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Is prostitution legal in Canada

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This article is written by Samiksha Madan, a law student at Symbiosis Law School, Hyderabad. This article analyses the legality of prostitution in Canada and scrutinises Bill-36 which was introduced in 2014.

It has been published by Rachit Garg.

Introduction 

Sex work essentially entails the exchange of sexual services for some consideration, which includes both money and goods. Bill C-36, Protection of Communities and Exploited Persons Act, introduced in June 2014 by Justice Minister, the Honourable Peter MacKay, aims to safeguard everyone’s safety by diminishing, deterring, and eventually abolishing the demand for prostitution to the greatest extent possible. Since the goal of Bill C-36 is to reduce the demand for sex work, with the ultimate goal of eliminating sex work in Canada, it criminalizes the procurement of sexual services. Consequently, a shift in focus of criminalisation from persons selling sexual services to those purchasing and financially benefitting from such services was seen. This article seeks to determine what has been essentially entailed under Bill C-36 and what role it has played in the legality of prostitution in Canada.

What is prostitution 

Prostitution is the practice that involves engaging in sexual activity, agreeing to engage, or offering to engage in sexual conduct with another person in exchange for money. The legal status of prostitution varies from country to country and also from region to region within a country, ranging from being an upheld or unenforced wrongdoing, to an unregulated profession. Pornography, sex shows, sexual surrogacy, and other forms of employment in what is sometimes referred to as the ‘sex industry’ are included in the much broader definition of ‘sex work,’ which also includes prostitution. Direct sexual access to the prostitute’s body is provided to the customer as part of the sex work known as prostitution. Brothels are foundations that are solely dedicated to prostitution. The law relating to prostitution is changing all over the world, and some people consider prostitution to be a form of savagery or abuse of women and children.

In the case of R v. Phippard (2005), the Court ruled that in order to determine whether or not a specific act would be considered a ‘sexual service for consideration, ‘a court would have to consider whether the service is sexual in nature and whether the purpose of providing the service is to sexually gratify the person who receives it. An express or implied agreement or contract for sexual service in exchange for consideration is required. It was stated in the case of R v. Lee (1989) that sexual activity with no expectation of consideration or payment in return for the services provided would not meet the test.

Legal standing of prostitution in Canada 

Bill C-36 represents a significant paradigm modification from treating prostitution as a “nuisance,” as determined by the Supreme Court of Canada in Canada (Attorney General) v. Bedford (2013), to considering prostitution as a kind of sexual exploitation that disproportionately and severely affects women and girls. This revolutionary shift is highlighted by Bill C-36’s stated goal, as expressed in its preamble, and the inclusion of most prostitution offences in Part VIII of the Criminal Code (1985), ‘Offences Against the Person.’ By delivering a strong message that everyone is entitled to dignity and respect, the Bill envisions safeguarding vulnerable people targeted by prostitution, the communities in which it is practised, and society itself. One of Bill C-36’s goals is to provide a shield to prostitutes by acknowledging them as ‘victims of sexual exploitation.’ According to the preamble to Bill C-36, the Parliament wishes to encourage persons who engage in prostitution to report incidences of violence and to leave prostitution.

All you need to know about Bill C-36

Three crimes in the Criminal Code of Canada were found to be unconstitutional in the case of Bedford v. Attorney General of Canada (2013). These offences predominantly dealt with prostitution-related behaviour in violation of Section 7 of the Canadian Charter of Rights and Freedoms. The Section substantiates the preservation of a person’s right to life, liberty, and security, as well as the right not to be deprived of these rights (except in accordance with the principles of fundamental justice). If Parliament had not passed Bill C-36, the declaration of invalidity would have taken effect on December 20, 2014.

Objectives 

Bill C-36, the Protection of Communities and Exploited Persons Act 2014, formulated to criminalize prostitution, was introduced in the year 2014 with three primary objectives include;

  • Protecting sex workers
  • Protecting communities and children from the harm caused by prostitution
  • Criminalizing the purchase of sex in order to reduce the demand for prostitution.

In accordance with the Bill, prostitution is a kind of sexual exploitation that disproportionately affects women and girls. The law seeks to protect the dignity of Canadians and uphold equality by not only outlawing the purchase of sexual services, the exploitation of others’ prostitution, the emergence of financial incentives for the sexual exploitation of others, as well as the institutionalisation of prostitution through profit-making businesses like strip clubs, escort services, etc. that sell sexual services, but also encouraging the victims to report incidents of violence and to leave prostitution.

Different types of prostitution offences

1. Purchasing offence 

The Bill criminalizes the purchase of sexual services by making prostitution itself an illegal practice. Communication for the purpose of purchasing sexual services may result in the criminal charge of “Obtaining Sexual Services for Consideration,” whether it occurs online through ads on Ashley Madison, webcams, Twitter, Instagram, in person at strip clubs, or on the streets. Bill C-36 advances its primary goal of reducing demand for prostitution by criminalising those who produce it, with the objective of eventually eradicating prostitution to the greatest extent achievable. The Bill seeks to prohibit obtaining sexual services for consideration or communicating in any place for that purpose, as stated in Section 286.1, and thus provides some protection to sex workers, as the criminalization of selling their own sexual services is not supported by the bill. 

a) Penalty:

  • Section 286.1(1) – Adult victim

It is considered a dual procedure offence since it entails a maximum penalty of 5 years in prison if charged by indictment and 18 months imprisonment if charged by summary conviction.

Escalation in the minimum fines starts at $500, which is mandatory on summary conviction for a first offence, which would include higher mandatory minimum fines as well if the offence is prosecuted by indictment and is committed in a public place which is or is next to a park, school, or religious institution, or a place where children can reasonably be expected to be present.

  • Section 286.1(2) – Child victim

The provision prohibits the purchase of sexual services for consideration from minors (under the age of 18 years), such that the purchaser of such services from a child victim would be held liable for imprisonment of up to 10 years and mandatory minimum penalties of 6 months for a first offence and one year for any subsequent offences that may also apply.

2. Advertising offences 

Advertising the sale of sexual services is criminalized for the first time under Canadian law through this Bill. It applies to individuals who advertise, either through print media, websites or in locations that offer such sexual services for sale, eg: strip clubs or the sale of another person’s sexual services.

  • Section 286.4 – those who knowingly advertise an offer to provide sexual services for some form of consideration.
  • Section 286.5(1)(b) – those who sell and advertise their own sexual services are protected from criminal liability for committing this offence.
  • Section 286.5(2) – those who participate in the commission of this offence, shall be protected from criminal liability if it relates to their own sexual services.

As a result, sex workers can legally advertise their own sexual services on the Internet or in print, whereas anyone who advertises another person’s sexual service risks proceedings under the new law.

a) Penalty:

It would be considered a dual procedure offence with maximum penalties including 5 years imprisonment if prosecuted by indictment and 18 months if prosecuted by summary conviction.

3. Material benefit offence

Section 286.2 – those who receive financial or other material benefits which are obtained by or derived from the commission of the purchasing offence.

This offence criminalises anyone who receives a financial or material benefit from those who purchase sexual services. It does, however, exempt sex workers who have received such benefits from the sale of their own sexual services or who have used their profits in legitimate business situations, such as supporting their family or purchasing gifts for others.

a) Penalty:

  • Section 286.2(1) – Adult victim 

An indictable offence with a maximum imprisonment of 10 years.

  • Section 286.2(2) – Child victim 

An indictable offence with a maximum of 14 years’ imprisonment and a mandatory minimum of 2 years’ imprisonment.

b) Exceptions – provided that there was no threat or attempt to use violence, abuse of a position of trust, power, or authority, or use of any type of intoxicating substance to encourage the sale of sexual services or engage in conduct that amounted to procuring and receiving a benefit in the context of a commercial enterprise that offers sexual services for sale.

  • Section 286.2(4)(a) – Legitimate living arrangements (e.g., children, spouses, roommates);
  • Section 286.2(4)(b) – Legal or moral obligations (e.g., supporting a disabled parent, gifts);
  • Section 286.2(4)(c) – Goods and services offered to the general public (e.g., accountants, landlords, pharmacists, security companies); and,
  • Section 286.2(4)(d) – Goods and services offered informally for fair value (e.g., babysitting or protective services).

4. Procuring offence

The offence of procurement was previously entailed under Section 212 of the Criminal Code. However, the Supreme Court found it to be in violation of Section 7 of the Charter and consequently struck it down in the Bedford case. 

Section 286.3 – to procure a person, to offer or provide sexual services for consideration or to recruit, hold, conceal, or harbour a person who provides for a certain consideration such sexual services, or exercise control, direction, or influence over that person’s movements, such that an offence under Section 286.1 is facilitated. The expression “to procure” has been defined by the Supreme Court of Canada as “to instigate, induce, or have a persuasive effect, which includes active participation in another’s prostitution on the part of the accused” in the case of R v. Deutsch (1986).

a) Penalty:

  • Section 286.3(1) – Adult victims

An Indictable offence with a maximum sentence of 14 years in jail

  • Section 286.3(2) – Child victim 

An indictable offence with a maximum sentence of 14 years in prison and a mandatory minimum sentence of 5 years in jail.

5. Communicating offence 

Section 213(1)(c) that made stopping or attempting to stop or in any way communicating or attempting to communicate with any individual for the purpose of prostitution or of obtaining sexual services was held to be guilty of the offence entailed under this Section, was ultimately struck down for having negative implications on the security of a person.

  • Section 213(1.1) is the only new offence that explicitly aims to criminalize prostitutes in the course of their work.
  • Section 213(1.1) – communicating in public locations that are or are near school grounds, playgrounds, or childcare centres with the purpose of offering or performing sexual services for consideration. The primary aim of the offence is to protect children from being exposed to prostitution, which is viewed as harmful in and of itself because such exposure risks normalising a gendered and exploitative practice in the eyes of naive and gullible youth and could lead to vulnerable children being drawn into a life of exploitation.

a) Penalty: 

A summary conviction offence with a maximum of 6 months imprisonment.

6) Trafficking in person offences

This takes into its ambit the recruitment, transportation, holding, harbouring, directing, or influencing of individuals to exploit them for sex work. These charges are severe because they are frequently coupled with charges of kidnapping and physical and sexual assault. The punishment for the offence comprises imprisonment for 4 years -14 years.

7) Bawdy House Offences

The provision for this offence, which was previously substantiated under Sections 210 and 211 of the Code, which prohibited activities with respect to places kept or occupied for the purpose of prostitution, was subsequently struck down in 2013. These provisions infringed upon the rights guaranteed under Section 7 of the Charter by preventing them from hiring bodyguards, working at fixed locations, etc. This deprivation of personal security was contradictory to principles of fundamental justice because it was completely disproportionate to the purpose of avoiding public nuisance.

Weapon

The definition of ‘weapon’, stated under Section 2 of the Criminal Code, through this Bill has been amended to include anything used or intended to have been used for restraining another person against their will (for instance, using handcuffs, rope, duct tape, etc.). Therefore, a person who possesses a weapon with the intention of committing an offence [Section 88], assault with a weapon [Section 267], or sexually assaulting a person with a weapon under [Section 272].

Why does the Criminal Code of Canada criminalize prostitution 

The human body is not a commodity that can be purchased and sold. Prostitution provides paid access to female bodies for men, who are the primary purchasers of sexual services. By legalising and regulating blatantly gendered behaviour, the human dignity of all women and girls alike would be diminished. It has been recognised through various international studies that jurisdictions that have legalised or decriminalised prostitution have comparatively larger sex industries and higher rates of human trafficking for sexual exploitation than those that choose to not legalise it. Since the purpose of Bill C-36 was to alleviate the demand for and purchase of sex services from sex workers, prostitution is now deemed to be a criminal offence under Canadian Criminal Law. It is hoped that criminalizing the purchase of sexual services and making prostitution a crime would discourage people from seeking such services and safeguard vulnerable sex workers.

Critical analysis

A ray of hope was seen by sex workers across Canada when, through the landmark decision in the case of Canada (Attorney General) v Bedford (2013), three sections of Canada’s Criminal Code were found unconstitutional.  Many hoped this was a step towards decriminalising sex work in Canada. Instead, Bedford resulted in Bill C-36. With Bill C-36, the sex industry was promised improvement. But in the eyes of many, Bill C-36 fell short of fulfilling the same. The laws proposed in Bill-36 have criminalised the demand for and procurement or the purchase of sexual services. However, it has not entailed within itself a provision criminalising those who sell these sexual services. The goal of these proposed laws, which are closely aligned with the Swedish or “Nordic” model of sex work regulation, is to specifically target the consumers of sexual services. The foundation of this model is the idea that adult sex work is inherently harmful to women and ought to be banned. According to the model, this goal is accomplished by criminalizing only those who pay for sexual services, portraying sex workers as victims in need of assistance, and providing programming to help people leave and prevent them from entering the sex industry. 

Conclusion 

However, Bill C-36 acknowledges that achieving its transformational paradigm shift would require some time as altering social views can be a long-drawn-out process. As a result, the approach of the Bill acknowledges that some people may continue to be at risk of or exposed to exploitation through prostitution until this transformation occurs. Critics believe that the new law has resurrected the ideological ghosts of our nineteenth-century past. The bill has been criticised and it is alleged that it will make sex workers more vulnerable by changing the negotiating power of individuals who sell sexual services. Clients are likely to be more apprehensive if purchasing sexual services is a crime or an offence punishable, pushing transactions into dangerous locations. Since condoms can be used as evidence in court, many clients are afraid to wear them, and this causes potential health risks to both women and men. Sex workers are not allowed to legally work together or advertise their services. All of these reasons are pushing sex workers into more dangerously solitary situations on the street.

Frequently Asked Questions (FAQs) 

Is living with a person who sells their sexual services unlawful?

Unless the person living with another selling their sexual services, whether family members or roommates, exploits the person selling such services, the law does not prohibit or restrict such a family member or roommate from living with them.

Is stripping illegal? What about tipping strippers?

The act of stripping is not illegal in itself, and so is tipping them. Since the strippers perform as entertainers in strip clubs, tipping or paying them for private dances is perfectly legal. However, if one pays for sexual services in a private room in a strip club, the conduct becomes unlawful.

References 

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Cultural and Educational Rights: Articles 29-30 under Indian Constitution

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This article is written by Millia Dasgupta and Nimisha Dublish. This article covers the cultural and educational rights of minorities and discusses various landmark cases relating to the topic. 

This article has been published by Sneha Mahawar.

Table of Contents

Introduction 

We have all heard that living room uncle or gossiping aunt proclaiming reservations are ruining our nation and the majority are the ones who suffer when it comes to admission. But one must stop and think, does the government truly have an inclination towards ruling for minority communities and their educational and cultural rights? To answer that question, we must first explore what are the cultural and educational rights minority communities have and how the government and courts deal with judicial questions concerning them. This article will explore such aspects in detail.

Who is a minority

Article 30  of the Constitution talks about two types of minority communities – Linguistic and Religious. But while it defines the categories of minority communities, there is no official definition of the word by the government.

One can derive certain pointers from the various articles in our Constitution and reports from the government. Article 29(1) safeguards the rights of minority communities and states that anyone with  “a distinct language, script or culture of its own” has the right to conserve it. 

From the language of the text, we may understand that communities with distinct languages, scripts or cultures fall under minority communities. But in later cases such as Bal Patil v. Union of India and the Islamic Academy of Education v. State of Karnataka, we see that courts rely on other factors such as economic welfare to decide whether a community is a minority or not.

In terms of religious minority communities, Section 2(c) of the Minorities Act recognizes 5 religions as minority communities namely Muslims, Sikhs, Christians, Buddhists, and Zoroastrians (NCMA).

An analysis of Article 29 of the Indian Constitution 

The basic rights of an Indian citizen are guaranteed by the Fundamental Rights enshrined in the Constitution of India. Basically, there are six fundamental rights entailed in the Constitution of India. Article 29 along with Article 30 of the Constitution of India talks about the cultural and educational rights that are given to an Indian citizen. The main aim of Article 29 of the Constitution of India is to protect the culture of the minority groups of India. India is a very diverse country which is both a strength and a weakness for it. The complex nature of India hence gives rise to the use of Article 29 of the Constitution. The Constitution acts as a guarantor of these rights to the minority groups of India. This helps in preserving all the marginalised groups of India. The people are also motivated to protect, propagate and preserve their culture. 

Article 29 was promulgated in the year 1975 on 26th April. Chapter 3 titled ‘Fundamental Rights’ contains Article 29 and comes under the Department of Personnel and Administrative Reforms.

The right is given only to those who are citizens of India and reside within the territory of India. Since India has a huge diversity of cultures and traditions, Article 29 of the Constitution of India gives the right to every citizen to maintain their culture and its related avenues. 

In India, Hindus exist in the majority but they are in the minority in some states. If we take India as a whole, then the Christians, Muslims, etc. are the minorities, but in the states in which Hindus are a minority, it is lesser. So, whenever a minority has a fear of losing its cultural identity, it is backed by Article 29 of the Constitution of India. 

Article 29(1) of the Indian Constitution aims at protecting the rights of a group. This is an absolute right for the groups in minority with respect to their cultural background. This provision cannot be subject to reasonable restrictions for the general public’s interests.

Article 29(2) of the Indian Constitution aims at protecting the rights of an individual. The Article has provisions that guarantee the rights of an individual citizen (not related to the community to which the citizen belongs). Hence, Article 29 as a whole guarantees the protection of both religious and linguistic minorities. 

As per the Constitution of India, there are only two types of minorities that are Religious and Linguistic. The Constitution in this Article has not mentioned the minorities as per caste, representation, etc. The Supreme Court said that the scope of the Article is not restricted to minorities only. The language used in the Article ‘section of citizens’ means that it includes both minorities as well as the majorities. 

In the case of Ravneet Kaur v. Christian Medical College (1997), the Court observed that the state was promoting discrimination in the institutes that were aided. The Court held that even the private schools and colleges which received government aid, cannot discriminate on the basis of religion, caste or race of the students. 

In the case of DP Joshi v. State of Madhya Bharat (1955), the Court noticed that there still exists one kind of discrimination that doesn’t come across people and that is the ‘place of residence. The state universities use the criteria of residence qualification for the admissions of students. In another case, Ashoka Kumar Thakur v. Union of India (2008), The Supreme Court ruled that it would be preferable not to offer reservations based on residence or institutional preference when it comes to admissions to postgraduate courses.

Case laws

S.P. Mittal v. Union of India, AIR 1983 SC 1

Facts

In this case, Sri Aurobindo was not only an excellent academist and administrator but he was also engaged in political work. Later on, he gave it all up for a life of meditation and moved to Pondicherry, Tamil Nadu. It was there where he met Madam  M. Alfassa, who would, later on, be known as Mother, who became his disciple. Later on, his disciples and the Mother established The Sri Aurobindo Society to propagate and practice the ideals and beliefs of Sri Aurobindo. 

Through this society, the founding president, the Mother, set up a township called Auroville which was meant for people to come and engage in various pursuits. Later on, The United Nations Education, Scientific, and Cultural Organization (UNESCO) took it upon themselves to fund provisions to help with the development of Auroville. 

When the mother passed away, many problems such as mismanagement of the project and misuse of the funds cropped up which made it impossible for the townships functioning and growth. Thus, keeping in mind the international character of Auroville due to the agreement with UNESCO, the government of Tamil Nadu took management in their own hands and filed a presidential ordinance which later on became The Auroville (Emergency Provisions) Act, 1980.

Seeing that the government took control of a ‘religious’ enterprise, the Constitutional validity of the Act was challenged on 4 grounds. One of the grounds was that it was violative of Article 29 and 30. 

Issue Raised 

Does the Act violate Article 29 and 30?

Decision 

It was held by the bench that the aforesaid Act does not violate Article 29 and 30. The court held that it, in no way curtailed their right or prevented any citizen from conserving its own language, script or culture and thus was not violative of Article 29. 

Also in this case, in order to seek protection under Article 30, one must prove that they are a linguistic or religious minority and the institution in question was established by them. Considering that Auroville was not religious and was founded on the ideology of Sri Aurobindo, they could not seek protection under these articles.

The State of Madras v. Champakam Dorairajan (1951)

Facts of the case

In the case of State of Madras v Champakam Dorairajan, the people of Madras challenged the order related to the admissions passed by the Madras government. The order contained provisions for the admission of students to state medical and engineering colleges. 

Issues involved in the case

It was found that the order denying admissions was solely on the basis of caste/religion. The issue was whether the provisions were in violation of the rights of the citizens under Article 29(2) and Article 15(4) of the Constitution of India or not. 

Judgment of the Court

The order was held to be void and in violation of Article 29(2) of the Constitution of India. As a consequence of which, Article 15(4) of the Constitution of India was amended for the first time and it empowered the State to make special rules and regulations for bringing forward any sort of socially and educationally backward classes of the citizens of India. It also covered the Scheduled Castes (SC) and Scheduled Tribes (ST).

State of Bombay v. Bombay Educational Society (1954)

Facts of the case

In the case of State of Bombay v. Bombay Educational Society, it was found that the Bombay government passed an order that aimed at banning the admission of students whose mother tongue was not English. The English medium schools that received government aid were mandated to do so. 

Issues involved in the case

The order denied the admissions solely on the basis of the mother tongue language of the students. The order targeted the Anglo-Indians and directed them to admit only those students whose mother tongue is English. They were warned that if they admitted other students who don’t speak English and don’t fall under the category as prescribed by the government, then the aid provided by the government will be forfeited. 

Judgment of the Court

The Court said that minority institutions have the right to give admissions to the students of their choice even if they receive government aid. The Government aid provided to institutes does not give the right to the government to violate the rights of minorities.

DAV College, Punjab v. State of Punjab (1971)

Facts of the case

In the case of DAV College, Punjab v. State of Punjab, the University issued a notice declaring that the medium of teaching and instructing shall be Punjabi in all the affiliated institutes. A petition was filed against the university claiming that minorities should have the right to choose the medium of teaching and instructing. 

Issues involved in the case

The order was infringing on the rights of those who didn’t know Punjabi. The issue was whether the notice was violating Article 29 and 30 of the Constitution of India or not. 

Judgment of the Court

The Court also agreed with the contentions made by the petitioners and granted relief to the affiliated institutes to teach and instruct in the languages that they felt comfortable with.

Jallikattu’s Case

In the infamous case of the Jallikattu festival, the very traditional game of bull-taming caught the attention of the political parties in the country. In the year 2021 in Tamil Nadu, the government got its eyes on the issue of the festival of Pongal. It has been a tradition for more than 2000 years. Jallikattu is a sport that is played to honour the bull owners who rear them for mating. The sport is a violent one as it tries to tame a bull for a prize, and if they fail, then the bull owner is given a prize. This sport is famous mainly in the districts of Madurai, Theni, Pudukkottai, Dindigul, and Tiruchirappalli in Tamil Nadu. These districts are famously known as the Jallikattu belt. The festival is celebrated in the month of January during the Tamil harvest time. 

In the year 2011, bulls were added to the list of animals whose training and exhibition were prohibited. As a result, bull-taming sports were banned by the Supreme Court in the year 2014. But the current position of the Jallikattu bull festival is that it has been legalised by the government. The case was referred to the Supreme Court in 2018, which is pending in court and the final verdict is yet to be passed. The main conflict that is to be resolved is whether the tradition that is followed by the people of Tamil Nadu should be protected as a cultural right which is a fundamental right, or not. Another one is whether Article 29(1) of the Constitution of India is against the rights of animals or not.

Rights of minorities

Certain rights are laid down to safeguard the right of minority communities. Article 29 ensures that anyone residing in India has the right to preserve a distinct language, script or culture and no State educational institute or any institute receiving aid from the state shall discriminate against anyone based on race, caste, creed, etc. Article 30 ensures the right of minority communities in educational institutions and prohibits discrimination against them. 

With regard to the reservation and special provisions for minority communities, many have brought up the argument that such provisions are ‘cushioning’. But in the case of The Ahmedabad St. Xaviers College vs State Of Gujarat & Anr, Khanna J. stated that such provisions are necessary so that “none might have the feeling that any section of the population consisted of first-class citizens and the other of second class citizens”. He also stated that a majority of the Fundamental Rights of the Constitution protect majority rights as it protects minority rights.

In the TMA Pai case, the judge considered the opinion of the Permanent Court of International Justice in the case of Minority Schools in Albania, advisory opinion was that there is a need for provisions that help minority groups preserve the uniqueness of their distinct culture and script and minority religions to uphold the uniqueness of their culture. Khana J. stated that “the object of protection is to enable minority communities to preserve the characteristics which distinguish themselves from the minority”.

In the Kerala Education Bill case, with regards to institutions handled by minority communities, Hidayatullah C.J stated that while Article 30 (1) might be general protection over distinct languages and scripts, it is also right to establish educational questions of choice. Thus this Act is not diminished if the institution’s primary function is not protecting minority culture, its also for institutions that are established and managed by minority communities and they accept other students as well.

The distinction between Article 29(2) and Article 15(1)

Article 29 (2) and Article 15 (1)  are very similar due to the fact they both prevent discrimination on the basis of caste, race sex, etc and are sometimes seen as mutually exclusive. However, there is a big difference. While Article 15 provides a broader ambit against discrimination on the basis of caste, race sex, etc, Article 29 provides specific restitution for those who have faced discrimination from state-run educational institutions at the time of entry or admission. 

Why did the fathers of the Constitution take an extra step to prevent discrimination by educational institutions? Education is important for a certain community to flourish and grow. When properly and efficiently educated, one becomes equipt to enter public services and search for jobs. Without the tools of education, the community shall be culturally but economically dominated. Thus, it is imperative that any minority community gets access to education and receives relief against discrimination. 

A tabular representation

S. No.Article 29(2)Article 15(1)
1.The Article aims at protecting the rights of the citizen against the state and other institutions as well.The Article aims to protect the rights of the citizens against the state only.
2.The Article mainly prohibits discrimination like admissions into educational institutes i.e., schools and colleges.The Article prohibits many types of discrimination.
3.The clauses are primarily related to admission to educational institutions that are maintained or aided by  the state.The clauses cover a wider scope than Article 29(2) and are applicable to all citizens.
4. Discrimination on the basis of sex and birthplace is not talked about in this article.Discrimination on the basis of sex and birthplace is prohibited as per this clause of the article.

Right of Minorities to establish and manage Educational Institutions

Under Article 30, the Constitution provides provisions for minority communities to establish and manage educational institutions and protect themselves from discrimination of granting aid by the government. Article 29 (1) gives any citizen the right to conserve a distinct language, script or culture of its own. While Article 29(2) also protects them, it is more for every citizen and is not specially tailored for minority groups.

One of the biggest debates in judicial history has been whether minority communities have the right to have autonomy while managing these institutions. Such questions gave birth to the famous T.M.A. Pai Foundation v. State of Karnataka case which had a massive 11 Judge Bench. In present times, the common consensus is that governments are allowed to regulate such institutes so long as such regulation is in pursuit of ensuring academic excellence and it does not harm the character of the minority institute.  

The Constitutional (44th Amendment) Act, 1978

The Constitutional (44th Amendment) Act removed the right to property as a Fundamental Right under Article 19. However, it ensured that “the removal of property from the list of Fundamental rights would not affect the right of minority communities to establish and administer educational institutions of their choice”. 

Relationship between Articles 29(1) and 30(1)

Article 29(1) states protect the rights of members of communities who have distinct language, culture, and script. 

Article 30(1) protects minority rights with regard to establishing and managing educational institutions.

Thus both Acts facilitate minority rights to establish and manage their own educational institutions. The only difference is that  29(1) makes an attempt to define who minority communities are. Due to the articles being almost identical, many might believe that when seeking protection, you can only seek protection under one.  But in St. Xaviers College v. the State of Gujarat, it was stated that Article 29(1) and 30(1) were not mutually exclusive.

Power of Government to regulate minority-run Educational Institutions

St. Xaviers College v. the State of Gujarat, AIR 1974 SC 1389

Facts

In this case, St. Xaviers College,  a religious denomination affiliated under the Gujarat University Act, 1949, provided education to not only Christians but students of other religions and creeds. They had challenged sections 35-A, 40, 41, 51-A and 52-A of the Gujarat University Act, 1972 which dealt with the appointment of teachers and students of minority communities. They stated that the Act encroached on the autonomy of the universities. 

The contention of the Parties

  • Article 29 (1) of the Constitution safeguards a citizen’s right to preserve his or her own language, script or culture, and Article 30 (1) states that minority communities have the right to establish and manage their own institutions. 
  • Article 30(2)  also states that the government should not discriminate against any institution under minority management. 
  • Under Article 32, they had a right to not only establish and administer institutes of their choice but they also had the right to affiliation( to operate independently, but also has a formal collaborative agreement with the state).

The opposition stated that Article 29 and 30 were mutually exclusive and protection under these Acts can not be brought up at the same time. They also stated that affiliation was not a Fundamental Right and that a minority institution must abide by the provision if they wished to be affiliated. Another argument was unless the law was an absolute violation of minority rights under Article 30(1), then there was no reason for the Act to be struck down.  They pleaded that the court wait until statutes and ordinances are issued in pursuit of the disputed sections. 

Issue Raised

  • Are Article 29 and 30 mutually exclusive?
  • Is affiliation a Fundamental Right?
  • Does section 35-A, 40, 41, 51-A, and 52-A of the Act tamper with the institutes Fundamental Right?

Decision 

It was held that

  • Article 29 and 30 were not mutually exclusive. 
  • While affiliation is not a Fundamental Right, it is necessary for the meaningful management and establishment of such institutes
  • Section 35-A, 40, 41, 51-A and 52-A of the Act would not apply to minority institutions as they tamper with their Fundamental Right to establish and manage educational institutions of their choice.

Ray C.J. and Palekar, J. stated that it would be wrong to limit their rights to only institutes that administer language, script, and culture. This would make the Act redundant. It is also wrong to believe that Article 29 and 30 are mutually exclusive because while Article 29 is for all citizens, Article 30 was placed to safeguard the rights of minority communities. Thus Article 30 must be treated as an extension of Article 29.

Jaganmohan Reddy, J.  stated that while affiliation is not a Fundamental Right, the state cannot use it as a tool to force an institution to abide by certain rules. The institution has the right to “establish their institutions, lay down their own syllabi, provide instructions in the subjects of their choice, conduct examinations and award degrees or diplomas, seek recognition to their degrees and diplomas and ask for aid where aid is given to other educational institutions”. The state can only discriminate on the basis of the excellence of the institution. 

With regard to the various disputed sections of the Act, the general consensus of the bench was that minority-managed institutions had the right to function without government intrusion of such nature. 

Re Kerala Education Bill, AIR 1958 SC 956

Facts

In this case, the President under Article 143 of the Constitution approached the Supreme Court regarding the Kerala Education Act 1958. Out of many of his inquiries, the President questioned Sub-Clause (5) of Clause 3 which stated ‘any new school or any higher class opened in any private school that did not live up to the standards of government regulation would not be recognized by the Government’.

The President’s question was whether giving such power to the government would be violative of Art 30 as minority communities had the right to manage and establish their own institutions. 

Issues Raised

While minority communities had the right to administer, do they have the right to maladminister?

Decision 

It was held that minority groups did not have the right to maladminister. Das, C.J. stated, “Reasonable regulations may certainly be imposed by the state as a condition for aid or even for recognition”.

It also stated that while opening up educational institutes was essential for minority communities to exercise their right under Article 30, all educational institutes are subjected to Article 29(2) which states that all citizens in state or state-aided institutions must not be discriminated during the time of admission on the basis of race, sex, creed, etc. 

Importance

The court’s opinion on government regulation on educational institutes and Article 29(2) have been used as persuasive precedents for landmark cases. An example is T.M.A. Pai Foundation v. State of Karnataka.

Sidhrajbhai v. State of Gujarat, AIR 1963 SC 540

Facts

In this case, the petitioners (Sidhrajbhai) are members of a society that has established many educational institutions, including a training school for teachers.  The Bombay government issued an order that 80% of teaching seats in non-government training schools would be reserved for candidates chosen by the government. The government also ordered the principal of that training school to not admit private students more than 20% of the class’s strength without the permission of the Educational inspector.

The principal expressed his inability to comply with orders and the government threatened them with disciplinary action. The society moved to the Supreme Court stating that this order violated several of their Fundamental Rights, including Article 30.

Issue Raised

Did the government orders violate Article 30?

Decision 

The orders violated Article 30. Article 30 is an absolute right and unlike Article 19, it cannot be subjected to ‘reasonable restrictions’. It was stated that such a right is for the protection of minority communities and their right to manage their own educational institutions. If it is diminished in the name if reasonable restrictions then it shall merely be an illusion and shall have no impact. The Kerala Education Bill case was quoted as in that case it was held that the State can impose legislation on educational institutions only if such restrictions are not detrimental to the “character of the minority institution”. Thus, unless these legislative restrictions aid the institution towards educational excellence while helping them retain its minority character, the court shall not take them into consideration.

Right of recognition or affiliation, not a Fundamental Right 

When the right of minority communities to establish and manage educational institutions is a Fundamental Right, it makes you wonder if affiliation or recognition is a Fundamental Right as well? At the end of the day, in order for an institution to achieve sufficient excellence, it is imperative that they have some sort of recognition or affiliation from the state.

This exact query was brought up in Sidhraj Bhai v. State of Gujarat. While the court recognized the importance of affiliation, they denied that it was a Fundamental Right. In later on cases like T.M.A. Pai Foundation v. State of Karnataka and P.A. Inamdar v. State of Maharashtra, it was held that the government is allowed to set up rules and regulations that institutes must follow in order to get affiliation. These regulations must be in pursuit of educational excellence.

Admissions of students and qualification of teachers in unaided minority institutions

Through the cases of T.M.A. Pai Foundation v. the State of Karnataka and P.A. Inamdar v. the State of Maharashtra, the general consensus of courts is that while such institutes have autonomy over management, such institutes must make sure that during admission they adhere to Article 29(2)- majority community students and employers should be admitted as well. 

Admissions in aided minority institutions

The government has the right to regulate the management of such institutions including fee structure, admission of students and employment of teachers. They shall have fixed quotas depending on the local need.  

Right of non-minorities to run educational institutions

The two rights are Art 19(1)(g) which is right to the profession (subject to restrictions in Art 19(6)) and Article 26 which is the right of all religious denominations to maintain and establish educational institutions.  

T.M.A. Pai Foundation v. the State of Karnataka, AIR 2003 SC 355

Facts

In this case, the St Stephen’s College v University of Delhi case was previously reviewed by a 5 Judge Bench, was transferred to a 6 Judge Bench and then a massive 11 Judge Bench to decide the status of minority rights.

Issue Raised

Kirpal, CJI framed 5 main questions, those that are relevant to the article have been stated below-

  1. “Is there a Fundamental Right to set up educational institutions and if so, under which provision?”
  2. To what extent can private universities be regulated?
  3. “In order to determine the existence of a religious minority in relation to Article  30, what is to be the unit?”
  4. “To what extent can the rights of aided private minority institutions be regulated?”

Decision

  1. For non-minority groups,  the two rights are Article 19(1)(g) [ the right to a profession which is subjected to restrictions of Article 19(6)] and Article 26 which gives the right to  “all citizens and religious denominations to establish and maintain educational institutions”. For minority communities, Article 29(1) and Article 30(1) is provided by the Constitution. 

The right of minority communities with regards to setting up educational institutes also includes the right to decide the method by which the students and teachers are selected. It should be fair, transparent and most importantly, based on merit. The same goes for un-aided schools. 

But it is important for such authorities to abide by Article 29(2) during admission. They must not discriminate against students on the basis of sex, race, creed, etc at the time of admission, especially students from the majority community. 

  1. Private institutions are divided into three categories to answer this question-
  • Private Unaided Non-Minority Educational Institutions- While the government can lay down rules and regulations (based on academic excellence) for affiliation, but the management of the institute should be autonomous. 
  • Private Unaided Professional Colleges- They have autonomy with regard to aspects such as fee structure and admission. But such colleges should not forgo the principle of merit and should reserve a few seats. These seats shall be reserved at the discretion of the management to those who have passed the entrance exam. The rest of the seats should go to people based on counseling by the state. For affiliation, the rules and regulations to achieve it should not be cohesive in nature. 
  • Private Aided Professional Institutions (non-minority)- Since the government is giving aid, they can lay down certain rules and regulations for management. They may also put guidelines for fee structure, admission for students and appointment of teachers. 
  • Other Aided Institutions- For such institutes, the government can lay down rules and regulations. 
  1. Linguistic and religious minority communities are covered by the expression “minority” under Article 30 of the Constitution. With regards to both Central and State law, the state shall be taken as the unit to decide whether a certain community is a minority or not. What happens when a community that is a minority in the country,  is a majority in a certain state was left unanswered. 
  2. Article 30(1) does not override the law or government regulations, keeping in mind such regulations does not destroy the character of minority educational institutions. Laws pertaining to subjects such as health and morality still apply to them. This is despite the nature of the wording of Article 30. Regulations that ensure academic excellence and are for the welfare of teachers and students still apply. 

When aid is given to such institutions, it must not come with certain conditions or regulations that harm the management and nature of the institution. But if such regulations are not detrimental to its management and character, then it is not violative of Article 30. 

Islamic Academy of Education v. the State of Karnataka, AIR 2003 SC 3724

Facts

In this case, several queries from the TMA Pai case were addressed. The importance of this case is that shows the various loopholes in the TMA Pai Foundation case, especially with regards to reservation of seats and autonomy of institutions with regards to management. 

Decision 

  • Educational institutes that are not given aid by the State are entitled to autonomy should not disregard the principle of merit.
  • Management of unaided non-minority institutes could reserve a certain number of seats for students who had passed the entrance exam but the rest of the students should pass through counseling regulated by the state
  • These unaided colleges should also provide provisions for the underprivileged.
  • The percentage of the seat should be fixed according to the locality and the needs of such an area. Different percentages can be fixed for minority and non-minority groups.   
  • The bench considered Article 19 as the right to manage educational institutions for non-minority communities and Article 30 (1) as the right to manage educational institutions for minority communities. 
  • Appropriation of seats can not be held as a ‘reasonable regulation’ or a regulation in the interests of minority communities. 
  • The bench also stated that they would set up committees to monitor the fee structure and admission process in private universities. 

P.A. Inamdar v. the State of Maharashtra: Reservation in Private Educational Institution violative of Articles 30 and 19(1)(g) 

Facts

In this case, several more queries from the  T.M.A Pai verdict were addressed and the Islamic Educational Academy case was reviewed as well.  This verdict goes against the Islamic Academy of Education verdict and reverts back to Pai. 

Decision

  • In correlation with the Kerala Education Bill case, Lohoti, C.J divides the amount of protection educational institutions (both minority and non-minority) can seek from Article 30 into three categories. 
    1. Unaided or unrecognized institutions that can enjoy protection under this Article to their “heart’s content”.
    2. Institutions asking for affiliation or recognition from the State must abide by the rules and regulations enforced by the government. This is only if the nature of such regulations is for the benefit of the institution.
    3. Institutions receiving state aid must abide by regulations with regards to the management of funds. Article 29(2) will also apply as they would be required to admit students from non-minority communities. 
  • The bench also puts a stop on policies that require unaided private colleges to reserve seats for citizens from backward classes. They believe such policies will cause the ‘nationalizing’ of seats. They believe such policies violated Article 30 of minority communities to set up and manage educational institutes autonomously and violated 19(1)(g) of non-minority colleges to practice any trade or profession. Instead, they let the state control the quota of seat-sharing between management.
  • Interestingly, they do allow for the reservation of seats for non-resident Indians or NRIs. The reason they give behind this is that the high fees charged from such students could help students belonging to weaker parts of society. 
  • In regards to admission procedure in unaided education institutes, the Bench decided that merit for admission in various levels of education is crucial but its level of importance increases with the rising level of education. Merit might not have much of a role to play in kindergarten admission but had a crucial role to play in college admission. 
  • The bench also decides that every institute is allowed to set up its own fee structure but it shall be subjected to regulations to prevent excessive profiteering.
  • And the last, but the most controversial, the bench stated that the Islamic  Academy of Education case shall not exceed TMA Pai. Committees to monitor the fee structure and admission process of private universities shall not happen. 

The Jain Community is not a minority

In the case of Bal Patil v. Union of India, it was debated whether Jains could become a minority under section 2(c) of the Minorities Act. The court rejected this claim and said it had statutory duties. They also stated-

“Before the Central Government takes a decision on claims of Jains as a ‘minority’ under Section 2(c) of the Act, the identification has to be done on a state basis. The power of the Central Government has to be exercised not merely on the advice and recommendation of the Commission but on consideration of the social, cultural and religious conditions of the Jain community in each state. Statistical data produced to show that a community is numerically a minority cannot be the sole criterion.” 

Conclusion 

Through this article, not only have we tried to understand who the government considers as minorities, but what logic the government has used to fix current-day reservation policies for minority colleges. We have seen the tedious process through which essential questions such as ‘who can be considered a minority’ and ‘whether affiliation is a Fundamental Right’. While it is clear that our judiciary has done extensive work in the field of cultural and educational minority rights, it seems that we have miles to go. 


Students of Lawsikho courses regularly produce writing assignments and work on practical exercises as a part of their co


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Agency theory of corporate governance

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Governance

This article has been written by Naveen Talawar, a law student at Karnataka State Law University’s law school. The article gives insight into the concept of corporate governance and the agency theory of corporate governance.

This article has been published by Sneha Mahawar.

Introduction 

The shareholder-manager relationship, which functions as the principal and agent in a corporation, has always been one of the issues discussed by scholars as a factor in determining whether a corporation succeeds or fails, depending on the nature of the relationship and the incentives upon which this relationship in a firm is based. This connection is governed and examined by the agency theory. The dilemma was defined and examined by Jensen and W.H. Meckling in their paper “Theory of the Firms” in 1976 on the basis of a relationship between a ‘Principal’ who appoints someone to duty and an ‘Agent’ who is appointed to act on the Principal’s behalf. 

Agency theory looks into the issues and solutions that arise when tasks are delegated from principals to agents in the context of competing interests. It examines the circumstances under which various types of incentive instruments and monitoring arrangements can be used to minimise welfare loss, beginning with clear assumptions about rationality, contracting, and informational conditions. Agency theory has had a significant scientific impact on social science due to its clear predictions and broad applicability, but it has also received significant criticism. This article deals with the agency theory of corporate governance in detail.

Concept of corporate governance

Corporate governance (CG) is a new phenomenon founded on a variety of complicated disciplines, including but not limited to legal, cultural, ownership, and other structural differences. However, its foundations are undoubtedly weak. The evolution of corporate governance was influenced by the growth, complexity, and advancement of the economy as well as the development of corporate structures.

What is corporate governance

The idea of corporate governance is ambiguous. In essence, there is no single, accepted definition of corporate governance; rather, it is subjective. The term ‘Corporate’ legally refers to a business transaction. Similarly, the term ‘Governance’ is the act of exerting authority, direction, or control. Thus, the concept of ‘Corporate Governance’ refers to the system by which a business entity’s management directs and controls activities in the best interests of the stakeholder. Corporate governance is the term used to describe how a corporation is operated. It is the method used to lead and manage businesses. It all comes down to striking a balance between social and economic as well as individual and societal aims.

Definitions of corporate governance

The following are some definitions of corporate governance:

According to the Cadbury Report (1992), it is defined as “the whole system of controls, both financial and otherwise, by which a company is directed and controlled.

According to the Organisation for Economic Co-operation and Development (OECD) report 1999, corporate governance is “A set of relationships between a company’s board, its shareholders, and other stakeholders. It also provides the structure through which the objectives of the company are set, and the means of attaining those objectives and monitoring performance are determined” 

According to the report of the N.R. Narayana Murthy Committee on Corporate Governance constituted by SEBI (2003), “Corporate Governance is the acceptance by management of the inalienable rights of shareholders as the true owners of the corporation and their own role as trustees on behalf of the shareholders. It is about commitment to values, about ethical business conduct and about making a distinction between personal and corporate funds in the management of a company.

In general, corporate governance refers to a set of practices that protect the interests of all stakeholders in a company. Corporate governance is a system of regulations, customs, and procedures for managing and guiding a business.

Pillars of corporate governance

The three pillars of corporate governance are as follows:

Transparency

The quality of something that allows one to easily understand the truth is referred to as transparency. In the context of corporate governance, this involves providing stakeholders with accurate, sufficient, and timely information about the operating results of the corporate enterprise.

In simple terms, transparency means having nothing to hide. This means that a company makes its processes and transactions accessible to outsiders. It also makes required disclosures, informs everyone affected by its decisions, and follows all applicable laws. Transparency is an important component of corporate governance because it ensures that an outside observer can scrutinise all of a company’s actions at any time. This makes its processes and transactions verifiable, allowing the company to provide a clear answer if a question arises about a step taken.

Accountability

Accountability is the obligation to explain the results of choices that were made in the interests of others. Accountability in the context of corporate governance refers to the Chairman’s, Board of Directors, and the CEO’s obligation to use the company’s resources (over which they have authority) in the best interests of the company and its stakeholders.

Independence

The top management of the company must be independent in order for good corporate governance to exist, which means that the Board of Directors needs to be a powerful, nonpartisan body that can make all corporate decisions based on business wisdom.

Need for corporate governance

Corporate governance is necessary to promote a workplace culture of transparency, accountability, and disclosure. It refers to upholding all moral and ethical standards, the law, and voluntarily adopted practices. This enhances shareholder value and wealth, as well as customer satisfaction. The following factors emphasise the importance of corporate governance:

Corporate performance

Improved governance structures and processes help to ensure quality decision-making, promote effective succession planning for senior management, and boost a company’s long-term prosperity, regardless of size or source of finance. This is related to improved corporate performance, whether in terms of share price or profitability.

Wide spread of shareholders

A company today has a large number of shareholders dispersed across the nation and even the globe, the majority of whom are unorganised and uninterested in corporate affairs. The idea of shareholder democracy is still only recognised by the law and the articles of association, so it needs to be put into practice through a code of conduct for corporate governance.

Changing ownership structure

In the present era, institutional investors (both foreign and Indian) and mutual funds have radically changed the pattern of corporate ownership, becoming the largest shareholders in the large corporate private sector. These investors have emerged as the greatest challenge to corporate management, requiring it to adhere to a set of established corporate governance principles to enhance its reputation in society.

Combating corruption

Companies that are transparent allow for transparency in all business dealings and foster an environment where corruption will undoubtedly disappear. Such businesses also have sound systems in place that fully disclose accounting and auditing practices. Corporate governance allows a company to compete more successfully by preventing fraud and other wrongdoing within the organisation.

Reduced risk of corporate crisis and scandals

Effective corporate governance ensures the effectiveness of the risk mitigation system. By making the board of a company aware of all the risks associated with a particular strategy, corporate governance is a transparent and accountable system that enables different control systems to be put in place to monitor the related issues.

Theories of corporate governance

Numerous theories of corporate governance cover the issues that arise in firm and company governance from time to time as well as describe the relationship between various stakeholders of the business while carrying out the business’s activity some of them are as follows 

Agency theory 

The basis of agency theory is the distinction between ‘the principals,’ or the owners (shareholders) of a business or organisation, and ‘the agents,’ or the managers hired to run the organisation. According to agency theory, there is a conflict between the agent’s and the principals’ goals because they are different. The next part of the article discusses in detail about this theory.

Stewardship theory

This theory holds that managers desire to produce quality work and maximise company profit, which generates a favourable return and raises the value of the shareholders. This theory contradicts the agency theory. As in this case, the theorist assumes that company managers are stewards whose actions, intentions, and behaviour are connected to the principal’s objectives.

Stakeholder theory

A stakeholder is a group of people who have influence over or are affected by an organisation’s processes, systems, and efforts to accomplish its objectives. If the competing interests of all the firm’s stakeholders were balanced, the goal could be accomplished. This strategy explains how the firm is managed by a variety of stakeholders, each of whom has specific demands. Stakeholders are interested in making the most of the company by managing it effectively. It also implies that when formulating policies, all organisations must take into account the needs of all stakeholders.

Resource dependency theory

According to the resource dependency theory, the board of directors’ responsibility is to give the company access to resources. It asserts that, through their connections to the outside world, directors are crucial in providing or securing essential resources for an organisation. The provision of resources enhances organisational performance, the firm’s performance, and its ability to survive. The directors bring legitimacy to the company as well as resources like knowledge, skills, and connections to important stakeholders like suppliers, buyers, public policymakers, and social groups. The four categories of directors are insiders, business experts, support specialists, and community influencers.

Agency theory of corporate governance

One of the most significant and widely discussed theories of corporate governance is the agency theory, which is used by many systems in the modern world. The debate over agency theory and corporate governance began in the 1930s. It is typically traced back to the 1930s with the publication of Berle and Means’ “The Modern Corporation and Private Property,” in which they noted that there was no effective check on the executive autonomy of managers due to the separation of ownership and control and the wide desperation of ownership. This concept was refined in the 1970s by writers such as Jensen and Meckling, Fama, Alchian, and Demsetz, who provided various explanations for issues that became known as the agency theory. At the time, writers defined and examined the dilemma in terms of the relationship between a ‘Principal’ who appoints someone to duty and an ‘Agent’ who is appointed to act on the principal’s behalf.

What is the agency theory

Agency theory is defined as the relationships between principals, such as shareholders, and agents, such as corporate executives and managers. The shareholders, who represent the owners or principals of the business, are said to employ the agents to carry out tasks. Directors or managers, are the shareholders’ agents and are given authority by principals to manage the company. According to the agency theory, shareholders expect agents to act and make decisions in the best interests of the principal. On the contrary, the agent may not always act in the best interests of the principals. In the 18th century, Adam Smith identified such a problem, and Jensen and Meckling presented the first detailed description of agency theory in 1976. 

Features of agency theory

Agency theory is a popular theoretical framework in corporate governance. Its popularity stems from two features. Firstly, it is straightforward because it divides large corporations into managers and shareholders, each with clearly defined conflicting interests. Second, it operates under the widely accepted premise that because every rational person is inherently egoistic, they will always seek to advance their own interests.

There are generally three sets of interest groups within the company: directors, shareholders, and creditors (such as banks). Since banks and managers have different overall priorities, stockholders frequently disagree with both of them. Shareholders are more interested in slow and steady growth over time, whereas managers look for quick profits that increase their own wealth, power, and reputation.

Purpose of agency theory 

The purpose of agency theory is to highlight areas where corporate interest groups are in conflict. Banks want to reduce risk, whereas shareholders want to make the most money possible. The ability of managers to turn profits and then impress the board is what makes them even riskier when it comes to maximising profits. There are costs involved with each group trying to control the others because modern corporations are established on these relationships.

Agency problems/conflicts 

Agency theory is used to understand the interactions of agents and principals. The agent represents the principal in a particular business transaction and is required to act in the principal’s best interests, regardless of personal financial benefit. Conflicting interests of principals and agents may arise because some agents may not always act in the best interests of the principal. Miscommunication and disagreement can lead to a variety of issues within businesses. Each stakeholder may become divided due to incompatible desires, which can lead to inefficiencies and financial losses. It brings up the principal-agent issue. The principal-agent problem occurs when a principal’s and an agent’s interests conflict. When owners’ and managers’ interests diverge, agency conflicts take place. They appear in various forms. They arise in several ways.

Moral hazard

The prospect that a party insulated from risk may behave differently from the way it would behave if it were fully exposed to the risk. A manager has an interest in receiving benefits from his or her position as a manager. These include all the benefits that come from status, such as a company car, a private chauffeur etc.

Risk aversion

The company for which executive directors and senior managers work typically provides the majority of their income. As a result, they are concerned about the company’s stability because it will protect their job and future earnings.   This suggests that management might be risk-averse and reluctant to fund more risky projects. Shareholders, on the other hand, may want a company to take bigger risks if the expected returns are sufficiently high. It matters less to shareholders if one company takes risks because they frequently invest in a portfolio of various businesses.

Time horizon

Shareholders are concerned about their company’s long-term financial prospects because the value of their shares is based on long-term expectations. On the other hand, managers might only have short-term concerns. This is because they might only expect to work for the company for a short period of time and because they might receive annual bonuses based on short-term performance. Managers may thus be motivated to increase the accounting return on capital employed (or return on investment), whereas shareholders are more concerned with long-term value as measured by net present value.

Effort level

It’s possible that managers put in less effort than they would if they were the company’s owners. This “lack of effort” could lead to lower earnings and a lower stock price. Both the middle and upper levels of management in a large corporation will be affected by the issue. Managers’ interests and senior managers’ interests may diverge, particularly if senior managers receive pay incentives to boost profits while managers do not.

Earnings retention

The size of the company, not its profits, is frequently a determining factor in how much directors and senior managers are paid. Instead of increasing shareholder returns, this gives managers an incentive to expand the business by raising sales and assets. Instead of paying out dividends, management is more inclined to want to reinvest earnings in the business to expand it. When this happens, businesses might make investments in capital projects with low expected profitability and a negative net present value.

Reducing the agency problem

Certain measures and principles can be followed by both the principal and the agent to reduce the likelihood of conflict. They are mentioned below.

Full transparency

When there is limited knowledge between the agent and the principal, agency problems are most frequent. The agent has far too much opportunity and too much temptation to use the knowledge gap for their own gain. When agent-principal relationships arise in business, full transparency can aid in closing the knowledge gap and preventing the agency problem from arising.

Restrictions on the agent’s capabilities

Giving the agent excessive authority to act on your behalf invites future issues and could influence the financial advisor to make poor decisions. Most successful governments use checks and balances because it limits the power of any single individual or entity, reducing corruption. Imposing restrictions is an effective method of limiting the agent’s power.

Commission and bonus structures

Relationship conflicts are less likely when incentives and bonuses are introduced and removed. Bonuses are a great way to encourage an agent and enable them to act in the principal’s best interests in order to achieve the desired incentive. Contrarily, bonuses may drive an agent to act solely in the interest of their own financial gain, disregarding the principal’s best interests in the process. Since every principal-agent relationship is different, it’s essential to choose the right strategies for every circumstance in order to maintain a decent, healthy relationship.

Criticisms of agency theory

Various authors have criticised agency theory. Numerous authors, in particular, have criticised the assumptions underlying the standard agency model as too restrictive, that is, not generalizable to the vast majority of humans but rather specific to a subset of individuals.

  1. This theory is one-sided, emphasising economic factors while ignoring (among other things) political factors, internal government problems, and the roles of other stakeholders.
  2. Numerous legal concerns are raised by some authors when presenting shareholder-manager relationships based on agency theory. For instance, not only shareholders are subject to risk. Other parties involved in value creation contribute resources that are essential to the company and take on the risk associated with its operations.
  3. By assuming that people behave opportunistically, some authors contend that agency theory paints an extremely negative picture of human nature.
  4. Several academics are skeptical of the concerns about ownership of a firm. From a legal standpoint, shareholders own only the shares of a company, and thus they should not be considered the sole residual claimants. The exclusive rights of shareholders modify the risk taken by various stakeholders, because managers controlled by shareholders will choose strategies that result in relatively safe financial returns, even at the expense of a lack of innovative development or ignoring other important goals for the firm.

Conclusion

Agency theory examines the issues and potential solutions that arise when tasks are delegated to agents by principals in the context of conflicting interests. Beginning with clear assumptions about rationality, contracting, and informational conditions, it examines the circumstances under which various types of incentive instruments and monitoring arrangements can be used to reduce welfare loss. Since agency theory makes precise predictions and has a wide range of applications, it has had a significant scientific impact on social science. At the same time, it has received a lot of criticism. The majority of this criticism is directed at the assumptions underlying agency theory, specifically those underlying simple models. These assumptions are frequently very restrictive in order to promote the mathematical tractability of the problems. However, some of the polemical criticisms levelled at it are unjustified.

FAQs 

What are the main characteristics of the agency theory?

Agency theory is concerned with relationships between parties in which one delegated some decision-making authority to the other. The principal would delegate some decision-making authority to the agent, who would then be responsible for maximising the principal’s investment in exchange for an incentive. Agency relationships are intended to add value to the parties involved. However, there are costs associated with engaging in the relationship, monitoring its progress, and enforcing it.

What is the principal-agent problem? 

The principal-agent problem is a conflict in priorities between a person or group and the representative authorised to act on their behalf. An agent may act against the best interests of the principal. The principal-agent problem is as varied as the principal and agent roles. It can happen in any situation where the owner of an asset, or a principal, delegates direct control over that asset to another party, or agent.

What are the most effective methods of reducing agency loss?

An agency loss is an amount that the principal claims was lost as a result of the agent’s acting against the principal’s interests. Offering incentives to corporate managers to maximise their principals’ profits is one of the most effective strategies for resolving disputes between agents and principals. 

References

  1. https://citeseerx.ist.psu.edu/
  2. https://www.researchgate.net/publication/273979161_Agency_Theory_Corporate_Governance_and_Finance
  3. https://portal.abuad.edu.ng/lecturer/documents/1508187226AGENCY_THEORY. 
  4. https://www.redalyc.org/journal/3579/357966632010/357966632010.pdf
  5. https://www.academia.edu/5582502/Corporate_Governance_and_Agency_Theory_3
  6. https://www.investopedia.com/ask/answers/031815/what-role-agency-theory-corporate-governance.asp

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Criminal psychology

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This article has been written by Oishika Banerji of Amity Law School, Kolkata. This article discusses criminal psychology in relation to the law, society, and people in general.

This article has been published by Sneha Mahawar.

Table of Contents

Introduction 

“Crime” is an act against the law, whereas “criminality” denotes intentions and a mindset of engaging in illegal behaviour. Criminal psychology provides solutions for criminality with the goal of controlling crime. It can be challenging to define crime as such since it is situation-based as well as contextual in nature. When a soldier in a war kills a counter-army soldier, it is regarded as a brave and patriotic deed. But it is regarded as a crime if committed by the citizens among themselves. It is crucial to take into account whether a civilian crime was committed in self-defence, while under the influence of drugs or alcohol, or under social pressure. As a result, while the legal definition of crime emphasises an act that violates the law, the normative definition of crime emphasises an act that violates our moral standards. Criminal psychology is the study of criminal behaviour, and by criminal behaviour we mean personality, attitude, physiology, learning, motivation, thinking, and other cognitive factors that contribute to the commission of a crime or the intention to commit a crime. Understanding criminal psychology is crucial because it allows us to characterise, explain, anticipate, and control such behaviour. With such intent, the author of this article wants to discuss criminal psychology and help the readers understand its relationship with the law. 

What is criminal psychology 

Since psychology is intended to systematically research behaviour, it has undergone significant transformation and diversification. Globalisation and liberalisation paradigms, which were quite popular in the 20th century, have now given way to more focused paradigms. Diversification is now more necessary to comprehend the theory and application of particular features. As a result, we observe that it is exemplary that eclectic, multidisciplinary, and multicultural approaches are thought to be more practical. At the same time, the necessity for a holistic approach cannot be overlooked. Governmental organisations must intensify their attention on enhancing legal services as a result of the rising crime rate.

Finding the causes of crime, understanding the psychology of criminals, and being able to design treatments at the individual and social levels are also crucial for enhancing social conditions. These days, it is impossible to overlook the existence of organised crime-related operations. Where may one find a little child, a woman, an adult, or an elderly person engaged in criminal activity? Crime can range from simple theft and break-ins to murder and mass killing. No matter the nation or state, there are many things that we see every day that have criminal intent. Females have been brutally abused and raped in a large number of recent rape incidents.

This raises the question of how a regular person, whom you presumably merely pass in a market or on public transportation, can go to such lengths without even thinking about other people and without fear of legal repercussions. Many cases in the history of crime have left many questions unanswered, which can only be explained by understanding human behaviour.

History of criminal psychology

Even if the idea of criminal psychology was first introduced in the early 20th century, its observable development has opened the door for contemporary criminal psychology. It is neither a restricted nor a theoretical idea, just like other areas covered by the study of psychology. It is regarded as one of the most important therapeutic approaches to revealing the true motivation and causes behind any criminal action in the legal context.

The first book on criminal psychology was written and edited in 1961 by a psychologist named Hans Toch. The line separating psychometrics from psychological criminology was first drawn in the early 1960s.

Goddard, a well-known psychologist, had alerted us to the fact that the majority of juvenile and adult offenders were “mentally defective,” concluding that intellectual disability was the main contributor to crime and delinquency. The hypothesis that a person’s psychology influences their criminal behaviour was developed by British psychologist Hans J. Eysenck in his book “Crime and Psychology.” He placed a strong emphasis on extraversion as a personality trait and held that it could be explained by both a biological propensity to seek or avoid stimuli and the ability to perceive experiences received from the environment. His beliefs were quite influential at the time, but as he grew older, the inclination for a clinical approach took precedence. The various theories used to punish the offender contain conceptualizations of criminal psychology and methods for dealing with it.

Evolution of criminal psychology

Criminal psychology has emerged from the two major branches of psychology, namely social psychology and clinical psychology. 

Social psychology is a significant and specialised area of psychology that aids in comprehending criminal behaviour and related issues. Social psychology focuses on group behaviour. It helps us comprehend how people act around others and how other people’s opinions and deeds shape how those around us perceive and think. Important topics covered by social psychology include competition, cooperation, mob behaviour, leadership, group behaviour, internal and external factors influencing group behaviour, etc. This makes it possible for us to comprehend, account for, manage, and forecast social behaviour, it is not necessarily caused by clinical issues. Humans are regarded as sociable creatures. Even though most of our actions are guided by social norms, the definition of proper and improper conduct, ethical behaviour, and unethical behaviour and their related meanings are influenced by the culture we are brought up in. The public policy allows us to comprehend the social context of a crime and the factors that contribute to its behaviour. Social psychology also helps us comprehend the societal influences behind particular behaviours. 

Clinical psychology is the area of psychology that focuses on using research methodology and findings in real-world settings to diagnose and treat mental problems. Assessment (including diagnosis), therapy, and research are the three primary categories under which clinical psychologists categorise their fundamental tasks. Clinical psychologists conduct assessments by administering and interpreting psychological tests, either to assess a person’s general intellect or other talents or to elicit mental traits that may help a doctor diagnose a specific mental condition.

Clinical psychologists can be found working in a range of places, such as private practice, businesses, and hospitals. Some focus on helping those who are physically or mentally ill, prisoners, drug and alcohol addicts, or elderly patients. In some situations, a clinical psychologist collaborates with a psychiatrist and a social worker and is in charge of carrying out research for the group in relation to any particular case. Clinical psychologists are also employed by the armed forces to assess or treat service members, while others work with courts to evaluate defendants or potential parolees.

Psychology and crime : the inter-relationship

Crime and psychology are closely related. What kind of person a person becomes is heavily influenced by their mental makeup. The examples or features that can aid in understanding how crime and psychology interact are as follows: 

  1. People who experienced physical or mental abuse as children or antisocial behaviour as adults are more likely to inflict these behaviours on their offspring, who will then frequently repeat the cycle. Children who are abused or neglected have a distinct worldview and perspective on the world; they are more prone to committing crimes as adults.
  2. More frequently than not, when they commit a crime against another person, they believe they are gaining the same authority as their abuser. Peer pressure has a significant impact on a person’s decision to commit a crime. 
  3. Young boys and girls who are bullied or who don’t quite match the expectations of contemporary society frequently end up using drugs, which is unlawful in and of itself, to gain the courage to conduct bigger crimes.
  4. Crime is frequently used as a last resort by those who feel unappreciated or who claim they are not taken seriously to try to get the respect of others around them. The graph of someone who is more inclined to commit a crime clearly shows that lack of education also influences that likelihood.

How psychology governs crimes against women in India

Studying the country’s crimes against women and the country’s enduring gender disparity can help one comprehend the function of psychology in relation to crimes in India. Women have historically been viewed as inferior to men and more as servants than as wives or partners, not just in modern times but even further back in India’s history when kings and rulers predominated.

Since ancient times, men have been the ones responsible for providing necessities for their families, with women viewed as only being useful for procreation, raising children, and maintaining the home. Women have always suffered as a result of this in every aspect of life. The birth of a boy is a cause for celebration, but the birth of a girl is frequently accompanied by suffering and despair. Gender detection is therefore illegal in India for a reason. Boys have historically been viewed as outgoing, whilst women have traditionally been viewed as shy.

Consider a boy who grows up in a typical Indian middle-class family, where his sister is exposed to these things from an early age, such as being given more food to eat and more milk to drink. The son and the father love having the job done at home, and even get to reprimand the women for not doing the same task to their taste, while the girl is forced to do all the housework alongside their mother. The girlchild is kept grounded while her brother receives all permission. When it comes to prohibited activities like drinking and smoking, boys get away with it, whereas girls get punished and reprimanded for the same.

The boy inherits all of his ancestors’ property, whereas the girl, who is married to a man and forced to leave her own home for the home of another man, does not inherit any property there (discussing property rights from the point of view of the society where there are equal laws and rights for women against their ancestors’ property, but using them frequently leads to prejudice and hatred). The youngster witnesses this as he develops the mindset that he owns the women he marries or who make up his life, which makes him believe that everything he does as a man is right, even if it is wrong. Crime is also a result of such ingrained perspectives, significant for moulding the child’s psychology. 

What role does psychology play in cases of suicide

Section 309 of the Indian Penal Code, 1860 (IPC) previously classified suicide or any attempt to commit suicide as a crime, but this was subjected to changes in 2017 with the passage of the new Mental Healthcare Act, which now states that “notwithstanding anything contained in Section 309 of the IPC, any person who attempts to commit suicide shall be presumed unless proved otherwise, to be under stress and shall not be tried and punished under the said Code.” A person who attempted suicide and is under a great deal of stress must be given care, treatment, and rehabilitation services in order to lessen the likelihood that they will attempt suicide again. Therefore, the Act aims to change the country’s system of mental healthcare.

According to NCRB data from 2015, one student commits suicide per hour. The total number of suicides that year was 8934, but the number of attempted suicides, many of which went unreported, is likely to be far higher. Failure in tests or even in their employment can be difficult for youth to handle, and neither relatives, friends, nor social institutions provide enough support. 

Given the lack of qualified mental health specialists in India, finding professional assistance might be challenging. Suicide among young students is on the rise in Kota, Rajasthan, where several for-profit coaching facilities promise success to push their pupils to meet impossible targets, thereby leaving them feeling anxious and depressed about disappointing their families and with no other option but to take their own lives. The top Indian Institutes of Technology (IITs) across the nation are exhibiting a comparable trend. Poor relationships with parents and friends, feeling unwelcome, a lack of understanding of their love relationships, and other factors are all contributing factors in these suicides.

However, this can be rectified, and the Indian government has already made a small but crucial move in that direction with the new Mental Healthcare Act, 2017. The Act guarantees that every individual with a mental illness has the right to exist in society, to participate in it, and to not be isolated from it. The person won’t stay in a mental health facility just because he doesn’t have a family, his family doesn’t accept him, he’s homeless, or there aren’t any community-based facilities available. The Act can be viewed as one of the many admirable efforts that need to be made in order to ensure that we have enough awareness of mental health to enhance the dialogue about mental health and eliminate the stigma associated with mental disease.

Role of psychology in understanding the decriminalisation of Section 377 of the Indian Penal Code, 1860

Section 377 of the IPC, which refers to “unnatural offences,” was first adopted in 1861, which was the time of the British administration in India. People who identify as homosexual were denied basic rights that everyone else was allowed to enjoy since they were not deemed to be human. An aspect of how a person’s brain works and responds to people of the same sex is pure science. The hypothesis that several studies in biological and psychological science have occasionally supported and confirmed cannot be ignored by society.

Sexual activity that was once considered “unnatural,” “deviant,” and “perverse” will now have to be embraced by everyone in a natural, justifiable way, just as it was intended, whether they like it or not. Since the government and the judiciary now support homosexuals, the judgement of the Supreme Court of India will change people’s perceptions of them and lead to a wider movement of acceptance of them as normal people, which will lead to more jobs and greater respect in society. It will also prevent crimes against them and the regular harassment they experience.

Although this progressive decision was a very major move for a democratic country, it still lags behind in its implementation. Countries like the USA, England, and Canada have long welcomed homosexual individuals, and they even borrowed their marriage laws. This accomplishment was also made possible by having an open mind and realising that no two people think and function in the same manner. People differ from one another and find humour in various things, and none of this would have been possible without efforts to comprehend psychology, people, and their various responses. Therefore, psychology unquestionably contributes to our knowledge of Indian crime, or more precisely, what was and could be a crime in India.

Criminal psychology and serial killings

It has long been believed that sexual motivations are primarily what lead to serial killings, and in more than half of the serial killers who have been interviewed, this has been proven to be the case. Criminals, including those who commit homicide in a single episode, are more likely to be male than female (9:1), although serial killers are more likely to be male (19:1). When a pair of serial killers operate, one member typically assumes the part of the dominant one while the other assumes the role of the submissive.

In general, serial killers choose their victims, and they find preoccupied, distracted, or weak individuals who are least likely to draw attention to their disappearance particularly alluring. Therefore, runaway youths, single women, transients, and prostitutes are the main targets for serial killings. The serial murderer kills in a similar way in each of his instances, but they are all much more horrific and unusual than regular killings, which makes them shocking to society and makes people remember them. Some of the more gruesome killings that are still noteworthy have been pointed out hereunder: 

Nithari case

When the skulls of missing children were found in the Nithari village, on the outskirts of Noida, a businessman named Mohinder Singh Pandher and his domestic worker, Surinder Kohli, were both taken into custody. Rape, cannibalism, paedophilia, sodomy, and even organ trafficking were all alleged crimes. In the same investigation, Mohinder was charged with 11 unsolved murders, while Surinder was found guilty of 5 murders. Both of them received death sentences. However, in 2014, Surinder’s death sentence was revoked and replaced with a life term.

Stoneman killer case

In one of the most infamous unsolved murders in Indian history, nine people were brutally killed in 1989 by having the tops of their skulls bashed with a large blunt object. A Calcutta newspaper dubbed the unidentified murderer “The Stoneman,” but the mystery surrounding those killings remains unsolved and the stone man has not been found.

Lady Cyanide or cyanide Mallika

From 1999 until 2007, Mallika, a resident of Bangalore, murdered six other women. She used cyanide to kill lower-middle-class women who had experienced domestic abuse while robbing them of their possessions and jewellery. She was detained in 2007 and given a life sentence.

Need of criminal psychology in the field of law

Criminal psychology, a field of study that focuses on the intents and behaviours of people who plan and carry out criminal activities, is an area of study that examines why people choose to commit crimes, frequently in the face of severe repercussions. On the other hand, psychology has itself, over time, led to substantial changes in how legal professionals see crime and the law, as well as changes in how the criminal justice system handles the mentally ill.

Criminal psychology offers greater insight into a criminal’s mind than that. It also affects how the law is put into practice. To make an objective decision in court, attorneys need to understand the reasons behind the defendants’ behaviour. Other mental health specialists and forensic psychologists are frequently requested to assist in clinically assessing the mental conditions of lawbreakers. Police jobs also incorporate psychology. Criminal anthropologists or forensic psychologists are frequently employed as criminal profilers, who use a combination of crime-scene investigation, investigative psychology, and other behavioural disciplines to identify potential culprits. These professionals are frequently used by law enforcement authorities to get insight into the mind of a potential offender by determining the offender’s likely personality type, lifestyle habits, and peculiarities.

Findings in criminal psychology may aid in the identification of suspects, maybe enabling law enforcement to stop more crimes or apprehend a serial offender. On a bigger scale, understanding what drives criminal behaviour, whether due to deprivation, personality traits, or other factors, is essential for fostering the social environments that would enable people to quit.

Criminal vs forensic psychology : how law benefits both 

The phrases “forensic psychologist” and “criminal psychologist” are frequently used interchangeably. People can carry out the same tasks whether they identify as one or the other. There are some crucial distinctions, though. 

  1. If you are referring to criminal profiling, that is probably the purview of criminal psychology. 
  2. Although forensic psychologists do the majority of assessments, a criminal psychologist may still provide tests. 
  3. Although many professionals who do experimental research identify as forensic psychologists, criminal psychologists evaluate a significant amount of research and data to determine the psychological profiles of criminals. 
  4. Another distinction is that although criminal psychologists concentrate on criminal problems, forensic psychologists deal with all legal matters, including civil ones.

What does forensic psychology have to offer

When speaking to experts who deal with crime in the nation, one frequently hears that “forensic psychology is an emerging field in India.” You may learn the same thing by performing a quick Google search for “forensic psychology in India.” While it is generally acknowledged that crime investigation organisations are using more techniques related to forensic psychology, there is still much room for improvement. In nations like the UK and Australia, forensic psychologists are an essential component of the criminal justice system. Their job descriptions are varied and include serving as victim counsellors, expert witnesses in legal proceedings, suspect interrogators, and criminal profilers.

Unfortunately, their Indian counterparts don’t have as many distinct, varying functions. The nation’s criminal investigation and judicial systems might benefit from allowing forensic psychologists to practise in additional areas and utilising their knowledge across different platforms. There are separate psychological departments at numerous governmental and non-governmental organisations that are involved in criminal investigations. In contrast to competent forensic psychologists, these departments find more use for clinical psychologists who are trained in diagnosis and psychotherapy. This is being done for an unknown cause.

The criminal justice system has several roles for forensic psychologists, with a concentration on the three domains of law enforcement, corrections, and the courts. Police psychologists who work for police departments, prison psychologists who work in our nation’s prisons, and expert witnesses who testify in court are three instances, one for each part. Every day, there is a stronger connection between the application of psychology and the law, creating new professional opportunities and places where it must be developed.

How psychology influences law

The legal system has been significantly impacted by psychological and psychiatric research, especially since the turn of the 20th century. The movement to deinstitutionalize the mentally ill occurred at the same time when more sophisticated psychiatric drugs were being developed, and there was also an increased awareness of the causes and potential treatments for mental diseases. Additionally, the rising psychological consensus that homosexuality and, more lately, being transgender are not mental diseases probably had a substantial impact on the decriminalisation of homosexuality in the United States. In addition, psychologists are now frequently consulted by legal professionals, such as attorneys, police officers, and judges, in order to evaluate defendants’ mental states and, if necessary, offer therapy. In recent years, the field of psychology known as “forensic psychology” has expanded rapidly. The possible ways in which psychology influences the law have been laid down hereunder: 

  1. By providing decision-makers with considerably more accurate images and representations of human perceptions and preferences, it aids in enhancing and influencing decisions.
  2. As eyewitnesses are frequently easily frightened or persuaded, it aids in determining the witness’s objectivity.
  3. It aids in lowering the number of false confessions.
  4. Psychological studies also examine a variety of legally and socially crucial issues.
  5. When decisions are made after taking the accused’s psychological needs into account, true justice is maintained.

Role of psychologist in an investigation

Professor Lionel Haward, the founder of criminal psychology, stated in 1981 that there are primarily four responsibilities for psychologists in a criminal investigation, in addition to ‘psychologists in science.’

  1. Clinical: To make a significant decision, a thorough evaluation must be carried out. This will help when interviewing the suspect and looking through the collected evidence.
  2. Experimental: In this situation, psychologists must conduct in-depth research on the specific case. Executing experimental tests as part of this research is necessary to comprehend the offender’s psychology and give the court pertinent data.
  3. Actuarial: This work primarily focuses on gathering statistical information on the suspect’s past and present mental and physical health because such information is crucial to determining if he would likely commit a crime in the future.
  4. Advisory: The psychologists are also accountable for advising the police and the court on how to move forward with their investigation. This covers every step of the vulnerable witness cross-examination process as well as the anticipated responses from the offenders.

Role of psychologist in a courtroom 

The forensic psychologist’s job starts when the police, attorneys, or judges ask them to examine and evaluate criminals. The information they gather during this time is then utilised as evidence in court. A forensic psychologist might work toward the rehabilitation of a criminal or victim in a medico-legal ward under a court order.

Section 45 of the Indian Evidence Act of 1872, states that “the court might take help of the experts, whenever it has to form a judgement upon a point of foreign law, of science, or art, or as to the identification of handwriting, and the opinion of such an expert is important.” 

The “mens rea,” the state of mind of the person who often pleads not guilty while testifying at a trial of the subject, will be illuminated by the role played by forensic psychologists. When someone enters a guilty plea and says they were impaired by drugs or alcohol or didn’t know they were doing it, the defence has the chance to ask for a lighter sentence or ask the judge to postpone rendering a decision.

Accordingly, a forensic psychologist can help the courts administer the law fairly by providing evidence in the form of reports from interviews and evaluations of the subject of the case. In these situations, experts are needed to intervene and take into account the interview and evaluation of the person in question to judge and provide an opinion on how true the person’s statement is. This aids the judge in executing a judgement that is fair and also takes into account the individual’s safety as well as the safety of society at large. Section 45 of the aforementioned statute also permits forensic psychologists to contribute their knowledge to the resolution of criminal investigations, giving them the freedom to adapt their forensic techniques to the demands of particular cases.

Why are psychologists relevant in building a robust criminal justice system

Psychologists possess some valuable skills that can help in improving the criminal justice system, which have been laid down hereunder: 

Judging the mental state of criminals

People frequently commit crimes when under duress or when their thoughts are not stable. In comparison to a sensible person, such criminals face fewer penalties. In such a case, forensic psychologists can evaluate the offender’s mental state and determine whether or not they are in the proper mental state. It can aid in creating appropriate penalties for criminal actions.

Advising the type of treatment in prison

Many criminals who suffer from mental illness are prone to injuring themselves or other inmates. These people receive special accommodation in rooms with settings tailored to their cognitive requirements. The optimum place for such criminals to be imprisoned and a suitable sentence might be recommended by forensic psychologists.

By offering a few advantages like the ones listed above, forensic psychologists can improve the legal system. Before it can sentence criminals, a court system must be thorough and clear. To aid the court in identifying the crimes committed and determining the appropriate sanctions, forensic psychologists are called upon.

Providing additional evidence

Forensic psychologists’ testimony might serve as extra proof to help the jury make a conclusion. Lack of evidence frequently causes cases to become murky. The outcome can radically change with a few flaws. In this situation, forensic psychologists can be of assistance by making comments and offering additional details on the criminal’s actions and motivations for committing the crime.

Motive, instrumentality and opportunity : how criminal psychology functions 

Psychologists and law enforcement officials are both very interested in understanding why people commit crimes and what can stop them from doing so in the future. Extensive study so far indicates a complex interplay of environmental, genetic, and personality factors. In order to understand how criminals select their victims, whether it is possible to protect oneself from particular types of crime, and what legal experts and policymakers can do to prevent crimes from happening, psychologists also conduct research, frequently working with people who have committed crimes or are the victims of crimes.

A person’s thoughts have an impact on their actions. A person’s personality determines how and/or what they think at any given time. What distinguishes people is personality. It would be unfair and unjustified to criticise a person for the crimes they have committed based solely on the way they appear, but a person’s mentality and personality have a lot to do with whether or not they will commit a crime and how serious it will be. People typically approach situations or carry out tasks differently from other people, but what makes a person’s approach unique is how they perceive the circumstance, and how they see it depends on their personality and attitude.

Although there has been significant progress in our knowledge of the criminal mind, there is still much to learn about the motivations of some criminals, as well as a degree of randomness in who becomes a victim and who does not. Some criminals act out of necessity, while others are motivated by rage, defiance of authority, a manipulative nature, or psychopathic characteristics. While it is untrue that all mentally ill individuals are more likely to commit crimes, there are specific situations in which mental illness, such as psychosis, substance misuse, or severe bipolar disorder, may motivate a person to breach the law.

The prosecution must prove both actus reus (‘guilty act’) and mens rea (‘guilty mind’) at the time of committing the crime in order to secure a criminal conviction. Failure to establish the presence of these components will result in a complete exoneration of the charged crime. The claim that there was no actus reus or mens rea is not a defence per se because both must be established by the prosecution at trial with evidence that is beyond a reasonable doubt. They differ from numerous positive defences, such as the defence of insanity or the self-defence defence, which are seen as explanations or justifications for otherwise unfavourable behaviour.

According to some research, thieves may select their victims in part or entirely depending on the way they move or appear. For instance, one study indicated that people who stood out visibly from their surroundings or moved in distracting, unconventional ways were more likely to be identified as prospective victims by criminals.

The relationship between mens rea and criminal psychology

The necessity that a defendant should have had a specific frame of mind at the time the crime was committed is known as mens rea, or guilty mind. The appropriate criminal statute will typically use one of the following phrases to describe the mens rea element of a crime, namely, intent, purpose, knowledge, recklessness, or negligence. Most criminal laws merely need a broad or objective mens rea standard, where the question is whether a reasonable person would have understood that the act would be harmful. The defendant must have known that they were behaving, but not that any specific criminal consequences would follow from their action, in order to be found guilty of a so-called general-intent crime; this is typically referred to as “recklessness” or “negligence.” The prosecution is exempted from having to consider the defendant’s mental state in order to satisfy this criterion. 

For some crimes, the prosecution must prove that the defendant truly knew or intended that specific harm would follow from their actions, a requirement known as a showing of specific or subjective mens rea. Specific or subjective mens rea is typically reserved for more serious offences with more severe punishments because this might be difficult to prove. As a person’s mental condition is unimportant to the question of general or objective mens rea, evidence of mental disease is rarely permitted in these situations. On the other hand, some states allow the submission of mental disorder evidence if it is rationally pertinent to challenge the objective or particular mens rea requirement (i.e., the state of mind associated with a specific-intent crime). If this defence (also known as diminished capacity) is successful, the defendant is often only concerned about being found guilty of a lesser charge that only calls for proof of general or objective intent.

In order to be able to punish the defendant if they are unable to persuade the judge or jury that the required particular intent existed at the time of the offence, prosecutors who charge a person with a specific-intent crime usually additionally charge the defendant with a general-intent crime. The use of evidence of a mental disorder in discounting the existence of a specific purpose differs from the use of evidence of a mental disorder for an insanity defence in that the former can result in an unconditional acquittal and the latter often results in civil commitment and treatment. Because, as stated above, both mens rea and actus reus are parts of the crime that must be established beyond a reasonable doubt, if they cannot be proven, the defendant will be exonerated of the charged crime. This outcome is the same as that which occurs from a lack of actus reus.

The use of expert testimony about mental diseases has frequently been prohibited by courts and legislators. For instance, testimony based on any indication of a mental disorder is prohibited in some jurisdictions unless it is being used to bolster an insanity defence. In Clark v. Arizona (2006), the Supreme Court maintained this approach, holding that Arizona did not violate due process by limiting the admissibility of evidence of mental disease to just insanity claims and excluding such evidence when it could be used to address mens rea. However, even in areas where mens rea experts cannot testify in court, the details of a defendant’s mental condition may still be discussed during plea talks and before sentencing.

Concurrence

Criminal conduct that results in unlawful hurt or damage must have both criminal intent and the banned harm or injury. The ideas of criminal acts, criminal intent, the congruence between acts and intent, causality, culpability, and defences are fundamental notions that are necessary for understanding criminal law.

Causation

A criminal act must be both the legal or proximate cause and the cause in fact or “but for” of harm or injury. Unless the intervening conduct was foreseeable, a coincidental intervening act shatters the line of descent established by a defendant’s unlawful act. Unless the intervening action was exceptional and unexpected, a responding intervening act does not sever the chain of causation started by a defendant’s criminal act.

Criminal psychology and its relation to actus reus

The conduct necessary for a crime is called actus reus. A person’s condition or status (such as being an alcoholic as opposed to criminal behaviour committed while intoxicated) and involuntary acts are all excluded from criminal liability by the actus reus requirement. Positive behaviour, omissions of obligatory or logically expected conduct, and ownership of illegally obtained objects are examples of voluntary acts that meet this criterion. The term “voluntary act” is used widely to refer to any act that involves the exercise of volition; for instance, someone acting under duress is nevertheless regarded as behaving voluntarily (although this may constitute an affirmative defence of duress).

Two sorts of actions that might be categorised as being involuntary exist, namely,  involuntary conduct and impaired consciousness. The first group comprises physically compelled movements (such as when someone pushes someone into another person, harming the third person), reflex movements (such as when someone gets stung by a swarm of bees suddenly), muscular contractions brought on by illness, and unconscious acts. Among the illnesses that could result in uncontrollable behaviour are strokes, epilepsy, and narcolepsy. A disruption in the mind-body link that leaves the person’s actions unguided by a conscious thought process underlies all of these behaviours. Compared to the second group, this one’s behaviours are more frequently considered as lacking the actus reus component.

The second category, impaired consciousness, includes behaviours where the connection between the mind and body has sufficiently diminished such that the person is not consciously aware of the actions being taken but is still capable of engaging in goal-directed behaviour based on previously learned responses. The person’s actions during these times may be referred to as “automatic,” and they may be called “automatons.” Concussion-induced temporary brain injury and sleep disturbances like night terrors are two typical examples of decreased consciousness. There has been debate over whether symptoms brought on by hypoglycemia should fall under this heading.

A claim that the defendant lacked actus reus is nearly never allowed to be supported by evidence of a mental illness. Instead, in places that permit volitional arguments, this evidence might be used to support an insanity defence, such as the idea that the defendant’s actions were motivated by an irresistible need brought on by the mental disease. Suppose a person’s inability to adapt their behaviour to the law is the result of mental disease. In that case, they may be exonerated under the insanity defence and then committed for treatment- a consequence that cannot be enforced on individuals exonerated for lack of actus reus.

Role of criminal psychology in criminal trials

The fields of law and psychology are both incredibly fascinating. The two do not appear to interact as much as they ought to under the Indian legal system, though. Even though psychology might be complicated, it can also be a very powerful weapon, particularly in criminal trials. It needs to be used by those who are incredibly credible and professional. A specialist in psychology should be able to provide us with fascinating and trustworthy insights into the thoughts of suspects, witnesses, and alleged victims, which would be of great assistance and support in difficult criminal trials. The human brain is perfectly capable of being examined. It would vary from case to case and jurisdiction to jurisdiction as to how such expert opinions are to be taken into consideration. This is receiving a lot of worldwide thought, and for good reason.

Criminal psychology and deterrence : how they work together 

We need to consider both the psychological and the physical when discussing deterrence. While we can erect physical and mental barriers to crime, like fences, locks, and the presence of guards, we can also erect deterrents that are almost completely psychological. So what prevents individuals from committing crimes? People will go to tremendous physical lengths to commit a crime if they think the reward is worth it, as anyone with even a small amount of experience or who has ever watched a movie can attest. On the other hand, a lot of crime is just opportunism, where someone is motivated to steal by an open gate, window, or unattended shop counter. And frequently, the potential repercussions are not even contemplated, much less brought to mind.

In general, punishments are meted out with the intent of deterring future offences and safeguarding society. In addition to ensuring adherence to a nation’s regulatory laws, it also aims to ensure that offenders are changed by imprisoning them.

There may be some people who still think that the threat of punishment works as an effective deterrent to crime, but there are probably none in the security professions. If it were the case, crime and criminals would not exist. Although physical punishment is a component of the deterrent process, certainty as a concept is actually much more crucial. In his essay “Deterrence in the Twenty-First Century,” Carnegie Mellon University professor Daniel S. Nagin asserts that “the evidence is significantly more consistent in favour of the deterrent effect of the certainty of punishment than that for the severity of punishment.”

Therefore, it is crucial to comprehend this concept before executing any security program or plan. It not only works in tandem with physical security tools like CCTV cameras, alarms, and guard patrols, but it also explains how and why such things function and how they don’t.

The effectiveness of legal sanctions has been the subject of a sizable corpus of research on what deters crime. The deterrence hypothesis, which underpins this study, contends that the threat of legal repercussions deters people from committing crimes. This theory is based on the idea that people decide whether or not to commit a crime by calculating the potential rewards of getting away with it against the potential costs of getting caught. It is grounded in the rational actor approach.

Simply “the process of manipulating an adversary’s cost/benefit calculations to prevent him from doing something you do not want him to do” has been described as the basic deterrence principle. For many offenders, those calculations are frequently conducted in a crude manner or not at all. The truth is that anyone with the desire to commit a crime can find an opportunity to do so. The road of least resistance is always taken by criminals, with the exception of the most committed and seasoned ones. Most people will opt to look elsewhere if they are faced with the certainty, real or otherwise, that they will be caught. They will act similarly if the payoff is clearly less desirable than the effort necessary to obtain it. The technique of persuading criminals that leaving the area is the safest course of action is true deterrence.

Theories of punishment 

Preventive theory

It is one of the earliest theories and is based on the idea that it is crucial to punish people who commit wrongdoing. This was created under the “eye for an eye and a tooth for a tooth” tenet. This portrayed the violent, irregular mind of criminals and encouraged a more spiteful method of enforcing the law. Later, jurists attacked it for making people more vulnerable than the crime itself. 

Deterrent theory

This outdated approach to punishment implied that harsh penalties would dissuade offenders from committing crimes. It claimed that in order to get people to obey the law, it was necessary to instil the dread of punishment in their minds. According to this theory, the amount of punishment meted out will satisfy the criminals’ selfish motives because they already had a mental decline and were acting out of desperation.

Preventive theory

This notion is based on the idea that punishment should primarily serve to deter future crimes rather than exact revenge. This theory was developed with a less criminological and more humanistic outlook. It holds that getting rid of antisocial people from society will stop new crimes from happening.

Reformative theory

In the present period, this kind of meted-out punishment is widely used. This philosophy is in favour of rehabilitation of the criminal as opposed to humiliating punishment. As a result, people’s human rights are increasingly protected, and jails are being used as homes for rehabilitation. This thought clarified the idea that if a person’s wicked nature is removed, he will once more be suitable for society. This hypothesis has opened up a vast field for investigation and analysis in criminal psychology.

Death penalty as an effective deterrence with respect to criminal psychology 

One of the first arguments for capital punishment was deterrence—the idea that the institution of the death sentence would deter potential murderers from actually committing murder. Barbarous methods of execution, including beheading, burning at the stake, decapitation, and disembowelment, were deemed to be particularly successful at inspiring the dread needed to deter potential capital offenders. 

The study does not support the deterrent impact of the death penalty, despite the intuitive appeal of this hypothesis. Neither the adoption of the death penalty nor its removal resulted in an increase in murder rates. Numerous studies have looked into the deterrent power of the death penalty. These studies have analysed homicide rates over time when the death penalty was abolished or reinstated, as well as homicide rates in jurisdictions with and without the death sentence (such as neighbouring states). Social scientists have attempted to statistically control for variables that are known to affect rates of violence, such as the size of the police force, the proportion of young males in the population, and unemployment rates, in order to examine the potential for a deterrence effect.

Studies have been done to see if the quantity of executions (rather than whether the death penalty is an option for punishment) is what deters crime. Specific analyses have also been done to see if only crimes punishable by death (such as aggravated murder) are deterred. The death penalty does not deter killers, according to the general conclusion of more than 40 years of research. Despite the fact that some researchers have discovered a deterrent impact for particular jurisdictions over a certain amount of time, other researchers have discovered what is known as the “brutalization effect,” a small but steady rise in the frequency of murders in the weeks after an execution.

Large data sets that have been gathered over extended time are frequently used in deterrence research. However, the deterrence theory also relies on a psychological theory to explain what goes on in the thoughts of potential killers. The likelihood that a murderer will be apprehended, found guilty, sentenced to death, and then put to death must be high enough for the death penalty to serve as an effective deterrent. The potential killer would also need to consider the likelihood of eventual execution as significantly more terrifying than the idea of spending the rest of his or her life in jail if the availability of the death penalty were to have a deterrent impact beyond that offered by life in prison. Even a logical evaluation of these probabilities would not necessarily deter a potential murderer, and given that the majority of killings are carried out while the perpetrator is under the influence of drugs or strong emotions, it seems improbable that murderers would weigh their options in a logical manner.

Psychological assessment of death row prisoners

The evaluation of death row inmates has expanded now that a fresh angle has been opened by the Supreme Court. In a historic decision, the Supreme Court mandated psychological testing for criminal defendants who were likely to receive the death penalty, along with a report on the defendant’s behaviour. The most recent order included the convict’s mental state as part of this larger set of factors needed to determine the suitability of the death sentence, indicating continuity with the 1980 Supreme Court decision (Bachan Singh vs State of Punjab, 1980) that reserved the death penalty for the rarest of rare cases and took into consideration aggravating and mitigating circumstances.

According to a court order, state governments and prison administrators must make sure that the head of a government medical facility assembles a team that includes a psychiatrist and a psychologist to assess inmates on death row. The team’s report should be presented in court before the attorneys make their arguments, not afterwards as is customary at the moment, together with the probation officer’s report regarding the prisoner’s behaviour, his or her work while incarcerated, and other necessary details. Justice Uday U. Lalit has stressed in a number of his rulings the type of support that other institutions must provide to the court while the death penalty is being contemplated.

The most recent ruling makes clear the parameters within which such aid must be provided. Although the topic of psychological testing is related to the earlier Supreme Court concept of mitigating circumstances, it also introduces a component that has resonance outside of the death row community. A system that is scarcely engaged in meeting their basic requirements or caring for their health is unlikely to have considered the possibility of evaluating the mental state of Indian inmates, from those who are detained and being tried to those who have been found guilty but not of capital offences.

The Supreme Court’s ruling treats convicts as human beings, evaluating their mental health to determine which punishment would be most appropriate. In this situation, a fitting would imply being both just and compassionate while also allowing for reform. This may apply to all convicts, not least to children detained in juvenile detention facilities. A shift in strategy is required for psychological evaluation, changing the focus of staff training in prisons. It is a crucial step in the modernization of the legal system.

Conclusion 

Criminal psychology in developing nations like India has a long history. It has been recognised for thirty years as a field of applied psychology that helps with crime prevention, intervention, and victim rehabilitation. Technological advancements over the past three decades have changed the perspective of criminals, prompting sophisticated and creative technology development for crime detection. Investigations now go beyond simply looking for lies to follow the biopsychosocial underpinnings of criminal behaviour in accused and suspects. A legal system is required for society to function properly.  Psychologists play a crucial role in the entire inquiry at the time of the proceedings by thoroughly researching the psychology of the criminals. This aids lawmakers in determining the laws that are necessary to instil dread in the hearts and minds of such criminals. No legislation can prevent a person with a mental illness from committing a crime, but a psychologist can predict if the individual will keep up their bad habits in advance. As a result, society has a better future thanks to this expanding branch of science. The legal system makes an effort to address many of the issues facing modern society. Some legal authorities do not view psychology as relevant, yet that is because law deals with conceptions of behaviour.

Frequently Asked Questions (FAQs)

How are psychology and criminology different from each other?

Despite being two distinct terminology and fields, psychology and criminology are equally significant and interrelated. While criminology is commonly understood to be the scientific study of crime and criminals, psychology is the scientific study of behaviour, which includes criminal acts and behaviour.

References


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Section 47 CPC

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civil procedure code

This article is written by Monesh Mehndiratta, a law student at Graphic Era Hill University, Dehradun. The article explains nature, scope, objective, and relevance of Section 47 CPC. It further discusses the powers and duties of executing courts. 

It has been published by Rachit Garg.

Introduction 

Whenever we think of an idea or plan, we try to execute it properly to achieve our goal, and if one plan or idea does not work or fails to furnish the desired goals, we think of other ways of execution. Similarly, when a court passes any order or decree, it also devises methods to execute the order or decree passed. This stage of execution of an order or decree in a suit is one of the most important stages as it consists of rights or remedies that have been granted to the decree-holder and obligations to be fulfilled by the judgement debtor. 

Now imagine there is a dispute between two parties where the personal rights of ‘A’ have been infringed upon by ‘B’. ‘A’ files a suit in a civil court as the plaintiff, while the defendant ‘B’ argues that there has been no infringement of any such rights. In the further proceedings, the court comes to a judgement that ‘B’ is liable to pay damages of say Rs. 50,000 to ‘A’ and passes a decree whereby ‘B’ becomes the judgement debtor and ‘A’ the decree holder/judgement creditor. When it’s time to execute the decree, ‘B’ refuses to pay any damages to ‘A’ and does not fulfil any kind of legal obligations. This is where the role of the executing court comes into the picture. If ‘B’ has to raise any objections against the execution or ‘A’ has to file an application for the execution of a decree, the same will be done in the court that has adjudicated the matter if no other court is explicitly mentioned in the decree for its execution. The court will now become the executing court and will devise methods for the execution of the decree in favour of ‘A’. 

Section 47 of the Code of Civil Procedure, 1908 specifically deals with objections to execution, discharge, and satisfaction of a decree. It deals with such questions that have to be considered while executing any decree. The article explains the scope, object, and general principles of the Section along with the necessary conditions. 

Nature and scope of Section 47 CPC

One of the most important principles of Section 47 is that any matter related to the execution, discharge, or satisfaction of a decree between two or more parties or their representatives in their absence must be determined in the same execution proceedings. No other or separate suit must be filed for the same. This indicates that the Section has a much wider scope than it looks. The executing court has been conferred exclusive jurisdiction on all matters related to execution, discharge, or satisfaction of a decree. 

According to Section 47, once a suit has been adjudicated and a decree has been passed, then all the questions related to the execution of the decree must be taken up and determined by the executing court. It further bars the filing of a separate suit for this purpose. In the case of Harnandrai Badridas v. Debidutt Bhagwati Prasad (1973), the Hon’ble Supreme Court held that in order to empower the executing court to consider and determine all questions related to the execution of a decree, unless it falls beyond its ambit, the provision of Section 47 must be interpreted liberally. 

Objective of Section 47 CPC

The following are the objectives of this Section:

  • To provide a quick and cheaper remedy in case the decree has not been executed by a judgement debtor. 
  • To determine any question or objection related to the execution of a decree. 
  • It also reduces the burden of filing a separate suit and thus prevents multiple litigations and suits. 
  • It also reduces the chances of pendency of suit and delay in justice, which might happen in case a separate suit is filed for the purpose of execution of a decree. 
  • It provides a legal remedy to the decree holder if the decree has not been executed properly or if there is any ambiguity in the execution. 
  • The decree can be enforced properly and without any failure with the help of the executing court. 

Essentials of Section 47 CPC

In order to apply Section 47, the following conditions or essentials must be fulfilled cumulatively:

  • The question related to the execution of a decree must arise between the parties to a suit or their representatives and not any third person not having any interest in the suit or execution. 
  • The question or matter at issue must be related to the execution, discharge or satisfaction of a decree. 

Parties to suit or their representatives

One of the essential conditions of Section 47 is that the parties must be determined properly. This question or any issue in execution must arise between the parties or their representatives in a suit in which a decree has been passed. The word “parties” neither includes de facto parties nor does it merely include plaintiff and defendant but also includes opposing parties. For example, in a suit related to partition, if any question arises between the co-defendants, they will fall under the category of parties for Section 47, while if any question arises between parties who are not opposing parties in a suit or between a party and a third person, then such questions will not fall within the ambit of Section 47. 

Explanation 2 of the Section clearly mentions that a purchaser of any property which has to be sold in execution of a decree is deemed to be a party to the suit in which the decree has been passed, irrespective of the fact that he or she is a stranger to the suit. Whether any person is a party to a suit for Section 47 must be decided on the basis of whether he is a party to any suit in which any decree has been passed or not. 

The term “representative” does not merely include legal representatives like heirs, executors, etc., defined under Section 50 of the Code but includes “representative in interest,” i.e., any person who is a transferee of interest to either the decree holder or judgement debtor and is bound to act according to the decree. It is at the discretion of the court to decide whether any person is a party to a suit or representative in order to apply Section 47 of the Code. 

Question or matter in issue

The question or matter at issue between the parties to a suit where the decree has been passed must be related to the execution, discharge, or satisfaction of such a decree. The following questions fall under the ambit of Section 47:

  • Whether the decree passed is executable, 
  • Whether the property mentioned in the decree be sold for execution of such decree, 
  • Whether the decree has been executed and whether the method or procedure followed satisfied the decree, 
  • Whether the property in question is included in the decree, 
  • Questions related to identity, attachment, or sale of property. 
  • Whether a party is entitled to restitution of property after the decree has been executed, 
  • Whether such execution be postponed or not, 
  • Whether the sale of property in the execution is warranted and done according to what has been mentioned in the decree, etc. 

Prior to the Amendment Act of 1976, various High Courts had given different opinions on whether the question related to the delivery of possession of property to an auction-purchaser falls under the ambit of Section 47. But the Supreme Court in 1973 clarified and settled that such a question is related to the execution, discharge, or satisfaction of a decree and must be determined under the Section and thus, clause (b) to Explanation 2 was added after the amendment. (Harnandrai Badridas v. Debidutt Bhagwati Prasad, 1973 )

Some of the examples of questions that do not fall within the category of questions under the Section are as follows:

  • Whether the decree passed is fraudulent, 
  • Whether it has become inexecutable by a compromise in the previous suit before the passing of a decree, 
  • Question of the jurisdiction of the court,
  • Question related to the validity of decree except in cases where it is a nullity, 
  • A pre-decree arrangement between the parties, 
  • Question or claim for compensation for wrongs committed by any officer in the execution of a decree, etc. 

Powers and duties of executing court

The powers and duties of the executing court are:

  • Plenary power to determine questions related to execution, discharge, or satisfaction of a decree. 
  • The relevant date for this purpose would be the date on which the proceedings were originally instituted. 
  • It can mould relief according to the changes in the circumstances. 
  • The court cannot go beyond what has been mentioned in the decree. 
  • The question related to the validity or correctness of the decree can not be determined by such a court. 
  • It has the duty to interpret the decree in cases of vagueness and ambiguity. 
  • It can also refuse the execution of a decree if there is an inherent lack of jurisdiction in the court. 

General principles for executing court

There are some general principles related to the power and duties of an executing court. These are:

  • No court can execute a decree for a property that is situated outside its local jurisdiction. Thus, the general rule is that an executing court has to work within its territorial jurisdiction.
  • The executing court can never go beyond what has been stated in the decree, nor can it modify the decree. 
  • If the court lacks inherent jurisdiction, then the decree passed will be a nullity and its invalidity could be easily established in execution proceedings. However, such a lack of jurisdiction must be easily identifiable on the face or in the first instance. 
  • In case the decree-holder dies, then it does not mean that the decree will now stand inexecutable. It can be executed against his legal representatives. 
  • The executing court has the power to interpret a decree in cases of ambiguity and vagueness. 
  • It can also decide whether such a decree has ceased to be executable by any subsequent developments. 
  • If a decree has become inexecutable by operation of law, then it might become executable by virtue of any further amendment. 
  • The executing court can also mould or modify the relief granted to the plaintiff according to any change in the situation or circumstances. 
  • If the executing court is executing a decree which has been transferred to it by some other court, then it will have the same powers as if it is executing a decree passed by the court itself. 

Appeal, revision and Section 47 CPC 

The word ‘decree’ has been clearly defined under clause 2 of Section 2 of the Code. Prior to the Amendment Act of 1976, the question related to the execution of a decree under Section 47 was subject to a first appeal under Section 96 and then a second appeal under Section 100 of the Code. This meant that if a party was not satisfied with the proceedings of the executing court and its order, then it could appeal further. It was earlier considered as “deemed to be a decree”. 

In the case of Parshava Properties Ltd. v. A.K. Bose (1979), the Patna High Court held that the determination of a question under Section 47 of the Code will be termed as a decree only if it fulfils the essentials of a decree defined under Section 2(2) of the Code and, thus, could be appealed further. However, this was overruled in the case of Narmada Devi v. Ram Nandan Singh (1987). On the other hand, the High Court of Allahabad, along with other courts in different judgments, has given a different view that after the amendment of 1976, an order passed under Section 47 of the Code does not fall within the meaning of the decree (Pratap Narain v. Ram Narain, 1980).  

Thus, after the amendment, any question determined under the Section and an order passed in lieu of the question are not considered as decrees, and so no further appeal lies. However, one can file a revision application under Section 115 of the Code if the conditions given in the Section can be fulfilled. 

Recent judgements related to Section 47 CPC

Sh. Parveen Kumar & ors. v. Sh. Choudary Ram & ors. (2014)

Facts

In this case, there was a dispute over illegal and unlawful possession of land by the defendants, which the plaintiff claimed belonged to him and other co-sharers. The allegations of the defendants were that they had forcibly taken over possession of the property as they were neither the tenants nor the owners. The trial court asked them to vacate the land. They further filed an application for the execution of the decree under Section 47 of the Code.

The judgement debtors, on the other hand, raised questions and objections to make it inexecutable on the ground that they had already purchased some part of the property and were the co-owners along with the plaintiff. The executing court heard the pleadings and came to the conclusion that the judgement debtors were also the owners, and the plaintiff could not be given actual possession of the property. The decree-holder further filed a petition against the executing court, claiming that it failed to execute the decree. 

Issue

Whether the petition is maintainable and whether the executing court failed to execute the decree. 

Judgement 

The court in this case held that it is well settled that an executing court cannot go beyond the decree, but according to Section 47 of the Code, it has the power to determine questions related to the execution of the decree and the objections therein. In the instant case, it was proved that defendants had purchased some parts of land, and so, they were co-owners along with the plaintiff and, thus, could not be asked to vacate the land. The court further dismissed the petition. 

Bharat Pumps and Compressors v. Chopra Fabricators (2022)

Facts 

In this case, there was an agreement between the two parties that also contained an arbitration clause. A dispute arose between them and they approached the arbitrator. The opposite party, after following the procedure and finishing arbitration proceedings, asked to execute the arbitration award with the help of the court and filed an application for the execution of the award, which was accepted. The revisionist further filed objections under Section 47 of the Code to make it inexecutable. 

Issue

Whether an arbitration award be treated as decree and whether any questions can be raised under Section 47in this regard.

Judgement

The Supreme Court held that an arbitration award is not included under the definition and meaning of decree in the Code and so no questions can be raised in the execution of such an award. The question related to execution, discharge, or satisfaction can only be raised and determined by the executing court in the case of a decree that has been passed by the court. Here, the executing court has no role to play and so no questions can be determined under Section 47 of the Code. The court further observed that the Arbitration Act, 1940 is self-sufficient and so any objections related to the award can be raised according to the provisions of the Act. 

Conclusion

Section 47 mainly deals with the questions that are to be determined by the executing court while executing a decree. The questions that can be related to execution, discharge, or satisfaction of the decree come under the ambit of this Section. The position of an order passed by the executing court under the Section was different before the Code of Civil Procedure (Amendment) Act of 1976. It was considered to be a deemed decree and an appeal in furtherance of that order was permitted. But after the amendment, it is clear that any order passed by virtue of Section 47 is not a decree and cannot be appealed. However, an application for revision can be filed, which is maintainable only if the conditions of revision are fulfilled. The Amendment Act of 1976 further provides that any amendment to Section 2(2) of the Code will not affect any such pending appeals and they will be determined as if they were determined before the amendment. 

Frequently Asked Questions (FAQs)

What are the different modes of execution of a decree?

A decree can be executed by:

  • Delivery of property, 
  • Attachment and sale of property under clause (b) of Section 51,
  • Arrest and detention under clause (c) of Section 51, 
  • Appointment of receiver under clause (d) of Section 51, 
  • Partition under Section 54
  • Cross-decrees and cross-claims, 
  • Payment of money, 
  • Specific performance of contract, 
  • Restitution
  • Execution of documents, 
  • Endorsement of a negotiable instrument, 
  • Attachment of rent, 
  • By decree against corporations or firms, etc. 

What is the difference between Section 47 and Order 21, Rule 58 of CPC?

Both Section 47 and Order 21, Rule 58 of the Code of Civil Procedure, 1908, are related to execution proceedings. The only difference is that Section 47 applies to parties in a suit or their representatives, but Order 21, Rule 58, applies to third parties and their representatives. Further, Section 47 bars a separate suit and appeal, but the latter only bars the suit. 

What kind of suit is barred under Section 47 CPC?

Section 47 bars a separate suit in respect of execution, discharge, or satisfaction of a decree. If any suit does not fulfil the two important conditions of the Section mentioned above, then the suit will not be entertained. 

What is the difference between Section 47 and Res judicata?

Res judicata deals with the final decision of the court in a suit on matters that have been already decided by one court and bars the filing of another suit on the same issue between the same parties to be filed in the same jurisdiction of another court, while Section 47 deals with the enforcement and execution of such decisions and specifies that any question with respect to execution will be determined by the executing court and there is no need to file a separate suit for the same.  

References 


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

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

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Article 370 of Indian Constitution

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This article is written by Niharika Agrawal, from IFIM Law School. This article deals with the history of Article 370 and its actual status under the Constitution of India.

It has been published by Rachit Garg.

Introduction

Article 370 of the Indian Constitution was a temporary provision that grants special status to the State of Jammu and Kashmir. This Article is temporary in the sense that the Constituent Assembly of Jammu and Kashmir had the right to modify, delete or retain it, and also it was considered to be temporary only till a plebiscite was held to ascertain the public wish. However, in recent times there has been a huge debate with respect to the temporary status of this Article. On many occasions, the Government and judiciary have claimed it to be permanent provisions. Thus the present article deals with the history of Article 370 and the actual status under the Constitution of India. 

Both India and Pakistan claim full sovereignty over the Himalayan territory of Kashmir. Previously known as Jammu and Kashmir (J&K), the region became part of India in 1947, not long after the subcontinent was partitioned following the end of the British administration. A ceasefire line was agreed upon after India and Pakistan went to war over it and came to control separate portions of the area. The state of Jammu and Kashmir, which is controlled by India, has experienced violence for 30 years as a result of a separatist uprising against Indian rule.

Brief about Article 370 of Indian Constitution

The autonomy of the State is given by Article 370 of the Constitution. The temporary provision of this Article is derived from Part XXI of the Constitution under the title “Temporary, Transitional and Special provisions” which grants special status to the State of Jammu and Kashmir. This article was included in the Constitution on 17th October 1949 that exempted the State from the Indian Constitution except from Article 1 and Article 370 and allows the State to frame its own Constitution. It also restricts Parliament’s legislative powers in respect of Jammu and Kashmir. There were many Indian legislation and statutes that apply to the whole of India but are not applicable to the State of Jammu and Kashmir. This Article helped the State to have total control over 94 items out of 97 items of the Union List except in the matters related to defense, foreign affairs, finance, and communication. However, due to different sets of laws for the State, the Parliament needs to take State government approval for the implementation of any of the above 94 items. The citizens of the state had different laws and rules than the union relating to citizenship, ownership, and Fundamental Rights. Due to this, any Indian citizen who is not a permanent resident of the state could not buy the property in Jammu and Kashmir. 

Jammu and Kashmir’s special status was effectively abolished in August 2019 when Article 370 was revoked, marking a turning point in the history of the area that was largely unopposed by the international community. Most nations, with the exception of China and Pakistan, were reluctant to overtly criticise India’s activities in Kashmir. In contrast to the constitutional changes themselves, the scant international response to India’s activities was mostly concentrated on the humanitarian situation in the valley. J&K was exempted from the application of the Indian Constitution (with the exception of Article 1 and Article 370 itself) and was allowed to create its own Constitution by virtue of Article 370. It limited the legislative authority of Parliament over J&K. The state government was only to be ‘consulted’ in order to extend a central law to topics covered by the Instrument of Accession (IoA). However, concurrence from the state government is required to expand it to additional issues. When British India was split into India and Pakistan by the Indian Independence Act of 1947, the IoA came into effect.

Salient features of Article 370 of Indian Constitution

  1. The State of Jammu and Kashmir has its own different flag and Constitution.
  2. The presidential rule cannot be imposed in the state, only the Governor’s rule can be proclaimed. The Government of India cannot declare a financial emergency under Article 360 in the state. Only a national emergency can be imposed in matters of external aggression or war. 
  3. The state has its own Criminal code titled as Ranbir Penal Code
  4. The citizens in the state have dual citizenship.
  5. The term of other Indian state Legislators is 5 years whereas, for Kashmir, it was 6 years. 

History of Article 370 of Indian Constitution

After the independence of India in 1947, the former ruler Maharaja Hari Singh of Jammu and Kashmir declared to remain independent from India and Pakistan. However, after this proclamation, Pakistan launched a non-official war to free the region from Hindu rule where there is a majority of Muslim people. When  Maharaja Hari Singh was unable to protect the state, he sought help from the Government of India. The Government of India was ready to help on the condition that Kashmir would accede to India. Hence both the parties signed the Instrument of Accession in Oct 1947. According to this accession treaty, this treaty could not be amended without the state’s consent and it also specifically protected the right to rectify the application of any further Constitution of India in its territory. 

During the framing of the Constitution of India, certain important events along with signing the Instrument of Accessions such as the ruler’s proclamations issued in 1948 and 1949, the establishment of popular government in Jammu and Kashmir, presence of representatives of J&K in the Constituent Assembly of India and the debates relating to Article 370, occurred in the State of J&K. 

The event of the ruler’s proclamation in March 1948 and November 1949, clearly examined the creation of a Constituent Assembly for J&K to enact its Constitution. These proclamations noted that the Constitution of India was likely to circulate and it would also apply to J&K temporarily so that India could govern its Constitutional relationship with the state of J&K. It was also further ordered that the Constitution framed for the State would supersede all the other provisions as and when it commenced. In this way, Article 370 was enforced from 26th January 1950 for temporary regulation of the constitutional relation between India and the State of Jammu and Kashmir. The feature of temporary character simply means that it will govern the relationship between Central and J&K till the Constituent Assembly of J&K enacts the Constitution of Jammu and Kashmir.  

The Constitution of Jammu and Kashmir was adopted on 17th November 1956 and was in effect from 26th January 1957. It was the only state in the country to have its own Constitution and had special status compared to the other Indian States. However, Article 370 and its provisions continued to govern the relationship between the state and the center in the interregnum. It was also noted that the Constituent Assembly of J&K was not created under Article 370, it just recognizes the importance of the Constituent Assembly as a reflection of the will of the people of Kashmir and its special status. 

The Indian Independence Act, 1947 gave 600 princely states, whose sovereignty had been restored at independence, three options: 

  1. To remain independent, 
  2. Join the Dominion of India, 
  3. Or join the Dominion of Pakistan. 

Joining either of these two nations required the execution of an IoA. A state that wanted to join might explain the conditions on which it consented to do so, even if there was no prescribed form. Pacta sunt servanda, which means that pledges made between states must be kept, is the adage that governs agreements between states. If there is a breach of an agreement, the parties must generally be put back in their original positions.

India’s declared position was that any disputes over accession should be resolved in accordance with popular will rather than by the princely state’s monarch acting alone. In India’s approval of the IoA, Lord Mountbatten remarked, “It is my Government’s aim that the subject of the State’s accession be determined by a reference to the people as soon as law and order have been restored in Kashmir and her soil is freed of the invader.” In its 1948 White Paper on J&K, the Indian government said that it saw admission as entirely transitory and provisional.

With the support of Vallabhbhai Patel and N Gopalaswami Ayyangar, Prime Minister Jawaharlal Nehru penned the following to J&K Prime Minister Sheikh Abdullah on May 17, 1949, “It has been settled policy of Government of India, which has been stated both by Sardar Patel and me on many occasions, that the Constitution of Jammu and Kashmir is a matter for determination by the people of the state represented in a Constituent Assembly.”

How was Article 370 enacted

  1. The Government of J&K provided the initial draft for Article 370. Article 306A (later renamed as Article 370) was modified and negotiated before being approved by the Constituent Assembly on May 27, 1949. 
  2. Even if accession was complete, India had offered to hold a plebiscite when the prerequisites were met, and if accession was not confirmed, “we shall not stand in the way of Kashmir divorcing herself from India,” was the belief according to the person who moved the resolution. 
  3. Ayyangar reaffirmed India’s commitment to a referendum and the creation of a separate constitution by the Constituent Assembly of J&K on October 17, 1949, when Article 370 was eventually incorporated into the Indian Constitution by India’s Constituent Assembly.

Importance of Article 370 for the Indian Union

The Indian Constitution consists of only two such Articles that have provisions applicable in Jammu and Kashmir. Article 1 includes the State of Jammu and Kashmir in the list of states. Article 370 is one such tunnel that allows the Constitution to be applicable in the state. It is observed that India has used Article 370 at least 45 times to extend the provisions of the Constitution of India to Jammu and Kashmir. Article 370 is the only way through which, by just one Presidential order, India has almost nullified the effect of the state’s special status. After the enactment of Order in 1954, more of the entire Constitution and its provisions and amendments were applicable to the State of Jammu and Kashmir. 94 out of 97 matters of Union list were applicable in the state, 26 out of 27 items of the Concurrent List have been extended and 260 out of 395 Articles are extended to the state besides 7 out of 12 Schedules

The Central government has used Article 370 in amending the provisions of the Constitution of Jammu and Kashmir even after the absence of such power to the President. Article 249 of the Constitution which provides power to the Parliament to frame laws on the State List entries, was applicable to the state just by the recommendations of the Governor and without any resolution by the Assembly. 

Temporary character of Article 370 of Indian Constitution

Article 370 is a unique character. For any matter related to the application of central law in the State of Jammu and Kashmir on the subjects provided in the Instrument of Accession, mere consultation of the state government is required. However, in other matters, the concurrence of the State Government is mandatory. This gives rise to major differences as in the former one there is discussion at the beginning and in the latter case, direct acceptance from the other party that is the state government is compulsory. 

Article 370 is an Article under Part XXI of the Constitution. This Article is temporary in the sense that the Constituent Assembly of Jammu and Kashmir have the right to modify, delete, and retain it. However, the Constituent Assembly of Jammu and Kashmir in its wisdom decided to retain it. Another reason behind its temporary character is the Instrument of Accession which was temporary in nature until a plebiscite was held to ascertain the public wish. There are certain opinions of the court regarding the temporary status of Article 370 of the Constitution. 

In the case of Kumari Vijaylaxmi Jha v. Union of India, (2017) the Delhi High Court, rejected the petition stating that Article 370 was a temporary provision and the continuation of such provision is a fraud on the Constitution. The Supreme Court in the same case in April 2018 opined that despite the title ‘temporary’ under Part XXI of the Constitution, Article 370 is not a temporary provision. 

The Constitution Bench of the Supreme Court also observed the case of Prem Nath Kaul v. State of Jammu and Kashmir (1959) and stated that the effect and application of Article 370 need to be judged on the basis of its object and its terms that are considered in the context of the special features of the constitutional relationship between the State and India. The main basis of the temporary provision under the Article is to determine the relationship between the state and the country by the Constituent Assembly of the state itself. 

However another bench of the Apex Court, in the case of Sampat Prakash v. State of Jammu and Kashmir (1986), observed that Article 370 can be invoked even after the dissolution of Jammu and Kashmir’s Constituent Assembly. Further, the Supreme Court refused to consider Article 370 as a temporary provision. The five Judge Bench held that Article 370 has never been curbed to be operative and hence it’s permanent in nature. It further opined that if the Article is the permanent feature of our Constitution then it cannot be amended and also will be part of the basic structure.  According to Article 368, the Parliament can amend any provision of the Constitution but such amendment should not destroy the Constitution and should also not alter any of its basic features.

There were many contradictory arguments relating to Article 370. It was argued that on one hand, the Article was temporary in nature and hence, is no more valid and required, while on the other hand, there was continuous justification regarding repeated use of Article 370 by the Government of India. The Supreme Court further clarified in the Sampat case that this provision with the example of Article 21. The Court interpreted that, ‘right to life’ under Article 21 of the Constitution means the right to live with human dignity. It also consists of the right to privacy under this article. Similarly, it was held that the term ‘temporary’ in the title of Part XXI does not mean to be temporary. It means any temporary provision may indeed be termed as ‘special’. And thus, the word “Special” was added in the title of the above part by the 13th amendment in the Constitution in 1962. 

Sardar Vallabhai Patel has also declared Article 370 as a special provision for the State of Jammu and Kashmir keeping in view the existing relationship between the Center and the state. It was also observed that the actual temporary provisions in the Constitution are the reservation of Scheduled Tribes (ST), Schedule Cast (SC) in Parliament, and the state assemblies which were initially for just 10 years. English was also once considered as a temporary language for governmental work. Thus, Article 370 is a permanent provision under the Constitution of India. 

Brief of revocation of Article 370 with an amendment to Article 367

On August 05, 2019, Article 370 ceased to be operative under the Constitution of India. The Government of India has revoked the special status of Jammu and Kashmir and took steps to change the regulation of the region. 

Article 370 was the temporary provision under the Constitution. Article 370(1)(c) states that Article 1 and Article 370 is applicable to J&K and Article 370(1)(d) allows the applicability of the other provisions to the state as specified by the President’s order with the concurrence of the Constituent Assembly of J&K. Article 370 was able to be inoperative only if the Constituent Assembly of the state was able to recommend the same to the President and also Article 370 was the temporary provision only till Kashmir has its Constitution by the Constituent Assembly of Kashmir. However, the Constituent Assembly of Kashmir was dissolved in 1957 without making any recommendation for amendment or abrogation of Article 370. Due to this reason, the Indian Supreme Court in the above cases has ruled that Article 370 is a permanent provision of the Indian Constitution. Therefore, the Union Government came with a solution to overcome this problem. They have used the powers of the President under Article 370(1) in order to indirectly amend Article 370(3) via Article 367.  

Article 367 is also an interpretation clause of the Constitution and added a new sub-clause 4(d). According to this amendment clause, “Constituent Assembly ” under Article 370(3) must be read as “Legislative Assembly of the State”. Due to this now the J&K Assembly was allowed to recommend abrogation of Article 370. But another problem that arose was that Jammu and Kashmir were also under Presidential Rule, therefore, Parliament had made the recommendation under newly modified Article 370 (3). According to this recommendation to the President to abrogate Article 370 was issued through the resolution by the Home Minister. This enabled the President to declare Article 370 has ceased to operate. 

Hence, Article 370 is currently inoperative under the Constitution.

Conclusion

The state of Jammu and Kashmir is an integral part of India. The state has been given some autonomy under Article 370 in the view of federalism and its unique history of the state joining the Union of India.  Article 370 is not the issue of integration but that of granting autonomy or federalism. After the judgment in 2018, the Apex Court held that Article 370 is a permanent provision since the Constituent Assembly of the State has ceased to exist. In order to overcome all the other legal challenges, the Indian Government rendered Article 370 as ‘inoperative’ and it still has its place under the Constitution of India.  

References

  1. https://www.mondaq.com/india/constitutional-administrative-law/785148/all-about-article-370-jammu-kashmir-from-dawn-till-dusk
  2. https://www.thehindu.com/news/national/full-text-of-document-on-govts-rationale-behind-removal-of-special-status-to-jk/article28821368.ece
  3. https://indianexpress.com/article/explained/understanding-articles-370-35a-jammu-kashmir-indian-constitution-5610996/
  4. https://www.theindiaforum.in/article/article-370-federalism-and-basic-structure-constitution
  5. https://www.livelaw.in/columns/the-myth-and-reality-of-article-370-147415
  6. https://www.researchgate.net/publication/334131946_An_Insight_to_Article_35A_and_Article_370_of_the_Constitution_of_India
  7. https://www.thehindubusinessline.com/opinion/three-reasons-why-the-presidential-order-on-kashmir-is-not-kosher-yet/article28836245.ece.

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Guide to road tax online payment

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save taxes

This article has been written by Oishika Banerji of Amity Law School, Kolkata. This article serves as a guide to the online payment of road tax for its readers. 

It has been published by Rachit Garg.

Introduction 

To fund the upkeep of India’s road infrastructure, the Indian government levies a tax on the purchase of a new car and therefore, it is common knowledge that any person who buys a vehicle is required to pay road tax. The road tax is a state-level tax, meaning that each state’s government imposes it separately. The procedures and regulations for collecting the road tax vary from one state to the other. The amount of tax also varies because different states impose taxes at varying percentages. The Central Motor Vehicles Act, 1988 mandates that the entire road tax must be paid upfront if a car is used for longer than a year. This article serves as a guide for online payment of road tax to its readers, as with the intervention of digitalization, payment of tax has been made easier as it has adopted the online mode as well. 

All you need to know about road tax 

India is a nation with a sizable network of highways connecting both states and various cities within each state. The state government of every state imposes a road tax or motor vehicle tax on the purchase of every vehicle in the nation, whether it be a commercial or personal vehicle, in order to fund the construction and maintenance of these roads as well as  formulate the enabling provision of various safety and emergency services alongside these roads. The road network is expanded, maintained, and upgraded with the amount collected in the form of road taxes. In essence, the Vahan tax is the government reclaiming money used for various tasks, including providing security and recovery services on Indian streets. 

When you buy a new car from a showroom, you’ll notice that the ex-showroom price listed in the brochure or on the company website is, depending on the state in which you reside, (around Rs. 15000 or roughly 10% lower). The base manufacturing cost of a bike or four-wheeler is added to registration fees, road tax, and insurance, bringing the final cost up to around 10% of the vehicle charge. While insurance and registration go without saying, car owners must also pay a road fee to the state government in order to operate their vehicle there.

Who levies road tax

All two-wheelers, four-wheelers, and other types of vehicles used for both personal and professional reasons are subject to road tax. Road tolls are levied by –

  1. The state government, which is responsible for collecting tolls, state vat, and the annual or lifetime motor vehicle tax.
  2. Based on the model and kind of vehicle, the Central Government imposes customs duty, central excise, central sales tax, GST, and various supplementary cess.

Who has to pay the road tax

Road taxes are paid by buyers and are calculated based on the vehicle’s ex-showroom price. The following factors determine how much road tax to charge:

  1. Seating capacity of the vehicle.
  2. Engine capacity of the vehicle.
  3. Age of the vehicle.
  4. Weight of the vehicle

Why is road tax a state-level tax

About 80% of the roads in each state of India are built by the corresponding state government, with the exception of national highways, which are built and maintained by the Central Government. Since each state pays for its own share of the expense of building these highways, each state imposes its own road fee.

As a prospective buyer, you will also be responsible for paying road taxes to the state where you intend to both purchase and operate your vehicle. This basically implies that when you purchase a bike or automobile in the state, you will be required to pay a road tax to the Delhi government (for example). Additionally, if you relocate from Delhi to Maharashtra, you must pay a state road tax to the Maharashtra state government within a month of your transfer.

The respective state municipal corporation is responsible for creating and maintaining the road network within a state, which is the basic justification for the state government’s involvement in the collection of road fees. The Central Government only constructs and maintains national highways.

Why is road tax levied on buyers of vehicles

India has one of the world’s greatest road networks, with a cumulative length that exceeds 5 million kilometres in 2019, and is still growing. The Indian government recovers costs in the form of a tax from the owners of vehicles in the nation in order to maintain the infrastructure of such a massive network of roads and supply necessities like street lighting and road signs. 

In the event that a driver is unable to avoid on-road accidents, funds raised are also used to provide safety precautions and emergency first aid. As time passes and more vehicles utilise the roads, this money is also used to upgrade and expand the network of motorways and expressways. In accordance with Section 39 of the Motor Vehicle Act of 1988, customers will therefore be required to pay a certain amount as road tax when purchasing a new vehicle.

When to pay road tax

  1. A person is needed to pay the road tax while registering a vehicle. 
  2. The road tax payment is made either annually or all at once, depending on the varying requirements of the various state governments. 
  3. If you buy an automobile in one state and pay a lifetime road tax, but then decide to move to another state and use it there, you will need to re-register the car there and pay the new state’s road tax. 
  4. If you are simply travelling to another state, you do not need to pay road tax again.

Where to pay the road tax

The road tax is paid at the Regional Transport Office, i.e., the RTO.

Does the road tax vary depending on the type of vehicle

Road tax for a vehicle is calculated based on various factors, including the following:

  1. State where the vehicle is registered.
  2. Vehicle engine capacity (CC).
  3. Seating capacity (bike, car, omnibus, truck).
  4. Vehicle’s age.
  5. Weight.
  6. Fuel type (petrol vs. diesel).
  7. Usage and vehicle class (personal vs. commercial use).
  8. Date of purchase and registration. 

Is it punishable in India to not pay road taxes

If road taxes are not paid within the allotted time, defaulters will be assessed a fine. Charges are determined as follows:

  1. For first-time offenders, the vehicle’s tax is payable for two quarters.
  2. Serial violators will face fines that cannot be less than the annual tax on a car, and they may even reach twice that amount.
  3. Fines cannot be lower than Rs. 300 and may also include a one-time annual tax. This fine can go up to twice the annual tax for repeat offenders and cannot be less than Rs. 500.

Will I need to repay the vehicle tax if I sell my vehicle to a person in another state

The purchaser will have to re-register the car in the state where they plan to drive it.

How much road tax is payable for a two-wheeler

Depending on the engine size, a two-wheeler must pay a road tax, which varies between states. Beforehand, get in touch with showrooms or dealers and request a price breakdown of the desired vehicle.

Will transport vehicles be charged a higher road tax

Road tax is based on a number of variables, including usage and the type of vehicle purchased. Since they fall under a different classification than private-use vehicles, commercial transport vehicles may be subject to a higher state road tax.

Can I pay road tax without a vehicle’s purchase invoice

Road taxes can be paid without providing an invoice. You can substitute additional documents like an insurance invoice, RC, and pollution control.

Do I have to pay road tax again if I move to another state

Yes. You must obtain a No-Objection Certificate (NOC) from your current RTO, re-register your car in the new state, and pay the road tax once again if you are permanently relocating to a different state. The same applies if you sell your car to a person who lives in a different state. Additionally, their state requires them to pay road tax once again.

How can you collect my RTO road tax refund

When you relocate to a new state, you will have to renew your registration with the new state RTO, pay the road tax, and get a NOC from your old RTO. However, if you move or dispose of your vehicle, the existing RTO may grant you a refund. The following paperwork is required when requesting a refund:

  1. Request letter for refund.
  2. A smart card (original or notarized copy).
  3. Chassis imprint.
  4. Pollution and insurance documents.
  5. NOC from the current RTO.
  6. Receipt of original road tax.
  7. Proof of migration.
  8. RTO Form 16 and DT.
  9. CRTI Intimation (only applicable in Karnataka). 

Road tax online payment in India

By visiting the transport department website of the state where the vehicle was acquired, people can also choose to pay the road tax online. A vehicle owner must provide both the Vehicle Registration Number and the Chassis Number before submitting the online road tax payment form. The next step is to choose the tax payment method and finish the payment procedure. 

A road tax form containing the specified amount has to be physically filled out by car owners at the state’s RTO. Road tax collection is still done by RTOs, but you can easily pay the amount online while lounging in the comfort of your home by entering the official website.

  1. Step 1: Visit the Parivahan website, maintained by the Ministry of Road Transport and Highways.
  2. Step 2: Under Online Services, click on Vehicle Related Services.
  3. Step 3: Select from the two options, i.e., Delhi & Sikkim State and the Other States. Wait while you are redirected to the state-specific website.
  4. Step 4: Here, select your State and RTO from the drop-down menu and log into your account.
  5. Step 5: Enter your vehicle’s registration number and fill in the other details.
  6. Step 6: Verify details and pay your road tax.

Guideline for payers making online payment for road tax

  1. Go to – https://parivahan.gov.in/vahanservice.
  2. Go through the “General instructions for availing Vahan Services” at the left of your screen.
  3. Enter “Registration Number” and click on “Proceed”.
  4. Click on “Pay your Tax”.
  5. Enter your “Mobile Number”. Then click on “Generate OTP”.
  6. Enter the OTP received on your mobile and click on “Show Details”. You may be prompted to enter your mobile number again.
  7. Cross-check the details regarding owner information, latest tax details, tax details, permit details (in case of transport vehicles), etc., shown under owner tax information.
  8. In case of any mismatch, please do not pay tax online, but contact the concerned RTO Office.
  9. In case the system identifies any discrepancy, a proper message will be displayed, and please follow the details contained in the message.
  10. You may be required to update your vehicle’s insurance details.
  11. Under tax details, enter the number of months/ year /quarter (if tax is up to date).
  12. Select suitable tax mode, as may be applicable, From the list:
  • Yearly.
  • Quarterly.
  • Lifetime.
  • Lump Sum – 5 years, etc.
  1. Auto-generated total payable amount will be indicated, if correct then click on “Payment” or “Reset” is incorrect.
  2. The “Confirm Tax Details” alert will indicate all the fees/taxes that an applicant has to deposit, check select the ‘Check-Box’ and then click on “Confirm Payment”.
  3. Select “GRIPS” as the payment gateway, check the amount and confirm, select your bank from the list shown, make the payment and save the generated fee receipt.
  4. Please do not refresh the payment gateway page during the transaction.
  5. Please do not press the back button on the payment gateway page.
  6. In case of any error during payment, please wait for 2 bank working days. Then go to the ‘status/reprint’ link and click ‘check pending transaction’.
  7. You will be required to insert your vehicle registration number and the last five digits of your chassis number (see your registration certificate) and press “show details”.
  8. Click on the “Trans ID” number (for example WB1712T…), and the amount details will be shown.
  9. Now click on “Check to Bank”.
  • In case of successful transactions, i.e. where payments have been made at the bank – a receipt will be generated.
  • In case of failed/pending transactions, the following message will come.
  1. You can also check the ‘status of the application’ through the same link ‘status/reprint’.
  2. For any other issues, please contact the concerned RTO.

Conclusion 

In conclusion, paying your road tax is a crucial step you should take after buying a car. It is against the law to operate a vehicle on which road tax has not been paid. This procedure is absolutely required. Therefore, if you intend to buy a car, make sure to pay the road tax on time to avoid paying a fine.

Reference

  1. https://www.godigit.com/road-tax.

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Section 125 CrPC

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Revision under CrPC

This article is written by Bheeni Goyal, from Symbiosis Law School, Pune. It explains the scope of Section 125 of the Code of Criminal Procedure and the revision applications passed against the orders under Section 125.

It has been published by Rachit Garg.

Introduction

Section 125 of the Code of Criminal Procedure is one of the most invoked and discussed provisions of the code. This code provides that any person who has sufficient means to maintain himself cannot deny the maintenance to the wife, children, and parents if they are not able to maintain themselves. However, sometimes the husbands, against whom the order of maintenance is passed may not be satisfied with the judgment passed by the lower court and therefore, they should have a platform where they can put up their grievances against the order. Therefore they have the right to file the revision application in the court of law as provided under Section 397 of the Code. The scope of revision applications increased in recent times due to increasing awareness and improved outlook of the judiciary towards providing justice to such parties as well. Let’s look at the scope of the revision available against the order under Section 125 of the Code Of Criminal Procedure.

Scope and applicability of Section 125 CrPC

Section 125 of the Criminal Procedure Code provides for the maintenance to the wife, child, and parents. The court after the party has invoked Section 125 of the Code, may order the respondent, that is the husband, to maintain the wife who is unable to maintain herself by providing monthly maintenance to her. However, there is an exception in the provision. For the purpose of providing maintenance to the wife, the husband has to be sufficient enough to support his wife after the separation and at the same time, the wife must not be living in adultery or living separately with her husband without any sufficient reasons. Even if they are living separately in mutual consent, then also the wife will not be entitled to any sort of maintenance. Whenever the judgment is passed in favor of the wife, the court has to make sure that the husband has sufficient means to provide maintenance to the wife. The court also needs to make sure that the wife after the separation does not have enough money to maintain herself.

Under Section 125 of the code, the provision is available for interim maintenance which means that during the pendency of an application in the court of law, the order may be passed by the magistrate directing the husband to pay the monthly allowances to the wife. However, the magistrate has the right to alter the amount of the maintenance to be paid, if he thinks that there is a change in the circumstances of the individual who has been paying or either receiving the monthly allowances. This was laid down in the case of Vikas v. State of Uttar Pradesh. All such applications of maintenance can be filed in any district where the person who is liable to pay resides or where the wife resides or where the person last resided with the wife or with the mother or with the illegitimate child. The purpose of Section 125 of CrPC is to achieve a social purpose in society.

The purpose of Section 125 CrPC was explained in the case of  K. Vimal v. K. Veeraswamy, where it was held that Section 125 of the Code had been introduced for achieving a social purpose. The aim of this section is the welfare of the wife by providing her with the required shelter, food after the separation from the husband. It was held in this case that if the wife has lived like a wife and the husband had treated her like a wife for all the years before their separation, then, the wife cannot be denied maintenance by her husband.

Grants of maintenance are a metric of social justice. A man’s essential obligation is to provide for his wife, kids, parents, close relatives, etc, while they are incapable of providing for themselves. Preventing immorality and poverty while improving the economic standing of women and children is the motive behind the concept of maintenance. The CrPC requirements obligate a person to fulfil the moral duty to which he owes the community in regard to his wife, children, and parents. The obligation is unquestionably lawful and binding on the person.

All communities in India are subject to the CrPC’s provisions, and therefore are very much secular, safe, and all-encompassing in character and apply to all faiths, castes, and creeds. Whatever personal law is used to guide and control the respective persons affected, the provisions of Section 125 of the CrPC are enforceable. However, procedures provided under Section 125 of CrPC are of a summary nature and apply to everyone regardless of caste, creed, or religion. Maintenance can be sought under the individual personal laws of people of other religions, and processes under such personal laws are civil in nature.

The provision found in Chapter IX of CrPC seeks to shield the neglected wife, parent, and children (minor) from complete ruin and destitution through a straightforward, quick, and effective restricted relief. Section 125 of CrPC offers a swift solution to prevent famine and social unrest. It differs from a husband’s civil liability. It serves as a straightforward summary procedure. It puts into practice a man’s fundamental obligation to support his wife, kids, and elderly parents who are self-supporting. 

The fundamental tenet of the maintenance stance under Section 125 of the CrPC is that no wife, young children, or elderly parents should be left without and succumb to complete pressure of wants in order to be persuaded to resort to crimes, etc. A Magistrate of the First Class may take swift action to avoid poverty under a provision in Section 125 of the CrPC.

Purpose of Section 125 CrPC

  1. The intent behind Section 125 of the CrPC is to protect dependents who are unable to support themselves from starvation, misery, and vagrancy. It is social justice legislation that was specifically passed to safeguard women, children, and elderly parents. 
  2. The main goal of Section 125 of the CrPC of 1973 is to support abandoned and impoverished wives, neglected and abandoned children, and vulnerable, elderly, and disabled parents. As a result, this provision promotes social welfare and social service. The Magistrate’s authority is primarily preventative in character rather than penal or punitive.
  3. The time-consuming, troublesome, heavy, process of civil law and litigation was sought to be avoided by providing a simple, quick, limited relief. This is because compulsion is (to some extent) imposed upon those persons whose duty it is to support their dependents who are unable to support themselves. 
  4. No wife, child, or parent should be abandoned on the scrap heap of society to beg or to lure others to commit crimes against them or to commit crimes themselves. A contract that violates this responsibility and totally waives the right to support one’s own wife and young children cannot be regarded as legal.

Features of Section 125  CrPC

Previously, while discussing legal terms that have been used in making up Section 125, some of the features that will be discussed below have already been referred to. Readers will therefore now be able to understand the features of the maintenance provision better. Section 125 of the CrPC is designed with the following features: 

Need for sufficient means for maintenance 

The most important requirement is that a person cannot be ordered to pay maintenance to another person unless they themselves have ‘adequate resources to support’ the person who has the claim and neglects or refuses to do so. The person asserting that he lacks sufficient means to sustain has the burden of evidence. The fact that he is unemployed does not excuse him from the requirement. In the instance of Hardev Singh v. State (1974), the Apex Court held that if a person cannot pay such maintenance allowance because he is a monk, then it is his obligation to cast off the yellow robe and labour. The high courts have been tougher in their interpretation. The social justice component and the protection of the society’s weaker members, namely, women, children, and the elderly, are cited as the causes of this interpretation.

Neglect and refusal to be maintained 

The term ‘neglect’ fundamentally refers to a disregard of responsibility that may be either unintentional or purposeful and is used to refer to a failure to maintain even when no such demand is made against the maintainer. Whereas, the ‘refusal’ to maintain occurs when there is a clearly stated purpose to not carry out his responsibility. This intention may be expressed or even suggested by the husband’s behaviour. The claimant has the onus of establishing this. The requirement that the wife lives with her husband is initially necessary for her to be able to claim maintenance, but if the Magistrate finds that she has a valid reason for doing so for instance, if her husband has taken in a new wife and if it is ritually permitted by their personal law, the condition may be removed from her claim.

Quantum of maintenance

Up until the Amendment Act No. 50 of 2001, the magistrate was obligated to grant maintenance not to exceed Rs. 500. There isn’t a cap on the maximum amount, instead, the Magistrate is free to decide the monthly rate in accordance with the circumstances of the case. The rate can occasionally be changed in accordance with Section 127, but it must be fixed, predictable, and not gradually growing. If both the wife and the child are suing the same individual, it is against the law to pay them both jointly, instead, each has a distinct claim that can be paid separately.

Claimant of maintenance under Section 125 must be unable to maintain himself/herself 

The incapacity of a woman to support herself is one of the requirements for claiming maintenance. She need not expressly request that she be allowed to care for herself. However, the Karnataka High Court ruled in the case of Adbulmuaf v. Salima (1978) that if the woman is healthy, educated, and still unable to support herself, she may still request maintenance, but the amount awarded to her will depend on these circumstances.

Scope of revision under Section 125 CrPC

Under Section 125 of the Code of Criminal Procedure, when the proceedings are conducted against the husbands, the court tends to decide the quantum of the maintenance, which has to be paid to the wife after considering the circumstances of the case. Although the maintenance declared by the court would satisfy the petitioners, what if the husband is not satisfied with the order of the court. As appeal under Section 125 of the court is not maintainable, the legal option which is available with the husband is to go for the revision proceedings. But it all depends on the merits of the case, whether the party has the right to file for the revision proceedings in the higher courts. But the jurisdiction of the higher courts is also limited, as they have to take into consideration certain aspects before proceeding with the revision of the case. One of the limitations is that the Higher Court cannot interfere when the evidence that has been presented by both parties is taken into consideration. The power of revision is available with Section 397 of the Code of Criminal Procedure.

The High Court or the sessions judge has the power to call for the examination of the record of any proceeding before any inferior court. However, the power of the revision will not be applicable concerning any of the interlocutory orders passed in any of the trial proceedings. In the case of Ashu Dhiman v. Jyoti Dhiman, which has been passed by the Uttarakhand High Court holding that an order passed by the trial court rejecting or allowing the application for the maintenance when the proceedings are pending in the court, cannot be considered as an interlocutory order and the higher court have the right to review the case which has been filed by the other party. In the case of Sunil Kumar Sabharwal v. Neelam Sabharwal, it was held that an order granting the interim maintenance under Section 125 is not an interlocutory order and therefore the revision of the same cannot be barred under Section 397(2). When the court has straightaway rejected or allowed the proceedings to be filed in the court of law then, the parties should have the right to go for the review by the court of law. Numerous judgments have been passed by the court and provided that even if the wife is capable of earning or is earning, cannot be denied the maintenance by the husband.

However, it is always necessary that the husband is more efficient in earning than the wife. In such cases, they need to approach the higher courts pleading the revision of the case. The Courts have been allowing the revision application when the wife is at fault herself. Sometimes the wife leaves their matrimonial houses without any sufficient reasons and for their ill motives to get the maintenance from their husband.

Landmark judgments

Numerous judgments have been passed by the courts supporting the contention of the husband when they file revision applications for setting aside or for the alteration of the maintenance amount when they are not satisfied with the order passed by the Trial Courts. This certainly increases the scope of the revision which is available under Section 125 of CrPC. 

The Patna High Court in the case of Masud Ahmed v. the State of Bihar, where the petitioner approached the High Court for setting aside the order which had been passed by the trial court directing the petitioner to pay the maintenance of Rupees 3000 per month to the ex-wife and Rupees 2000 per month as the maintenance for children. The petitioner had argued that his ex-wife, a teacher in a school, had been earning quite well. He contended that Section 125 of CrPC could only be invoked when the wife is not able to maintain herself. But, in this case, she had been earning sufficiently well by working in the school. The court in this case held that the wife should not be provided with the maintenance as after the divorce, the wife had sufficient means to maintain herself and therefore the court set aside the order for giving Rupees 3000 per month as the maintenance. 

In another case of Aarif v. Shajida, the revision petition was filed before the Madhya Pradesh High Court under Section 397 and Section 401 of the Code of Criminal Procedure for setting aside the order which had been passed by the lower court directing the petitioner to pay 3000 Rupees for the maintenance to his wife. It was contended by the husband that the wife had deserted him again and again and had been living away from him for a long time. She did not have sufficient reasons for staying away from the matrimonial house, then she even kept leaving and coming back to her matrimonial house. The court found that the action of the respondent-wife was contradictory. Hence, the court allowed for the revision of the application.

Revisional courts also have the power to set aside the findings of the fact recorded by the lower courts concerning Section 125 of the Code of Criminal Procedure. In the case of  Deb Narayan Halder vs. Anushree Halder, it was held that the High Court in the exercise of its revisional powers can set aside certain findings of facts found by the lower courts under Section 125 of the Code of Criminal Procedure. It was held by the court that, “it is well settled that the Appellate or Revisional Court while setting aside the finding recorded by the Court below must notice those findings, and if the Appellate or Revisional Court concludes that the findings recorded by the Trial Court are indefensible, they should record its reasons for coming to such conclusion. Where the findings are findings of fact it must discuss the evidence on record which justifies the reversal of the findings recorded by the Court below. This is particularly so when findings recorded by the Trial Court are sought to be set aside by any Appellate or Revisional Court. One cannot take exception to a judgment merely on the ground of its brevity, but if the judgment appears to be cryptic and conclusions are reached without even referring to the evidence on record or noticing the findings of the Trial Court, the party aggrieved is entitled to ask for setting aside of such a judgment”. 

The court however does not have the power to exercise the powers under Section 125 of CrPC if the wife has been granted the alimony under Section 25 of the Hindu Marriage Act, 1955.  In this case, the wife has preferred alimony under the Hindu Marriage Act and at the same time, she opted for the maintenance under section 125 of CrPC. It was held by the Court that the wife has the right to opt for the maintenance under section 125 of CrPC and after that, she could opt for the interim maintenance under Hindu Marriage Act. However in this case it was the opposite where the wife opted for the Alimony under the Hindu Marriage Act and then opted for the maintenance. Therefore in such cases, she can only be granted one relief and that is of maintenance and that’s why the decree for the alimony under this case will be converted into the suit for the maintenance under section 125 of CrPC.The above-mentioned judges have provided us a glimpse of the changed outlook of the judiciary towards revision applications and further increasing the scope by setting up more precedents.

Sandeep Walia v. Monika Uppal (2022)

According to the Delhi High Court’s decision in the recent case of Sandeep Walia v. Monika Uppal (2022), parties to matrimonial disputes frequently fail to reveal their true income to the Court in an effort to avoid being held responsible for maintenance. Therefore, the Court may decide on maintenance based on the parties’ status and their standard of living. This opinion was made in a case where the husband had contested a family court’s judgement that partially granted the Petitioner’s wife’s motion under Section 125 of CrPC and awarded Rs. 10,000 per month in maintenance. The husband had contended that as his wife was well qualified and making a good living while he was unemployed, she was not entitled to maintenance. 

Facts of the case

  1. On October 25, 2015, the parties’ marriage was conducted. Due to disagreements among their own families shortly after their marriage, they began living separately. Before the family court, the Respondent (wife) had made a prayer under Section 125 of the Code of Criminal Procedure, 1973. She claimed that she had to endure excruciating mental pain as a result of her husband’s harassment at the marital home. She provided numerous examples in her counter statement and added that her husband, a revisionist, works as a graphic designer for an NIIT company in Gurugram and makes Rs. 40,000 a month. 
  2. She added that her husband received an additional amount of Rs. 40,000 per month in addition to the rental money from the residence. She went on to say that her husband had no debts to pay, that he was the only son, and that his mother received a pension of Rs. 25,000 a month. She sought for a grant of Rs. 40,000 per month for maintenance and Rs. 25,000 for court costs in response.
  3. The husband claimed that the respondent-wife had tortured and been abusive to him mentally. He claimed that she had left the marital home without cause or explanation, that she had falsely reported the situation to the CAW cell, and that she had then skipped out on the counselling sessions.

Judgement delivered by the Delhi High Court 

  1. The High Court noted that until the Court issues a ruling stating that the wife is not entitled to receive maintenance from the husband on any legally permissible basis, it is the husband’s sacred responsibility to provide for the wife financially.
  2. The spouse claimed that he was keeping a three-bedroom apartment and paying rent of Rs. 12,000 per month, discounting energy costs of roughly Rs. 2,000, according to the High Court. It further stated that the husband’s monthly expenses were roughly Rs. 35,210 and that he had invested money in mutual funds, from which he received regular dividends. 
  3. The Court also believed that the petitioner’s husband’s outright claim that he had no income could not, under the circumstances of the case, be used as a defence to absolve him of his responsibility to provide for his wife.

Pradeep Kumar v. Smt Bhawana and Anr (2022)

In a recent case of Pradeep Kumar v. Smt Bhawana and Anr (2022), Justice Asha Menon of the Delhi High Court observed that “to deny maintenance to an estranged wife and child is the worst offence, even from a humanitarian perspective.” While dismissing a petition by a husband contesting a Trial Court decision, Justice Asha Menon made an observation directing him to pay a sum of Rs. 20,000 as a consolidated amount towards interim maintenance to the wife and child till the resolution of the matrimonial dispute. 

Facts of the case 

The petitioner’s husband’s attorney claimed that Rs. 1,000,000 had been deposited with the Court Registry in accordance with this decision in order to cover the discrepancy. The petitioner further asserted that he was prepared to give the wife and child Rs. 4,000 per month in accordance with his monthly earnings of Rs. 28,000, which he had previously stated to the Family Court in his affidavit of income and expenditure. Additionally, it was claimed that the petitioner was open to keeping the wife and child as well as renting out a space for them to live separately.

Observation of the Delhi High Court 

  1. Although the petitioner’s husband stated that the money had been paid through February 2022, the court noted that the wife and kid indicated that payments had only been made up until September 2021, or for seven months. 
  2. The Court also voiced worry that spouses are pressuring their wives to file execution petitions in order to stop payments, even after a court has ruled that she is entitled, even if only temporarily. By judgement dated April 20, 2022, the High Court instructed the husband to deposit the difference between the amount determined by the Trial Court and the amount he was ready to pay, or Rs. 4,000, which he claimed he had paid to the wife in the form of an FDR up until February 2022.
  3. With the aforementioned observations, the court dismissed the petition and ordered the wife to pay Rs. 20,000 in fees in front of the Family Court on the next hearing date that had been scheduled.

Jagannath Bedke v. Haribhau Bhedke (2022)

In the matter of Jagannath Bhagnath Bedke v. Haribhau Jagannath Bedke (2022), the Aurangabad Bench of the Bombay High Court stated that courts should not become overly technical when deciding petitions under Section 125 of the CrPC. The court ruled that the aforementioned provision is intended to provide a person with immediate support, particularly financial support, in order for that person to survive. When dealing with the case under Articles 226 and 227 of the Constitution challenging the lower court’s ruling dismissing the petitioner’s maintenance application, the single bench consisting of Justice Vibha Kankanwadi made some observations which have been highlighted hereunder. 

Facts of the case 

The petitioner’s wife, although alive, was living separately from the petitioner and with the respondent. The petitioner had three children. The petitioner had claimed that he submitted an application because he had no source of income and was unable to work due to his advanced age. The Magistrate determined from the evidence presented that the petitioner could not support himself and that the respondent had refused to support his father even though he was able to do so. He had agreed to pay Rs. 5000 in upkeep each month.

The Petitioner filed a petition for support from his son with the Judicial Magistrate First Class, Shevgaon, District Ahmednagar, in July 2014. The petitioner stated that he had no source of income and was unable to work because of his advanced age. However, his application was approved, and the son was told to make monthly payments of 5,000 rupees. The son filed a revision petition, and the Additional Session Judge rejected the initial application. The father submitted the present petition contesting the Additional Sessions Judge’s ruling. The petitioner stated that he has no source of income and is unable to work due to his advanced age.

The respondent, in this case, asserted that the petitioner had sold his farmland for 750000 rupees, despite the sale deed’s showing a lower price. He did, however, assert that his father has vices that have led to conflict between his parents and their separation. The son claimed that his father only asked for money to indulge in his vices.

Observation made by the Bombay High Court 

  1. The bench looked at the circumstances and noted that the revisional court had denied the appeal on a technicality because the petitioner had received some money from the sale and had purportedly admitted that he was paid Rs. 20 per day for labour. Therefore, the issue is whether the father has access to a source of income that is sufficient for his needs. 
  2. The Court ruled that the maintenance order may only be modified and not completely thrown out, by the revisional court. It is the son’s duty to provide for his father, and he is not permitted to impose the requirement that the father live with him and pay support.
  3. The petitioner being currently between the ages of 73 and 75, the Court learned from the submissions that the petitioner no longer owns any land. The Court went on to say that even if it were assumed for the sake of argument that the petitioner owned a piece of land, the question of whether or not that provided him with enough income to support himself and whether or not his physical capabilities permitted him to cultivate the land himself or have it cultivated for him by someone else remained.
  4. The Court had also stated that petitions filed under Section 125 of the CrPC cannot be treated by courts in a manner that is so hyper-technical, as the revisional court’s approach appears to be. The Court, therefore, overturned the revisional court’s decision and decreased the father’s maintenance payment to three thousand rupees per month.

Conclusion

Although Section 125 of the Code of Criminal Procedure protects the right of the wife, and the parents to get the equitable amount of maintenance from the husband or their children respectively, there should not be any misuse of such a provision. Nowadays, the scope of revision against the order passed under Section 125 has increased, and the higher courts are increasingly accepting the revision applications under Section 397 for providing appropriate reliefs to the opposite party. There is no set rule which the courts have been following in allowing or rejecting the revision application, it all depends on the facts and circumstances of a certain case. Sometimes the wife, even after the separation, has enough means to maintain herself. Some High Courts had rejected the revision application filed by the husbands because even after their ex-wives had means to maintain themselves, they still were required to give them the maintenance. However, in the above-mentioned case laws, the High Courts have approved the revision application of the husbands because the wives could maintain themselves. Therefore the court decides it based on circumstances prevailing at that time. Hence, these precedents have increased the scope of the revision application against the order passed under Section 125 of CrPC. Although, the author believes that before invoking any such provisions, the parties should solve the matters among themselves.

References

Frequently Asked Questions (FAQs)

Who can claim under Section 125?

  • Any wife under Section 125 (1) (a).
  • A child who is still a minor according to the Indian Majority Act, 1875 under Section 125(1)(b).
  • According to Section 125 (1) (d), if a mother or father cannot support themselves, they are entitled to claim maintenance from their children. 

What is the nature of proceeding under Section 125 CrPC?

It is to be noted that proceedings under Section 125 CrPC are civil in nature.

How much is maintenance on Section 125 CrPC?

Under Section 125 CrPC, there is no fixed amount of maintenance that has been provided. The maintenance amount is determined by the competent magistrate on case to case basis. 

Is Section 125 CrPC a summary trial?

Yes, a trial under Section 125 of the Code of Criminal Procedure, 1973 is a summary trial. 

Is a working wife eligible for maintenance?

At first, it was believed that because a working woman is earning money and can support herself, she is not eligible to request maintenance. Now, it is clear that she can make a maintenance claim while having a job because of rulings in instances like Bhagwan v. Kamla Devi  (1974) and Chaturbhuj v. Sita Bai (2007).

Who cannot claim maintenance under 125 CrPC?

  • According to Section 125(l)(a) of the Code, a wife who is neglected by her husband or whose husband refuses to maintain her cannot receive a maintenance allowance; rather, the allowance may only be given to a wife who is unable to support herself, but not to a wife who is doing so with some difficulty.
  • Under Section 125 CrPC, a major unmarried daughter who is neither ill or disabled cannot claim maintenance.

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Independent directors under the Companies Act, 2013

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Companies Act

This article is written by M.S.Bushra Tungekar from the University of Mumbai Law Academy and Ayush Tiwari, a student of Symbiosis Law School, NOIDA. The author in this article who can be an independent director highlights their roles, duties, functions, and the manner in which they are selected.

It has been published by Rachit Garg.

Introduction

With the introduction of corporate governance in India, the need for independent directors in companies was realized. The Companies Act 1956, did not have the necessary provisions. In order to bridge the gap, the Ministry of Corporate Affairs amended the Act in 2013.

Independent directors play an important role in maintaining the balance between the management and the ownership in a company. Independent directors help in attaining not only profit maximization but also keep a check on shareholders’ welfare.

In simpler words, an independent director is a third party who is a member of the board of directors, having an impartial position with a company. The independent director does not participate in the daily functioning of the company neither he is a part of the executive team of the company.

Who can be an Independent Director?

Chapter XI of the Companies Act 2013, deals with the appointment and qualifications of directors. Provisions pertaining to who can be an independent director under the Companies Act 2013 are set forth under section 149 subsection (6) of the Act. The section provides that an independent director in regard to a company means a person other than the managing director, or a whole-time director, or a nominee director:

  • Is a person of integrity and a person who has the relevant expertise and experience, in the opinion of the board.
    • The person should not be the promoter of the company or any of its subsidiaries or any of its holding or, any of its associate companies.
    • The person should neither be related to the promoters of the company nor the directors in the company. Including the directors of its holdings, any of its subsidiaries, or any of its associate companies.
  • The person should not have or had any pecuniary relationship with the company (including its holdings, subsidiaries, or associate companies) during the previous two financial years. However, the pecuniary relationship mentioned in this clause means the monetary relationship should be other than the remuneration as director or transaction not going beyond ten percent of his total income.
  • None of whose relative must have had or has any relationship with the company (including its holdings, subsidiaries, or associate companies) that is in the nature of pecuniary or transactional.
  • None of whose relative during the current or two immediately previous financial years is:
    • Holding any security or interest. Provided it must not exceed fifty lakhs or two percent of the paid-up capital;
    • Is indebted; or
    • has provided for a guarantee, or security for the indebtedness of a third party.
  • The person neither himself nor any of his relatives:
    • Holds any managerial position of importance or is employed in the company (including its holdings, subsidiaries, or associate companies) during three immediately previous financial years.
    • For the three immediately previous financial years has been an employee or, proprietor or a partner in the:
  1. Firm of auditors,
  2. The firm of company secretaries,
  3. Cost auditors of the company (its holdings, subsidiaries, or associate companies),
  4. The legal firm carrying transactions on behalf of the company (its holdings, subsidiaries, or associate companies) amounting to ten percent or more of gross turnover.
  • The person having the hold of two percent or more voting power in the company along with his relatives.
  • Is the head of the Non-profit organization that receives twenty-five percent or more from the company (its holdings, subsidiaries, or associate companies).
  • A person having the prescribed qualifications.

Which companies must or can appoint independent directors

It is obligatory for certain companies to appoint an independent director. Sub-section (4) of Section 149 of the companies Act 2013 provides that:

  • Every Public listed company must have at least 1/3rd of the total number of directors.
  • The Union government to prescribe for the minimum number of independent directors for other classes or classes of public companies.

Rule 4 of the Companies (Appointment & Qualification of Directors) Rules, 2014 provides for the number of independent directors. It states that the public companies falling under the below-mentioned criteria shall have at least two independent directors:-

  • Having paid-up share capital of INR 10 crores or more.
  • Having a turnover of INR 100 crores or more.
  • Having in the aggregate, outstanding loans, debentures, borrowings, and deposits, more than INR 50 crores.

Exceptions to the following clauses:

  • Joint venture.
  • Wholly owned subsidy.
  • A dormant company as defined under the Act.

Limit on the number of Independent Directorships?

According to section 165 of the Companies Act 2013, the maximum number of companies wherein a person can be appointed as a director shall not be more than 20 companies (including the alternate directors). For calculating the limit wherein a person can be appointed as a director in a public company, the directorship of that person in private companies (holdings, subsidiary company) shall be included.

In the case of a public company in which a person can be appointed as a director shall not be more than 10 companies. However, the Companies Act, 2013 is silent regarding any specific limit on the number of companies where a person can be appointed as an independent director.

Appointment  and Re-appointment of Independent Directors

Qualifications

Independent directors are directors of a company. Independent directors are subject to the same general requirements and disqualifications as any other director. The 2013 Act specifies specific qualification standards for independent directors in addition to those outlined in the Listing Agreement. An independent director must be a subject matter expert with the necessary qualifications in the domains of finance, law, management, research, and corporate governance. He must be a person of moral character, faith, honesty, and appropriate experience. Additionally, he should not be a promoter of the business or any affiliated businesses, or even a relative of any promoters or board members. In addition, he must not have any financial ties to the corporation, its holdings, subsidiaries, or promoters. He must, thus, be a person in order to be selected as an independent director. He must be qualified to serve as a director and provide assurance that he is not ineligible. In order to serve as a director, he must also submit his written approval, which must be filed with the Registrar, and declare his director identification number (DIN).

The New Act prohibits the appointee from being associated with the promoter or directors of the company, its holding, subsidiary, or associate company, whereas, the listing agreement prohibited the appointment of a person in relation to the promoters or persons possessing management positions at the board level or one level below.

The new Act does not require the appointment to be unrelated to someone holding managerial positions at the board level or one below the board, unlike the listing agreement, and it can be deduced from this. Companies must adhere to the standards under both until the regulations developed in this respect give further clarity since the new Act does not supplant or replace the listing agreement. While the Listing Agreement does not contain any strict rules about the potential appointee’s family, the new Act stipulates that neither the independent director nor any of his kin may:

  1. Hold a significant managerial role or had worked for the business during any of the three financial years;
  2. Has participated in any of the three financial years as an employee, proprietor, or partner;
  3. Holds 2% or more of the company’s total voting power;
  4. Belongs to any non-profit organisation whose chief executive officer or director obtains 25% or more of its revenues.

While the new Act stipulates that an independent director must possess honesty, the necessary knowledge, and the necessary experience, it does not specify the criteria to be used in deciding whether a person satisfies these requirements. The ultimate effect is that listed corporations eventually nominate independent directors after using their own discretion. It is important to note that, in contrast to the 2013 Act, the listing agreement does not define the term “a person with integrity and holding the necessary skills and experience” when describing the individuals eligible to be selected as independent directors. This provision is not present in the Listing Agreement. These constraints aim to ensure that independent directors do not act against the financial or pecuniary interests of the firm. There may be a need to review the selection criteria for independent directors at many listed companies.

Tenure of Independent Directors

The duration of the term of office for independent directors has been set forth under subsection (10)  and subsection (11) of section 149 of the Companies Act,2013.

According to section 149(10), an independent director can be appointed for a term up to 5 consecutive years.
This was clarified by the Ministry of Corporate Affairs via its General Circular 14/ 2014, stating that the appointment of an independent director for the term of 5 years or less is permissible. Whether the appointment is for five years or less, it will be considered as one term.
The independent director under this section shall be eligible for reappointment through the passing of a special resolution and the disclosure of such information has to be made in the board report.

Furthermore, section 149(11) states that no person shall be appointed as an independent director for more than two consecutive terms. Although such independent directors shall be eligible for reappointment after the expiration of 3 years.
The person shall have to resign from the office on completion of two consecutive terms even if the aggregate number of years is less than 10, as clarified by the Ministry of Corporate Affairs via its General Circular 14/2014.

Remuneration of Independent Directors.

Subsection (9) of section 149 of the Companies Act 2013, expressly prohibits independent directors from gaining any stock options.

However, the independent director may receive remuneration in the form of a fee. The said fee shall be decided by the board of directors, and it shall be in the form of a sitting fee to an independent director for attending meetings of the Board or committees. The amount of the said fee shall however not exceed INR 1 lakh per meeting.

Retirement by Rotation

Unlike other directors, the independent directors shall not be liable to retire on rotation as provided by subsection (13) of section 149.

Alternate Director

Section 161 of the Act provides for the appointment of alternate directors, nominee directors, and additional directors. The section states that a person shall be appointed as an alternate director for an independent director only if he has the said qualifications required to be appointed as an alternate director.

Intermittent director

According to Rule 4 of the Companies (Appointment & Qualification of Directors) Rules, 2014, any company falling within the ambit of the said rule must appoint an independent director in case of an intermittent vacancy within 3 months or before the immediate next Board meeting.

Manner and selection of independent directors

Provisions pertaining to the appointment of independent directors are set forth under section 150, section 152, part IV of Schedule IV.

Selection of independent directors

The main aim of appointing an independent director is that the appointed person should be impartial and help with good corporate governance. The manner in which an independent director shall be appointed has been laid down under part IV of Schedule IV of the Companies Act 2013.

Part IV clause (1) of Schedule IV states that the appointment of an independent director should be free from any company management. The board of directors shall appoint an independent director, however, the board while appointing must ensure that there is a balance between skills, knowledge, and experience in the board. Doing so will facilitate the board to administer their roles and duties efficiently as provided under section 150 (1).

Therefore the board may nominate the person to be appointed as independent directors. The board has also been given an option to select an independent director from the data bank that has been maintained. The data bank might be anybody, associate as notified by the central government. The responsibility of conducting due diligence before appointing an independent director shall be of the board.

Approval

The board nominates person(s) for the post of independent director. However, the appointment of the independent director should be approved in the shareholders meeting ad provided under Part IV clause (2) of Schedule IV.

Section 150(2)  states that the appointment of an independent director must be approved in the general meeting held by the company. Additionally, an explanatory statement must be attached to the notice of the general meeting. The notice must provide the justification for selecting the said independent director.

Furthermore, Section 152(5) also requires the explanatory statement to specify that in the opinion of the board, the independent director fulfills the conditions laid down under this Act and its rules.

Appointment Letter

The appointment of the independent directors must be formalized by a letter of appointment.  The letter of appointment shall mention the following things listed below (as specified by Part IV clause (4) of Schedule IV.):

  1. The tenure of the independent director.
  2. Expectations of the board and the board level committee(s) in which the independent director is expected to serve.
  3. The fiduciary duties and the corresponding liabilities.
  4. Provisions of director and officer insurance.
  5. The code of business ethics to be followed by its directors and employees.
  6. List of prohibited actions when functioning as such in the company.
  7. The remuneration, periodic fees, provision for reimbursement of expenses and profit related commissions; if any.

The terms and conditions of the appointment of independent directors must be posted on the company website and must be made available for inspection at the company’s registered office(during business hours) as provided under clause IV (5)(6) of Schedule IV.

Consent

Every person who has been appointed to hold an office as an independent director must give his consent to act as an independent director and the said consent must be filed with the registrar within 30 days as provided under Section 152 (5) of the Act.

Furthermore, the independent director must furnish the consent in writing on or before his appointment in Form Dir 2 in conformity with rule 8 of Companies ( Appointment and Qualification of directors) rules, 2014.

Re-appointment

According to clause V of Schedule IV, the independent directors shall be re-appointed based on the performance evaluation report.

Resignation

For various reasons, an independent director may resign from the position by giving the board written notice of his intention to do so and providing a plausible explanation for why he is unable to maintain his position. As per the Companies (Registration Office and Fees) Rules, 2014, he must also give a copy of his resignation letter and an explanation of his reasons for leaving within 30 days to the Registrar of Companies. Upon receiving a resignation notice, the board is required to take note of it and notify the applicable stock exchange, as well as the Registrar of Firms in the case of listed companies. Additionally, they must provide information on the resignation in the board report that is distributed to the company’s next annual general meeting. The resignation is effective only on the day the company receives the notice of resignation—or any later date that may be specified in the resignation letter. 

When a director tenders his resignation and the Board of Directors accepts it and takes action on it, the director is no longer responsible for any liabilities the company may incur after the date of acceptance of his resignation, with the exception of the liabilities he personally incurred when he bought shares of the company. Directors who resigned and submitted their resignations to the Registrar of Companies (ROC) before the relevant time during which the alleged offences occurred should be granted relief.

However, at this time, these explanations must be specific in their resignation letter due to the increased obligations and consequent responsibilities. The resignation letter of an independent director is a public record that may be cited as prospective evidence in a lawsuit or an inquiry to establish compelling reasons for the resignation. It can serve as a useful tool for the director to reduce his exposure and justify his stance before resigning. A fresh appointment must be made as an independent director within 180 days of the resignation date.

Resignation may only be withdrawn or revoked, prior to the resignation’s effective date, which is the later of the day the firm receives the notice of resignation or the date mentioned in the resignation notice. In Union of India v. Shri Gopal Chandra Misra and Others (1978), the Supreme Court of India ruled that an incumbent’s written notification to the appropriate authority of his intention or proposal to step down from his post as of a future specified date may be withdrawn by him at any time before it becomes effective, barring any legal, contractual, or constitutional restrictions. The case of Yamaha Motors (Pvt) Ltd. v. Labour Court-II and Another (2012) also adopted a similar approach. It was emphasised that a potential resignation may always be revoked prior to going into force, although it would always be subject to the employee’s service conditions.

Since just resigning and absolving oneself of duty cannot be done, there should be some guidelines. Resignations based only on vague personal reasons cannot be accepted in order to leave one firm just to serve others.

Removal

Like any other director of the corporation, an independent director may be dismissed from the board. They can be dismissed before their term ends by passing a regular resolution that is supported by the majority of the members. The independent director must have a fair chance to be heard before being removed. However, a director chosen by proportional representation cannot be dismissed before the end of his tenure. Specific notice must be introduced at the meeting when a director is to be dismissed. The resolution voted in the Extraordinary General Meeting (EGM) to remove the directors was deemed invalid since no particular notice of the vote to remove the directors was given. To provide the concerned director with a chance to voice his views, the corporation must also submit a copy of the document to him. The concerned director may also ask for more time to send his representative or a lawyer. In the event of a time constraint, the director may address the matter at the scheduled meeting. However, if the company or another individual file a claim with the National Company Law Tribunal (NCLT) claiming that doing so would amount to securing unwarranted exposure for defamatory material, such representation may not be read out at the meeting. With a majority vote, shareholders may also dismiss a director with or without cause. However, if two-thirds of the directors were chosen by proportional representation, this option would be unavailable. If any compensation or damages are due to the dismissed director under the conditions of his appointment as director, they might have to be paid.

Separate meeting

The independent directors of the company shall hold an exclusive meeting at least once in the financial year. The meeting shall be without the non-independent directors. All the independent directors of the companies must be present at such meetings.

The agenda of the meeting shall be as follows:

  • Reviewing the performance of the board, of the non-independent directors, and the chairperson of the company.
  • Assessing the structure and the flow of information between the board and the company management is required for the efficient and effective functioning of the board.

Evaluation of the performance of an independent director

Part VIII of the Code for Independent Directors provides that based on the performance evaluation report term of an independent director may be extended or he may be reappointed. The performance evaluation of the independent director is to be conducted by the entire board of directors.

Director Identification Number (DIN)

Director Identification Number is a unique 8 digit identification number that is allotted to an individual who wishes to be a director or a company or someone who already is a director of a company. This number is allotted by the central government.

Section 152 of the companies Act makes it compulsory for the directors to obtain a unique identification number. The provisions pertaining to Director Identification Number are set forth under section 153 and rule 9 of the  Companies (Appointment and Qualifications of Directors) Rules, 2014.
Director identification numbers facilitate the government in maintaining a database. Every person intending to be a director or every person who is already a director in a company shall be allotted a single number irrespective of the number of directorships he holds.

To obtain a Director identification number an individual needs to apply to the Ministry of Corporate Affairs in the manner prescribed along with the prescribed fee. The central government shall allot the director identification number to the individuals within a month.

The DIN is valid for a lifetime. After receiving the DIN, the director within a month must inform about the same, to all the companies where he holds or intends to hold the position of director. The company on receiving the DIN must inform about the DIN of the director within 15 days to the Registrar of Company.

The detailed procedure and the requirements for the application of DIN are provided under rule 9 of the  Companies (Appointment and Qualifications of Directors) Rules, 2014. While allotting and scrutinizing for DIN, Rule 10 of the Companies Rules 2014 (Appointment and Qualification of Director) is also considered.

Data Bank of Independent Directors

In order to strengthen good corporate governance, the ministry of corporate affairs launched Databank for independent directors. The databank maintains a database of the independent directors that are willing to take up the post of an independent director and is also eligible for the post. The data bank facilities the selection process of independent directors by the company as can select the per their requirements.

Indian Institute of Corporate Affairs has been authorized by the central government to create and to maintain a data bank for independent directors. The data bank is an online data bank displayed on the website of the institute.

The provision relating to the details required by the databank is provided under the companies (creation and maintenance of databank of independent directors ) Rules 2019. Accordingly, the following details of individual are required by the databank:

  • Director identification number (DIN)
  • Full name
  • Income tax PAN
  • Fathers name
  • Date of birth
  • Gender
  • Nationality
  • Occupation
  • Present and permanent full address along with PIN code
  • Phone number
  • Email id
  • The educational qualifications and professional qualifications
  • Details of experience or expertise (if any)
  • If any pending criminal proceedings
  • Details of the limited liability partnership which he is a part of:
    • List of the limited liability partnerships,
    • The names,
    • Nature of the industry of the limited liability partnership,
    • The duration along with the dates,
  • Details of the companies he is part of:
    • The Name of the companies.
    • The nature of the industry.
    • The duration along with dates.
    • The nature of directorship i.e whether he serves as an independent director or an executive director, or nominee director, or a managing director.

The data shall be provided by the institute on payment of a prescribed fee by the company. Indian Institute of Corporate Affairs shall not be held responsible for the lack of accuracy of any information. As mentioned earlier it is the responsibility of the company to conduct due diligence on the prospective independent directors.

The individual whose name has been included in the databank in the event of any change must inform the institute within 15 days.

Further,  in respect of any person who has been appointed as an independent director or who intends to hold the position of an independent director, the institute shall comply with the following:

  1. Conduct a competency self-assessment test with the curriculum covering subjects such as basic accountancy, company law, securities law, and other areas relevant to the functioning. The test would be conducted online.
  2. Assemble the required study material for individuals appearing for the above-mentioned assessment. The study material will be in the form of online lessons or audiovisuals.
  3. Provision for individuals to take an advance test for the areas specified above and prepare the study material for the same.

Code for directors

The standards and professional conduct that is expected by the directors have been laid down under Schedule IV of the Companies Act,2013. The code for independent director includes guidelines for professional conduct, the duties of the independent directors, their roles and functions. These are discussed below:

Professional conduct

The independent director according to the part I of the schedule IV must:-

  1. Sustain ethical standards.
  2. To be impartial while discharging his duties.
  3. Perform his responsibilities in the interest of the company.
  4. Allocate the necessary time to fulfil his professional obligations so as to facilitate him in an informed decision making.
  5. Not allow any unnecessary considerations that will hamper his independent judgment, while taking decisions for the benefit of the company.
  6. Not to abuse his position.
  7. Abstain from actions that would cause him to lose his independence.
  8.  Assist the company in incorporating good corporate governance.

Duties of Directors

The independent director according to part II of schedule IV has the following roles and functions:

  • In case of issues relating to strategic risk management, resources, key appointments, standard of conduct, and performance, the independent director must facilitate in bringing an independent judgment.
  • The independent director must be impartial when considering the evaluation of the performance of the management and the board of the company
  • He must ensure the financial controls and risk management systems are efficient and effective.
  • An independent director must always make sure that he is safeguarding the interest of all stakeholders especially the minority shareholders.
  • In case of conflicting interests of all stakeholders, the independent director must try to maintain a balance.
  • The independent director must facilitate in determining remuneration for different levels of:
    • The Executive directors.
    • Key managerial personnel.
    • Senior management and wherever necessary.
  • While adjudicating matters, the independent director must adjudicate keeping in mind the interest of the company as a whole.

Duties of the independent directors

  1. Independent director must update and enhance their skills knowledge and familiarity with the company regularly.
  2. An independent director must aim to attend all the board meetings and the meetings conducted by the board committee is of which he is a member.
  3. The independent director must try to keep himself updated about the company the external environment under which it operates.
  4. Before approving any related party transactions the independent director must ensure death the transaction is in the interest of the company and has been duly considered.
  5. An independent director must report the matters concerning unethical behavior whether it is actual or suspected fraud of the companies ethics policy for code of conduct.
  6. The independent director must never disclose confidential information  except if such disclosure is required by law.
  7. In order to discharge his duties or in order to take any decision independent director may seek expert opinion or  clarifications of the information
  8. Must be active and an impartial member of the committees of the board that they are part of.
  9. In case of any concerns regarding a proposed plan of action or scheme, the independent director must convey his concern to the board and make sure that they are duly addressed and resolve.
  10. Independent directors are prohibited from unjustly obstructing the functioning of the board or committee of the board.
  11. Independent directors must make sure that there is a proper and efficient vigil mechanism in place in the company.
  12. Independent directors should never overstep their authority. Protecting the interest of the company, its shareholders, and its employees are the primary duty of an independent director.

Position of independent directors in various committees

The companies Act 2013, requires the independent directors to be a part of certain committees such as the:

Audit committee

According to Rule 6 of the Companies (Meetings of Board and its Powers):

Rules, 2014, the following classes of companies shall constitute an audit committee:-

  • Every public listed company
  • A public company having paid-up share capital of INR 10 crores or more
  • A public company having a turnover of INR 100 crores or more
  • A public company having in the aggregate, outstanding loans, debentures, borrowings, and deposits, more than INR 50 crores.

Section 177 of the Companies Act,2013  provides that the audit committee would consist of at least three directors. The majority of directors in the audit committee must be independent directors.

Nomination Committee and Remuneration committee

According to Rule 6 of the Companies (Meetings of Board and its Powers):

Rules, 2014, the following classes of companies shall constitute a remuneration committee:

  • Every public listed company.,,
  • A public company having paid-up share capital of INR 10 crores or more,
  • A public company having a turnover of INR 100 crores or more,
  • A public company having in the aggregate, outstanding loans, debentures, borrowings, and deposits, more than INR 50 crores.

According to section 178 of the Companies Act, the nomination committee and the remuneration committee shall consist of at least three or more non-executive directors. One half of the committee shall comprise of independent directors.

The chairman of the company cannot chair the remuneration committee or the nomination committee, irrespective of whether he is an executive or non-executive director. The chairman of the nomination committee or remuneration committee must be an independent director.

Corporate social responsibility  committee

According to section 135 of the Companies Act 2013, a company having a net worth of INR 500 crores or net profit of INR 5 crore or turnover of INR 1000 crore shall constitute a Corporate Social Responsibility Committee.

Corporate Social Responsibility Committee shall consist of three or more directors out of which one has to be an independent director.

Advantages of appointing independent directors

Instead of a board made up of dependent directors, a board with a majority of independent directors would be more capable of overseeing the CEO. Also, adding additional independent directors typically leads to more outside counsel and knowledge (due to the executives’ coming from different backgrounds). The directors are not vulnerable to excessive influence from the management group because they, by definition, have no material link to the firm. So we can say that independent directors are essential to effective corporate governance and are typically preferred for appointment to the Board of Directors.

Disadvantages to appointing independent directors

Appointing independent directors has a number of disadvantages as well. Some of which are: 

  • There is a danger of knowledge asymmetry because independent directors often know less about the firm than the management team. 
  • Despite the fact that a director may be independent by definition, this does not guarantee that the director is working with complete impartiality; 
  • Independent directors are susceptible to management pressure. 
  • Additionally, they might not possess the knowledge and abilities needed to serve as the Board of Directors effectively.

Frequently Asked Questions (FAQs)

Who has the authority to appoint independent directors?

The company’s general meeting must authorise the nomination of an independent director.

What if the company later failed to uphold the conditions of the appointment?

If a corporation fails to meet one of the aforementioned standards for three years in a row, it is not required to follow the rules until it meets the conditions once more.

How long may a name be stored in the data bank?

By paying the appropriate fee, a name’s inclusion in the data bank might be for a duration of one year, five years, or for life.

Is a DIN required to enter a name into a data bank?

Yes, it is mandatory, and anyone without a DIN may freely apply to the institute to have their name included in the data bank.

Conclusion

An independent director bridges the gap between the management and its shareholders. They promote the principles of corporate governance by facilitating disclosures, transparency, and accountability of the company to its stakeholders.

They help the company in inculcating the best corporate governance practices. The independent directors make sure that the company is functioning in such a way that it keeps in mind the best interest of its stakeholders, customers, minority shareholders, workers, its own interest, and the interest of the public at large.

An independent director brings an impartial and independent judgment to the company. It acts as a watchdog. The inclusion of Independent directors will ensure that the companies are not doing any fraud. Independent directors in corporate governance will have a positive impact on the corporate environment in India.

Reference


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Vehicle wrecking and scrapping in India

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This article is written by Nishka Kamath, a graduate of Nalanda Law College, University of Mumbai. It is an endeavour to shed light upon the Vehicle Scrappage Policy in India along with the advantages, steps, and RTO rules of scrapping vehicles. Further, in order to provide a global perspective, an attempt has been made to discuss car wrecking steps and how such a facility can be hired in Hamilton.  

It has been published by Rachit Garg.

Introduction

Vehicle scrapping policies have been around since the global recession of 2008. The Government of India as well as governments across nations have been implementing car scrapping policies to assure that there is a surge in sales of new automobiles as well as that the inefficient vehicles on the roads are removed, all in an environmentally friendly manner.    

Recently, Prime Minister Narendra Modi launched the much-awaited Vehicle Scrappage Policy in India, as well, and affirmed that this National Policy will provide a new identity to the auto sector and boost the circular economy, which in turn will make the process of financial development more endurable and environment-friendly. 

Car wrecking/ vehicle scrapping in India

In India, car wrecking or scrapping is not a common activity like selling used cars. Old vehicles have been playing a key role in polluting the environment, which is why the New Vehicle Scrapping Policy (discussed below) was announced to scrap unfit vehicles off Indian roads. All the notifications pertaining to this policy by the Ministry of Road Transport and Highways (MORTH) can be accessed here

Before we go to our Indian policy, let us have a look at an automobile wrecking facility in Hamilton, to develop a global perspective on such an amazing, environment friendly policy! A note must be made that the below mentioned steps are based on car wrecking in Hamilton, whereas the article will discuss the Indian aspect of all the vehicles and/or automobiles, let alone that of cars. 

Hiring car wreckers in hamilton: how do cash for cars work?  

If you have a car that you no longer use, you can still sell it to private buyers. You have that option, or you can contact a cash for cars business and offer them your vehicle. 

These buyers will accept cars in any condition, depending on what they can get. But how does cash for cars work, and how do they process cars? This article will shed some light on how cash for cars do their business.  

  1. Fill Up The Form Or Call  

You can find local car wreckers in Hamilton by searching online or in print classifieds. They also have their phone number or website printed if they advertise. You can call them and talk to one of their members or staff about your car. If you contact them online, you will likely see a form you need to fill in with information. Submit it, and they will probably email or call you back.  

  1. Receive a partial quote  

Whether you contact car wreckers in Hamilton by phone or on their website, you might be able to get an instant quote for your car. They will give a specific amount depending on the information they get. But this is subject to change because they will have to inspect your vehicle. If the car wreckers offer a free removal service, they will haul the vehicle from your place. Otherwise, you will drive it to the shop or hire a towing service.  

  1. Acceptable model, conditions, and makes  

Most car wreckers will accept any vehicle. They will also look into junk cars that don’t run anymore. They will want cars, vans, trucks, RVs, 4WDs, jeeps, and more. Some cash for cars companies will only accept certain models and brands.  

  1. Legitimacy And Finding The Right Buyer  

Buying junk cars has been around for decades and is among the fast-growing industries. Many were able to get extra cash for selling their vehicles to car wreckers. 

Depending on the car’s condition, sellers can get as much as NZ$12,000 to NZ$15,000.  

Since it’s a legitimate business, you must conduct research to find the right one you can do business with. Not all cash-for cars operate the same way. Read online reviews about the company if they offer good customer service. One thing you need to keep in mind is to be realistic when expecting the amount they’re likely to pay.  

  1. What The Buyers Want For The Vehicle 

Cash for cars pays owners because of what they can get from the vehicle. The team will pay the owner depending on the scrap metal and parts they can resell. 

In addition, they will take vehicles involved in car accidents. The reason for that inspection is they want to see how much they can get back from buying your car. They will also want to see which parts are still working so they can sell them to private buyers.  

  1. What Sellers Should Do Before Selling Their Vehicle 

First, inspect your car before giving it up to the car wreckers. You might’ve left personal items behind and won’t get them back once the car is at the shop. If it has leftover fuel, you can use it up or drain it. You can also ask if the car wreckers can remove the drain themselves so that you can save time and effort. 

Owners must take the plate numbers and surrender them to the agency where they registered. The last thing you want is for other people to use the plate number when it can be traced to the registered name. Inform your insurance company that you’re no longer using the vehicle. The car wreckers won’t be responsible for the issues that come later concerning vehicle documentation.  

  1. How Do Cash For Cars Process Cars?  

The process of dismantling vehicles varies from one wrecker to another. But they will likely have similar methods of retrieving essential car parts. They will attend to the disconnection of wires and other pipes to remove the engine. The engine is one part of the car up for recycling.  

Next, they will drain the leftover liquids such as gasoline and antifreeze. Car wreckers must follow safe ways of draining, so they won’t harm the environment. 

The wreckers will then strip the vehicle of all metal parts for selling as scrap metal. Non-metallic parts they can sell are blinkers and tail lights, windshields, and transmissions.  

The car wreckers will also look into plastic parts for recycling. They must follow the law to keep the business operating. Safe measures for recycling are good for the environment and keep more waste away from landfills.  

To conclude, car wreckers offer cash in exchange for vehicles of all kinds and conditions. They will pay for what they can get out of the car. It is also important to remember to be realistic about how much you can expect for your car. So, try to contact different car wreckers to work out a deal and see which ones can give you a better offer. They’re only a phone call away.

Vehicle scrapping policy in India 

On August 13, 2021, a new Vehicle Scrappage Policy was announced by the Government of India. The Vehicle Scrapping Policy (discussed in brief below) was launched by Prime Minister Narendra Modi at an Investor Summit. As per the policy, the focus is to de-register private cars (also known as passenger vehicles), which have been used for over 20 years, and commercial vehicles that have been used for over 15 years. 

Object of the Vehicle Scrapping Policy

The main object of the policy is to remove all the unfit vehicles and recycle them in a systematic manner. The ultimate motive is to curb environmental pollution caused by old vehicles that have been used for a long time and do not have a valid fitness certificate. This policy will not only aid in reducing air pollution but also help in recycling old parts and machinery of the vehicles, along with key materials like steel, plastic, and copper. This policy was also implemented with the aim of bolstering vehicle sales. 

Fitness test under the Vehicle Scrapping Policy 

Vehicles that are older than the set age (15 years for private vehicles and 10 years for commercial vehicles)  will have to undergo a fitness test as per the new policy if the owners want to run their vehicle on the streets of India. The test will have several ways to determine the fitness of the vehicle, such as:

  1. The condition of the engine,
  2. The emission status,
  3. The fuel efficiency of the vehicle,
  4. The safety and the safety features, inter alia

What happens if the vehicle does not pass the fitness test under the Vehicle Scrapping Policy   

If the vehicle does not pass the fitness test, its registration will be cancelled. Such a vehicle will then be sent with other vehicles for scrap. The said policy is under the Voluntary Vehicle Modernization Programme (VVMP); thus, if the vehicle fails the fitness test, then the owner will have to deposit his car in 60-70 registered scrap facilities across the country. For this, the owner will get a scrap certificate issued from there, which will be valid for 2 years. He can avail himself of the discount certificate to get a discount of up to 5% of the ex-showroom price at the time of buying a new vehicle in lieu of a certificate of deposit for scrapping an old vehicle.

Advantages of the Vehicle Scrapping Policy

General advantages of the vehicle scrapping policy  

The vehicle scrapping policy in a country like India will result in the following positive outcomes: 

Cleaner air

The first and foremost advantage of this policy is that the air will be a lot cleaner. Considering the fact that ineffective vehicles are taken off the roads, the air pollution level will undoubtedly drop.  

Increase in sale of new vehicles

This new policy will ensure that there is a surge in the sale of new vehicles, with the old ones being scrapped. 

Easy, safe and faster commute 

Commuting on Indian roads will be a lot safer, hassle-free and faster considering the advanced and superior features the vehicles of this era come with, along with the added safety measures. 

Employment opportunities 

The Government of India is setting up several authorised vehicle scrapping facilities, which will yield massive employment opportunities in India.

Metal recycling 

Vehicle scrapping will act as a major breakthrough for recycling raw and precious metals in the recycling industry of India, thus yielding better revenue. 

Advantages of vehicle scrapping policy for car owners 

The following are the major advantages for car owners who scrap their vehicles: 

Discount certification

Vehicle owners, for scrapping their old vehicles, will receive a discount certification of up to 5% of the ex-showroom price at the time of buying a new vehicle. This certification can be attained within a period of two years. This discount is usually over and above the scrap value an individual receives for their vehicle. 

No registration fee for a new vehicle 

An individual, upon buying a new vehicle, will not have to pay any registration fee, upon declaring the Certificate of Deposit. 

Tax rebates 

State governments will offer a concession on road tax of up to 25% for non-transport vehicles (personal vehicles) and 15% for transport vehicles (commercial vehicles) for the new vehicle. 

Steps to scrap a car or any other vehicle in India

The following are very brief steps for scrapping a car or any other vehicle in India under the Vehicle Scrapping Policy: 

Step 1: Contact the service centre

Step 2: Complete the documentation 

Step 3: Let the evaluation of the dealer begin

Step 4: Let the scrappage start after the evaluation is complete 

Step 5: Get the scrappage certificate

RTO rules for car/automobile scrapping and deregistration of old cars and vehicles 

The following are some of the key rules an individual must follow for deregistering and scrapping a vehicle in India: 

  1. The owner of the vehicle must inform the concerned RTO about scrapping the old vehicle. 
  2. The owner must hand over the vehicle registration certificate along with removing the chassis number plate while scrapping the vehicle.
  3. The owner must submit the confirmation document that the vehicle scrap dealer has provided.
  4. The owner must also hand over an affidavit with the application for deregistration of the vehicle.
  5. The owner must also affirm that the said vehicle is not under loan, insurance claims or any pending court case(s). 
  6. The RTO will then follow a verification process for the documents submitted, verify the records of the vehicle on to their database,  procure diligence reports from the traffic police and National Crime Records Bureau and if found satisfactory, will proceed towards deregistration and eventually scrapping of the old vehicle. 

Why is India in a dire need of amends in the Vehicle Scrapping Policy

Indian consumers are upset with the Government’s vehicle scrappage policy and are of the opinion that amendments should be made to the policy. Some of the suggestions include the following: 

Kilometres driven instead of age to define old vehicles

Consumers want kilometres driven instead of age to define old vehicles. There is a possibility that a vehicle that is used for over 15 or 20 years of age may be in the best condition and need not be scrapped. 

Increase the age of taking a fitness test or re-registration by 2 years 

The COVID-19 Pandemic has put several vehicle owners in trouble, especially auto and taxi drivers. The auto and taxi unions have urged the government to increase the last 2 years, i.e., 17 years for commercial vehicles and 22 years for private vehicles. With the implementation of this policy, several taxi and autorickshaw owners lost their means to earn their bread and butter, which left them no choice but to return to their respective hometowns. 

Urge banks to inculcate an easy pay EMI (Equated Monthly Instalment) option for new vehicle owners 

Further, the government can urge the banks to add an option of easy-pay EMI (Equated Monthly Instalment) option for new vehicle owners, as not every vehicle owner will have the necessary funds to buy a new vehicle. Moreover, there are certain commercial drivers, say, auto and taxi drivers, who barely make ends meet, let alone have funds for buying a new vehicle. 

Make scrapping old automobiles a more inviting prospect

Vehicle owners are of the opinion that the government must make amends to the policy, thus making it more alluring to invite prospective owners to scrap their vehicles. With the present policy, maintaining an old vehicle with all the requisite certifications becomes over-priced. Further, the added incentives provided to buy a new vehicle are clearly inadequate to please the typical Indian consumer.

Conclusion 

For attaining the aim of boosting economic flow and creating a circular economy that turns waste into wealth, the Vehicle Scrappage Policy can be very efficient. Further, the principles of the 3 Rs, i.e., reuse, recycle, and recover, would uplift the automobile sectors and metal industries of India.

However, with all such developments, it is pertinent that the government pays close attention to the needs, conditions, and demands of middle-class families, thus making an impact on the overall development of the nation and not just one segment. 

Please note: The above information is for informational purposes only. It is always recommended to take guidance from an expert before making a decision. 

References 

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