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Common Cause v. Union of India : case analysis

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This article is written by Shraileen Kaur, a student at ICFAI University, Dehradun. In this exhaustive article, the author discusses in detail the judgement in the case of Common Cause v. Union of India (2018); the concept of euthanasia, the petition, issues, and arguments in the case, along with the opinion of the Bench hearing the case. 

It has been published by Rachit Garg.

Table of Contents

Introduction  

The right to life and personal liberty is one of the most significant fundamental rights that helps in the exercise of other fundamental rights. It also acts as a facilitator of other fundamental rights. It particularly includes their right not to be killed by another person. But the question is whether a person’s right to life includes the right to die.

This question was answered in the case of Common Cause v. Union of India (2018). In this case, the petition was filed by a registered society named Common Cause. 

The society demanded that the ambit of Article 21 of the Constitution of India be extended to include the right to die with dignity as a component of the right to live with dignity. It also requested guidelines for the State to create suitable policies that would allow people with declining health or terminal illnesses to execute living wills or advance medical directives.

The Supreme Court of India, after carefully examining Indian and international laws and precedents, notably the ruling in K.S. Puttaswamy and Anr. v. Union of India and others (2017), determined that the right to die with dignity is a fundamental right under Article 21 of the Indian Constitution. Additionally, the Court approved the application of advanced medical directives, emphasising that through this process, it can be ensured that the individual had a dignified death as his or her individual autonomy is protected. 

The Court went into great length about the evolution of the right to privacy, pointing out that it is necessary for maintaining human dignity, without which freedom cannot be realised. The right to privacy was also seen as being essential to maintaining one’s physical integrity, freedom of choice, and individuality. Additionally, the decision of a court in the United States of America in Re Quinlan (1976) was taken into consideration by the Supreme Court of India in evaluating government interest and privacy protection. The case showed that as physical integrity was increasingly damaged and possibilities of recovery decreased, the right to privacy expanded and state interest diminished.

The Supreme Court of India further observed that along with violating the principle of informed consent, it also violates the patient’s right to individual autonomy and integrity, which the Apex Court has recognised as a component of their right to privacy. Treatment should never be continued against the patient’s desires. 

This article analyses the judgement of the Apex Court in the case of Common Cause v. Union of India (2018) along with its background, associated concepts and precedents. 

Concept of euthanasia

Before analysing the case of Common Cause v. Union of India (2018), it is essential to understand the concept of euthanasia. 

The term “euthanasia” is derived from two greek words “eu”, which means “good” and “Thanatos”, which means death. Euthanasia is the practice of ending a patient’s life in order to relieve their suffering. Normally, the patient in concern would have a serious illness or be in excruciating pain.

Euthanasia would allow the individual to have a comparatively ‘good death,’ as opposed to sentencing them to a slow, excruciating, or indignified demise.

There are different types of euthanasia, namely – 

Active and passive euthanasia

Active euthanasia refers to the act of killing an individual by employing any active means of death. Some of the instances of active euthanasia involve injecting an individual with a fatal drug dose, leading to death. Due to the means employed under active euthanasia, it is sometimes also referred to as “aggressive euthanasia.” 

Passive euthanasia refers to a process where an individual is intentionally obstructed from living life. Whenever any artificial life support is withdrawn, such as a ventilator or feeding tube, leading to the death of an individual, it comes under the ambit of passive euthanasia. 

Voluntary euthanasia and involuntary euthanasia

Voluntary euthanasia refers to ending the life of the individual in question with their consent. On the other hand, involuntary euthanasia refers to ending the life of the individual in question without his or her consent. Cases of involuntary euthanasia are quite popular among nations with low per capita income. When they cannot afford to pay for the treatment of their relatives, they opt for involuntary euthanasia to avoid hefty payments. 

Euthanasia on the basis of administration

On the basis of administration, euthanasia can be divided into two different types, namely – self-administered euthanasia and euthanasia administered by others. 

In self-administered euthanasia, the individual in pain himself or herself administers the means of ending his or her life. On the other hand, in euthanasia administered by others, an individual other than the patient is appointed to administer the means of ending the life of the sufferer. 

Assisted euthanasia

Assisted euthanasia refers to ending the life of an individual with the assistance of a medical professional. 

The aforementioned methods of euthanasia can be combined in a wide variety of ways, and many of them are morally debatable. Various nations permit some forms of assisted suicide, such as voluntary or passive forms of euthanasia.

  • Mercy killing 

The phrase “mercy killing” typically refers to an active, involuntary or non-voluntary form of euthanasia that is delivered by a third party. To put it another way, someone intentionally ends the life of a patient to put an end to the misery of the individual suffering.

  • Physician-assisted suicide

“Physician-assisted suicide” refers to active, voluntarily performed assisted suicide in which a doctor supports the patient in ending his or her life. The patient is given the means necessary to commit suicide by the doctor, such as ample medication.

In addition to being acrimonious, the euthanasia debate also raises a number of legal, psychological, sociological, and economic issues. Since the dawn of time, it has been a problem for humanity and has taken centre stage at the nexus of bioethics and jurisprudence.

While euthanasia supporters cite the freedom of self-determination and the absurdity of extending a life devoid of purpose and dignity, opponents contend that palliative care should take priority and that legalisation of euthanasia would violate the idea of the sanctity of life.

Therefore, the majority of countries have made an effort to strike a balance between these different perspectives and have only allowed passive euthanasia, or the removal of life support, with sufficient safeguards for people who are critically ill or in a persistent vegetative condition. Many nations, including the United Kingdom of Britain, Colombia, Canada, Luxembourg, the Netherlands, Switzerland, Belgium, and Singapore, also permit the implementation of advance directives with the necessary protections.

Common Cause v. Union of India (2018)

Parties to the case 

In the case of Common Cause v. Union of India (2018), the parties involved are mentioned below – 

Parties to the petitionName of the Parties
PetitionerCommon Cause – Non Profit Organisation based in Delhi
Advocate(s) representing petitionerPrashant Bhushan
RespondentMinistry of Health and Family Welfare
Advocate(s) representing respondentSaurabh Shyam Shamshery, K. V. Jagadeeswaran, Pamidighantam Sri Narasimha
IntervenorJai Kishan Agarwal; Delhi Medical Council; Society for the Right to Die with Dignity; Dr. Surendra Dhelia; Indian Society of Critical Care Medicine; Vidhi Centre for Legal Policy
Advocate(s) representing intervenorR. R. Kishore, Preveen Khattar, Sanjay Hegde, and Arvind Datar.

Petition as filed by Common Cause

To draw attention to the suffering of people with terminal illnesses whose natural lifespan is being unnaturally stretched by unwelcome medical treatments, Common Cause, a non-governmental organisation, filed a writ petition in the Supreme Court in the public interest.

The Apex Court has already acknowledged that the right to life includes the right to live with dignity. Additionally, the Court has ruled that while the right to life does not encompass the right to death, it does include the right to dignity up until the end of one’s normal lifespan.

This petition makes the case that it is inhumane to artificially extend life without taking the patient’s wishes into consideration. Victims in this condition are unconscious; therefore, the choice to prolong their suffering is chosen on their behalf by medical professionals or by the patient’s families.

Through this appeal, the Court is urged to legalise passive euthanasia. It declares that it is not attempting to legalise active euthanasia, which entails taking steps like administering lethal medications to end a person’s natural life. When a patient’s natural life is approaching its end, passive euthanasia, on the other hand, signifies that nothing will be done to artificially extend it.

The petition states explicitly that it wants patients to have the option of passive euthanasia. It advises putting policies in place for living wills, which patients can sign if they want to specify what medical operations can and cannot be done on them if they get to the point where they are unable to express their preferences.

Prayer by the petitioners

The petitioners had requested the Court to appoint an expert committee of professionals to examine living wills and passive euthanasia, including physicians, social scientists, and attorneys.

In their petition, the petitioners ask the Court to establish rules for the execution of living wills as well as passive euthanasia.

Grounds on which petition is sought

The petitioners argued that extending the natural life of an individual by medication and increasing suffering violates numerous fundamental rights. Some of these fundamental rights are stated below – 

  • Right to privacy

Numerous international conventions and treaties recognise privacy as a fundamental human right. It serves as one of the basic pillars of a democracy and is crucial for the preservation of human dignity. The right to privacy comes under the ambit of Article 21. This Article concerning the right to life and personal liberty has a wide scope and encompasses all aspects of a person’s existence that make it more meaningful.

Article 12 of the Universal Declaration of Human Rights Act, 1948, reads in part, “No one shall be subjected to arbitrary interference with his privacy, family, home, or communications, nor to attack against his honour and reputation,” thus recognising the right to privacy as a fundamental human right.

In India, the Supreme Court proclaimed the right to privacy to be a fundamental right in the K. S. Puttaswamy v. Union of India case in 2017.

The petitioners contend that the right to privacy includes the freedom to decide on sensitive and private issues like undergoing medical procedures to extend one’s natural life. This means that individuals must be given the freedom to choose whether they want to continue their medicated life or end their sufferings.

  • Right to die with dignity

It is widely accepted that the right to life guaranteed by Article 21 extends beyond simple survival. In the Gian Kaur v. the State of Punjab, (1996) ruling, the right to die with dignity was established as a fundamental right, and the Constitutional Court’s five-judge panel, which included the then Chief Justice of India Dipak Misra, Arjan Kumar Sikri, Ajay Manikrao Khanwilkar, Dr. Dhananjaya Yeshwant Chandrachud, and Ashok Bhushan, decided that both voluntary and involuntary “passive euthanasia” are acceptable. The Court declared:

“The right to live with dignity also incorporates the facilitation of the dying process for those who are terminally ill or who are in a passive vegetative state and have no chance of recovery. The right to a dignified death and to a smooth end to life may not be supported if advance medical directives are not legally recognised.”

According to the petitioners, a person’s right to dignity lasts till the end of their natural life. A life which is unnecessarily stretched with the help of life support or other medical equipment without their approval does not accord them dignity when their natural life has begun to wane due to old age or a fatal illness. Considering the precedents of the Apex Court, the right to life does not include the right to death. The petitioners contend that even while the right to death is not part of the right to life, it must be a part of the right to a life with dignity.

  • Right to freely practice one’s profession

The petitioners also make a reasonable argument that doctors are obligated to continue treating patients even when they are aware that doing so will only cause them pain. Their right to freely practise their profession is being violated by this. 

Additionally, they point out that when scarce medical resources are used to extend the natural lives of individuals who are unable to recover, others who could benefit from the same resources are excluded. This is a violation of their right to life under Article 21.

  • Right to liberty

Article 21 imposes on the state the duty to preserve life and liberty in addition to upholding the individual’s right to life and liberty. The petitioners contend that in order for the State to uphold its duty to safeguard life, it cannot compel anyone to receive medical care against their will. This is because everyone has the right to live life with liberty. They contend that if a person merely remains physically alive but is mentally or emotionally incapacitated, they should have the option to decline life-extending medical procedures. The right to liberty under Article 21 is violated when this option is denied. 

Background

The question of whether the freedom to die is a fundamental right guaranteed under Article 21 was first put before the Supreme Court in P. Rathinam v. Union of India (1994). In this case, Section 309 of the Indian Penal Code, 1860, i.e., attempting to commit suicide, was challenged on the ground of being against fundamental rights. Invoking the ruling in Maruti Shripati Dubal v. the State of Maharashtra (1987), the Court determined that Section 309 of the Indian Penal Code was unconstitutional because fundamental rights can have both constructive as well as detrimental aspects. It stated that the right to life would also include the right to die. Later, in Gian Kaur v. the State of Punjab, a constitutional issue regarding Section 306 of the Indian Penal Code, 1860, which deals with abetment to suicide, was brought up before the Apex Court.

Here it was contended, quoting P Rathinam v. Union of India, that aiding in the suicide of another person could not be punished because the aiding party was only assisting in the execution of a basic right. The Court overturned its decision in P. Rathinam and stated that because all basic rights differ from one another, a single test should not be adapted to them all. Since there is a negative component to the safeguards under Article 19, Article 21 cannot be interpreted in a comparable way. Furthermore, suicide cannot be recognised as an element of Article 21 even if it is construed in this way because it always incorporates an overt act on the part of the suicide victim.

Therefore, an unnatural death could not be considered a part of the right to life.

The Court made a distinction between the “right to die” and the “right to die with dignity” by citing the House of Lords ruling in Airedale National Health Service Trust v. Anthony Bland (1992). A person’s natural death process has already started when they are in a permanent vegetative state or are terminally ill, and without life support, death is unavoidable.

The Court addressed the question of allowing euthanasia for the first time in the case of Aruna Ramchandra Shanbaug v. Union of India (2011). 

When Aruna Shanbaug was viciously raped and suffered injuries that rendered her in a permanently vegetative state, she was working as a nurse at King Edward Memorial Hospital in Mumbai. For a very long time, she received nursing care from the hospital staff, but her condition did not get any better. Aruna Shanbaug’s euthanasia request was made on her behalf by social activist Pinki Virani. However, it was determined that she lacked the legal authority to make the request because she could not be granted the status of a close friend.

However, the two-judge Bench went ahead and made a decision, citing Airedale once more as well as other international legal precedents, and concluded that, under certain conditions, passive euthanasia might be permitted for patients who are terminally ill or in a persistent vegetative state. Recognising the patient’s autonomy, the Court decided that if the individual is aware and competent to provide approval, their opinion must be considered; otherwise, at the very least, a close friend’s view is required, and they should make the same decision as the individual would have if he or she was in a conscious state. After that, the case would be brought before the High Court, where a division bench would need to assemble a group of three qualified doctors to examine the patient in question.

Additionally, it was opined that these rules should be followed until Parliament passes any legislation relating to the matter.

Facts of the case

In this case, the writ petition sought a decision that, in accordance with Article 21, the ‘right to live with dignity’ included the ‘right to die with dignity’ as well as a guarantee that those in a vegetative state or who are terminally ill might sign a living will or an Advance Medical Directive.

Although this issue was initially brought before a three-judge Bench, where it was transferred to a Constitution Bench because of conflicting precedents about the law governing the right to die in India.

The issue, as stated in the petition, first came to light in the year 1994 when the decision in P. Rathinam v. the Union of India was announced. Considering the facts and circumstances, the decision in this case was announced by a division Bench of the Apex Court, which stated that – 

“Criminalisation of attempt to commit suicide under Section 309 of the Indian Penal Code, 1860 stands unconstitutional as the section is violating the provisions mentioned under Article 14 (Equality before law and equal protection of law) and Article 21 (Protection of life and personal liberty) of the Constitution of India.”

The Court further stated that the right to life also includes the right to die. However, this decision was overruled in the case of Gian Kaur v. the State of Punjab (1996). In this case, the five-judge Bench of the Apex Court narrowed the scope of Article 21 by declaring that the right to life under Article 21 of the Constitution of India does not include the right to die under its ambit. 

Ultimately, the Supreme Court allowed passive euthanasia in the year 2011 in the case of Aruna Ramachandra Shanbaug v. Union of India and Others. In this case, the Court allowed passive euthanasia to the rape victim, who had been in a vegetative state for the past 42 years. The Court held that – 

“Under certain exceptional circumstances, passive euthanasia can be allowed to put the sufferings of the patients to the end.”

Also, the Apex Court laid down specific guidelines to be followed strictly when deciding on the question of giving passive euthanasia to the patient. 

Issues in the case

A total of 5 issues were framed in the case of Common Cause v. Union of India. These issues are as follows – 

  1. Whether passive euthanasia and active euthanasia are different from each other? 
  2. Whether the right to die in dignity falls under the umbrella of the right to live with dignity protected by Article 21 of the Constitution?
  3. Whether in India, individuals are allowed to include passive euthanasia in their living will?
  4. Whether there exists any recommendation by the Law Commission of India concerning the use of euthanasia as a means to end the sufferings of patients?
  5. Whether there exists any right provided to the individual for stopping the medical treatment of the person or for removing the life-supporting equipment from the individual leading to death?

Arguments as presented by the parties

During the hearing of the case, the arguments were presented by all three parties. Here are the arguments presented by different parties – 

Arguments as presented by the petitioner

The petitioner made the contention that the idea of preserving individual autonomy was embedded in the right to privacy and that it also played an important part in the definition of liberty. The argument made in support of this perspective was that using advanced medical techniques to keep a patient alive in a persistent vegetative state prolonged their pain and suffering and allowed for an infringement on their autonomy and dignity. The petitioner additionally asserted that the right to live and die with dignity were interlinked. 

Moreover, it argued that a person could not be compelled to accept medical treatment against their will and that it was their right under common law to decline any undesired medical treatment.

Arguments as presented by the respondent

The respondent, i.e., the Ministry of Health and Family Affairs, submitted a counter affidavit in the Court and stated that the ministry found it highly unfavourable to regulate euthanasia as the need for euthanasia entirely depends on a case-to-case basis where uniform laws or regulations cannot be made. It was further argued by the respondent that under Article 21 of the Constitution of India, the right to live with dignity is included, but the right only includes the proper availability of food, shelter, and means for treatment for any health ailment. Hence, they asserted that the right to die with dignity does not form a component of the right to live with dignity. 

Arguments as presented by the intervenor

In this case, Society for the Right to Die with Dignity, a society registered in Mumbai since 1981 by one of the social activists, Minoo Masani, filed an application as an intervenor. The Supreme Court accepted the intervention of society. The intervenor submitted the affidavit in support of euthanasia. It was stated in the affidavit that there is a need to have a mechanism which can ensure a calm departure of an individual from life, leading to less pain and suffering. It further stated that freedom of choice also includes the freedom to choose whether to live or not to live. This freedom entitles the person to choose death rather than being in a state of irrecoverable ailment. Moreover, the intervenor also advocated the living will concept and attached a sample of a living will with the affidavit filed in the court.

Opinion of the judges

In this case, the Supreme Court delivered its judgement on 8 March 2018. The judgement by the Apex Court included two opinions of the judges, namely – 

  • Majority opinion 
  • Concurring opinion

The majority opinion was provided by the then Chief Justice of India – Justice Dipak Misra. The majority opinion was also cited on behalf of Supreme Court Judge Ajay Manikrao Khanwilkar. 

On the other hand, a concurring opinion was provided by Justice Dhananjaya Yeshwant Chandrachud. 

The majority opinion of the judges

The then Chief Justice of India, Dipak Misra, authored the majority opinion. He focused on one of the issues of the case, which stated – Whether there exists any right provided to the individual for stopping the medical treatment of the person or for removing the life-supporting equipment from the individual leading to death.

Justice Misra opined that this question has diverse aspects dealing with legal issues, questions on ethics, morality and societal norms. There is also a huge potential for abuse of such rights. 

Citing the precedents, Justice Dipak Misra writes that –

Initially, in the case of P. Rathinam v. Union of India (1994), the issue of whether the right to life guaranteed by Article 21 also includes the right to die was raised. When the constitutional validity of Section 309 of the Indian Penal Code, 1860, was challenged, the case was handled by the Apex Court by drawing a parallel among different fundamental rights. Moreover, according to Article 19, the right to free expression includes both the ability to speak and the ability to remain silent. Similarly, the right to not live is also a part of the right to live under Article 21 of the Indian Constitution. As a result, Section 309 of the Indian Penal Code, 1860, was declared unconstitutional.

However, just a year after the judgement of P. Rathinam v. the Union of India (1994) was announced, it was challenged in the case of Gian Kaur v. State of Punjab (1996). 

The argument was that someone who aids suicide is only helping to uphold Article 21 of the Indian Constitution. P. Rathinam was overturned by the five-judge panel. It was determined that P. Rathinam made the wrong verdict by relying on the analogy that certain other fundamental rights include the ‘right not to,’ as the right not to speak is a covert act. It is not a blatant act like taking one’s own life. The Court made clear that it would not be considering the issue of euthanasia while quoting from Airedale National Health Service Trust v. Bland (1992) multiple times and made a distinction between the right to die, which is unnatural, and the right to die with dignity, which is natural. Also, it was upheld that Sections 306 and 309 of the Indian Penal Code, 1860 are constitutional.

Despite this commendable judgement, the issue concerning the legality of euthanasia did not come to an end. In the year 2011, the issue regarding the legality of euthanasia was raised in the case of Aruna Ramachandra Shanbaug v. Union of India and others (2011).

The Court concluded that Gian Kaur permitted the early death of a person who was suffering from a terminal disease or was in a lifelong vegetative condition. Withholding treatments with the purpose of swiftly bringing about the patient’s death was described by the Court as “passive euthanasia.” It was decided that passive euthanasia was acceptable provided doctors removed the patient’s life support in accordance with informed medical advice. 

The Court becomes the ultimate decision-maker of what is best for the patient when the Parens Patriae principle is invoked (Parens Patriae is the Latin phrase for ‘parent of the nation’. The principle states that the Court has the authority to intervene and act as a guardian). Article 226 gave the High Courts the power to exercise this authority. Moreover, the Court stated in the case of Gian Kaur v. the State of Punjab (1996) that euthanasia could be made legitimate only by the introduction of the concerned legislation. 

Analysis of the precedents by majority opinion holders

First, contrary to what was held in the case of Aruna Shanbaug, Chief Justice Misra claims that Gian Kaur’s judgement merely made reference to a portion of Airedale and that Gian Kaur’s reasoning did not include the Airedale case. Second, Gian Kaur’s decision did not condemn the idea of euthanasia. In fact, it suggested that it might fall under the category of the right to a dignified life. It also made a distinction between intentionally taking one’s own life and taking one’s own life by refusing medical care. Second, Gian Kaur’s judgement did not suggest that euthanasia could be legalised; Aruna Shanbaug’s bench misunderstood Gian Kaur’s judgment.

After that, Chief Justice Misra talks about the current situation. To start, he defines euthanasia.

Generally, there are two types: passive euthanasia – when there is no overt act of administering medications or substances that will end one’s life and active euthanasia – where there is an overt act done to end the life of the individual. The case of Aruna Shanbaug permitted passive euthanasia. However, she set restrictions and prerequisites. There is a ban on active euthanasia. Euthanasia may also be non-voluntary or voluntary, depending on the decision-making capacity of the patient. There is also “physician-assisted euthanasia,” which is largely based on the doctor’s recommendations. 

The British Columbia (Attorney General) v. Rodriguez (1993) and Vacco v. Quill (1997) decisions said that the intention and cause of death are what separate active from passive euthanasia. Chief Justice Misra supported this rationale.

The majority view on the right to deny treatment or medication

Expressing the view of the majority Justice Dipak Misra acknowledges the right of individuals (above the age of 18 years) to make their own choices. Individuals even have the freedom to choose whether to opt for medical treatment or not. He stated that an individual’s freedom to make choices and their self-determination constitute the fundamentals of life. Therefore, the choice to forgo medical care belongs to every adult who is of sound mind. Besides this, the decision may be void if the individual was not legally qualified to make a decision if it was made under pressure, if the terms were unclear or confusing, or if it was based on false information.

In contrast to euthanasia, physician-assisted suicide, and suicide, Chief Justice Misra places the right to make choices on a higher pedestal. He makes it clear that refusing medical assistance is neither euthanasia nor suicide, as they are both self-initiated positive actions taken with the express purpose of causing one’s own death. The majority opinion also referred to the principle of necessity. This principle refers to the cases of emergency when taking consent of the patient is not possible. In these situations, the doctor is required to act in the best interest of the patient. Given the inability to interact with the patient, such a measure would be essential. It would have to be one that a prudent person would adopt in the patient’s best interests.

The opinion of the majority was supplemented by the following cases – 

  1. Schloendorff v. Society of New York Hospital (1914) – New York Court of Appeal
  2. F v. R (1983) – Supreme Court of South Australia
  3. Rogers v. Whitaker (1993) – Supreme Court of New South Wales
  4. Malette v. Shulman (1990) – Supreme Court of Ontario
  5. Secretary, Department of Health and Community Services (NT) v. JWB and SMB; famously known as Marion’s case (1992) – High Court of Australia

The majority view on the concept of passive euthanasia and Article 21 of the Constitution of India

Expressing the majority view on passive euthanasia and Article 21, it was stated that – 

“It is critical that the Court come to the conclusion that Article 21 permits passive euthanasia so that it can establish the rules for its regulation. The authority to establish the rules is known as ‘Judicial Legislation,’ which is the applicability of legislation to new or unexpected demands and circumstances.”

Chief Justice Dipak Misra stated that the application of fundamental rights must be flexible, as stated in numerous judgements. K.S. Puttaswamy v. Union of India (2017) clarified that Article 21 includes the concept of individual dignity. According to Chief Justice Misra, it ‘corrodes the essence of dignity’ to let a sufferer wait for death while not knowing whether or not they are still alive. Death does not indicate the disappearance of dignity because dignity does not require any connection to a person’s condition. Thus, under Article 21, a terminally sick individual or one who is in a permanent vegetative condition might choose to have his life end prematurely. This is a fundamental human right. Hence, there is no need for legislation on this subject. Also, it is specifically stated that Article 21 permits only passive euthanasia. 

The majority of opinion holders referred to the following cases while giving judgement on Article 21 and passive euthanasia – 

  1. Board of Trustees of the Port of Bombay v. Dilipkumar Raghavendranath Nadkarni and Others (1982) – High Court of Bombay
  2. Maneka Gandhi v. Union of India (1978) – Supreme Court of India
  3. Central Inland Water Transport Corporation Limited and another v. Brojo Nath Ganguly and another (1986) – Supreme Court of India
  4. M. Nagaraj and others v. Union of India and others (2007) – Supreme Court of India
  5. V.C. Rangadurai v. D. Gopalan and others (1978) – Supreme Court of India
  6. K.S. Puttaswamy v. Union of India (2017) – Supreme Court of India

The majority view the autonomy of an individual and the right to self-determination

A person’s ability to practice self-determination as well as autonomy involves whether or not they are willing to conform to clinical procedures and therapies.

Aruna Shanbaug’s case highlighted that one has the option of choosing the method of treatment only if they have a sense of self-determination. If a patient lacks the mental capacity to make decisions, their preferences, as expressed in a living will or by agents acting on their behalf, should, be honoured. These preferences would be known as “substituted judgements.” The caregiver must act in the patient’s best interest and cannot let personal beliefs, motivations, or other factors persuade their decisions.

According to Chief Justice Misra, if a doctor is satisfied that a patient’s condition is fatal, they are obligated to follow their patient’s wishes. The patient’s best interests cannot be served by any other factor.

The majority view on the issues concerning medical ethics, societal morality code of conduct, and state interest

In order to resolve the issues of medical ethics, social morality, societal code of conduct, and state interest, Chief Justice Misra makes it clear that stopping medication in an irreparable condition is distinct from discontinuing patient care altogether. He continues by asserting that such concerns and pity are out of place once passive euthanasia is acknowledged by the law as defending the right to die in dignity.

The majority view on the inclusion of an advance medical care directive

The phrase “Advance Medical Directives” describes a person’s medical choices and names the people who will make those choices if the person is unable to express his preferences to a physician. Instead of using the word “living will,” Chief Justice Misra offered recommendations for “Advance Medical Directives.”

Only an individual who is above 18 years of age, of sound mind, able to speak, and capable of understanding the aim and implications of advanced medical directives may carry out one such directive. It must be carried out voluntarily and free from coercion, undue influence, or constraint. It must be in writing and explicitly state how and when medical care may be stopped or discontinued. It should state that the executor of the advance medical directive is always free to withdraw the instructions.

It should include the name of the caregiver or immediate family member who will be permitted to consent to, decline, or discontinue medical treatment in accordance with the advanced medical directive. The most recently signed advanced medical directive will be taken into account if there are multiple valid advanced medical directives.

The Judicial Magistrate of First Class, who has jurisdiction over the matter, must verify that the executor signed the advance medical directive willingly and without being coerced and in the presence of two attesting witnesses. A preliminary opinion must be provided by a medical board that has been established by the hospital and is composed of at least three medical practitioners with a minimum of 20 years of expertise in the health area. After visiting the patient, the Board will determine whether to recognise the advanced medical directive or not.

A second medical board that has been established by the District Collector will review the hospital medical board’s certification. Following that, the Judicial Magistrate of First Class must be informed of the Board’s decision before visiting the individual to authorise his decision.

The individual, his family or close relatives, his doctor, or the medical staff may file a writ to the High Court under Article 226 of the Medical Board that refuses to allow the advance medical directive to be performed. The decision to approve or reject the advance medical directive will then be made by a division bench appointed by the Chief Justice of the concerned High Court.

The advance medical directive may be terminated or modified by written notice at any time. The doctors must be convinced beyond reasonable doubt that the executor of the advance medical directive is chronically ill, is receiving extensive treatment, is on life support, and that the condition is irreversible. This should be done before the doctors give consideration to the directives in the declaration. In situations where advance medical directives are not present, the process differs solely in the first phase, which is the execution of the advance medical directive. These directives will be in effect until a law is passed by Parliament.

Concurring opinion as cited by Justice Dhananjaya Yeshwant Chandrachud

Expressing the concurring opinion, Justice DY Chandrachud states that – 

“The right to privacy is an element of human dignity. The sanctity of privacy lies in its functional relationship with dignity. Privacy ensures that a human being can lead a life of dignity by securing the inner recesses of the human personality from unwanted intrusion. Privacy recognises the autonomy of the individual and the right of every person to make essential choices which affect the course of life. In doing so, privacy recognizes that living a life of dignity is essential for a human being to fulfil the liberties and freedoms which are the cornerstone of the Constitution.”

Justice DY Chandrachud states that the Court cannot limit itself by considering euthanasia “only at the individual level”; rather, the Court should focus on other levels of the social organisation, such as socio-cultural, institutional, and administrative levels.

Considering the facts and circumstances of the cases, Justice Chandrachud framed four main issues. These issues are as follows –

  • Considering medical ethics, is the medical practitioner obligated to follow the choice made by the patient concerning his or her medical treatment? 
  • Whether the person who is incapable of expressing his or her wish should be permitted by law to refuse to continue or withhold his or her medical treatment? 
  • Does the Constitution of India provide any right to make a choice regarding medical treatment? If yes, does the Constitution also provide the individual with the authority to decide the future course of action?
  • Whether the person in question should be permitted to refuse to continue or withhold his or her medical treatment? 

Analysis of precedents by Justice DY Chandrachud

In his concurring opinion, Justice Chandrachud analysed two landmark judgements of the Apex Court, namely – Gian Kaur v. the State of Punjab (1996) and Aruna Ramachandra Shanbaug v. Union of India and others (2011).

Analysis of Gian Kaur v. State of Punjab (1996)

According to Justice Chandrachud’s findings, Gian Kaur’s judgement disagreed with the interpretation done in the case of P. Rathinam v. Union of India (1994). According to this ruling, Article 21 defines life as a life with dignity, and it is incompatible with the continuation of life for any reason, including attempting or aiding suicide. A person’s right to life does not include a person’s right to die. Conversely, it did not make a clear decision on whether or not to permit euthanasia.

Justice Chandrachud continued by stating that given recent domestic and international trends that led to the decriminalisation of suicide, Gian Kaur’s ruling that the right to live does not encompass the right to die in the context of suicide may need to be reconsidered in the future.

According to the Mental Healthcare Act of 2017, someone who attempts to commit suicide is presumably under a considerable amount of stress and cannot be prosecuted and penalised under the Indian Penal Code, 1860. He further claims that the right to live and the right to die can be seen as two faces of a single coin.

Analysis of Aruna Ramachandra Shanbaug v. Union of India and others (2011)

In order to prevent abuse, the Aruna Shanbaug case permitted passive euthanasia in specific circumstances with the High Court’s authorisation. Passive euthanasia is the denial of medical care required to maintain life. It is an omission, whereas active euthanasia is the act of administering a fatal drug or effort to end an individual’s life. However, the perception in Aruna Shanbaug’s case that Gian Kaur’s judgement approved the Airedale judgement is inaccurate.

The excerpt from the Airedale judgement that was highlighted in the Gian Kaur case is actually about the need for laws that would permit active euthanasia, not the other way around.

Aruna Shanbaug’s decision received criticism from Justice Chandrachud as well about the issue of decision-making authority concerning the continuation of medical treatment of the individual. By considering the opinions of Aruna Shanbaug’s caregivers, medical staff, and legal experts, the Court rejected her right to individual autonomy and self-determination in death. Aruna Shanbaug’s interpretation of Gian Kaur’s verdict on euthanasia is similarly inconsistent. On the one hand, Aruna Shanbaug claims that ‘no final opinion was conveyed’ in Gian Kaur. On the other hand, Gian Kaur’s lack of a definite opinion on the subject was thus interpreted as sanctioning it. According to Justice Chandrachud, both paths of reasoning cannot coexist.

Additionally, Justice Chandrachud is devastated by the Court’s comparison of Aruna Shanbaug’s case to the proceedings of Nazi war offenders.

The distinction between different types of euthanasia made by Justice DY Chandrachud

In his analysis of the distinction between different types of euthanasia, Justice Chandrachud states: 

  • As the name suggests, involuntary euthanasia is the taking of life against the wishes of the individual being killed. It is against the law and is nothing less than murder.
  • Non-voluntary euthanasia is the act of ending an individual’s life without permission or disagreement from the person being murdered.
  • Voluntary euthanasia is the act of ending a person’s life at the desire of the individual being killed.
  • Active euthanasia is the act of actively accelerating death.
  • Passive euthanasia does nothing to preserve life.

Justice Chandrachud offers a number of remarks about how law and bioethics interact. Moreover, passive euthanasia is a problem if withdrawing or withholding medical treatment could cause suffering and, ultimately, a torturous and protracted death. The goal of euthanasia, which is to end the pain, will be defeated in this situation. For example, Aruna Shanbaug would have died from suffocation if her medical care had been stopped. 

Is this the most dignified death that could ever occur? To relieve one’s pain, passive euthanasia is not a streamlined solution. Additionally, Justice Chandrachud cautions against prioritising medical professionals’ advice while performing a euthanasia procedure. This neglects individual autonomy as well as the misery of the sufferer.

Concurring views on the issue of the quality and sanctity of life

The right to life is safeguarded by the Constitution as a universal human right. Even in times of necessity, this right is sacrosanct. It acknowledges the value of life as its invincible component. Although the principle of sanctity of life forbids the intentional taking of life, this does not imply that life must always be preserved for as long as humanly possible. The idea of “quality of life” can be used to support the right to die. According to the Constitution, safeguarding the sanctity of life is intimately connected to upholding human dignity, which is jeopardised by physical impairment, illness, and suffering.

According to Justice Chandrachud, Article 21 protects human dignity in death and makes it actionable against the State.

Concurring views on the potential repercussions for medical practitioners

Justice Chandrachud came to the conclusion that a medical practitioner’s recommendation to suspend or withhold medical assistance for a critically ill person is not made with the intention of causing death. He came to this conclusion after considering the different potentially unbearable circumstances that an individual would have to face if there was no reasonable cure and the agonising and ineffective procedures that an individual would have to undergo. As a result, the action does not qualify as culpable homicide or murder.

Concurring view on Advance Medical Directives

Advance directives come in two different forms: a living will, which expresses a person’s opinions and preferences regarding medical care; and a lasting power of attorney for medical care delivery, which designates a third party to make healthcare choices on behalf of the person in the event of his or her incapacitation.

Judgement in the case of Common Cause v. Union of India (2018)

The Supreme Court’s Constitution Bench had already ruled in the Gian Kaur case that the right to a dignified death was a constitutionally guaranteed right. Additionally, the Court made it clear that the Gian Kaur ruling did not convey the idea of passive euthanasia. Furthermore, the Court highlighted the difference between different types of euthanasia, primarily active and passive euthanasia. It is stated that where active euthanasia necessitates an overt action to terminate the life of the individual, while passive euthanasia involves the act of removing life support to end the suffering of the individual. It concluded that the Court’s decision in Aruna Shanbaug to rule that passive euthanasia could only be legalised through legislation was incorrect.

Concerning living wills, the Court determined that there was clear evidence of the adoption of the idea of advance medical directives in India.

The Court went on to say that the ability to carry out an Advance Medical Directive was a move towards safeguarding the rights to individual autonomy and self-determination. A standpoint which showcases the best interests of the patient may be used in cases when patients are unable to make an educated choice, permitting a caretaker to intervene and decide the alternative on their behalf.

This case went into great detail about the relationship between autonomy and liberty and the right to privacy, as it was outlined in the case of Justice K.S. Puttaswamy v. Union of India. In this case, the Court cited passages from various judgements. The Court even explored the relationship between privacy rights and their consequences for euthanasia. In addition to Indian cases, the Court also referred to international court rulings.

The Court cited the decision in Re Quinlan (1976), in which the New Jersey Supreme Court determined that as the person’s condition deteriorates, the interest of the state changes substantially and the person’s right to privacy with regard to their personal integrity grows greater. A guardian, including family members, spouses, or children, might do this on behalf of the patient if they are unable to exercise their rights to privacy independently. 

The ruling rendered by the European Court of Human Rights (ECHR) in the case of Pretty v. the United Kingdom (2002) was also cited in this judgement. In this matter, the European Court of Human Rights came to the conclusion that a person had the option to prevent what they perceived to be an unpleasant and traumatic end to his or her life.

In addition, the Court ruled that such a decision would be protected by the right to respect for private life as outlined in Article 8(1) of the European Convention on Human Rights.

The Court stated that the right to privacy mandated preserving the moral fortitude of decisions made by the individual in the private sphere of choices pertaining to death. The Court held that the safeguarding of these fundamental rights was an extension of the right to privacy as they were connected to the fundamental rights to life and personal liberty guaranteed by the Constitution under Article 21.

Landmark judgements referred to by the Supreme Court in Common Cause v. Union of India (2018)

P. Rathinam v. Union of India (1994)

In this case, Section 309 of the Indian Penal Code, 1860, was challenged on the ground of being in violation of Article 21 of the Constitution of India. Concerning the then prevalent situation, the court bench led by Justice Banwari Lal Hansaria held that Section 309 of the Indian Penal Code, 1860 was in violation of Article 21 and hence was declared unconstitutional. Also, the Court decriminalised assisted suicide. 

Gian Kaur v. State of Punjab (1996)

In this case, the decision in the case of P. Rathinam v. Union of India (1994) was challenged before the Supreme Court. The five-judge Bench led by Justice Jagdish Sharan Verma held that the decision in the previous case was wrong. The Court upheld the constitutionality of Section 309 of the Indian Penal Code, 1860. The Court stated that, considering Article 21 of the Indian Constitution, the right to life is included in it. However, when a question arises regarding the right to die, the ambit of Article 21 is not wide enough to include the right to die. 

Moreover, the Court also quashed the legitimacy of passive euthanasia as well as assisted suicide. 

Aruna Ramachandra Shanbaug v. Union of India (2011)

This case was the most significant instance that marked a breakthrough in the legislation regarding euthanasia. Passive euthanasia was legalised, and the Smt. Gian Kaur’s case rulings were entirely overruled. The fundamental distinction between this case and the common cause case, which might be seen as a complement, is that in the former, passive euthanasia was made legal, whereas, in the latter, the right to die with dignity was essentially incorporated into the right to live with dignity.

Airedale National Health Service Trust v. Bland (1993)

This decision, which was determined in the House of Lords of the United Kingdom, is widely regarded as setting the standard for passive euthanasia as well as euthanasia globally.

Analysis of the judgement in Common Cause v. Union of India

Analysis of euthanasia by the Court

Using a writ petition, Common Cause, an NGO, brought up the right to die with dignity once more before the Supreme Court. The organisation asked that ‘advance directives and attorney authorisations’ be made lawful so that those who are terminally ill or in a persistent vegetative condition might exercise their right to do so. A five-judge panel made up of the then Chief Justice of India, Dipak Misra, Arjan Kumar Sikri, Ajay Manikrao Khanwilkar, Dr. Dhananjaya Yeshwant Chandrachud, and Ashok Bhushan received the case after it was originally heard by a three-judge panel. The nine-judge bench of the Supreme Court in Puttaswamy explained the privacy-autonomy-dignity matrix guaranteed by the Constitution of India under Article 21. The bench has drawn the right to die with dignity from this reasoning.

It maintained the ability of a person who is competent in giving permission to issue advance directives and attorney authorisations to permit the suspension of ineffective medical treatment or life-supporting technology in cases when the patient is terminally ill or in a persistent vegetative state. In order to keep a proper balance between relevant legislation and medical ethics, the bench has also established rules that set forth how such directions may be carried out. The Court established these directions with the intent to avoid any potential abuse of such directives. To provide a framework for the right to carry out these directions and get attorney authorisations, all judges have extensively examined the ethical, social, and legal challenges surrounding the idea of euthanasia and advance directives.

For instance, the opinion provided by Chief Justice Dipak Misra for himself and Justice Khanwilkar begins with a philosophical discussion of the worth of life and the irreverence of a life devoid of purpose and dignity. He has referenced a number of writers, philosophers, and thinkers, including Epicurus, Hemingway, and Tennyson, who have advanced the notion that mortality is not an adversary and that, rather than an undignified extension of life, a dignified death is a reason to celebrate.

He has also considered the socio-economic concerns surrounding this matter, such as the stigma that may be attached to medical professionals who stop life support and the potential for abuse of such legislation by dishonest family members, underlining the significance of carefully drafting legislation concerning advanced medical directives. To deduce the right to die with dignity from Article 21, Judge Arjan Kumar Sikri also looked to Gandhian ideals, the teachings of numerous religions on human dignity, several international agreements, as well as Mill’s idea of individual autonomy. In line with Dworkin’s definition of a “hard case,” Judge AK Sikri categorises it as one in which there are multiple legal options and judicial discretion must be used in the service of the greater good.

Additionally, Chandrachud J. has addressed the topic of euthanasia in light of the interlinkages between scientific knowledge, medical science, morality, and the fundamental ideals of individual autonomy and dignity enshrined in the Constitution of India. He has highlighted the importance of considering this right not only from an individual standpoint but also from institutional, political, and social views with an eye toward the future. The “best interest” standard, which medical practitioners are expected to follow, has its roots in the Hippocratic Oath and Plato’s writings. Judge Ashok Bhushan has taken a similar strategy and has mentioned various religious doctrines regarding life and death in addition to tracing the history of the best interest norms.

Additionally, in order to defend the right to a dignified death, every member of the bench has reviewed the legal precedents set forth by the Hon’ble Supreme Court, from the case of P. Rathinam to Aruna Shanbaug. To give an example, Justice Dipak Misra stated that the Supreme Court had made a distinction between the “right to die” and “the right to die with dignity” in its earlier judgments. While the right to die could only be drawn from the right to die with dignity in a very limited way, that is only in the manner of passive euthanasia and only for individuals in a permanent vegetative condition. The former could not be construed to be a component of the protection of life and personal liberty under Article 21 of the Indian Constitution. Similarly, with regard to the Court’s decision in Shanbaug, Judge AK Sikri has explored the various kinds of euthanasia, as well as its philosophies, ethics, and economic history. A contrast between the “right to die” and the “right to die with dignity” has also been drawn by Judge DY Chandrachud and Judge Ashok Bhushan through analysis of the judgments in the cases of Gian Kaur and Aruna Shanbaug.

In addition, they have made comparisons to the Transplantation of Human Organs and Tissues Rules, 2014, which permit advanced medical directives for organ transplants. Moreover, the Court cited the Mental Healthcare Act, 2017, which acknowledges advanced instructions for individuals suffering from mental illness. It details the process for documenting and carrying out such a medical directive, including the executor’s informed permission, the obligations of the healthcare practitioner, the creation of a medical review committee, the nomination of patient representatives, and the safeguards granted to medical practitioners. More crucially, the judges have drawn inspiration from the Puttaswamy decision, in which the Court outlined the connection between the notions of dignity, privacy, and personal liberty to provide the groundwork for this right.

In order to highlight the same, they have concentrated on the ideas of sanctity and quality of life that have been infused into modern jurisprudence through a number of decisions by the Hon’ble Supreme court, from the case of Maneka Gandhi to K. S. Puttaswamy judgement.

Analysis of international jurisprudence on euthanasia by the Court

To support its decisions, the Bench has extensively researched relevant international jurisprudence. Following in the footsteps of the Bench in the Shanbaug case, all of the judges analysed the House of Lords’ judgement in the Airedale case, in which the House of Lords evaluated both libertarian and utilitarian perspectives in legalising passive euthanasia for people in a persistent vegetative condition. When giving its judgement on the issue of whether to permit withdrawal of medical treatment or life-supporting equipment for a patient who is in a persistent vegetative condition, the Court stated that – 

A special case to the rule of the sanctity of life can be made when individuals are not expected to survive or recover and are in a condition where a majority of medical practitioners believe that extending their lives is not in their best interests. Giving medical assistance to such an individual who doesn’t want to pursue treatment and who gets no benefit from such treatment would actually constitute forceful physical intervention of that patient. It is also highlighted that, in order to prevent abuse, the Court’s view must be sought in certain circumstances, such as – 

  • When there is a discrepancy among the medical practitioners, 
  • A conflict between the opinions of the family members,
  • A difference between the parent or guardian and the professional opinion, or
  • When the relative of the patient is not present to provide consent.

It is also noted that life extension in these situations is a “no win and all lose” scenario, and the expertise, efforts, and resources that would be invested in extending the life of an individual could be productively applied to restoring the wellbeing of other individuals, who, if treated properly, may be able to have a productive life. Despite allowing passive euthanasia, the judiciary chose not to create a law on the subject and instead gave the Legislature the opportunity to discuss the issue. Additionally, the bench has relied on other rulings involving assisted suicide, such as R v. Director of Public Prosecutions (1995), which underlined utilitarian reasoning and the concern for individual autonomy.

Additionally, Judge DY Chandrachud and Ashok Bhushan have taken into account the requirements of the Mental Capacity Act, 2005, passed by the British Parliament. It contains specific guidelines about the ability to give his or her consent, the appointment of a caretaker, and the value of medical advice. It is noteworthy to observe that the adoption of this legislation has led to a concentration on enhanced healthcare services rather than the discontinuation of medical treatment, despite the fact that the guidelines proposed by Chief Justice Dipak Misra closely resemble its contents. The United States’ legal framework regarding the freedom to decline medical care and physician-assisted suicide has also been explored in-depth by the Court. The Court, meanwhile, has chosen to ignore physician-assisted suicide and instead draws inspiration from the right to decline medical care.

Not just this, the bench members – Chief Justice Dipak Misra, Judge DY Chandrachud, and Ashok Bhushan, have referred to euthanasia and mental health-related legislation in several nations. Some of these nations or states are – 

  • Columbia
  • Montana
  • Washington
  • Oregon

These states or nations also have authorised advanced medical directives along with the guidelines to execute these directives. The Court has also cited the case of Cruzan v. Director, Missouri Department of Health (1990), in support of their judgement.

In Cruzan v. Director, Missouri Department of Health, the Supreme Court of the United States of America upheld the individual autonomy of the patient by ruling that the state would need to provide “clear and convincing evidence” of the individual’s wish to end life assistance in order to persuade the doctor to do so. Furthermore, Justice Misra and Judge Bhushan have quoted the decision in Vacco v. Quill (1997), in which the Supreme Court supported the State of New York’s ban on physician-assisted suicide. The Court made a distinction between physician-aided suicide and letting a patient reject life-supporting treatment. The Court opined that the declining treatment was legal as a component of the legal system, which provides the right to bodily integrity and individual autonomy. In a similar context, Judges Chandrachud and Bhushan discussed Cardozo’s opposing opinions in Schloendorff v. New York Hospital Trust (1914). The case was decided by the New York Court of Appeals. The Supreme Court of India referred to this case in order to ensure that personal sovereignty serves to protect the right of a person to initiate the withdrawal of life-sustaining treatment in cases of a fatal disease. The Court referred to numerous jurisdictions for extensive research regarding jurisprudence. Some of these nations are – 

  • Singapore
  • Canada 
  • Switzerland
  • Australia
  • Belgium
  • Netherlands

Justice Misra even quoted the judgement in the case of Carter v. Canada (2015), where the Apex Court of Canada stated – 

Physician-assisted suicide shall be permitted in certain situations where the medical state of an individual is critical and irrecoverable. However, such consent should be provided by an adult in clear terms. He has also spoken about the protections put in place by the Parliamentary Joint Committee, which was established in 2016 with the aim of establishing both substantive as well as procedural safeguards. In order to implement advanced medical directives in India, he also took inspiration from the committee and developed measures. 

Additionally, he has studied the situation in Australia, where the right to refuse medical treatment and advance medical directives have both been recognised as a part of common law and where the individual’s best interest is the guiding principle for deciding whether to discontinue treatment or not. For instance, the High Court of Australia determined in Secretary, Department of Health and Community Services v. JWB and SMB (1992) that an individual (major) of sound mind can take voluntary decisions regarding what should be done to his or her body. Also, his decision is protected by common law.

Moreover, the Court referred to the following cases – 

In these judgments, the Court noted that states had authority in “end of life” circumstances, maintaining a balance between both the principles of autonomy and the right to life and allowing termination of treatment. If adequate precautions are put in place, allowing passive euthanasia in such circumstances would not be against the duty of the state under the convention.

In addition, the Court has mentioned the prerequisites for consulting other doctors, the precondition that the person has the legal ability, the person’s medical condition and level of pain, the existence of alternative solutions, etc. that are outlined by laws in the Netherlands, Luxembourg, and Belgium concerning the consent of the person.

Euthanasia is only permitted in certain countries when all other treatments have failed and the person’s pain is intolerable and cannot be relieved in any other way than death. These prerequisites have been very carefully outlined in these laws. Additionally, Judge Bhushan discussed the situation in Singapore, where the Advance Medical Directive Act, 1994, contains comprehensive provisions concerning the same, and in Switzerland, where Articles 362 and 365 of the Swiss Civil Code, 1907, provide for the performance and enforcement of advanced medical directives.

Analysis of the procedure and guidelines laid down by the Court regarding the authorisation of an attorney and the issuing of advance medical directives

The right to die with dignity, which is found in Article 21, has been rooted by Justice Misra in light of the aforementioned international jurisprudence. He has established various protections and processes with regard to the advance medical directives and attorney authorisations, which have been approved and reinforced by other judges on the bench. He views this as a question of interpretation of the Constitution which the Court is obligated to do. The regulations provide that only an individual above the age of 18 years, of sound mind, who is capable of communicating, reacting, and comprehending the repercussions of signing the document, and who has full information and understanding, may freely sign it.

The declaration must indicate informed permission and clearly and indisputably specify when medical care may be discontinued, or additional treatment may not be administered in an effort to extend life. It must also include a clause that allows the executor to revoke it, as well as the name of a caretaker who will give permission to refuse or discontinue medical care in compliance with the advance medical directive. The most recent advanced medical directive will take effect if there are multiple ones. However, the rules do not cover circumstances when the directive is unclear.

The paper must be officially approved by a Judicial Magistrate of First Class, who is expected to document approval as to the informed consent and voluntary participation of the executor, and two attesting witnesses, who should ideally be unbiased, must be present. A tangible copy of the document and a digital copy must be stored with the JMFC in order to prevent tampering in the future, and another real and virtual copy must be stored with the Registrar of the relevant District Court. Additionally, the municipality or panchayat, if applicable, is required to keep a copy.

If family members are uninformed, they must be informed, and if there is a family doctor, he must also be notified. Only after the person is terminally sick and the doctor has verified the document’s validity with the JMFC, only then can the document be put into action. Officials at the hospital are compelled to take action if the practitioner has a philosophical or religious disagreement. The doctor is required to notify the hospital administration of the members of the Medical Board, which will be composed of the head of the concerned department and three specialists from different fields (such as pharmaceuticals, urology, haematology, etc.) who have expertise in emergency departments and have been practising for at least 20 years overall.

The Board will then examine the patient while the designated guardian is present, and it will make a determination regarding whether or not the directives in the document can be followed. If this preliminary opinion is positive, it will be forwarded to the jurisdictional collector, who will then establish a new medical board with the Chief District Medical Officer serving as chairman and three experienced practitioners from diverse specialties with at least 20 years of experience, excluding the doctors who were on the preceding Board. If, after examining the individual, this Board agrees with the hospital’s board; the decision will be reported to the JMFC. Next, the JMFC will pay a visit to the patient as soon as possible to approve the implementation of the document. The document may be revoked by the executor at any time before it is put into effect by putting it in writing. It is possible for the executor, family, or even the practitioner to file a writ petition under Article 226 before the High Court in situations when the medical board denies authorisation. In these situations, the Chief Justice of the stated court will need to appoint a division bench to make a decision. The High Court would be authorised to establish an impartial medical board with the same credentials as those listed above, and it would have a duty to make a decision quickly and in the patient’s best interests.

Furthermore, there is no requirement to follow unclear instructions. As a result, the Court has established thorough guidelines that are applicable until  Parliament passes relevant legislation. It is necessary to ensure that there are no gaps in the application of these rules in light of the precedents in nations like the Netherlands, where advance directives have been legal for a very long time. 

Suggestions

In my view, the Court must have ordered the formation of a separate group composed of judicial and medical specialists to supervise the application of these rules in every instance. After all, there is undoubtedly a risk of abuse of these directives and authorisations, given the lack of resources and poor quality of treatment in India.

Furthermore, there is no indication in the instructions as to when a person’s “permission” may be regarded as having been given with informed choice and without any coercion or undue influence. I think the Hon’ble Court should have required a psychological assessment and consultation by medical professionals before someone used their ability to execute advanced medical directives. Similarly, they do not specify a mechanism for revoking such directives, which may lead to disagreements about whether or not the patient has cancelled the advance directives. It would have been ideal to specify a similar process for revoking such directives.

Additionally, the Court has created a pathway for the abuse of this authority by permitting the treating practitioner to approach the hospital administration for the creation of a medical board in the absence of any directions or approval from a critically ill person. However, this is done with the knowledge and cooperation of family members. Taking such action in the absence of the instructions would be a violation of the right to personal liberty, even though the Court’s prescribed procedure would be implemented in this situation as well.

Conclusion

The decision in the case of Common Cause v. Union of India (2018) demonstrates how the notion of proportionality has been applied. It showcases how the Court balances two aspects of the same right, in this case, the right to life guaranteed under Article 21 of the Constitution of India. While the right to life gives rise to a strong state commitment to safeguarding human life, it also guarantees the person’s autonomy to make decisions regarding his or her own health. 

The Court has carefully considered the social, intellectual, moral, and economic facets of this matter. It has made an exception to the idea of the sanctity of life in circumstances where a person’s existence has lost significance and prolonging his life is no longer in his best interests. 

Comparative jurisprudence has also proven extremely useful to the Court. The Bench members performed a thorough analysis of international jurisprudence while carrying out this exercise. The Court has confirmed the right to die with dignity and to make advance directives while also providing specific guidelines for doing so. In order to frame the guidelines, the Court relied on the case of Visakha and others v. State of Rajasthan (1997).

Hence, the need of the hour is to frame proper legislation conforming to the guidelines laid down by the Supreme Court along with overcoming the loopholes in the judgement. 

Frequently Asked Questions (FAQs)

Under what circumstances and illnesses can an individual be subjected to passive euthanasia? 

In order to avoid intruding on the purview of medical specialists, the Court has not named any diseases. The family’s permission may be sought for passive euthanasia if the practitioners are of the opinion that there is no chance of recovery. According to doctors, the issue should only come up for individuals who are permanently incapacitated (vegetative state) or in a coma.

What is the doctrine of the double effect commonly used in reference to cases concerning euthanasia? 

According to the theory of double effect, as long as a morally right action has an unintended unfavourable consequence, it is ethically justifiable to carry it out. This is valid even if one anticipates that a negative outcome is likely to occur.

The aforementioned theory is used to support situations where a medical practitioner administers medications to a patient despite having realised that doing so may reduce the life of a patient in order to relieve distressing symptoms.

This occurs because the practitioner is not aiming to kill the individual intentionally, and the bad outcome of the tragic death is a secondary consequence of the positive outcome of lowering the person’s misery.

What is the status of the legality of euthanasia in India?

In India, passive euthanasia is permitted by the judiciary. According to this concept, medical professionals are permitted to remove a person’s life support if they are in a persistent vegetative state. Aruna Shanbaug’s tragedy led to the legalisation of passive euthanasia in India. Although the bench prohibited active euthanasia, it did rule that passive euthanasia might be permitted under specific conditions.

If the person is in the capacity to take decisions, his requests must be considered. If the person is incapacitated, the preferences of close relatives, such as the patient’s wife or husband, parents, children, and others, must be considered. If there are no close relatives available, the opinions of a close friend can be considered.

After that, the case must be heard by at least two judges on a bench at the High Court. A group of three qualified doctors should also be on Board to assess the condition of the patient. The bench must also take into account the opinion of the government of the concerned state along with close relatives of the patient. According to the Apex Court, this process should be followed up until India’s Parliament passes a statute permitting euthanasia.

The government of India is now working on a bill titled “The Management of Patients with Terminal Illness-Withdrawal of Medical Life Support Bill.”

The Bill is being developed in accordance with the Law Commission of India’s guidelines, which specify that an individual’s life support may be removed if they are in a permanent vegetative state (PVS) or have an irreparable health condition.

The Centre is against the idea of a living will because it might be abused. People can specify in advance, with the use of a living will, that they will not be given life support if they have a terminal illness.

References


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Film titles and Copyright Law

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This article is written by Henlynn D’Souza. This article has been edited by Ojuswi (Associate, Lawsikho). 

This article has been published by Sneha Mahawar.

Introduction

With the growing popularity of OTT platforms, films of diverse genres, languages, and even decades are now available at the press of a button on a single platform. With such a large pool of content available on these streaming sites, there is a fair possibility of finding two or more films with the same title. While much is discussed about the protection of the original literary, musical or sound works of a film, such as a storyline, screenplay, and songs, the protection of the title, which serves as its identity, is rarely debated. A film’s title is arguably one of its most defining features, and in certain cases, considerable effort and imagination go into making it as creative as possible to draw the attention of the audience. A film’s title serves as the bridge between the film and its viewers, and a creative title could attract the desired audience to theaters much to how a memorable book title may attract more attention than a dull one. However, granting such short works copyright protection under the Copyright Act may be a little tricky. Though no minimum word limit is prescribed under the Copyright Act for a work to be considered copyrighted, the name of a film would generally not be more than a few words making it very difficult to assess the originality of the work. Through this article, we will thus examine the protection given to film titles under the Indian Copyright Act and other laws with reference to various judgments while attempting to assess the role that Film Associations play in registering and protecting film titles.

Protection of film titles under the Copyright Act, 1957

From Don to Dostana, a number of contemporary films have shared titles with beloved classics. There have also been a handful of instances where the same actors have acted in two films having the same title. When two films share the same title and in certain cases, the same actor, the audience may draw comparisons between them even though the films have nothing else in common. A same or similar film title, sometimes referred to as a ‘Mockbuster’ is often used by the creators of a new low-budget film to capitalize on the popularity of a former hit. A producer would naturally want to protect his film title to avoid a similar scenario. The question now is, is such protection even provided under any law applicable in India?  Since the fundamental works of a film are protected under The Copyright Act of 1957, we will access the protection given to film titles under the provisions of the Act.

Relevant Legal Provisions of the Copyright Act: Section 13 of the Act specifies which works are protected under the Indian Copyright Law, according to S. 13 (1) copyright subsists in original literary, dramatic, musical, and artistic works, cinematograph films, and sound recordings. Section 14 of the Act defines the term copyright, it states that copyright is the exclusive right to do or authorize someone to do any of the acts related to the aforementioned original works as specified therein. 

Since most titles are common words or phrases used in everyday life and cannot be deemed an ‘original literary work’ per se, a straightforward reading of the Act suggests that a movie’s title would not be protected, because it would be difficult to determine whether a title was original. The copyrightability of film titles was examined in detail by the Supreme Court in the judgment of Krishika Lulla and Ors. vs. Shyam Vithalrao Devkatta and Ors, the two-judge bench stated, “The mere use of common words, such as those used here, cannot qualify for being described as ‘literary’… The title in question cannot, therefore, be considered to be a ‘literary work’ and, hence, no copyright can be said to subsist in it, vide Section 13; nor can a criminal complaint for infringement be said to be tenable on such basis.”  This landmark decision has been used as a reference in practically every claim for copyright infringement of a film title.

It should also be noted, under Section 44 of the Act, names or titles of works protected by copyright as well as other information pertaining to the authors, publishers and owners of copyright should be maintained in a register that is kept in the approved format and is referred to as a “Register of Copyrights”. One might assume that this would imply the title’s protection under the copyright act, but section 44 only addresses the registration of works protected by copyright; it makes no provision for the protection of the title itself. This is because the title is not automatically protected simply because it is listed in the register of copyrights. And as decided in Sanjay Soya Private Limited Vs. Narayani Trading Company the registration of copyright itself is not mandatory.

Thus, it is safe to say, in a film title claim, the provisions of the Copyright Act 1957, more particularly, Sections of infringement Section 51 (When copyright infringed), Section 55 (Civil remedies for infringement of copyright),  and Section 58 (Rights of the owner against persons possessing or dealing with infringing copies) would not get attracted in case of use of an existing film title since the “work” mentioned under Sections 13 and 14 of the Copyright Act 1957 means the underlying work that forms a part of a film and the title of a film is excluded from its meaning.

The decision of various courts regarding alleged copyright infringement of film titles

Citing the landmark judgment of Krishika Lulla, courts have time and again dismissed the claims of copyright infringement of a film title at the outset. In Gen X Entertainment Ltd. V. Purple Haze Motion Pictures Pvt. Ltd. and Ors, the plaintiff sought an injunction for the film “EMOTIONAL ATYACHAAR” as it was almost identical with and/or being deceptively similar to the plaintiff’s distinctive and well-known registered title, name and trademark “EMOTIONAL ATYACHAAR”, here too the court emphasized that “Title alone of a literary work cannot be protected by copyright law. Copying of the title alone and not the plot, characterization, dialogue, song, etc. is not the subject of copyright law.” 

In another similar case of Akashaditya Harishchandra Lama Vs. Ashutosh Gowarikar and Ors., the plaintiff brought a suit seeking copyright infringement as well as a grant of an interim injunction against the release of the defendant’s film titled “Mohenjo Daro”, while dismissing the title claim from the very start the Bombay High Court referred to various precedents while stating that, “It is settled law, and has been for a very long time, that there is no copyright in a title.” 

Likewise, judge Colabawala noted in the 2020 ruling of Zee Entertainment Enterprises Limited vs. Ameya Vinod Khopkar Entertainment and Ors. for the copyright claim for the film “De Dhakka”, “…it is quite clear that a title of a work cannot be considered to be the subject-matter of copyright law because a title by itself is in the nature of a name of a work and is not complete by itself, without the work.” 

Therefore, it is abundantly evident from a quick review of the aforementioned court rulings in cases involving similar allegations of title infringement that a copyright cannot be asserted over a film’s title. The various reasons stated for the same can be summarised as follows:

  1. A film title is merely a synopsis of the work and is incomplete without the work itself.
  2. Common terms cannot be considered ‘literary’ and only adopting the name of the work but not any other work in the film cannot be considered a copyright violation.
  3. A title does not entail literary composition and is therefore insufficient to sustain a claim to protection under Section 13 of the Copyright Act.

However, in the case of Zee Entertainment Enterprises Limited Vs. Ameya Vinod Khopkar Entertainment and Ors the court discussed the protection of film titles in conjunction with “sequel rights”.

What are sequel rights

The term “sequel rights” refers to the exclusive right to produce a particular film’s sequel, which may incorporate a sizable portion of the original film’s plot into its own, often with the same actors. A producer may assign such sequel rights through an assignment agreement. 

But how does the sequel right affect film titles

Though not protected under copyright a passing-off action can be claimed in case a film is broadcasted to the public as a sequel of a particular film without proper assignment of such sequel rights. Similar to the Zee Case, in Narendra Hirawat & Co. Vs. M/s. Alumbra Entertainment & Media Pvt. Ltd. & Ors. the Bombay high court distinguished between the right to remake a film and the right to create its sequel. The court ruled that a party cannot lead the public to believe that a film is a sequel to another by adding a number or other similar suffix after the title without a clear indication of such sequence rights in the Assignment agreement. The court noted that the defendant in the aforementioned case was granted the sequel rights, allowing them to produce and subsequently release the film Sarkar-3, even though the plaintiff had been assigned the rights to the film “Sarkar,” and thus no case of infringement can be made against the defendant.

Protection for titles based on film characters

What do Gajni, Krishh, Munna Bhai MBBS, and Sultan have in common? The name of the main character in each of the four films—Gajni, Krishh, Munna Bhai MBBS, and Sultan—served as the basis for their titles. Considering this situation, it’s reasonable to ask whether a title based on a key character in a movie would qualify for protection under the Copyright Act since these fictional characters are protected. To respond to this question we must refer to the ruling in Arbaaz Khan v. North Star Entertainment Pvt. Ltd. According to the court, “Chulbul Pandey” may be protected under the act if the film character “Chulbul Pandey” is unique and the portrayal of that character as well as the ‘writing up’ of that character in an underlying literary work is capable of protection”. 

However in Warner Bros Entertainment Inc. & Anr. v. Harinder Kohli & Ors. when the registered trademark owners brought a suit of infringement, seeking a permanent injunction, against the defendants for a film released by them by the title of “Hari Puttar” who had registered the title with the Indian Motion Pictures Producers Association (IMPPA). According to the court, the plaintiff’s lawsuit was dismissed because their films targeted a specific set of audiences that were easily able to distinguish the Harry Potter films from Hari Puttar. The films had two diverse genres and no person would draw parallels between the two. Therefore, even though the title may be based on a well-known character, the test in such a claim would be the potential to cause confusion, and because “Hari Puttar” could not possibly create confusion in the minds of the audience, it does not constitute a violation of the plaintiff’s copyright. Additionally, the court noted the legal limitations connected with registering film names with organisations like the Film and Television Producers Guild of India Ltd. and the Indian Motion Pictures Producers Association (IMPPA), we shall therefore look at the implications of registration of film titles with such associations.

Registration of film titles with associations or GUILDS

As per the IMPPA report of 2021-2022, the Title Registration Committee of FMC has registered 16023 titles belonging to the members of IMPPA. However, as seen earlier, such registration may lack any legal impact. In the case of ‘Hari Puttar’, the court held that protection to titles registered to a particular association may only apply to its members and such registration won’t be binding to a third party since the agreement is only between the association and its members. In another case, in the case of Fish Eye Network Pvt. Ltd. vs. Association of Motion Pictures & T.V. Programme Producers and others the court observed that the plaintiff had relied on a custom or trade practice under  which   a  title  is   registered  with   one   of  the   associations   of which the  registrant is a member and before such registration of the title the association   verifies  with  the   other   associations   as  to  whether  the same  or  deceptively   similar  title  has  been   registered  with  another association, however without any acquired goodwill, a claim for the protection of such title cannot be made and allowed the defendant to use the title “Thank You” 

Further while dismissing the plaintiff’s request for an injunction on the grounds that he had registered the name “Raja Rani” with the defendant Film and Television Producers Guild of South India where the defendant is a member the court stated “the registration of the applicant/plaintiff with the second defendant would not give a cause of action for him to claim as a matter of right the same title in respect of the film produced by the defendant Nos.1, 3 and 4, who claim to be members of another council… Rules of a particular council or a body can only bind those members and not members of another body”. 

Numerous associations representing various stakeholders in a film are established in India. The non-exhaustive list of the same includes Film Makers Combine (FMC), The Indian Motion Picture Producers’ Association (IMPPA), Producers Guild of India (GUILD), Western India Film Producers’ Association (WIFPA), Indian Film and TV Producers Council (IFTPC) [previously known as the Association of Motion Pictures and TV Programme Producers (AMPTPP)], Cine & TV Artistes Association (CINTA), Film Federation of India (FFI) and Federation of Western India Cine Employees (FWICE). The main aim of these organizations is to protect the interests of their stakeholders. In the Indian entertainment industry, it is customary to “register” film titles with such associations. 

Many other similar judgments have also pointed out that though the membership of an association may be beneficial only a title that has acquired goodwill and is a registered trademark can be protected by law. 

arbitration

Registration of film titles in the trademark registry

The judgment of Francis Day & Hunter Ltd v Twentieth Century Fox Corporation Ltd,  one of the earliest title infringement claims where the privy council stated that the fact that titles aren’t substantial enough to justify a claim to protection, however, this doesn’t mean that in particular cases a title may not be so extensive a scale and so important a character as to be a proper subject of protection against being copied. Through this, the court pointed to the possibility of protection of film titles through their registration as trademarks. Film titles that are a part of a franchise or sequence of titles are more likely to be registered as a trademark as compared to single titles, basically, the title should be a part of continuous work. 

However, by putting emphasis on the words ‘so extensive a scale or so important a character we can see that work must gain some secondary meaning over and above it being registered as a trademark, for it to be considered a well-known mark. The Court considers a number of variables when determining secondary meaning, including the duration of use, the frequency of use, the cost of advertising and promotion, and the number of viewers and buyers of the work.

A study of judgments like Biswaroop Roy Choudhary vs. Karan Johar, Anil Kapoor Film Co Pvt Ltd v. Make My Day Entertainment & Anr and Kanungo Media (P) Ltd vs. RGV Film Factory indicate that for a passing off to stick, a title must have a distinctive identity that can be distinguished by the public. Various film titles like Padman (ID: 3749859), Singham (ID: 3672533), 3 Idiots (ID: 1940729), and Dhoom (ID: 1319835), have been registered as a service mark under class 41, of the fourth schedule of the Trademark Rule, 2001. They are accorded protection under the Trademark Act 1999.

Interestingly, in Sholay Media and Entertainment Pvt. Ltd. and Ors v. Parag Sanghavi and Ors. a trademark and copyright infringement suit was filed in the Delhi High Court restraining the release of the film ‘Ram Gopal Verma Ki Sholay’ which was a remake of the iconic film ‘Sholay’. It was observed that the mark ‘Sholay’ (although not registered under Class 41 but under Class 16 and Class 31) had gained distinctive character and the defendants were restrained from using the same as it was a violation of the plaintiffs’ exclusive moral rights of the copyright and amounted to passing off. 

Conclusion

Due to the inability to identify a title’s originality, a film title, through which it will be remembered for decades, does not enjoy any copyright protection as the other underlying works of the film, the same as seen above has been reiterated by a number of judicial precedents. 

A better alternative to protect film titles would be registering them under the Trademark Act 1999. It is better to register a series of names than to register a single-use title, but the courts have frequently ruled that single-use titles may still be registered if they have secondary meanings and are distinguishable in the eye of the public. Film titles may be registered and protected as service marks in India under the Trademark Act 1999. 

Associations like Guilds and IFTPC have an ongoing practice of registering film names along with the scripts or other works of a film, they also consult with other associations to see if there is any conflict of title. Though this practice may save the hassle of having to register the title with the trademark registry, associations cannot legally bind any third party to not use a title registered with them. They simply place a contractual obligation on their members to refrain from using the same or deceptively similar titles; the regulations of such associations do not apply to other parties who are not its members. 

Likewise, just because a studio has registered a film title with an association does not mean the producer has permission to use the title; in order to prevent future allegations of passing off, he may need to conduct a search to see if such a title is a registered service mark under the Trademark Act. Hence, registering a title with the trademark registry is a must to avoid unauthorized use of it in India.


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Legal tender

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This article has been written by Nimisha Dublish of the Vivekananda Institute of Professional Studies, GGSIPU, New Delhi. The article talks about all possible aspects of legal tender in India. It also discusses the legal status of cryptocurrencies in India. It is followed by the scenario of legal tender in some other countries as well. 

This article has been published by Sneha Mahawar.

Introduction

We remember the last time everyone heard and understood the meaning of legal tender was when demonetisation happened back in 2016. Everyone ran here and there to replace the paper notes that were no longer the means of transaction. The old notes were to be replaced with the new official legal tender. Those with black money were highly confused about what to do with the huge denominations of notes, which were no longer acceptable as legal tender in India. In layman’s terms, legal tender is a sort of mechanism acknowledged by law as a means to hold private or public debt, meet fiscal responsibility (tax payment), abiding contracts, and payment of fines/damages. Most countries use their national currency as legal tender. The Reserve Bank of India is the organisation commissioned to create and issue legal tender to the public at large. Coins and notes come under the legal tender of India. The form of money that is accepted and required for the payment of any kind of monetary debt is known as legal tender. 

Different jurisdictions have their own specific legal tender, and legal tender is specifically a mode of payment which helps pay off debts. In a normal sense, cash in the form of coins and banknotes is widely accepted as legal tender in most countries, whereas credit cards, cheques, or any other form of similar non-cash means are not accepted for the same. A growing hype about cryptocurrencies has also been seen in public. However, cryptocurrencies are not commonly accepted as they are not legally recognised by many countries around the globe. 

Breakdown of the term “Legal Tender”

The coins and notes that are circulated in the market are authentic legal tender issued by the Reserve Bank of India (RBI). The creditors and those to whom the payment is to be made have to accept the same as a valid source of payment towards the debt. Some may accept payment through cards and cheques and some may not. However, they remain the legal tender of India. They are the substitutes and the holder can go and receive the payment for the debt availed. The term ‘legal tender’ means an offer. It is derived from the Middle French word ‘tendre’. The Latin meaning of ‘tendere’ is to stretch out, which means to extend (to hold outwards). 

What is legal tender and why is it important

There are many modes of payment that a person uses in their daily life. If we take a deep look into history, then we can trace that humans once used salt and spices as a mode of exchange, i.e., as currency. But if we see it now, legal tender is the money that is recognised by the law of the relevant land. The law must accept it as a valid form of payment. The Reserve Bank of India Act, 1934 gives the Reserve Bank of India/ Central bank the sole right to issue banknotes/currency of the nation. The said Act states that the banknote as issued by the Central Bank shall be accepted as legal tender at any place in India for the payment of the amount as expressed therein. 

Many people are not aware that the 50 paisa coin is accepted as legal tender in India. Therefore, it can be derived that 50 paisa coins, which is the lowest denomination of money, can be used for paying dues up to Rs. 10. Hence, these are limited in character, whereas the currency notes can be used for making payment of an unlimited amount, which makes them unlimited legal tender. The economic functions of money are performed by legal tender in cases like monetary policymaking and currency manipulation. There are some countries around the globe that do not issue their own currency and use the US dollar for the same purposes as legal tender.

The cancellation of a legal tender holds an important status in society as it derives all its value from recognition by the government. If the central authorities don’t recognise some money as legal tender, then it loses its value and reduces it to just a piece of metal or paper. The same may not apply to gold. Even if the government declares gold to be of no value or nil value, people might continue to trade it. This is because the value of gold is not passed on to us by government dictatorship but by ancient traditions. This is not true for a piece of paper to survive in the market without having any backing from legal norms or the government. If the currency note is presented to a person, then it means that the Reserve Bank of India or the Central Government promises to ‘pay the bearer’ an equivalent sum of money/amount/goods/services as printed on the banknote. 

Why should a person be concerned about the status of currency as a legal tender

If one day a person wakes up and comes to know that all the money he has in liquid form is no longer accepted as legal tender, then it will lead to huge financial jolts in his finances, as happened at the time of demonetisation back in 2016. One of the biggest demonetisation moves can be traced back to when the European Union was born in 1999 and the commonly accepted currency was demonetised. The act was done for the new national currency to be adopted, i.e., the Euro from 2002 onwards. Paper currency notes were also replaced with polymer notes in Australia in the 1990s. Even India, back in 1946 and 1978, withdrew Rs. 10,000 notes and demonetised them. The withdrawal of the high denomination legal tender is making the economies shift to cashless and electronic forms. A cashless society can be described as an economy wherein financial transactions are no longer conducted by money or in the physical form of cash like coins and banknotes. The transactions are carried out in the digital form. In historical times, cashless economies existed but in the form of barter systems or some other means of exchange. In the barter system, goods were given in place of certain other goods holding a similar value. For example, people used to sell 1 kg of wheat in place of 1 kg of rice or 1 kg of cereals in place of half a kg of something holding a similar value, like kidney beans. 

Types of legal tender money

Unlimited legal tender money

Any amount of debt can be paid in this form of money. No person can refuse to accept this mode of payment; otherwise, they may face legal consequences. In India, the paper notes or bank notes issued by the Reserve Bank of India are known as unlimited legal tender.

Limited legal tender money

Debt up to a certain amount can only be paid off using this type of money. If someone makes a payment of more than the prescribed limit, then it is up to the receiver to accept it or deny it. If the receiver denies the payment, then no legal action can be taken against the person. Coins are the only form of legal tender that exists in the form of limited legal tender money. 

Economic functions of legal tender money

There are several purposes served by legal tender in the economic sphere. It is used as a medium of indirect exchange, a unit of account, a store of value, and a standard of deferred payment to fulfil the functions of money in the economy. The usefulness of money is enhanced by legal tender as it helps to reduce transaction costs. Legal tender results in reducing the rigidity in the money supply, and a single currency can eliminate the associated translation costs with the use of multiple competing currencies in a nation. Monetary policies become possible because of the application of legal tender and its laws in a nation. Legal tender allows the manipulation, debasement, and devaluation of the currency by its issuer in order to obtain seigniorage. Seigniorage means the profit made by a government by issuing currency, especially the difference between the face value of coins and their production costs.

Importance of legal tender money in India

  1. The legal tender is used by the market players as a way to carry out indirect exchange, as a unit of account, as a store of value, as a mode of deferred payment, standard to perform the functions of money in the economy. 
  2. There is increased flexibility in the chain of money supply if a single currency is used as legal tender and eliminates the transaction costs linked to the usage of multiple competing currencies.
  3. Legal tender makes the making of monetary policy possible. 
  4. It facilitates the issuance of fiduciary media by the banking system to meet trade needs. 

Limitations of legal tender money in India

If there is any loss in the status of the currency’s legal tender, the personal finances of a citizen are hugely affected. For a short-term period, it also tends to disrupt the smooth functioning of the day-to-day business activities of a nation. There exists a full-fledged war around the globe on tax evasion, which makes the case for countries to withdraw high-value notes from a legal tender. All this leads to a cashless and electronic economy in terms of payments and transactions. 

Legal norms governing legal tender in India

The Indian currency is represented as Indian Rupees (INR), where one rupee comprises 100 paise. The legal tender of India is symbolically presented as ‘₹’. This symbol represents the Devanagari letter and the Latin capital letter ‘R’.

Legal tender under the Coinage Act, 2011

Section 6 of the Coinage Act, 2011 covers the issuance of coins by the Government of India. The provisions are as follows-

  1. The legal tender (coins) used for the payment and means of a transaction should not be defaced or of less weight. The weight of the coin shall remain within the prescribed limit.
  2. The coins not below Re 1 should be legal tender for all sums up to Rs. 1000. 
  3. The coin holding the value of 50 paise i.e. half a rupee shall not be used to pay the sums exceeding Rs. 10. 
  4. However, if a person wishes to accept a sum of money as prescribed above, then he/she is free to do so and it is not prohibited by law. But nobody can be forced to accept money beyond the prescribed limits. 

Legal tender under the RBI Act, 1934

  • As per the norms of Section 22 of the RBI Act, the Reserve Bank of India has the sole right to issue banknotes in India. 
  • Section 25 of the Act describes the design, form, and material used for banknotes, which shall be approved by the Central Government after considering the recommendations made by the Central Board of RBI. As far as the coins are concerned, they are only distributed by the RBI when they are supplied by the Government of India. As per the Coinage Act, 2011, the Government of India is solely responsible for the designing and minting of coins in various denominations.
  • As per the provisions of Section 24 of the Reserve Bank of India Act, 1934, the banknotes shall be of the denominational value of Rs. 2, Rs. 5, Rs. 10, Rs.20, Rs.50, Rs. 100, Rs. 500, Rs. 1000, and Rs. 10,000. The value shall not exceed Rs. 10,000 as per the recommendations of the central board on this behalf. 
  • Section 26(2) of the RBI Act, 1934 covers the provision for the issuance of banknotes (Rs. 2, Rs. 5, Rs. 10, Rs. 20, Rs. 50, Rs. 100, Rs. 500, and Rs. 2000) by the Reserve Bank of India unless they are withdrawn from circulation and shall be accepted as legal tender all over India for the mode of payment. Re. 1 notes are also to be accepted as legal tender issued by the Indian government. The Rs. 500 and Rs. 1000 notes of the Mahatma Gandhi Series issued up to November 8th, 2016 cease to be used as legal tender with effect from midnight of November 8th, 2016. 
  • As defined in Section 33 of the Reserve Bank of India Act, 1934, all banknotes issued by the Reserve Bank of India are backed by assets like gold, foreign currency assets, and government securities. 

Whether cryptocurrencies are legal tender in India

There have always been debates and discussions around the legal status of cryptocurrencies in India. People hype around the growing era of digital currencies in the form of cryptocurrencies. The Government of India has cleared the air a bit on the topic and has talked about it in the session of Union Budget 2022-23. But moving back a bit into the procedures and chronology that happened before the presentation of the Union Budget, it began with a circular issued by the RBI. The circular restrained banks, NBFCs, and payment system providers from transacting in virtual currencies. They were also restrained from giving services to virtual currency exchanges. A writ petition was filed by several crypto exchange platforms in the Supreme Court of India. This resulted in a decision in favour of the platforms dealing with virtual currencies. The circular issued by the RBI was held unconstitutional in the case of the Internet and Mobile Association of India v. Reserve Bank of India (2020). The ban on organisations dealing with virtual currency exchanges was struck down by the Supreme Court in the present case. An amendment was made in Schedule III of the Companies Act 2013. The amendment was made on March 24th, 2021. The amendment said that all companies dealing in cryptocurrencies in the form of investments are required to disclose the amount for the new financial year. Also, the companies are required to mention the profit or loss that is involved in the transaction. The amendment made it compulsory for the companies to mention the number of holdings they have along with the details of deposits and advances they have taken from any person/authority for the purpose of trading or/and investing in cryptocurrency. 

An announcement was made by the Finance Minister of India, Nirmala Sitharaman, in the Union Budget of 2022-23 that any form of income that occurs from the transfer of habitual digital assets shall be taxed at a rate of 30 per cent. It was further added that a 1 per cent tax deduction has been proposed for all the transactions involving cryptocurrencies in them. However, the taxation of virtual digital assets doesn’t make them legal tender or a recognised legal mode of transaction. It was made clear that this doesn’t imply the legal recognition of cryptocurrencies in India. 

The Cyber Security Directions were issued on April 28th, 2022, regarding the Know Your Customer (KYC) database. The instructions read as, the virtual asset service providers, virtual asset exchange providers and custodian wallet providers are mandatorily required to maintain and save all information as a part of Know Your Customer (KYC) and a financial record shall also be maintained consisting of financial transactions for a minimum period of 5 years to ensure cyber security in the area of payments and financial markets for the citizens. This also protects their data and fundamental rights and gives them economic freedom to grow in the area of virtual assets. Maintenance of data for 5 years implies that the companies are required to exist for a minimum period of 5 years. This is proof on the part of the Government of India that they may have permitted de facto approval of cryptocurrencies and transactions in them. 

The Finance secretary, TV Somanathan, has clarified a bit more on this topic in an interview with the Press Trust of India (PTI). He said that gold and diamonds are metals that are of great value but are not recognised as legal tender in India. Just like them, private cryptocurrencies will also never be legal tender in India. Legal tender is something that is accepted by law as a means of settlement of debts, and India will not be making any crypto assets as legal tender. He also said that only the Digital Rupee issued by the Reserve Bank of India will be legal tender in India. Cryptocurrencies will never be legal tender in India. 

El Salvador is the first country that has made Bitcoin a legal tender. The Central African Republic (CAR) became the second country after El Salvador to adopt Bitcoin as their legal tender. However, India has been working on various laws that can be issued for the regulation of cryptocurrencies in India, but no solid draft has been issued yet or released publicly. 

In the winter session of Parliament before the Union Budget 2022-23, the Cryptocurrency and Regulation of Official Digital Currency Bill were listed for introduction. It was listed for regulating cryptocurrencies. The Bill came out of concern for misleading claims for the investors. The investors were lured by the tricks, and there was no certain legislation that could protect their rights and safeguard them from fraud. Currently, there are no such regulations for the use of cryptocurrencies in the nation. 

The Government of India has announced the introduction of the Digital Rupee to be issued by the RBI to keep up India’s pace with the global shift towards virtual financial instruments.

Difference between legal tender and fiat money

Legal tender is a currency that is declared legal by the government of that particular nation, whereas fiat money doesn’t hold any intrinsic value. The currency is set as the legal standard for repaying debt by first issuing it as a fiat currency and then as legal tender. Fiat money holds a benefit by giving the central bank greater control over the economy, but by doing this, the government can print more money, resulting in hyperinflation. 

Fiat money is a type of currency that is not backed by any kind of commodity like gold. It is only backed by the government. The value of fiat money is based on the relationship between demand and supply in the economy and holds value because of people’s faith in it. However, fiat money cannot be redeemed. Inflation may occur if the government prints too much fiat currency, which affects the money supply chain. 

Legal tender money is, however, different from fiat money in several aspects. It is backed by commodities like gold. It is a form of payment that is recognised by the government and is used to pay financial obligations, etc. National currencies like the US Dollar and the Indian Rupee are legal tender. Certain laws are made to ensure official legal tender gains. 

S. No.Legal TenderFiat Money
1.A currency that is declared legal by the country’s government and holds an intrinsic valueA currency that is backed by the government and doesn’t hold any intrinsic value.
2.Legal tender is set as a standard for repaying debts.The value of fiat money is maintained by the relationship between the demand and supply in the economy.
3.It is backed by assets like gold.It is not backed by any asset but by the government.

Status of legal tender in other countries

Australia

The legal tender of Australia is the Australian Dollar. Section 36(1) of the Reserve Bank Act, 1959, covers the aspect of legal tender without an amount limit. The Currency Act 1965 of Australia provides for the coin’s general circulation as legal tender and also mentions the prescribed limit of the amount. The Australian banknotes and coins are established by the Reserve Bank Act 1959 and the Currency Act 1965, but they are not necessarily required to be used in transactions and non-acceptance of legal tender in Australia is not unlawful. If the dealer mentions beforehand or specifies the mode of payment before making the contract for the supply of goods or/and services, then he is at liberty to accept whatever the buyer mentions as a mode of payment. If one refuses to accept the payment in the legal tender for an already existing debt wherein no other mode of payment is specified, then there may be legal consequences. 

Canada

Canadian dollars as issued by the Bank of Canada and coins as issued by the Royal Canadian Mint Authority are the legal tender of Canada. In Canada as well, there is a limit imposed by their Currency Act on the limited value of transactions in coins. When a person owes someone else more than one amount on the same day due to one or more obligations, the sum of all those amounts is regarded as the single amount due and payable on that day.

El Salvador

In the year 2021, El Salvador became the first ever country to accept Bitcoin as a legal tender. The Legislative Assembly of El Salvador voted in the ratio of 62-22 for the Bill to pass and then submitted it to President Nayib Bukele for the classification of cryptocurrency. 

New Zealand

The history of legal tender in New Zealand is one of the most complex ones around the globe. Banknotes started getting issued as per the provisions of British law by the Union Bank of Australia back in 1840. However, these were not automatically called a legal tender in New Zealand. The banknotes were given the status of legal tender after many ordinances were passed in 1844. Two sets of legal tenders were created. The Colonial bank of the issue became the sole issuer of the legal tender in 1847 in New Zealand. In the era between 1861 and 1874, the Bank of New Zealand, the Bank of South Wales, and the National Bank of New Zealand and the Colonial Bank of New Zealand were created by the Acts passed in Parliament and authorise these to issue bank notes backed by gold and however, these banknotes were not the legal tender money. Financial difficulties faced by the bank that could have led to failure made it necessary for the government of New Zealand to make a declaration to assist the Bank of New Zealand. In 1893, the government was allowed, as per the Bank Note Issue Act, to declare the bank’s right to issue legal tender. The Banking Amendment Act of 1914 gave the status of legal tender to the bank notes issued by the issuer and also removed the bank’s requirement to authorise them to issue bank notes that must be redeemed on demand for gold. Finally, in the year 2005, bank notes were given the status of legal tender for all sorts of payments, and coins were also legal tender for payments up to a certain limit. The old-style silver coin remained legal tender till October 2006 only. After this, new coins were introduced in August 2006, which to this day remain legal tender in New Zealand. 

Singapore

Singapore and Brunei have had an agreement related to the interchangeability of currency since 1967. Both the Singapore Dollar and the Brunei Dollar come under the Currency Interchangeability Agreement. Both the currencies are exchangeable and tradable at par without adding any extra charge during any transaction in either country. This phenomenon of acceptance of one country’s currency in another country is known as ‘customary tender’. The countries have been following this customary tender trend since 1967. 

United Kingdom

Legal tender in the United Kingdom has a very limited meaning. The meaning is very technical in the settlement of debts. Legal tender in the UK is solely for providing guaranteed settlement of debts and doesn’t affect the party’s right of refusal of service in any transaction. Moving back to history, gold coins were legal tender for the payment of any amount, whereas silver coins were limited to sums of over 2 pounds and bronze for sums of over 1 shilling. Throughout the UK, coins holding values of 1 pound, 2 pounds, and 5 pounds are legal tender in unlimited amounts. As per the Coinage Act of 1971, gold sovereigns are also legal tender for any amount. 

Norway

In Norway, the Norwegian Krone (NOK) is the legal tender as per the Central Bank (Sentralbankloven) of May 24, 1985. As per the law, no one can be forced to accept more than 25 coins of each denomination. 

Conclusion

One can define legal tender as the currency of a nation in the form of paper money and coinage. Legal tender is considered valid for payment of any financial obligations. The nationally recognised legal tender varies from nation to nation. We have seen growth in the legal recognition of cryptocurrencies as well, but many nations are afraid of accepting or giving them the status of legal tender because of their virtual nature. Most countries keep bringing in amendments to the circulation of legal tender money in their nations. In some countries, like Singapore and Brunei, a trend of customary tender can be seen. This means that the currencies of both nations can be used in place of each other in both nations. No added tax, cost, or amount is charged on these transactions. In India, the RBI has come up with a digital rupee that is yet to be issued. It will be governed by the RBI only. Our Finance Minister, Nirmala Sitharaman, talked about this in the presentation of the Union Budget for 2022-23. 

Frequently Asked Questions (FAQs)

Can coloured, stained, or scribbled notes be counted as legal tender?

All the coloured, stained, or scribbled notes continue to be legal tender, provided they are still decipherable. They can be deposited or exchanged at any branch of the bank. 

Are coins accepted in all transactions as legal tender?

As per the instructions of the RBI, banks are required to accept coins in all transactions and exchanges as legal tender. 

What happens to the bank notes of older designs when new designs are introduced in the market? 

Both old and new design notes coexist in the market. Gradually, the circulation of old design notes decreases, whereas new design notes circulate more.

What are the legal provisions that deal with forged notes?

Sections 498A to 498E of the Indian Penal Code (1860), along with the High-Quality Counterfeit Indian Currency Offences Rules, 2013 under the Unlawful Activities (Prevention) Act (UAPA), 1967, deal with the offences against forged notes. 

References


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Improved recoveries because of the Insolvency and Bankruptcy Code, 2016

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This article has been written by Sonia Bohra, pursuing a Certificate Course in Introduction to Legal Drafting and Article Writing from LawSikho. It has been edited by Ojuswi (Associate, LawSikho).

It has been published by Rachit Garg.

Introduction

To quote “Kumar Mangalam Birla” –

“The IBC is a very deep reform. It is almost as deep a reform as GST or demonetization. It changes the fundamental character of Indian business”.

Over the past few years, the banking sector of India has faced various problems due to non-performing assets (NPAs) which has brought stagnation to the Indian economy. Massive loans were taken by several organizations/industries but were declared insolvent at the time of the repayment of the loan. There was depreciation in the assets of the organizations and the amount of loan to recover was insufficient for them. The earlier regime also did not prove effective for the revival, therefore India went on having a staggering amount of non-performing assets. This impacted not only the domestic market but also affected foreign Investments. Hence it became necessary to update the laws and incorporate best practices from all over the world which led to the enactment of the Insolvency and Bankruptcy Code, 2016.  This act is based on the UNCITRAL Legislative Guide which consolidates the existing framework by creating a single law for insolvency and bankruptcy.

How is the recovery rate higher than other modes

insolvency

IBC still has the highest percentage of debt recovery as compared to the other modes such as SARFAESI Act and Lok Adalat. As per the RBI report, lenders recovered INR 104117 crores through IBC and the recovery rate was 46.3 % while the recovery rate through Lok Adalat was 6.2% SARFAESI Act was 17.4 percent and  DRTs was 4.9%. Due to the suspension of initiation of fresh insolvency proceedings under the IBC during the year March 2020 till March 2021 and covid-related debt being excluded from default being claimed by the lenders, this code was still one of the major modes of recovery in FY 2020-21.

Further, it was also reported that as on 31st July 2021, 14510 cases involving INR 5.13 lakh crores default were withdrawn from NCLT before the applications were admitted by the adjudicating authority. This shows that though the IBC is not meant to be a recovery mechanism it proves to be a crucial tool for pushing fearful promoters on losing control over their company into repaying debts before the applications of insolvency are admitted by NCLT. 

IBC has also encouraged settlement between corporate debtors and creditors after the initiation of the Corporate Insolvency Resolution Process (CIRP). 5258 CIRPs had commenced till March 2022 as reported by the Insolvency and Bankruptcy Board of India (IBBI) and out of these 731 have been appealed or reviewed and 586 have been withdrawn, 1609 have ended for liquidation orders and 480 have ended in resolution plan’s approval.

Avenue for corporate debtor’s revival : an overview 

Due to IBC, now the creditors have the option to revive the corporate debtor and maximize their asset’s value by inviting resolution plans. Provisions like moratorium after admission of the application of insolvency and Resolution Professional’s power to apply to NCLT for termination of onerous contracts are all conducive to attempting the revival of corporate debtors, instead of following the civil suit process.

480 corporate debtors have been rescued as on March 2022, through resolution plans with assets value being INR 1.31 lakh crores under IBC as per the IBBI data.

Recent legal developments in relation to IBC

Over the past few years, the IBC has evolved thanks to several judicial precedents that gave legal clarity across various topics.

Following are the important judicial precedents given by court tribunals over the past few years.

1.      Definition of Financial debt

Under section 5(8) of IBC, “financial debt” means “debt that is dispersed against the consideration for the time value of money.”

In one of the cases, the National Company Law Appellate Tribunal (NCLAT) held that loans advanced to home buyers through financial institutions and banks shall not be considered as financial creditors but shall be included in the committee of creditors (CoC) under corporate debtor. This is due to liability on individual homebuyers for the repayment of home loans. Under this case, the corporate debtor had sold 44 home buyers flats of their project and the loan was sanctioned to such homebuyers by Axis Bank. NCLAT relied on the case Pioneer Urban Land & Infrastructure Limited & Anr Vs Union of India & Ors and reiterated that corporate debtor’s financial creditors shall be homebuyers whether they have taken a loan from a bank or self-financed their flats or units.

2.      Resolution professional’s rejection of resolution plan

A recurring issue is resolution professionals’ increasing interference in determining the eligibility of prospective resolution applicants under Sec 29A of the IBC. The NCLAT relied on the judgment of Arcelor Mittal India Private Limited v. Satish Kumar Gupta where the Supreme Court held that decision regarding the resolution applicant’s ineligibility should not be taken by the resolution professional. They can only give their opinion regarding the ineligibility of resolution applicants and inform the CoC. In the case of Everest Organics v. Leesa Lifestyle, NCLAT held that the CoC has the power to approve the resolution plan and determine the resolution applicant’s eligibility under section 29(A)(e). The resolution professionals and CoC can only give a legal opinion on such aspects and appoint consultants to take a detailed review of resolution applicants and their connected persons for determining the eligibility of such resolution applicants under section 29A of the Code.

3.      Withdrawal of resolution plan

The Supreme Court ruled in the case of Ebix Singapore Pvt Ltd v. CoC of Educomp Solutions Ltd & Anr that IBC only allows withdrawal from CIRP if the procedure specified under section 12A of the IBC and Regulation 30A of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 is followed. The resolution applicant cannot withdraw its resolution plan if the CoC has approved it. The NCLAT also held that after the approval is given by the CoC of such a resolution plan the CoC cannot consider another resolution applicant’s plan if it thinks that it might be a better plan.  

4.      Joint CIRP

Consolidation of CIRPs is not provided under the IBC.  In the case of Jitender Arora, Resolution Professional of M/s. Premia Projects Ltd v. Tek Chand the NCLAT held that the corporate debtor’s assets, even if they are held by another company, should be included in the corporate debtor’s information memorandum and corporate identity report. According to the NCLAT, a corporate debtor’s CIRP shall not include a subsidiary’s assets if the subsidiary is not undergoing CIRP. This matter was remanded to the NCLT by giving the direction that admission application shall be considered for a subsidiary company.

5.      Section 29A of IBC

In the case of Bank of Baroda & Anr v. MBL Infrastructures Ltd & Ors According to the Supreme Court, an individual creditor must invoke a personal guarantee even if the admission application to seek CIRP is filed by another creditor to attract disqualification under section 29A(h).

NCLAT also gave an interpretation of “control” under Section 29A(c) of this code.  In this section, a person cannot submit a resolution plan if at the time of submission such person has a non-performing account or a non-performing account of a corporate debtor under its management or control.  Here expression “control” under section 29A(c) is only positive control that is (mere power to block a company’s special resolution cannot amount to control).

6.      Benefits from recoveries under avoidance application

This code does not specify under avoidance applications which stakeholder is entitled to receive the amount.  In the case of 63 Moons Technologies, Limited v. The Administrator of Dewan Housing Finance Corporation Limited the NCLAT held that CoC cannot take the decision regarding who would be the beneficiary of the recoveries that are filed under section 66 of this code which deals with fraudulent and wrongful trading. The facts and circumstances of each case must be considered by the adjudicating authority when making such a decision.

7.      Guarantors to the corporate debtor under this Code

Under section 60(1) of this code, the adjudicating authority shall be NCLT for corporate debtors and personal guarantors. Section 60(2) of this code requires that if any liquidation process or CIRP of the corporate debtor before NCLT is pending, then the application relating to the CIRP of the personal guarantor or corporate guarantor shall be filed before NCLT.

In the case of “State Bank of India v. Mahendra Kumar Jajodia”, the NCLAT had to deal with the issue of initiation of CIRP against the principal debtor’s guarantor under section 95(1) of this code, in spite of no pending CIRP against the principal debtor.  To seek initiation of CIRP against the corporate debtor’s guarantor, the State Bank of India filed an application under section 95(1) of this code. The NCLT, relying upon section 60(2) of the code, held that as no CIRP or liquidation proceedings were pending of the corporate debtor, the application was not maintainable. According to the NCLAT, Section 60(2) of this Code is intended to ensure that both proceedings will be heard by the same NCLT.  Section 60(2) in any way does not prohibit the filing of proceedings under section 95 of the code even though there are no pending proceedings against the principal debtor before the NCLT.

8.      Issuance of the warrant by NCLT

Section 19 of this code requires the cooperation of the management of the corporate debtor with a resolution professional for providing all required documents for the smooth CIRP of the corporate debtor. The resolution professional has the power to file an application before NCLT if the management of such corporate debtors does not cooperate with them. 

Recently the NCLAT upheld the warrant issued by NCLT against the directors of a corporate debtor which were suspended in an application filed under section 19 of this code. The NCLAT also held that it has the power to issue a non-bailable warrant for enforcing the attendance of a person.

Conclusion

This Code has marked a paradigm shift in efforts to resolve stressed assets in the financial system. As opposed to the “debtor-in-possession” model that has failed to improve India’s credit discipline, the law adopts a “creditor-in-control” approach. This Code fundamentally rebalances the power between debtors and creditors in the face of default by the debtors. This approach makes economic sense because the creditor only has the contractual portion of the economic surplus generated by the borrower, and the remaining surplus is distributed to the equity shareholders indefinitely until a default occurs. At this point, equity shareholders are protected by limited liability, but creditors lose all of their exposure to insolvent debtors. With one stroke, it eliminated the Hon’ble Supreme Court-recognized “divine right of promoters to continue in the saddle” and restored the interests of other stakeholders, especially creditors.

Insolvent debtors must be protected from their own management, where necessary, to maximize their value to society at large as a whole. Section 29A has given further impetus to this idea. Promoters are facing the possibility of losing control of their respective companies for the first time if the financial burden is not addressed in a timely and comprehensive manner.

This Code also establishes CoC as a public institution, with primary responsibility for ensuring that stakeholder value is maximized during the corporate debtor’s resolution. The Code also strengthened the negotiation power of operational creditors by allowing them to file CIRP initiation with respect to operational debtors who have defaulted.

To summarise, we have come a long way in improving the credit discipline in India. However, like public policy, this is an ongoing process and there is always room for improvement.

References

  1. https://www.lexology.com/library/detail.aspx?g=01c7ad37-612b-44bc-945a-6ec1ea3dab0a
  2. https://thelawreviews.co.uk/title/the-restructuring-review/india
  3. https://www.ibbi.gov.in/uploads/whatsnew/08933bb5e16cab360074d3ef1640452a.pdf
  4. https://www.cnbctv18.com/legal/five-years-of-ibc-what-has-worked-and-what-hasnt-bankruptcy-board-chief-defends-insolvency-law-10663041.htm
  5. https://www.business-standard.com/podcast/economy-policy/where-does-ibc-stand-five-years-after-rbi-s-dirty-dozen-announcement-122061400060_1.html
  6. https://m.rbi.org.in/scripts/BS_SpeechesView.aspx?Id=1306
  7. https://ibbi.gov.in/uploads/whatsnew/9cb1453bf7337c6eb76ac1aa331bd2ad.pdf
  8. https://ibbi.gov.in/webadmin/pdf/whatsnew/2018/Oct/33945_2018_Judgement_04-Oct-2018_2018-10-04%2018:02:45.pdf
  9. https://www.casemine.com/judgement/in/618b36469fca1956f646bb08
  10. https://main.sci.gov.in/supremecourt/2020/19687/19687_2020_33_1501_29954_Judgement_13-Sep-2021.pdf
  11.   https://www.casemine.com/judgement/in/619b4fe0342cca38c6a10f00 
  12.   https://www.iiipicai.in/wp-content/uploads/2022/02/IBC-Case-Law-Capsules-Vol.-5-Number-05-January-31-2022.pdf 
  13.  https://ibbi.gov.in/uploads/order/b9195540fd1634d9a533aa211f1d8292.pdf

https://ibbi.gov.in/uploads/order/2022-01-28-124013-g0wpl-26414f3846632f4c82d397e67e510d1f.pdf


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Power of police to seize any property during an investigation

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This article is written by Shashank Singh Rathor, a student currently pursuing B.A. LL.B. degree from Ideal Institute of Management & Technology and School of Law, Affiliated to G.G.S.I.P.U., Delhi. This article highlights the power provided to the police officials under Section 102 of CrPC and explores the implications of Nevada Properties Judgment on Section 102 of CrPC.

This article has been published by Rachit Garg.

Introduction 

How would you react If I tell you that Section 102 of the CrPC provides police officers with the power to seize any of your property? Imagine, a crime has been committed in your neighbourhood and police seizes your property on the suspicion that you can be the mastermind behind that particular crime. In such a situation, what will you do? 

You will probably feel traumatised at that moment, helpless at the power of the police. Well, you might be thinking that you are part of such a country where police can do everything on mere suspicion only. Well if you have such doubts then this article will clear most of the things for you.

This article is going to discuss, what can police exactly seize under Section 102 of CrPC? Moreover, what is beyond the scope of Section 102 of CrPC? Whether police officials are authorized to seize both immovable and movable property under the purview of Section 102 of CrPC or not. This article will also analyze the judgments and the case laws which are directly or indirectly related to Section 102. Moreover, there are also some suggestions and recommendations that can be applied or taken care of, in the further amendments related to the seizure of immovable property by police officials.

Movable property

There is no such definition of movable property in the CrPC. As per Section 2(y) of CrPC, the terms and expressions defined under Section 22 of IPC would be equally applicable in CrPC as well.

Section 22 of IPC defines the term ‘movable property’ to include corporeal property of every description, except land and things attached to the earth or permanently fastened to anything which is attached to the earth. Thus, any property or thing which is not permanently attached to the earth is stated as the movable property.

Section 102 of the Code of Criminal Procedure

Section 102 of CrPC, 1973 validates the power of police officers to seize certain property.

According to Section 102 –

  1. Any police officer may seize any property which may be reported or suspected to have been stolen, or which may be found under situations that originate suspicion of the commission of any crime or offense.
  2. If any lower-ranked police officer other than the in charge of the police station seized the property then he or she would be bound to report about the same to the in charge of the police station.
  3. Each and every police officer who stands under subsection (1) should have to immediately report the seizure to the magistrate having jurisdiction and in cases where the property is of such kind that it cannot be transported to the court, or if there is difficulty in securing the proper arrangement for the custody of such property, or if the continued detention of property in police custody is not needed for investigation and might not be considered relevant for the investigation, then the police officer may grant custody thereof to anyone on his executing a bond undertaking to produce before the court as and when it required for the execution of the further orders of the court as to the disposal of the same.

It also provides that if the property which was seized under sub-section (1) is subjected to fast and natural decay and the owner of such property is absent or unknown and the worth of such property is less than ₹500 then it might be sold immediately by auction under the orders of the superintendent of police and for such procedure, the provisions defined in Section 457 and Section 458 of CrPC should be applied, as nearly as practically possible for the net proceed of such sale.

This section highlights a few conditions to be fulfilled –

  • If the seizing police officer is below the rank of inspector then he or she should immediately submit the report of the seizure to the police station in-charge or senior.
  • After that, the senior should have to submit the report of seized property to the magistrate of that jurisdiction.

According to this Section, the power of the police is discretionary, and it does not make it mandatory to seize property in each and every case of robbery, theft, homicide, etc.

Purpose of seizing the property

According to the law, the police may have the power to seize the property of the accused under four main grounds:

  1. For The Safekeeping

The police have the authority to seize valuable property like money, jewelry, expensive electronics, etc. For investigation of the case and to protect such property from any kind of further damage or crime. Sometimes, police officials do such things to protect it from any kind of tampering by the accused or criminal.

  1. Forfeiture 

The police have the power to seize certain property if they believe that such property was taken into use for the commission of the crime or procured during the commission of that crime.

Examples of some properties that can be forfeited:

A. Certain vehicles can be forfeited in a variety of situations or circumstances, which are somehow related to the crime or offense.

B. The amount of money that might be given or taken for some criminal offense like for unlawful dealings of drugs or illegal gambling.

C. Any kind of electronic devices of the suspected persons, which are somehow connected to that particular crime or offense. 

3. Contraband- In simple terms, contraband refers to such property which might be seized by police officers because it’s already a crime to have such things in the first place. These kinds of property include illegal drugs, unlicensed handguns, etc.

  1. Evidence

The police can detain the property, which can help to form the evidence against the accused person.   

Nevada Properties Private Limited Through Its Directors v. The State of Maharashtra And Another

Nevada Properties Private Limited through Its Directors v. The State Of Maharashtra and Another (2019) settled the issue by stating that the word any property under section 102 CrPC does not include immovable property.

Facts of the case

The appeal in the following case arose due to a special leave petition filed by Nevada Properties Pvt Ltd before the Supreme Court of India, on the judgment given by Bombay High Court “in Kishore Shankar Signapurkar v. The State of Maharashtra”, the single judge bench held that the term “any property” coined in the sub-section (1) of Section 102 of CrPC does not include immovable property and hence, the police authority cannot take custody of or seize any immovable property for investigation even if that immovable property reasonably doubtful or found suspicious in between investigation of the crime or offense.

However, the police authority is not barred or prohibited from seizing any documents or papers of title correlated with the immovable property, as the same is different from the seizure of immovable property.

Issues raised 

  • The question before the Hon’ble Supreme Court was, whether immovable property comes under the expression “any property” under Section 102, i.e., Seizure of Code of Criminal Procedure or not?

Judgment

The verdict was pronounced by the three-judge bench comprising the Chief Justice of India Ranjan Gogoi, Justice Sanjiv Khanna, and Justice Deepak Gupta. 

  • Firstly, the Bench analyzed the motive of the legislature behind the enactment of this particular provision. The Court observed that the main intention behind making this provision is to authorize the police authority to seize such property which might be found in such a situation which creates suspicion of the commission of any crime or offense at that place. But in the strict sense, only movable property can be taken into custody or seized, not the immovable one. Although the documents or papers related to the suspicious immovable property can be seized, specifically the immovable property cannot be seized.
  • The Court furthermore stated that as per the concern of seizure or custody of immovable property, Section 145 and 146 of CrPC could come into effect as per the law. However, Section 102 of CrPC is not entitled to authorize or allow the police authority to dispose of a man from his immovable property for the sake of investigation.
  • The Hon’ble Court also examined the expression “situations which might create doubt or suspicion of the commission of any criminal offense”. The Court stated that mere ‘suspicion’ is a wider and weaker term when it comes to justifiable satisfaction, Section 102 of CrPC doesn’t permit or empower the police officers to have the firm opinion and evaluate or adjudicate on the affairs of immovable property. The Court further stated that it couldn’t be forgotten that adjudication is the power of the Court; the function of the police is to investigate any offense. By encompassing the seizure of immovable property under the realm of Section 102 of CrPC, the police will be having the extreme power to seize someone’s immovable property based on their mere presumption. Further, the Court also mentioned that the matter or dispute regarding land, house, etc. comes under the jurisdiction of the civil court, and any such inappropriate attempt to convert a civil matter into a criminal dispute should be discouraged.

The Court took into account the following case laws –

  1. Teesta Atul Setalvad v. The State of Gujarat 

In“Teesta Atul Setalvad v. The State of Gujarat,” the petitioner pleaded that the continued seizure of her bank account by the police authority is not valid as it does not amount to be property and is not related to the crime, so her account should be defreezed. The Court after analyzing the case ruled that the bank account comes under the realm of Section 102 of CrPC and the same would be counted as property and freezing of bank account by police under Section 102 is valid. The Hon’ble Supreme Court, in this case, overruled the judgment of the Bombay High Court in The State of Maharashtra vs.Tapas Neogy where the respective High Court opined that the bank account of an accused does not amount to a property and the same cannot come under the realm of the property so the bank account could not be seized under Section 102.

  1. Binod Kumar v. The State of Bihar  

In the Binod Kumar vs. The State of Bihar case, the plaintiff had filed a case in the civil court due to the unaccomplished construction of the building in the given time. Eventually, the respondent filed a criminal complaint in the civil case for non-payment of the decided amount for constructing that building. The Hon’ble Supreme Court went on to rule that any attempt to convert the civil dispute into a criminal one should be discouraged.

  1. RK Dalmia etc v. Delhi Administration  

In the RK Dalmia etc. vs. Delhi Administration case, the Supreme Court ruled that the expression ‘any property’ in sub-section (1) of Section 102 of CrPC has to be elucidated as per the definition mentioned under the Indian Penal Code 1860, which is not exclusively restricted to movable property. In fact according to the Indian Penal Code 1860, whether the particular property comes under the purview of the particular provision or not, all depends on whether that specific property is subjected to any criminal offense or not.

  1. The State of Gujarat and Others v. Utility Users’ Welfare Association and Others 

In The State of Gujarat and Others v. Utility Users’ Welfare Association and Others case, the Supreme Court of India adjudged that to find whether a case will set a precedent or not, it all depends on the structure of the framed proposition by the Court. The Court should frame the supposed proposition carefully and then insert the word reversing its meaning. If the answer is contrasting, then the case will set a precedent and vice versa. 

The majority judgment of the Supreme Court of India backed the earlier judgment of Bombay High Court and held that in Kishore Shankar Signapurkar v. The State of Maharashtra, the Bombay High Court laid down the law correctly and the judgment of the same High Court in Bombay Science and Research Education Institute v. The State of Maharashtra and Ors did not lay down the law correctly. 

Justice Deepak Gupta, “one of the judges in the panel,” delivered the separate concurring verdict. He clarified that under Section 102 of CrPC, police are authorized to seize any property that might be suspected to have been stolen. Moreover, adding on to this he said that theft or robbery can be done of movable property, not of immovable property. The term ‘seized’ has been taken into use for the actual physical custody of certain property.

He further stated that as per subsection 3 of Section 102 of CrPC, if the property is of such kind that it is tough to transport it to be produced in the court or it is very difficult to provide such accommodation to take custody of that property, then such property can be handed over to anyone on executing a bond. It indicates that the property must be capable of being produced before the Court and also be capable of being kept inside some accommodation. However, this is not possible with immovable property. Furthermore, he added that in the dispute between the landowners and tenants, if the rented property would be seized then it would be a mockery of rental laws.

Justice Deepak Gupta further mentioned that in such circumstances where a person forges a will, “the ‘will’ would be seized, not the willed property”. Because in such a situation the seizure of immovable property will create a chaotic problem.

A short analysis of the case

The Nevada Properties Private Limited through Its Directors v. The State Of Maharashtra And Another is one of the crucial judgments pronounced by the Hon’ble Supreme Court. As the consequences of this verdict might be far-reaching and most importantly this judgment demarcated the power of police officers provided under Section 102 of CrPC.

The verdict pronounced by the Court was completely justified and correct. The Court concurred that the immovable property should not fall under the expression “any property” mentioned in subsection (1) of Section 102 CrPC due to the following reasons:

  • The term ‘seize’ in Section 102 CrPC clearly remarks that the rationale behind this Section is to take physical custody of the property.
  • The immovable property is something that could not be physically seized or taken into custody, it could only be attached or sealed.  
  • As per chapter VIIA of CrPC, the power to annex or seal any immovable property lies with the Court only.
  • According to Section 102, the seizable property is suspected to have been stolen, robbed, etc. but an ‘immovable’ property cannot be stolen.
  • Subsection (3) of Section 102 clearly says that the property must be of such type that could be produced and accommodated before the Court; both these things are impossible with the immovable property.

Thereupon, it can be interpreted from the above contentions that the police officers are not empowered to attach, seal and seize an immovable property.

Law Commission Report

The 154th Law Commission Report presented by the Law Commission of India under the chairmanship of Justice K. Jayachandra Reddy led forward a legal reform on CrPC which also highlighted the need to change in Section 102 of the code.

The right to a speedy trial is protected in the Criminal Procedure of our nation. So, to achieve the same, an amendment was made into Section 102(3) of CrPC and a proviso clause was added to ensure that there shouldn’t be any kind of damage to the property due to the conduct of the Court.

Under Section 102(3) of CrPC, the inclusion of the words like ‘difficulty in proper accommodation or continued retention of property in police custody not considered necessary’, making it easy for the Indian courts to interpret the section with more clarity. 

Comparative analysis along with other countries

For the sake of investigation, sometimes it is necessary to take custody of any suspicious property of an accused, as it is a crucial part of the investigation which might give some clue to the investigating officer and can help him to move forward in the further investigation. Nevertheless, it should also be taken into account that during this phase the rights of the accused person would be least likely to be violated and the authority must take utmost care of this.

Following are the rules and provisions of law associated with the seizure of property in other countries:

  • Canada

Following Section 489 of Canadian Criminal Procedure,1985 the Canadian police officers may seize any property with or without a warrant which they have appropriate grounds to believe that it was procured by or in the commission of the crime that infringes this or any other act of Parliament. Thus, in Canadian Criminal Procedure, there is no such bifurcation between movable and immovable property for the seizure by the police authority, which is contradictory with the Indian Court’s judgment. 

  • US

The seizure of any property in the US comes under the realm of civil forfeiture and criminal forfeiture. In the US, the police authority is empowered to seize not only movable property but also immovable property which might be suspected to be used or engaged with any sort of crime.

  • South Africa

The Criminal Procedure Act, 1977 of South Africa prominently affirms that police may seize anything, provided they provide proof of the commission of the crime in the Republic or elsewhere or provide proof of the fact that the commission of the crime was planned. Furthermore, according to the verdict of the Court of South Africa, it was held that the term seizure not only comprises taking possession of the suspected property but also subsequent detention of the same.

Seizure of bank accounts and money under Section 102 CrPC

The Madhya Pradesh High Court, in the case of Bhimji Ramji Gujrathi v. Emperor (1944), held the seizure of the bank account as legal. In the given case, the police had caught the accused with a certain amount of money in their possession due to certain information that was received regarding an alleged illegal trade. The Court held the seizure of this money to be valid under Section 102 CrPC.

In another judgement, the Supreme Court in the case of State of Maharashtra v. Tapas D. Neogy(1999) held that the police have the power to seize the bank account of an accused under Section 102 CrPC as the term ‘property’ also includes bank accounts within its scope. This observation of the Supreme Court was reiterated even in later judgements. The Supreme Court in the judgement of Teesta Atul Setalvad v. State of Gujarat(2018) placed its reliance on the judgement of Tapas D. Neogy and held that the account of the accused or anyone else who is associated with the said offence can be seized upon suspicion or any link that is directly associated with the said offence. The Court also held that nothing in Section 102 CrPC requires the police to issue a prior notice before such a seizure to the accused and that the application for de-freezing of the account can be made by the accused upon the completion of the investigation.

However, this stance of the Supreme Court has not always remained the same. The Court, in various cases, has also ordered the de-freezing of accounts by holding that a bank account cannot be treated as “property” under Section 102 CrPC. For instance, the Supreme Court in the case of Swaran Sabharwal v. Commissioner of Police (1987) held that in case it is found that the seizure took place on false suspicion, the police authorities will be directed to pay compensation to the accused.

Further, the Gauhati High Court, in the case of Purbanchal Road Service v. State(1990), held that for section 102 CrPC to apply, it is important that an actual seizure take place. The Court went on to explain that “seizure” implies actual possession of property and, therefore, merely putting restrictions on a bank account cannot be termed as a “seizure” within the meaning of Section 102 CrPC. The Court has also strictly held in the case of Jayendra Saraswathy Swamigal (2) v. State of T.N.(2005) that a bank account cannot continue to be seized once the investigation is complete. 

Seizure of oxygen cylinders during COVID-19 : legal or illegal under Section 102 CrPC

The Delhi High Court, in the case of Matrix Cellular (International) Services Ltd. v. State (NCT of Delhi) (2021), addressed the seizure of oxygen cylinders and other medical equipment sold in the black market (sold at high profit margins) during the second wave of the COVID-19 pandemic that witnessed a low demand for oxygen cylinders throughout Delhi NCR. High profile names like Khan Chacha and Dayal Opticals were also named in this case. On the issue of the seizure of the oxygen cylinders by the police being illegal, the Court held that Section 102 CrPC allows the police to seize any property that is under suspicion of being stolen or is found under suspicious circumstances that imply the commission of an offence. The Court, on this basis, held the seizure of oxygen cylinders under Section 102 CrPC as legal since the cylinders were found under suspicious circumstances and the accused were found to be in violation of COVID-19 protocols and lockdown measures.

Suggestions and recommendations

  • As our Hon’ble Supreme Court excluded the seizure of immovable property from the domain of Section 102 of CrPC, it means the police officials will not be able to seize any kind of immovable property by using the power provided under this Section. Our legislature must amend Section 102 of CrPC to clarify that the term any property used in the respective section only talks about the movable property and immovable property will not be counted under the realm of Section 102 of CrPC anymore. This should be done to avoid any sort of confusion in the future and make it easy to interpret.
  • Moreover, snatching complete jurisdiction from police officials regarding the same could be detrimental in some cases. As in certain cases, the immediate seizure of not only of the movable but also of the immovable property is required as sometimes it’s necessary to prevent the evidence from any kind of tampering from the suspected person and it should also be taken care of that the case of prosecution might not hamper due to any kind of tampering with the evidence. So, taking into account such unforeseeable situations, certain provisions should be inserted or amended.
  • Last but not the least, while seizing any immovable property by the police official, the order or permission of the magistrate should be made put forth as mandatory and the magistrate may be empowered to have jurisdiction in such cases and may grant permission depending on the severity of the crime. So, a speedy process can be initiated against the accused or offender in serious crimes and the police might have some authority to take fast action in such circumstances, before any kind of tampering with the evidence and the orders from the magistrate can be taken at an early stage. So, the property could be sealed and taken into custody as early as possible, which may further help the prosecution to prove their facts. 

Conclusion

For many years, in the Indian courts, it was a sizzling topic of debate whether immovable property comes under the realm of Section 102 CrPC or not. With the Nevada properties judgment, the Court ultimately deduced that the immovable property can not be seized under Section 102 CrPC.

The Division Bench explored numerous circumstances in which the immovable property can be seized or taken into custody and how it might harm the various other provisions of the law. The statutes like the Indian Forests Act, 1927 and the Narcotic Drugs and Psychotropic Substance Act, 1985 also have provisions to seize ‘movable property’ by the concerned officers only.

As of now, we all know that Section 102 talks about such properties which might be suspected or alleged to have been stolen or robbed. But this is something that is not possible with the immovable property as it cannot be stolen or robbed.

The verdict of the Apex Court in Nevada Properties Judgement has very well demarcated the expression ‘any property’ in subsection (1) of Section 102 CrPC. The Court’s decision that the immovable property is not incorporated in Section 102 of CrPC, will resolve the various concerns and also protect the rights of an accused person.   

Frequently Asked Questions(FAQs)

Can immovable property be seized under Section 102 CrPC?

As per the judgement of the Supreme Court in the case of Nevada Properties Private Limited through Its Directors v. The State of Maharashtra and Another (2019), immovable property cannot be seized under Section 102 CrPC.

Is it required for the police to serve a notice to the accused before seizing the bank account?

As per the judgement of the Supreme Court in the case of Teesta Atul Setalvad v. State of Gujarat(2018), the police are not required to serve any notice to the accused before seizing the bank account under Section 102 CrPC.

Can the police continue to seize the property even when the investigation is over?

As per the judgement of the Supreme Court in the case of Jayendra Saraswathy Swamigal (2) v. State of T.N.(2005), a bank account cannot continue to be seized once the investigation is complete. 

References

  1. https://www.scconline.com/blog/post/2021/02/20/bank-account/#_ftn23.
  2. https://www.scconline.com/blog/post/tag/section-102-crpc/.
  3. Nevada Properties Private Limited Through Its Directors v. The State of Maharashtra And Another, (2019) SCC Online SC 1247.
  4. Indian Penal Code, 1860
  5. Criminal Procedure Code, 1973
  6. Kishore Shankar Signapurkar v. The State of Maharashtra, 2003 (4) MhLj 938.
  7. M/s. Bombay Science and Research Education Institute v. The State of Maharashtra and Ors., (2008) All M.R. (Crl.) 2133.
  8. Teesta AtulSetalvad v. The State of Gujarat, (2018) 2 SCC 372.
  9. State of Maharashtra v. Tapas D. Neogy, (1999) 7 SCC 685.
  10. Binod Kumar v. The State of Bihar, (2014) 10 SCC 663.
  11. R.K. Dalmia etc. v. Delhi Administration, AIR 1962 SC 1821.
  12. The state of Gujarat and others v. Utility Users’ Welfare Association and Others, (2018) 6 SCC 21.
  13. Canadian Criminal Procedure, § 489.
  14. Indian Forests Act, 1927.
  15. Narcotic Drugs and Psychotropic Substance Act, 1985.
  16. https://www.scconline.com/blog/post/2019/09/24/section-102-crpc-doesnt-empower-police-to-attach-seize-and-seal-an-immovable-property/
  17. https://advocatechenoyceil.com/2020/02/21/can-a-police-officer-seize-any-property-in-the-course-of-an-investigation/
  18. https://www.mondaq.com/india/crime/969562/whether-seizure-of-an-immovable-property-falls-under-the-purview-of-s102-of-the-criminal-procedure-code-when-reference-is-made-to-any-property39
  19. https://core.ac.uk/download/pdf/43166635.pdf
  20. https://lawcommissionofindia.nic.in/101-169/Report154Vol1.pdf

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Why is contract enforcement necessary in international contracts

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This article is written by Pratham Dave. This article has been edited by Ojuswi (Associate, Lawsikho). 

This article has been published by Sneha Mahawar.

Introduction 

In the fast and growing world, there is an increase in cross-border investments and the expansion of organizations or business entities. To expand the business or in cross-border investments in another country, there is a requirement to incorporate international contracts and contract enforcement is the necessary element of legally binding contracts, regardless of the types of contracts, whether there is an international contract or not. Even at the time of the disputes arising between the parties over a term of the contract, a court of law will examine whether the agreement is valid and enforceable or not. In international contracts, contract enforcement legally binds the parties to follow the terms of the agreements. If there is a breach by any party, then the aggrieved party can challenge it in a court of law and claim damages for it.

An effect of weak contract enforcement can lead to many problems, such as difficulty in international trade, harmful investment, restrictions on entrepreneurship, etc.

What are international contracts 

The term “international contract” means a legally binding agreement between two or more parties from different countries, in which they are entitled to do or not to do certain things. Those countries can have different legal systems. [i.e., civil or common law]. International contracts should be written rather than oral in order to be more precise and have simpler dispute resolution mechanisms. These contracts include all features of international trade, although the most commonly used ones are:

  • International sale deed
  • international supply agreement.
  • International services agreement
  • International franchise agreement
  • International distribution agreement
  • International agency agreement
  • international manufacturing agreements, etc.

International contracts are majorly inclined towards international trade, cross-border transactions, etc. Without international contracts, international trade, cross-border investments, and other activities become difficult to manage if disagreements arise between the parties.

The products or services being exchanged across international borders, this kind of commerce enables more market competitiveness and competitive prices. Due to competition, buyers can purchase goods at lower prices. However, in order to prove that a process or transaction occurred between two or more parties, an international contract must be signed or executed by the parties in question. This aids in the hassle-free resolution of disagreements between the parties. 

Essentials of international contracts

There are many terms that should be included in every international contract; a few of them are as follows:

  • Force Majeure Clause: When unavoidable occurrences (such as war, embargoes, significant disasters, etc.) prevent a party from upholding their end of the bargain, this clause helps to end the contract. This clause should be invoked in all international contracts.
  • Governing Law: This clause implies which nations’ laws should apply in the event of a conflict. Contracts and agreements often contain governing law terms, also known as choice of law clauses, which specify the laws that will apply to the transaction in the event of a dispute. They are common provisions included in agreements and transactions involving businesses. It makes sure that there is no ambiguity regarding which laws apply to a contract. Since they can demand that the contract takes into account local legislation, the party proposing the agreement stands to gain the most.
  • The question of jurisdiction can get tricky when disagreements occur between parties to an international transaction. Regarding the location of the courtroom, there are no set rules. Therefore, all international contracts should incorporate a clause identifying the court, region, or panel that will resolve the disagreement. A clause identifying the court, region, or panel that will resolve disagreements should be included in all international contracts. 
  • International contract parties could not communicate in the same language. In such cases, the final agreement may be translated into a number of languages, with the possibility of up to two or three language versions of the same document. Therefore, it is crucial to designate through a language clause which language is the “official” version of the contract. The act of translating will necessarily modify the meaning of some elements of the agreement, even though a proper translation of a contract by a legal expert will make every effort to remain as close to the original as feasible. Without a language clause, there could be problems in the future if a court wants to figure out what the contract means and it’s not clear which version is the official one.

Benefits of international contracts

International agreements are important because various nations have competitive benefits in the manufacturing of specific items. International trade agreements are simple when one country provides a good that another requires; by allowing open commerce of that good, both countries profit. The importing nation obtains access to necessary products, while the producing nation gains access to new consumers. There are a lot of good things about international trade agreements, like more exports, economies of scale, more competition, and the use of a lot of raw materials.

Purpose of international law

Increased interstate participation is what led to the development of international law. Its primary goal is to keep international peace and security among various states. It also helps in:

  • promotion of cordial ties between the member nations (members of the international community, for example, the United Nations),
  • In ensuring fundamental human rights,
  • to resolve global issues through collaboration between nations.
  • The United States should refrain from threatening or using force against the territory of any other state in order to guarantee the people’s right to self-determination,
  • Among its duties is the employment of peaceful means to resolve international issues.

What is contract enforcement

A contract must be complied with in order to be enforced. When two people agree to sign a contract, they must follow the law of contracts and keep their end of the deal.

The Standard Rule for Contract Enforcement says that a certain part must be legally binding:

  • Offer/Acceptance
  • Intention
  • Consideration
  • Capacity

For instance, the 1919 case of Balfour v. Balfour was the foundation for contract law as it gave birth to the purpose behind the creation of the legal reaction theory in contract law. Legal reaction theory means that one lawful act will be responsible for a subsequent legal act taking place. Lord Justice Atkin observed that agreements that are made between a husband and his wife, specifically for personal family relationships, to provide maintenance costs and other related capital, are generally not categorised as contracts because, in general, the parties to the agreement do not intend to enter into an agreement that should be for legal ends. Therefore, a contract cannot be enforceable by nature if the parties to it do not intend to create legal relations with each other.

Why does contract enforcement matter

  • Increase in trade and investment:
    • Many countries report that they would be willing to invest more if they had greater confidence in courts.
  • Economic Development and Sustained Growth:
    • A study found that countries with better court systems have larger and more efficient firms.
  • Improved access to credit

What does contract enforcement measure

The contract enforcement measures include

  • The time and cost of resolving the dispute through a local first instance court;
  • The quality of judicial processes index, which includes a series of good practices in the areas of court structure and proceedings, case management, court automation, and alternate dispute resolution [ADR];

Enforcement of treaties

When it comes to enforcing international law treaties, conventions, and other agreements, it matters if these agreements are automatically legally binding on India or if the government has to ratify them (Article 253 says the government has the power to do this even if the agreement has financial obligations) or if there needs to be enabling legislation.

Article 253: Legislation for giving effect to international agreements

The Honourable Supreme Court of India’s ruling in the important case of Jolly George Varghese and Others vs. Bank of Cochin addressed the issue of whether treaties are immediately binding or whether any specific legislation is required to make them so. The Honourable Supreme Court of India ruled in this matter that “The positive commitment of the State Parties ignites legislative action at home but does not automatically render the covenant as an enforceable part of the corpus juris of India,” in the words of Justice Krishna Iyer.

In general, we can see that domestic laws are supported by international treaties and covenants. Typically, treaties are used to fill in any gaps in domestic law, to interpret the domestic law in cases of ambiguity in the language, to support and justify a decision made in any case involving domestic or international law, to put into effect international conventions, decisions of international conferences, and treaties, covenants, and protocols if they are not in conflict with currently enacted domestic laws, and to satisfy and assist with the goals of domestic and international law.

Conclusion 

All types of agreements, including international contracts, include provisions for contract enforcement. A contract’s validity is ensured through its enforcement. Contracts that are not legally enforceable cannot be enforced in court. As a result, the key component of international contracts is contract enforcement. The parties should confirm whether the contract is enforceable.

References 


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Lawyers and general people with high IQs

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Introduction 

The world knows many intelligent people who helped humanity develop faster, created innovative inventions, and made incredible scientific discoveries. But who has the highest IQ? It turns out that having a high IQ does not guarantee impeccable success in all endeavours. Today we want to talk about people with high intelligence quotient.

Who has the highest IQ of all time?

William Sidis

According to some reports, William Sidis had the highest IQ of all people who lived on our planet – according to some tests, from 200 to 300. He began to show extraordinary abilities in early childhood: he began to speak as early as 4 months, and at 2 spoke and wrote fluently in English and French. At the age of 9, he graduated from high school. He applied for admission to Harvard, but then his application was rejected due to emotional immaturity, but he still became a student at this University at the age of 11. Here, he studied better than his classmates and showed excellent results.

It is believed that his father, a practising psychotherapist, made an outstanding contribution to the upbringing of little Wilm. He developed a program that allowed him to make a child prodigy out of his son.

From an early age, he suffered from excessive public attention, did not like such fame, and was tired of the paparazzi, so after graduating from University, he decided to go into the shadows. He lived all his life under assumed names and worked as an ordinary accountant. As soon as someone saw extraordinary mental abilities in him, he immediately quit and moved to another city. William Sidis died at age 46 from a cerebral hemorrhage alone in a small apartment.

He did not make a great scientific discovery in all his life and died an unhappy man. His life story inspired director Gus Van Sant’s film Good Will Hunting, which is included in the 250 best movies according to IMDB.

Leonardo Da Vinci

Many consider Leonardo da Vinci a genius of his time because his work gave considerable impetus to developing many areas in science and art. Many art historians still cannot unravel the Mono Lisa phenomenon, and designers are studying his drawings of tanks and helicopters. When Leonardo da Vinci lived, there was no IQ test yet, so it was challenging to find the exact indicator. However, scientists have studied his writings and the age at which the most important discoveries were made and believe that his IQ ranged from 180 to 220.

Albert Einstein

Today it is rare to find someone who knows nothing about Albert Einstein. This theoretical physicist created the Theory of Relativity, which turned the attitude toward science in general, and many of his formulas are now taught at school. According to some reports, the IQ of Albert Einstein ranged from 205 to 225.

Albert Einstein did not speak until age 3, so his parents seriously feared the boy’s developmental delay. Still, when he began talking, his vocabulary was like an adult’s. In addition, he did not finish the gymnasium and failed the entrance exams to the University (he entered only the second time). However, this did not prevent him from becoming an outstanding scientist of his time.

Christopher Hirata

Who has the highest IQ? Christopher Hirata has the highest IQ of all scientists alive and working today – 225. At age 13, he became the youngest winner of the 1996 International Physics Olympiad. A year later, he entered the California Institute of Technology without any problems.

At the age of 16, he began an active collaboration with NASA on projects related to the exploration of Mars. At 22, he received his Ph.D. in physics from Princeton and is currently teaching at an institute in Ohio and collaborating with leading scientific companies.

Now that we know there exist individuals with such high IQs, let us have a look at the IQs of some of the well-known lawyers and attorneys across the globe, throughout the history of mankind. 

Lawyers with one of the highest IQs 

Hugo Grotius (1538–1645)

It has been proclaimed that Huig de Groot, best known by the Latinized name Hugo Grotius, was a 17th-century Dutch jurist and scholar. He is known to have an estimated IQ score of 200. Grotius is well-known for his contributions to International Law. He was also titled as the “Father of International Law” by some of the most renowned international theorists. Even today, his contributions on sovereignty, international rights of commerce, and the norms of just war continue to inform theories of the international legal order. 

Moreover,  he was designated as the Attorney General of Holland, Zeeland, and West Friesland in 1607. Additionally, he has been said to be one of the all-time cleverest individuals across the sphere, according to their mind-blowing IQs.

John Quincy Adams (1767-1848)

John Quincy Adams, a former U.S. President and a Harvard graduate, was said to have an IQ of 175. This score was reportedly the highest of all the U.S. Presidents. John studied all across the globe, became well-acquainted with seven languages throughout his lifetime. He was an American statesman, diplomat, lawyer, and diarist who served as the sixth President of the United States (1825-1829).

Interesting fact: John Quincy Adams became a lawyer without even completing his law school. He joins the pantheon of historical figures who were lawyers, including Alexander Hamilton and Abraham Lincoln, both of whom also never attended law school.

Teddy Roosevelt/Theodore Roosevelt Jr. (1858-1919)

Theodore Roosevelt Jr., often referred to as Teddy Roosevelt, who was given the title of “one of the most dynamic Presidents in White House history” by the Constitution Center, was estimated to have an IQ of 153, thus, being one of the smartest Presidents in U.S. history. 

He came from a wealthy New York family and attended Harvard and Columbia Law School, but did not finish his graduation from the latter. Although Roosevelt was an able law student, he often found the law to be irrational. He went to law school but did not complete his graduation as after winning an election he decided to drop out, thus giving the statement- “I intended to be one of the governing class.

Chester Alan Arthur (1829-1886)

Chester Alan Arthur, with an estimated IQ of 152.3, was born in Fairfield, Vermont, to an Irish father and an American mother. He attended Union College in upstate New York, which is where he grew up, too. He then became a lawyer in New York City, where he worked on several high-profile civil rights cases before becoming entangled in politics and taking over the office of President in 1881.

Franklin Delano Roosevelt (1182-1945)

Franklin Delano Roosevelt, also known as FDR, was a U.S. President who stayed on as President for 12 years of his tenure and is said to have had an estimated IQ of 150.5. He was born into the eminent Roosevelt family of Hyde Park, New York. He graduated from both Groton School and Harvard College and later on took off to attend Columbia Law School, which he left after passing the bar exam to practice law in New York City. 

Later, he was assigned as an assistant secretary of the U.S. Navy. He directed the country through the Great Depression and World War II. He became a central figure in world events during the first half of the 20th century.

Abraham Lincoln 

Abraham Lincoln, an American lawyer and the 16th President of the United States, is believed to have an estimated IQ of anywhere between 125-140. He received very little formal schooling and mostly taught himself everything. In other words, most of his education was self-taught. But irrespective of that, he became a lawyer and then President of the U.S. 

Furthermore, he also led the Union in the Civil War and enacted the Emancipation Proclamation to abolish slavery.

IQ ranges and scores 

Below is a list of IQ ranges and scores along with a brief description of typical functioning and other features. The I.Q.’s are demonstrated on a scale with a general population mean of 100 and standard deviation of 15. They refer to scores on adult tests only, by adult norms. The exact cut-offs for the ranges are arbitrary, and it is mandatory to realise that an individual’s functioning may depend on more than I.Q. alone. Further, it is unknown whether an IQ beyond about 140 has any extra weightage.

A point must be taken into consideration that such scores are not very easy to measure. For instance, oftentimes, a low IQ score is hard to calculate using a regular intelligence test; similarly, very high IQ scores are also hard to determine accurately, as several reference measurements are needed to ascertain a score that can be reliable.  Further, it must be noted that usually professional tests, like the Culture Fair Intelligence Test or the Classical Intelligence Test, not only provide a typical IQ score but also have a remark on the IQ range. The table below discerns distinct categories based on the height of your IQ score, meaning one can gain some wisdom from the same.

Tabular representation of IQ ranges and scores 

Retarded 

IQ Scale Remarks Category of population/Name of the individual / Name of the individual   Modal IQ
<20Profound retardationNot available 
20-34Severe retardationNot available 
35-49Moderately retarded Australopithecus — when evolving into humans45
50-69Mildly retarded Homo habilis — the first tool-makersEarly Homo erectus — the first real humans, using spoken wordsLater Homo erectus — after having mastered the fireArchaic Homo sapiens” — including Pre-Neanderthals50
55


60

65

Below average 

IQ Scale Remarks Category of population/Name of the individual  Modal IQ
70-79Borderline retardedEarly Homo sapiens— non-Cro-Magnon70
80-89Borderline averageCurrent world population85

Average

IQ Scale Remarks Category of population/Name of the individual  Modal IQ
90-99AveragePopulations of industrial, technological societies90 and higher 
100-109AverageMost intelligent current populations105

Above average 

IQ Scale Remarks Category of population/Name of the individual  Modal IQ
110-119Above average Homo pacificus — the future new species, wherein violent crime is virtually absent115
120-129Above averageBruno Mars123
130-139Gifted Arnold Schwarzenegger135

Intelligent 

IQ Scale Remarks Category of population/Name of the individual  Modal IQ
140-149IntelligentWarren Buffet140
150-159Highly intelligent Will Smith157
160-169Very highly intelligent Albert Einstein 160
170-179Pervasively intelligentImmanuel Kant175
180…Exceptionally intelligent Nikolas Tesla189

Description of the IQ ranges and scores 

Retarded 

Individuals whose IQ falls between less than 20 and up to 69 come into this category. Profound and severe retardation are the causes of brain damage caused either during pregnancy, during birth, or in the budding years, and these deformities are not genetic or inheritable. The bifurcation for the same is as under:

Profound retardation (lower than 20)

Usually, individuals who have an IQ below 20 are multi-handicapped have evident physical deformities, and have short life expectancies. Such individuals are very much dependent on others. 

Severely retarded (20-34)

For individuals whose IQ scale ranges anywhere from 20 to 34 (termed as severely retarded), primary intellectual tasks, including language, are tough to comprehend. 

Moderately retarded (35-49)

Individuals with an IQ ranging from 35-49 (termed as moderately retarded), may learn easy life skills and also be employed, provided certain education is provided to them. 

Interesting fact: The most intelligent non-human animals, like crows, chimpanzees, parrots, dolphins, etc., fall under this IQ range. 

Mildly retarded (50-69)

Individuals who fall under the IQ range of 50-69 (termed as mildly retarded), can usually figure out how to take care of themselves, be employed in normal jobs, provided supervision is provided. This retardation can largely be genetic and inherited. 

Below average 

Borderline retarded (70-79)

Individuals who fall under the IQ range of 70-79 (termed as borderline retarded), have limited trainability. They may face issues with daily tasks; the instances, inter alia, may comprise:

  1. Using a phone book,
  2. Reading schedules related to buses or trains,
  3. Banking and performing tasks related to banking,
  4. Filling forms,
  5. Using electronic appliances like a video recorder, oven, computer, etc.

Thus, they may require aid in managing their day-to-day affairs and may be employed for simple tasks but need supervision. 

Below average (80-89)

Individuals who fall under the IQ range of 70-79 come under the category of below average, and such persons are above the threshold of usual independent functioning. 

Interesting fact: This IQ range has the most involvement in violence, i.e., most of the violent crimes are perpetrated by males who fall in this range. However, this does not explicitly imply that all males in this range are violent, or that all violent males fall in this range. 

Average 

Average (90-99)

Individuals who have an IQ of 90-99 have the ability to learn to trade in a hands-on manner and carry out chores that involve decision-making The instances of such individuals can be as under:

  1. Craftsman,
  2. A salesperson
  3. A clerk.

A point should be taken into consideration that theoretical knowledge can be acquired from this range upward. 

Average (100-109)

Individuals who have an IQ of 100-109 have the ability to learn written materials. Further, they can also be employed in senior positions. 

Above average 

Above average (110-119)

Individuals who have an IQ of 110-119 have the ability to learn in the ‘college’ format; for instance, such individuals may have a bachelor’s degree and could be one of the below, amongst others:

  1. Manager,
  2. Teacher,
  3. Accountant.

Interesting fact: Such individuals possess the capability of taking high-range IQ tests.

Above average (120-129)

Individuals who have an IQ of 120-129 have the proficiency to compile and deduce information by themselves. The instances of such individuals include:

  1. Attorney,
  2. Chemist,
  3. Executives of companies. 

Intelligent

Gifted (130-139)

Individuals who have an IQ of 130-139 possess the capacity to write a legible piece of text like an article or a modest novel. 

Intelligent (140-149)

Individuals who have an IQ of 140-149 have the capability to have analytical conversations and do scientific work.

Above this range, very few individuals achieve such high scores. The range for such high scores is as below: 

Highly intelligent (150-159)

Only one in four individuals can score an IQ of 150 or higher. 

Very highly intelligent (160-169)

Only one in ten individuals can score an IQ of 160 or higher. 

Pervasively intelligent (170-179)

Only one in hundred individuals can score an IQ of 170 or higher. 

Exceptionally intelligent (180-185)

There are very few intelligent individuals living who score in this range. About one in every thousand high-range individuals scores an IQ of 180 or higher. 

Now that we have studied the scores and ranges of IQs along with obtaining information on some of the top lawyers with the top range of IQs, a few questions may arise as to, “What is the most current average IQ of a lawyer?” and “What is the minimum IQ to become a lawyer?” 

So, let’s have a look at what the role of IQ is in the day-to-day life of individuals who are lawyers now.

Lawyers and their relationship to IQ

What is the current average IQ of a lawyer? 

As per an article, a lawyer’s IQ ranges somewhere between 114 (50th percentile), others may have a score of 109 (25th percentile) and some others 124 (75th percentile). However, the IQs are just one marker to determine the success rate and their capabilities in their work.. 

Further, one must understand that individuals who have an IQ of over 100 can just do anything they wish to. Additionally, in the case of attorneys, lawyers, and legal professionals, there are a fair number of individuals with an IQ score of less than 100. 

Do you need a high IQ if you want to be a lawyer?

In today’s world, there are some careers that demand that the professionals not only have to complete the day-to-day tasks, but also be able to analyse distinct cases and think outside the box and come up with result-oriented techniques that aid in the growth of the company. This is exactly where Intelligence Quotient or IQ comes into play.

It is not a fact unknown that lawyers’ average IQ is relatively higher in comparison to other professionals. This statement is true as lawyers, we have to study and remember a large bulk of information, utilise analytical skills as well as develop an abstract thinking to present a specific case, which increases the chances of having a higher Intelligence Quotient than that of most professionals. 

To become a successful lawyer/attorney, it is pertinent to note that this job will require utmost commitment, dedication, and even hard work to ace in such a challenging field. 

There will be several options to choose from in and after law school, namely:

  1.  tax lawyer, 
  2. corporate lawyer, 
  3. family lawyer,
  4. criminal lawyer, etc.

and one needs to have an above-average IQ level to be a successful attorney/lawyer in the field of interest. However, on the other hand, with no accurate estimation about what kind of intellect is most beneficial for attorneys/lawyers, it is difficult to deduce which ones are cut out for this legal profession.

Does an IQ of 100 suffice to become a lawyer? 

It is important to consider the fact that intelligence and memory are two distinct concepts and have nothing to do with each other. They are oftentimes conflated, but the reality is that they are entirely dissimilar. 

Academic achievements need sharp memory skills and not an average or above average IQ quotient. In other words, an individual with an IQ of 100 or less may or may not excel, thus,  solely depending on the efforts and amount of dedication he/she puts into attaining it. 

What is the average IQ to become a successful attorney/lawyer?

As stated above, success not only depends on the IQ range one has scored but also on the amount of hard work and dedication one puts into attaining that goal. 

However, it is believed that, typically, a good lawyer will be from the best law school, score well in the LSAT or CLAT (or whichever entrance exam one chooses to take), and also graduate at the top of the class. It is also said that getting into a top law school places an individual in the top 5% of their IQ range, meaning the IQ range is between 130-140. 

But to sum it all up, a good lawyer must have proper argumentative skills, be outgoing, have a hawk-eyed vision, and be smart enough to tackle every case thrown in his way. 

Do you have to be really smart to be a lawyer?

The answer may vary from person to person, however, to become a lawyer, an intensive as well as an extensive education and learning is mandated. Even though there are several self-taught attorneys and lawyers who have passed the bar (check the aforementioned paragraphs, for reference- John Quincy Adams), the majority of them did it in the traditional manner by going and finishing off their education in law schools. 

So the answer to this question, in my opinion, is, yes, lawyers need to be smart and intelligent enough to become successful, but it also depends on the amount of dedication one puts into it. In short, simply being intelligent and not utilising your wit will not aid in achieving success as a lawyer. 

Recent reports on the average IQ and a gradual shift towards average intelligence among lawyers: an overview

A recent analysis states that some lawyers have an IQ of approximately 114 (in the 50th percentile), some 109 (in the 25th percentile), and some 124 (in the 75th percentile). Interestingly, there are also a reasonable number of lawyers who have IQs below 100. This really indicates that IQ is just one marker to determine someone’s capabilities in their work.

Yet, as per research, lawyers’ IQs are oftentimes classified above most occupations – with an average of 130 – similar to doctors, surgeons, and engineers. Even though the accuracy of these findings remains in dispute (considering the different methodologies applied), this shows that being a lawyer is a career that demands a high level of academic intelligence. 

Words of motivation 

Aim to be the best, not just the smartest!

When it is becoming common for lawyers to have varying IQ scores, ranging from the average 108 to a high 130 score, it should be considered that an individual does not necessarily ‘attain’ a certain range of IQ score to become a lawyer, let alone a successful one! Being the brainiest in your class or having the highest IQ might easily make you a genius, but, if you do not possess the necessary communication, research, teamwork, and people skills to succeed within the legal profession, you will still be far from being the ‘best lawyer’ in town.

However, do not get disheartened with the aforementioned words, it is never too late to choose a career path and to take the necessary actions to build up skills that will help accelerate your career path. This route may not be as facile as ABC, but so is the case with other fields. It won’t be easy, but it will definitely be worth it. All the best! 

Conclusion

As you can see, each person with a high IQ manages their life differently. Someone devotes all his energy to the development of science, while others are trying to bury the talent. The problem is that this is an innate talent, that is extremely difficult to develop artificially, but if you succeed, then it is not a fact that your child will be happy.

From the aforementioned passages, it can be deduced that it is not important to have the highest range of IQ to become successful, neither in life, nor in the field of law. While IQ may play a role in success to a certain extent, it is the dedication, hard work, and brushing up of requisite skills required to attain success in the field of law an individual chooses to set their career path in! 

Interesting Frequently Asked Questions (FAQs)

Can IQ be increased with age?

Usually, IQ tests are adjusted as per the age of the test-taker and the IQ tests give out the same answer to a very substantial extent, even after a period of a year. The older you are, the more stable your test score will be. The most volatility in IQ scores is in childhood, mostly in adolescence. So, yes, IQ can change over time, as stated by Richard Nisbett, Professor of Psychology at the University of Michigan. 

Do lawyers’ high IQs (intelligence quotients) compensate for a low EQ (emotional quotient) or EI (emotional intelligence)? 

It is not necessary. However, studies have shown that while attorneys do score high in intelligence, they generally score below average in emotional intelligence. 

What type of individual can become a lawyer? 

An individual who has the following skills, inter alia, can become a good lawyer:

  1. Trustworthiness,
  2. Listening skills, 
  3. Emotional awareness, 
  4. Diplomacy, 
  5. Excellent judgement, 
  6. Managerial skills, and 
  7. Other human relations capabilities 

Does your LSAT (Law School Admission Test) score correlate with IQ?

The LSAT is not a test for determining your IQ range. As opposed to popular belief, the LSAT score does not measure your intelligence quotient. Thus, the LSAT does not render those with higher scores smarter than those with lower scores.

What are Elon Musk’s and Stephen Hawking’s IQ levels?

Professor Stephen Hawking is said to have the same IQ score of 160 as Albert Einstein. Whereas, for Elon Musk, there are no official records on the same, his IQ is estimated to be 155. The same has been inferred by the experts on his ability to grasp and apply complex technical data, his early aptitude tests, and how he utilises his skills and expertise to drive innovation in complex industries. 

How could I increase my IQ?

There are several experts who claim that IQ may or may not be increased, however, below are some methods an individual can try to boost their intelligence: 

  1. Have regular workouts,
  2. Get proper sleep,
  3. Practice meditation,
  4. Have some caffeine or green tea,
  5. Consume foodstuffs that are rich in nutrients,
  6. Play an instrument,
  7. Read books.  

References 


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What is a small and medium exchange and which companies are listed on it

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This article has been written by Debojit Das.

It has been published by Rachit Garg.

Introduction

Stock market investing offers a wide scope of choices. It offers a bigger number of conceivable outcomes than trading shares in the secondary market. There is a wide range of choices accessible, aside from the notable stock exchanges- that are, trading shares of listed companies. There is the Initial Public Offer (IPO) or primary market, the segment of derivatives and as of late the most recent Small Medium Enterprises (SME) exchange. For sure and confident investors, who are searching for fresher and more beneficial choices, the SME exchange can end up being a predominant stage. In this article, we survey and review the SME Stock Exchange in India, the requirement for an SME Exchange, the system for trading on SME Exchange and significant trading rules and guidelines. 

Small and medium enterprises’ features

Companies typically list their shares in the primary market on the exchange through an Initial Public Offer (IPO). This generally incorporates enormous corporate or big companies. Nevertheless, a few small and medium ventures have a limit with respect to giving better or superior returns for investors. Further, certain investors who have prevalent information on surveying the risk of an SME are likewise keen on putting resources or investing in SMEs that match their risk craving. To coordinate such investors with investors, both National Stock Exchange (NSE) and Bombay Stock Exchange (BSE) have made separate SME stock exchanges in India. The BSE alludes to its SME exchange, while the NSE exchange is termed ‘Emerge’. 

What is a SME exchange

Have you at any point pondered about putting investments into new companies or start-ups, all the more explicitly a stock that will give you manifold returns? Here, we are not looking at putting investments to private-equity funds or venture capital, which by and large put investments into some beginning phase organizations or rather one, may say early-stage companies out of the conviction that one of them will give dynamic returns. All things being equal, our attention is on organizations that are recorded or listed in a SME Exchange.

An organization needs to meet a few standards or criteria set by the Securities and Exchange Board of India (SEBI) to get its shares listed on a customary exchange or say on a regular stock exchange. These incorporate having an operating profit of Rs 15 crores over the most recent three years, the base or the minimum post-issue market capital of at least Rs 25 crores, and so on. Be that as it may, throughout some stretch of time, the need to permit significantly smaller/early-stage organizations to fund-raise from general society or the public through the capital market was felt. Subsequently, such organizations, alluded to as SMEs (small and medium enterprises) were permitted to bring capital up in a different trading platform, wherein the entry hindrances would be lower. This exchange or trading platform is called an SME exchange.

Oddly, it’s not anything but a different trade like the BSE or NSE. All things considered, it is a different trading platform from the main stock exchange, where the shares of SMEs are exchanged. Along these lines, the name, SME trade, is somewhat deceptive.

Since the BSE and NSE operate SME trades (called BSE SME and NSE Emerge, separately), investors who can transact stocks in customary or regular exchanges can consequently buy shares in SME exchanges.

Chapter XB of the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations defined the term SME Exchange as a trading platform of a recognised stock exchange or a dedicated exchange allowed by SEBI to list the securities issued in accordance with Chapter XA of SEBI (ICDR) Regulations and this separates the Main Board (which is, in turn, is defined as a recognised stock exchange that has nationwide terminals of trading, other than SME exchange).

The Indian Small and Medium Enterprises (SME) area has continually gone about as the shield for the Indian economy by giving it adaptability to forestall worldwide financial shocks and afflictions. It has arisen as a profoundly energetic and dynamic area of the Indian economy throughout the last five decades.

SMEs not just assume a vital part in giving huge work openings at relatively lower capital expense than enormous ventures yet additionally help in the industrialization of rural regions. The Indian MSME area is the foundation of the national economic structure as the Sector comprises 36 million units and starting today, it gives work to a worth mentioning of 80 million people. The Sector, in more than 6,000 items, contributes around 8% to GDP besides  45% to the complete manufacturing output and 40% to the exports from the country.

The Micro, Small, and Medium Enterprises Development (MSMED) Act, 2006 was accommodated for working with the advancement and improvement along with upgrading the gravity concerning competitiveness of MSMEs (normally alluded to as SMEs) and for the connected issues. Considering the job of SMEs in country-building and their potential as far as producing business and employment is just as encouraging development and venture, it was basic and prudential that a fundamentally empowering climate ought to be accommodated for these enterprises to thrive.

The Prime Minister’s Task Force (Jan. 2010) had suggested the setting up of a devoted Stock Exchange/Platform for SMEs. SEBI has additionally set out the guidelines for the administration of SME Platform. To this drive, the Bombay Stock Exchange and the National Stock Exchange have set up the BSE SME Platform and EMERGE individually. The Stock Exchanges are consistently running after making the stage generally reasonable for organizations to turn out to be huge from little by raising funds from the Capital Market.

Requirements of listing for SMEs

On the accounts of normal stock exchanges, there are huge numbers of companies listed. Nonetheless, the quantity of listings on the SME exchange is restricted because awareness is just expanding. Besides, the SME stock exchanges have limitations in entry, for example, positive net worth and cash flow for two years before the procedure of listing. Moreover, organizations, which had once applied for winding up or restructuring, are not admissible to list on the exchange. These limitations assist with shielding investors from extra risk and guarantee that listed SMEs are authentic.

Trading in SME stock exchanges

Trading on the SME Stock Exchanges is practically similar to trading on the BSE or NSE. It does not require any methodology. Some trading rules are nevertheless different. The SME exchange has a bigger size than a typical lot size – the least number of shares one can buy or sell in every transaction. One is not allowed to trade sums lower than rupees one lakh. Likewise, the lot size fluctuates as per the price of the stocks. For example, on the NSE Emerge, in the event that the stock price is found to be lower than Rs 14, then the lot size is 10,000. Nevertheless, in the event that the sock price is seen between Rs 120-Rs150, then the lot size is found to tumble to 1000. 

Likewise, shares in the SME trade can be traded either in the continuous market or in the call auction market. Like the typical money section or the normal cash segment, these shares fall into classifications like the ‘block trading window’, ‘rolling settlements’, ‘odd lot trading’ etc. Moreover, one can put both markets as well as limit orders very much like an ordinary trade. These can be cancelled and customised until the order is processed. When settled, the shares will be conveyed in T+2 days (transaction day +2 working days).

Benefits of listing on SME exchanges

There is no denying that SMEs assume an important part in the development of the economy both, as a contributor to the national income as well as job creators. This has been perceived by the economies across the world prompting the development of SME exchanges in different developed and developing economies. Listing on SME exchanges enjoys the following key benefits:-

  1. The first and foremost thing is that it gives admittance to capital by equity infusion which is an immediate development driver. The money raised is the company’s own and the company is at complete freedom to use it for any reason like diversification, expansion, procurement, acquisition or even advance or loan reimbursement, all of which prompts a good overall healthy balance sheet. These companies are well-positioned to raise capital in other ways when listed, including qualified institutional placements (QIP), preferential issues, right issues, and other global fundraising instruments, such as Foreign Currency Convertible Bonds (FCCBs), Global Depository Receipts (GDRs) and American Depository Receipts (ADRs). Financial Institutions and banks also like to extend finance to listed companies rather than against unlisted ones.
  2. Secondly, it at the same time gives a helpful exit route to stock option holding employees, private equity investors and other investors by giving liquidity to these shareholders and value maximization. Liquidity in shares additionally empowers the existing shareholders to trade in their own shares prompting better      valuation than through private transactions.
  3. Thirdly, a significant change directed by listing is great for administration or in common parlance to be said as good governance. Benefits gathered at the time of listing are immensely helpful as the organizations set them up for this occasion and furthermore over the lifetime of the organization. Governance and regulatory supervision controls as normal compliances become a piece of the organization’s everyday presence. Ideal revelation and proper disclosure of material data and information not only encourage further developed governance but also safeguards investors’ interest. 
  4. Fourthly, listing on an SME Exchange upgrades the distinguished character of these organizations, which would in some      way or the other be missing because of next to zero openness. As a listed entity, these organizations currently have a genuine platform to feature themselves, assisting them with managing their rivals and at the same time getting the chance to market themselves, resulting in setting out open doors for business. Listing prompts upgraded public awareness because of media inclusion and freely accessible data; thus concludes further credibility of these enterprises.
  5. Fifthly, the listed securities’ sale draws in short-term capital gains tax of just 15% and long-term capital gains of only 10%, making it tax proficient too, as against the sale of shares of a company which is not listed, which draws in the assessment of tax of 30%. Short-term capital gains and 20% long-term capital gains. 
  6. In conclusion, a striking component of listing on an SME Exchange is the benefits of flawlessly relocating to the main board i.e. the BSE or NSE. Assuming the paid-up capital of the organization surpasses Rs 10 crores and is up to Rs 25 crores, an organization might migrate to the main board.

Other benefits 

The federal government of India has initiated a range of schemes and measures to permit MSMEs for easier admittance to funds, to modernize the sector and make it more cut-throat in the worldwide market.

These contain schemes ensuring the quality of products, especially those intended for exports, technology up-gradation, incubation, credit-linked capital subsidy and UID-related schemes which make possible the ease of receiving a subsidy.

Some of the other concessions obtainable to the MSMEs are scheduled below:

  1. 50 percent subsidy on patent registration;
  2. Collateral-free loans from banks;
  3. Eligible for industrial promotion subsidy;
  4. 1 percent exemption on the interest rate on overdraft;
  5. Protection against delayed payments; 
  6. Concession on power utility bills;
  7. Reimbursement of ISO certification charges.

Benefits of tax for SMEs

Other than different advantages, both BSE and NSE SME Exchange additionally offer Tax Benefits to the SMEs getting recorded on their SME Platforms. The tax benefits of SME listing are listed below:

Capital gain tax applies when short-term unlisted shares are sold for up to 30%, whereas long-term capital gains are 10% without indexation and 20% with indexation.

However, when listed securities are sold in the short term then the capital gain tax of 15% is attracted. Moreover, there is no long-term capital gain tax provided it has been under the purview of Securities Transaction Tax (STT). This makes it apparent that the listing of shares on SMEs is very attractive.

Capital Gain TaxListedUnlisted
Long Term Capital Gain TaxNIL20%
Short Term Capital Gain Tax15%30%

After China, India’s Micro, Small and Medium Enterprises (MSMEs) base is the biggest in the world. The sector is engaged in the manufacturing of over 6000 products and provides a wide range of services – ranging from traditional to hi-tech items. To attract greater Foreign Direct Investment (FDI) along with the Government of India’s “Make in India” initiative, the Indian MSME sector is pondered for rapid growth and coordination with major global value chains.

As per the official records, there are about 63.05 million micro industries, 0.33 million small and near about 5000 medium enterprises in the country. The State of Uttar Pradesh with a share of 14.20 percent of the total MSMEs stands out to have the largest number of estimated MSMEs. With a share of 14 percent, West Bengal comes as close to second place, followed by Maharashtra and Tamil Nadu with a share of eight percent.

The propagation of COVID-19 in India followed by the consequent lockdown has tormented national economic growth and financial pressure was put on businesses. To categorize MSMEs, the government has announced changes to the way it will make it happen in light of this.

Liquidity factor in SME exchange

Some alertness ought to be practised while trading on the SME exchanges in India. As a matter of first importance, investors should know that the risk factor is very high during the procedure of investing in small and medium-sized companies. While they are suitable for giving truly extraordinary returns they also have a higher than normal likelihood of being impacted. Henceforth, it is important to be well informed and       research well. Likewise, liquidity is lower in the exchanges of SMEs, when compared with the regular exchange. A few orders may not track down a matching buyer or seller immediately. Hence it is significant for investors in the SME stock exchange to do their well-researched homework or background check before investing.

How do you qualify as MSME in India

Based on investment and turnover, the definition of who qualifies as a micro, small and medium-sized enterprise (MSME) in India has changed. On May 13, 2020, when Finance Minister Nirmala Sitharaman announced the first tranche named COVID-19 special economic package, Atmanirbhar Bharat Abhiyan or Self-Reliant India, the new definition of micro, small and medium-sized enterprise (MSME) was deemed to be applicable for both manufacturing and services MSMEs in India. The new definition stretches the types of businesses that can now take the benefits of the MSME status and enjoy the related benefits.

MSME-India-Classification-May-2020
(Image: Graphic Asia Briefing Ltd)

Revision to definition announced on May 13, 2020

  1. Organizations with investments up to INR 10 million (US$132,521) and turnover up to INR 50 million (US$662,715) are defined as micro units
  2. Organizations with investments up to INR 100 million (US$1.3 million), and turnover up to INR 500 million (US$6.62 million) are defined as small units
  3. Organizations can be eligible as medium-sized units if they have investments up to INR 200 million (US$2.6 million), and turnover up to INR 1 billion (US$13.24 million). 

NSE emerge versus BSE SME

Obviously, the qualification model, rather to say the eligibility criterion for BSE SME was loose when contrasted with NSE Emerge. Organizations which couldn’t conform to the NSE eligibility norms prefer listing on the BSE SME Platform. As of late, however, the BSE SME amended and redesigned its eligibility models, aligning them more with that of NSE Emerge. The current and updated standards and norms for the BSE SME listing are mentioned below:-

Incorporation

The Company shall be incorporated under the Companies Act, 1956.

Financials

  • Post Issue Paid up Capital

The post issue paid up capital of the company (face value) shall not be more than Rs. 25 crores.

  • Net-worth

Positive Net-worth

  • Tangible Assets

Net Tangible Assets should be Rs 1.5 Crore.

Track Record

The company or the partnership/proprietorship/LLP Firm or the firm which has been converted into the company should have a combined track record of at least 3 years.

Or

In case it has not completed its operation for three years then the company/partnership/proprietorship/LLP should have been funded by Banks or financial institutions or Central or state government or the group company should be listed for at least two years either on the main board or SME board of the Exchange.

The company or the firm or the firm which has been converted into the company should have combined positive cash accruals (earnings before depreciation and tax) in any of the years out of the last three years and its net worth should be positive.


Other Requirements

  1. It is mandatory for a company to have a website.
  2. It is mandatory for the company to facilitate trading in demat securities and enter into an agreement with both depositories.
  3. There should not be any change in the promoters of the company in the preceding one year from the date of filing the application to BSE for listing under the SME segment.


Disclosures

A certificate from the applicant company/promoting companies stating the following:


a) “The Company has not been referred to the Board for Industrial and Financial Reconstruction (BIFR).”

Note: Cases, where the company is out of BIFR, are allowed.

b) There is no winding up petition against the company, which has been admitted by the court or a liquidator has not been appointed.

The new listing criteria are viable from July 12, 2018. While the goal behind the amendment is to work with the listing of development-oriented companies by making the distinguished system more rigid, the changing standards may perhaps prompt a lack of companies trying to list on the SME platforms.

Comparison of listing and compliance norms of SME exchanges with main board listing

S.N.ParticularSMEMain Board
1EligibilityMinimum Post Issue Paid up capital – Rs. 3 crores.
Minimum Post Issue Paid up capital – Rs. 10 crores
2Track Record of Distribution Profits

There must be distributable profits in 2 out of immediately preceding 3 years, OR
Net worth shall be Rs. 5 crores.



There must be profit in last year and also distributable profits in 3 out of immediately preceding 5 years.
3Underwriting100% underwritten issues. Merchant bankers are required to underwrite up to 15% on their own account.

Not Mandatory (Under 50% compulsory subscription to QIBs)
4Market MakingMerchant bankers are required to undertake market making for a period of 3 years.

Not Mandatory
5Timeline3-4 Months8-10  Months
6Need For SEBI Approval
SEBI approval is not required.
SEBI approval for DRPH is a preliminary condition for IPO.
7IPO Application Size
Rs.1,00,000/-Rs.5000 – Rs.7000
8IPO Timeframe3 to 4 months6 months onwards
9Reporting Requirements
Half yearlyQuarterly

Challenges faced by start-ups while listing on SME exchanges

The difficulties in the form of challenges faced by start-ups while listing on SME Exchanges might be ascribed to the battles of being a start-up itself. A log-jam in the growth and development of SMEs will consequently affect the popularity of an SME listing as a mainstay of fundraising. With numerous obstructions in their development, listing alone can’t guarantee a positive outcome. In addition, the shortfall of any advantage or incentive because of listing regularly neglects to motivate the start-ups to list. A large number of these start-ups often miss the mark on experience and technological capabilities to cruise through the entire listing process. These shortcomings are additionally extended because of the absence of human resources, readiness, non-compliances and an overall absence of awareness among the youthful business visionaries about the listing process. Restricted information on the stock markets and listing method is a significant hindrance for these start-ups who customarily have just relied upon banks for raising capital.

Regardless of measures set up by the regulator, the result is a long way from good. Most start-ups see the casual listing standards to be no less troublesome than listing on the main board and would prefer to stand by a couple of more years and get listed on the main board itself. The exclusions or exemptions accessible to the companies listed on the SME Exchanges might be minuscule and the feeling of dread towards punishments and penalties by virtue of non-compliance could make these companies less entrusted about listing.

Limited time programs or promotional programmes by the stock exchanges to build awareness among these start-ups could go quite far to conquer a significant number of the difficulties talked about above. Furthermore, stock exchanges need to advertise the SME platform as an item or product. This should be possible through appropriate advertisement, both on paper as well as through web-based gateways. At present, there is less media inclusion of SME issues when contrasted with the main board issuances. Scripts of the SME Exchanges usually don’t occupy space on numerous capital market sites. Giving motivating forces like incentives for listing may likewise help the development of these exchanges. 

The ideal method for advancing the SME Exchange is not simply by making awareness among the investors or by eliminating the listing hindrances but by making an information-related ecosystem for these new start-ups. The stock exchanges could enjoy interactive sessions with these companies which could assist with lessening obstacles and give a true impulse to the SME development story.

Regardless of the Micro, Small and Medium Enterprise (MSME) sector perseveringly going about as the rampart for the Indian Economic structure, MSMEs keep on lacking admittance to ideal and sufficient money as finance at a sensible expense, which is fundamental for its development. Reserve Bank of India through its Expert Committee Report (2019) had assessed that the overall credit gap in the MSME area or sector presently remains in the range of Rs 20-25 trillion. To connect this, SMEs have been raising funds by publicly listing their equity on stock exchanges devoted to SMEs.

SEBI ( Issue of Capital and Disclosure Requirements) Regulations, 2018, licenses an entity to make an IPO on devoted SME Exchanges on the offset chance that it’s post-issue paid-up capital is less than or equivalent to Rs 10 crores. In addition, an entity with a post-issue paid-up capital above Rs 10 crores yet underneath Rs 25 crores has the choice to list on the main board or the SME Exchange. This additionally implies that the admittance to SME Exchanges isn’t simply restricted to entities defined as MSMEs under the MSME Act, 2006, according to which the investment in the plant and machinery cannot surpass Rs 10 crores for an entity to be distinguished as an MSME. The companies which are listed on the SME Exchanges are allowed to move to the main board once they fulfil the listing requirements of the main board. Also, in the event that their post-issue paid-up capital surpasses Rs 25 crores, main board listing becomes obligatory.

Buzz behind SME listing

The World over, nations with complex and developing capital markets have exchanges committed to raising or better to say emerging companies: SGX-Catalist in Singapore, AIM in the UK, MOTHERS in Japan, TSX-Ventures in Canada and ChiNext in China. In India, previously we had the erstwhile OTCEI and INDONEXT as SME committed stock exchanges. In the year 2010, The Prime Minister’s Task Force suggested setting up a devoted stock exchange for SMEs, which was tried      by SEBI and at last, allowed the existing stock exchanges to set up SME explicit trading platforms having cross-country terminals.

In India, presently, two main exchanges (BSE and NSE) have devoted exchanges for SMEs. BSE, being the first to have an SME platform in the year 2012, currently has 310 companies listed on its ‘BSE-SME’. Of these, 71 companies have successfully exercised the option to move from BSE-SME to its main board. NSE emulated BSE’s example and laid out ‘Arise’ which has over 180 SMEs. Out of these, 22 companies have moved from EMERGE to NSE’s main board.

As of late, SME Exchanges have been humming or buzzing with activities in correlation with the main board. In the financial year 2018 and 2019, a total of 261 SMEs were listed, out of which 123 were listed on the main boards of BSE and NSE (IPOs, FPOs and OFS (SE)). As far as the market capitalization is concerned, the SMEs have had the option to raise Rs 6090 crores from the market starting around 2012 till September 30, 2019 (this incorporates IPOs and FPOs), with Rs 2255 crores and Rs 1620 crores having been raised in the financial year 2018 and 2019 separately alone. Nearer to the present time, out of five IPOs that hit the market on September 30, 2019, three are SME IPOs.

Ascend in listing

On one hand, obviously, SME listings have expanded manifold over the most recent couple of years. This can be generally ascribed to the straightforwardness, ease and advantages of SME listings. For example, the least allotted members required is 50 for SME listings, rather than 1000 imminent allotted members as mandated for the main board listing. This lower edge helps the IPO-bound SME to have a focused marketing approach and results in lower costs. Dissimilar to main board listings, the offer documents for the IPO-bound SME are verified by the exchange rather than by the securities market regulator, SEBI.

The long-term and short-term capital gains tax is easily pulled in for the sale of securities listed on SME exchanges and is significantly lower than the tax rate applicable for the sale of unlisted securities. Further, corporate governance norms under the LODR      Regulations, track record, alternate valuation methods and financial reporting requirements are additionally more relaxed for SME listings.

Creating awareness

On the other hand, while the public listing offers a horde of advantages to SMEs and their partners, SMEs have historically been shy of listing because of increased disclosure requirements and compliance loads when contrasted with unlisted companies. For example, Regulation 15(2) of the LODR Regulations furnishes relaxation in terms of compliance with certain corporate governance norms laid therein, for SME listings. The Companies Act, 2013 still applies to listed SMEs even with these relaxations. Hence, it becomes fundamental to sharpen the promoters of SMEs of the long-term sustainable growth advantages of SME listings and how a listing can help in the development of SMEs. 

MSME has unremittingly gone about as the sentinel for the Indian economy, giving it the versatility to avert worldwide economic shocks and afflictions. Likewise, the markets and the regulators have rested their confidence in this sector’s capabilities by time and again introducing administrative and regulatory changes to harness its development potential.

Conclusions

Since the launch, SME Exchanges so far have witnessed robust responses as is proved by the fact that more companies have been listed on SME Exchanges than on the Main Board. With growing confidence in the exchanges, it is expected that SMEs will attract greater interest from institutional and retail investors in the Public Issues on the SME Exchanges. In this segment, the best way to see growth would be done not only by removing the obstacles to sources of financing for SMEs but also by facilitating a knowledge ecosystem for such emerging companies. With these companies, regulators must also increase their interactions and work on removing some of the bottlenecks which will necessarily need to increase      investors and greater participation in the development story of these emerging enterprises. India’s position is at the cusp of growth and development. The much-needed impetus to the growth story of India is the capital flow toward emerging companies. Emerging enterprises have the zeal and the promise to take India on to this growth curve- as long as it is well supported by a growth ecosystem fuelled capital.

Reference:

  1. https://www1.nseindia.com/getting_listed/content/sml_med_enterprise.htm#:~:text=The%20SME%20platform%20of%20the,25%20crores.
  2. https://www.feedough.com/small-and-medium-enterprises-sme/
  3. https://www.valueresearchonline.com/stories/48964/what-is-the-sme-exchange-should-you-invest-in-companies-listed-on-it/
  4. https://taxguru.in/sebi/listing-small-medium-enterprise-sme-exchange.html
  5. https://www.abhipra.com/sme-listing
  6. https://www.rbi.org.in/scripts/bs_viewcontent.aspx?Id=3055

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Understanding cookie law, e-privacy and related issues

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Data Privacy

This article is written by Muheeb. This article has been edited by Ojuswi (Associate, Lawsikho). 

This article has been published by Sneha Mahawar.

What are cookies

Cookies are like small pieces of data, normally stored in text files, so whenever you visit a website, you create a series of information, from your username and password to information that is very specific to you, that can be used to identify your device while you use the network.

The existence of cookies was due to the stateless nature of web pages—i.e., they cannot retain or store information and neither can they transfer information out to another page. Hence, there was a limitation on the use of web technology. Therefore, the creation of cookies was to rectify and overcome this limitation in web technology. Because, at its core, cookies are like memory for web pages; they store the data that is generated by the user either temporarily or permanently. The data stored in this cookie is created by the server upon your connection. After you connect, an ID that is unique to you and your device is added to the data.

They can be used to watch the pages you visit between sites, allowing advertisers to build a picture of your interests. Then when you land on a site that shows one of their ads, they can tailor it to those interests because when a cookie is exchanged between your computer and a network server, the server reads the ID and knows what information to specifically serve to you. This is generally known by the term “behavioural advertising” as it targets your behaviour 

Types of cookies 

There are two main types of cookies:

Temporary cookies 

Session cookies are temporary cookies. They store information about your current session and then are erased when your browser is closed. So, when you click on Google Chrome or Firefox and start to type something, a session is created which essentially tracks and stores all the information that you were looking for, even the security information, temporarily, which indeed seems to be invasive of your privacy.

Permanent cookies 

Permanent cookies, on the other hand, sometimes called persistent or stored cookies, are placed on your device’s hard drive and are not deleted when your browser is closed. The term “Deleted” is key in this regard, as in the previous case, what you’ve searched for was limited to that session, but in this case, the cookies are stored in a more permanent form.

Example: When you input a password and a pop-up comes by asking you “whether you want to save the information for later use” in order to ensure these cookies recognise you whenever you come back to resume your search. Permanent cookies are important as they continuously track your patterns and behaviour to improve the user experience and provide data for that particular site’s analytics program.

Browser-independent cookies 

Browser-independent cookies, more commonly known as Flash or Silverlight cookies, act a lot like permanent cookies, except they aren’t stored by your browser. Instead, they have the respective programme files that store them and use them to devise their data. What makes it work is that these cookies are a lot more difficult to delete than the other two, as you may need another separate programme that helps in the removal of these cookies, e.g., Adobe Flash Cookie Remover.

Why was the use of cookies regulated

While these cookies are incredibly useful, a lot of corporations use them to manipulate your web experience. This is in the form of unwarranted advertisements and invasions of privacy as the information that you’ve used on a web page could be easily shared with a third party.

Therefore, the Cookie Law legislation made it mandatory for websites to get consent from their visitors to store or retrieve any information from any device that can be used to access the website, including a computer, smartphone, or tablet. This gave consumers like you the choice to permit these web pages to use your information.

The cookie law on a global scale was first started by way of EU legislation. The Privacy and Electronic Communications Directive 2002/58/EC (the “ePrivacy Directive“) or “ePD”) was the first EU legislation to regulate the use of cookies and trackers and process personal data for web users inside the European Union. Although the ePrivacy directive regulates cookie usage, email marketing, data minimization, and other aspects of data privacy, since the most common technology used today is cookies, this ePrivacy Directive came to be known as the Cookie Law.

A brief overview of the e-privacy directive and its requirements

The Directive introduced new requirements for websites to gain prior consent from visitors to store or retrieve information on their devices. Additionally, the law dictates that website owners must inform users of the cookies they use and the way they will be used. This applies to all websites, regardless of where they are hosted; however, strictly necessary cookies are exempt from this requirement. It agrees that cookies are a useful technology. However, they can also affect user privacy. Therefore, it mandates that an internet site must ensure compliance with:

  • The requirement to provide clear and precise information about cookies (including strictly necessary ones) and their purpose when users visit a website
  • The requirement of obtaining prior consent to store the cookies of users on their personal devices
  • It is required to provide users with the option to refuse consent to use cookies.
  • Ensuring a user-friendly approach to all aspects of cookies, such as requesting consent to access their cookie information, opt-out option, and accepting or rejecting consent as user-friendly as possible.
  • Access to the specific website content may be conditional on the informed user’s consent if it is used for a legitimate purpose.

Now, for your understanding, the difference between the Cookie Law and the flagship EU General Data Protection Regulations (“GDPR”) is about the territorial scope of the laws. While on the one hand, the ePrivacy Directive applies only to organisations that process personal data within the European Union and provide services over electronic communication. The GDPR is far broader and it applies to all companies and organisations, regardless of their place of origin, that supply goods and services to consumers in the EU or collect and process personal data of website users located within the EU.

In 2017, the EU proposed a regulation referred to as the e-Privacy Regulation (ePR), which could repeal the ePD. Unlike the Directive, it’ll become a mandatory law across all member states once it comes into effect. The ultimate draught is expected to address some concerns regarding cookie consent. A few major differences from the Directive are that its websites can no longer use ‘legitimate interest’ because the basis for using cookies and the Regulation’s territorial scope is supposed to be similar to that of GDPR.

As per the recent developments, the ultimate effective date still remains unknown, and with the 24-month transition period, it’s unlikely to be before 2023.

“Cookie” laws around the world

The EU ePrivacy directive is not one size fits all and different countries within the EU could have different variations of the directive and compliance requirements. However, the core rules and compliance requirements must follow the directive’s provisions. The EU cookie law (ePrivacy Directive) is enforced by each EU member state’s data protection authority, consistent with national laws. Outside of the EU, the ePrivacy Directive may have formed the blueprint for the cookie law. However, a few other countries, aside from the European Union, also regulate cookies and play an important role in shaping the privacy landscape in the world. Outside of the EU, the ePrivacy Directive may have formed the blueprint for the cookie law. However, a few other countries, apart from the European Union, also regulate cookies and play an important role in shaping the privacy landscape in the world.

USA (United States of America)

There is no general cookie law in the US. However, some states have privacy laws that regulate website users’ personal data management and cookie usage as it relates to their residents. More importantly, as of 2022, the US privacy legislation shows that four US states have signed data privacy laws, whose locus standi is currently either active or is set to go into effect in 2023.

  1. California Consumer Privacy Act (CCPA)-In effect from January 1st, 2020.
  2. Virginia Consumer Data Protection Act (VCDPA)–In effect from January 1, 2023
  3. Colorado Privacy Act—In effect July 1st, 2023
  4. Utah Consumer Privacy Act, which goes into effect on December 31, 2023

The definition of personal information under the CCPA, which is currently the only US cookie law in force, also expands to digital identifiers, such as cookies. It requires websites to inform users about cookies set by the site, their source, their purposes, and with whom they share the information. The CCPA also has an explicit requirement for an “opt-out” option that needs to be provided by the website to its users. The opt-out choice enables the user to withdraw consent from the website to process their personal data. This option has to be clear and understandable from a layman’s perspective 

UK (United Kingdom)

Before Brexit, the data privacy landscape within the UK included the flagship GDPR, a variation of the ePrivacy Directive, and the UK Data Protection Act 2018. However, post-Brexit, the UK is no longer conformed to the EU cookie law or GDPR unless any business there uses EU individuals’ personal data for offering goods and services or to monitor their behaviour.

Hence, the UK adopted its version of the GDPR. Now the UK GDPR is borrowed word-for-word from its EU version. So, the restrictions and requirements predominantly follow the text of the EU’s GDPR. Furthermore, the UK adopted the Privacy and Electronic Communications Regulations (PECR) derived from the EU ePrivacy Directive to protect personal data collected via electronic communication networks or services.

The privacy and electronic communications regulations also have some clauses for cookies. The core requirement of PECR is transparency by the websites. They have an obligation to inform, explain, and put up the objectives behind the use of cookies obtained from their users. Also, like its counterpart, the ePrivacy Directive, PECR talks about cookies and the validity of consent, with a focus on informed, explicit, specific, and revocable consent.

India

Neither does India have comprehensive personal data privacy legislation nor specific legislation regulating the usage of cookies. The landmark case on the right to privacy, K.S. Puttaswamy v. Union of India, is one of the landmark cases on the right to privacy. The apex court declared that the right to privacy is essentially a fundamental right that is guaranteed by the constitution of India. Furthermore, it laid down the foundation for data protection laws as it emphasised the mandatory requirement of obtaining a user’s consent before accessing or utilising the personal information of the user. The limitation to this observation, however, is that the definition of personal information does not include cookies within its ambit. This gives the leeway to the websites to wilfully ignore and be non-compliant with any data security standards like IS 174782 – which is a certification ensuring compliance with well-implemented privacy practises that are prescribed to the entity, resulting in issuing both necessary and unnecessary cookies without the user’s consent or fraudulently obtaining it.

Issues with cookie laws and the requirement to address these issues

While on paper, the cookie laws around the world are pretty straightforward in terms of handling cookies, a few issues do permeate the surface through legislation limitation and wilful disregard.

Regulatory bureaucracy or willful non-compliance

Most websites are simply ignoring the requirements of the cookie law. The opt-in feature required by the directives is either too simple (paving the way for accepting all cookies) or too complicated (finding the reject button for non-essential cookies).

As per an interview conducted by a team of TechCrunch with Max Scherms, who is a long-time privacy campaigner and also Noyb’s president, “A whole industry of consultants and designers develop crazy click labyrinths to ensure imaginary consent rates. Frustrating people into clicking “okay” is a clear violation of the GDPR’s principles. Under the law, companies must facilitate users’ expression of choice and design systems fairly. “Companies openly admit that only 3% of all users want to accept cookies, but more than 90% can be nudged into clicking the ‘agree’ button,”

Instead of giving a simple yes or no option, companies use every trick in the book to manipulate users. We have identified more than 15 common abuses. The most common issue is that there is simply no ‘reject’ button on the initial page, “

Moreover, the team of TechCrunch, while speaking to one of the spokespersons of Nyob, put up a question as to the prevalence of cookie abuse across the European Union based on the data collected by Nyob. The reply highlighted that just on their initial intake of 5,000 websites, which had to be reduced to 3,600 websites to give focus, they were able to determine approximately 3,300 websites that violated the norms of GDPR.

(Source: Natasha Lomas’ article on TechCrunch)

Legislative limitation: cookie pop-ups

In terms of legislative limitations, cookie pop-ups are a cause of concern, as some of these cookie banners are not user-friendly and do not give out enough information to completely educate people about what data will be collected and how they intend to use it. The whole aspect of omission of vital information, using complicated language, or creating barriers to denying consent is borderline fraud, and the consent that is acquired thereby is fraudulently taken, as they make it difficult for users to even understand what they are consenting to when they click that “accept cookies” button.

Factors contributing to the issue of Cookie Popups:

  1. Ignorance by visitors and incomprehension about what information is being saved
  2. Declining access to the website on the rejection of cookie pop-up
  3. Deception of cookie banners by false choices: A 2019 study by Célestin Matte, Nataliia Bielova, and Cristiana Santos examined the effects of cookie banners and found violations on 54% of the websites the researchers analysed. The nature of violations included no mechanism for refusal of consent and collection of data even after refusal of consent by the users.

Conclusion

Two decades of technological advancement have brought us today to the position where the internet could regulate and influence the decisions we make. The younger generation is even more susceptible as, without understanding the consequences and use of personal information, they fall prey to impulsive buying and invasion of privacy, among other things. While cookie laws condoning and regulating this behaviour and ensuring safe space online are being implemented both inside and outside of the European Union, the issue, however, might be categorised as wilful non-compliance of this regulation, rather than a lack of legislation. As tech giants are growing increasingly frantic over higher administration costs, the newer requirement of informed consent makes it even stricter, but the lack of enforcement of these regulations is something that needs to be addressed going forward. The penalties could be increased drastically, special enforcement courts/tribunals could be set up to address the grievances of consumers, and watchdog NGOs like Nyob could be partnered with regulatory bodies to oversee and rectify any and all violations.


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Article 74 of the Indian Constitution

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This article has been written by Raksha Yadav, studying BBA.LL.B at ISBR Law College, Bangalore. The article gives an analysis of Article 74 of the Constitution, which deals with the Councils of the Ministers.

This article has been published by Sneha Mahawar.

Introduction

India is a democratic country, and it follows secularism. There is a parliamentary form of government that consists of the Prime Minister along with his Council of Ministers. Article 74 of the Indian Constitution states that there should be a Council of Ministers, and the Prime Minister is the head of the Council. The Council aids the President in performing his functions smoothly. The judiciary can not inquire about the advice given by the Council. The Council consists of cabinet ministers, state ministers, and deputy ministers. The 42nd and 44th Amendments of the Constitution made it mandatory for the President to take advice from the Council of Ministers. Article 53  of the Constitution states that the President of India has executive powers which can be exercised directly by him or through his subordinate authorities. The President is the nominal and constitutional head of the country, but Article 74 says that the President has to follow the advice of the Council of Ministers, which thereby vests the executive powers in the Council of Ministers and makes the cabinet ministers have actual executive powers.

Amendments made to Article 74 of the Indian Constitution

The law is dynamic and it keeps changing as per the needs of society. The Indian Constitution came into force in 1950. For the welfare of the citizens and the smooth functioning of the government, it is essential to make certain changes to the statutes. Article 368 of the Indian Constitution provides the provisions of the amendments to the Constitution. There are a total of 104 amendments in the Constitution. In this section, we will discuss two major amendments relating to Article 74, i.e., the 42nd Amendment and the 44th Amendment of the Constitution.

42nd Amendment of the Indian Constitution

The Constitution (42nd Amendment Act) of 1976 is also known as the ‘Mini Constitution.’ It inserted some new articles and amended the existing ones in the Constitution. To access the list of the changes made in the provisions of the Constitution, click here.

Before the 42nd amendment, there was a provision which said that the Council of Ministers aids the President in exercising his powers, but it did not provide a provision which makes it binding on the President. Thus, such an amendment was made to the Constitution. 

44th Amendment of the Indian Constitution

The Constitution (44th Amendment) Act, 1978 reversed the provision of the 42nd Amendment which says that the government can amend the Constitution as per their wish. After this Amendment, the President can ask the Council of Ministers to reconsider their advice, but the President is bound to act according to the advice given by the Council of Ministers after reconsideration. Earlier, there was no such provision that stated this.

To access the list of the changes made in the provisions of the Constitution after the 44th amendment, click here.

Appointment of the Council of Ministers

According to Article 75 of the Constitution, the President shall appoint the Prime Minister and, on the advice of the Prime Minister, the President will appoint other Ministers of the Council. The composition of the Council can not exceed fifteen per cent of the total number of members of the parliament. The appointed members must take an oath in the presence of the President. All the members of the Council are responsible to the house of peoples i.e., Lok Sabha. A member of the Council also must be a member of Parliament.

If any member is disqualified due to defection then they can not hold the position of minister no matter which House of the Parliament a political party member belongs to. A member who belongs to the House of Parliament and members of a political party who become disqualified due to defection will not be allowed to be named as Ministers for the Council.

In this case, Rai Sahib Ram Jawaya Kapur and Ors. v. In The State of Punjab (1955), it was stated that the President has executive powers, but Article 75 says a Council of Ministers would aid, along with the Prime Minister, to advise the President to exercise his power. The President will become the formal or constitutional head of the executive, and the ministers or the Cabinet will hold the actual executive powers.

In the case of Shamsher Singh & Anr v. the State of Punjab (1974), the Court held that the President and the governors of the state are only the formal and constitutional heads and they exercise their powers with the assistance of the Council of Ministers.

Qualifications of the ministers

A person who is going to be appointed as a minister must be a member of either the Rajya Sabha or Lok Sabha. If the person who is appointed as the minister is not a member of any House of Parliament, he has to become a member of Parliament within six months, otherwise, the person has to resign from his post of minister.

Salary and allowances of the members

The Parliament decides the salary and allowances for the ministers and government authorities according to Article 75(6) of the Constitution.

Each minister shall be entitled to receive salary as per annum along with residence, sumptuary, travelling, and daily allowances, motor vehicle, and medical treatment as mentioned in the Salaries and Allowances of Minister Act, 1952.

The sumptuary allowance (Section 5 of the Salaries and Allowances of Ministers Act, 1952)  for the Prime Minister increased from Rs. 1500 to Rs. 3000 per month in 2001. The sumptuary allowance for a Cabinet Minister increased from Rs. 1,000 to Rs. 2,000 per month, for a Minister of State from Rs. 500 to 1,000 per month; and for a Deputy Minister from Rs. 300 to 600 per month.

arbitration

How does the Indian government operate

Article 77 of the Indian Constitution states:

  1. In the name of the President, the Indian Government makes all executive decisions.
  2. The President may establish that the orders and other documents that are created and carried out in the President’s name must be authenticated.
  3. The order and the instrument, duly authenticated, cannot contest its validity.
  4. The President must pass regulations to make the government’s work easier to conduct and to distribute among the Council of Ministers.

Rights of the Council of Ministers

According to Article 88 of the Constitution, every minister and the Attorney General of India are entitled to speak and participate in the proceedings of either House. He may be named a member of any committee of Parliament and any joint session of the Houses, but he is not permitted to vote because of this clause.

Oath of the Council of Ministers

All the ministers and the Prime Minister take an oath in the presence of the President and swear to perform their functions with full integrity and in accordance with the Constitution. Diligently and faithfully carry out the responsibilities of his office, treat everyone fairly, and do so without favouritism, hatred, or any other form of bias according to the Third Schedule of the constitution.

Categories of the Council of Ministers

The Council of Ministers is broadly divided into three categories, which are as follows:

Cabinet ministers

The cabinet ministers are responsible for leading all the important ministries of the government, such as defence, finance, external affairs, and the home ministry. It plays a very important role in the formulation and execution of policies.

Ministers of state

These ministers work under cabinet ministers and do not have any charge of ministry independently.

Deputy minister

Deputy ministers work under the cabinet minister and ministers of state. They do not have independent authority to lead any ministry and assist the cabinet ministers and ministers of state.

Functions of the Council of Ministers

The functions and powers of the Council of Ministers are explained below:

Policy formulation

The Council of Ministers creates legislation and policies for internal and external matters. They take decisions and advise the President. State ministers and deputy ministers of the relevant department will be informed after the policy has been developed. It supports the cabinet minister’s effective management of the operations and implementation of the policies. They also participate in the parliamentary debate and cast their votes.

Executive power

The Council of Ministers monitors and controls the government departments. Government policy is set by the Council of Ministers, and departmental functions are executed in accordance with that policy. The Cabinet’s decision is implemented by the Council of Ministers. They keep the state in a state of peace and order. The Council of Ministers advises on all significant appointments.

Financial power

The Council of Ministers presents the Budget and Money Bills in Parliament. They also manage the expenses of the government’s policies and approve proposals for the projects initiated by the government.

Responsibilities of the Council of the Ministers

Collective responsibility

The word ‘collective’ means that all the ministers of the Council should stand together for all their actions and misdeeds. According to Article 75(3) of the Constitution, the Council of Ministers is collectively responsible for the Lok Sabha and they are also collectively responsible for the legislative assembly of the state as per the provisions of Article 164(2) of the Constitution. When any policy or bill is presented in parliament, it’s the responsibility of all the members of the Council to unite together, if there are any differences among the members they can not show their differences in the Parliament. If a no-confidence motion is passed against the Council of Ministers in the Lok Sabha or legislative assembly, then all the ministers have to resign. The decision made by the cabinet is binding on all the ministers.

In the case of S.P. Anand, Indore v. H.D. Deve Gowda & Others (1996), the Supreme Court held that the Council of Ministers is collectively responsible to the House of Parliament for supporting the democratic system’s efficient operation. If a minister disagrees with the Council of Ministers’ majority decision, he has two options: resign or accept the outcome.

Individual responsibility

The ministers are also responsible individuals, apart from collectively responsible. If a minister acts without the approval of the Cabinet or the Prime Minister, then individual responsibility is enforced and the action is criticised and condemned by Parliament. If a minister personally does such an act that is against the law and order or makes any statement against the Prime Minister, then he will ask to resign.

In the case of Secretary, Jaipur Development v. Daulat Mal Jain(1996), the Honourable Supreme Court held that each minister is responsible for all of his or her individual and collective actions, policies, and activities. They owe the public a duty of care and are liable. Their rights and obligations are governed by laws and regulations. Only the Department’s Minister bears moral and legal responsibility for the actions taken, duties performed, and rules put in place.

Legal responsibility

In the Constitution, there is no provision that deals with the legal responsibility of the Council of Ministers. Further, the advice that is given to the President by the Council of Ministers is not questionable by the courts. 

In the case of S.P. Gupta v. President of India and Ors. (1981), the Supreme Court stated that the advice that the Council of Ministers provides to the President can not be inquired into before the court but that the materials on which the Council of Minister’s advice to the President is based are not secret and can be examined by the courts.

In the case of  S.R. Bommai and Others Etc. v. Union of India and Others Etc. (1994), the Supreme Court held that the advice that has been given by the Council of Ministers is barred from questioning by the court but does not hold back any information or documentation from the court’s review.

Conclusion

The Indian Constitution adopted parliamentary democracy for this nation from the United Kingdom. In a parliamentary democracy, the Prime Minister and his cabinet, who are frequently chosen from the majority party in Parliament, are given the real power of governing. The head of the State remains the constitutional head of the State in such a democracy, whether it be the King or the President. He follows the advice and guidance provided to him by the Council of Ministers, which is led by the Prime Minister.

Article 74 of the Constitution provides a provision to constitute a Council of Ministers to give aid to the President. A dictatorship will be established if authority is given to one individual. India is a democratic and republican country, and the powers are well divided among the appropriate authorities. The Constitution of India borrowed the cabinet system from the British Constitution (the British Constitution is not written down). In Britain, it is generally acceptable for the monarch to follow the Ministers’ proposals. Therefore, in India, the President is the nominal head, but he is bound to follow the advice given by the Council of Ministers. 

Frequently Asked Questions (FAQ)

What is the qualification of the Prime Minister?

A person who is a citizen of India, a member of the Lok Sabha, or a Rajya Sabha can become Prime Minister.

Which provision of the Constitution states the duties of the Prime Minister?

Article 78 of the Constitution lays down certain duties of the Prime Minister, such as communicating decisions to the President and providing information about the Union administration and legislative proposals that the President may request.

What are the powers of the President of India?

The President has executive, legislative, emergency, financial, and judicial powers.

What is the difference between the Council of Ministers and the Cabinet?

The Council of Ministers consists of cabinet ministers, state ministers, and deputy ministers, whereas the cabinet consists of all the ministers of important and major ministries. The Council of Ministers has 70-80  whereas the cabinet has 15-20 members. The Council of Ministers is responsible for carrying out decisions made by the Cabinet.

What are the constitutional provisions for the State Council of Ministers?

Article 163 of the Constitution states that there shall be a Council of Ministers headed by the Chief Minister that gives advice to the Governor of the state.

References


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

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Abhyuday AgarwalCOO & CO-Founder, LawSikho