When a dispute arises between the parties to a contract, the court will determine the intent of the contract and its terms/conditions. Therefore, it’s become very important to use specific words in a contract in the right place and the right sense. Choice of words is very important in a contract, if a party chooses inappropriate words it can have severe consequences in future or if you chose words as per the right context it will save you from the future hustle. Just like the sun in the sky, you can accomplish many things: comfort, sunburn, thirst and relaxation, same is with the word in a contract. The word you chose to include in your contract has a profound impact on your intention and the obligation you want to put on other parties.
Good word choice means using specific nouns, strong verbs, and excellent describing words like adjectives and adverbs. Good and specific word choices will add colour to your contract drafting skills and help make a contract airtight. The courts from time to time have pronounced the effects of particular words in legal documents. Even though many legal drafts continue to be drafted in the same manner as before, no account has been taken of the courts’ decisions so far. In this article, we will discuss the legal effect of “between” and “among” which are frequently used in drafting contracts and in various other legal documents. You will learn how they can cause difficulties and how they can be avoided.
General definition
There is a rule of grammar that “between” is used only to reference the relationship between two persons and things and “among” is used when there are more than two.
Example-
All the profits shall be divided equally between A and B at the end of every month.
All the profits shall be divided equally among A, B, C and D at the end of every month.
When to use between
When there is a comparison in the middle of two or more things then it requires the preposition “between” to be used. For example- In this semester you are required to choose one language course between Hindi, French and German.
There is a common misbelief that has been going on for a long time, that between is only used when there are less than two people or thing and in case there are more than two people or thing among shall be used as a preposition.
It is only a myth, we can surely use between even when there are more than two persons, places or things involved, as long as they are distinct or isolated.
When to use among
Generally, among is used in a sentence of collective arrangement. When something is in the middle of or in between a group of people or things, “among” is used as a preposition. Either it is surrounded by something or part of a group.
For example- I leave my residuary estate to my trustees to divide among such charitable objects as they shall in their absolute discretion select.
Here, among is indicating that something belongs to a certain group. We can also construe that among is used for indefinite, unspecified and non-distinctive relationships between groups.
Difference between “among” and “amongst”
Both “among” and “amongst” have the same meaning and they both are correct. They can be used interchangeably. The word among is most commonly used in writing and daily life oral communications
The word “amongst” is not used commonly because as per American English the word “amongst” is considered an outdated version of “among.”
Is among singular or plural
It cannot be classified as singular or plural. It is used to express the relationship between a singular or plural noun, verb, group, and collective noun in sentences.
Use of between and among in a contract
In all cases, use “between” as the preposition in the introductory clause of a contract, rather than among such as “by and between”. For example,
This Exclusive Agreement is entered into this ___ day of ___ 202__ (Effective date).
BY AND BETWEEN
ABC, a company with CIN ______ incorporated under the laws of India having its registered office at ______, hereinafter referred to as Company.
AND
XYZ, an individual with Aadhar No. _____ and permanent address _____, hereinafter referred to as Proposed Buyer.
According to The Oxford English Dictionary, it is not only permissible but preferred to use “between” in the place of “among” with more than two parties.
Example-
All the profits shall be divided equally between A and B at the end of every month.
All the profits shall be divided equally between A, B, C and D at the end of every month.
Both the sentences are correct. Among cannot be replaced with between in both cases.
“Among” and “between” have their specific meanings and are used differently. The distinction is not the number of people or things, but how the people relate to each other. If the people are relating individually to each other, the proper word is “between.” If the people are acting as a group, the proper word is “among.”
Ironically, the people advocating saying “this is a contract among three people” are misusing it. The whole group isn’t agreeing with itself. The members of the group are agreeing with each other.
If you violate the contract, an actual aggrieved person will sue you. The group isn’t going to sue itself. Again. So “among” is wrong, and “between” is correct.
When not to use between
In drafting many times, we use “between” and “among”. As we discussed earlier “between” is more suitable to use and also preferred most of the time but not at all times. Sometimes you have to avoid using between also otherwise it can cause unnecessary problems.
Example:
All my jewellery shall be divided between my son, A and daughters of my son, B which are X and Y.
This sentence cannot give a proper idea of the division of Jewellery and can be construed in two ways:
First, it might be construed as, giving a half share of Jewellery to A and the remaining half to A and B which is one quarter each.
Secondly, it might be construed as giving one-third share of jewellery to each A, X and Y.
The above-mentioned clause must be drafted to make clear sense of the division of jewellery. It can be drafted like this:
All my Jewellery shall be equally divided. one-third to my son, A, one-third to my granddaughter, X and one-third to my granddaughter, Y.
Comparison Table between “between” and “among”
Parameter
Between
Among
Definition
“Between” is a preposition, is used in case of having a choice that involves distinct and individual things or places.
“Among” is also a preposition, used in the case of having a choice in a large group of things and people which are non-distinctive.
Time
It is used to indicate the things that happened in the middle of two or more people, things and places.
It is used to indicate the things that happened in the middle of more than two or a group of non-distinctive people, things and places.
Usage
“Between” can be used when we talk about more than two persons, things and places.
“Among” can be used when we talk about more than two non-distinctive persons, things, and places.
What do they imply?
The preposition “between” implies a figurative or a real location in the middle of two or more distinctive things, places or locations.
The preposition “among” implies a position in the middle of a large group that is non-distinctive.
For Example
India lies between Nepal, Pakistan, China, Bangladesh, Bhutan, Myanmar and Afghanistan.Don’t eat between meals.
An Indian woman among the survivors.He bought a house among trees.
Conclusion
Word choice is very important in contract drafting, if you choose inappropriate words it can have severe consequences in future. The word you chose to include in your contract has a profound impact on your intention and the obligation you want to put on other parties. As we have discussed above with some examples, how prepositions like between and among can cause ambiguity to a clause of a contract so it is prudent to use them with their exact meaning.
There is a wrong belief that “between” is used only to reference the relationship between two persons and things and “among” is used when there are more than two. It is only a myth, we can surely use between even when there are more than two persons, places or things involved, as long as they are distinct or isolated. “Among” is used when something is in the middle of or in between a group of people or things. Either it is surrounded by something or part of a group. Both “among” and “amongst” have the same meaning and can be used interchangeably.
The distinction is not the number of people or things, but how the people relate to each other. If the people are relating individually to each other, the proper word is “between.” If the people are acting as a group, the proper word is “among.” In all cases, use between as the preposition in the introductory clause of a contract, rather than among such as “by and between”. As we discussed earlier with some examples, “between” is more suitable to use and also preferred mostly, but not at all times. Sometimes you have to avoid using between them also. Otherwise, it can cause unnecessary problems.
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This article is written by Shraileen Kaur, a student of ICFAI University, Dehradun. In this article, the author discusses about the Foreign Contribution Regulation Act, its history, scope, significance, concerns, limitations, as well as, recommendations regarding cognizable offences.
Table of Contents
Introduction
The foreign contributions in India are governed and supervised by the Indian government in accordance with the Foreign Contribution (Regulation) Act, 2010. The Foreign Contribution Regulation Act of 2010 outlines the conditions under which individuals, groups, and businesses in India may receive and use foreign contributions. The authorities saw the necessity to make some changes to the Foreign Contribution Regulation Act, 2010 in order to avoid illegitimate use of financial resources, to strengthen national integrity and regulatory mechanisms.
The Foreign Contribution Regulation (Amendment) Act, 2020, brought several changes to the Foreign Contribution Regulations Act, 2010. Some of these changes include limitations on the kinds of institutions that may receive foreign contributions, restrictions on the transfer and utilisation of foreign resources, additional requirements for obtaining registration, and clauses relating to the revocation or surrendering of a registration certificate.
However, there have been growing apprehensions regarding the Foreign Contribution Regulation (Amendment) Act, 2020 among the non-governmental organisations and other institutions in India that receive international aid.
Foreign Contribution Regulations Act : an overview
All Indian charitable organisations have recently been under official scrutiny for the flow of foreign funds. In April 2015, it was revealed that the Ministry of Home Affairs had withdrawn licences for more than 8,000 charitable organisations because they had not complied with the legal requirements for disclosure of foreign funds. In some instances, the authorities have also revoked registrations granted in conformity with the Foreign Contribution Regulation Act, 2010, passed by Greenpeace India. Numerous reports claim that the government has thoroughly examined the adherence level followed by several institutions with respect to the regulations under the Foreign Contribution Regulations Act. The Foreign Contribution Regulations Act was originally implemented to manage the flow of international funds and verify that these funds are only employed for purposes authorised by law.
All Indian charities that accept donations from abroad must abide by the rules outlined in this Act. Moreover, it is crucial to consider both the key aspects of the Foreign Contribution Regulations Act and the effects of violating statutory obligations.
History of the Foreign Contribution Regulations Act
The Foreign Contribution Regulations Act was initially enacted in 1976 following a debate over the potential use of foreign funds in general elections. The original rule permitted non-governmental organisations to independently accept foreign contributions. However, all the non-governmental organisations had to publicly report how much they accepted and spent annually. They are currently required to register themselves before taking any foreign funding. Moreover, they are unable to transfer the funds to unlicensed charitable organisations. The government believed that most of these organisations were being used as a backdoor gateway for foreign entities to donate money to political groups, which led to the implementation of these laws.
Nearly two decades later, the government started to redraft the Foreign Contribution Regulations Act in order to fill up certain loopholes in the original legislation. The Foreign Contribution (Regulation) Act, 2010 was passed in May 2011. There are certain new regulations and obligations in the 2010 Act. For instance, the Foreign Contribution (Regulation) Act, 1976, only provided protection for newspapers when it came to media institutions that transmitted content. However, the Foreign Contribution Regulation Act, 2010, includes contemporary media forms, like television and the internet. Additionally, it forbids funding more than 50% of an institution’s operational expenses with contributions from abroad.
The Foreign Contribution Regulation Act, 2010
History and rationale behind the introduction of the Foreign Contribution (Regulation) Act, 2010
The Foreign Contribution Regulations Act, 1976 was replaced by the Foreign Contribution Regulations Act, 2010. Policymakers and non-profit voluntary groups that sought and utilised foreign donations engaged in a protracted discussion on numerous problems that led to the introduction of this Act. The legislation serves as an exclusive legal channel for the inflow of foreign charity, which is significant and has changed over time. It plays the role of a facilitator in the operation of socially sound non-profit organisations. Foreign philanthropists depend on the government’s certification of qualified funds that non-profit organisations get and are exempted from paying tax for their donations in the legislation because there is no system for NPVO accreditation or systematic self-regulation as there is in the West. Despite the hassle of registration as well as other regulatory procedures, it protects against abuse, fosters confidence and trust, and supports the legitimacy of non-profit organisations and their contributors. It creates connections between the domestic laws protecting the privacy of beneficiaries and the various charities of contributors all over the world. With the new statute’s implementation, some aspects related to the Foreign Contribution Regulations Act of 1976’s policy, administrative procedures, and court rulings also needed to be addressed. The Foreign Contribution Regulation Act, 1976 failed to control foreign funding properly, and it was not enforced in cases when the amount went beyond what was permitted. Therefore, it is without a doubt that the Foreign Contribution Regulations Act required a significant revision in 1976 to accommodate the shifting nature of India’s economic growth.
By enacting the Foreign Contribution Regulation Act of 2010, it is hoped to regulate funding or donations made by foreign sources to Indian groups. The Act also aims to prevent foreign contributions that could harm the national interest.
This Act’s main goal was to prevent foreign assets from having an impact on India’s decision-making. Any organisation that wishes to obtain funds from a foreign source must register with the Indian Ministry of Home Affairs, submit an annual assessment of its financial records, and provide full disclosure of any individual contributions.
This Act is also supposed to prevent foreigners from using their influence to harm India’s national interest through corrupt public officials or the electoral process. According to Section 35 of the Foreign Contribution Regulation Act, 2010 if a person violates any of the Act’s provisions, the concerned person shall be awarded imprisonment of 5 years.
Although the Act has financial regulation and internal security as the primary emphasis, despite this, it falls under the ambit of the Ministry of Home Affairs rather than the Reserve Bank of India.
Significant provisions under the Foreign Contribution (Regulation) Act, 2010
According to Section 2(1)(h) of the Foreign Contribution (Regulation) Act, 2010, any donation, delivery, or transfer that comes from a foreign entity is considered to be a foreign contribution. This also includes –
Any item that isn’t being given as a gift for domestic consumption.
Any currency, domestic or foreign, also comes within the ambit of foreign contributions.
Funds from international entities may be accepted and used by any institution or agency that is recognised by the Ministry of Home Affairs. Such institutions or agencies must work for specific traditional, commercial, socioeconomic, religious, or environmental reasons. However, it is required to keep track of all contributions it has received from abroad in a separate account.
Every year, the Ministry of Home Affairs must get an audited copy of this information from a registered chartered accountant.
However, some individuals and organisations, including judges of the court of law, candidates for government positions, specifically politicians, editorial staff and publishing houses of certified newspapers, employees of the government, members of the national assembly, and political parties, are prohibited from receiving and using any foreign contributions.
This Act permits the termination of the registration of a non-governmental institution if the Ministry of Home Affairs thinks the institution is politically influenced rather than impartial. In most cases, non-governmental organisations receive a certificate of registration with a five-year expiration date.
According to the requirements of this Act, any person whose estate has been dissolved must dispose of their assets in a manner specified by the government. The organisations where the donations obtained from international entities are deposited are required to maintain a separate bank account. It should be noted that only foreign donations may be entered into that account; all other funds are not eligible to be deposited in a separate bank account.
Each and every bank is required to disclose to the prescribed authorities the amount of foreign contributions received as well as other relevant information.
The Foreign Contribution Regulation (Amendment) Act, 2020
The Foreign Contribution Regulation (Amendment) Act, 2020, amends certain provisions of the Foreign Contribution Regulation Act, 2010. The government claims that the objective of the legislation is to enhance enforcement, increase transparency and integrity in the acceptance and utilisation of foreign contributions, and facilitate legitimate non-governmental organisations or other organisations that serve society. The Foreign Contribution Regulation (Amendment) Act, 2020 went into effect on September 29, 2020. The introduced legislation would have a significant impact on Indian communities and other social organisations. The calculated effect of the legislation includes the following –
Charities that have less monetary value would be either restricted or shut down.
Front-line jobs would be lost.
The progress of the nation towards achieving sustainable development goals is already hampered by the consequences of COVID-19. The Act would adversely impact the ongoing scenario.
A decrease in international financing for non-profit organisations in India will also compound the consequences of reduced corporate assistance in the form of the mandatory 2 percent charity.
Key priorities of the Foreign Contribution Regulation Act (Amendment), 2020
The key priorities of the Foreign Contribution Regulation Act (Amendment) 2020 are as follows –
To forbid any foreign grants from going to organisations that employ ‘public servants’, or,
To prevent the foreign contributions from going to any organisation that the government ‘controls or owns’;
To forbid the transfer of funds obtained under the Foreign Contribution Regulations Act to some other individual or group;
To reduce the maximum amount of overhead expenditures that can be paid for using funding under the Foreign Contribution Regulations Act from 50% to 20%;
To give the Ministry of Home Affairs more authority to revoke a licence under the Foreign Contribution Regulations Act for a period longer than 180 days;
To make Aadhaar a requirement for those who manage beneficiary organisations, and
To put a restriction stating that only the State Bank of India in New Delhi may accept foreign donations.
Notable provisions of the Foreign Contribution Regulation Act (Amendment), 2020
Some of the notable provisions that were amended by this Act are as follows:
Limitations placed on public servants for the acceptance of foreign donations
Public servants are those who work for the government and receive payments from it in exchange for carrying out their assigned duties. This amendment was made in an effort to shield public servants from the influence of foreign resources on any of their decisions. In accordance with the Foreign Contribution Regulation Act, 2010, a number of people were prohibited from receiving any foreign contributions, including those running government offices, editorial staff or publishers of authorised newspapers, judges, employees of the government, and political parties, including members of the legislature. Nevertheless, public employees were also included on this list as a result of the amendment in the Act.
Restriction on the transfer of foreign funds
According to the Foreign Contribution Regulation Act, 2010, no foreign contribution may be transferred to an individual unless that individual has qualified for the authorisation of a foreign contribution or has secured previous authorisation to receive such a foreign contribution. The Foreign Contribution Regulation (Amendment) Act, 2020, however, changed this clause to limit the transfer of foreign donations to other citizens. Now, as per this Act, a ‘person’ is defined as any organisation, entity, or registered business.
Introduction of mandatory identification criteria for registration
The foreign contribution can be accepted –
If a person has a certificate of registration issued by the central government, and
If they are not registered but previous authorisation to accept the foreign contribution has been secured by them.
According to the Foreign Contribution Regulation Act, 2020, the government specifies the procedure through which a person can apply for registration, its renewal, or prior approval for collecting foreign donations. Aadhaar numbers must be provided as a form of identity for all directors, office holders, or key functionaries who are requesting prior approval for membership or the renewal of registration. The purpose of this amendment is to encourage the use of Aadhaar Cards. In accordance with this amendment, the government has access to all the information regarding the non-governmental organisations that receive foreign donations. A copy of the person’s passport or an overseas citizen of India card must also be issued if they are a foreigner for identification purposes.
Compulsory opening of the FCRA account
A beneficiary of a foreign contribution was allowed to receive foreign contributions in an account that can be opened at any of the scheduled banks, in accordance with Section 17 of the Foreign Contribution Regulation Act, 2010. However, Section 17 has been changed by the Foreign Contribution Regulation (Amendment) Act, 2020. Now, it requires that a registered institution or any other recipient of the foreign contribution must acknowledge the funds obtained from foreign entities in a branch of a scheduled commercial bank that has been designated by the Central Government. In this case, the State Bank of India, New Delhi, has been authorised for the purpose of depositing the foreign contributions and acknowledging the same. Under the State Bank of India, New Delhi, an account that receives foreign contributions is labelled as an ‘FCRA Account’. This branch’s account is specifically designed to receive contributions from abroad; no other deposits are permitted. However, accounts can also be formed in other banks to utilise the contribution. Through the centralisation of the inflow of donations into a single bank, the amendment aims to make monitoring and regulating the funds simpler than before.
Limitations on the utilisation of foreign contributions
A new provision was added along with a change to Section 11 of the Foreign Contribution Regulation Act, 2010 by the Amendment Act. It should be highlighted that any unused foreign contributions may only be accepted or used with the prior approval of the government.
Suppose the government determines, after conducting a summary investigation, that a person has violated the Act’s provisions. In that case, even if that person has been granted permission under the Foreign Contribution Regulations Act to accept and use foreign charitable donations without government approval, the government may prohibit that person from doing so. According to the amended Act, the government has the authority to prevent a beneficiary of a foreign contribution that has previously been permitted to do so from using the unutilised foreign contribution. The government may use such a remedy if, following a short investigation, there are good reasons to believe that the beneficiary has engaged in any action that violates the Act’s requirements.
The 2010 Act made changes to the preceding Act, such as limiting the ability to restrict a beneficiary solely in the case of a breach of the Act’s rules. However, a beneficiary can also be restricted for preventive reasons under the 2020 amendment.
Renewal of registration
Prior to the amendment, all individuals who had received certificates of registration under the Act and were registered under its provisions had to renew them within six months. However, with the Foreign Contribution Regulation (Amendment) Act of 2020, specific guidelines were established, leaving it up to the government to decide whether to renew the certificate or not. It is done after conducting an investigation to make sure the applicant is not a fictitious person, has not been charged or convicted of inciting communal violence or engaging in activities related to religious conversion, and has not been found guilty of misusing funds.
Reducing the criteria for using foreign contributions for administrative purposes
According to the Act, recipients are allowed to use funds for the intended purpose. The contributions must not be used by the recipient for any other purpose. The 2020 Act modifies Section 8 of the Foreign Contribution Regulations Act, 2010, in a specific way. Previously, there was a 50% ceiling on how much of the funds collected might be used for administrative purposes. There is now a 20% cap. This clause aims to make it more difficult for non-governmental organisations to use the money for reasons other than those for which it was intended and to encourage them to use it to accomplish the desired goal.
Renunciation of the certificate of registration
After the modification, anyone who wishes to renounce their certificate can do so if they are given a nod from the central government. Suppose the government has a solid reason to ascertain that the person in question has not violated any of the Act’s provisions and designated government authority has already been given the power to handle the person’s funds. In that case, the government may initiate such a process of renunciation of the certificate of registration.
Suspension of the certificate of registration
In this context, the word ‘Suspension’ means that a registered individual is not permitted to receive or use the funds. The 2020 Act modified Section 13 of the Foreign Contribution Regulations Act of 2010. The timeframe of 180 days that the government may have previously used to suspend a person’s registration certificate during an investigation has now been extended to 360 days as a result of the modification. This clause, however, is criticised since it gives the legislature the authority to keep the FCRA registration certificates suspended if the registration cannot be cancelled.
Criticism and concerns regarding the Foreign Contribution Regulation (Amendment) Act, 2020
In particular, for those defending the rights to freedom of association, freedom of assembly, freedom of expression, and the right to participate in political affairs, the Foreign Contribution Regulations Act is criticised for not conforming to international laws or standards.
In the words of the United Nations High Commissioner for Human Rights,“It is being used to deter or punish non-governmental organisations for civil liberties reporting and advocacy.” It puts human rights advocates and activists at serious risk while placing disproportionate restrictions as well as burdens on their lawful activities. In India, those who express controversial opinions about the government are most at risk, including people and organisations.
Concerns of the UNHRC with regards to the Foreign Contribution Regulations (Amendment) Act, 2020
The Indian legislature has been given the ability to limit the use of foreign contributions under the Foreign Contribution Regulations Act, 2020. Indian authorities have taken measures to limit the amount of foreign financing that Indian non-governmental organisations can receive. By this modification, the Ministry of Home Affairs has been given broad authority to revoke the status of any group or non-governmental organisation and to refuse to renew the registration of such institutions.
Michelle Bachelet, the United Nations High Commissioner for Human Rights, expressed concern over this, as well as the activists who were detained in India. The Foreign Contribution Regulations Act, 2020, which prevents non-governmental organisations from receiving foreign funds, was suggested to be repealed by the Indian legislature by three experts from the UN Human Rights Council.
According to the UN Human Rights Council, the Foreign Contribution Regulations Act, 2020 is allegedly out of compliance with the Human Rights Council’s standards. These experts took the stance that non-governmental organisations and those who fight for human rights must be given the freedom to carry out their vital roles without being subjected to undue restrictions on receiving foreign funds.
Concerns raised by non-governmental organisations
Both small and big non-governmental organisations were concerned about the law. The non-governmental organisations thought that the public’s perception of them was being distorted by the legislation, making them appear to be evil. Also, the recent amendments have created certain circumstances in which large businesses cannot transfer funds to smaller ones due to the stringent restrictions placed on their operational expenses.
For a period of six months, the Indian government revoked NGO Lawyers Collective’s registration. Indira Jaising and Anand Grover, the organisation’s founders and human rights lawyers, were accused of misusing the foreign contribution and breaking the Foreign Contribution Regulations Act’s rules by using it for something other than what it was intended.
The NGO produced documentation to support the claim that all of its expenditures were made in accordance with the Act’s guidelines, but the suspension was nonetheless implemented. The Lawyers Collective’s registration was allegedly terminated for political reasons, according to the experts at the United Nations Human Rights Council, in order to stifle their criticism of the government’s actions.
Teesta Setalvad, a distinguished name in human rights, was the founder of both Citizens for Justice and Peace and Sabrang Trust, which were both suspended by the Indian government in September 2015 in accordance with the Foreign Contribution Regulations Act. The authorities criticised the founding members of the lawyers’ collective because they helped Teesta Setalvad with her legal issues.
The country’s government also temporarily halted Greenpeace India’s registration in April 2015 for a period of six months. Earlier, the UNHRC expressed alarm to the administration about this.
Viewpoints of some notable people on recent amendments
The viewpoint of the executive director of the Population Foundation of India
During a webinar, Poonam Muttreja, executive director of the Population Foundation of India, spoke about the problems brought on by the most recent amendments. She claimed that non-governmental organisations are now in the shadow of scepticism. The commitment-oriented civil societies will suffer as a result of the modified legislation, which paints non-governmental organisations as evil in the eyes of the public.
The non-governmental organisations are acting out of compassion rather than in search of financial reward. She questioned whether non-governmental organisations are afraid of the government since they speak up and speak out about the most underrepresented topics for which the government has no statistics. This posed a threat to the government authorities.
She has also drawn attention to the fact that the law declares all non-governmental organisations to be of the same character rather than identifying specific non-governmental organisations that are not adhering to the statutory rules. Criminal investigations against the organisations that had misappropriated the funds have occasionally been carried out in the past, so doing so now would not be difficult.
The viewpoint of the director of the Institute for Social Impact and Philanthropy
Ingrid Srinath, the director of the Institute for Social Impact and Philanthropy, condemned the fact that, despite accusations that non-governmental organisations were concealing or failing to disclose the identities of their members during debates on the Amendment Bill, no proof was provided. Despite the fact that foreign direct investment is more than fifteen times more than foreign contributions, she also questioned the targeting of only foreign contributions and not foreign direct investment. In addition, she said that out of the 21,490 entities with licences, only about 4,000 had received sub-grants. Only 1,803 organisations have been documented to have used 20% of the foreign contributions when it comes to administrative costs.
Nityanand Rai, the minister of state for housing, stated that the purpose of the amendments is to increase accountability and stop the improper use of money from international funds.
However, the issue also pertains to the Rs 9,600 crore flowing to the PM-CARES Fund, which is sponsored by foreign sources but continues to be exempted under the Foreign Contribution Regulations Act. It also includes the Rs 6,000 crore coming through electoral boards and even from overseas sources that are entirely invisible.
The viewpoint of the chief executive officer of VANI
There are numerous non-governmental organisations that operate in remote and rural regions without access to any foreign funding, according to Harsh Jaitli, chief executive officer of VANI, the peak body of Indian voluntary development organisations. As a result, many small and large groups collaborate in order to ensure funding and growth. The new amendment act will have an impact on these groups.
Non-governmental organisations play a significant role whenever there are floods or other urgent situations, such as the current COVID-19 issue. All local groups collaborate with non-governmental organisations in such circumstances.
Even if we focus on recent events, for instance, the Assam floods, local groups collaborated with non-governmental organisations to assist the flood victims and address the problems created by the flood. Both the Prime Minister and the Niti Aayog expressed their admiration for the non-governmental organisations’ work. In contrast, none of these non-governmental organisations was consulted prior to the most recent Foreign Contribution Regulations Act revisions.
The viewpoint of the director of the Concept Society in Madhya Pradesh
Hemal Kamat, the director of the Concept Society in Madhya Pradesh, claimed that her group has been assisting Dalit and Adivasi women for more than 15 years. However, the most recent amendments have made it more difficult for non-governmental organisations to survive. She referred to it as ‘absurd’ to declare on the one hand that women should be made self-reliant through the creation of organisations, or “Atma Nirbhar,” and on the other hand, to make amendments that are at odds with both the self-reliance of women and the survival of non-governmental organisations. She argued that many employees in these organisations make very little money despite having a significant impact on people’s lives. As a result of the new amendments, which lower the cap on administrative expenditures from 50% to 20%, it would be highly challenging to compensate these employees.
The viewpoint of the founder and managing director of LEADS Trust
The small non-governmental organisations that operate in the backward states are the ones who would be most affected by the latest amendments. The non-governmental organisations have received multiple calls from the grassroots workers working at different non-governmental organisations concerned that the most recent changes would make it impossible for them to support their families. A.K. Singh, the founder and managing director of LEADS Trust, had been collaborating closely with small non-governmental organisations in states like Jharkhand, Odisha, and Chattisgarh.
He argued that it is quite devastating to see an amendment come in this way at a time like COVID-19 when non-governmental organisations and government authorities are working hard to collaborate in order to enhance the lives of the people. He further explained that not all organisations have the ability to generate money. He said that large organisations raise money on behalf of small non-governmental organisations that deal with tribal people and other backward segments of society in order to link them with developmental efforts.
Response by the Government of India to these concerns and criticism
The Indian lawmakers defended themselves by pointing out that the amount of money coming into the nation from abroad increased between 2010 and 2019. However, the issue is that the money is not being used for what it was initially intended for or the one for which permission had been granted. In order to clarify its position, the Indian government stated that the Foreign Contribution Regulations Act, 2010 amendment was introduced in order to streamline the entry of foreign currency.
However, the Foreign Contribution Regulations Act 2010 failed to ensure the legitimate utilisation of foreign funds. As a result, the legislature suggested an amendment to the Foreign Contribution Regulations Act of 2010 in order to limit the influx of such unregulated foreign contributions into India and also to prevent the use of these foreign donations for immoral and illegal purposes, as these things threaten India’s internal security. Thus, this amendment has raised the level of accountability and openness for foreign contributions.
Stance of the Indian courts
The stance of the courts of law in India has been illustrated through numerous judgements.
Indian Social Action Forum v. Union of India (2020)
Facts of the case
Initially, in this case, the writ suit was dismissed by the Delhi High Court. Later, the Indian Social Action Forum appealed to the Supreme Court, claiming that the clause relating to groups that are deemed to be of a ‘political nature’ breaches a number of rights guaranteed by the Constitution. These include the rights to life and liberty, the right to form an association, the right to equality, as well as the fundamental freedoms of speech and expression.
Issues involved in the case
Whether clauses of ‘political nature” breach fundamental rights or not.
Judgement of the Court
In this case, the Supreme Court ruled that certain non-governmental organisations cannot be denied access to foreign funds because they are not involved in party politics or active politics and that the definition of ‘political nature’ cannot be extended to ‘active politics’ and ‘party politics’.
In order to justify this decision, the Court reasoned that the phrase ‘political interests’ illustrated under Rule 3(v) of the Foreign Contribution Regulations Amendment Rules, 2011 was overly ‘vague’ and ‘susceptible to misuse’. Additionally, it was recognised that lawful political action methods, such as strikes and protests enshrined under Rule 3(vi), are protected and that the Foreign Contribution Regulations Act should not be utilised to deny an organisation its legal right to accept foreign contributions.
The Apex Court further stated that the Delhi High Court’s ruling that the Foreign Contribution Regulations Act 2010 provision’s language was comprehensive but neither ambiguous nor imprecise, which was affirmed by the Supreme Court in the appeal. Although the word political interests used in Rule 3(v) of the Foreign Contribution Regulations Rules is not inherently illegal. It is vague and susceptible to misuse and must be defined extremely carefully.
The Supreme Court acknowledged that lawful political actions such as strikes and protests are legal and that the Foreign Contribution Regulations Rules should not be used to deny an organisation its right to receive foreign contributions. The Court ruled that certain non-profit organisations that are not involved in active politics or party politics should not be denied access to foreign donations and that the definition of ‘political interests’ or ‘political action’ cannot be expanded to include activities that are not part of active politics or party politics.
Association for Democratic Reforms v. Union of India (2000)
Facts of the case
It is an ongoing case before the Supreme Court. In this case, the petitioner claimed that the amendment to the Foreign Contribution Regulations Act 2010 opened channels for foreign funding of Indian political parties.
Issues involved in the case
Whether amendments in the Foreign Contribution Regulations Act 2010 have been intended towards providing foreign funding to political parties in India?
Judgement of the Court
In the affidavit, the Indian Election Commission acknowledged that the amendment “would permit unrestricted foreign funding of political parties in India, which may result in foreign firms influencing Indian policies.”
On the other hand, the Supreme Court claimed that it requires an ‘in depth hearing’, which hasn’t been scheduled for the past 2.5 years.
Noel Harper and Co. v. the Union of India (2022)
Facts of the case
In this case, the question was raised regarding the amendments made in the Foreign Contribution (Regulation) Act, 2010. The petitioner claimed that the amendment was violative of the constitutional rights guaranteed by the constitution of India as well as that they were arbitrary in nature.
Issues involved in the case
Whether the changes made to Sections 7, 12(1A), 12A, and 17(1) of the Foreign Contribution (Regulation) Act, 2010 are arbitrary, irrational, and violative of the constitutional rights guaranteed by Articles 14, 19, and 21 of the Constitution of India?
Judgement of the Court
The Supreme Court ruled that Sections 7, 12(1A), 12A, and 17 of the 2010 Act, which was changed by the Foreign Contribution (Regulation) Amendment Act, 2020, are in violation of the Constitution. The Court further stated that regarding Section 12A, the primary functionaries/office bearers of the applicant (associations/non-governmental organisations) who are Indian nationals are expected to provide an Indian passport for the purpose of their identification. The requirement in Section 12A regarding identification shall be deemed to have been substantially complied with in every case.
Recommendations provided by the International Commission of Jurists
The Indian Parliament should establish an independent committee to review the Foreign Contribution Regulations Act, 2020 to ensure that it complies with India’s constitutional provisions and international human rights obligations, particularly those which guarantee freedom of association, freedom of assembly, freedom of speech, and expression, and the right to participate in political affairs of the nation.
As per the review done by the International Commission of Jurists, at least six statutory provisions and related rules should be repealed or modified.
Section 5 of the Foreign Contribution Regulations Act 2010 and Rule 3 of the Foreign Contribution Regulations Rules 2011 should be deleted or altered to only apply to provisions connected with ‘active politics’ or ‘party politics’, with precise definitions of these terms. These prohibitions should not be used to deny access to foreign funds to organisations because they are not involved in active politics or party politics.
There is a need to repeal or alter Sections 9 and Section 12 of the Foreign Contribution Regulations Act, 2010 in order to define “prejudicial” impact on “public interest” in a precise and limited manner. Additionally, there is a need to amend Sections 9 and 12 of the Foreign Contribution Regulations Act 2010 to change other classification terms that are used in the provisions, such as having a negative effect on India’s sovereignty and integrity, freedom or fairness in the election to any legislature, friendly relations with any foreign state, and harmony between religious, racial, social, linguistic, or regional groups, castes, or communities.
There is a recommendation to repeal Section 2 of the Foreign Contribution Regulations Act 2020, which, in its current form, includes a classification that affects many people. Also, there should be an amendment in Section 3 of the Foreign Contribution Regulations Act 2010 restricting access to foreign money for public employees.
There is a need to repeal Section 3 of the Foreign Contribution Regulations Act 2020, which amends Section 7 of the Foreign Contribution Regulations Act 2010 and forbids registered organisations from giving foreign funding to other associations and organisations.
Repeal Section 12 of the Foreign Contribution Regulations Act 2020 and replace it with Section 17 of the Foreign Contribution Regulations Act 2010, which mandates that anyone applying for the Foreign Contribution Regulations Act certificate must open a “Foreign Contribution Regulations Act Account” at the State Bank of India in New Delhi.
The government of India should also consider repealing Section 4 of the Foreign Contribution Regulations Act 2020, which modifies Section 8 of the Foreign Contribution Regulations Act 2010 and lowers the maximum percentage of foreign money that can be used to pay administrative costs from 50 to 20 percent.
Conclusion
The Act aims to control how people, associations, and businesses can accept and use funding from foreign sources while also keeping an eye on any potential transfers of cash to other parties. Additionally, the maximum amount that can be used to pay for administrative costs from foreign contributions has been reduced from 50% to 20%. By expanding the existing 180-day window to include more time, the legislation also gives the ability to revoke Foreign Contribution Regulations Act certificates. Many people think that the amendment would inhibit research and hinder the efforts of non-governmental organisations in the nation. Additionally, it will affect employment as non-governmental organisations will no longer be a lucrative employment option.
Nowadays, non-governmental organisations receive a larger portion of foreign donations. The number of non-governmental organisations in the nation has also grown, and as a result, there have been many cases where the money has been used for reasons other than those for which it was intended. Therefore, it was necessary for the government to limit such practices.
The Foreign Contribution Regulations Act, 2020 is the legislation that will aid the government in making sure that the money obtained from foreign sources is only used for legitimate purposes and to help non-governmental organisations in the nation meet their goals in the best possible manner.
Frequently Asked Questions (FAQs)
What effects will the amendments have on non-governmental organisations that are not FCRA-registered?
Previously, non-FCRA registered non-governmental organisations were permitted to receive a percentage of FCRA funds from FCRA registered non-governmental organisations with the government’s prior approval. Such funds shall not exceed 10 percent of the foreign contribution received by the FCRA registered non-governmental organisations. After the amendment act, collaborations within the non-governmental ecosystem will be impacted. Service agreements for particular services rendered to an FCRA-registered firm are unaffected by the application of the 18% GST. The revenue generated by the supply of such services shall not exceed 20% of the overall revenue made by the non-governmental organisations.
Also, as the amendments are in effect, the requisites for FCRA registration have changed. The requisite eligibility requirements and paperwork needed for such registration include Aadhaar, affidavits to be signed either by office bearers or chief functionaries, as well as the ban on having public officials on the board.
What impact will these amendments have on CSR agencies that can only support NGO partners that are FCRA-registered?
CSR funders are required to verify through due diligence or by requesting an assurance from their non-profit partners that their governing boards are free of any “public servants.”
CSR funders must incorporate the necessary restrictions in terms of participation with non-profit partners in order to prevent the recipient entity from using their funds for additional purposes.
CSR funders should also make sure that the combined budget and purpose of utilisation of funds by non-profit organisations are appropriately followed.
In order to prevent projects from getting stuck in the middle of execution owing to a delay in the process of renewing the FCRA certificate, CSR agencies would also need to be informed of the date of expiry of the FCRA registration of their non-profit organisations.
Will this Act have an effect on the services that an individual offers to non-governmental organisations that are registered with the Foreign Contribution Regulations Act?
The definition of a foreign contribution does not apply to any payments that an individual receives in lieu of services provided in the ordinary course of business. These amendments may have an impact only if the FCRA-registered non-profit counts the service fees as part of its administrative costs, which are now capped at 20% of the total foreign donation. If the services are related to managing or operating the business, the non-profit organisation may classify the service fees as “administrative costs” depending on the type of services provided. The fees can also be classified as “professional charges” in certain situations.
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This article has been written by Hemant Bohra, a law student at Lovely Professional University, Punjab. This article discusses in detail the different rights of medication administration that a medical professional should consider and their importance in reducing medication administration errors. It also provides other solutions to lessen the chances of errors during the medication process.
It has been published by Rachit Garg.
Table of Contents
Introduction
When someone is admitted to the hospital, they have the right to be treated for their medical problem and to get high-quality nursing care. In the same way, nurses also have various rights in their medical practice to make their work more convenient and avoid suffering risks. The complicated procedure of medication administration is often guided by a standard set of tests/rights that are used in nursing schools and hospitals to help students and faculty. The nurse is expected to implement those rights since there are legal obligations for the activities that are in compliance with the Standard Operational Procedure (SOP) and only then would the nurse be able to minimize errors in delivering medication.
However, all registered nurses are academically qualified, ethically accountable, and held professionally responsible for carrying out their tasks in a safe manner. Therefore, nurses have the ability to administer, identify, and report medication mistakes if there are any. But before we know about the rights of medication administration, let’s first discuss what exactly a medical administration is.
Medication administration
Medication administration may be defined as the process of overseeing and managing each and every element of the administrative side of providing healthcare services. In order to guarantee the success of the healthcare provider or system, medication administration is required to perform all the non-clinical functions involved in running a healthcare institution, from daily operations like personnel to budgeting and finance. Healthcare delivery must be planned, supervised, and coordinated by medical administrators.
Medication administration may include the control and management of:
Hospitals, medical clinics, medical stores, healthcare agencies, medical camps, etc.
Particular divisions or sections, such as cardiac care units, critical care units, and emergency rooms.
Particular sectors, including personnel, facilities management, admissions, and financing.
Medication administrators
The healthcare system is one of the most complicated and dynamic industries as a whole, so it requires highly qualified management personnel to keep things operating smoothly. It includes medical billers, transcriptionists, nurses, hospital executives, assistants, HR, etc. Depending on the tasks or responsibilities assigned to them, medical administrators may also be referred to as hospital administrators or health care managers.
Responsibilities of a nurse as a medication administrator
As medication administrators, the nurses must verify the medication order before administering it, and they must also use their critical thinking skills to consider the ordered medication in light of the client’s status and condition, as well as any relevant lab results, vital signs, or other relevant information. They must also consider the client’s allergies and any potential drug interactions.
Because giving the patient the wrong drug can be fatal, the nursing duties associated with dispensing medications are quite extensive. To prevent medication mistakes, numerous checks and balances are in place. A nurse is required to be educated about adverse effects and drug interactions, validate the prescription and the patient, deliver medications as directed, obtain clarification when necessary, and record medication delivery in medication records.
According to the research conducted by the faculty of Tehran University of Medical Sciences, Tehran, nurses play a critical role in assuring the safety of the drug delivery process and are accountable for 64.55% of medication mistakes in hospitalized patients. Before a drug is provided, the nurse is the final person to verify that it was prescribed and dispensed accurately. The administration of medications is likely the riskiest duty a nurse may conduct, hence several regulations and standards have been developed to assist reduce the likelihood of medication mistakes.
Rights of medication administration
As administering medications involves the life of a human body, it is seen to be the duty with the highest level of risk that a medical administrator can undertake. As a result, several regulations have been established to protect human life from unseen danger and to minimize potential risks. That is where the rights of medication administration come into the picture.
Originally, there were five rights of medication administration, which includes:
Right patient
The first step in administering medication is to make sure that the patient is the appropriate one. When a patient receives medication meant for someone else, it frequently results in medication mistakes. It is practically hard to recall the names and faces of every patient. The nurse must examine the patient’s medicine administration record, including identification accepted at the institution and identification band, in order to correctly identify a patient.
However, not all patients, particularly those in nursing homes or with mental illnesses, wear identifying bands. Extra caution may be required in these circumstances since some patients may be disoriented or unable to self-identify. Prior to giving medication, it is crucial to constantly abide by the facility’s identification policy.
Right drug/medication
Research has shown that the most common medication error involves giving and prescribing the wrong medicine to the patient. It is the utmost responsibility of medical professionals to make sure that the medicine name specified matches the medication being delivered. Due to prefixes, suffixes, or names beginning with the same initial letter, certain brand names or generic names may have extremely similar spellings or sounds. Given that the two pharmaceuticals at issue might have radically different modes of action or reasons for prescription, it is crucial to distinguish between medications with similar names.
Patients purchase the wrong medications as a result of poor handwriting and sometimes abbreviations in prescriptions, which ultimately results in causing severe injury to them. To confirm the prescription, the physician should be called if their handwriting is illegible. Utilizing Computerized Prescriber Order Entry (CPOE), which has been shown to lower prescription mistakes, is one way to address this problem.
In the case of Krushna Pad Mandal v. State of Odisha (2020), in order to get his ill wife treated, Krushna Mandal, the accused in the Narcotic Drugs and Psychotropic Substances (NDPS) Act, 1985 case, requested an interim bail. However, the Court discovered that a doctor’s prescription was written in illegible handwriting while reviewing accused’s wife’s medical records. The Court while granting bail to the accused observed that in order to prevent drug errors, doctors must make a conscious effort to write prescriptions legibly, preferably in capital letters. In addition, the Court pointed out that unclear handwriting on prescriptions confuses not only harms patients but also pharmacists, prosecutors, and judges who might have to read such documents during a hearing.
In a similar case, in February 1997, a 4-year-old boy named Harry Donnelly of Somers passed away following routine, low-risk outpatient operation to remove his adenoids and insert small tubes to drain fluid from his ear holes at Hudson Valley Hospital Center in Peekskill. After investigation, it was found that the cause of the death was an adverse reaction to the use of the false or non-prescription anesthetic phenylephrine by the medical professional.
Right dose
Nurses’ daily responsibilities include calculating and verifying medicine dosages, verifying the frequency recommended and accurately filling out the medication chart. To prevent giving patients the incorrect dose, nurses should check the label on the dose, challenge prescriptions for medications and doses that are illegible or seem risky, or employ bar-code technology if it is functioning. Medical organizations (hospitals, clinics) believe that these procedure guidelines are sufficient to confirm the appropriate dosage. Usually, nurses do not actually prescribe the dose; they just provide it as directed by the medical authority.
Additionally, mistakes might happen if the prescriber employs inaccurate or deceptive units. Misuse of decimal points and acronyms might result in incorrect prescriptions. Similar to this, the right units of measurement must be used when the nurse determines the amount of medication to dispense.
In the case of M/S. Spring Meadows Hospital & Anr v. Harjol Ahluwalia (1998), a child with typhoid was admitted as a patient in the hospital of the accused. The child passed out soon after receiving the injection from the nurse and later died. Before the National Commission, the minor child’s parents filed a complaint. The panel came to the conclusion that the child’s brain had been harmed by a significant delay in steps to revive the heart and that the infant had cardiac arrest as a result of intravenous administration of an excessive quantity of the injection.
Right time
The biggest difficulty and top concern for a doctor is timely medication administration. In order to sustain a beneficial effect, various medications frequently have predetermined intervals or window periods during which another dose should be administered. This right time is based on the guiding premise that drugs should be prescribed as nearly as feasible to the time, and that nurses should not stray from this time by more than 30 minutes to prevent negative effects like changing bioavailability or other chemical processes.
Preparing the drug at the proper moment is another aspect of administering medication when it is needed. Unless the manufacturer specifically advises it, medications shouldn’t be prepared more than a few hours (or even an hour) before administration. How soon after the scheduled time a drug should be provided may be a question for medical students. The basic idea is that drugs should be taken as close as possible to the time that has been recommended.
Right route
Choosing the proper route of administration has grown increasingly difficult. Because each route has related technology or equipment that must be mastered, nurses today need to be far more informed than they were in the past. There are various ways to provide medicine to patients, and each has a different impact on how quickly the chemical is absorbed, how quickly the medication takes action, and if there are any potential adverse effects. Oral, through the eyes, intravenously, topical, or subcutaneous injections are a few popular methods.
The nurse has to be aware of how various routes differ from one another, such as in terms of rate of absorption or time before effect. However, the notes surrounding the way that medications should be administered are important to keep communication clear as nurse shifts change or others administer medication.
There is scarcely any evidence of a reduction in errors that can be seen even after implementing these five conventional rights in medical practice. The rights of medication administration needed to be improved as the work becomes more complicated due to the multiplication of diseases and becomes more dangerous, which is why certain new rights have been implemented in the medical industry to encourage administrators to exercise greater caution in their job.
Other rights of medication administration
Right to refuse
Both the nurse and the patient may be offered the option to decline treatment when necessary under various conditions. The patient may find it difficult to take the medication or they may not understand the necessity for it, which leads to refusal. In a similar manner, the nurses have the right to decline to deliver a prescribed medicine if they have any questions about the validity of the prescription or believe it to have been written erroneously.
The right to refuse is also mentioned under Article 21 of the Constitution of India, in which the patient has a legal right to refuse treatment except in an emergency situation. However, if a patient persists in refusing the prescription, it is the obligation of the medication administrator to note this in the patient’s file and let the healthcare practitioner know.
In the case of A.S.Mittal v. State of U.P. (1989), the Court observed that when a patient consults a doctor, the doctor has certain obligations to the patient. These obligations include a duty of care in determining whether to take on the case and what treatment to administer. Any of the aforementioned obligations that have been violated may give rise to a claim of negligence, and the patient may then sue his doctor for damages.
Right to documentation
The individual dispensing the drug is accountable for accurately documenting that delivery. The nurse should sign the patient’s medical chart and indicate any medicine administrations in the patient’s medical file. This shows that the patient has received the drug, according to the proof. The patient may refuse their medicine or, in certain situations, forget to take it. Thus, signing the medication record before the drug has been given carries a risk.
Similar to not signing when a drug has been provided, doing so increases the possibility that another nurse may repeat the dose. The medication’s generic name, dosage, timing, route, reason for administration, and result should all be documented. Communication between medical providers may break down in the absence of sufficient documentation.
Right to information/ knowledge
All facets of the drugs that they are taking (patients) or giving (medical administrator) should be explained to patients and nurses, depending on each individual’s responsibilities. Information regarding the purpose of the medicine, any potential side effects, and the proper disposal of unwanted and expired medications should be provided frequently to nurses. The proper and safe way for the patient to self-administer drugs should be explained to them.
Some nurses may also need to get additional instructions on how to administer tube feedings, prepare insulin, give themselves an intramuscular injection, use an inhaler properly, or take insulin. In a similar way, nurses have a responsibility to ask pharmacists about the medications they are to provide to their patients. Apart from that, nurses should be taught how to prepare and store medications in accordance with local regulations and educated on proper monitoring prior to medication administration.
In the case of Poonam Verma v. Ashwin Patel and Ors. (1996), while distinguishing between negligence, carelessness, and recklessness, the Supreme Court held that anybody who practices medicine while being ignorant of a specific medical system would be considered to have committed medical negligence.
Right to policies and action
The framework required for nurses to safely dispense medicine must be provided by the health care administration. The Board of Regulation in Nursing regulates nursing practice, but nursing rules within a healthcare organization are what direct nursing practice. In many cases, policies shield the nurse from legal action if something goes wrong. In contrast, failing to adhere to the policy or administering medication without one puts the nurse in danger of legal action as well as the suspension or loss of their license.
A nurse giving medication must make sure it is administered for the right result. It might be dangerous to provide a stimulant to a patient who already seems to be asleep. When a nurse is giving a patient medication, they should explain to them what the medicine does and why it was ordered.
In the case of Sishir Rajan Saha v. The State of Tripura and Ors. (2002), the Court held that If a doctor or specialist neglects to treat a patient who has been hospitalized in an emergency situation or who is under his care and the patient dies or suffers effects that could have been prevented with the doctor’s proper care, the doctor may be held accountable for medical malpractice.
Right to response
The nurse should keep an eye on the patient to make sure it is having the appropriate impact after giving the medicine to the patient. This right to medication delivery entails a determination of whether the medicine is working as intended, which is critical for several high-risk treatments, including insulin, blood thinners, etc. Providing medication monitoring to determine the medication’s ongoing effects is another aspect of the appropriate approach.
The medical administrator benefits as well from keeping track of which medications are effective and which are not. It is important for nurses to remember that their role and duty in ensuring drug safety does not end once the proper medication has been given.
In the case of Bombay Hospital & Medical Research Centre v. Asha Jaiswal & Ors., (2010), the patient was not examined or assessed by any doctor in the hospital and because of this the patient’s pulse dropped. Furthermore, it was claimed that despite his serious state, the patient was compelled to wait in line for the Digital Subtraction Angiography (DSA) machine for many hours before finding out that it was broken and having to wait again for several hours before an angiography could be done. Then, the legal heirs of the deceased filed a complaint with the Commission, accusing the institution.
Significance of rights of medication administration
Medical administrators frequently feel as though there is not enough time due to the number and complexity of patients in today’s healthcare system. Nurses can use a variety of tactics to lessen the likelihood of adverse medication events. Going back to the fundamentals of giving patients their medication rights involves the core premise. High-risk or high-alert drugs, as determined by the Institute for Safe Medication Practices (ISMP), require more time. In fact, many hospitals demand that high alert medicines be double-checked before being administered by a second nurse. The safety and wellness of those you serve to depend on your understanding of medication administration rights and how to use them.
The easiest approach for a medication administrator to avoid medication errors is to always follow the rules while helping someone administer their medications. The rights of medicine administration exist to safeguard the patient and the nurse giving it as well as to lessen the harm brought on by medication errors. In order to guarantee a firm base of knowledge throughout their careers, nurses should continue learning about various drugs and their rights and policies because drug responses vary from person to person. Therefore, poor medicine delivery might result in dangerous mistakes and reduce the effectiveness of the senior patient’s treatment.
To further grasp the idea and use of medical administration rights, let’s now discuss potential errors in medication administration.
Errors in medication administration
Medication administration errors continue to be common despite huge efforts to reduce them by deploying new technology and simplifying procedures. This is a truth that errors cannot be avoided because nurses, patients, and medical professionals are all human beings that are prone to errors. Because of their interdisciplinary character, they are obligated to uphold their specific duties to guarantee the security of medication administration and respect the aforementioned rights.
Medication errors would be any avoidable incident that may result in or contribute to improper medicine usage or patient damage when the medication is within the control of the medication administrators or even the patient. Most common medication errors include wrong prescriptions and screening errors such as forgetting to record an allergy or failing to consider the possibility of a medication interaction. Medication errors also include errors in compliance, such as failing to adhere to protocol or regulations set forth for the distribution of medicines.
Cases of negligence in medication administration
Dr. T.T. Thomas v. Smt. Elisa And Ors. (1986)
In the above case, the husband of the plaintiff was hospitalized after experiencing extreme stomach discomfort. It was determined that the patient had acute appendicitis, which required rapid surgery to preserve his or her life. However, the surgeon backed out of the emergency procedure, and the patient passed away. According to the Kerala High Court, the defendant was responsible for the patient’s death since the doctor failed to execute the procedure in an emergency.
Juggankhan v. State Of Madhya Pradesh (1964)
In the recent case, the defendant, a licensed homeopath, gave the guinea worm patient 24 drops of stramonium and a leaf of dhatura. The accused did so and was held accountable even though he was unaware of the consequences of administering such a chemical. In this case, the Supreme court observed that if a doctor administers a medication that is known to or used in a specific branch of the medical profession, he implicitly proclaims that he has an understanding of that area of science, and if he does not actually possess that understanding, he is acting rashly or negligently.
Pooja Sharma & Ors. v. Maharaja Agrasen Hospital & Ors.
In the aforementioned case, a newborn became completely blind as a result of Retinopathy of Prematurity (ROP), a medical condition connected to premature birth, going untreated until it reached the irreversible Stage 5 stage. Because the parents of the baby were not informed or given instructions on the possibility of ROP in a premature newborn, the hospital and its workers were held accountable for medical negligence. The hospital and the ophthalmologist did not evaluate the infant as per the standard procedure.
Solutions to reduce medication administration errors
Simply adopting the rights of medication administration will not significantly minimize or eliminate medication errors. Therefore, the healthcare administration needs to apply other possible and effective methods to reduce the chances of errors. Some of them are as follows:
Use of barcodes
In a system with extensive barcoding technology, a research conducted by the faculty of the School of medicine, Johns Hopkins University on medication errors indicated a 41% reduction in errors and a 51% decrease in possible adverse drug events. So, by marking patients, drugs, and medical data with barcodes, it is possible to electronically link the correct dose of the right medication to the right patient at the right time, which helps eliminate errors in the healthcare system.
Proper storage of medicine
To retain effectiveness, medicines that need to be kept refrigerated must be kept refrigerated, and vice versa for prescriptions that need to be stored at room temperature. The majority of biologicals need to be refrigerated, and if a multidose vial is used, it has to be labeled so that its expiration date from the time it was opened is not exceeded.
Double checking process
Double checking is a process that calls for two authorized medical practitioners to examine the drug before giving it to the patient. Based on the subjective hypothesis that other people’s compensating behaviour might minimize human errors, it is an effective function. Double checking is a preventative measure that can identify issues before they endanger the patient and, as a result, frequently stops the reporting of errors in medication administration.
Communication and counselling
Interacting with the patient and confirming their understanding of the dose, drug allergies, and discussing any additional drugs they may be taking can help prevent medication errors. At a certain point, counselling a patient helps to decrease errors because if the patient begins to feel better, he or she may believe that the medication is no longer necessary, or if they start to feel worse, they could stop their therapy to prevent adverse effects. So, it is important to guide the patient throughout the medication process.
Conclusion
As we all know, administering medication is considered to be one of the most complex professions which requires due attention at every stage of it, and thus nurses are provided with various rights to reduce that complexity and make the medication process safe and secure. To assist nurses in avoiding prescription mistakes that might have negative or even fatal effects on patients, nurse education programmes should cover all of the preventative techniques described above and more.
By effectively enforcing their rights, medication administrators must strive to deliver quality treatment. In any clinical circumstance, the well-being of the patient and the standard of care must come first. However, nurses are not the only ones responsible for upholding rights; the entire healthcare system must be effective.
Frequently Asked Questions (FAQs)
What is a Standard Operating Procedure (SOP)?
A collection of written instructions known as a ‘standard operating procedure’ (SOP) outlines the precise steps that must be taken to carry out common medical procedures. To ensure that the company maintains consistency and complies with industry norms and business standards, standard operating procedures (SOPs) should be adhered to consistently.
How can patient-centered strategies for medication management reduce errors and enhance outcomes?
According to a study conducted by the faculty of the Department of Medicine, Indiana University, USA, patient involvement in the medication process or taking an active part in sharing their expertise and concerns can increase the efficacy of medication safety. Therefore, assessing what is important to patients is crucial.
Is pursuing a career in medication administration rewarding?
One of the industries with the highest employment growth worldwide, healthcare administration has a high median pay and a wide range of career opportunities. Financial manager, healthcare financial consultant, administrative medical assistant, hospital administrator, etc. are just a few of the many career options available in the complex field of healthcare administration.
Can nurses give patients medication on their own without a doctor’s prescription?
No, nurses are not allowed to administer without a professional doctor’s approval. Although, under certain advanced nursing practices, nurses have the power to prescribe medicines as well as the kinds of drugs and dosages that further vary from state to state.
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What makes you say that the cosmetic products which are purchased by you are authentic? For me, authenticity plays a role when purchasing a cosmetic product which is not inferior. This includes the logo, the place where it is being sold, its dominance in the industry, the price at which it is sold, and cross-checking that the product doesn’t mismatch in any way with the original cosmetic product. So it is quite evident. Customer Loyalty in the Cosmetic Industry is gained only through the dominance of the brand in the market and the goodwill attached to the business. Customer loyalty and goodwill can only be achieved in the second place. The first place is the Trademark of the Beauty Brand. Coming to the point, the Kardashian family has been placing its dominance in the Cosmetic Industry. This article will be discussing one of the most adored brands which appeals to the eyes of most women. That is Kim Kardashian’s cosmetics and the trademark dispute which arose when KKW was rebranded as SKKN for a skincare line.
About Kim K’s cosmetic products
Kim Kardashian’s fans love to copy her outfits, makeup and lifestyle. After Kim’s sister Kylie, Kim started her brand known as KKW. Kim didn’t eventually venture herself into the Cosmetic Industry but her love for face contours made her do so. In the initial stages, she collaborated with her sister Kylie cosmetics by creating a kit of four nude lipsticks. She dynamically launched her brand named KKW Beauty on June 21, 2017. KKW Beauty had begun only by selling contours and highlighters, the products were sold immediately after its launch just within two hours. And, expanded through the love and the growing demand of it by the consumers. Due to its popularity, in a short span of time special edition kits of contour, highlighters and lip glosses were also being sold.
Surprising her fans further, the Instagram diva launched perfumes as KKW fragrances with 3 crystal-inspired scents. Presently, the KKW Beauty line expanded and is offering up to all makeup products with fragrances over six scent pillars.
The transition from KKW to SKKN
On August 1st, the KKW Beauty website was shut down by Kim Kardashian. As by her statements, she wants to make a comeback with a better and different name. Including new formulas which seem to be innovative, modern and packaged in an elevated and sustainable new look. But yet, until now there has been no launch of it on her side. The new brand name which is likely to replace KKW Beauty is SKKN. On March 30th, Kim Kardashian filed a trademark application for SKKN. However, what she faces later is a legal dilemma.
While the registration of the trademark was done, Kim Kardashian’s lawyer got slammed with a Cease and Desist Notice by Beauty Concepts LCC. The renowned brand has claimed that they have been in the use SKKN+ brand since 2017. Providing salon and skincare services which are owned by Cydnie Lunsford. Beauty Concepts adamantly stated that not just this, they also operate a website and social media handles using the letters SKKN+. There has also been an application of the words to the U.S Patent and Trademark Office to register the SKKN+ logo.
Keeping up with SKKN in the USPTO
SKKN+ filed its application 2 days before an application filed by SKKN by Kim, on March 28th, 2021. On the examination performed in the Trademark Office, SKKN was not found to be descriptive despite the pronunciation being “SKIN”. SKKN by Kim covers classes 3 and 44 along with other additional classes that are suspended until the issues with Beauty Concepts SKKN+ are resolved. Even though there is an addition of BY KIM along with SKKN this does not resolve anything. The confusion caused between SKKN+ and SKKN BY KIM does not resolve or become less by avoiding or adding a distinctive matter to the mark. KIM K no matter is more successful and if USPTO goes in favour of SKKN, it would not be surprising for her fans. The Kardashian sisters are not new to inter-party proceedings enabling them to actively enforce their rights on brands and judgments passed in their favour.
Trademark confusion under Indian law
There has been no further legal update between the two parties. But for instance, if this situation arose in India, the Registrar under the Trademarks Act, 1999 is entitled to the power to deal with the matter as per the act. The situation which is described above between Kim K’s SKKN mark and Beauty Concept SKKN+ would be administered by the Trademark Registrar. The Registrar would in most cases reject Kim K’s application under section 11 of the Trademarks Act,1999 as relative grounds for refusal of registration. BY KIM SKKN is similar to the earlier trademark SKKN+ which has higher chances of confusion among the public. As this avoids the unfair advantage that could be detrimental to the distinctive character or reputation of the earlier trademark.
Indian cases on matters of confusing trademarks
Below are a few judgments listed for the use of the deceptively similar trademark by the defendant with an earlier existing trademark:
In the case of Parle Products (P) Ltd. Vs. J.P. and Co., Mysore AIR 1972 SC 1359 stated that: When deciding whether one mark is deceptively similar to another, the court decided that the main aspects of the marks must be considered. It is not necessary to retain both marks side by side for a registered trademark that is likely to confuse or mislead the public or any specific individual as being a product with a registered trademark when it is not. It is sufficient to infer that an infringement has occurred.
The respondent’s domain name was “marutisuzuki.com,” whereas the complainant was “Maruti Suzuki.” The WIPO Arbitration and Mediation Centre noted that Maruti Udyog Ltd. utilised the hybrid mark ” Maruti Suzuki” on a variety of goods, as well as brochures and ads. Respondent’s claim that Maruti is the name of an Indian God and that it is acceptable for naming their website since nothing is possible without God’s blessing was dismissed as a ruse with no validity. It does not affect the domain name’s identification in relation to the mark. It was also discovered that the World Information Pages had no legal right to the domain name in question. It was decided that the World Information Pages domain name will be handed to Maruti Udyog Ltd.
IN CADILA HEALTHCARE LTD V/S CADILA PHARMACEUTICALS LTD, 2001: The Supreme Court chose to avoid interfering with past decisions by carefully examining the principles. It highlighted the reasons for the non-interference and indicated that any opinion from the court without proof is unwise and that the court must evaluate all principles before passing any judgement. In making its decision, the court looked at pertinent instances. The court had said in National Sewing Thread Co. Ltd., Chidambaram Vs. James Chadwick and Bros Ltd., AIR 1953 SC 357, that any trademark registration application that is likely to cause confusion must be denied by the Registrar (Section 8 of Trademarks Act). It further noted that it was the applicant’s responsibility to persuade the Registrar that his trademark did not violate any of the Trademarks Act’s prohibitions. As a result of analysing the relevant sections, sub-sections, and acts, the court determined that purchasers of such drugs, whether pharmacists or not, should be considered men of ordinary intelligence capable of making mistakes. The court decided that it was a case of deceptive similarity, based on the provisions of Section 8 of the Trademarks Act, 1999, and Section 17-B of the Drugs and Cosmetics Act, 1940, and that any confusion could have serious health consequences. In this case, the following were some of the most essential characteristics to consider while analysing fake similarity:
The origins of markings.
The degree of resemblance between competing marks, both phonetically and visually
Goods’ nature.
This is the location where the items are utilised.
The goods’ similarities in terms of efficacy, performance, nature, and so on.
The intended users of the items, their intellect, and the level of caution that must be used.
Conclusion
Well, that can’t be said that there would be no use of SKKN by Kim Kardashian since the trademark application for SKKN is already done. But unfortunately, there has been a lockdown on the @SKKN social media account and SKKN.com by Kim K’s legal team. SKKN+ has over 8000 plus followers on Instagram. The popularity of the brand on social media is also recognized by the number of followers it has gained. Also, Beauty Concept has invested its valuable time, effort and money to reach this far.
Beauty concepts may be a smaller brand compared to KKW. But the use of SKKN by Kim K would cause confusion amongst the people. There is a trademark registration for SKKN but the matter is under examination for opposing SKKN by Beauty Concept. And, there is no further update on the use of SKKN by Kim Kardashian until the matter is resolved legally.
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This article is written by Ritika Sharma, pursuing B.Com LLB (Hons.) from the University Institute of Legal Studies, Panjab University. This article discusses the origin, characteristics, and merits and demerits of democracy. It also exhaustively examines the types of democracy with their peculiarities, advantages, and examples.
The Preamble of the Constitution of India, 1950 reads “We, the people of India, having solemnly resolved to constitute India into a sovereign socialist secular democratic republic…” India is considered the largest democracy in the world. Article 21 of the Universal Declaration of Human Rights states, “everyone has the right to take part in the government of his country, directly or through freely chosen representatives.”
A monarchy is another form of government that can be translated to “rule by one” and is similar to a dictatorship. Furthermore, oligarchy is “rule by a few” and is often criticised for being a system full of corruption and selfish motives. As democracy is considered the rule of the people, it has always been considered the most justifiable form of government when compared to systems such as oligarchy and monarchy. The four essentials of liberal democracy are legitimacy, justice, freedom, and power. This implies that the ruling government should be legitimate, should impart justice and freedom, and have a system of checks and balances over power. The follow-up piece studies the different aspects of democracy, along with a detailed analysis of the types of democracy, which include direct, representative, presidential, parliamentary, authoritarian, constitutional, monitory, and religious democracy.
Meaning of democracy
According to Merriam Webster’s dictionary, “a government in which the supreme power is vested in the people and exercised by them directly or indirectly through a system of representation usually involving periodically held free elections.” The term ‘democracy’ has been derived from the Greek words ‘demos’ meaning ‘the people’ and ‘kratos’ meaning ‘authority.’ Therefore, it means ‘government by the people.’ According to D.D. Basu’s commentary on the Constitution of India, democracy is defined as “that form of government in the administration of which the mass of the adult population has some direct or indirect share”.
In the case of Mohan Lal v. Dist. Magistrate, Rai Bareilly (1993), the meaning of democracy was discussed as “a concept, a political philosophy, and an ideal practised by many nations culturally advanced and politically mature by resorting to governance by representatives of the people elected directly or indirectly.”
Origin of democracy
The Panchayat system, which highlights the democratic setup, is an old system that is still in use today. In ancient India, the democratic form of government can be traced back to the republics called Maha Janapadas. The State of ‘Vaishali’, which is present day Bihar, was considered to be the world’s first republic.
It is said that democracy was prevalent in multifarious areas of the world before the 5th century. There were groups amongst the tribes responsible for making decisions without any outside interference. The term ‘democracy’ was coined by the Greeks, and Athens is one of the most significant democracies in world history. The Athenian democracy encouraged equality in the decision-making process but also had various limitations as it excluded women and slaves from participating in the voting system. Ostracism is one of the leading examples of democracy in Athens, where each citizen used to participate in the process of deciding the name of the person who was to be ostracised at mass meetings. Furthermore, Roman democracy has also been instrumental in motivating the democratic system. The ancient world created a basis for the democratic form of governance. Then agriculture and trade came into the picture, and non-democratic systems such as oligarchy, monarchy, and aristocracy started to emerge. In the modern world, there are several types of democracies that have their own peculiar characteristics shaped by the history, geographical location of the country, and the will of the people.
Salient features of democratic form of government
The general characteristics that can be traced to the democratic form of government include the following:
Equal citizenship rights
In a democratic system, there is no discrimination on the basis of caste, colour, sex, religion, etc. Every person can participate freely in the decision-making process. Article 326 of the Indian Constitution lays down the provision regarding the eligibility of a voter. Also, nobody is granted special rights and privileges in these aspects, and several countries like India provide reservations in the representative positions to women and other minorities so that every section of society can have equal opportunity and status in the positions of power.
Transparency
Democracy ensures transparency with free and fair elections in which candidates are chosen by the people. Holding elections at regular intervals is a vital element of democracy as it allows the citizens to choose the person who could work for the benefit of society. In this way, people take part in the system and any scope of bias is eliminated. In India, elections to the Lok Sabha take place every 5 years. Chapter XV of the Indian Constitution specifies the provisions regarding elections.
Free speech, expression, and choice
Democracy promotes free speech, expression, and choice. Article 19(1)(a) of the Indian Constitution provides for freedom of speech and expression and a democratic setup furthers this fundamental right. Citizens can express their wishes by favouring or opposing any political party and their ideology with the power of the vote. Encouraging citizens to express their thoughts is one of the glaring features of democracy. The public has the right to express their opinions on social media (subject to reasonable restrictions) because of the prevailing democratic form of government.
Federalism
In a democratic country like India, states have the power to take decisions without the intervention of the central government. The state government can make laws on the subject areas mentioned in the State List and Concurrent List, which consist of 61 and 52 entries, respectively.
Independence of the judiciary
Article 50 of the Indian Constitution provides for the separation of the judiciary from the executive and it reads, “The state shall take steps to separate the judiciary from the executive in the public services of the state.” This is a significant feature of a democratic country, and it makes the judiciary an autonomous body. The justice mechanism becomes impartial and aids in granting equal status to every citizen by treating them at par with any celebrity or person belonging to the elite class before the law.
Rule of law
The rule of law prevails over everything, and nobody is considered superior to the law. This is crucial to fixing responsibility and accountability and diminishing every trait of impartiality that could otherwise reign in a country headed by a monarch or oligarch. Furthermore, fundamental rights are granted a dominant status in a democracy.
Headed by Council
A democratic nation is not headed by a single person but by a group called the Council of Ministers. According to Article 75(3), the Council of Ministers shall be collectively responsible to the House of People. The Council of Ministers takes decisions and works for the best interests of society. This helps to avoid tyranny, as no single person is given the responsibility.
Difference between democratic and non-democratic forms of government
Non-democratic forms of government include monarchy, oligarchy, aristocracy, etc. The above-discussed features of democracy highlight the essentials of a system of democracy and also roughly reflect the basis on which a democratic and non-democratic system could be distinguished. The following points mark the key differences between the two:
Power to rule- As discussed, in a democracy, the ruling power is in the hands of the public and they can decide the group of persons to whom they give the power to make important decisions for the nation. On the other hand, the ruling power in a non-democratic system is in the hands of one or a few people who are not elected by the people, and therefore, the public does not have any say in the decision-making process.
Right to freedom- In democratic countries, people have the right to freedom of speech and expression and to form an association with which they can give their suggestions and comments on the policies framed by the government. Also, they can protest if any decision is detrimental to their interests. Conversely, all these rights are generally not available to people belonging to non-democratic countries.
Sovereignty- Democracy encourages sovereignty while a non-democratic government favours domination over its subjects.
Justice mechanism- In a democratic setup, the power to give judgments and declare punishments is with the judiciary. However, in other forms of government, there is hardly any such mechanism as only a few people who are not the representatives of the public have the power to render justice.
S. No.
Basis
Democratic government
Non-democratic government
1
Power to rule
Power to rule is in the hands of the public.
Ruling power is in the hands of one or a few persons.
2
Right to freedom
This right is available to the public.
It is restricted.
3
Sovereignty
It encourages sovereignty.
It favours domination.
4
Justice mechanism
Justice is ensured by a separate branch called the ‘judiciary’.
The rulers of the nation have the power to render justice.
Types of democracy
A democratic form of government can also be categorised into further sub-parts based upon some peculiar features. The following discussion underlines the different types of democracies in the world.
Direct democracy
In this type of democracy, people directly participate in the ruling process of the country, and decisions are taken by the public directly. In case any law or policy is to be introduced then citizens give their votes for or against such a matter and only then it could be passed or rejected. It is also called ‘pure democracy’ as there is no direct involvement of any intermediary who decides on behalf of the people of the country. The ancient example of direct democracy is the democratic setup in Athenian Greece.
Forms/Features of direct democracy
Referendums, initiatives, and recalls are the intrinsic features of direct democracy. These are explained below:
Referendums- Switzerland follows a direct form of governance. This nation adopts various measures, such as popular initiatives and mandatory and optional referendums, to take into account the will of the people. The answers that can be given to the referendum are usually ‘yes’ or ‘no’. For instance, in New Zealand, referendums can be both government-initiated and citizens-initiated referendums. Government-initiated referendums are promoted by the government and then public opinion is taken into consideration, while citizens-initiated referendums are purely the result of the public will and these are initiated via petitions by at least ten percent of the eligible voters.
The usage of referendums is increasing day by day owing to the advantages it offers. It aids in resolving various conflicts between the political parties without splitting them. These are also useful when an authoritarian rule is to be transformed into a democratic form of government. The votes of citizens are the major deciding factor when changes are to be made in the constitutions of the states.
Initiatives- These are of two types, namely, citizens’ initiatives and agenda initiatives. Citizens’ initiatives allow the public to file a proposal and demand a vote of the public. This could be either direct or indirect. In direct initiatives, the proposals are directly sent to the public for approval or rejection, while in indirect initiatives, the proposals are sent to the legislators, who can then send them to the public for voting, with or without amendments to the proposal. Transparent rules and the specific responsibility and accountability of the authorities are pivotal for the success of this form of direct democracy. California’s referendum on a high-speed railway system was based on citizens’ initiatives.
On the other hand, an agenda initiative places an issue on the political agenda and requires the legislature to consider the proposals. For instance, an agenda initiative was proposed in Argentina to end the special pension funds.
Recall- It is a system by which the public’s vote can remove an elected official from his/ her position before the expiration of their tenure. It acts as an essential way of putting pressure on the authorities to take action.
Types of direct democracy
Direct democracy can be a deliberative and participatory democracy.
Deliberative democracy- Promotion of public discussion and consideration of reasonable views of the public in policy-making is called deliberative democracy. This theory was majorly supported by the jurist John Rawls. According to him, decisions taken after the debate would be based on a rationale that would limit the scope of self-interests and inequality in the public. The essentials of this type of democracy include public debate on the issues and processes and the promotion of reasoning based on logic rather than other factors such as religion. These would lead to the production of legitimate results, thereby creating a democratic society. Citizens’ initiative review is an example of deliberative democracy.
Participatory democracy- This type of democracy aims at encouraging citizens to take policy decisions. It aims at creating umpteen number of opportunities for the people for their involvement in useful contributions, therefore it encourages interactions and discussions between the leaders and the common man. At present, no country wholly follows this type of democracy. Local self-government and the panchayat system are examples wherein citizens’ participation is considered of utmost importance. This type of democracy can lead to maximum benefits in terms of development and stability if adopted in a fair and organised manner. According to the United Nations Development Programme, “participation is a method in which people are firmly engaged in the political, economic, socio-cultural processes that affect their lives”.
Advantages of direct democracy
The following are the advantageous features of direct democracy:
Complete transparency- Direct democracy includes the involvement of citizens, thus, the government cannot hide any material fact from them. This leads to favourable decision-making as everyone has an idea of the outcomes.
Satisfaction of the public- This form of democracy ensures maximum satisfaction of the people of the nation due to maximum participation.
Improvement in quality of life- As the decisions are taken by the ones who face the problems and challenges, they lead to the best results thereby improving the quality of life of the public.
Other benefits include the promotion of equality, more cooperation, and responsible behaviour by the public.
Disadvantages of direct democracy
The demerits of a direct form of governance are as follows:
Incompetency of citizens- It is not necessary that the citizens of the nations that follow direct democracy are competent and informed. As the major decisions are taken by them directly, it can lead to flawed results.
Complexity- Many times, citizens have to decide on a number of propositions which causes complexity and confusion as even the most informed citizens find it difficult to make a decision on more than one issue simultaneously.
Minority rights- As the decision is taken with the help of the majority vote, direct democracy can threaten the rights of vulnerable communities. It often leads to the victory of one side over the other and the losing side is often the minority, so it can cause trouble in nations consisting of people from different communities and religions.
Some other examples of countries that follow direct democracy mechanisms are Columbia, Venezuela, Uruguay, the Philippines, etc. In the USA, there is no provision for direct democracy at the national level. However, it is followed actively in various US states.
Representative democracy
Representative democracy is the most common type of democracy that prevails in the world today. The origins of this type can be traced back to the ancient Roman Republic. In this, decisions are taken by the elected representatives who are chosen by the voters through a majority. The policies and laws are formulated by these elected representatives of the public. Parliamentary and presidential forms of democracy are considered to be a part of representative democracy. Another name for this type is ‘indirect democracy’. As people give the power to decide to their representatives, elections become an essential feature of this type of government. Similarly, the role of political parties and the opposition is crucial.
Features of representative democracy
The key features of representative democracy are as follows
Elected representatives- This is the most crucial aspect of this type of democracy, as its name suggests, the country is ruled by the representatives who are elected via elections.
Independence of judiciary- The principle of separation of powers is followed in representative democracy, which makes the justice delivery system independent of the executive and legislators. For example, in India, which follows representative democracy, the Apex and subordinate courts function independently of the other two pillars of democracy.
Powers- The powers are exercised according to the Constitution, which contains the basic principles and laws for the operation of the country. This leads to the formation of an organised system of governance.
Appointment of officials- The officials of the nation following representative democracy are appointed in accordance with the provisions of the Constitution which may provide for ballot elections or other forms of governance like panchayats or local self-government.
Advantages of representative democracy
There are several benefits to adopting representative democracy. The two most significant of these are:
Well-structured- Representative democracy is a well-organised form of democracy in which functions are performed in several layers. The election process itself has to be conducted systematically. Therefore, it is beneficial for the larger countries.
Voting rights- This is the glaring feature of representative democracy and puts the power to decide in the hands of the public through a group of people whom they trust. Additionally, voting power can be used to remove inefficient ministers from authoritative positions.
Equality- Representative democracy fosters equality as everyone has equal voting rights irrespective of religion, race, sex, caste, or community. This ensures equal participation and satisfaction among the public.
Disadvantages of representative democracy
The disadvantages of this widespread form of government include an increase in costs, slow processing and reviewing of decisions, and inefficiency in the completion of long-term goals since the ruling party keeps changing at regular intervals. These are briefly discussed below:
Unfeasible- As elections are the vital element of representative democracy, this is a time-consuming as well as an expensive form of structure. The conduct of elections and campaigns consumes huge amounts of money and time.
Obstacles in long-term projects- This is one of the major demerits of democracy. As the decision-makers or representatives have the authority to work as long as they hold their position, it leads to the creation of issues in long-term development projects since the representatives keep changing.
Conflicts- It leads to conflicts between the political parties, which aim to attract voters with different ideals and objectives. Consequently, it causes confusion in the minds of eligible voters.
Some of the examples of countries that follow representative types of democracy are India, the USA, the UK, Canada, and Australia.
Presidential democracy
In a presidential democracy, the President has greater power than the government of the state, and the head of the state is also the head of the government.
Features of presidential democracy
The chief features of this system are highlighted below:
The President is both the de jure and de facto head of the state.
There is no dominant role of the Legislature, and the President heads the Cabinet members who are not answerable to the Legislature of the state. The President has full discretion to select the members of his cabinet.
Unlike in a parliamentary democracy, the President cannot be removed via a no-confidence motion in Parliament.
The President is empowered to formulate policies and laws for the Legislature.
Advantages of presidential democracy
The following points reflect the benefits of presidential democracy:
As the President can choose the members of the Cabinet without any interference from the Legislature, he/ she makes the best efforts to select experts and competent people.
There is relatively less scope for politics as the President works with the aid of Cabinet members without any intervention.
The vices, such as defections or desertions are less prevalent in this system.
Examples of countries that follow the presidential democracy system are the USA, Brazil, and Sri Lanka.
Parliamentary democracy
In this type, the role of Parliament is the highest when decisions regarding the passing of a bill or policy are to be taken. The power of the legislature is greater than that of the executive branch of the government. The Parliament has the right to choose and remove the head of the state.
Features of parliamentary democracy
Some popular characteristics of parliamentary democracy are:
The head of the state is merely a constitutional head and the Council of Ministers is empowered to take decisions and is accountable to the Legislature.
The Council of Ministers is itself an element of the Legislature and also has to get majority support from the latter.
The central power lies with the head of the state (Prime Minister), who also heads the Council of Ministers. Any minister in the Council of Ministers holds a position at the pleasure of the head.
The Council of Ministers is collectively answerable to the Legislature and also depends upon the will of the Legislature.
The ministers function as a team, and in the case of any disagreement, they have to move collectively as one unit and affirm what the majority favours or otherwise resign.
Advantages of parliamentary democracy
India follows this democratic system due to the following benefits:
Due to British rule, India was already familiar with this system.
This system offers the benefits of separation of power and harmony between the Legislature and the Executive.
There is the feature of accountability in this system which can keep a check on the functioning of the ministers.
Other countries which follow parliamentary democracy are the UK, Canada, the Netherlands, Italy, etc.
Authoritarian democracy
In an authoritarian democracy, there is the dominance of the elite class. The wealthy and elite sections of society are part of Parliament, and the citizens have to choose amongst them.
Features of an authoritarian democracy
Two features of an authoritarian form of government make it a type of democracy. These are:
Firstly, although from a selected pool, people have the power to choose their representatives.
Secondly, this system embraces the democratic model, i.e., the executive and legislative branches.
Advantages of an authoritarian democracy
The benefits of this form of democracy include:
Saves time and money- Since the prospective candidates belonging to the elite class are already fewer so less time and money are consumed in the election and decision-making processes.
More clarity- This system of democracy is easy to understand since there are no complex government hierarchies as in parliamentary and presidential democratic setups.
Constitutional democracy
This type aims at protecting the rights of minorities and vulnerable sections of society by restricting the authority of the majority communities.
Features of constitutional democracy
Sovereignty- The consent of the public is of utmost importance and the ruling party governs with the consent of the people and for their benefit.
Rights of minority- In this type of democracy, more attention is paid to the protection of the rights of minorities, so it’s a democracy for the minority section of the population.
Limited powers of the government- The ‘institutional and procedural’ limitations are imposed on the powers of the government. This is achieved by, firstly, the division of powers amongst three organs (legislative, executive, and judiciary) and further sharing of functions with other branches; secondly, a stringent mechanism of checks and balances and thirdly, following the rule of law.
Advantages of constitutional democracy
Apart from the fact that it protects the rights of minorities, the following are some other merits of this type of democracy:
Freedom of conscience and expression- This type aims at following the constitutional principles like freedom of conscience and expression sacredly, leading to the promotion of participation of the citizens in decision-making processes.
Protection of right to privacy- Privacy concerns are taken into account and personal, family, medical, religious, and other types of privacies are protected under a constitutional democracy.
Equality and justice- The country functions in such a way that the citizens’ rights to political, economic, and social equality are considered to be on a higher pedestal, which also ensures justice by the law enforcement agencies.
The countries that follow constitutional democracy are Israel, the USA, Germany, Japan, etc.
Monitory democracy
It’s a form of democracy in which several agencies monitor the ruling authorities. It evolved after the Second World War and its idea was introduced by Professor John Keane. It basically aims at inculcating a system of checks and balances over the government. John Keane, in his book The Life and Death of Democracy, stated that this system reflects the notion of “one person, many interests, many voices, multiple voters, multiple representatives”.
Elements of monitory democracy
There are three basic elements that make monitory democracy a success by providing the means of monitoring. These are:
Guide-dog institutions- These are anti-corruption agencies that act as monitoring bodies in guiding the democratic framework of their countries.
Watch-dog institutions- According to John Keane, these include “ombudsmen, royal commissions, public enquiries, and independent auditors’ checks”. It is another means to restrain the arbitrary power of the government and make it follow particular standards and principles.
Non-government organisations- These are the most famous elements which help society keep a check on the powers of the state. Additionally, they work for the interests of society and equip the public with necessary information regarding public policies.
Examples of other monitoring bodies include petitions, consumer forums, think tanks, social forums, focus groups, etc. Some of the countries which follow monitory democracy include the USA, New Zealand, Argentina, Japan, Australia, and some European and South Asian nations.
Religious democracy
Religious democracy refers to the system in which the scriptures or other sacred texts are followed for the governance of the country. In an Islamic democracy, religion is the basis of ruling and formulating laws and policies. The principles of government are also structured in consonance with secular laws. The most perfect example of this type of democracy is Islamic democracy, where the representatives of the people have to consider and follow the teachings of Islam and rule accordingly.
Direct democracy in relation to representative democracy
Direct and representative (indirect) democracies are often considered contradictory to each other. However, both of these have similar purposes. In a representative democracy, the decision-making power is given to elected representatives by the public, and in a direct democracy, the public itself participates in this process with the help of referendums. The issue with representative democracy is that it might not produce the results that the public expects from its representatives as it involves contentious political issues. But, direct democracy also faces certain issues. For example, if a referendum has already been conducted on a particular matter, it poses problems for the holding of a referendum on the same matter again.
The following table highlights the differences between direct and representative democracy.
S. No.
Basis
Direct democracy
Representative democracy
1
Decision-making power
The decision-making power is in the hands of the public and all the laws and policies are formulated with the help of referendums.
The decision-making power is in the hands of the elected representatives.
2
Presence of intermediaries
The citizens directly take part in the important matters of the nation, so there are no intermediaries.
The elected representatives act as intermediaries.
3
Transparent/ non-transparent
It is more transparent than the representative form of democracy.
It is less transparent as work is performed by the representatives.
4
Important feature
Referendums are the essential part of direct democracy through which consent on the formulation of policies and laws is gathered.
The essential feature of representative democracy is that elections are held at regular intervals and in an organised manner.
5
Effectiveness
It is relatively time-consuming as the process of referendums and framing of laws takes a lot of time.
It is less time-consuming than direct representation due to the involvement of representatives.
6
Examples
The countries which follow direct democracy are Switzerland,
The countries which follow representative democracy are India, the USA, the UK, etc.
Presidential democracy in relation to parliamentary democracy
Both the presidential and parliamentary forms of government are considered to be a part of representative democracy as the decisions are taken by the elected representatives. However, in a parliamentary democracy, the parliament is involved and is accountable to the legislature, while the executive branch of the presidential system is independent of the legislature.
The following table marks the differences between the two.
S. No.
Basis
Presidential democracy
Parliamentary democracy
1
Meaning
It can be defined as the form of government in which the President is the chief head and the executive and legislature function independently of each other.
It can be defined as the form of government in which there is a system of parliament and a council which is accountable to the legislature.
2
Selection of ministers
Ministers are selected by the President, and usually a team of experts is chosen.
Generally, members of parliament are selected as ministers and no outsider is included.
3
Head of the state and government
The President is the head of the state and the head of the government.
The head of the state and the head of the government are different people.
4
Accountability
The executive is not accountable to the legislature.
The executive is accountable to the legislature.
5
Separation of powers
There is a separation of powers between the judiciary, executive, and legislature.
There are instances of overlapping functions and powers of these organs.
6
Autocracy
As the President has more discretion than the head of the state in a parliamentary form of democracy, therefore, there is relatively more autocracy.
It is less autocratic.
7
Tenure of the head
The tenure of the President is fixed.
The tenure depends upon the support of the Parliament.
8
Examples
The examples of countries following a presidential form of democracy are the USA, Brazil, Sri Lanka, etc.
It is followed in India, the UK, Canada, the Netherlands, etc.
Merits and demerits of a democratic form of government
Merits
In a democracy, the considerations of the common public are taken into account. Therefore, it is considered the best form of government. The following points will shed light upon the several merits of a democratic setup:
Answerability- The election process and the power in the hands of a few, make the decision-making authorities answerable to the general public, so the representatives owe a duty to them and strive to formulate the rules and regulations for the benefit of society. Similarly, it allows people to question them on the steps they take.
Good decision-making- The power in the hands of voters to elect, together with the pressure from the opposition, makes the ruling party work efficiently, which increases the quality of decision-making and prevents the formulation and implementation of non-beneficial or corrupt rules.
Reduces exploitation- Democracy reduces exploitation of the weaker communities. This is achieved from two angles. Firstly, it does not encourage any prejudicial notions against any section on the basis of caste, race, or sex and aims at reaching equity by introducing reservations for the positions of authority. Secondly, every citizen is eligible to be a voter, irrespective of their community and religion (subject to adult suffrage and Article 326 of the Indian Constitution). Therefore, the chosen representatives work, keeping in mind the interests of every being.
Fosters economic development- Democratic governments foster economic development as they promote equality and freedom so each section of the population gets equal opportunities in terms of education and employment.
Stability- Democratic countries are considered more stable than non-democratic because there are fewer disagreements and aggressive behaviour on the part of the public as decisions are taken by elected representatives of the majority. The structure of democracy is such that there are fewer chances of armed conflicts such as belligerency or insurgency.
Separation of powers- Separation of powers among the judiciary, executive, and legislature is one of the crucial features of democracy which saves a country from conflict due to usurpation of powers and presents the most structured system before the public.
Demerits
The loopholes in the democratic form of a system are illuminated below:
Based upon the will of the majority- As discussed, the people who get the maximum votes become the representatives of the public, but it then lacks the will of the minority of the population so it cannot be said that the ruling party was elected by all the citizens, rather they represent the majority class.
Ineffective- The voting system becomes ineffective when the population who is to vote is not educated and lacks the correct decision-making abilities. People, sometimes, get fascinated by the promises made by the parties in their election campaigns and vote for them without gauging their previous performances and development prospects of the agendas they put forth. This makes the system ineffective and deviates from democratic principles and purposes.
Expensive form of government- Election processes entail huge funds which make the whole process a costly affair for the developed and least developed nations.
Slower implementation- Apart from being an expensive system, the democratic form of government works at a snail’s pace. The election process itself consumes plenty of time, and then reviews take more of it. Furthermore, passing bills in the parliamentary form of democracy is also a time-consuming procedure. Consequently, in democracies, the implementation of the changes is relatively slower.
Obstacles in long-term projects- Changes in the ruling party every five years create obstacles in the long-term development projects that hinder the growth of democratic countries.
Concluding remarks
Although democracy has both merits and demerits, the former surpasses the latter, and every nation could strive to overcome the pitfalls they face in their democratic systems.
There are some ideologies around the types of democracy that have arisen owing to several setbacks in democratic principles around the world. These include aggregative and radical democracy. The former showcases the idea that the opinion of the people should be encouraged at the stages when the policies are to be adopted, and radical democracy aims at upholding the principles of equality and freedom and keeping them at the highest pedestal. With the domination of representative democracy in the world, these notions are often overlooked or are being undermined. There are multifarious factors, such as issues of defections, aggressive competition amongst political parties, corruption, etc., due to which the debate on whether India should switch over to a presidential democracy has never been in a state of hibernation. However, the adoption of a completely different system would demand a lot of effort since the system would have to be tailor-made according to our constitutional principles.
Above all, any democratic setup cannot reap benefits unless the government is honest, competent, and does not involve itself in any kind of unscrupulous means.
Frequently Asked Questions
Why is monarchy termed tyranny?
According to the Merriam Webster’s Dictionary, the word ‘tyranny’ refers to “oppressive power exerted by a government” or “a government in which absolute power is vested in a single ruler”. Thus, it represents a monarch’s rule and points to the fact that in case a single person rules the nation without any system of representatives, he/ she is most likely to exert oppressive power over the public.
How does democracy prevent armed conflicts?
Examples of armed conflicts are belligerency and insurgency. Belligerency is the state of conflict between two rival powers in a country, while insurgency refers to a revolt against the established government. In a democracy, when the will of the citizens is taken into account while selecting the representatives, there are very few chances of a state of belligerency and insurgency.
Which are the major democracies in the world?
According to the Economist Intelligence Unit’s Democracy Index 2021, the world’s top 10 most democratic places include Norway, New Zealand, Finland, Sweden, Iceland, Denmark, Ireland, Taiwan, Australia, and Switzerland.
Which countries are ruled by a non-democratic form of government?
Non-democratic forms of government include monarchy, oligarchy, and authoritarian forms of government. In Saudi Arabia and Jordan, the monarchy system is prevalent, wherein a single person rules the country. North Korea follows an authoritarian system of government. Vietnam follows the one-party system, which single-handedly rules the nation without any opposition, and China is a communist state.
How can democracy be strengthened?
Protection of the rights of citizens is an essential component of a democratic government. Thus, establishing a system that preserves the rights to free speech and expression, the right to form associations, and the right to choice is crucial. Furthermore, work needs to be done at the ground level by creating awareness and educating the voters on how to make a robust structure.
What are referendums?
Referendums are the votes of the public. In a direct democracy, laws and policies are introduced at the will of the majority of the citizens of the nation. Therefore, referendums are the instruments that carry out this procedure of voting.
What is the difference between a citizens’ initiative and an agenda initiative?
In citizens’ initiatives, the citizens of the nation have a crucial role in making proposals for the purpose of voting, while in agenda initiatives, the issues are placed on the political agendas and the legislators act upon the proposals. These two can overlap when there is just one person eligible to put an issue on the political agenda.
References
Kumar, Narendra (2015) Constitutional Law of India, Allahabad Law Agency, Faridabad
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This article is written by Gautam Badlani, a student at Chanakya National Law University, Patna. This article examines the provisions and judicial decisions relating to the Constitution (Thirty-fifth Amendment) Act, 1974. The article highlights the salient features of the Act and the special provisions made for the representation of the people of Sikkim in the Indian political institutions. The article also highlights the significance of the 35th amendment and its aftermath.
It has been published by Rachit Garg.
Table of Contents
Introduction
The Constitution (Thirty-fifth Amendment) Actwas passed in the year 1974 by the Parliament. The Act provided for the designation of an Associate State for Sikkim, which was unprecedented in Indian history. The 35th amendment is considered to have paved the way for the admission of Sikkim as a full state in the Indian Union. This article explains the historical reasons for the amendment, the provisions and key features of the amendment, and the aftermath.
Historical perspective of the 35th Amendment of the Indian Constitution
Prior to the 35th Amendment, Sikkim was a protectorate state, and the people of Sikkim wanted to build closer ties with India. On 8th May, 1973, a tripartite agreement was entered into by the Sikkim Chogyal, the representative of the Indian Government (Foreign Secretary, Keval Singh) and the representatives of the political parties of Sikkim. The agreement provided that the people of Sikkim had a right to participate in an election based on adult suffrage and envisaged the setting up of the Sikkim Assembly, which would have a 4-year term. Subsequently, the Sikkim Assembly was established in 1974. The Assembly expressed a desire to build close relations with India.
Subsequently, the Government of Sikkim Bill, 1974 was passed by the Sikkim Government with a complete majority. The Bill envisaged greater participation and representation of the people of Sikkim in the political institutions of India. Thus, the 35th Constitutional Amendment was enacted to give effect to the Government of Sikkim Act, 1974 and to uphold the wishes of the Sikkim people to build closer ties with India.
Salient features of the 35th Amendment of the Indian Constitution
TheAmendmentinserted Article 2A in the Constitution, which provides for Sikkim’s association with the Union. Furthermore, the Act also inserted the 10th Schedule in the Constitution, which laid down the territories of Sikkim and the conditions on which Sikkim had been associated with the Union.
Responsibilities of the Indian Government
The Government of India had the following responsibilities:
For protecting the territorial integrity and for the defense of Sikkim.
Regulating and conducting Sikkim’s political, economic and financial external affairs.
The Government of India was responsible for building and maintaining railways, telegraphs, wireless connections, air navigation technology, posts, telephones, and landing grounds.
For the social as well as economic development of Sikkim.
For ensuring communal harmony and effective administration in Sikkim
For providing educational opportunities to Sikkim students in the higher educational institutions of India and for providing them an equal opportunity for employment in the Indian public service as compared to other citizens.
For facilitating greater participation of Sikkim people in Indian political institutions.
Representation to the Sikkim people
The Act also provided for the representation of the people of Sikkim in the Legislature and other political institutions. It contained the following provisions:
The people of Sikkim were allotted one seat in the Lok Sabha and Raj Sabha each.
The representative to the Rajya Sabha was to be elected by the Sikkim Assembly and the representative to the Lok Sabha was to be elected by the people of Sikkim directly. Sikkim was to be considered as one Parliamentary constituency.
The qualifications required for being elected as a representative of Sikkim in the Parliament were the same as the qualifications required for being a member of the Sikkim Assembly.
The Sikkim representatives to the Lok Sabha as well as Rajya Sabha were deemed to be members of the respective houses in all respects other than those related to the President and Vice-President.
The questions regarding the disqualification of Sikkim representatives were to be referred to the President and the President was to decide on the issue after consulting with the Election Commission.
Aftermath of the 35th Amendment of the Indian Constitution
The 35th Constitutional Amendment was repealed by the 36th Constitutional Amendment, 1975, which provided the status of a full state to Sikkim, and the name of Sikkim was included as a state in the First Schedule of the Indian Constitution. Sikkim became the 22nd State of India through the 36th Amendment to the Indian Constitution. This Amendment omitted the Tenth Schedule. The 36th Constitutional Amendment was ratified by the states in accordance with Article 368 of the Constitution and amended Article 80, Article 81, First Schedule, and Fourth Schedule.
Special provisions relating to Sikkim
The 36th Amendment also insertedArticle 371-F which provides for certain special provisions concerning Sikkim. These special provisions are:
The Legislative Assembly of the State of Sikkim is to consist of a minimum of 30 members and has the same powers and functions as those of a State Legislative Assembly provided under the Indian Constitution.
The amendment also empowered the Parliament to make provisions for the election of members belonging to different sections of Sikkim to the Sikkim Legislative Assembly.
The Governor of Sikkim was responsible for ensuring peace and the economic and social advancement of the different sections of the Sikkim population.
The President was empowered to repeal or to make amendments to the laws of Sikkim existing before the amendment in order to bring them in line with the provisions of the Indian Constitution. Such a decision of the President could not be challenged before any Court. This power of the President was to expire after 2 years from the appointed date.
Landmark Judgments
The significance of the 35th and 36th Amendments was summarized by the Supreme Court in the case of State of Sikkim v. Surendra Prasad Sharma (1994). The Court noted that the 36th Amendment was based on the special opinion poll which was held on 14th April, 1975 and it was on the basis of the special poll that the Chief Minister of Sikkim made the request to the Indian Government to admit Sikkim as a state in India. Subsequently, Entry 22 added the name of Sikkim as the 22nd State of India.
In the case of Nirmala L. Mehta v. A. Balasubramaniam (2004), the petitioner had won a Sikkim lottery and her income tax was deducted as per Sikkim tax laws before the prize money or the lottery was credited to her. However, when she claimed the tax amount as a deduction at the time of filing her income tax return, the Assessing Officer refused to consider the request on the ground that the amount was neither paid to the Indian treasury nor the tax was deducted in accordance with Section 199 of the Income Tax Act, 1961. The petitioner then approached the Commissioner of Income Tax who provided the relief of excluding the amount deducted as tax under the Sikkim laws from the total amount of lottery which was to be considered while calculating the income tax return.
The Court made the following observations regarding the inclusion of Sikkim as an Indian state:
During British rule, Sikkim was ruled by a hereditary monarch known as Chogyal who accepted the paramountcy of the British.
Subsequently, as India gained independence, Sikkim became a protectorate state of India under a Treaty between the Government of India and Sikkim, and the matters relating to defence, communications, and external affairs of Sikkim were to be managed by India. Despite wide public opinion in favour of a merger with India, Sikkim could not become a full state due to its princely rule and strategic geographic location.
The monarchy ended in 1974 when the Sikkim Assembly decided to establish a full government in Sikkim and to establish closer ties with India.
The Sikkim Assembly then passed the Government of Sikkim Act and the Government of India enacted the 35th Constitutional Amendment to give effect to the Sikkim resolution.
The Court noted that the 35th Constitutional Amendment introduced the concept of an Associate State and was innovative in nature.
The Court then noted that since the Chogyal had resented the 35th Constitutional Amendment and sought international intervention, the Sikkim Assembly had passed a resolution in 1975 declaring the Chogyal’s actions to be prejudicial to the Sikkim people’s democratic desires and abolishing the Chogyal institution.
The Court further observed that the insertion of Article 371F was essential as the laws in Sikkim, before it became a part of India, were made for a society under a monarchy and were not consistent with the Indian Constitution, which provides for a free society. Thus, it was essential to make special provisions to fulfil the assurances that were given to the people of Sikkim. Article 371F ensured that there was a smooth transition of Sikkim from a monarchy to a democratic free society.
The Court then held that the petitioner had won the lottery in India and had paid the tax as per a special taxation law applicable in an Indian state. Furthermore, the Income Tax Act, 1961, was not applicable in Sikkim at the time when the petitioner won the lottery. The Court, while allowing the petition, held that the Income Tax Act could not be applied to income earned in Sikkim at a time when the Act was not applicable to Sikkim.
In the landmark case of R.C. Poudyal. v. Union of India (1993), the question arose before the Apex Court as to whether Article 371F was violative of the basic democracy principles. The petitioner had challenged the reservation of seats provided in the Sikkim Assembly as per the provisions of Article 371F.
The petitioner contended that the reservation was violative of Article 14 and Article 371F was in violation of the democratic and republican principles of the Indian Constitution. Furthermore, since the reservation was on the basis of religion, it violated Article 15 of the Constitution.
The State contended that a law providing for the terms and conditions of the admission of a new state, made in accordance with Article 2 of the Constitution was not justiciable and hence the petition was not maintainable. Furthermore, the petitioners pleaded that Article 371F empowered Parliament to make reservations for less-represented communities in the Sikkim Assembly even if such a reservation was in contravention of the Constitutional provisions. Article 371F specifically barred judicial review of the Parliament’s decision.
The Court held that the petition was maintainable and laws made concerning the terms of admission of new states were justifiable. Even though the powers conferred on the Legislature under Article 2 are very broad, it cannot be held that Parliament enjoys unfettered power and cannot be subjected to judicial scrutiny. The terms and conditions cannot be in violation of the fundamental principles of the Indian Constitution.
The Court observed that Article 2 and Article 371F of the Constitution need to be read harmoniously in such a manner that they are not inconsistent with the provisions of the Constitution.
The Court held that Article 371F was valid as the Constitution does not mandate perfect mathematical equality of voters and even if it resulted in any discrimination, then such discrimination was justified in view of the historical realities of the State of Sikkim. The reservation was necessary as the beneficiary communities were minority groups who would not enjoy adequate representation in the State Assembly in the absence of such a reservation.
Conclusion
The 35th Constitutional Amendment is a landmark and unprecedented amendment that provided the status of an Associate State and ultimately paved the way for the inclusion of Sikkim as the 22nd State of India. It helped Sikkim in building close ties with India, and this was evident in the result of the public opinion poll held by the Sikkim Chief Minister in 1975. The representation provided to Sikkim in the legislative instruments of India played a key role and led to the enactment of the 36th Constitutional Amendment.
Frequently Asked Questions
How many Constitutional amendments have there been in India and which was the latest amendment?
There have been 105 amendments to the Indian Constitution. The latest amendment was made in the year 2021, which restored the States’ and Union Territories’ right to identify and maintain a list of economically and socially backward communities.
Name the first Chief Minister of Sikkim.
Kazi Lhendup Dorjee was the first Chief Minister of Sikkim.
What are the official languages used in the state of Sikkim?
Four languages are largely spoken in Sikkim: Sikkimese (Bhutia), English, Lepcha, and Nepali.
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This article is written by Tarini Kalra, a BBA-LL.B. student from Fairfield Institute of Management and Technology affiliated to Guru Gobind Singh Indraprastha University, New Delhi. The article discusses the Ketan Parekh Scam, its timeline of events and the legal consequences that it attracted.
It has been published by Rachit Garg.
Table of Contents
Introduction
A share market is a locus where financial instruments such as stock, derivatives, mutual funds, or bonds are traded between buyers and sellers on public listed shares and security. The Indian stock market is monitored by the Securities and Exchange Board of India (SEBI). Presently, there are seven recognized stock exchanges in India: Bombay Stock Exchange, National Stock Exchange, Calcutta Stock Exchange Ltd., Indian Commodity Exchange Ltd, Metropolitan Stock Exchange of India Ltd., Multi Commodity Exchange of India Ltd., and National Commodity and Derivatives Exchange Ltd.
SEBI held Ketan Parekh, a former stockbroker guilty of stock manipulation and insider trading. He was named as one of the key culprits in Sensex’s 176-point fall, which caused the 2001 Budget to collapse. He used to artificially rig the prices of handpicked shares referred to as K-10 stocks, by obtaining loans from banks such as Global Trust Bank and Madhavpura Mercantile Cooperative Bank. He has been also convicted for the Canfina mutual fund scam, a fraud of more than Rs 47 crores. Ketan Parekh’s scam was estimated at more than 40,000 crores by the Serious Frauds Investigation Office (SFIO).
Who is Ketan Parekh
Ketan Parekh is a Chartered Accountant by profession. The institutional brokerage business under the name of Narbheram Harakchand Securities (NH Securities) was a family business of Mr. Parekh which he inherited from his father. He was a trainee in Harshad Mehta’s company, GrowMore. He was a suspect in numerous frauds that Growmore was involved in, although he was never found guilty. With the emergence of the dot com boom in the late 1990s, he began investing in low-liquidity IT and telecom firms, which were known as the ‘K-10’ stocks. K-10 stocks were Pentamedia Graphics, HFCL, GTL, Silverline Technologies, Ranbaxy, Zee Telefilms, Global Trust Bank, DSQ Software, Aftek Infosys and SSI. He owned roughly 16 percent of Global’s floating shares, 25 percent of Aftek Infosys, and 15 percent of Zee and HFCL, respectively. As a result of the significant growth in the value of K-10 stocks, brokers and fund managers began to invest extensively in K-10 stocks. Ketan Parekh and Vinay Maloo along with Kerry Packer launched KVP Ventures primarily focusing on information technology software, internet, e-commerce, media and entertainment, and telecommunications with an initial capital of $250 million on 27 March 2000. For fraudulently rigging the pricing of K-10 shares, he was barred from trading in the Indian stock market for 14 years.
Parekh’s Modus Operandi
Ketan Parekh’s initial step was to pick up the substantial stakes from promoters at large discounts and shifted his focus primarily on institutional investors. He was bullish in nature regarding the stock market. He required three elements to boost the market: stocks, the stock exchange, and finance. The Bombay Stock Exchange (BSE) grew more cautious after the 1992 Securities Scam and increased security and fraud detection. Thus, Ketan Parekh traded on the Kolkata Stock Exchange, which lacked rigorous and important restrictions. Ketan Parekh’s stock selection was based on four key factors:
the business must be small;
the company must have a low volume;
the company’s future prospects must be high; and
the company’s market capital must be low.
His stock portfolio was mostly focused on the technology, communication, and entertainment industries after the emergence of the dot com boom, popularly known as the ICE sector. He referred to them as ‘K-10’ stocks. Funds were raised through promoters such as Global Telesystems, Himachal Futuristic Communications Ltd, and Zee Telefilms or by his own money. Some funds were also raised through institutional investors through mutual funds, Hedge funds, Insurance companies, P/E funds, or banks such as Global Trust Bank and Madhavpura Mercantile Cooperative Bank in the form of loans and pay orders without providing sufficient securities. He purchased some shares of Madhavpura Mercantile Cooperative Bank to sway the bank’s loan decision in his favour. Back then, RBI permitted traders to acquire loans of about 15 crores.
In March 2001, MMCB issued Pay Orders of Rs. 137 Crores for Ketan’s Companies: 65 crores to Classical Share and Stockbrokers, 20 crores to Panther Investrade, and 52 crores to Panther Fincap which were discounted by Bank of India and all these companies had their accounts in Bank of India as well. However, the Reserve Bank of India intervened in 2001 and returned the bounced pay orders to the Bank of India. MMCB was unable to clear the payments because it lacked adequate money. RBI labelled MMCB a defaulter, and BOI suffered a loss of Rs. 137 crores.
Ketan Parekh paid back only Rs. 7 crores, which led to the filing of a 130 crore Rupees fraud case against him. The entire scheme was exposed after Ketan was detained by the Central Bureau of Investigation. He adopted two methods for his operation, pump and dump scheme, and circular trading.
Pump and Dump Scheme
The initial stage of the pump and dump strategy was to inflate stock value artificially. He invested in K-10 stocks by acquiring about 20-30% of the company’s stock which was less well-known in the stock market and inflated the price of the shares, which eventually became overvalued leading to enticing the institutional brokers and investors to invest in the shares. Then he dumped the shares, causing the stock prices to fall drastically.
2. Circular Trading
In circular trading also known as the “badla system”, he traded the stocks between his entity and other friendly entities. Prices of the stock valuation were raised by luring investors and traders for high liquidity through his operational team’s large volume of trading of similar sell orders for the same number of stocks and at the same price and at the same time which showed the high demand and created large volumes of the stock in the market.
Timeline of the case
The timeline of the scam of Ketan Parekh is as follows:
2nd March 2001: The K-10 shares were the major reason for Sensex’s 176-point loss. The irregularity in the payment by Ketan Parekh accelerated the stock market and SEBI initiated an investigation into the fall.
8th March 2001: SEBI banned short sales and rumours were in the stock market regarding the payment crisis on the Calcutta Stock Exchange.
9th March 2001: The Sensex fell by 175 points, and three famous brokers were held in default against the Calcutta Stock Exchange, one of them was Ketan Parekh.
30th March 2001: Bank of India filed a criminal case against Ketan Parekh for his involvement in the pay order scam of Madhavpura Mercantile Cooperative Bank and he was arrested by CBI.
4th April 2001: SEBI prohibits Ketan Parekh’s broking and merchant banking firms to start a fresh business.
9-11th April 2001: Ketan Parekh admitted acquiring funding from Zee and HFCL. However, Zee denied lending any money to any broker but admitted to advancing the acquisition of 28.5% in AB Corp and 15% in B4U.
26th April 2001: A committee of SEBI was inaugurated to abolish circular trading and the Government joined Parliamentary Committee to probe the scam.
14th March 2001: SEBI approved JR Varma Committee’s agenda on ban on circular trading from 2nd July onwards, introduced options on individual stocks, and shifted all stock into the rolling settlement from 2nd January 2002.
18th May 2001: Ketan Parekh was released by the Bombay High Court for a bond of Rs. 5 lakhs and he was directed to present himself to the CBI’s office twice a week.
10th August 2001: Ketan Parekh was arrested by CBI for fraud and misappropriation of public funds and the case was filed by Madhavpura Mercantile Cooperative Bank.
24th August 2001: Ketan Parekh was released on the grounds that he will deposit Rs. 16 crores within 6 months.
6th September 2001: Zee sued Ketan Parekh to recover Rs. 90 crores from him.
7th February 2002: A case was filed by Ketan Parekh’s broking and merchant banking firms to lift the ban from starting a fresh business. The case was dismissed by the Securities Appellate Tribunal until the inquiry was completed in the specified time frame.
11th February 2002: Ketan Parekh was served with a notice by Global Trust Bank (GTB) to recover Rs 180 crore outstanding to the bank.
15th April 2002: Ketan Parekh failed to pay the amount due to Madhavpura Mercantile Cooperative Bank.
2nd December 2002: Calcutta police arrested Ketan Parekh but bail was granted to him as he fell ill.
20th January 2003: Ketan Parekh turned himself in at Chief Metropolitan Magistrate Calcutta Court.
6th June 2003: SEBI directed Ketan Parekh’s companies to not buy, sell or transfer any shares of Global Trust Bank till investigations.
19th June 2003: Ketan Parekh agreed to pay dues to the Bank of India.
12th December 2003: SEBI banned Ketan Parekh and his associates for 14 years from the stock market.
8th March 2004: SEBI cancelled the registration of Ketan Parekh’s broking entities.
15th June 2004: Central Government filed a petition against M/S Kopran Limited, a company of Ketan Parekh for recovering Rs. 28 crores from him.
13th May 2005: A debate in Lok Sabha was initiated to consider the bill of Credit Information Companies (Regulation) which primarily focused on the regulation of credit information companies and facilitating efficient distribution of credit and for matters connected
20th April 2006: A case was filed to investigate the nature and mode of operation of the transactions by the company, Shonkh Technologies International Ltd, as Ketan Parekh acquired shares of Shonkh Technologies International through his company, Panther Fincap and Management Services, which was beyond the permissible limit and without the required disclosures.
14th July 2006: A petition was filed by Ketan Parekh against the order of SEBI dated 12th December 2003 which debarred him and his associates from the stock market for 14 years. The petition was dismissed considering the huge scam.
14th November 2006: A petition was filed by Panther Fincap and Management Services Ltd and Classic Credit Ltd. against the penalty imposed on them. The petition was dismissed by the Court and directed to pay the penalty within 45 days from the date of the case.
2nd August 2007: The Appellate Tribunal ordered M/s. Panther Fincap and Management Services to pay 50% of the penalty sum, with the condition that if they fail to do so, the appeals would be rejected.
16th January 2008: NH Securities Ltd challenged an order of CIT(A) which affirmed the loss disallowance. For statistical reasons, the appeal was allowed.
29th January 2008: M/s.Triumph International Finance India Ltd. challenged an order issued by the Commissioner of Income-tax (Appeals) on 13.11.2007 sustaining the penalty. The impugned judgment on this issue was quashed and the appeal was permitted.
13th March 2009: Ketan Parekh filed an appeal against a CIT(Appeals), Central-VII, Mumbai judgment dated 13-03-2009 for Rs.3,00,000/- in unexplained spending from income in his capital account. The appeal was allowed because after being declared an offender under the Prohibition of Fraudulent and Unfair Trade Practices Regulations Act, 2003, the appellant had to rely on other family members for personal costs.
29th November 2011: A petition was filed by Ketan Parekh for dismissing the order of the Division Bench of the Bombay High Court due to financial hardships. The appeal was dismissed by the court and directed to comply with the order and pay off the penalty of Rs. 80 crores within four weeks.
3rd March 2014: Ketan Parekh was sentenced to imprisonment for 2 years with a fine of Rs 50,000 by a special CBI court in Mumbai for cheating.
4th November 2017: Ketan Parekh was sent to judicial custody for non-appearance in court.
27th February 2018: Ketan Parekh and his cousin were found guilty of fraud under the SEBI Act by a special SEBI Court and were given three years in prison and a penalty of Rs. 10 lakhs.
Laws surrounding the Ketan Parekh scam
The Securities Appellate Tribunal’s (SAT) key responsibility is to review appeals against findings obtained by the SEBI (Securities and Exchange Board of India) or by evaluating matters in compliance with the Securities Exchange Board of India Act, 1992. The establishment of Securities Appellate Tribunals is discussed in Section 15K of the Securities and Exchange Board of India Act, 1992. Within the ambit of Section 195 and Chapter XXVI of the Code of Criminal Procedure, 1973, the Securities Appellate Tribunal is considered to be a civil court. The SEBI (Securities and Exchange Board of India) Special Courts is formed under Section 26A for speedy trials of offences.
In the case of Sebi v. Ketan V. Parekh and Others (2003), Ketan Parekh and his associates were debarred from the stock market under the Sections 11 and 11B of the Act read with Regulation 11 of SEBI (Prohibition of Fraudulent and Unfair Trade Practices Relating to Securities Market) Regulations, 2003 and Regulation 11 of SEBI (Prohibition of Insider Trading) Regulations, 1992 which deals with dismissing the investing of any security in a recognized stock exchange, prohibiting any person associated with the securities market from buying, selling, or dealing in securities, any office-bearer of any stock exchange or self-regulatory organization can be suspended from their position, seize and hold the proceeds or securities in respect of any transaction under investigation attach after passing an order on an application or instruct any intermediary or anyone in any way affiliated with the securities market not to sell off or transfer an asset constituting part of any transaction under inquiry.
In the case of Securities and Exchange Board of India v. Panther Fincap and Management Services Limited and Ors (2018), Ketan Parekh was found guilty of the offense and he was imprisoned for a term of 3 years with a fine of Rs.5,00,000 under Section 24(2) of the Securities and Exchange Board of India Act, 1992. This Section deals with the punishment imposed by the adjudicating officer on anyone who fails to pay or comply with any of the directions or orders, which may include imprisonment for a term of one month that may extend to ten years or a fine that may extend to twenty-five crore rupees or both and under Section 235(2) in the Code Of Criminal Procedure, 1973 states that if the defendant is found guilty, the judge follows the guidelines under Section 360, hear the defendant on the issue of sentencing before passing judgment on him in accordance with the law. He was also directed to compensate an amount of Rs.3,25,000 to the Securities and Exchange Board of India.
Legal provisions and implications relating to financial fraud under the Securities Exchange Board of India Act, 1992
Chapter VI-A deals with the penalties and adjudication under the Securities Exchange Board of India Act, 1992. Section 12A prohibits the manipulation and use of fraudulent methods, insider trading, and the direct or indirect acquisition of securities or control by any individual.
Section 15A deals with penalties for failure to furnish information, return, etc. Section 15B deals with the penalty for failure by any person to enter into an agreement with clients. Section 15C deals with penalties for failure to redress investors‘ grievances. Section 15D deals with a penalty for certain defaults in the case of mutual funds. Section 15E deals with penalties for failure to observe rules and regulations by an asset management company. Section 15H deals with penalties for non-disclosure of acquisition of shares and takeovers.
In the case of stock brokers, the penalty for default is dealt with under Section 15F. If an individual fails to issue contract notes stipulated by the stock exchange of which he is a member, he is subject to a penalty of up to five times the amount for which the contract note was required. If any individual fails to deliver any security or fails to pay the sum due to the investor in the way prescribed in the rules, he shall be subject to a penalty of one lakh rupees for each day that such failure persists, or one crore rupees, whichever is less. If an individual charges more than the amount provided in the regulations for brokerage, he will be penalised 1 lakh rupees or five times the amount charged more than the specified brokerage, whichever is higher.
Insider trading is punishable under Section 15G. If any individual deals in securities of a body corporate listed on any stock exchange on his behalf or behalf of any other person based on any unpublished price sensitive information, or advises, or acquires for any other person to deal in securities of any or causes any person to trade in any securities of any body corporate based on undisclosed price sensitive information, will be subject to a penalty of twenty-five crore rupees or three times the amount of profits gained through insider trading, whichever is higher.
Section 15HA establishes a penalty for fraudulent and unfair trade practices that may not be less than five lakh rupees and extend to twenty-five crore rupees, or three times the amount of profits derived from such practices, whichever is higher.
Legal provisions and implications relating to financial fraud under the Indian Penal Code, 1860
Section 405 deals with criminal breach of trust. When a person dishonestly expressly or impliedly misappropriates or converts any property to his use, or dishonestly uses or disposes of property in contempt of any legal order regulating how such trust is to be discharged, or of any legal contract is in violation under criminal breach of trust. Punishment of criminal breach of trust is mentioned under
Section 406 with imprisonment of a term which may extend to three years, with a fine, or both.
Section 409 deals with a criminal breach of trust committed by a public servant or by a banker, merchant, or agent. It is punishable for a term of ten years or which may extend to life imprisonment, or fine, or both.
1)When someone deceives another person, intentionally or unintentionally, or coerces the victim into giving away any property or consenting to its retention
2) When someone persuades the victim to act in a way which causes or is likely to cause injury to the victim’s body, mind, or reputation.
3) When the victim is compelled into acting in a way that he or she would not ordinarily act in if he or she were not being coerced.
Section 416 deals with cheating by personation. Cheating by personation occurs when an individual pretends to be another person, consciously or unknowingly substitutes one person for another, or represents that he or any other person is someone different from him or another person, comes within the ambit of cheating by personation.
Section 417 deals with the punishment of cheating with imprisonment for a term which may extend to one year, or with a fine, or both.
Section 418 deals with cheating with knowledge that wrongful loss may result to a person whose interest in the transaction to which the cheating relates he was bound, either by law or by a legal contract, to protect, shall be punished with imprisonment of either description for a term which may extend to three years.
Section 420 deals with cheating and dishonestly inducing the delivery of property. When an individual cheats, alters or dishonestly obtains the transfer of property or any portion of valuable security, or anything that is signed or sealed and can be transformed into valuable security carry a sentence of up to seven years in jail and a fine.
Section 467 deals with forgery of valuable security, will, or other documents by any individual who will be punished with imprisonment of either description for a term that may not exceed 10 years and shall also be subject to a fine.
Section 468 deals with a person who commits forgery with the intent to cheat are subject to imprisonment for a maximum of seven years and a fine.
A forged document or electronic record used as a genuine document or record is prohibited under Section 471 and is punishable in the same way as forging such a document or electronic record.
Legal provisions and implications relating to financial fraud under the Companies Act, 2013
Under Section 447, ‘fraud’ is defined as “any act, omission, concealment of any fact, or abuse of position committed by any person with the intent to mislead, obtain an unfair advantage, or harm the interests of the company, its shareholders, its creditors, or any other person, whether or not there is any wrongful gain or loss.”
Any person found guilty of fraud faces a fine of at least ten lakh rupees or 1% of the company’s annual revenue, whichever is lower, as well as a term of imprisonment that must not be less than six months but may not exceed ten years. They are also subject to a fine that must not be less than the amount involved in the fraud but may not be less than three times the amount involved in the fraud. If the fraud concerns a matter of public interest, the sentence cannot be less than three years.
Section 36 deals with the punishment for fraudulently inducing someone to invest money by making false statements, promises, or forecasts that are false, deceptive, or misleading, or knowingly conceals any material facts, in order to persuade someone to enter into or offer to enter into any agreement with a view to purchasing, selling, subscribing for, or underwriting securities or any agreement that is purportedly intended to secure a profit for any party or fraudulently obtaining credit facilities from any bank or financial institution will be punished under Section 447.
Section 38 deals with the punishment for personation for acquisition, etc., of securities. Any person who submits an application to a company in a false identity to purchase or subscribe to its securities, or who submits multiple applications to the same company under different variations of name for acquiring or subscribing for its securities, or induces the company, directly or indirectly, to allot securities to him or any other person in a fictitious name will be punished under Section 447.
Section 229 deals with penalties for providing false information, document mutilation, and document destruction. When a person tampers, conceals, mutilates, misrepresents, or removes documents that pertain to the company’s or body corporate’s property, assets, or business, or when they are involved in any of these actions, or when they make false entries in documents pertaining to the company or body corporate, or when they provide an explanation that is false or that they know to be false, shall be punishable under section 447.
Section 251 deals with the fraudulent applications for removal of name. If an application by a company under Section 248(2) has been made to evade the liabilities of the company, or to deceive the creditors or to defraud any other persons., The person in control of the management of the company is jointly and severally liable to any person or persons who had suffered loss or damage as a result of the company being notified as dissolved, and are punishable for fraud in the manner prescribed by law in Section 447.
Section 448 deals with punishment for false statements. Any person who makes a statement that is false in any material particulars and knows it to be false or omits any material fact and knows it to be material in any return, report, certificate, financial statement, prospectus, statement, or other required document is subjected to punishment under Section 447.
Conclusion
The second-largest fraud in India was the Ketan Parekh scam. In the aftermath of the fraud, SEBI incorporated Clause 49 to the Listing Agreement to make sure that businesses behave in the best interests of the market by adhering to excellent corporate governance principles. To stop these frauds, RBI has also sought to make the laws and regulations better. To assist banks in finding cases of borrower fraud at an early stage, the RBI has established a Central Fraud Registry Portal, a searchable database and all Indian banks have access to the platform.
Frequently Asked Questions (FAQs)
What are pay orders?
A financial instrument that the bank issues on the client’s behalf directing the payment of a specific amount to a specific recipient.
What is Sensex?
A figure illustrating shares priced with one another on the Mumbai (Bombay) Stock Exchange.
What was the dot com boom?
The emergence of sectors of technology, internet, communication, and entertainment was the dot com boom.
How did Ketan Parekh scam happen?
Ketan Parekh was involved in cheating with banks by presenting misleading facts, rigging off the stock market prices, exploiting investors’ decisions, misusing public funds and engaging in insider trading.
What was the impact of the Ketan Parekh scam on the economy?
The Sensex fell by 175 points and Madhavpura Mercantile Co-operative Bank collapsed. According to RBI data, the cooperative banking sector has accrued losses of about Rupees 1598 crore.
References
TheScam, From Harshad Mehta to Ketan Parekh by Debashis Basu and Suchita Dalal
The Scam: Who Won, Who Lost, Who Got Away: from Harshad Mehta to Ketan Parekh by Debashis Basu, Sucheta Dalal
Students of Lawsikho courses regularly produce writing assignments and work on practical exercises as a part of their coursework and develop themselves in real-life practical skills.
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This article is written by Yashasvi Jain pursuing a Diploma in General Corporate Practice. This article has been edited by Ojuswi (Associate, Lawsikho).
In 2017 the Securities and Exchange Board of India ( hereinafter SEBI) Committee, Uday Kotak Committee, was formed with the aim of improving standards of corporate governance of listed companies in India. The Committee was requested to provide recommendations on various issues relating to corporate governance. Based on the recommendations provided by the Committee, SEBI released a consultation paper in early 2021 proposing amendments to the Listing Obligations and Disclosure Requirements (hereinafter LODR) Regulations, 2015. The objective behind proposing such amendments was quite clear, to modify the corporate governance structure. The consultation paper examines various proposed amendments to the regulations regulating independent director appointment and removal, along with their responsibilities and remuneration, to bring more transparency into the processes.
While several of the recommendations in that report have been diluted, SEBI approved a set of amendments to the LODR Regulations, in its board meeting held on 29th June 2021 concerning the regulatory provisions related to independent directors. This article aims to analyze the role of Independent Directors post such amendments.
What is an independent director
An Independent Director is a non-executive director of a company who does not have any kind of relationship with the company or any related persons that may affect the independence of his/her judgement. An Independent Director has no hand in the day-to-day activities of the company.
The provisions relating to Independent Directors are contained in the Companies Act, 2013 and the SEBI LODR Regulations, 2015.
Role of an independent director
An Independent Director is the one who acts as a coach or a mentor to the company. The role includes working as a watchdog, one who oversees and improves the corporate credibility and governance standards of a company. They are responsible for ensuring better governance. They also play a pivotal role in risk management for the company, among other things.
SEBI’s latest LODR amendments and the role of independent directors
With these amendments, the impact on corporate governance in Indian companies is yet to be seen; independence is a subjective issue and holds different meanings and parameters, so it can’t be achieved solely through regulations. SEBI has introduced these changes to empower independent directors. The key changes cut across five broad themes:
Eligibility of independent directors
Previously, the LODR Regulations prescribed different cooling-off periods for different eligibility conditions for an independent director (based on the relationship viz. pecuniary relationship or other association viz. KMP/employee/ relative of KMP). Through these amendments, SEBI extended the cooling-off period across all eligibility conditions for a person to be appointed as an independent director to 3 years. It is important to have a uniform cooling-off period to ensure uniformity and ease of compliance with the regulations.
The amendment laid down that KMPs (Key Managerial Positions)/ relatives of such KMPs or employees of promoter group companies, cannot be appointed as independent directors in the company unless there has been a cooling-off period of 3 years. it also highlighted that To establish the independence of the directors it is important to exclude such persons from acting as independent directors. In addition to this, it has significantly reduced the limitations on the relatives of independent directors of a listed company, who are employed in roles other than the KMPs. This means that the provision did not allow the relatives of independent directors to be employed in positions other than the KMPs, in the listed company, or in any organization referenced to the promoters, for a period of 3 consecutive financial years immediately before such proposed appointment, no longer applies.
Appointment, re-appointment, and removal of independent directors
The Kotak Committee on corporate governance recommended that while selecting Independent Directors organizations should map the skills and competencies vital for the board in the context of its business/sector, it was to push companies to think it through while selecting Independent Directors. To perform a detailed assessment of the skills required by the board and ensure that the board’s composition is well suited, including the right set of competencies and complementary skillsets to the board. This focuses on developing a disciplined selection process that focuses on the board’s requirements. The process followed by the Nomination and Remuneration Committee (NRC) lacked transparency, so through these amendments, SEBI necessitates a structured procedure to be run by the NRC and amplifies its function and transparency to ensure that a suitable candidate is appointed as an independent director ( instead of someone simply nominated by the promoter).
SEBI through its consultation paper proposed a dual approval process involving the vote of the ‘majority of minority shareholders. Though this proposal did not go through, the amendments mandated the requirement for special resolutions for appointment, re-appointment, and removal of independent directors. The introduction of a special resolution is aimed at giving a greater voice to public shareholders, including institutional shareholders, who will now need to vote in favor of these resolutions relating to the appointment, re-appointment, and removal of independent directors.
The number of votes favoring the special resolution would have to be at least thrice the number of votes against it. This should help prevent independent directors from being replaced or selected according to the promoters’ whims. Further, it also requires additional disclosures to be made by listed companies, including the names of companies from which the director has resigned, to shareholders at the time of appointment/re-appointment of independent directors. This would throw light on the experience of the director and help the shareholders make an informed decision.
Committees of the Board
The amendment has modified the composition of certain committees of the board. As per the amendment, at least two-thirds of the members of the Audit Committee (AC) and NRC should be independent directors. This strengthens the role of independent directors and gives them more influence and a greater voice inside NRC and the audit committee. In addition to this, it also increases the independence of independent directors from the promoters. Although the proposal to limit the audit committee to directors who are not related to the promoters did not go through, raising the number of independent directors from just a simple majority to two-thirds is a positive step.
By increasing the total number of independent directors in the NRC, SEBI has harmonized the composition of directors in the NRC for listed entities that have issued SR equity shares with entities that have issued equity shares with equal voting rights.
Related party transactions
The role of an audit committee is to review financial statements, scrutinize inter-corporate loans & investments, and valuation of undertakings and assets of the listed entity, wherever applicable. In the case of related party transactions, prior approval of the Audit Committee is mandatory. One of the important amendments concerning related party transactions is that SEBI has mandated the approval of all such transactions only by independent directors on the audit committee. Although the original proposal was to not have any director related to the promoters on the audit committee to enhance the independence of independent directors, the amendments have made it the responsibility of independent directors to approve such transactions.
Remuneration to independent directors
Earlier, concerning both the Companies Act and the LODR Regulations, independent directors were not given stock options. There was a grave requirement to adequately compensate the independent directors for their time and value to the company. While there were concerns that a large remuneration may compromise the independence of ID, lesser compensation may also not attract competent IDs on the boards of the listed entities. In this regard, SEBI referred to the Ministry of Corporate Affairs (MCA), allowing flexible compensation structures while deciding on remuneration for independent directors, which may include ESOPs, profit-linked commission, etc. within the limit of the Companies Act, 2013.
These amendments also mandate the top 1,000 listed entities, by market capitalization, to undertake Directors and Officers Insurance for all their independent directors.
Conclusion
The role of independent directors has often been criticized for being incompetent in recognizing mismanagement, inadequate corporate governance, or even securing the funds of the corporate entity. These amendments were long overdue, to ensure the role, significance, and independence of independent directors in these listed companies. The major step towards this was the modification of the provisions governing the appointment, dismissal, and remuneration of the independent directors.
In the Indian context, where the promoters hold large dominance over the boards, the voice of independent directors is often overlooked or is not strong enough. These amendments appear to be promising in these aspects and bring a significant change. But more importantly, these improvements will direct the independent directors, the boards, and the shareholders to work towards bettering the standards of corporate governance. However, it is still too soon to judge whether these changes will bring any significant improvement in the independence of independent directors and change the corporate governance scenario for these listed companies.
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This article has been written by Ayush Tiwari, a student of Symbiosis Law School, NOIDA. This article elaborates upon the fundamentals of the Pre-Conception and Pre-Natal Diagnostic Techniques (Prohibition of Sex Determination) Act (PCPNDT). Along with its importance, features, and shortcomings, the article covers all the highlights of the Act with the help of recent developments.
Sex selection has been going on for a while. All areas of India and all walks of life are affected by patriarchal traditions that date back thousands of years. The census of 1991 revealed that there were significantly fewer females than boys. The child sex ratio shows that the decline in the female birthrate is concerning. There have been results of research that demonstrated that even in the twenty-first century, boys were still preferred over girls. There was a need for a comprehensive law making gender testing illegal in the Indian States since the practice of determining the sex of foetuses as a result of technological advances had compelled the government to establish legislation so that female feticide could be prohibited or regulated. Between 0 and 6 years old, there were 919 females for every 1000 boys in 2011, down from 927 in 2001 and 945 in 1991.
Background of the PCPNDT Act
The Indian government approved the Pre-Natal Diagnostic Techniques (Regulation and Prevention of Misuse) Act (PNDT) in 1994, and it went into force on January 1st, 1996. However, preconception sex selection has become feasible due to regular scientific advancements. The Pre-Conception and Pre-Natal Diagnostic Techniques (Prohibition of Sex Selection) Act was renamed in 2003 when changes were made to the Act to incorporate this. Policymakers changed the Act’s title to guarantee that sex selection is prohibited both before and after conception as a result of the country’s declining child sex ratio.
Need for the PCPNDT Act
A son has always been favoured above a daughter due to cultural norms and patrilineal line of succession regarding property rights. As a result, families had a propensity to keep having children until a male child was born, which exacerbated India’s overpopulation problems.
This was the standard up until the 1990s when the development of ultrasound technology made prenatal sex determination a common procedure. This resulted in the growth of thousands of crores of businesses where doctors perform selective abortions for a fee.
Female foeticide has been encouraged in a variety of ways due to social prejudice against women and a preference for boys, which has shifted the country’s gender balance in favour of males. Consequently, it was necessary to pass the Pre-Conception and Pre-Natal Diagnostic Techniques (Prohibition of Sex Determination) Act, 2003 (PCPNDT) legislation.
Features of the PCPNDT Act
The PCPNDT statute defines sex selection as the process of determining the foetus’s sex and removing it if it is of undesirable sex.
Prenatal diagnostic techniques in unauthorised units, sex selection on a man or woman able to conduct Pre-natal Diagnostics tests for purposes other than those specified in the Act, and the selling, distribution, supply, renting, etc. of an ultrasound machine or other equipment capable of detecting the sex of the foetus are all prohibited under this Act. The principal features of the Act are:
The Act forbids sex discrimination both before and after conception.
By limiting their usage to detecting genetic abnormalities, metabolic diseases, chromosomal abnormalities, certain congenital deformities, hemoglobinopathies, and sex-related illnesses, it controls the use of pre-natal diagnostic methods including ultrasonography and amniocentesis.
The sex of the foetus will not be determined by any test, including ultrasonography, at any laboratory, centre, or clinic.
No one, not even the person performing the legal process, is allowed to express the sex of the foetus to the expectant mother or her family by words, signs, or any other means.
Under Section 22 of the Act, anyone who places a notice, circular, label, wrapper, or other document advertising pre-natal and pre-conception sex determination services, or publicises through interior or other media in digital or print form, or participates in any noticeable representation made by hoarding, wall painting, signal, light, sound, smoke, or gas, can be sentenced to up to three years imprisonment and fined Rs. 10,000.
Aim behind the enforcement of the PCPNDT Act
To make sure that all district-level promotion programmes for girl children are put into action.
Through community involvement, the PNDT Act’s implementation is being monitored and evaluated.
Ensure that implementing agencies are held accountable by participating in community monitoring of the Act’s implementation.
Using Anganwadi personnel and Accredited Social Health Activists (ASHAs) to keep track of pregnancies, Medical Termination of Pregnancies (MTP), and birth registration.
Locating Act offenders by carrying out thorough audits of the form “F” filled out for the clinic’s pregnant patients.
Create an annual plan for the country, state, and district.
An overview of the PCPNDT Act
Prenatal diagnostic practices
Such practices are defined under Section 2(i) of the PCPNDT Act, 1994.
It refers to all medical operations, including:
Ultrasonography,
Foetoscopy,
Obtaining or removing samples of chorionic villi, amniotic fluid, taking a blood sample, a tissue sample, or any other bodily fluid and sending it to a genetic laboratory or a genetic clinic for carrying out any prenatal diagnosis for sex selection before or following conception,
Prenatal diagnostic procedures are defined in Section 2(k) as follows:
It refers to an ultrasound or any examination or study of a pregnant woman’s blood, amniotic fluid, chorionic villi, tissues, or fluids to look for chromosomal abnormalities, congenital defects, hemoglobinopathies, or sex-related illnesses.
While these procedures and tests are together referred to as pre-natal diagnostic methods in Section 2(j).
Regulation of Genetic Counselling Centres, Genetic Laboratories, and Genetic Clinics
According to Section 3, genetic counselling centres, genetic laboratories, and genetic clinics must register with the Act and employ competent personnel in order to operate.
Section 3(a) places restrictions on individuals, labs, clinics, etc. that are not registered with the Act.
Techniques for prenatal diagnosis
Section 4 of the statute governs the techniques for prenatal diagnosis.
Section 4(2) of the statute states that only patients with the following defects are given a prenatal diagnosis:
Chromosomal abnormalities
Genetic disorders of metabolism
Haemoglobinopathies
Sex-specific genetic disorders
a congenital disorder or,
Any more irregularities that the Central Supervisory Board (CSB) deems necessary.
Radiation is also used to do diagnostics on patients. Another name for this procedure is radiology.
Prenatal diagnostic procedures may not be employed or carried out unless the person qualified to do so is confident that all of the following requirements are met:
The expectant mother is older than 35 years old.
The expectant mother has experienced at least two spontaneous abortions or foetal losses.
The expectant woman had been exposed to substances, such as drugs, radiation, infections, or toxins.
The expectant mother’s family has a history of genetic diseases, such as mental impairment or physical abnormalities like spasticity.
Whatever other requirements that the Central Supervisory Board may specify
Except for the purposes listed in Section 5(2) of the PCPNDT Act, no one, including a relative or the pregnant woman’s husband, should solicit or promote the use of any pre-natal diagnostic methods on her.
Section 5 of the Act requires written authorization from the expectant mother and a ban on discussing the foetus’ gender.
Under Section 6, the determination of gender is forbidden.
The Central Supervisory Board and the State Supervisory Board
Chapter IV (Sections 7 to 16(a)) covers the establishment of the Central Supervisory Board, which will, among other things, examine and keep an eye on how the Act and Rules are being implemented. State and Union Territory Supervisory Boards are to be created for the same purpose under Section 16(a).
Constitution of the Central Supervisory Board
The constitution of the Central Supervisory Board (CSB) is done by the Union Government to exercise the authority and carry out the duties entrusted to the Board by this Act. The CSB is constituted according to Section 7 of the PCPNDT Act.
Section 7(2) of the Act says that the board shall consist of:
The Chairperson, ex officio, shall be the Minister responsible for the Ministry or Department of Family Welfare.
Renowned obstetricians and gynaecologists;
Renowned paediatricians;
Renowned social scientists; and
Representatives of groups that support women;
Three female lawmakers, two of whom will be chosen by the House of Representatives and one by the Council of States;
Two members will be selected by the Union government in alphabetical order and two in reverse alphabetical order, to represent the States as well as the Union territories. With the proviso that no appointment under this Section may be made without the state government’s or, where applicable, the union territory’s, recommendation;
A Union Government officer in charge of Family Welfare who is not below the rank of a Joint Secretary or equivalent, and who will serve as the Member-Secretary, ex officio.
Term of office of members
A member’s term of office, excluding ex officio members, shall be as follows:
Three years for appointments made in accordance with clauses (e) or (f) of Section 7(2); and
One year in the case of an appointment made in accordance with subsection (g).
Appointment of the Board’s officers and other personnel
The Board may, subject to any regulations that may be issued in this regard, appoint (whether on deputation or otherwise) the number of officers and other personnel that it deems necessary in order to enable it to effectively carry out its functions under this Act. It is provided, however, that the Central Government’s consent is required for the appointment of any category of officer that may be mentioned in such regulations.
All officers and other employees hired by the Board are subject to the terms of service and are entitled to the compensation set forth in the regulations.
Authentication of board orders and other documents
All orders and decisions made by the Board must be signed by the Chairman or another member designated by the Board in this capacity. All other documents issued by the Board must be signed by the Member-Secretary or another officer designated in a similar manner in this capacity.
Disqualifications for membership appointments
Has received a conviction and prison term for a crime that the Central Government deems to include moral turpitude; or
Is an undisharged insolvent;
Any individual who ceases to be a member may be appointed again under the same terms of service as specified.
Meetings of the Board
The board shall convene at such time and location and shall comply with the regulations as to the transaction of business at its meetings (including the quorum at such meetings), as long as the board meets at least once every six months.
The Chairman, or the Vice-Chairman in his absence, will preside over meetings of the Board.
Any other individual selected by the members attending the meeting shall preside over the meeting if for whatsoever reason the Chairman or the Vice-Chairman is not able to attend.
The decision on any matter brought before the Board at any meeting shall be made by a majority of the votes casted by the members present at that time and voting. In the case of a tie vote, the Chairperson, or in his absence, the person who presides shall have a second or casting vote.
Members who are not ex officio members are entitled to any allowances that the Board may deem appropriate.
According to Section 16 of the Act, the Board would have the following duties:
To provide policy advice to the Central Government about the use of prenatal diagnostic tools, sex-selection tools and precautions against their abuse;
To examine and track the application of the Act and the rules issued under it, and to suggest amendments to the Central Government;
To educate the public about the harmful practises of pre-conception sex selection and prenatal foetal sex determination that can result in female foeticide;
To establish a code of behaviour for staff members at genetic counselling facilities, genetic research facilities, and genetic clinics;
To monitor the activities of various organisations created in accordance with the Act and take the necessary actions to guarantee correct and efficient implementation;
Any other duties that the Act may specify.
State supervisory boards
Section 16A talks about the state supervisory boards (SSB).
Composition of the SSB
The State’s Minister of Health and Family Welfare, who will serve as Chairperson by default;
The Secretary of Health and Family Welfare, who serves as the Vice-Chairperson by default;
Ex officio Secretaries or Commissioners of the Departments of Law, Social Welfare, Indian Systems of Medicine, and Homeopathy, or their representatives;
The State Government’s ex officio Director of Health and Family Welfare or Indian Systems of Medicine and Homeopathy;
Three women serving in the Legislative Council or Assembly;
The State Government shall designate ten members, two of whom must come from each of the following categories:
renowned social scientists and legal professionals;
Notable female campaigners from NGOs or other sources;
Renowned obstetricians and gynaecologists or specialists in stri-roga or prasuti-tantra;
renowned paediatricians or geneticists in medicine;
Renowned sonologists or radiologists;
G. An official in charge of family welfare who is not below the rank of Joint Director and who serves as the Member Secretary by default.
The functions of the SSB
The State Supervisory Board must convene at least once every four months and perform the following duties:
To raise awareness among the general public about the state’s practice of pre-conception sex selection and prenatal foetal sex determination that results in female foeticide;
To examine the actions of the state’s relevant authorities and suggest appropriate action against them;
To provide the Board with appropriate suggestions about the execution of the Act’s and regulations’ provisions.
Sending the Board and the Central Government any consolidated reports that may be required about the different Act-related activities carried out in the State;
Any further duties that may be specified in the Act
Advisory Committees and Appropriate Authorities
Chapter V (Section 17, 17(A)) includes Advisory Committees and Appropriate Authorities. Under Section 17, the appropriate authorities are granted a wide range of powers, including the ability to issue, revoke, or suspend a centre’s registration, as well as the ability to look into complaints and take legal action. The Appropriate Authorities have the authority to issue search warrants, require the production of documents, and call people, among other things.
Appropriate authorities must work with an Advisory Committee’s assistance and counsel. Each of the Union Territories should have one or more Appropriate Authorities appointed by the Central Government.
The State Appropriate Authority is a multi-member organisation made up of:
A member of the Joint Director of Health and Family Welfare-Chairperson rank or above;
A prominent woman representing the interests of a women’s organisation; and
A member of the state’s or union territory’s law department
Appropriate authorities must be appointed at the district and sub-district levels as well, per Supreme Court directives. The Civil Surgeons, or Chief Medical Officers, have been recognised as the appropriate authorities at the district level.
Duties of Appropriate Authorities
The appropriate authority’s duties include:
To accept registration application submissions
To approve, revoke, or suspend the registration and enforce the requirements for genetic counselling offices, clinics, and laboratories
To look into claims of violations of the Act’s and the Rules’ provisions
To respond to criticism by bringing a complaint to court.
Should review all Form Fs filled out for each ultrasound, including the whole justification for the scan and its outcome.
Sending decoys to doctors who are suspected, then raiding the facility or inspecting the location and gathering evidence there and then
To guarantee that any sex determination made is accurately recorded
To commence independent investigations in such a situation and to take necessary legal action against the employment of any sex selection technique by anybody at any location, whether it is done so voluntarily or is brought to its attention.
To educate the public about the harmful practises of sex selection and prenatal sex determination
To keep an eye on how the Act’s and regulations’ requirements are being followed
Advising the CSB and State Boards of any amendments needed to rules necessary to reflect advancements in technology or societal factors
To act upon the advisory committee’s recommendations for suspension or cancellation of registration that were made following an investigation of the complaint.
The Powers of the Appropriate Authorities
The following powers have been granted to the appropriate authority:
Summoning anybody who has knowledge of a breach of this Act’s norms or provisions to appear in court.
Production of any record or tangible thing pertaining to violations
Issuing a search warrant for any location where prenatal sex determination or sex selection practices are allegedly being used; and
Any other matter that is prescribed.
Composition of Advisory Committees
Three medical professionals are chosen among obstetricians, paediatricians, gynaecologists, and medical geneticists;
One legal expert
A single official to represent the State Government’s communication and publicity department or the Union Territory, as applicable;
Three accomplished social workers, at least one of them must be a representative of a women’s organisation.
Registration for PCPNDT
Under Section 18 of the Act, any genetic counselling centre, genetic laboratory, and genetic clinic having an ultrasound or imaging machine may register.
The web portals made accessible by each state, like Karnataka, Maharashtra, etc., are used for PCPNDT online registration.
Under subclause (2) of the aforementioned provision, a request for the registration of a genetic laboratory, clinic, counselling centre, or centre with an ultrasound or imaging machine, or any other machine capable of determining the sex of a foetus, may be made to the competent authorities. Any of the aforementioned facilities, laboratories, or clinics founded prior to the passage of this law must be registered within six months of that date. Such a facility should stop operating if it is not registered within six months of the start of this legislation.
If the aforementioned medical facilities meet the specifications for the types of equipment and standards put out under this legislation, every such counselling centre, laboratory, or clinic receives a certificate of registration under Section 19 of the PCPNDT Act. After a predetermined amount of time, the registration certificate may be renewed by paying particular costs. The certificate has to be prominently displayed at the place of business.
If the aforementioned medical facilities meet the specifications for the types of equipment and standards put out under this legislation, every such counselling centre, laboratory, or clinic receives a certificate of registration under Section 19 of the PCPNDT Act.
After a predetermined amount of time, the registration certificate may be renewed by paying particular costs. The certificate has to be prominently displayed at the place of business.
Registration Revocation or Suspension
According to Section 20 of the Act, the registration certificate may be suspended or revoked suo moto in response to a complaint by delivering a show-cause notice and providing justification therein.
The authorities may continue with the suspension or termination of registration even after providing the medical centre with sufficient time to respond.
According to Section 20(3), the relevant authority may postpone the registration of a location without providing any notice if it determines that doing so is in the interest of the public or is expedient, but only after specifying the justifications in writing.
Appeal against registration under the PCPNDT Act
It is granted in accordance with the PCPNDT Act’s Section 21. An appeal against registration suspension and revocation may be lodged with the following authorities, which are:
Central government acting against a competent central authority’s directive,
State government acting against a state’s competent authorities’ directives.
Offences and it’s penalties under the PCPNDT Act
The Preconception and Prenatal Diagnostic Techniques Act’s (PCPNDT) Section 22-26 outlines the offences covered by this law and the penalties that may be imposed.
Section 22– Under Section 22,advertising of any clinic, laboratory, or other location that uses radiography, imaging methods, etc. in connection with a facility for prenatal sex determination is forbidden. Any violation of the provisions in this section will result in a penalty, which includes up to three years in prison and a fine that might reach ten thousand rupees.
Section 23– While Section 23 addresses this, any gynaecologist, other health practitioners, owner of a genetic laboratory, counselling centre, or clinic, or employee of such a location who renders his professional or technical services and does so in violation of any provisions under this Act is also in violation of the law.
A fine of up to 10,000 rupees and a sentence of up to three years in imprisonment to the offender under Section 22 of the Act. And, if convicted again, the penalty could be increased to five years’ imprisonment and a fine of up to 50,000 rupees under Section 23 of the Act. The relevant authority may notify the state medical council of the name of the concerned medical petitioner, according to clause (2) of this Section. The purpose of penalties is to take the required measures, suspend the defendant’s registration in the event that charges are brought, and, in the event that he is found guilty, have his name permanently or for five years removed from the council’s register.
If a person consults a genetic counselling centre, clinic, or laboratory for any cause other than those listed in subsection (2) of Section 4, according to clause (3) of this Section, they might face up to five years in jail and a fine of 50,000 rupees. Additionally, a second conviction carries a penalty of up to five years in jail and a fine of one lakh rupees.
The proviso in this Section states that any woman who is required to undergo a diagnostic procedure for sex selection is exempted from the application of Section 23 subsection (3).
Additionally, Section 24 of the Act presumes that the spouse and her family are responsible for pressuring a woman to have a diagnosis other than the diagnostic procedures listed in Section 4(2). And, under Section 23 subclause (3), such a person is held accountable for aiding an offence and is subject to a penalty for that offence.
Section 25 specifies the penalty for the violation of the PCPNDT Act’s requirements. If no punishment is specified elsewhere in this Act for such a violation. Such a penalty may include three-month imprisonment, or a fine of up to a thousand rupees, or both. This fine may increase on a subsequent conviction. The amount is increased to 500 rupees per day for as long as there are other convictions following the first one.
Under Section 26, the offences committed by businesses, whether intentionally or negligently, are covered. The person in charge of the administration of the organisation will be held accountable and punished appropriately if such an offence is committed with his or her permission.
Every offence is cognizable under Section 27, which also prohibits bail and compounding.
Under Section 28 of the Act, the appropriate authorities are mentioned who can take cognizance of an offence given under the Act, just as the jurisdiction of the specific courts is outlined.
The necessity for clinics and other organisations to maintain records is outlined in Section 29.
The Appropriate Authorities have the authority to look for and seize records under Section 30.
Section 32 of the Act mentions the authorities which can make rules in accordance with the Act.
Amendment to the PCPNDT Act
To better control the technology used in gender selection, the Pre-Natal Diagnostic Techniques (Regulation and Prevention of Misuse) Act, 1994 (PNDT), was amended in 2003 to The Pre-Conception and Pre-Natal Diagnostic Techniques (Prohibition of Sex Selection) Act (PCPNDT Act).
Consequences of the amendment
The primary goal of the Act’s amendment was to include the practice of pre-conception sex selection. The following things have been added in the amendment of 2003:
Including ultrasonography in its scope
Constitution of a state-level supervisory board and the strengthening of the central supervisory board
Making provisions for harsher penalties
granting the competent authorities the right to use a civil court to search for, confiscate, and seal the violators’ machines and equipment
limiting the sale of ultrasound equipment to authorised organisations
Loopholes in the PCPNDT Act
Chances of corruption
Registration of Genetic Guidance Centers and Laboratories may only be used to legalise private clinics that continue to engage in these operations for financial gain despite the law’s ineffective deterrents. Additionally, licencing would open up a new door for corruption to get around the paperwork. We are now more conscious that these tests should only be conducted in publicly accountable government hospitals rather than endorsing the private sector.
Elimination of fear
The appropriate authorities have confiscated the ultrasound device in multiple instances. According to the PCPNDT Act’s provisions, if the Appropriate Authority seizes any ultrasound equipment or other foetal sex detection equipment used by an organisation not registered under the Act, then the organization’s machine is only released upon payment of a penalty equal to five times the registration fee and upon receipt of an assurance from the organisation that it will not engage in foetal sex detection or sex selection before or after conception. This proviso eliminates the Act’s fear or deterrent elements. It merely communicates that after making a minimal payment and submitting an undertaking, the person may continue working. To stop encouraging those who commit this offence to break the rules of this Act, this rule should either be repealed or changed.
Punishing the victim
The law’s attempt to dissuade women by punishing them is its most unpleasant and illogical aspect. In a setting where the social structure gives women very little room to make independent judgments and forces them to make “choices,” such a provision can only make women’s agony worse. Only the preservation of the interests of those responsible for providing such a facility can be facilitated by penalising women.
No local authorities
The establishment of local vigilance committees, which would aid in effective implementation, is not contemplated, and the only nominal entities are those at the central and state levels. Due to the extremely high earnings made from this industry, the punishment for the offenders is minimal and incapable of serving as a deterrent.
A Loophole in Form F of the Act
The majority of the time, during a search and seizure, the appropriate authorities discovered errors in the Form F’s completion. These forms serve as early documented proof proving the patients’ identities. It is challenging to track down the ladies and determine whether a sex-selective abortion was carried out following the ultrasound because of inadequate documentation. The PCPNDT Act defines improper recordkeeping as a crime.
Updating the Act
Future sex-determination methods being developed, such as testing for craniate cells in maternal blood, subtle sex-pre-selection methods like electrolysis, Ericsson’s approach, etc., are currently not covered by the legislation. If emerging technologies do not expand the reach of the law, they will quickly steer away from the horrible issues that it must confront.
Difficulty in the assessment of an application
The law’s effective execution seems more or less impossible. Given that people acquiring the sex of the foetus may be interested in learning the results, it is not advisable to prevent information about the sex of the craniate from being disclosed. The process of assessing the application has grown more difficult due to the rising popularity of the ability to avoid detection among suppliers and consumers.
Hence, attempts to manage or regulate the operation of the private medical sector by standalone legislation may not be the most appropriate course of action. The problem that arises in the other direction is that a state must participate widely in the execution of this Act; the passage of the law is simply the first step in that direction. A type of work that is typically not considered a core health performance must be performed by the state machinery, in this case, the health department.
Landmark cases
Union of India v. Vinod Soni & Others, 2005
In this case, the petitioners were a married couple. They had essentially raised two arguments against the Act’s constitutionality: first, that it violates Article 14 of the Indian Constitution, and second, that it violates Article 21. However, the Article 14 challenge was not pushed into submission at the time of the hearing. However, the Hon’ble High Court pointed out the flaw in this justification by stating that “the right to personal liberty cannot be stretched in any way to include the freedom to forbid the conception of a female or male foetus, which should be left to the will of nature.” The High Court held that “these rights, even if further expanded to the extremes of the possible elasticity of the provisions of Article 21, cannot include the right to selection of sex, whether preconception or post-conception,” citing Supreme Court decisions that explain that Article 21 includes the right to food, clothing, a decent environment, and even protection of cultural heritage. The High Court noted that “this Act is factually enacted to advance the child’s right to complete development as provided for under Article 21.” Therefore, regardless of the infant’s sex, a conceived child has a right to full development under Article 21. As a result, the High Court rejected the petition, ruling that there was no evidence at all that Article 21 of the Constitution was violated.
Suo Motu v. State of Gujarat, 2008
The following issues were raised in this case for consideration:
Does Section 28 of the Pre-conception and Pre-natal Diagnostic Techniques (Prohibition of Sex Selection) Act, 1994 permit a court to find a violation of the Act upon receipt of a complaint from any official authorised by the appropriate authorities to file such a complaint?
Does the proviso to subsection (3) of Section 4 of the PNDT Act mandate that the complaint should include specific claims about the violation of Sections 5 and 6 of the Act?
Is it the authority’s responsibility to establish that there was a contravention of the provisions of Section 5 or 6 of the Act
Judgment
A court may take notice of an offence under the Pre-conception and Pre-natal Diagnostic Techniques (Prohibition of Sex Selection) Act, 1994, on a complaint submitted by any official authorised in that regard by the relevant authorities, according to Section 28 of the PNDT Act.
The proviso to Section 4(3) of the PNDT Act does not mandate that the complaint alleging accuracy or inadequacy in preserving records in the required way should also contain an accusation of violating Sections 5 or 6 of the PNDT Act.
The burden of proving a violation of Sections 5 or 6 does not fall on the prosecution in a case based on allegations of a shortcoming or error in maintaining the record in the manner specified by sub-section (3) of Section 4 of the PNDT Act.
Suggestions
In a comprehensive view of gender inequality, it is also important to include the serious crime of killing female foetuses. The fervently upheld mistreatment of women, the use of violence, the denial of economic prospects, and the complete silence of their voices, even on such a private and important subject as rearing their own families, all reveal deeply ingrained patriarchal attitudes. However, while being a multifaceted evil, it still has to be combated with a persistent campaign from all angles. There can be obstacles and dead ends. They must be recognised, named, and dealt with. The cruelty and avarice of the medical profession’s members in such activities and degrading practices must not be tolerated by professional organisations like the Indian Medical Association.
For the PNDT Act to be a fundamental transformation, emphasis must also be placed on sufficient education, lobbying, publicity, and commitment to saving female foetuses and unborn daughters so that their Right to Life is recognised and protected, even in situations where doctors are not involved directly. If they have specific information, their vigilance in reporting such acts to competent authorities can certainly help. The creation of a creative legal engagement plan as a method of mobilisation and opposition is ultimately what is required.
Conclusion
The level of PCPNDT Act knowledge fell short of expectations. Women’s attitudes towards the sex of children and societal factors that favour male offspring are still ingrained in society. It is imperative that the media, social workers, and medical personnel take an active role in educating the public and changing women’s attitudes.
The most prevalent goals of the pre-conception and pre-natal diagnostic procedures Act of 1994 are to monitor female foeticide and prevent it from occurring. After being put into effect, its effectiveness is clear.
A good indicator is that the PCPNDT Act’s sex ratio has risen to 108.18 men for every 100 females, or 947 females for every 1000 males, and is increasing at an estimated annual rate of 0.19 percent. Although there is still a lack of knowledge of the crime of female foeticide in rural India, the government has introduced several programmes to combat it and promote the welfare of girls. in order for people in rural India to stop these activities. The “Mukhbir Yojna” is one such plan. A person who notifies the government department of any doctor or other medical personnel engaging in the practice of sex determination or female foeticide would receive a reward of 2 lakh rupees.
At last, it can be seen that the medical and health law regarding protecting the female foetus has resulted in some changes, but the medical fraternity needs to be protected at the same time from these minor offences. For this reason, the right to operate a clinic, hospital, or nursing home with all of these regulations that are in harmony with the responsibilities of doctors and medical ethics needs to be properly examined, as doctors owe a constitutional duty to treat the sick and injured.
Frequently asked questions (FAQ’s)
The prenatal determination technology (regulation and prevention of misuse) Act of 1994 had its name changed by which Amendment Act?
Ans. The Pre-Conception and Pre-Natal Determination Techniques (Prohibition of Sex Selection Techniques) Act was revised in 2002 to include the pre-natal determination method (regulation and prevention of misuse).
According to the PCPNDT Act of 1994, who is the appropriate authority?
Ans. For the purposes of this Act, the Central Government shall designate one or more appropriate authorities in each of the union territories by publication in the Official Gazette.
How does PNDT registration work?
Ans. In the USG room and the reception area, the PC-PNDT registration certificate must be on display in its original format. A copy of the PC-PNDT Act must be kept at the centre and must be visible in both the USG room and the lobby/reception area.
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This article is written by L M Lakshmi Priya, a student from the School of Law, Sathyabama Institute of Science and Technology, Chennai. This article provides an exhaustive overview of a preliminary decree. It also discusses the types of decrees passed in the court of law.
It has been published by Rachit Garg.
Table of Contents
Introduction
The most common terminology used concerning civil proceedings is the decree and which is commonly referred to as the verdict rendered by the judges during the case in a court of law. An official such as a judge in a court or other tribunal will issue an order. Section 2(2)of the Code Of Civil Procedure,1908 states that the formal expression the court makes about disputes to the parties may either be final or preliminary. Similarly, a preliminary decree refers to a decision the court makes before the parties’ conclusive rights have been established when it is unable to grant them the final decree. The court can pass a preliminary decree when the case is not entirely resolved and the remaining proceedings are still pending.
Example of a preliminary decree
If a wife requests support, the court should consider it during the trial process; if not, the court may issue a preliminary judgement for maintenance during the trial process; eventually, the judge may declare the final decision after consulting both the parties.
Now let’s look into the deeper perspective of a preliminary decree.
When can a preliminary decree be passed
The following circumstances are ensured by the Civil Procedure Code so that the preliminary decree may be issued:
The court may issue a decree for possession of the property, for rents that have accrued during the period before the institution of a suit or for the directing an inquiry as to such rent, or for mesne profits, or for directing an inquiry as to such mesne profits when a suit is brought to recover possession of the immovable property and for rent or mesne profits.
Case law – Smt. Subashini v. S. Sankaramma (2018)
The Telangana High Court in this case highlighted the priorities of awarding mesne profit, where it helps to compensate the original owner when the same property is in another person’s unlawful possession and where it is granted to rectify the situation done to the lawful owner by way of compensating the original owner.
Order 20, Rule 13 – Administration suit
The court may make a preliminary decree and any other judgement that may be appropriate in a dispute involving property or concern about its administration that is before the court for a final decree.
Case law – Bai Asmalbai v. Esmailji Abdulali (1963)
In this case, the plaintiff was the widow of Mahmadalli Ibrahimji, who passed away on August 10, 1947. Following his passing, 5 people sued 8 other people to administer the deceased Mahmadalli Ibrahimji’s property. The Court issued an order for administration and named a commissioner to divide the decedent’s assets among his heirs. In the appeal, it was determined that the variation was that the administration should only apply to two-thirds of twenty tolas of gold rather than thirty tolas of gold and that the sale-deed of a house executed by the deceased Mahamadam in favour of his wife defendant was a fraudulent transaction and that the house was, therefore, eligible for administration.
Order 20, Rule 14 – Suits of pre-emption
When the court passes the decree to claim pre-emption regarding the sale or purchase of any property it can be on the day or before the purchase money shall be paid on paying the purchase money to the court and if there is any cost against the plaintiff in case the defendant should deliver the possession to the plaintiff, whose title thereto shall be deemed to have accused from the date of such payment and if the cost or the purchase money is in pending then the court may dismiss the suit.
Case law – C K Gangadharan v. Kumaran (2019)
In this case, the court provided answers to a variety of questions relating to pre-emption rights, including the need for a mandatory injunction to enforce pre-emption, the requirement that the preemptor has the same rights as family members in order to protect family property from outsiders, and the constitutional inconsistency of the right of pre-emption based on consanguinity.
Order 20, Rule 15 – Suits for dissolution of a partnership
When it comes to decisions involving the dissolution of a partnership or taking the partnership’s account in compliance with the parties’ respective share proportions, the court may issue a preliminary decree before issuing a final decree.
Case law – M. Muthukrishnan v. Ethirajulu (2009)
The Court cited a case and ruled that it is not essential to declare the shares in the judgement it has issued in this matter. However, when it is proven through the pleadings and the evidence that the parties have equal shares, the decree must be created by stating the parties’ respective shares. The court must also draft the decree in accordance with Order 20, Rule 15 C.P.C and Form No. 21.
Order 20, Rule 16 – Suits related to accounts between the principal and agent
The Court shall issue a preliminary decree before issuing its final judgement directing that the accounts it deems appropriate to be taken in any suit for an account of financial transactions between a principal and an agent or in any other suit not previously provided for where it is necessary to take an account to determine the amount of money due to or from any party.
Case law – Rajendra Singh v. State of Rajasthan (1983)
The Court in this case held that the right to request a statement of accounts is an unusual form of relief that is only given in very specific circumstances and is only to be requested when the relationship between the parties is such that it is the only relief that will allow the claimant to adequately assert his legal rights. A reference to another case was made to reach this decision. The judge highlighted that an agent had a legal obligation to account for his principal under Section 213 of the Contract Act,1872 but that the principal had no equivalent legal duty toward the agent.
Order 20, Rule 18 – Suit for partition and separate possession
If the decree is related to the estate property of the government to pay them revenue, then the decree shall declare the rights of the parties, and the partition may occur in the collector’s presence. If the cases relate to movable or immovable property, then the court may pass the preliminary decree with further investigation based on the parties rights.
Case law – Shasidhar v. Ashwini Uma Mathad (2015)
It was decided that in a lawsuit filed by a co-sharer, co-owner, or joint owner, or as the case may be, for partition and separate possession, it was necessary for the court to examine the nature and character of the properties in a suit, including who was the original owner of the suit properties, how and by what source he/she acquired such properties, whether it was his/her self-acquired property or ancestral property, or joint property or coparcenary property in his/her hand. The Court must consider the grounds of each party’s claim in its proper context before recording a decision about its extent.
Order 34, Rule 2 – Suits related to the foreclosure of a mortgage
When a lawsuit involving foreclosure is filed, the court must order that any money owed to the plaintiff, the costs of his legal defence, and any outstanding principal and interest on the mortgage be deducted from the account if he succeeds. When the defendant fails to pay the sum of charges set by the court at the preliminary decree, the plaintiff may move for the final judgement.
Case law- Narayan Deorao Javle v. Krishna (2015)
In this case, the Supreme Court ruled that even if the mortgagor had acquired a portion of the mortgaged property through the use of a registered sale deed, the decree of foreclosure issued in the lawsuit brought by the mortgagee would not have rendered the mortgagor’s right to redeem land irrelevantly.
Order 34, Rule 4 – Suits for the sale of the mortgaged property
If the plaintiff is successful in the sale lawsuit, the court may issue a preliminary decree, and if the defendant doesn’t pay, the plaintiff may ask for a final decree. The time limit for paying the amount found or declared due under sub-rule (1) or the amount adjudged due in respect of additional costs, charges, expenses, and interest may be extended by the court from time to time, with good cause demonstrated and under conditions to be determined by the Court, at any time before a final decree for sale is issued.
Caselaw – Kanti Ram v. Kutubuddin Mahomed (1894)
As it is to enforce the mortgage security, in this case, the judge’s opinion to dismiss the plaintiff’s lawsuit is incorrect, and the plaintiffs have the right to an order for the sale of the mortgaged property subject to the lien of the prior encumbrances and the formation of the new mortgage decree in accordance with the Transfer of Property Act, 1882.
Order 34, Rule 7 – Suits for the redemption of a mortgage
When the plaintiff submits the application and pays the defendant’s other costs, the defendant is then expected to take all other actions that are necessary to support the plaintiff. If either party fails to comply with the court’s instructions during the preliminary decree, the other may file for the final decree.
Caselaw – L. K. Trust v. EDC Ltd. (2011)
The Apex Court stated in this decision that the mortgagor’s rights are safeguarded in a claim for the redemption of a mortgage. Although the right to redemption is a legislative right in India, the existence of a right of redemption depends on the continued existence of the underlying mortgage. The right of redemption under a mortgage deed can only be terminated in a way that is permitted by law; this right cannot be eliminated except by an agreement between the parties or by a court order.
Features of a preliminary decree
The decree expresses a court judgement. The qualities listed below must be met for a court decision to be considered as a preliminary decree.
Appealability
You can move to the high court by filing an appeal of a particular preliminary decree if you are dissatisfied with the lower court’s order, but you must do it before the final decree is made.
Illustration – In a case involving the division of property, the Madras High Court issued a preliminary decree determining the parties’ respective shares. A final decree was passed based on this initial decree. One of the parties appealed the final judgement on the grounds that the preliminary judgement did not assign the party any shares. Because an appeal against a preliminary decree cannot be brought after the final decree has been issued, the Court refused to allow this appeal.
Passing of a second preliminary decree
The preliminary decree should always be followed by the final decree, while changes to the preliminary decree are permitted prior to the final decree’s approval as long as there has been a significant change in the circumstances. The court must evaluate the revised statute and issue a second preliminary decree as necessary.
Illustration – A filed a partition lawsuit against four defendants. The lower court issued a preliminary decree outlining the parties’ respective shares. However, two parties passed away before the final decree could be issued, and a disagreement emerged regarding their respective portions. In order to resolve the conflict, the court had to redistribute the shares specified in the initial provisional decree. It was decided that nothing in the law prevents the issuance of more than one preliminary decree if the situation calls for it. It was decided that a second preliminary decree was necessary.
Non-execution of preliminary decree
Execution refers to the procedure for carrying out or giving effect to a court’s decision. It’s important to remember that only a final decree can be put into effect unless it also becomes a part of the final decree.
Illustration – A filed a partition lawsuit against B, and a preliminary decree was issued defining the shares of A and B in the lawsuit as property. B filed for the preliminary decree to be executed before the court issued the final judgement. The Supreme Court ruled that there is no executable decree because no final decree has been delivered in this case. The decree doesn’t become enforceable until after the final version has been approved.
Characteristics of a preliminary decree
Right of the parties
It should be the plaintiffs and defendants who are parties to the rights in concern rather than a third party who has never been sued before. The rights of the parties concerning all or all of the issues in dispute in the lawsuit must have been decided.
Adjudication
The term ‘adjudication’ simply refers to the court’s decision, which should only be made by judges and other legal professionals after a thorough judicial review of the relevant facts.
Suit
A suit must have been filed to receive an adjudication, and a civil court case is started by filing a plaint. For instance, legal actions brought under the Land Acquisition Act,1894, the Hindu Marriage Act,1955 the Indian Succession Act,1925 etc. are called statutory suits, and the judgement rendered in accordance with such laws is regarded as a decree.
Final decree
When the final decree is rendered, the court reaches its conclusion and will no longer accept further arguments. For instance, interim divorce judgments are granted in order to provide the parties with a chance at reconciliation. The divorce lawsuit then receives a final decree.
Consequences of preliminary decree
A court may issue more than one preliminary decree in a case, and the Civil Procedure Code’s provisions do not prohibit this. The only thing it specifies is that a court may issue a preliminary judgement in a case.
Case laws
Phoolchand v. Gopal Lal (1967)
In this case, the trial court issued a preliminary decree regarding the shares of the parties after which two of the four parties passed away before the issuance of the final decree due to disagreements between the other parties. The Court then redistributed the shares as specified in the first preliminary decree, and later stated that the CPC does not forbid the issuance of more than one preliminary decree if the circumstances of the case enforce it.
Ganduri Koteshwaramma v. Chakiri Yanadi (2011)
In this case, the court ruled that the final judgement should be following the preliminary judgement, but it doesn’t mean that the preliminary judgement cannot be amended depending on the facts of the case.
How is a preliminary decree executed
Execution of a preliminary decree just entails putting effort into the court’s decision, thus a preliminary decree is not executable unless it is made a part of a final decree. A preliminary decree declares the rights of the parties, and a final decree satisfies that preliminary decree.
Example – A filed a partition lawsuit against B, and a preliminary decree was issued defining the shares of A and B in the lawsuit as property. B filed for the preliminary decree to be executed before the court issued the final judgement. The Supreme Court ruled that there is no executable decree because no final decree has been delivered in this case. The decree doesn’t become enforceable until after the final version has been approved.
Types of decrees
The court may decide cases by decree or order. The court resolves conflicts formally by issuing a decree, which is essentially broken down into the following heads.
Preliminary decree,
Final decree,
Partly preliminary and partly final decree.
Preliminary decree
The preliminary decree is brought up by the court prior to rendering a decision in order to put an end to disputes over the parties’ rights and all other issues. It is designed to be passed on by the court to rule on specific cases. This preliminary decree is issued in advance of the final decree. The preliminary decree is a court ruling that outlines the parties’ legal rights and responsibilities but leaves the final result up for decision in the following proceedings. When the court is supposed to decide on the parties’ rights first preliminary decree is passed. But a preliminary decree will not completely conclude the case.
Example of preliminary decree
X, Y, and Z, the parties to the property, are asking the court to order its partition, but the court cannot do so until it has established the shares and rights of each party. The court could issue a preliminary decree in this case in order to accomplish this.
A’s wife sues her husband for maintenance in this case, and the court must make sure that she receives maintenance throughout the trial to enforce that. The court may therefore issue a preliminary decree to ensure that she receives maintenance all through the trial.
Case law
Selvamani v. Chellamal (2015)
In this case, the court made a preliminary decision regarding the parties’ respective shares. Later, the final decree was made, and one party appealed it, arguing that the preliminary decree had not given him any shares. However, the court dismissed the appeal because it was not possible to appeal the preliminary decree since the final decree had already been made.
Final decree
A final decree is one in which the court of law resolves all legal concerns and issues the final order after the dispute in the lawsuit has been resolved, and the court will then entirely dispose of the lawsuit. Final decrees are granted in one of two situations:
1) when an appeal is not filed within the allotted time or when the high court decides on it, and
2) when the court completely settles the case.
Example of final decree
To provide for a chance of reconciliation, interim divorce decrees are granted. A final decree is subsequently issued in the divorce suit.
Case law
Shankar Balwant Lokhande v. Chandrakant Shankar Lokhande (1995)
The Court ruled in this case that until the final decree is issued, there cannot be a formal court order that definitively resolves all of the case’s issues.
Partly preliminary and partly final decree
The Code of Civil Procedure permits a decree to be partly preliminary and partly final. This occurs because only a portion of the order is final, while the rest is a preliminary decree
Example of partly preliminary and partly final decree
Think about two brothers who want to inherit their late father’s property but the property is now rented. The succession of the property may be the final decision, and the rent from the leased property may be both a preliminary and final decree.
Case law
Lucky Kochuvareed v. P. Mariappa Gounder (1979)
In this case, the Court concluded that there is a dispute between mesne profits and a claim for possession of the immovable property. Thus, the court must either decide who is the rightful owner of the property or order a mesne profits inquiry. The first component defining possession of the property is final, whereas the piece determining the mesne profit is preliminary.
Difference between preliminary decree and final decree
Preliminary decree
Final decree
The formal statement made by the court to determine the rights of the parties involved in the issues in the lawsuits is known as a preliminary decree.
The final decree resolves the lawsuits entirely and leaves no issues for decisions in the future.
The court may determine the parties’ rights and wait for the final decree to be rendered
There is nothing left to decide after the parties’ rights and responsibilities are established by the final decree.
The preliminary decree may be revised if the circumstances change.
The final decree must always comply with the preliminary decree.
A preliminary decree may be issued more than once.
There can be more than one final decree issued.
According to Phoolchand v. Gopal Lal ,(1967) a preliminary decree may be issued more than once.
The term ‘preliminary decree’ is not defined in the Civil Procedure Code, but the CPC has preliminary decree, final decree and partly preliminary and partly final decrees, which the court may issue regarding any decree from this. The preliminary decree can also be appealed, and there may be more than one preliminary decree. When necessary, the preliminary decree will be followed and come to an end with the final decree, which helps to determine the parties’ rights.
Frequently Asked Questions (FAQs)
Is it possible to appeal a preliminary decree?
An appeal is possible for both preliminary and final decree. But it should be challenged earlier, thus, when the court issues the final decree, an appeal against the preliminary decree cannot be made; rather, the preliminary decree will become the final decree once the appeal period has elapsed for the preliminary decree.
When can the second preliminary decree be passed?
When circumstances change, a second preliminary decree may be issued, but it may not serve as the final decree. InAlagammal v. Gopal Lal (2016), the Supreme Court decided that a second preliminary decree can be issued in a partition case to modify the shares that had already been allocated in the first decree and resolve any disagreements that might have arisen between the parties who survived the partition.
What is a deemed decree?
Deemed decrees are those that do not satisfy the requirements of a decree but are nonetheless specifically identified as decrees by the legislature. There are some orders that are regarded to be deemed decrees under the Civil Procedure Code, such as adjudication under Order 21 Rule 58, Rule 98, and Rule 100, while Section 2(2) of the Code of Civil Procedure, 1908 does not explicitly mention this form of decree.
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