later challenged in the Supreme Court under Article 134.
Zahira Habibullah Sheikh vs. State of Gujarat (2004): This case involved the Best Bakery massacre, where several people were burnt alive during the communal riots in Gujarat in 2002. The case had been marked by witness intimidation and a botched investigation. The Supreme Court took suo moto cognizance of the matter under Article 134 and transferred the case out of Gujarat.
Ajmal Kasab vs. State of Maharashtra (2012): This case dealt with the 2008 Mumbai terror attacks, where Pakistani national Ajmal Kasab was one of the main perpetrators. Kasab was convicted and sentenced to death by the trial court, which was later upheld by the Bombay High Court. The case was then appealed to the Supreme Court under Article 134.
Yakub Abdul Razak Memon vs. State of Maharashtra (2015): This case dealt with the 1993 Bombay bombings, where Yakub Memon was one of the conspirators. Memon was convicted and sentenced to death by the trial court, which was later upheld by the Bombay High Court. The case was then appealed to the Supreme Court under Article 134, which rejected his plea for mercy and upheld his death sentence.
Article 135: Supreme Court possesses jurisdiction over federal court’s legal jurisdiction and can exercise that authority.
Federal Courts functioned until the supreme court of India was established in 1950. Federal courts were the supreme authority of the Indian judicial system.
Under current law “Jurisdiction and powers” of the Federal Court are to be exercised by the Supreme Court of India unless otherwise specified by law or by Parliament. The supreme court shall also have the authority, jurisdiction or power for the cases which do not fulfil the criteria under Article 133 or Article 134. Before the implementation of this Constitution, the Federal Court and the Supreme Court could exercise all these functions in accordance with any applicable law.
In the case of the State of Maharashtra v. Milind (2000), the question before the Supreme Court was whether the Bombay High Court had the jurisdiction to hear an appeal against an order of acquittal passed by a Metropolitan Magistrate. The Supreme Court held that the high court had the jurisdiction to hear such an appeal under Article 135 of the Constitution.
Further, in the case of Moosa Raza v. State of Kerala (2005), Article 135 was interpreted in the context of appeals from the decisions of the Rent Control Appellate Authority. The Supreme Court held that when a statute provides for two forums of appeal, both the forums should be deemed to have concurrent jurisdiction unless the statute expressly excludes one of them.
Article 136: Appeal by Special Leave under the discretion of supreme court | Special Leave Petition
In ordinary situations, the procedure to appeal in Supreme Court can be found from Articles 132,133,134. There might be the chance that after covering all the aspects of appeal to the Supreme Court, any situation may arise whose solution is not provided in Articles 132,133 and 134, i.e., some rule of law might still be broken. Thus, to overcome this, a special power is given to the Supreme Court under Article 136 of the Indian Constitution, 1950. This power completely rests upon the discretion of the Supreme Court.
Before the Supreme Court takes up the case depending on its discretion, till that time this is known as a petition, but once Supreme Court accepts this petition then it is known as an appeal. This article can be termed as an article of special leave petition.
As observed and concluded in the landmark judgement of Ramakant Rai vs. Madan Rai (2004), the Supreme Court had observed that any private party can also file an appeal under Article 136 in the Supreme Court challenging acquittal.
In the case of Dharambir Singh v. Central Bureau of Investigation (2008), the Supreme Court held that the power under Article 136 is not limited to questions of law but extends to questions of fact as well. However, the court will not interfere with the findings of fact unless there is a gross miscarriage of justice.
In the case of Raja Ram Pal v. Speaker, Lok Sabha (2007), the Supreme Court of India has held that the power under Article 136 is not absolute and should be exercised sparingly and only in exceptional cases where there is a manifest error of law or flagrant violation of the principles of natural justice.
In the case of Lachmi Narain v. Union of India (1975), the Supreme Court had once again held that the grant of leave under Article 136 does not automatically stay the operation of the impugned order and that the court has the power to pass appropriate interim orders while the appeal is pending before it.
Final Appellate Authority/Final Order of Supreme Court
The Supreme Court is the final authority and the highest court of appeal, and no appeal lies and can be filed after or against the judgement of the Honourable Supreme Court. But one option is given where the Supreme Court can review its own judgement within 30 days from the days of judgement on the grounds of review.
Conclusion
As we come to the end of this article, it is necessary to state that the appellate jurisdiction, as has been discussed under the Indian Constitution, stands as a fundamental pillar of the Indian judicial system and therefore exercising the same is extremely essential as per circumstances.
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“Surveillance for a probe into the credibility and accountability of independent directors” is a topic that is related to corporate governance. The role of independent directors is to make sure that the affairs of the companies are managed ethically and legally. Recently, there has been an increased focus on the credibility and accountability of independent directors, particularly their financial relationship with the company or any other personal affairs. The focus on independent directors has increased due to increased scams and frauds.
The era of scams has raised concerns over the decades after multiple scams that have rippled through the system and economic bones of the country. These bones are considered to be its companies. They are considered the bones of a country because they are responsible for bringing prosperity to the country. But what if they are all involved in scams and fraud?
As we all know, big corporations have a major impact on a country, its people, and its economic policies. So, even a small disturbance in the company can have a severe impact.
To maintain the structure and transparency of the company for its investors and general public, the Companies Act of 2013 has a person named ‘Independent Director’ as mentioned under Section 149 (6) of the Companies Act, 2013.
An independent director is an unrelated person to the company who does not hold any interest in the company and is responsible for looking after the workings of the company without even participating in the daily workings of the company. He is, as his name suggests, ‘independent’ from any external influence, has an advisory role, and consults the company so that it does not do something unlawful that could be harmful in the future.
Who is an independent director
According to the ministry of corporate affairs, an independent director is an outside person who is not related to the people of the company. He is mandatory to be appointed in companies with significant public interest and can give a boost to corporate governance. Independent directors play a vital role in the formation of corporate governance. Though experts still raise questions about the independence of these directors, it is important to strike a balance between them and the stakeholders.
They must be made properly aware of their duties, functions, powers, and expectations of the members or stakeholders so that the company can flourish. While discharging their duties, they must adhere to the Guidance Note on Independent Directors that was issued in the year 2020. This guidance note brought about a few amendments to the SEBI Regulations and the Companies Act.
They are also expected to attend the company’s board meetings and other committee meetings to maintain the quorum in the case of listed companies. Where the company is not listed they are under no obligation to attend such meetings.
Qualifications of an independent director
An independent director should preferably possess appropriate skills, experience, and knowledge in one or more domains of finance, law, management, sales, marketing, administration, research, corporate governance, technical operations, or other domains that are related to the company’s business.
An independent director must be:-
He/she must be a person of high integrity and must have the required expertise and experience;
He/she must not be or have any close relation with the promoters or directors of the company;
His/her relatives must not have any interest in the company’s holdings, subsidiaries, etc. during the immediately preceding two financial years or CFY;
He/she must not be indebted to company in any way during the immediately preceding two FY or CFY;
Appointment of an independent director
The appointment of independent directors should be made by the company’s shareholders, and they must be very diligent while choosing their directors because they are considered to be the backbone of the company. The independent director could be an Indian or from any other country, but the company appointing an independent director from some other nation must obtain prior permission from the Central Government as mentioned under the Companies Act. However, there are a few terms and conditions attached to the appointment of an independent director who’s not of Indian origin.
Every director of the company must disclose his name, residence, and other particulars as may be listed. The director also has the option to resign from his/her post. When the director has resigned, he has to prove the delivery of such information to the company to discharge him/her from liability.
After the expiration of the appointment term, the director can be reappointed at the next board meeting if the board is satisfied with their performance and would like to see them function more.
What is meant by accountability and credibility of an independent director
Section 149 in Schedule 4 of the Companies Act, 2013 talks about the code of conduct of the independent director and its duties.
Accountability, in layman’s language, means ‘responsibility.’ Here the term refers to the responsibilities of the director, or we can say “for what an independent director be questioned off.”
Directors’ responsibilities reflect the director’s role in the misconduct and the severity of the problem. Investors are likely to hold those directors accountable who have greater roles in the finances of the company. As they set out the financial structure of the company and are responsible for all the major expenses.
Credibility and accountability go hand in hand. If one of them collapses, the other is questioned. If a person is credible, then only he will get the responsibility, and only after that will he be held accountable in the case of any irregularity.
Credibility can also be called the perception that the independent director is trustworthy, reliable, and capable of taking on the responsibilities that are vested in him. To maintain credibility, a director must follow the code of conduct as per the Act and fulfil all the duties and responsibilities assigned to him.
Scanning of an independent director
Independent directors need to be scanned and checked, whether warranted or unwarranted, and we have learned this from various scams that have happened in the past, like the 2G Spectrum Scam, in which it was found that the independent directors, bureaucrats, and politicians were interested insiders who were responsible for the scam. Later, a probe was started against them. The CAG still doesn’t know the exact figure of the scam, but an estimated figure is Rs 1.76 lakh crore. This scam proved to be the downfall of the Manmohan Singh led government in 2014.
The credibility of the independent directors needs to be checked. Their sources, their contacts, communications, connections, checking for insider trading, and confidentiality must be checked from time-to-time to avoid any hassle. These scans are made on the directors by the company themselves, or by IT authorities, the CBI, etc.
The scanning does not allow getting into the privacy of the director; otherwise, no one will be willing to be an independent director. It should be kept in mind that there should be some kind of-
Monitoring mechanism that does not hinder the privacy of the directors;
The scan should done lawfully and should not hinder the privacy of the director;
The limit for intervention must be clearly prescribed by the Central Government; and
Their office shouldn’t be meddled with unnecessarily and there should be no secret wires installed in their office for surveillance purposes.
When can there be a probe over an independent director
There are many issues, problems, and reasons that may raise the issue of a probe against the directors of the company; some of them are as follows-
Insider trading: Independent directors have much crucial information related to the company that can be used to gain an advantage over the people and earn an unfair profit from it.
Lack of expertise: Independent directors are supposed to have expert knowledge in the fields in which they are in charge; if the director lacks the knowledge or expertise, this may result in wrong decision making by the directors and could land them in trouble.
Breach of corporate governance norms: Independent directors are expected to comply with corporate governance. If a director fails to follow the norms as listed under various acts (governing companies in India) and is unable to discharge his duties, a probe could be ordered against him.
Personal interest: If an independent director has any sort of personal interest in the affairs of the company, a probe could be ordered against him.
Some famous scams
Satyam Scandal: ‘Satyam Computers’ was a jewel of the Indian IT sector. It was the 4th largest IT company in India at the time when the scam happened. Mr. Ramalingam Raju, Satyam’s CEO, took responsibility for the fraud and said that he had overstated the financial records and the revenue of the company. He also added that he had over-stated all the financial figures to make the company look more attractive to investors.
The independent directors were put into question after the probe because they were found handicapped in figuring out the financial frauds running in the company and looked incapable of performing their duties.
As a result of the negligence, several independent directors faced many legal actions, and a new board was constituted by the government to look after the company.
Yes Banks 2020 crises: In March 2020, India’s leading financial bank faced crises because of which its administration was taken over by the RBI. All the independent directors of Yes Bank were put into question as they were unable to fulfil their duties and were unable to direct the management of the company to work within the necessary protocols.
After this, a new management team was set up by the RBI. Several of its top executives were arrested, including its founder, Mr. Rana Kapoor.
This crisis set up an example of how important it is for the independent director to perform its duties and look after the financial irregularities of the company; if they are unable to perform their duties, then a large chunk of the masses would be impacted by it.
Nirav Modi Scandal: In this scandal, the employees of the Punjab National Bank issued a fake Letter Of Undertaking (LOU) to Nirav Modi and his company to get the loan from the overseas banks. The LOUs were issued without collateral. The fraud was worth around Rs. 14,000 crore. The negligence and incapability of the independent director were raised as they were incapable of identifying the financial fraud that had been running for years until a foreign bank put a question mark on the authenticity of the LOUs issued by the bank. They were negligent and not capable of performing their duty to scrutinise the finances of the company and could not detect the financial error of such a large amount. This had led to a probe against the independent directors of the company and the removal of most of them.
Conclusion
Independent directors are shown and represented as a non performing asset of the company; they have always been represented as an unnecessary requirement until their main work comes into place. They work like agents of the public in these big corporations and are responsible for creating a non fraudulent environment for business.
Like we have seen in the above cases, negligent and blind eyed independent directors were responsible for allowing such kinds of frauds to commence, and their negligence resulted in widespread losses for the economy. Their small look at those flaws could have made a big difference.
So it is very clear after this article that independent directors may look unnecessary at a glance but are very important for the stability of the company.
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This article is written by Vandana Kumari, a law graduate from Rizvi Law College, Mumbai University. This article contains a brief overview of Section 188 of the Indian Penal Code, 1860, and vastly concerns itself with the punishment covered by it along with the relevant case laws.
During the infamous COVID-19 lockdown, you must have heard numerous cases about people being arrested or fined for violating lockdown guidelines. Ever since the nationwide lockdown came into force on March 25, 2020, a staggering number of over 1.04 lakh cases have been registered in the state of Maharashtra for violation of COVID-19 guidelines, which led to 19,838 arrests and the collection of approximately Rs. 3.97 crores in fines. This was the data up until May 2020. If this was the story of one state in just two months of the lockdown, we can imagine what the figure must have been for the whole nation throughout the pandemic. Returning to the topic, the question here is under what law were these arrests made? What is the prescribed punishment under that law? This article will directly delve into the posed question.
Section 188 of the Indian Penal Code, 1860, finds its place in Chapter X of the Code, which deals with offences related to contempt of the lawful authority of public servants. The public servants are entrusted with the authority to maintain law and order within the society. Thus, it becomes crucial for the law of the land to provide the necessary reinforcement for their authority to stand firm. Section 188 of the Code serves this purpose. It provides punishment for displaying disobedience to an order duly promulgated by a public servant in the public interest. Here are a few examples of orders made under Section 188 of the IPC:
An order commanding an assembly of five or more persons to disperse;
An order directing a religious procession to not pass down a certain street; or
An order to maintain the status quo of the disputed property
What crime is defined under Section 188 of the IPC
Section 188 of the IPC criminalises any deliberate disobedience of an order that is duly promulgated by a public servant empowered by law to do so. Such an order can either direct any individual or any group to abstain from a certain act or to take certain action with certain property in his possession or under his management. For instance, avoidance of service of summons, non-appearance or non-attendance in response to an order, non-compliance with orders made for maintaining public order and peace, etc.
According to this Section, the actus reus, or wrongful act, is the disobedience of an order. However, mere disobedience does not constitute an offence in itself. Such disobedience, in order to be punishable, should have caused or have the potential to cause obstruction, annoyance, or injury, or the risk of obstruction or annoyance, to any lawfully employed person. It will also be punishable if such disobedience causes or tends to cause danger to human life, health, or safety, or causes or tends to cause a riot or affray.
Furthermore, to constitute mens rea for this offence, mere knowledge of the order is sufficient. No person who does not know about the promulgation of the order can be punished for its disobedience. The explanation attached to the Section also describes the same. It clarifies that the offender need not have the intention to produce harm or contemplate his disobedience as likely to produce harm. It is sufficient that he knows about the order that he disobeys and that his action will produce, or is likely to produce, harm.
Nature of offence under section 188 IPC
According to the First Schedule of the Criminal Procedure Code (CrPC), 1973, offences under Section 188 are cognizable, bailable, and can be tried by any magistrate, which means a charge under Section 188 would necessitate arrest and a person charged under this Section can be released on bail.
Essentials of crime under Section 188 IPC
A thorough perusal of the Section leads to the following essentials of this offence
There must be an order promulgated by a public servant
The expression ‘promulgation’ has not been defined anywhere in the Code, and it does not prescribe any particular mode for promulgation. The literal meaning, however, is “to make known by public declaration, to publish, or to proclaim.” This has been a point of extensive discussion in several case laws, namely, State v. Sm. Tugla, (1955), Kothakota Papayya and Ors. v. State, (1975), Bhagirathi Srichandan and ANr. v. Dmaodar@ Dama Baral and Ors, (1986) and many more. In all these judgments, it was observed that promulgation of an order meant publication of that order publicly and openly. It can be by the beat of drums, notification in the Gazette, or by openly reading out the order in public. Pronouncement of an order in open court amounts to a valid and sufficient promulgation for the concerned parties in the proceedings. Similarly, the Bombay High Court in Emperor v. Raghunath Vinayak, (1925), dealt with a case wherein a sub-inspector of police orally ordered to stop music before a mosque and it was disobeyed. The accused, when arrested, contended that there must be a written or printed order before it could be held to have been promulgated. Their contention was rejected, and it was held that the word “promulgate” indicates that there must be some form of publication. But, it is not necessary that the publications should be through newspapers, posters or leaflets. When an order is pronounced in open court, it is made public and nothing more needs to be done to publish it.
The public servant must be lawfully empowered to promulgate such order
Generally, the orders contemplated under Section 188 of the IPC are those made by public functionaries for public purposes. The source of this power is mainly derived from Sections 144 and Section 145 of the CrPC.
Such an order directed the accused to abstain from a certain act, or to take certain order with certain property in his possession or management
The orders under Section 188 are made to maintain public tranquillity, public health, safety, or convenience. It can be either directed at the public at large or at any individual who poses threat to law and order.
The accused had knowledge of the order
The question of whether the accused had knowledge of the order is a question of fact. It is the duty of the prosecution to prove by positive evidence that the accused disobeyed the orders despite having knowledge of their existence. A mere proof of a general notification promulgating the order does not satisfy the requirement of Section 188 of the IPC. This was observed by the Calcutta High Court in the case of Ram Das Singh and Ors. v. Emperor (1926).
Recently, in Prasad Kori v. State of M.P. (2023), the Madhya Pradesh High Court observed the same. In this case, a bank (the applicant in this case), which was entitled to recover money from a chronic defaulter (the complainant), took possession of his vehicle with due compliance with the law. The complainant got an FIR registered under Section 188 and Section 379 of the IPC. He contended that the bank did not comply with the order passed by the collector regarding the takeover of respective vehicles. But he failed to put anything on record to suggest that the order was served on the applicant or that they were aware of the contents of the order. Thus, the Court opined that the charge under Section 188 is not sustainable. With respect to theft, as it is a compoundable offence, the parties agreed to settle the matter, and the proceedings were quashed.
He must have disobeyed the order
Though mere disobedience is not sufficient to convict a person under Section 188, it nonetheless initiates the action. For instance, in the aftermath of the Hathras Gang rape incident, Section 144 of the CrPC was implemented in the state of Uttar Pradesh. The Congress leaders, Rahul Gandhi and Priyanaka Gandhi Wadra, were detained by the UP police while they were on their way to visit the victim’s family. When asked, the police officials informed them that they were arrested under Section 188 for disobeying the orders under Section 144.
His disobedience caused or tended to cause obstruction, annoyance or injury, or risk of obstruction, annoyance or injury to any person lawfully employed, or
The words “lawfully employed” assume vital importance in this regard, and cannot be overlooked. The act of disobedience has to be such that it causes or tends to cause obstruction, annoyance, or injury to a person “lawfully employed” and not just to any person, be it a private party or the general public, in whose favour or for whose protection, an order is promulgated by the public servant.
Further, the annoyance has to be proven as a fact. The mere mental annoyance of the concerned authorities is not enough to constitute an offence under this Section.
Such disobedience caused or tended to cause danger to human life, health or safety, or a riot or affray
A mere act of disobedience is not the actus reus under this Section. It must be shown that disobedience has or tends to have the aforementioned consequences. To illustrate it, there is a judgment of the Calcutta High Court in the case of Mt. Lachmi Devi and Ors. v. Emperor (1930) on similar lines. The facts of the case were that a group of six women were booked under Section 188 for moving along the street singing a Bhajan song without taking prior permission from the Commissioner of Police to take out a procession. They took the position that they were not engaged in any political manifestation or anything harmful but were merely singing songs. There was no evidence on record to suggest that the singing or their arrest caused or tended to cause any riot or affray. They cannot be convicted based on the general assumption that any arrest in the situation prevalent in the area may lead to a riot or affray. Thus, the Calcutta High Court set aside the order of the Presidency Magistrate and acquitted all the accused.
Not having knowledge that disobedience may cause harm cannot be a defence
The Madras High Court in Jeevanandham v. State (2018), by way of illustration, explained that if in a town where no order was passed for chaining up dogs, A lets his dog run about loose, A will not be liable to punishment for any mischief which the animal may cause unless it can be shown that A knew the animal to be dangerous. However, if it is proved that A was aware of an order that talked about confining dogs and yet he did not do so, he cannot use this as a defence. Further, even if he had reasons to believe that his dog was harmless, that will not act as a defence in court. So, if the court thinks that A’s disobedience has caused harm or risk, A will be liable to receive punishment. On the other hand, if the court believes that there was no danger and that the local order was an inappropriate one, A will not be liable to punishment.
Illustration
An order is promulgated by a public servant lawfully empowered to promulgate such an order, directing that a religious procession shall not pass down a certain street. A knowingly disobeys the order and thereby causes the danger of rioting. It can be said that ‘A’ has committed the offence defined in this Section.
What are the procedures followed under Section 188 of the IPC
Section 188 IPC is a cognizable and bailable offence. This implies that the police have the power under Section 154 of the CrPC to register an FIR, investigate the matter, and file a final report under Section 173(2) of the CrPC before the concerned magistrate.
Ideally, in such situations, the magistrate is empowered under Section 190 of the CrPC to take cognizance of any offence upon receiving a complaint of facts that constitute such an offence, or upon a police report of such facts, or further, upon information received from any person other than the police officer.
However, Section 195 of the CrPC carves out an exception for cases falling under Section 188 of the IPC. It prohibits the magistrate from taking cognizance of the police reports. Section 195(a)(i) bars the court from taking cognizance of any offence punishable under Section 188 IPC or the abetment or attempt to commit the same, unless there is a written complaint by the public servant concerned for contempt of his lawful order.
The legislative intent behind Section 195 was discussed in the leading case of C. Muniappan & Ors v. State of Tamil Nadu (2010). In this case, the Supreme Court elucidated that this provision was made to protect an individual from facing any criminal prosecution instituted upon insufficient grounds by persons actuated by malice, ill-will or frivolity of disposition. In addition, it was also to save the time of the criminal courts from being wasted by endless prosecutions.
The nature of the bar under Section 195 was clarified by the Supreme Court in the landmark case ofState of Punjab v. Raj Singh and Anr. (1998). The Apex Court observed that a plain reading of Section 195 makes it clear that the bar comes into operation at the stage of taking cognizance, and it has nothing to do with the statutory power of the police to investigate an FIR that discloses a cognizable offence. In other words, the statutory power of the police to investigate under the Code is not in any way controlled or circumscribed by Section 195 CrPC.
How FIRs are registered for violating Section 188 of the IPC
As discussed above, it is settled that the restraint of Section 195 of the CrPC applies to the magistrate in taking cognizance and not to the police in recording the FIR and conducting an investigation. Therefore, there is no bar to the police registering an FIR for the offence committed under Section 188.
However, once the investigation is complete, the public servant whose order has been disobeyed has to make a written complaint, which becomes part of the final report. The filing of this complaint is a prerequisite for the magistrate to proceed. The magistrate, on being satisfied that it attracts the ingredients of Section 188, shall take cognizance and proceed further.
In the case of Jeevanandham v. State (2018), the Madras High Court held that it is mandatory to follow the procedure of Section 195 of the CrPC to prosecute an accused of an offence under Section 188; otherwise, such action would be rendered void ab initio. There must be a complaint by the public servant whose lawful order has not been complied with. The power of police officers is limited to preventive action, and he has to immediately inform the concerned public servant to enable him to proceed with the complaint before the Court.
Punishment for crime under Section 188 IPC
The punishment under Section 188 varies with the severity of the consequences of the act:
If the disobedience of the order causes or tends to cause obstruction or annoyance or injury, or risk of the same, to a person lawfully employed, the offender will be subjected to a simple imprisonment of up to one month or a fine up to Rs. 200, or both;
If such disobedience is of a greater nature, so as to cause or tend to cause danger to human life, health or safety, or causes or tends to cause a riot or affray, the offender shall be punished with imprisonment of either description for a term which may extend to six months, or with fine up to Rs. 1000, or both.
In Khoshi Mahton and Ors. v. The State (1964), there was a proceeding under Section 144 of the CrPC between two parties, and they were restrained from going on a particular piece of land where there were standing paddy crops. One of the parties cut and removed the crops. The magistrate held that the action amounted to disobedience and that it tended to cause a riot or affray, and he sentenced the accused to undergo rigorous imprisonment for 2 months and to pay Rs. 55 as a fine. In default of payment of the fine, they will have to undergo further rigorous imprisonment for 15 days. They filed an appeal before the session judge. He was of the opinion that the disobedience did not risk any riot or affray, and he reduced the sentence to simple imprisonment up to one month, maintaining the fine. When the case came before the Patna High Court, it observed that such acts of disobedience created an apprehension of a breach of peace, and it is sufficient to prove that the disobedience tended to cause a riot or affray. It held that the finding of the session judge was wrong and dismissed the application.
There have been many cases along similar lines. The key factor in deciding these cases rests upon three factors, namely-
the promulgation of the order;
the accused’s knowledge and disobedience; and lastly,
the happening of the mentioned consequences under Section.
In addition to this, it is noteworthy to mention that the punishment under this Section finds its place in the Epidemic Diseases Act, 1897, as well. It is an Act to provide for better prevention of the spread of dangerous epidemic diseases. Section 3 of the Act states that any person who disobeys a regulation or order made under this Section will be deemed to have committed an offence punishable under Section 188 of the IPC. This Section was widely used throughout the nation during the period of COVID-19 lockdown.
Important case laws
Municipal Council, Ratlam v. Shri Vardhichand and Ors (1980)
Background of the case: The Municipal Council was ordered by a magistrate under Section 133 of the CrPC to provide the amenities to the people living in the locality and abate the nuisance, close certain pits, repair drains, remove dirt, and construct public bathrooms within 6 months. The case came before the Supreme Court through a Special Leave petition by the corporation.
Issue: Whether the court can compel a statutory body to carry out its duty to the community by constructing sanitation facilities at great cost and on a time-bound basis?
Arguments by the council: They pressed the issue of a lack of funds.
Judgment of the Court: The Supreme Court held that whenever there is a public nuisance, it is the duty of the magistrate to remove the nuisance within a time to be fixed in the order. This power is derived from Section 133 of the CrPC. This is a public duty implicit in the public power to be exercised on behalf of the public and pursuant to a public proceeding. Failure to comply with the direction will be met with a punishment contemplated by Section 188 IPC. In this case, the consequence of the disobedience is closely related to public nuisance, as noncompliance with the magistrate’s order would lead to health and environmental issues.
The Court also observed that lack of funds would not stand as an excuse against the ineffable “human rights” of people. The municipality was expected to properly utilise the funds that they received from the state government for the maintenance of public areas.
The Supreme Court held the municipal council, through its officers, liable under Section 188 for disobedience and non-compliance with an order passed by a magistrate under Section 133 of the CrPC.
Om Prakash and Anr. v. State (Govt. of NCT of Delhi) (2019)
Background of the case: After the assassination of Prime Minister Indira Gandhi, violent anti-Sikh riots erupted in Delhi. In order to curb that, a prohibitory order was passed on October 31, 1984, in Delhi, banning the assembly of more than five people and the carrying of arms till further orders. On November 1, 1984, at 6 p.m., an order under Section 144 of the CrPC was issued by the Police Commissioner imposing a ban on anyone in Delhi coming outdoors without the permit granted by the Deputy Commissioner of Police of the concerned district, until further orders. On November 2, 1984, it was intimated to the police station on the telephone that a massacre was going on in the area. When the police reached the spot, they found a few houses on fire.
According to the statements of the eyewitness, Vidya Wati, a large crowd of non-Sikhs came to the area, and they stabbed her husband, Thakur Singh, three times and thereafter set him on fire. They also set their three-wheeled scooter on fire. She alleged that the appellants, Om Prakash and Vedi, the younger brother of Om Prakash, had murdered her husband.
Ratio decidendi: Despite the prohibitory orders in force, the accused flagrantly disobeyed the orders. They caused riots as well as a grave danger to the health and safety of people in the community. This fulfills all the ingredients of an offence punishable under Section 188.
Judgment of the Court: The Delhi High Court upheld the sentence awarded by the trial court to the appellants for an offence punishable under Section 302 (punishment for murder) read with Section 149 of the IPC (every member of unlawful assembly guilty of offence committed in prosecution of common object). And for the offence punishable under Section 147 of the IPC, the Court sentenced the appellants to undergo rigorous imprisonment for a period of two years, respectively. Further, for the offence punishable under Section 188 IPC, the appellants were sentenced to undergo rigorous imprisonment for a period of six months, respectively. The Court held that all the sentences would run concurrently.
Conclusion
Not long ago, the Delhi High Court, in the case of Decathlon Sports India Pvt. Ltd. v. State of NCT of Delhi (2022), flagged the necessity of quick disposal of cases under the Disaster Management Act, 2005, and Section 188 of the IPC as well. This case was related to the opening of the showroom past the deadline during the lockdown in 2021, thereby violating the existing orders. The point here is that the maximum period under Section 188 is up to six months, but the case in question was dragged out for over seven months without any closure.
It is unfathomable as to why the cases under Section 188 cannot be disposed of in a more purposeful manner. The intention of the legislature behind Section 188 is noteworthy, but the procedural mechanism under Section 195 of the CrPC makes it sluggish. According to Section 195(1)(a) of the CrPC, the court is barred from taking cognizance of offences under Section 188 except upon a written complaint by the public servant concerned. The conversion of the information received into a complaint by a competent public servant, the registration of the FIR, the issuance of notices under Section 41A of the CrPC, and the consequent necessity of filing a Section 173 of the CrPC report have only led to complications in matters and a colossal waste of time and human resources. The Delhi High Court in the aforementioned case suggested adopting a simpler approach in cases where ordinary citizens are involved and who have no criminal background. It also clarified that the existence of an FIR, despite a complaint being presented before the court, will not bar the court from taking cognizance of the matter.
Frequently asked questions (FAQs)
Is Section 188 a bailable offence?
According to the First Schedule of the CrPC, Section 188 is a cognizable and bailable offence.
In which court can Section 188 be tried?
It can be tried in the court of any magistrate.
Is Section 188 a compoundable offence?
As per Section 320 of the CrPC, Section 188 is a non-compoundable offence.
References
Ratanlal and Dhirajlal, 2019, The Indian Penal Code, LexisNexis.
RV Kelkar’s Criminal Procedure, Lucknow, Eastern Book Company.
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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This article has been written by Amit Kumar, pursuing a Diploma in Intellectual Property, Media and Entertainment Laws and has been edited by Oishika Banerji (Team Lawsikho).
It has been published by Rachit Garg.
Table of Contents
Introduction
Copyright, known as the bundle of rights, provides the proprietor of the copyrightable subject-matter an exclusive right over his original works, to use them to earn profit as well as protect them from authorised uses. Any original, not necessarily novel work is protected under this form of intellectual property if the same abides by the conditions laid down by the Copyright Act of 1957 or is falling within the ambit of such legislation. It is ideal to note that in the case of copyright, an idea cannot be safeguarded for it is only the expression that can be protected. Copyright protection ideally according to the mentioned legislation, subsists for a period of 60 years. But, for the same to apply, there are certain tests that need to be taken into consideration. This article is owed to the same.
Tests of copyright
As such no test or criteria are given in the Copyright Act, 1957. But, it is the Indian judiciary that has over time taken reference from foreign courts and has also based its reasoning in such a way that the same developed as tests for identifying whether copyright protection will subsist on such matters or not.
Doctrine of originality
The concept of ‘originality’ as provided under the Copyright Act, 1957 has been introduced to safeguard new work or creation or inventions from that of unauthorised uses, reproduction that has been done without consent or inventions from forgeries, or other unoriginal works. The concept is considered to be the yardstick of the copyright law, which determines the applicability of the same. According to the doctrine of originality, the work seeking copyright protection has to be of the author’s own intellectual creation and not a copied version of an already published original work. Section 13 (1) of the Act of 1957 uses the word “original” but does not define it. So, work has to be original for getting protection under the Act.
The yardstick can be presented in the form of two tests, that helps in determining whether the concerned work is original or not, namely,
As can be understood by the very heading, this part of the originality test basically requires the work seeking copyright protection to not be a copied material, instead objectively be an original one.
Threshold/degree of originality(varies from court to court):
In case of this part of the originality test, no appropriate explanation can be attached, instead what can be kept open for the readers to understand is that this part of the test rests its identity to be defined by the courts. It is the court of law who is left to determine the degree of originality in the matter seeking copyright.
The doctrine of Sweat of Brow
The sweat of the brow doctrine is a famous doctrine developed in the English land with the intent to determine whether the subject-matter is eligible for copyright protection or not. Work to be copyrightable requires it to be the result of simple diligence, as per the sweat of the brow doctrine of the United Kingdom. Reliance is put more towards labour and time invested in creating the invention instead of the level of creativity it holds.
In the case of University of London Press v. University Tutorial Press (1916), the court applied the test and held that it does not require expression to be in original or novel form but what should be abided by is that the work is not a copied one. It held that questions are original work and the mere creation of the same question by another author does not lead to infringement.
USA’s Modicum of creativity doctrine
In the landmark case of Feist Publication Inc v. Rural telephone service Co (1991), the court of law had observed that work that has been applied for copyright protection must be an independent creation and modicum of creativity must be present, which signifies that there must be minimum or sufficient intellectual creativity and judgement in work and degree of creativity need not be high but a minimum level of creativity should be there. This very decision is what can be termed as the doctrine of modicum of creativity. This doctrine finds its place in the United States of America.
The doctrine of merger in India
When it comes to India, the doctrine of merger deserves an explanation. As a common saying we have previously noted that copyright subsists in expression of ideas and not ideas itself. Taking the same into consideration, the doctrine of merger states whenever there is an expression seeking copyright protection and the expression is same as the idea it has emerged from, or vice-versa, it will be the idea which will be emerging as an expression thereby making the same as non-copyrightable. Thus, if the idea and expression are not distinguishable, then the expression in that case will not be subjected to copyright protection.
While deciding the case of Eastern Book Company v. D.B. Modak (2007), the Supreme Court of India has discarded the sweat of brow doctrine and has shifted to the doctrine of modicum of creativity thereby allowing addition and contribution made by Supreme Court Cases (SCC) in their judgement, although as such judgments are not copyrightable. Hence flavour of minimum creativity was accepted to create a balance between reward for effort and reasonable standards.
Copyright tests for peculiar works
Computer programming
Computer programming is complex, time taking, and requires creativity and skill. Hence the work of the software engineer needs to be protected, else it would be unprofitable to indulge in such activity if the program languages could simply be copied by someone to produce the same result. Nations have developed their own unique way to cope with the unique issues of computer programming piracy with some states like India providing statutory protection under the Copyright Act, 1957, some provide under the patent law like USA and many others nations under a sui generis system. Though all the elements of software are held to be copyrightable but identifying breach of copyright of highly complex technical diversity is difficult. There are two ways of infringement:
Literal copying of code.
Non-literal copying of code
Test of copyright protection
For literal copying: appropriation of a substantial part of copyrightable code and way of copying is immaterial
In the case of Data Access Corporation v. Powerflex Services Pty. Ltd (1999), an Australian court held that the critical character of the part copied in deciding the main function of Plaintiff’s programme is not the only criteria in determining a core part of the copyright to be granted. The court emphasised on the originality test to be applied to the parts which were contested for being infringed. The court had also observed that structure, sequencing and the combination of commands and the choice of commands will all be important in deciding originality of work
For non-literal copying:
Non-literal elements are protected as alternate lines of code, which can be cited to create the same programme structure or obtain similar user interfaces.
Look and feel Test:
This test focuses on the manner in which the content is displayed to the user through the graphical interface, hence, it is based on what is seen by a user over the display (the audio-visual elements) rather than the original algorithm that is to be examined. Same was held by a US court in the case of Broderbund Software Inc. v. Unison World Inc (1986).
Abstraction, filtration and comparison test:
In the case of Whelan v. Jaslow (1986), the court of law had opined that the structure, sequence and organisation of the code will fall within the protection of copyright and not merely the verbatim part of the code.
In the first step, the court should identify a threshold of abstraction to settle the idea-expression dichotomy,
In the second step, the court must restrict the ambit of the expression decided by the abstraction, and
In the third step, the court must equate whatever is left of both programs to determine substantial similarity.
Extrinsic-Intrinsic test:
In the US case of Brown Bag Software vs Symantec Corp (1992), the court had held that the first stage of the test is the intrinsic one where the Court shall objectively consider every element of work and separate the copyrightable parts. If the applicant fails at this stage as the parts copied are not copyrightable, the scope for the extrinsic test does not arise.
Fictional character
Courts have adopted a two-step test to regulate copyright infringement related to fictional characters. This test helps to determine whether the character’s expression is protectable; and, if so, whether or not there is an infringement. The two tests that are followed in the United States are:
Distinct delineation’ test.
Story being told test.
The ‘Distinct Delineation‘ Test
Courts adopted this test in the case of Nichols v. Universal Pictures Corp (1930), where the court had opined that the fictional characters are under the ambit of copyright protection if they were distinctly delineated. This delineation test is a two-steps test, which at first checks whether the previous character’s expression is sufficiently delineated to fall under ambit of copyright protection, and then in the deliberate stage assess whether the infringing fictional character’s expression is sufficiently similarity with previous character
The ‘Story Being‘ Told Test
This test was adopted in the Warner Bros. case., where the court held that Warner Bros. had its exclusive copyright on their book (even from the authorship), but the author was merely striving to protect his right to use his work. It was held that the original author reserved his right to use fictional characters in other works.
Conclusion
As we come to the end of this article, it is ideal to note that every copyright test has its own unique trait and the same cannot be compared with one another. Each test comes with its own set of guidelines but what lies common is the purpose behind all such tests which is to determine whether a work will be subjected to copyright protection or not and to also look after the fact that no rights of the original author is prejudiced by any immoral activities that is detrimental to the very element of creativity and innovation.
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This article has been written by Subhadeepa Sen, a student from the School of Law, Christ (Deemed to be University), Bangalore. In this article, the author has extensively discussed Section 380 of IPC and explored the ambit of the punishment provided therein. In addition, the author has also delved into the ingredients of the offence and analysed certain landmark judgments in that regard.
Whenever we come across news related to crimes happening across the country, we tend to reflect on the underlying reasons that can potentially give rise to such crimes in society. We also ponder over whether it is the consequences of social evils that can necessarily be conducive to an upsurge in crime rates. In numerous circumstances, a veritable spectrum of reasons can cause an individual to commit a particular offence for example, poverty or unemployment, however, on the other hand, it can also be certain psychological reasons for instance, greed; anger or jealousy can also play a role. This article talks about one such offence stipulated under Section 380 of the Indian Penal Code, 1860 (“IPC”) which is “Theft in dwelling house, etc.” The Section aims to be a protective measure and safeguards properties that are hoarded or kept in a particular house, tent or vessel. The commission of this offence laid down in the impugned Section, calls for stringent action in the form of punishment. The Section calls for imprisonment for a term that may extend upto seven years. The article further elaborates on the ingredients of the crime so committed and explores the ambit of the punishment. In addition, the article shall analyse certain landmark cases that shall shed light on what exactly constitutes a theft of property in a dwelling house, tent or vessel and the situations in which the impugned Section shall be attracted.
What crime is defined under Section 380 IPC
Section 380 stipulates that whoever carries out the offence of “theft” in a building, tent or vessel that has been in use either in the form of a “human dwelling” or has been utilised as a “custody” of the property shall be liable for punishment under the impugned Section. For instance, P, a friend of Q, goes to her house and takes a cup lying on her dining table without her consent and knowledge, will be said to commit an offence under this section. The person charged under this Section shall be liable for simple or rigorous imprisonment for a term that may extend upto seven years. The offence is classified as a cognizable, non-bailable, non – compoundable offence, triable by any Magistrate.
The Section essentially talks about a ‘theft’ of some kind and is a part of Chapter XVII of Offences against Property i.e., ‘offences related to theft’ in the Indian Penal Code, 1860. Section 378 of the Indian Penal Code talks about what constitutes the offence of theft. Section 378 defines ‘theft’ as “Whoever, intending to take dishonestly any movable property out of the possession of any person without that person’s consent, moves that property to such taking, is said to commit theft.” A person is said to commit ‘theft’ when he dishonestly takes any moveable property and in the course of that, moves the property from the possession of any person without the consent of that person. For example, A steals a car from B and later sells its parts. Here, A, with a dishonest intention takes the car out of the possession of B in order to sell its parts, as against his consent and knowledge. This constitutes theft. The Section has been elaborated extensively in five explanations and further substantiated by sixteen illustrations.
It is noteworthy, that a ‘dishonest intention’ is an integral part of the commission of the offence. In the absence of dishonest intention, it will not be deemed as an offence amounting to theft. Section 24 defines dishonest intention in the Indian Penal Code as, anything that is done with an intention that will cause a wrongful gain to some person and a wrongful loss to the other. This can be better understood in the form of an illustration. A owned an expensive vase and an exactly similar vase was owned by B too. However, due to an accident, B’s vase gets cracked. One day, when B comes to A’s house and sees the vase, B decides to take A’s vase in order to replace his cracked vase. B takes possession of the vase and thereby, dishonestly deprives A of the vase without his consent. Under the present circumstance, B has committed theft. However, when for a reason that is bonafide or in good faith, a person believes a particular property to be his own, and thereby, takes its possession with this belief, he will not be said to commit a theft. Hence, a dishonest intention is a prerequisite in order to charge a person with theft.
Ingredients for Section 378 – theft
In order to charge a person under Section 378, there are certain ingredients that must be proven. These are as follows:
The Section mentions a ‘dishonest intention’ to be an important prerequisite for the commission of the theft.
The nature of the property mentioned is that it must be a ‘movable property.’
The moveable property must be taken out of the possession of another person.
The taking out of the moveable property must be done without the consent of the other person.
When the property is moved to render its taking, it is said to be theft.
Even in a situation, where the moveable property is taken out of possession for a temporary duration it shall still constitute the offence of theft.
Dishonest intention
The dishonest intention is the most important ingredient for the offence of theft to occur. The intention will either be a wrongful gain to someone or cause a wrongful loss to someone. A person is said to be wrongfully gaining property when he gains it even though he is not legally entitled to it. On the other hand, a person is said to be wrongfully losing if the loss has been made to him unlawfully even when he is legally entitled to it. For instance, if A takes a watch from B against her consent and later sells it to C at a higher price. B is wrongfully deprived of her watch and A has wrongfully gained in the process even though he was not entitled to the same.
Absence of consent
A person is said to be giving consent to something when they are doing the act or allowing the act to happen by their own free will. Consent is not expressly defined by the Code, however, Section 90 of IPC mentions what shall not constitute a valid consent. In the circumstances in which ‘consent’ is given under fear of injury or under a misconstrued fact, or has been obtained through intoxication or during unsoundness of mind when the consequences of the same cannot be known by the person, it is deemed that there is no consent. For instance, P allows X to take his clothes and sell them when they become unusable by P. After a few days, X sells the clothes to S. P cannot hold X liable for the same since P consented to the act of selling the clothes.
Consent when given verbally or in writing is known as an “express consent.” When a doctor undertakes an uncertain surgical procedure and takes permission in writing to perform the same from the patient, however, he later dies in that process. The doctor will not be held liable. Because the risk was taken voluntarily by the patient and express consent was taken from him. However, when the consent is deemed from an act or conduct of a person or is presumed under a certain circumstance, it will be known as implied consent. For instance, when a customer enters a restaurant and orders food, it is deemed that he is going to pay the bill for the food he orders. This is implied consent.
Moveable property
The term ‘Property’ has been defined by various jurists. The essence of the term property can be understood as the exclusive right of ownership that a person possesses over a material as well as an immaterial object. It is inclusive of all the legal rights that a man has over the property. Hence, a property can be corporeal (tangible) or incorporeal (intangible for example, patent, trademark, etc.,) in nature. Similarly, it can be movable as well as immovable and privately owned or publicly owned. However, for the present discussion, we shall restrict ourselves to corporeal and movable properties.
The dishonest intention must be present as soon as the property is moved. Hence, an act of theft shall be deemed complete only when the property is moved dishonestly. The movement of the property must be in order to take it. For instance, using treats to entice the animals to follow someone in order to make money using them. As soon as the animals start to follow, they go out of the possession of the owner and against his consent. Hence, it will constitute theft.
Possession must be taken from another person
Possession, in essence, would mean exclusive ownership or control over a property. Hence, an act done to take property out of the possession of the property holder shall constitute the offence of crime. In circumstances, wherein the property is not in the possession of anyone and is taken by someone, it will not be said to be the offence of theft. Hence, wild animals will not come under the purview of theft. However, a ring belonging to A when taken out of his possession by B against his consent will constitute the offence of theft.
Essentials of crime under Section 380 IPC
For an offence to be constituted as a crime under Section 380, must have the three essential ingredients which are as follows:
There must be a commission of theft.
In order to constitute a crime under the impugned Section all the ingredients of theft must be complied with. In simple words, a person must take movable property from the property holder with a dishonest intention of depriving the property holder of the possession of the movable property and against his consent. For instance, B takes A’s coat believing it to be his under a mistake of fact. B shall not be liable since a dishonest intention is a prerequisite to constitute the offence of crime.
The commission of such theft must have taken place in a building, tent or vessel.
In the case of Yash Pal and Anr. v. State of Haryana and Anr. (2017), it was observed by the High Court of Punjab and Haryana that, even though the word ‘building’ has not been defined under IPC, Section 442 which refers to Section 380 of the Code, defines the term “building” in its ordinary and usual meaning, i.e., as ‘a block of bricks or stonework covered in by roof’ thereby elaborating the fact that there must be a “constructive masonry” on the sides of the premises in order to construe it as a building. This in essence suggests that there must be some sort of structure. Hence, a building along with the words ‘tent’ and ‘vessel’ must have a structure as a mandate under the section, that aims to provide some level of security to the people living within it or for the property that has been kept there for custody. The term ‘vessel’ has been defined under Section 48 of the Indian Penal Code as anything that has been construed in order to facilitate conveyance by water of either human beings or of property shall mean a vessel under this Code. As per the Merriam-Webster dictionary, a tent means, “a collapsible shelter of fabric (such as nylon or canvas) stretched and sustained by poles and used for camping outdoors or as a temporary building.”
Such a building, tent or vessel must be used as a human dwelling or for the custody of the property.
The case of State of Gujrat v. Vedva Vaghari Moti Nagji and Anr. (1971), the High Court of Gujarat observed that “anything that is utilised exclusively for the purpose of habitation of a person or a group of persons including a family signifies as a building.” Thus, such a building, tent or vessel within the meaning of the Section shall denote those structures that are deemed to be utilised for human living or where a property is stored for safe custody. It is also to be noted that the word ‘custody’ implies a sense of security and is very different from the word ‘keeping.’
The case of State v. Nihal Singh (1971) further elaborated on the essence of the term ‘human dwelling.’’ It was held by the Punjab and Haryana High Court that, even though, through the ordinary dictionary meaning the term ‘dwell’ can be understood as to be able to “remain as in a permanent residence” or “to have one’s abode to reside,” it is not the only elucidation it can have. It has a multitude of meanings and a variety of ways for its usage. This meaning is still construed today i.e., “to abide, remain or linger for a time in a place or condition.” Hence, as per Section 380, the term ‘dwelling’ would mean a building, tent or vessel where someone “resides, remains or lingers” irrespective of whether it is permanent or temporary.
Punishment for the crime under Section 380 IPC
The cardinal principle of criminal jurisprudence states that the prosecution is duty-bound to establish its case beyond a reasonable doubt. In order to facilitate the same, it must produce compelling evidence that cogently proves its case. The punishment prescribed under Section 380 is as follows: A person charged under the impugned Section shall be liable for simple or rigorous imprisonment for a term that may extend upto seven years and will also be liable to pay a fine. The nature of rigorous imprisonment is that the person sentenced under the same must perform hard labour while in prison whereas in simple imprisonment, the person may have to perform simple tasks. Since theft under Section 380 is an aggravated form of theft, a punishment higher than Section 379 has been prescribed.
Whether it is a bailable or non-bailable offence
Section 437 of the Code of Criminal Procedure,1973 prescribes bail procedure in case of non-bailable offences. In offences that are ‘non-bailable,’ the person charged under the same does not possess the right of bail and it is completely upon the discretion of the court of law whether to grant the bail or not. Since this is discretionary power conferred upon the court of law, a judge takes a lot of care and caution in a bail matter. It must strike a balance between the interests of the society at large and an individual’s liberty. Generally, offences that are serious in nature, are non-bailable. An offence committed under Section 380 is non-bailable. The graveness in the offence can be due to the fact that a property that has been stolen could be of high value. Theft of the same can cause an irreparable loss to the property holder.
Whether it is a cognizable or non-cognizable offence
Sections 155 and 156 of CrPC deals with non-cognizable and cognizable offences respectively. Section 2(l) of CrPC defines what is a non-cognizable offence. In the case of a non-cognizable offence, a police officer does not have the authority to arrest someone without producing a warrant. However, in cases of cognizable offences which has been defined under Section 2(c) of CrPC, power has been conferred upon the police officer to arrest without having to wait for the arrest warrant to be produced from the court. Section 380 is a cognizable offence meaning, the gravity of the offence is such that, an arrest against a person can be initiated without a warrant.
Whether it is a compoundable or a non-compoundable offence
Offences that have the ability to be fixed or remedied by coming into a mutual agreement are referred to as compoundable offences. The parties can mutually agree to effect a compromise while the case is undergoing trial, this is called ‘compounding’ and the offences in which this is permissible, is known as compoundable offence. In this process, further trial is discontinued. Generally, only offences that are of a less serious nature and do not put the state’s well-being or society’s peace at stake shall be a compoundable offence. Section 380 is a non-compoundable offence because it has a tendency to be heinous and might have an effect upon the state’s well-being.
Important case laws
The State v. Nihal Singh and Anr. (1971)
In this case, luggage was stolen from the waiting room of the railway station. Therefore, the issue that arose was, whether a ‘waiting room’ of the railway station comes within the purview of human dwelling under Section 380 of the Code. The contention was with the meaning of a human dwelling. It was held that human dwelling is a place within which a person “lives, remains or lingers” which can either be for a temporary or permanent duration. Hence, a waiting room at a railway station will constitute a ‘building used as a human dwelling’ and any property stolen from there, would constitute an offence under Section 380 and will be punishable.
K. E. Lokesha and Ors. v. The State of Karnataka (2012)
Ratna Alias Ratan Lal and Anr. v. State of Rajasthan (2014)
In the present case, some unknown persons entered the victim’s house by breaking the lock of the house. It was alleged that a lot of silver and gold items were stolen from there. It was later stated in the report that the articles stolen along with cash amounted to Rs. 64,000. During the investigation, stolen articles were recovered from the accused and they were charged under Sections 454 and 380 of IPC. They were sentenced to a punishment of rigorous imprisonment for two years and five years respectively, along with a fine of Rs. 2500.
Dr. Manoj Bhavarilal Chopda v. The State of Maharashtra and Anr. (2016)
In the present case, a belt was suspected to be stolen by a person from a shop. The property holder had a shop in the Chhatrapati Shivaji International Airport, Mumbai. The shop had a lot of different items ranging from accessories, belts, handbags, etc. One day, one of the employees of the shop found a leather belt missing and as a result, CCTV was checked. The CCTV footage showed the accused taking the belt and putting it in the pocket of his blazer. This offence was registered under Section 380 of the IPC, however, a petition was filed by the accused that, a settlement was entered into by the property holder and the accused wherein, the accused paid Rs. 10,500 which was the price of the belt and along with Rs. 10,500 as a fine. Hence, the FIR was quashed. It was observed by the Bombay High Court that, for an offence to be made out under Section 380 a ‘theft’ from a building, tent or vessel used as a human dwelling or as a custody for the property needs to be proved. Hence, ingredients of theft i.e., Section 378 of the IPC also need to be incorporated. There must be a dishonest intention in the removal of the movable property against the consent of that person. And since the accused has paid an amount of Rs, 21,000 and the same was accepted by the property holder, no dishonest intention on the part of the accused can be garnered from the facts, additionally, the CCTV footage was inconclusive. Hence, the FIR was quashed.
Recent case laws related to Section 380 of the IPC
Anjani Gupta v. State (NCT of Delhi) (2022)
In the present case, a marriage was solemnised between the petitioner and the son of the respondent. Soon after marriage, it was alleged that the petitioner was tortured and harassed for dowry. Moreover, the petitioner was also humiliated by her in-laws who mistreated her for issues in addition to making dowry demands. The respondent in the present case, filed a complaint under Section 380 of the Code alleging that the petitioner had stolen certain documents in the form of letters that were under his deemed possession during his absence from the house. The Delhi High Court held that, for a case to be made out under this Section, there must be prima facie ground. In the preliminary stage, no dishonest intention can be established on the part of the petitioner. The actions of the petitioner do not construe the fact that there was a dishonest intention on the part of the petitioner and hence, the ingredients of Section 380 were not satisfied. Hence, the petition was allowed.
Imran Khan v. State of Maharashtra (2019)
In this case, the petitioner was alleged to have stolen certain gold ornaments and some cash. As the complaint was lodged, the petitioner was arrested and in his possession, the stolen gold ornaments were found. Additionally, Rs. 25,000 worth of cash was also recovered from him. The matter went for trial and the petitioner was convicted under Section 380 of the IPC. It was contended by the petitioner that there was no evidence to convict him. The High Court of Bombay then held that the petitioner possessed the gold ornaments and cash which were seized from him and he was unable to justify why he had them. The Court cited Section 114 of The Indian Evidence Act, 1872 which stipulates that the Court can presume certain facts to be true. In the current instance, the inability of the petitioner to invalidate the presumption mentioned under Section 114, his conviction was upheld by the honourable High Court.
Conclusion
India has a very bright future taking into account the strives it is taking, be it in the international forefront, with the technological revolution ranging from the introduction of AI and 5G, unending participation of women at every sphere possible and not forgetting, the ever so dynamic judiciary of our country. The road ahead does seem demystified however, the crimes that still plague our society need to be curbed. This would require an undeterred approach and a stringent framework that will help in the eradication of such evils that disrupt the wellbeing of the society at large.
As we understood one such crime in the article above at length, it becomes pertinent to briefly touch upon the essence of the same for clarity. An offence under Section 380 must fulfill the conditions of theft under Section 378 of IPC. This involves taking someone else’s movable property with a dishonest intention to wrongfully deprive him of possession of the property against his consent. The property must be taken from a building, tent or vessel that has been used as a human dwelling or as a possession of the property. Such offences, even though can seem to be trivial in comparison to grave offences such as rape or murder, what must be understood is that, such offences too can lead to devastating consequences and irreparable loss to someone. No crime should be taken lightly because any such commission or omission will have an effect on the person so affected by such commission or omission. Theft is a serious offence and the legal framework in India has in place to punish those who engage in the offence of theft shows the gravity of the same. Individuals ought to be more aware of their rights and most importantly, their responsibility towards society in order to deter such offences from happening.
In conclusion, the act of taking someone’s property and depriving them of their possession against their consent not only amounts to a violation of their right but also constitutes an act of criminal nature that must not be condoned. If found guilty of the same, they should be punished accordingly.
Frequently Asked Questions (FAQs)
Can a person be arrested for theft without a warrant?
Yes, a person can be arrested for theft without a warrant since it is a cognizable offence and the police has the right to arrest in such a case.
Is theft a compoundable offence?
Theft is a compoundable offence i.e., the dispute can be resolved by means of settlement between the parties at the will of the property owner.
What is the difference between theft and criminal misappropriation?
In case of theft, the intention is dishonest right from the beginning, whereas in case of criminal misappropriation, the dishonest intention might develop later. In case of theft moving the property itself is an offence however in case of criminal misappropriation that is not enough. The accused is required to dishonestly convert it to its own use.
References
The State v. Nihal Singh and Anr. 1970 Cur LJ 843
Dr. Manoj Bhavarilal Chopda v. The State of Maharashtra and Anr. 2016 SCC OnLine Bom 9185
K. E. Lokesha and Ors. v. The State of Karnataka, 2012 Cri LJ 2120
Anjani Gupta v. State (NCT of Delhi), 2022 SCC OnLine Del 699
Imran Khan v. State of Maharashtra, 2019 SCC OnLine Bom 46
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Judicial review is the process of examining the constitutionality of any law passed by the Parliament. If the law passed is found to be violating or infringing the provisions of the Indian Constitution, then either the high courts or the Supreme Court of India can declare them as void thereby not allowing them to be enforceable. John Marshall, an American politician and lawyer, had created the concept of judicial review. In India, the principle of the rule of law is followed and the Indian Constitution is considered to be the supreme law of the land. Laws made are to be in consonance of the basic structure of the Constitution and not in abeyance of it, for the latter gets nullified ipso facto. Although one cannot find any express mentioning of the term ‘judicial review’ in the Indian Constitution, there are several provisions of the Constitution that makes a reference or hints on the concept. Whenever we talk about judicial review, the two significant functions that need to be looked into are:
Legitimation of the government actions.
Safeguarding the Constitution from being encroached upon by the government. has two important functions to look upon.
This article discusses the concept of judicial review with respect to the Indian Constitution in detail.
Importance of judicial review
Judicial review is necessary because it protects the fundamental rights of the citizens and the residents that have been laid down under Part III of the Indian Constitution thereby maintaining the supremacy of the Constitution and restricting the legislature and the executive from misusing their vested powers. Judiciary’s power to examine executive actions and legislative enactments is what judicial review is inclusive of. The importance of judicial review can be understood in the following ways:
Practising judicial review helps in distributing the power between the Union and the states.
It ensures that the judiciary is independent as it works independently thereby also clearly defines the functions of every organ of the government.
It protects the fundamental rights of the citizens guaranteed by the Indian Constitution.
Elements of judicial review
Both the Supreme Court and the high courts have the power to exercise this judicial review under Articles 32 and 226 respectively. While Article 32 provides that a person can approach the Supreme Court for any violation or infringement of his or her fundamental rights, Article 226 clearly states that a person can approach high courts on similar grounds. Judicial review can be done over laws formulated by both the state and the Center.
Article 32 of the Indian Constitution
Article 32 of the Indian Constitution guarantees individuals the right to constitutional remedy, by means of which they can approach the Supreme Court of India, in order to seek justice, in cases where they have been deprived of their guaranteed fundamental rights. The Apex Court is vested with the power to order directions that will aid in enforcing the deprived rights thereby restoring them as well. Article 32 of the Indian Constitution is therefore also recognised as the protector and guarantor of fundamental rights.
It is ideal to note that the Indian Constitution provides for 5 types of writs that can be issued by the courts as a consequence of a petition filed under Article 32. They are the writ of Habeas Corpus, Mandamus, Certiorari, Quo Warranto and Prohibition. The constitutional remedies provide the citizens with equipped means of restoring their infringed rights. It is ideal to note that the writ jurisdiction that the Constitution confers, comes with prerogative powers and although discretionary, are unbounded in its limits. On the basis of the same, it is clear that the constitutional system does not entertain the presence of arbitrary powers. Therefore, whatever decision is taken by the Apex Court when approached by Article 32, the same must be based on sound reasoning.
Article 226 of the Indian Constitution
The specialty of Article 226 when compared with Article 32 is that while the latter solely deals with fundamental rights violation, the former can also deal with questions of law alongside fundamental rights. Although exercising its vested power under Article 226 is discretionary for the high courts, such discretion deserves sound judicial reasoning. It is also necessary to note that while high courts exercise their power under the discussed provision, the court is duty-bound to take into consideration that the petitioner who approached them, had no alternative remedy to resort to other than the one provided under Article 226.
The Rajasthan High Court has rightfully observed that the power of judicial review that has been vested upon high courts, under Article 226 of the Indian Constitution, is to be considered as one of the fundamental features of such Constitution and no legislation can have room for overriding such vested jurisdiction from the high courts while deciding the case of LNJ Power Ventures Ltd. v. Rajasthan Electricity Regulatory Commission and Ors (2022).
Functions of judicial review
The main function of judicial review is to explain the laws made by the legislature. The judicial review ensures that the law that is passed is not violating the provision of the Indian Constitution. It reviews the law which had been passed by the legislative and executive wings of the government. Judicial review also delivers justice to all citizens of a country and therefore can be termed as the guardian of the Constitution.
Grounds for judicial review
The grounds of judicial review are:-
(1) Jurisdictional Error – It actually happens when a complaint has wrongfully been addressed by the court. The court has no authority to do so. This error can be addressed by issuing a “Writ of Certiorari”.
(2) Irrationality – It is also known as “Wednesbury unreasonableness”. In this, no decision maker comes to the same decision. They fail to consider relevant matters.
(3) Procedural Impropriety – It is a failure to comply with the laid down procedures. It actually consists of two areas, namely, failure to observe the rules and to observe the fundamental rule of justice.
Types of judicial review
Judicial reviews are of three types, namely-
(1) Legislative decision – Judicial review for legislative decisions means that whatever law is passed by the legislative organ of the government, the same must follow the provisions of the Constitution. It should not disrespect or disobey any provisions of the Constitution.
(2) Administrative decision – Judicial review for administrative decisions means that the court has the power to review an action of legislature and executive. If their actions are found to be in violation of any of the provisions of the Constitution, then they will be declared as void. Therefore, their actions should follow the provisions of the Constitution.
(3) Judicial decision – Judicial review of judicial decisions signifies higher courts overviewing the decision passed by the lower courts without intervening in their functionality. The same is required for the efficient functioning of the Indian judiciary.
Procedure for judicial review in India
The phrase “procedure established by law”, as provided under Article 21 of the Indian Constitution, serves as the governing principle for the concept of judicial review. This principle actually means that the law which has been enacted by the legislature is valid or has a legal effect only when the correct procedure is followed. There is a test of constitutionality that the law has to pass and if the law passes that test then only can it be an enforceable law.
Limitations of judicial review
Judicial review is only limited to higher courts like the Supreme Court and high courts, not to the lower courts. Judicial review can neither interrupt any political questions nor any policy matters. Judicial review just reviews the law that had been made. It does not make or implement the laws as this power is vested with other organs of the government. It also limits the functioning of the government.
What is the current scenario of judicial review in India
The present series of cases that are approaching before the Indian courts, where they are being asked to exercise the power of judicial review, have seen a trend in the courts to step back from the same, owing to avoidance of judicial encroachment. The Himachal Pradesh High Court while deciding the case of Santosh Nanta vs State of H.P. & Ors. (2023), has observed that judicial review if exercised in overlooking any decision that is made by expert domains of a selection committee for a reasoned selection process to be carried out, would be considered to be tantamount to treading on a thin sheet of ice and therefore, judicial interference should be avoided.
Further, the Andhra Pradesh High Court, while deciding the case of Nallacheruvu Obulesu v. State of Andhra Pradesh & ors (2023), has observed that courts’ power to exercise judicial review in cases of dispute originating from tender invitation conditions, stands limited. This is because, the terms and conditions of the tender are directed by the government, who after bearing a mindful nature and reasoned decision while prescribing the same. The authority who calls for tender is considered to be the appropriate judge in the same, and questioning his decision is ipso facto unrequired interference in his functioning by the court. Thus, it is not for courts to conclude as to whether the conditions that the tender carries are good or bad.
These decisions reveal that the judiciary itself has been conscious enough while exercising the discretionary power of judicial review thereby avoiding judicial overreach in its best terms.
Conclusion
Judicial review is the most important and powerful tool provided in the hands of senior courts by the Indian Constitution. It keeps a check on the other organs of the government so that they function properly without unnecessary interference. Thus, judicial review stands as a requirement for time immemorial and is also considered to be the basic structure of the Indian Constitution.
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This article has been written by Sonal Srivastava, Student, Amity Law School, Lucknow, and Naveen Talawar, a law student at Karnataka State Law University’s law school.The article discusses trade union registration, the history of the Indian trade union movement, the registration procedure, the legal status of a registered trade union, the privileges and immunities of a trade union, the rights of a registered trade union, and the duties and liabilities of a trade union.
It has been published by Rachit Garg.
Table of Contents
Introduction
At the beginning of the 20th century, India began to industrialise and become more capitalist. The need to formally establish the groups that had developed to defend and protect the rights of the workers arose as the workforce expanded day by day. Thus the Trade Unions Act, 1926 was enacted on March 25, 1926, in order to register and safeguard these worker groups. Consequently, the registration of the trade unions raised the status of the unions in the eyes of employers and the general public. Before we proceed with the registration of trade unions it is important to understand the history of the trade union movement in India.
Chapter II of the Trade Unions Act, 1926 deals with the provisions of the registration of trade unions. According to section 2 (h) of the Act, “Trade Union” means any combination, whether temporary or permanent, formed primarily for the purpose of regulating the relations between workmen and employers or between workmen and workmen, or between employers and employers, or for imposing restrictive conditions on the conduct of any trade or business, and includes any federation of two or more Trade Unions. Thus, the present article shall deal with the most important aspect of trade union, and that is the registration of trade unions.
Historical background of the trade union movement in India
The industrial revolution in India in the 19th century had a drastic impact on the western world. This caused an impact on the social structure resulting in significant changes in the production, shipping and transportation processes. The development of science and technology in the industrial sector led to the emergence of the two classes. The managerial class (entrepreneurship class) and the working class (labour or wage-earning class). Further , both these classes have conflicting interests. While the working class demands for higher wages with better working conditions the managerial class demands for more production at minimum wages.
As a result of change in the industrial relations, the managerial and the wage-earning classes have different goals and this conflict is mainly caused by how the government manages them. In order to resolve the dispute between both the classes the government implements certain policies and make use of administrative actions and tripartite consultation. These disputes include the dispute over wages of the worker, inadequate security and facilities and other similar issues.
The factors like restrictions on free speech, unequal wages for the workers, lack of industrial development and other forms of exploitation of the workers have significantly contributed to the growth of trade union movement in India during the 19th century and the First World War. N.M.Lokhande (Narayan Meghaji Lokhande) who is regarded as the father of the trade union movement in India was the first to set up the organised labour movement in India. His aim was to revise the Factories Act of 1881 and to create awareness about the unfair treatment of the textile workers in India.
As a result of this India witnessed another phase of trade unionism between 1904 and 1911 during which many trade unions were established. Further, the All India Trade Union Congress was established by the leaders of the Indian National Congress in 1920. This union provided the hierarchical setup of the associations at the provincial and regional levels which eventually connected the individual unions. Shri. N.M. Joshi, the father of modern trade unionism in India, introduced a trade union bill in the assembly in the year 1921, serving as the first representative of Indian labour at the International Labour Organization (ILO) in 1920. Thus, the struggle for legal recognition of trade unions in India began for the protection of the working class and their existing difficulties, at a time when British rule was in place and the government was unwilling to pass the bill.
However, the government was compelled to pass the Indian Trade Unions Act in 1926 as a result of intense pressure from the political parties. The second world war broke out unexpectedly after the Indian Trade Union Act of 1926 was passed, bringing with it some challenging circumstances for the business community and economic hardships for the working class. During the war, the government restrained trade union activity by citing the defence of Indian regulations, which expressly forbid strikes in essential services. After gaining independence in 1947, the national government promised to give the working class a fair deal and passed several labour laws that granted rights and benefits to industrial workers. This marked the beginning of a new era for the Indian labour movement.
What are trade unions
According to the Act, a trade union is any group that is eligible to register as one, which includes both employers’ and workers’ organisations. An association’s or combination’s main objective will determine whether or not it qualifies as a trade union. Section 2(h) of the Trade Unions Act, 1926, defines a trade union as “any combination or association of persons based upon mutual confidence, understanding, and cooperation for the protection of common interests”. It could be any group of workers or employers. It does not have to be a permanent combination; it can be formed even for a shorter period.
The definition outlines the primary objectives of a trade union. The trade union is therefore established primarily for the following two goals:
First, for regulating the relationships between-
Workmen and employers;
Workmen and workmen; or
Employers and employers
Second, for imposing limitations on the operation of any trade or business, which includes any federation of two or more trade unions.
The definition of the trade union under the Trade Union Act makes it clear that the main aim of a trade union is to keep the relationships between the persons involved in the industrial production and process in balance, harmony and with the right adjustments.
Necessary to register a trade union
A trade union under the Industrial Dispute Act, 1947 has been defined as that which has been registered under the Trade Unions Act, 1926. Therefore a trade union which has not registered under the Trade Union Act is not regarded as a trade union under the Industrial Disputes Act. Further the Industrial Dispute Act provides certain rights to only those kind of trade unions which have been registered under the Trade Unions Act, 1926 and those trade unions which are not registered under the Act have no such rights.
It was frequently observed in India that the workers usually form their own association or unions without registering them under the Trade Union Act. These unions used to negotiate bonuses and other terms of employment with the employers and the employers in return were also used to give due consideration to their opinions. As a result of this recognition made by the employers it was often believed by the workers that they have a trade union with significant negotiating power with the employers. But this is not the case since their trade union or association are not legally recognised as a trade union, the powers provided to the trade unions under the Industrial Dispute Act do not apply to them.
Although an unregistered trade union is permitted to carry out the same functions as a regular trade union as defined under the Trade Unions Act, it is not allowed to file a petition for an industrial dispute, represent an employee, or take part in any proceedings under the Industrial Disputes Act. An unregistered trade union is also unable to speak on behalf of its members or employees while negotiating a contract with an employer and even if it does it may not be able to enforce the contract.
Further, the Industrial Disputes (Central) Rules, 1957, makes the distinction by stating that a registered trade union has the right to give the employer the names of “protected workmen” and that the employer must maintain the terms of employment of such protected workmen while an industrial dispute is in progress. However, an unregistered trade union lacks the power to name “protected workmen,” and even if it does it has no legal significance. In other words “protected workmen” designated by an unregistered trade union are not eligible for the protection provided by Section 33 of the Industrial Disputes Act.
Similarly, the worker who is a party to a dispute may be represented in any proceeding brought under the Industrial Disputes Act by any executive or office holder of a registered trade union to which he belongs under Section 36 of the said Act. This benefit does not apply to unregistered trade unions.
In Calcutta Port Trust Union v. Haldia Shore Ship and Transport Handling Workers Co-Operative Construction Society Ltd. and Others (2013), the High Court of Calcutta stated that “any trade union that is not registered under the Trade Unions Act cannot be treated as a trade union under the Industrial Disputes Act, 1947.” Further, the court with respect to Section 36, which provides for the representation of the parties in clear terms stated that “any member of the executive or other office-bearer of a Registered Trade Union is entitled to represent a workman in any proceeding under the Industrial Disputes Act.”
Therefore, if the workers intend to form an association to act as a trade union, they must register the union under the Trade Union Act, 1926.
Registration of trade unions
The method of registration of the trade unions encourages the unions to expand steadily and maintain strong unions. The Act provides certain protection and benefits to the registered trade union. As a result, it is necessary to register the trade union under the Trade Union Act, 1926.
The provisions relating to the registration of the trade unions are provided under Chapter II, Section 3 to 14 of the Trade Union Act, 1926. The registration of trade unions ensures the advancement of long-lasting and reliable unions. Although the registration of the trade union is not mandatory, it is recommended because the registered trade union enjoys certain immunities. Similarly, certain rights and privileges have been provided to the members of the registered trade union.
In other words, those who belong to a registered trade union are entitled to protection, immunity, and exemption from certain legal obligations on both civil and criminal liabilities. However, it should be noted that an individual dispute only turns into an industrial dispute when it is represented by a group of employees or a trade union, whether they are registered or not. Similarly, a union for civil servants cannot be registered under the Trade Union Act.
Procedure for registration
The procedure for registration of a trade union is as follows:
Appointment of Registrars
According to section 3 of the Act, the appropriate government shall appoint a person to be the Registrar of Trade Unions for each state, and the appropriate government shall also appoint as many additional registrars as it may deem fit to carry out the purposes of the Act.
In the case of trade union registration, the trade union is in charge of the entire registration procedure. The appropriate government may appoint a person to serve as the registrar of trade unions under Section 3 of the Trade Union Act, 1926. The appropriate government, whether state or central, may also appoint additional and deputy registrars as it sees fit to exercise and carry out the registrar’s powers and duties. However, such a person will work under the supervision and direction of the registrar. He may exercise the powers and functions of the registrar within the limits specified for this purpose.
Mode of Registration
According to section 4 of the Act, any seven or more members of a Trade Union in accordance with the provisions of the Act may make an application apply for registration of the trade union. There are two conditions subsequent to the same, firstly no trade union of workmen shall be registered unless at least 10% or 100 of the workmen, whichever is less engaged in the employment of the establishment are its members on the date of making of its application and secondly no trade union shall be registered unless on the date of making of application, minimum seven of its members who are workmen are employed in the establishment or industry.
Also, such application shall not be deemed to be invalid merely on the ground that at any time after the date of the application, but before the registration of the trade union some of the members but not exceeding half of the total number of persons who made the application has ceased to be members.
Application for registration
According to section 5 of the Act, every application for the registration of the trade union shall be made to the Registrar and shall be accompanied by a copy of the rules of the Trade Union and a statement of the following particulars namely-
The names, occupations and addresses of the members making the application;
The name of the trade union and the address of its head office, and
The titles, names, ages, addresses and occupations of the office- bearers of the trade union.
Where a trade union has been into existence for more than a year, then a copy of the assets and liabilities shall also be submitted along with the application for registration.
Provisions to be contained in the rules of a Trade Union
According to section 6 of the Act, a Trade Union shall not be entitled to registration under the Act unless the executive committee has been established in accordance with the provisions of the Act and the rules provide for the following-
The name of the trade union;
The whole of the objects for which the trade union has been established;
The whole of the purposes for which the general funds of the trade union shall be applicable;
The maintenance of a list of the members of the trade union;
The admission of ordinary members who shall be persons actually engaged or employed in an industry with which the trade union is connected;
The conditions under which any member shall be entitled to any benefit assured by the rules and under which any fine or forfeiture may be imposed on the members;
The manner in which the rules shall be amended, varied or rescinded;
The manner in which the members of the executive and the other office bearers of the Trade Union shall be elected and removed;
The safe custody of the funds of the trade union, an annual audit, in such manner, as may be prescribed, of the accounts thereof, and adequate facilities for the inspection of the account books by the office bearers and members of the trade union, and;
The manner in which the trade union may be dissolved.
Power to call for further particulars and to require alteration of name
According to section 7 of the Act, the registrar may call for further information for the purpose of satisfying himself that whether all the particulars are in accordance with section 5 and 6 of the Act.
In case the trade union applying for registration bears a name identical to that of an existing trade union and the registrar feels that the name so resembles that of the other that there are fairs chances of the persons being misled then the registrar shall ask the trade union applying to change the name and shall refuse to register the same until such alteration has been made.
Registration
According to section 8 of the Act, if the registrar thinks that the trade union has complied with all the provisions of the Act, it shall register the Trade Union by entering in a register all the particulars in accordance with the provisions of the Act.
Certificate of registration
According to section 9 of the Act, the registrar shall issue a certificate of registration to the trade union after registration under section 8 which shall be conclusive proof that a trade union has been duly registered.
Cancellation of registration
According to section 10 of the Act, a certificate of registration of a trade union may be cancelled or withdrawn or an application of the trade union to be verified in such manner as may be prescribed; where the registrar is satisfied that the certificate has been obtained by fraud or mistake or the trade union has ceased to exist or has willfully and other notice from the registrar contravened any provisions of the Act and if the registrar is satisfied that a registered trade union ceases to have requisite number of members.
Before issuing such an order, the registrar must be satisfied that the registration should be cancelled or withdrawn, as requested by the trade union. If the registration is being withdrawn or cancelled for any other reason, the registrar is required to provide two months’ notice specifying the particular grounds for the proposed action.
Appeal
According to section 11 of the Act, any person aggrieved by any refusal to register a trade union or withdrawal of registration, etc by registrar may file an appeal where the trade union head office is situated within the limits of a presidency town to the High Court, or where the head office is situated in an area, falling within the jurisdiction of a Labour Court or an Industrial Tribunal, to that court or tribunal as the case may be; where the head office is situated in any area, to such court, not inferior to the court of an additional or assistant judge of a principal Civil Court of original jurisdiction as the appropriate government may appoint.
On an application to the appropriate forum, the court may either dismiss the appeal or pass an order directing the registrar to take appropriate measures.
The court shall have the same powers of a civil court under Civil Procedure Code, 1908 and may follow the same procedures.
The highest appeal can be made to the High Court.
Registered office
According to section 12 of the Act, all communications shall be made on the registered office of the trade union
Incorporation of registered trade union
According to section 13 of the Act, every registered trade union shall be a body corporate having a common seal and perpetual succession with power to acquire and hold movable and immovable property and shall by the said name sue and be sued.
The legal status of trade unions
Is a registered trade union a legal person? In light of the provisions of Section 13 of the Trade Union Act, 1926, the answer may be given in the affirmative. It is important to remember that the Trade Union Act only gives legal status, benefits, and rights to registered trade unions. An unregistered trade union does not get these things. Further, once a trade union is registered, all communications and notices to the registered trade union may be addressed to its registered office.
Legal status was granted to registered unions, bestowing certain advantages and powers, in order to encourage registration. The Trade Unions Act, 1926, empowers a legal personality to use funds for trade disputes to achieve its goals, as well as protection from criminal prosecution, immunity from civil action, and the validity of its members’ agreement from the challenge that its objectives are in trade restraint. Thus, following their registration in accordance with the provisions of this Act, trade unions are granted several rights.
Privileges and immunities of a registered trade union
Registered trade unions are entitled to certain privileges and immunity. The Trade Unions Act, 1926, grants members and leaders of registered unions a number of privileges and immunities. The registered trade unions’ immunities or privileges can be explained under the following headings:
Immunity from civil liability
This immunity is available to all officers and members of a registered trade union. No civil action is admissible against them for an activity related to a trade dispute on the grounds that such an act induces some other person to breach a contract of employment; or it interferes with some other person’s trade, business, or employment. Further, the inducement should also be legal and not against the law of the land. There is no protection from threats, violence, or any other illegal methods.
Immunity from tortious liability
Torts are considered to be civil wrongs. It can be resolved through a civil court action. It is distinct from breaches of quasi-contracts, contracts, and trusts, as well as other equitable obligations (e.g., trespass, private nuisance, among others). The Trade Unions Act of 1926, however, provides immunity from tort liability in Section 18(2). The act that seeks immunity or exemption from tort liability must advance a trade dispute.
If an agent acted without the knowledge of the executive committee of the trade union; or against the express instructions of the executive committee, a registered trade union is not liable for the torts committed by the agent in furtherance of the trade dispute.
Immunity from criminal liability
Section 17 of the Trade Unions Act of 1926 exempts registered trade union officers from prosecution for criminal conspiracy. According to English law, a conspiracy is “an agreement between two or more persons to carry out an unlawful act or an authorized act in an unlawful manner.” Section 120-A of the Indian Penal Code, 1860, imposes penalties for criminal conspiracy.
A registered trade union is granted immunity under the Trade Union Act of 1926. This immunity is only applicable to legal agreements made by a trade union’s members for the stimulation of legitimate objects of a trade union, so it is only partially available. One right given to registered trade unions to help them settle trade disputes is the right to call for a strike and try to get their members to join. All acts that give rise to civil lawsuits are considered illegal acts.
So, for example, two men who agree to try to get employees to break their contracts with their employers are guilty of criminal conspiracy. However, Section 17 of the Trade Union Act of 1926 protects trade unionists from criminal conspiracy if the agreement they made was not to commit a crime.
Rights of registered trade unions
The following rights have been granted to registered trade unions:
Right of admission
The right to be admitted as a union member is not an absolute right. A trade union may set restrictions and admissions requirements in accordance with the Trade Union Act,1926, the rules, and any other applicable laws.
Right of representation
If an employee makes a written statement, the trade union may intervene in a dispute on their behalf. A trade union can then make a representation with that statement before any conciliation officer, industrial tribunal, labour court, etc. A trade union can then make a representation with that statement before any conciliation officer, industrial tribunal, labour court, etc.
Right to spend general funds
A registered trade union has the right to use its general fund for the payment of salaries, allowances, and expenses to its office-bearers, the prosecution or defence of any legal proceedings for securing or protecting any trade union rights, the conduct of trade disputes, compensation to members for any loss arising from trade disputes, the provision of educational, social, or religious benefits to members, the publication of periodicals on labour matters, the issue of or undertaking of liability under policies of assurance on members’ lives or policies of members against illness, accident, or unemployment, contribution to any cause intended to benefit workers, and any other object notified by the relevant government.
Right to constitute a separate political fund
If the registered trade union decides to pursue political objectives, it has the power to establish a separate political fund for those purposes using contributions that are separately collected for or made to that fund. Payments for the advancement of the civil and political interests of its members may be made out of this fund. Thus, the political funds are separate funds established by the trade union through a separate levy on its members for the advancement of the civil and political interests of its members.
Rights granted to it as a legal person
The following rights are granted to a registered trade union as a result of its legal status and registration name:
Right to a common seal in its own name;
Right to purchase, hold, and sell both movable and immovable property in its own name; Right to enter into contracts in its own name; and
Right to bring legal action for any infringement of its rights. It may also be sued on its behalf by any aggrieved party.
It should be noted that these are very important rights. Rights lose their significance if the trade unions lack the ability or competence to enforce them in their own name.
Right to inspect books
Members of the trade union or office bearers have a valuable right under Section 20 of the Trade Union Act, 1926, which allows them to inspect the book of accounts at any time. However, they are not allowed to take a copy of any books.
Right to amalgamate
According to Section 24 of the Act, two or more registered trade unions may amalgamate into one union with or without dissolution or division of their respective funds.
Right to change its name
Any registered trade union may change its name with the consent of at least two-thirds of all of its members, subject to the provisions of Section 25.
Duties and liabilities of a registered trade union
The following duties and liabilities are placed on unions registered under the Trade Unions Act:
Duty to make provisions in the rules of certain matters
The provisions listed in Section 6 of the Trade Unions Act, 1926, must be included in the constitution of the trade union. Section 6 contains information that the trade union must include in its regulations. Some of these regulations specify the goals for which the trade union was founded, the uses for which its general funds may be put to use, the acceptance of new members, the process for dissolving the trade union, and other things.
Duty to constitute executive as required
It is the responsibility of the registered trade union to set up the trade union’s executive in accordance with the rules of the Act. Sections 21-A and 22 of the Act contain the provisions pertaining to the formation of the executive board of the trade union. According to the provisions of the Act, two obligations must be fulfilled before the registration process can begin. The Registrar has the power to refuse to register the proposed trade union if these obligations are not met.
Duty to spend general funds as required
The trade union has a legal obligation to use general funds in accordance with Section 15 of the Act, which lists specific items for which only general funds may be used and not otherwise.
Duty to constitute a separate political fund
The trade union must establish a separate fund, commonly known as a political fund, in accordance with Section 16, and it may be used for the objects specified therein if it decides to advance the civil and political interests of its members.
Duty to provide access to books of trade union
A registered trade union shall maintain the account books and membership list for inspection by an officer or member of the trade union at such times as may be specified in the rules of the trade union.
Duty to send notice to the registrar
The trade union has a responsibility to notify the registrar of any changes to its name, any amalgamations, any changes to the address of its head office, and any dissolutions. Every year, a general statement of all receipts and expenditures of every registered trade union during the year ending on the 31st day of December, the next preceding such prescribed date, and of the assets and liabilities of the trade union existing on such 31st day of December, must be sent to the registrar on or before such date as may be prescribed. This general statement must be audited in the prescribed manner. The statement must be written in the appropriate format and include all necessary information.
Conclusion
In today’s system of production and distribution of goods and services, trade unions have evolved into a significant and powerful force. The modern industrialisation of society gave rise to trade unions. The methods used to produce goods and services, their distribution, the allocation of economic resources, the amount of employment and unemployment, the nature of rights and privileges, governmental policies, the mindset and status of significant portions of the population, and the very nature of economic and social organisations are all now being significantly impacted. In these circumstances, their role has given rise to significant and widespread controversy. In a developing economy like ours, trade unions and their policies are especially important.
Frequently Asked Questions (FAQs)
What is registration of trade union?
Every registered trade union shall be a body corporate by the name under which it is registered, and shall have perpetual succession and a common seal with power to acquire and hold both movable and immovable property and to contract, and shall by the said name sue and be sued.
Is it compulsory to register a trade union?
The Trade Unions Act, 1926, does not require the registration of trade unions. However, it is recommended that a trade union be registered under the Act because the Act grants a registered trade union many rights.
Is it possible to cancel the registration of the trade union?
The Registrar can take away or cancel a trade union’s registration certificate if the trade union asks for it or if the Registrar finds that the certificate was obtained fraudulently, by mistake, or because the trade union no longer exists.
Who is disqualified from being members of registered trade unions?
Section 21A of the Trade Union Act specifies the disqualification of trade union office holders. If a person has not attained the age of eighteen or has been convicted by an Indian court of any offence involving moral turpitude and sentenced to imprisonment, they are ineligible to be elected as members of the executive or any other office bearers of a registered trade union until five years have passed since their release.
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This article is written by Aarushi Chopra pursuing Diploma in International Data Protection and Privacy Laws. This article discusses the debate in an analytical manner if Section 43A of the IT Act, 2000 is within the parameters of the IT Act, 2000 or not.
Section 43A of the IT Act, 2000 deals with the “ Compensation for failure to protect data” and since its introduction, it has fueled the debate about its scope within the Act.
Section 43A of the IT Act, 2000
The Information Technology (Amendment Act), 2008 (“2008 Amendment”) came into effect from 27th October, 2009. It sought to address concerns that the original IT Act of 2000 did not address, as well as account for future developments in IT and associated security issues. This led to the incorporation of Section 43A, which talks about compensation to be paid by a body corporate for its failure to protect data. The section can be divided into two parts, wherein –
A body corporate negligently fails to implement and maintain reasonable security practices and procedures while handling sensitive personal data on a computer resource that it owns, controls, or operates, and
As a result, causes a wrongful loss/wrongful gain to any person,
then such body corporate will be liable to pay damages by way of compensation to all the individuals affected as a result of such failure.
Despite the fact that the 2008 Amendment did not define Personal Data or Sensitive Personal Data specifically, Section 43A indicated that ‘sensitive personal data or information’ would mean such personal data as may be prescribed by the Central Government in consultation with such professional bodies or associations as it may deem fit.
Financial information (bank account, credit card/debit card, or details of other payment instruments);
Physical, physiological and mental health conditions;
Sexual orientation;
Medical records and history;
Biometric information.
Any details relating to the aforementioned are also covered by Section 3 of the SPDI Rules if it is given to a body corporate for processing or storage as part of a service or under a lawful contract. Subject to the exception that no information shall be regarded as sensitive personal data or information if it is freely accessible or available in the public domain, provided pursuant to the Right to Information Act, 2005, or disclosed under any other law currently in effect.
It is important to note that the term ‘sensitive personal data or information’ is made up of two distinct terms, i.e. ‘sensitive personal data’ and ‘sensitive personal information’ and therefore should be read separately.
These Rules further define Personal Information (“PI”) as “any information that relates to a natural person, which, either directly or indirectly, in combination with other information available or likely to be available with a body corporate, is capable of identifying such person.”
Analysis of the question
However, the question that arises is whether Section 43A and the SPDI Rules contained therein fall outside the purview of the IT Act. The following details should be taken into account before answering the same:
Electronic communication and electronic documents are the main topics covered by the IT Act. In general, laws created under the IT Act cannot be applied to matters outside its purview. Section 43A only applies to SPDI in a computer resource. This means that it does not cater to data stored physically and therefore, its applicability is only with respect to data stored electronically. The SPDI Rules have been created by the Central Government in accordance with Section 87(2)(ob), read in conjunction with Section 43A of the IT Act. This section states that the Central Government is empowered to make such rules as necessary for reasonable security practices and procedures and sensitive personal data or information under section 43A.
It can therefore be argued that the SPDI Rules would only apply to PI in an electronic format or in a computer resource and would not apply if PI is kept in non-electronic forms (such as physical registers or hard copy documents).
A press note published by the MCIT on August 24, 2011, clarified that the SPDI Rules pertain to SPDI and are applicable to any body corporate or organisation located in India. The Press Note exempts Indian outsourcing firms/foreign companies from the collection and disclosure provisions outlined in the SPDI Rules.
Section 43A only includes SPDI within its ambit, but the SPDI Rules don’t just deal with SPDI. The phrase ‘personal information or sensitive personal data or Information‘ has also been used in various contexts. For example, under Rule 5 of the SPDI Rules, the terms “information,” “Personal Information,” and “SPDI,” which have varying definitions and implications, have been used in different sub-clauses. This shows an inconsistency between the SPDI Rules and Section 43A.
The location of computer resources in India determines the applicability of Section 43A. This is because the SPDI Rules apply to personal data regardless of the nationality of the provider of the information. As a result, the information provided by nationals of other countries whose information is stored, handled, or dealt with in a computer resource by a corporate entity in India would also be subject to Section 43A.
It can also be said that the SPDI Rules are applicable in the case the body corporate is based in India, regardless of the location of the computer resource, whether in India or abroad, and regardless of the residency status of individuals. It can further be said that even if the body corporate is abroad and uses an Indian computer resource to handle data for individuals who are located in India, then the SPDI Rules will be applicable. However, Section 1(2) of the IT Act also applies to “any offence or contravention thereunder committed outside India by any person”.
The SPDI Rules have additional compliance requirements in addition to setting forth reasonable security practices and procedures. It can be seen that the majority of these extra compliances fall outside of Section 43A’s purview, and accordingly, it can be argued that the non-compliance penalty under Section 43A shouldn’t be enforced.
It should also be noted that a negligent act that results in wrongful loss or wrongful gain to any person is connected to Section 43A’s operational fraction. Therefore, compensation under Section 43A would not be attractive unless any wrongful loss or gain has occurred.
In order to fully understand Section 43A, a body corporate has been defined to include a sole proprietorship, a firm, or other association of individuals carrying out professional or commercial activities. However, the SPDI Rules do not require a body corporate to gather personal data as part of its regular commercial or professional operations for the SPDI Rules to apply. A body corporate will be subject to the SPDI Rules as long as it engages in any kind of professional or commercial activity. This means that any person or entity who is not involved in commercial or professional activities would not be covered by the SPDI Rules.
Conclusion
After analysing the above-mentioned details, it can be said that the scope and applicability of the SPDI Rules are not in accordance with Section 43A of the IT Act. It can further be said that the SPDI Rules are out of the scope of the IT Act but Section 43A is not out of the scope of the IT Act, 2000. With almost 12 years being passed after the SPDI Rules came into force, these inconsistencies have still not been resolved, making it easier to find loopholes within the laws and take undue advantage.
Accordingly, The Digital India Act, 2023 will be released by the Ministry of Electronics and Information Technology in order to replace the Information Technology Act, 2000 and the rules within. The Digital Personal Data Protection Bill, 2022, which was introduced in November 2022, and the Digital India Act will be implemented concurrently by the Indian parliament. The legislation’s primary goal is to create a comprehensive, central framework that would handle problems in relation to data protection, intermediary regulation, and cybercrime.
On 09th March 2023, via the Digital India Dialogues held in Bengaluru, the Proposed Digital India Act was introduced, wherein the objectives and proposed provisions for the Act have been laid out. With the IT Act being a 22-year-old law, introduced at the beginning of the internet era, and lacking its ability to keep up with the new technologies, the Digital India Act was a much-awaited step. Only time will tell how the bill’s initial draft comes out.
References
Information Technology Act, 2000.
Information Technology (Reasonable Security Practices and Procedures and Sensitive Personal Data or Information) Rules, 2011.
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