All you need to know about constitutional design

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February 18, 2022

The article is written by Ansruta Debnath, a law student of National Law University Odisha. This article is an attempt to comprehensively explore all the elements of constitutional design related to the Indian Constitution.

This article has been published by Shoronya Banerjee.

Introduction

The history of constitutional design in India is extremely complex and is rooted in the colonial era. A holistic understanding of all the events that led up to the development of the Constitution might give a slight inkling as to what the Indian Constitution of 1950 aims to embody. The latter must be understood as at the heart of every constitutional decision lies the judiciary’s assessment of what the Constitution means, why it exists in the shape and form it does, and what injustices it is meant to remedy.

Path to the Constitution

While the Indian Constitution has come a long way and was heavily influenced by various legal and administrative documents that preceded it, a big aspect of its constitutional design lies in the administrative and legislative development of the British colonial era. The British influence was heavily felt especially after the Revolt of 1857 when the British Crown formally took over the sovereign control of India and the East India Company was dissolved. A series of acts and reforms shows how the demand for self-rule evolved and the British Parliament attempted to accommodate such interest while not relinquishing full control. All of this finally culminated in the Indian Independence Act of 1947, passed by the British Parliament that made India independent of the British Crown and asked for the setting up of an interim Constituent Assembly that would be tasked with drawing up the future Constitution of the country.

The British influence

Indian Councils Act, 1861

This Act was the first one to give in to the demand for Indian representation within the centralised Legislative Council of India. Thus, the Executive Council of the Governor-General was expanded to include certain additional non-official members for the conduction of legislative matters. Within these non-official members, the Indians were included through nomination. However, the Legislative Council was neither representative nor deliberative in any sense.

The 1861 Act also decentralised the legislative powers of the Governor-General’s Council and vested them in the governments of Bombay and Madras by the creation of provincial councils. This decentralisation of power somehow echoed the principle of separation of powers. But the principle was enforced just in name and not in practice.

Indian Councils Act, 1892

This Act increased the number of members in the Legislative Council. The Council was allowed to even discuss financial matters like the budget causing a limited increase in the scope of law-making powers. However, maximum powers were retained by the Governor-General.

A major development through this Act was that it tried to include representation of various classes and categories of the Indian population within the Legislative Council. For example, one non-official member had to be nominated from the Bengal Chamber of Commerce. Moreover, members had to be nominated from certain local bodies like universities, municipalities, zamindars, etc.

Morley-Minto Reforms, 1909

The size of the Legislative Councils both at the central and provincial levels was increased. An element of elections was introduced within the Legislative Council; it was a welcome move because appointment through nomination was not considered a proper method of implementing population representation. However, the election was an indirect form of election, not direct.

The Morley-Minto reforms were drastic in a very different aspect. For the very first time ever, a separate electorate was granted to Muslims. Thus, there was representation on communal lines which concretised the communal sentiments in the country. The seeds of the communal divide were sown as the British sought to govern by a “divide and rule” policy while at the same time creating discord between the Indians. The British felt that a rift would work in their favour to control the increasing nationalistic sentiment within India.

Government of India Act, 1919

The Government of India Act of 1919 introduced a bicameral system of Legislature, something that remained while the Constitution was being drafted and thus is seen even today. The Upper House was also known as the Council of States and the Lower House was called the Central Legislative Assembly. Both the houses had elected members.

The subjects of administration were divided into two categories, i.e., central and provincial. The central subjects were those which were exclusively kept under the control of the central government.

The provincial subjects were subdivided into ‘transferred’ and ‘reserved’ subjects. In the governance of the province came about the concept of “dyarchy” or dual government. The ‘transferred’ subjects were to be administered by the Governor with the provincial legislative council. The ‘reserved’ subjects, on the other hand, were to be administered exclusively by the Provincial Governor and their Executive Council, with no responsibility of the provincial legislature in this regard.

Through this Act, the provincial budget was separated from the central budget. The provincial legislature was empowered to present its budget and levy its taxes relating to the provincial sources of revenue. The Central Legislature retained the power to legislate for the whole country on any subject.

The Governor-General continued to be all-powerful and only responsible and accountable to the British Parliament. His prior sanction was required to introduce bills relating to certain matters; he had the power to veto or reserve any Bill passed by the Indian Legislature for the consideration of the Crown. He could also make ordinances in case of emergencies.

There were multiple problems with the Government of India Act of 1919. The dyarchy envisioned by this Act was not welcomed by the general public. The Indian ministers could not satisfactorily influence much of the law-making function of the legislatures. The Act was followed by numerous protests which steam-rolled into the passing of the Rowlatt Act, further protests led to the Jallianwala Bagh massacre and finally satyagraha and the Non-Cooperation Movement by Gandhi.

The result of the 1919 Act was studied by the Simon Commission, which was constituted in 1927 and was headed by Sir John Simon. It gave its report in 1930 but was shelved eventually. However, it played a big role in the drafting process of the Government of India Act of 1935.

Government of India Act, 1935

The Government of India Act, 1935 was a landmark statute that influenced the Indian Constitution in such a way that in 1958, Justice Venkatarama Aiyer observed that the Indian Constitution ought to be interpreted in light of the 1935 Act.

The 1935 Act, through a novel provision, introduced the concept of a federation. It prescribed the formation of a federation by incorporating the provinces and the Indian princely states as units within the federation of India. The princely states were supposed to have an option to join but since they did so voluntarily, the federation never came into existence.

Apart from the creation of a federation, the 1935 Act had the following important provisions-

Division of subjects of administration between Federal, Provincial and Concurrent Lists. The Federal List was under the purview of the Central Government, the Provincial under the provincial governments and the Concurrent under both, with the centre having supremacy. This system of division of powers was retained after independence with even the subjects of the different lists remaining the same in the lists of the Seventh Schedule.
The system of dyarchy was abolished in the province and was brought about in the Centre. Reserved and transferred subjects were created within the federal list.
The Lower House of the Central Legislature was renamed Federal Assembly and it had a tenure of five years. The Upper House continued to be the Council of States with one-third of its members retiring every year.
Both the Houses had representation from the general population, the princely states and as well as on communal lines.
A Federal Court was established but the Privy Council continued to remain as the highest level of appeal.
The Governor-General continued to remain as the most powerful person in British India.

The Simon Commission in its recommendation had promised Dominion status to India. However, the same was not given any effect in this Act.

Cripps Mission, 1942 and Cabinet Mission Plan, 1946

The commencement of the Second World War necessitated complete Indian support for Britain. But, demands for independence were at an all-time high in India. The British attempted to reconcile with the Indian leaders but all efforts failed. In 1942, Sir Stafford Cripps was sent, with a few proposals, to India. Called the Cripps Mission, it proposed the formation of an elected constituent assembly and the Dominion status to India, provided they were accepted by the Indian National Congress and the Muslim League.

The Indian leaders rejected the proposal for being conservative. They wanted complete independence and that could not be satisfied by just the dominion status. The Cripps Mission thus failed.

Finally in 1946 Lord Attlee sent a Cabinet Mission to India. The object of the mission was to help India achieve its independence as soon as possible and set up a Constituent Assembly. The Constituent Assembly was supposed to have 389 members who would be directly elected from the population through proportional elections.

The Cabinet Mission however rejected the idea of Pakistan. The Muslim League refused to accept the Cabinet Mission and finally through the Mountbatten Plan of 1947, the partition of India occurred.

Indian Independence Act, 1947

India ceased to be part of the British crown and became an independent country. The Central Legislature of India ceased to exist and an interim Constituent Assembly was set up to draft the Indian Constitution.

The Indian vision

Nehru Committee Report, 1928

In the All-Party Conference of 1928, the challenge to draft the Indian Constitution was accepted by the Indian political leaders. A small committee headed by Motilal Nehru drafted an excellent report that illustrated a few fundamental concepts for the future Indian Constitution. A few of the recommendations made were:

This was the first Indian document that mentioned fundamental rights for the very first time. It proposed nineteen fundamental rights for the Indian citizens.
It asked for the Dominion status of India.
There was a discussion of equality of status for men and women.
The report also spoke about voting rights and said that disqualification if any must be on reasonable grounds only.
A federal structure of government was envisioned.
Most importantly, the report emphasised on secularism. It said that there should be no connection between the state and religion. Thus, it rejected the demand for a separate electorate for Muslims.

Fourteen Points of Jinnah, 1928

Even though Muslims were made part of the Nehru Report forming process, Jinnah felt that Muslims were not getting adequate powers. So the Muslim League created their report which had the following features:

Demand for a separate electorate for Muslims.
If a separate electorate could not be granted then there was a mandatory requirement of one-third reservation of legislature seats for Muslims at both the central and provincial levels.
Protection of religious rights and activities of the Muslims.

The other provisions of the ‘14 points of Jinnah’ were similar to the Nehru Report.

Karachi Resolution, 1931

This resolution was passed by the Indian National Congress in the backdrop of Mahatma Gandhi being released from the jail for his salt march, the end of the Civil Disobedience Movement through the signing of the Gandhi-Irwin Pact, and the execution of Bhagat Singh and two of his associates.

The resolution reiterated the goal of “purna swaraj”. Moreover, along with the commitment to fundamental rights, the Indian leaders pledged to fulfill certain socio-economic liberties like removing child labour, free primary education, etc. This Resolution lit the flame of India as a social welfare state and made way to the genesis of the Directive Principles of State Policy or DPSPs in the Constitution of India.

The Constituent Assembly

The burden of the constitutional design was squarely on the Constituent Assembly. The Cabinet Mission envisaged the establishment of a Constituent Assembly that would frame a Constitution for the country. For that purpose, its members were elected by the provincial legislative assemblies.

Each province and each Indian state was allotted seats in proportion to its population. The seats were distributed among the main communities in each province. While the Constituent Assembly, before the partition of India had 385 members, after the partition the Constituent assembly for India had 299 members. It took 2 years, 11 months and 18 days for the Constituent Assembly to finalise the Constitution.

First, the Objectives Resolution was adopted after a month of discussion and it mainly reiterated the vision that had to be kept in mind while the Constitution was being drafted.

After the third reading was completed the draft was considered ready and it was passed on 26th November 1949. The Constitution of India then came into effect the next year on 26th January 1950.

Guiding values of constitutional design

Mahatma Gandhi was not a part of the Constituent Assembly. However, in 1931, in the magazine ‘Young India’, he had spelt out what he believed should be the guiding ethos to the Indian Constitution. He wanted to fight for an India where everybody had a voice, there was no distinction between the high and the low class, untouchability was completely eradicated and women had the same rights as men.

Dr. B.R. Ambedkar, while sharing Gandhi’s vision of eliminating inequality, disagreed on how that inequality should be removed. Nonetheless, he played a big role in the formulation of the Indian Constitution, and might even be credited with the creation of the Preamble, a careful study of which makes it very clear what the vision for independent India was. The Objectives Resolution also gives a good idea of the values that guided the Constituent Assembly.

Objectives Resolution

It had the following points:

To foster unity of the nation and to ensure its economic and political security, to have a written constitution and to proclaim India as a sovereign, democratic republic.
To have a federal form of Government with the distribution of powers between the centre and states.
To guarantee and secure justice, equality, freedom of thought, expression, belief, faith and worship, vocation, association and action to all the people of India.
To provide adequate safeguards for minorities, backward and tribal areas and depressed and other backward classes.
To maintain the integrity of the territory of the republic and its sovereign rights on land, sea and air according to justice and the law of civilised nations.
To attain a rightful and honoured place in the world and make its full and willing contribution to the promotion of world peace and the welfare of mankind.

Preamble

The basis for India’s democracy was laid by values that inspired and directed the liberation movement, as well as by values that were nourished by it. These values accumulated into a philosophy that is enshrined in the Preamble to the Indian Constitution. All of the Indian Constitution’s articles are guided by this philosophy.

The Constitution opens with a brief description of the document’s fundamental values. This is the Preamble and it conveys certain vital sentiments, all of which will be discussed in this section.

We, the people of India

The Constitution has been created and enacted by the people of India through their representatives, and not handed down to them by a foreign authority. This establishes the supreme nature of the Constitution as it is created through the will of the people.

Sovereign

Through a shift from the colonial era, sovereignty is placed at the hands of the people of India and not the British government. Thus, every aspect of governance and rule will be undertaken by the people of India itself.

Socialist

The aim of the government is not only to govern but ensure the holistic development of all sections of the society. Thus the state must function as a socialist, welfare state and actively aid in the eradication of socio-economic inequalities.

Democratic

The establishment of a form of government where people enjoy equal political rights, elect their rulers and hold them accountable.

Republic

The head of the state is an elected person and not a hereditary position. Thus, people will be governed by someone who they feel is appropriate and competent.

Justice

Establishes the basic idea that citizens cannot be discriminated against on the grounds of caste, religion, and gender. Social inequalities have to be reduced and the government should work for the welfare of all, especially of the disadvantaged groups.

Liberty

There are no unreasonable restrictions on the citizens on what they think, how they wish to express their thoughts and the way they wish to follow up their thoughts in action.

Equality

All are equal before the law. The traditional social inequalities have to be ended. The government should ensure equal opportunity for all.

Fraternity

Fraternity is the link that helps in making true equality and liberty a reality. It helps in breaking down socioeconomic hierarchical relations and says that no individual should be considered inferior to another.

How and why does the Indian Constitution exist

A Constitution is a set of written or unwritten rules that governs the citizens of a nation. A constitution may be required for a lot of different things. They are required for clubs, cooperative societies as well as political parties. Similarly in a nation where there are so many conflicting interests, it is important to lay down certain rules to ensure that there is maximum harmony. This is what a constitution endeavours to do. In South Africa, a long negotiation between the conflicting interests of the whites and the black finally led to a compromise of rule by the majority, equal rights to the blacks and so much more.

As seen above, the Indian Constitution was a culmination of various imperial acts as well as certain ideas of liberty, fraternity, and equality that our Constitution makers believed that India deserved. The constitution was and is the supreme authority of our country. It does the following things:

Generates a degree of trust between various stakeholders in the country.
It specifies how the government will be constituted and who will have power.
It limits the government and ascribes rights to the citizens of the country.
It lays down the aspirations of people to create a good society.

However, to understand the truth of constitutional design it is important to answer two very fundamental questions:

Why does the Constitution exist?
In what way does the Constitution exist?

Gautam Bhatia eloquently attempts to answer these questions in his book ‘Transformative Constitutionalism’. He articulates two conflicting opinions about this aspect of the Indian Constitution. One school of thought suggests that the Indian Constitution is a conservative document that was a result of the constituent assembly functioning under the old political regime and slowly graduating into self-government. The Constitution, according to this opinion, essentially came about as a result of the transfer of power rather than an absolute transformation. This idea can be defended by the following arguments:

The Constituent Assembly as a result of the Cabinet Mission of 1946 and thus was a product of a British institution.
The Indian Constitution replicates 75% of the Government of India Act, 1935.
The Indian Constitution replicated certain provisions which were a reason for protest before India got independence. For example, the emergency provisions can suspend the legal system of the country.
The constitution-makers did give primacy to national integration, India’s place in the international sphere and national security rather than individual freedoms.
The system of government that the constitution established was not novel. It was a Westminster form of parliamentary democracy, i.e., the one that was in existence in Britain.
Finally, the Constituent Assembly was not an accurate representation of the entire country. During the national struggle for independence, the Indian National Congress was known to actively suppress any kind of movement that did not conform to their agenda.

The other school of thought regarding the idea of the Indian Constitution is that the latter was a transformative document. Bhatia argues in favour of this argument with the following:

The Constituent Assembly might have owed its legal existence to the Imperial Government but one of its first acts after it was constituted was to declare itself as a sovereign body.
Dr B.R. Ambedkar had defended the charge of the Constitution being a copied version of the 1935 Act by saying that they had simply borrowed some of the administrative aspects from the latter.
The Indian Constitution attempted to renounce certain injustices by a two-pronged approach. One, it transformed the relationship between the state and individual by fundamental rights, universal adult franchise etc., something that was non-existent in the colonial era. Two, it reconstructed the state and society by bringing in a “layered sovereignty”, giving effect to the struggle of self-determination and attempting to erase socioeconomic hierarchies.

Institutional design

The point of the Constitution was not to just embody certain principles but also to realise those principles through the establishment of various institutions. Some of the main features of the Indian Constitution are discussed in this section.

Rule of law

Article 14 of the Indian Constitution talks about equality before the law and equal protection of the law; it also helps in checking the government when it attempts to wield arbitrary power. The concept of rule of law when applied to India states that Indian law, and by extension the Indian Constitution, is the supreme authority of the country. Thus, in a monarchy, where the monarch is the supreme authority whose word is the law, there is no rule of law per se. Because, in that situation, the monarch dictates what the law is and is above the law. However, if the monarch subjects themselves to the law, rule of law exists.

Rights and duties

The supremacy given to fundamental rights by the Constituent Assembly is quite apparent on a reading of the Constitution. Spanning from Article 12 to Article 35, Part III of the Indian Constitution is dedicated only to fundamental rights.

All the rights provided can be clubbed together under 6 major categories of fundamental rights-

Right to equality
Right to liberty
Right against exploitation
Right to freedom of religion
Cultural and educational rights
Right to constitutional remedies

A very important feature of our constitution is that the rights given are based more on equity rather than equality. While Article 14 of the Constitution provides that the state shall not deny any person equality before the law or equal protection of the laws within the territory of India, the guarantee of equal protection is a guarantee of equal treatment of persons in equal circumstances. This permits differentiation in different circumstances.

The fundamental duties, given in Part IVA of the Constitution, were added in by the 42nd and 86th Constitutional Amendment Acts. There are a total of eleven fundamental duties and they enshrine certain moral and civic duties of the citizens of India. They do not, however, have legal sanctions.

Aspects of social welfare

India aspired to be a welfare state. It was evident from the Karachi Resolution 1931. In its commitment to give real effect to liberty, equality, and fraternity, the Indian Constitution departed from the default template of fundamental rights that was established by the United States of America in 1776. It laid down that to ensure fundamental rights to the citizens of a democratic self-governing country, there had to be limitations on the state and its power. However, that kind of system, called structural liberalism, created certain dichotomies like the public, where norms like liberty and equality were applicable, and the private sphere where such norms were inapplicable. Our Constitution makers realised that the private sphere was also an area where the domination of the weak took place and thus that had to be tackled through constitutional mechanisms.

Thus, the limiting of state power could not be absolute, as the state had to have the responsibility to uplift the down-trodden and less-privileged. The Constitution attempted to view the State, not as a limiter of individual freedom but as a means of social transformation. Accordingly, Part IV containing the Directive Principles of State Policy was added, which enumerated certain principles that would facilitate and enable the legislators of India to ensure socio-economic justice.

The executive, legislature, judiciary

The Indian Constitution is the longest written Constitution especially because it lays down the government machinery at the central as well as state-level in complete detail. Our government machinery manifests “separation of powers”, a timeless principle given by Charles de Montesquieu. This system postulates the independence of the three organs of the government- executive, legislature and judiciary- from each other, creating as an effect a system of checks and balances.

Part V of the Constitution talks about ‘The Union’ in which Chapter I (Articles 52–76) is dedicated to ‘The Executive, Chapter II (Articles 79–122) deals with ‘Parliament’ (the legislature) and Chapter IV (Articles 124–144) with ‘The Union Judiciary’. The government machinery of the states is given in Part VI, spanning from Articles 152 to 237.

Federal in structure, unitary in spirit

The 1935 Act has shown that India never transformed into a federation. The Constituent Assembly, while creating a federal form of government steers clear of absolute federalism. India’s federal structure was created by the division of the territory of India into states instead of several states coming together to form a country as was the case for the United States. This inevitably asserted more power to the centre. Certain federal and unitary features of the Indian Constitution have been discussed below.

Federal features

Subjects of administration have been divided between the Union and the states, through the Union, State and Concurrent Lists of the Seventh Schedule.
The Eleventh and Twelfth Schedule, added by the 73rd and 74th Constitutional Amendment, gave authority and jurisdiction to Panchayats and Municipal Corporation over certain subjects. This deepened the federal nature of our country.
The Constitution explains centre-state relations in-depth, to avoid conflicts and establish clear cut powers and duties of both the state and centre.
The bicameral system of the Central Legislature is also a method of reinforcing the federal equilibrium.

Unitary features

While the Concurrent List allows for both the Centre and the states to make laws of subjects within that list, in case of conflicting laws, the Centre always has supremacy. Moreover, residuary subjects are under the purview of the Central Government.
The emergency provisions are given in (Articles 352–360) and show how the declaration of a national emergency can take away all the powers of the states.
The Indian judiciary, although independent, is unified.
The control of the Union Territories (Part VIII) lies with the Centre.

Conclusion

The Indian Constitution is a living, breathing document because our constitution-makers meant for it to be one. The dynamic history that culminated into the longest, written Constitution in the world is quite historic and worthy of reverence. Values of equality, liberty, and fraternity were and are of great importance. Understanding the true aim of the Constituent Assembly assumes importance at times of utmost political turmoil. The constitutional design placed utmost importance on the citizens of the nation. But it also wanted to ensure that India as a unified nation would make a mark on the world map.

References

The Constitution of India, 1950
Sumeet Malik, V. D. Kulshreshtha’s Landmarks in Indian Legal and Constitutional History
M.P. Jain, Outlines Of Indian Legal And Constitutional History
Gautam Bhatia, Transformative Constitutionalism, Prologue

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Copyrights and comments : can we extend copyright protection to online comments

By

Shoronya Banerjee

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February 18, 2022

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This article is written by Athira Soman, pursuing a Diploma in US Intellectual Property Law and Paralegal Studies from LawSikho. This article has been edited by Prashant Baviskar (Associate, Lawsikho), Ruchika Mohapatra (Associate, Lawsikho), and Arundhati Das (Intern at Lawsikho).

This article has been published by Shoronya Banerjee.

Table of Contents

Introduction

In the age of the internet, where billions of people are interconnected, the data created is fathomless. Statistics show that there were 5,10,000 comments posted on Facebook every minute back in 2019 and 77 million new comments being posted every month on blog posts of websites such as WordPress in 2021. These comments are no doubt the product of a person’s intellect, however, are they protected? To understand this, we must first look into what kind of protection can be provided as well as whether such protection can be afforded to these online comments.

Copyrights under the Copyrights Act, 1957 (Hereinafter referred to as ‘the Act) is the protection granted to the creators of original works i.e works of literary, artistic, dramatic, musical nature or cinematographic films and sound recordings. It is essentially a bundle of exclusive rights vested in and exercised by the owner of the copyright. The rights included are the right to sell, right to reproduction, right to translation, right to adaptation, etc as reiterated in Section 14 of the Act. It is an intellectual property, the protection of which commences as soon as an original idea is expressed. The subject matter of copyright protection is the expression of an idea and not the idea itself. As observed by the court in the case of Twentieth Century for Film Corporation v. Sohail Maklai entertainment Pvt Ltd, an idea that is available to the world cannot be monopolised by anyone, it is the presentation of the idea by various people in various original works that are protected.

Online comments as a subject matter of copyrights

For copyrights to subsist in comments, they must be a subject matter that is protected under copyright law. The court in the case of Shyam Lal Paharia v. Gaya Prasad Gupta, clarified that literary works meant not only literature in prose or poetry but anything in writing or print would fall within its ambit. Hence, online comments being the expression of thought in a written manner may fall within the ambit of a literary work.

However, for it to receive copyright protection, it must not only be a literary work but original. The jurisdictions around the world have evolved various tests of originality through judicial precedents. Whether it be the test of originality which requires that the author has produced a non-copying work i.e it has not been copied from another work and the threshold of originality that has been established in various courts.

In the United Kingdom, the Sweat of the brow doctrine is followed, which states that copyright protection is given to the work of an author in exchange for the labour, skill, or judgment put into it. The court ruled in the landmark judgment of University of London Press v. University Tutorial Press, that the expression of thought in writing or print need not be in a novel form but must originate from the author and his labour and skill must be put in.

On the other hand, in the United States, there was a shift from the doctrine of independent creation to the doctrine of a modicum of creativity. While the doctrine of independent creation relied on the labour and talent of the author to provide copyright protection, the modicum of creativity doctrine relies on the work where a sufficient amount of intellectual creativity i.e a minimum level of creativity and judgment has been put into the work. This doctrine was applied in the landmark judgment of Feist Publications Inc v. Rural Telephone Service Co, where the issue was whether a compilation of telephone numbers in a directory was copyrightable. It was held to not have copyright protection as there was no creativity involved and lacked the requisite originality.

India follows the doctrine of merger as the sweat of the brow doctrine has been rejected and we shifted to the modicum of creativity doctrine, introducing the flavour of the minimum requirement of creativity in the landmark judgment of Eastern Book Company v. D.B Modak, where the copyright protection was given to the additions made to the judgments by the editors and not to the judgments and orders themselves which were in the public domain.

Hence, whether an online comment is subject to copyright protection would differ on a case-to-case basis and blanket protection to all the comments cannot be given, it would not only depend on the labour put into the comment but also the level of creativity.

Who owns the copyright to online comments?

Considering that an online comment does fulfill the criteria of originality, the next question would be who owns the copyright to them, which would depend on who owned the comment itself, the author of the comment, the owner of the content where the comment is written or the owner of the website on which it is published. For example, according to the YouTube Terms of Service, ‘content’ includes all the texts including comments generated by users on the website and the ownership of the content is retained by the user who generates it. However, there is also a licence that is royalty-free, sublicensable, and transferable provided to YouTube by agreeing to the use of their service that enables the service provider to reproduce, distribute, prepare derivative works and use it for other related purposes.

Similar to this model, most major social media platforms like Reddit, Instagram, Twitter, etc., allow the retention of ownership rights over the original contents of the user while reserving a royalty-free, transferable and non-exclusive license to use, distribute, host, copy, create derivative works, etc., from the contents. Since the ownership of the content, in this case, the online comments rests with the original poster, any copyright that lies in these comments will be owned by the original poster. Comments of the user that appears publicly on a platform, are also classified under the user-generated content over which the user has copyright.

In the case of blogs or forums, where online comments are allowed, since there are no written terms to show ownership of the comments, it would rest with the original commenter. While an implied license is created due to the absence of a formal agreement to allow the display of the comments. However, this type of licence is unreliable for the blog or forum owners to use the comments without the permission of the original poster as the rights provided by the implied license would only be up to the extent of allowing the proper functioning of the blog or forum and not to allow reproduction or any other infringement of the copyright that may be vested in the comment i.e it may not be an implied copyright license.

Consequences of copyright protection of comments

Unlike other forms of content, if a blanket copyright protection is provided to online comments, it could lead to the institution of several frivolous suits leading to burdening the already overburdened courts. There are also possibilities of suits being filed with malicious intent by the copyright owners of the online comments. It would also cause several hurdles to the owners of the original content where the online comments are posted, for example, they would require permission from each individual commenter who is a right-holder when sharing or recreating a particular page, leading to the owner of the original content of the page with no absolute control over that page.

What about copyright violations via online comments?

Of course, the easiest method to ensure that no copyright of an online comment is infringed would be to not let anyone comment in the first place. But this would defeat the purpose of such platforms where there is a discussion of opinions of the various users and an exchange of ideas and knowledge.

Licensing through click-wrap agreements

Clickwrap agreements are essentially unilateral digital or electronic contracts that require the user to agree to certain conditions before using a platform or software, usually presented by an “I accept” that must be checked.

One of the widely used clickwrap agreements to ensure that no copyright infringement takes place by a platform owner are extensive terms and conditions that allow the fair use of online comments. A platform owner in their terms of use may include the proprietary rights clause that acknowledges the ownership of the user over their own content but also have them agree to provide the platform with the necessary license to use, distribute and publish the content on the platform. A way to report and remove copyrighted content must also be provided to ensure the platform is not held legally responsible for the infringement of copyright.

Blog or forum owners may provide an additional clause in the clickwrap agreements that allow them to use the comments on their page without infringing any copyright. This would mean that even if the comments of a blog were to be used in a book where all the blog posts were compiled, there would be no copyright infringement.

While Clickwrap contracts are internationally recognised and enforceable as long as they do not contain oppressive or unconscionable terms, in India, their enforceability depends on various factors such as free consent being actively taken from the user. As long as the unilateral contract is consented to act and there is equal bargaining power, it is a valid and enforceable contract.

Creative Commons License

Another method to ensure that no copyright infringement of an online comment occurs is to get the original commenters to agree that their comments would fall under creative commons through a license. Creative Commons License not only allows the original creators, in this case, the commenters, to retain the copyright on their comments but also allows others to make use of this work by way of copying, distributing, etc. This ensures that due credit is given where it is required while also not interfering with the use of the content. These licenses also make it possible to use the work without contacting the creator or any negotiations.

Conclusion

In general, there is only vague copyright protection of online comments, and this reluctance to recognise the protection of online comments is understandable due to the consequences that may arise from full-blown protection given to them. Although clickwrap agreements may be a solution to this issue, certain amendments to the legislation that recognise and enforce them would be necessary for its better implementation. There is also a need for uniform regulations as it is hard to ascertain jurisdiction in the online world. Hence, only after some clarity is gained on how online comments gain copyright protection through guidelines and other judicial precedents there can be further discussion about the same. However, It is high time the protection of copyright is brought into mainstream discussions and debates to ensure that the legislative intent of the Copyright Act is preserved and the legitimate owners of the right can exercise them freely.

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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Section 341 IPC : overview and case laws

By

Rachit Garg

-

February 17, 2022

0

This article has been written by Meera Patel, a B.A. L.L.B student from the Maharaja Sayajirao University, Faculty of Law, Vadodara. This is an exhaustive article that covers everything you need to know about Section 341 of IPC.

Table of Contents

Introduction

Among all other rights we enjoy, we have the right to move freely in this country. According to Article 19(d) of the Constitution of India which states that “All the citizens have the right to move freely throughout the territory of India”. Not just free movement but we also enjoy personal liberty under Article 21. In easy words, the citizens of India get the freedom from physical restraint of the person by wrongful imprisonment. The Constitution provides various provisions if a person is deprived of personal liberty under the Indian Penal Code, 1860.

This is an in-depth article that explains the meaning of wrongful restraint and elaborates on the penal sanctions in cases when a person violates the freedom of movement or personal liberty of another individual or group. Before we understand Section 341 and its provisions, we need to know what wrongful restraint and wrongful confinement are.

Wrongful restraint – Section 399 IPC

The word ‘wrongful’ according to law means unfair or injurious. In other words, ‘wrongful’ indicates unlawful activities which amount to a civil wrong. The word ‘restraint’ means that when a condition or situation is created through which an individual is wrongfully kept under control. As per Section 399 of the Indian Penal Code, wrongful restraint is defined as, “Whoever voluntarily obstructs any person to prevent that person from proceeding in any direction in which that person has a right to proceed, is said wrongfully to restrain that person.” This Section was constituted to secure an individual or a group from getting deprived of their guaranteed personal liberty.

To constitute the crime of committing wrongful restraint, the person who was deprived of their liberty must face an obstruction. Other than that, the person who faced the obstruction must feel that they are deprived or not given access to proceed towards the direction they desired to proceed in the first place. The last and main component which is required for it to be called a crime is that the victim must have the right to proceed towards the desired direction in the first place.

The main purpose behind constructing this Section is to ensure that an individual’s freedom is protected at any cost. We are eligible to move around the country in any direction we want and that is why the law must make sure that we get what we deserve. That is why even if someone experiences the slightest inconvenience in this context, it will be considered as wrongful restraint. By the term ‘slightest inconvenience’, the author means to say that the obstruction someone faces should not necessarily be physical and the presence of the accused party is not mandatory for it to be considered as an example of wrongful restraint under Section 399 of the Indian Penal Code. The reason behind this rule is that the act of assault isn’t the only way someone can obstruct an individual’s way as mere words can cause obstruction and that is why it may constitute a crime under this section.

An individual must prove their right to move on the land they were going towards before getting obstructed to invoke Section 399 of the Indian Penal Code, 1860.

Examples

Ashvini is walking towards the city garden and Jaykishan deliberately obstructs the path to make sure that Ashvini doesn’t reach the garden. In this case, Ashvini has the right to pass and go to the city public garden but as soon as Jaykishan blocks her path, it is determined that Jaykishan has wrongfully restrained her from passing.
Piyush is helping his neighbor Komal fix her roof but couldn’t do it. Komal removed the ladder and threatened him that she will not give him the ladder back until he repairs her roof damage. This is a classic example of wrongful restraint as Komal detained Piyush on the roof of her house therefore Komal will be held liable for obstructing Piyush’s path.

Exception

Even though the meaning of wrongful restraint is defined clearly, some exceptions make Section 399 of the Indian Penal Code even more specific. The exception in this Section states that if a person in good faith (good faith being the keyword) feels that they need to obstruct someone’s pathway over land and/or water, then it will not amount to wrongful restraint.

Examples

Ridhi was about to enter the ATM near her house but she was stopped by Shrey. They tried to stop her from entering the ATM as there was a snake trapped inside. In this example, Shrey tried to stop her with good faith therefore this will not constitute wrongful restraint.

Punishment for wrongful restraint – Section 341 IPC

As briefly mentioned above, Section 341 of the Indian Penal Code deals with the punishments that shall be used as remedies for wrongfully restraining an individual from moving towards a direction, place, etc provided the fact that the person has the right to go there. This section states, “Whoever wrongfully restrains any person shall be punished with simple imprisonment for a term which may not extend to one month, or with fine which may extend to five hundred rupees, or with both.”

The word restraint means that the individual’s liberty has been compromised against his will and that’s what makes it different. Amongst many other reasons, a vital reason behind implementing this provision was because the Constitution of India believes the Right to Freedom of Movement of every individual in this country throughout the territory of India is crucial and that is the reason why our Constitution has catered to such rights by providing Article 19 and Article 21 as both these articles guarantee that every citizen of the country shall enjoy the Right to Personal Liberty.

Ambiguity is a concept that makes it easier for us to establish a proper set of laws depending on the situation and that is why we can say that liberty is not absolute. It can be turned and twisted depending on the public interest and by simply following the legal procedure. In this case, when we talk about the compromise of an individual’s right to movement, lodging a complaint against the accused before a magistrate is the first step to take as per the legal procedure, keeping in mind the fact that the nature of the act is a prime factor that should be considered before lodging the complaint. The vital element that is necessary to inspect Section 341 of the Indian Penal Code is the keyword ‘obstruction’. Obstruction is necessary for it to be considered as an offense and it should be directly attributed to the person accused. The person who has been accused of committing this offense must know or have a reason for causing the obstruction or for restraining the person from moving.

The main reasons that are considered before constituting an act as an offense of wrongfully restraining someone should be that the act of restraining someone must be voluntary and that the act of restraining someone must be in good faith as mentioned above. Therefore, if an obstruction is made in good faith, the accused is said to have committed no crime.

Case laws related to Section 341 IPC

In the case of Lalloo Pd v. Kedarnath Shukla (1962), the petitioner Lallu Prasad accused Dr. Shukla of entering his shop and accusing him of not paying the rent on time thus asking him to vacate the shop and on refusal to do so, Dr. Shukla took away the keys from the petitioner to lock the door. He locked the door and went his way to lodge a complaint against Mr. Lallu. Later on, it was found that Mr. Lallu broke the lock and put his lock on the door instead, therefore when he came to his shop the next day, Dr. Shukla was standing in front of the door with three men and threatened Mr. Lallu if he attempted to open the shop. According to the facts of the case, the defense put their argument forward by stating that he just went to the shop to ask for the due payment and due to the financial state of the complainant, he was not able to pay the rent so he voluntarily handed over the keys to Shukla.

As per the verdict, Shukla was not held liable for trespass as asking the tenant to vacate the space on non-payment of the due is legal but at the same time, the court also observed that Shukla did put a lock on the door of the shop therefore by locking the door he had restrained the petitioner to enter the shop thus found him guilty under Section 341 of IPC. he was charged with a fine of twenty rupees.

In the case, Vijya Kumari v. S.M. Rao (1996), the Apex Court of India held the complainant who was a teacher licensee of a hostel has no right to keep living there even after the term of the license she holds expires and therefore she cannot claim to utilize the room and if she refuses to move out and cause obstruction and that will amount to wrongful restraint which is cognizable offense. This statement was supported with an argument that stated that any individual that wrongfully restrains a person to move towards a particular direction shall be held guilty under Section 341.
As per the facts of the State v. Babulal and Ors.(2020), it was held that the defense was held guilty under Section 341 of IPC amongst various other Sections for hurling offensive and abusive words on his sister-in-law when they were on the terrace. Like mentioned above, verbal abuse may also invoke Section 341 of IPC as it is counted as restraining an individual.
In the case of State v. Kishan Kumar & Anr.(2013), the defense Mr. Kishan Kumar and Mr. Pankaj Kumar were accused and later on acquitted for for voluntarily causing hurt by raping the prosecutrix, threatening to kill her if she would disclose the said act. They were also held guilty for wrongfully restraining her under Section 341 of IPC.
As per the facts from the case State v. Nitin Arora & Anr.(2014), the accused Mr. Nitin Arora was accused of raping the prosecutrix inside his shop. He pulled her in the shop and shut it up before raping her. He also threatened to release the video on the internet if she disclosed the incident to anyone. He was accused and acquitted for various offenses and one of them included Section 341 of IPC for wrongfully restraining her in his shop.

How is wrongful confinement different from wrongful restraint

As per Section 340 of the Indian Penal Code, it is clearly stated that whoever restrains any person in such a manner as to prevent the person from proceeding beyond certain circumscribing limits, is said ‘wrongfully to confine that person.’ Section 340 of the Indian Penal Code, 1860 defines the meaning of wrongful confinement. As mentioned above, compared to the offense of wrongful restraint, wrongful confinement is a serious offense. Wrongful confinement states that a person is wrongfully restrained from proceeding beyond a limited area. To constitute the crime of wrongfully confining anyone, the person who deprives their victims of their private liberty needs to confine the person voluntarily. Coercion will not work in this case. Secondly, the person who committed the offense must prevent their victim from proceeding beyond the limit they have given to their victims.

Conclusion

To sum up, there is a small difference between wrongful restraint and wrongful confinement. The thin line that separates both from one another is that wrongful confinement means restricting someone from going somewhere by all directions whereas the other one means restricting someone’s movement by just one direction. The offense of wrongfully restraining anyone is bailable, cognizable and the offender can be put under trial by any magistrate. The punishment for wrongful restraint is mentioned under Section 341 and the Section states that the offender shall be subjected to pay a fine that may extend upto 500 rupees or face jail time which may extend upto a month or both.

References

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How to apply for a legal heir certificate in India

By

Shoronya Banerjee

-

February 17, 2022

0

This article has been written by Oishika Banerji of Amity Law School, Kolkata. This article deals with the application for a legal heir certificate in India.

This article has been published by Shoronya Banerjee.

Table of Contents

Introduction

In the event of a family member’s untimely death, a legal heir certificate must be acquired in order to transfer the deceased’s assets to his or her legal heirs. A legal heir certificate is a crucial document that establishes the deceased’s relation with his or her lawful heirs. After obtaining a death certificate from the municipality/corporation, the heirs can apply for this legal heir certificate to assert their claim to the deceased person’s property and debts. Typically, attorneys assist in the drafting and registration of a legal heir certificate. A legal heirship certificate is required to determine who the real legal heirs are, as well as any legal heirs who were left out of the division, etc. The area Taluk/Tehsildar, the corporation/municipality office of the corresponding area, and the district civil court can all provide legal heir certificates. This document lists all of the dead person’s lawful heirs and is only granted after a thorough investigation. This article provides the readers with the process of applying for a legal heir certificate in India.

Legal heir certificate

A legal heir certificate identifies the genuine heir, who can subsequently claim the deceased person’s assets and property. To place a claim on the dead person’s property, all qualified successors must have this certificate. The legal heir certificate only gives the bearer the right to claim insurance, as well as receive government dues such as provident fund, gratuity, and arrears. A person with a succession certificate can sell the deceased’s property. However, the same can be carried out after obtaining a written agreement and a NOC (No Objection Certificate) from all other legal heirs of the deceased.

The legal successor of a deceased person is obligated under the Income Tax Act of 1961 to submit the deceased’s income tax return on his behalf if the latter earned taxable income in the previous year. As a result, the legal successor of the deceased must register with the income tax department for this reason. The documents which are required for the registration of a legal heir in income tax are provided hereunder:

Death certificate.
PAN card of the deceased.
Self-attested PAN card of the legal heir.
Legal heir certificate.
An affidavit in the presence of the Notary Public.

Purpose of a legal heir certificate

In general, while purchasing or registering property, the buyer should seek a legal heir certificate to verify the property’s ownership. There may be numerous legal heirs for an ancestral property, in which case it is necessary for all legal heirs to sign the deed of conveyance providing their permission to avoid any dispute. The following are the significant purposes of a legal heir certificate:

For the purpose of distributing the decedent’s property and assets to his/her heirs.
To file an insurance claim.
To approve and handle the dead employee’s family pension.
To obtain government benefits such as provident fund, gratuity, and so forth.
To receive the deceased’s wage arrears as a state or federal government employee.
To find work through compassionate appointments.

Who can apply for a legal heir certificate

The following persons are considered as the legal heirs according to Indian laws and can claim a legal heir certificate:

Spouse of the deceased.
Children of the deceased (son/ daughter). It is to be noted that married and unmarried daughters are now legal heirs and enjoy the same rights as sons since 2005 after the amendment of the Hindu Succession Act, 1956. As a result, married daughters are also the legal heirs of the deceased.
Parents of the deceased.

The immediate legal heirs of a deceased individual are the parents, spouse, and children. When a person dies without having any direct legal heirs, the legal heirs are the deceased’s grandchildren. If there are no grandchildren, the legal heirs will be the dead person’s siblings and sisters, who will be able to receive the legal heir certificate.

If the second wife is officially married under the Hindu Marriage Act of 1955, she has deemed the deceased’s wife and the legal heir. When the first marriage is formally dissolved by a divorce decree or the first wife dies, the second wife becomes legally wedded. The children from the first wife, as well as the children from the second marriage, shall be regarded as legal heirs of the deceased.

Offspring born to a man and a woman who are not married or born out of wedlock are referred to as illegitimate children. Illegitimate offspring have all of the rights to the dead parent’s property and are thus considered as legal heirs.

Documents required for obtaining a legal heir certificate

The following list of documents is called for in order to obtain a legal heir certificate:

Signed application form.
Identity/Address proof of the applicant (voter’s ID, Aadhaar Card Driving License, Passport, or any other government-issued identity card).
Death certificate of the deceased.
Date of Birth proof of all legal heirs (birth certificate, school transfer/leaving certificate, PAN card, passport, etc.).
A self-undertaking affidavit.
Address proof of the deceased (Any legitimate identity evidence or telephone/mobile bill, gas bill, or bank passbook with the legal heir’s name and address can be used as proof of the legal heir’s address).

Difference between a legal heir certificate and a succession certificate

A legal heir certificate is used to identify the living beneficiaries of a deceased person, whereas a succession certificate is used to establish the beneficiaries’ credibility and provide them the authority to acquire the deceased’s debts, assets, and other resources.
A legal heir certificate is obtained through a Tehsildar or Taluk Office, whereas, a succession certificate can be obtained through a civil court and high court.
The maximum time period for obtaining a legal heir certificate is 30 days, whereas, for a succession certificate, it is a period 7-8 months.
The relevance of a legal heir certificate is to assist in locating living heirs and obtaining the appropriate pension or tax benefits. Whereas, the significance that a succession certificate holds lies in property transfer concerns. It also aids in the identification of rightful legal heirs.
The fees required for issuing a legal heir certificate are a stamp duty of Rs. 2 and Rs. 20 on affidavit. Whereas, for a succession certificate, a certain percentage of the value of the property in question constitutes the fees that need to be paid.

The process involved in applying for a legal heir certificate in India

The area Taluk/Tehsildar, as well as the corporation/municipality office in the appropriate area and the district civil court, can provide legal heir certificates. This document lists all of the dead person’s legitimate heirs and is only released after a thorough lookout. In most cases, acquiring a legal heir certificate takes 30 days. If the certificate is not received in a timely manner or the responsible authorities do not reply, one should contact the Revenue Division Officer (RDO)/sub-collector. The process involved in obtaining a legal heir certificate have been summarised below:

The dead person’s rightful heir must go to the proper official in their region and request a legal heir certificate application form. The applicant must complete the application and sign it before submitting it to the appropriate authorities. This application includes the names of all legal heirs, their link to the dead, and family members’ residences.
The application should include all essential documentation, including the deceased person’s death certificate. A death certificate from the municipality/corporation office is required.
Along with the application, an affidavit on stamp paper or a self declaration must be presented.
An inspection is conducted and the investigation is completed by a revenue inspector/administrative officer.
The authorised official issues the legal heir certificate once the investigation is concluded satisfactorily.

A detailed list of the procedure involved in applying for a legal heir certificate in India

Approach the Taluk Office: The applicant must go to the office of the Tehsildar or Taluk. When he chooses to approach a lawyer from the District Civil Court, he has another alternative.
Receive the application form: The applicant must acquire the application form from the Tehsildar official in charge.
Enter the details: The candidate must next fill out the application form with all of the needed information.
Attach the documents: After entering all of the information, the applicant must attach all of the required papers to the application form.
Affixing stamp: The applicant must stamp the application form with a Rs. 2 stamp.
Submit the application: After that, the applicant must submit the application form to the Tehsildar office’s approved officer.
Verification process: The village administrative officer and revenue inspector then verify the application.
Issuing the certificate: The certificate will be issued by the appropriate authorities when all of the verification steps have been completed, and it will list all of the deceased’s legitimate heirs. In most cases, obtaining a legal heir certificate takes 30 days, but if there is an unreasonable delay or the involved authorities refuse to reply, the applicant must contact the Revenue Division Officer (RDO) or the sub collector.

Online application for obtaining a legal heir certificate in India

An online application for a legal heir certificate is available. On the e-portal of the applicant’s relevant district, the applicant may fill out the form for obtaining a legal heir certificate and attach the needed papers. When submitting the form, the applicant must pay the costs online. When the certificate is available, it may be downloaded through the e-portal. It is to be noted that different states can have different sets of procedures for procuring a legal heir certificate, therefore, the standard steps which are involved in an online application for obtaining a legal heir certificate in India, have been laid down hereunder. To make it easier for the readers of this article, an online application form can be accessed here.

Step 1: The applicant has to login to the e-district portal of his/her state.
Step 2: The applicant needs to click on the “Apply Online” option which is visible on the homepage itself.
Step 3: The login page will appear and the applicant needs to enter the registered mobile number.
Step 4: The applicant thereafter needs to click on the “Proceed” button to enter into the district home page (it is to be noted that different states can have a separate name for this page)
Step 5: The applicant needs to select the “New Request” option in the menu bar and click on the “Surviving Family Member.”
Step 6: On the very next page, the application form will appear on the screen.
Step 7: The above-mentioned form needs to be filled up by the applicant with the required details and the required scanned documents need to be uploaded.
Step 8: The applicant thereafter needs to click on the “Save” button to submit the application successfully.
Step 9: Further, the applicant has to click on “Online Payment” to pay the application fees.
Step 10: After the successful payment, the applicant can download the certificate.
Step 11: The applicant can click on the “Get Status” option from the menu if the certificate is not available.
Step 12: The applicant can enter the acknowledgment number and click on the “Find” button to view the status of his/her application.
Step 13: The applicant can click on the “Print” button which is often right next to the get status option.
Step 14: The applicant thereafter has to enter the acknowledgment number and click the “Search” option.
Step 15: The legal heir certificate will be visible to the applicant on the screen itself.
Step 16: The applicant has to then click on the “Download Certificate” option to download the legal heir certificate.

This is how a legal heir certificate looks like;

Conclusion

As we come to the end of this article, it is worth stating that a legal heir certificate is a necessary document for obtaining the deceased’s retirement benefit claims, gratuity, and provident fund claims, as well as pension and insurance claims. It establishes the heir’s legitimacy and gives them the power to inherit the deceased’s possessions.

References

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Gyan Prakash Arya v. M/s Titan Industries Limited : an arbitrator cannot modify an arbitration award on an application filed under Section 33 of the Arbitration and Conciliation Act

By

Shoronya Banerjee

-

February 17, 2022

0

This article has been written by Bhavya Verma, pursuing a Diploma Course in Advanced Contract Drafting, Negotiation, and Dispute resolution from LawSikho. This article has been edited by Prashant Baviskar (Associate, Lawsikho), Ruchika Mohapatra (Associate, Lawsikho), and Indrasish Majumder (Intern at Lawsikho).

This article has been published by Shoronya Banerjee.

Table of Contents

Introduction

The case of Gyan Prakash Arya v. M/s Titan Industries Limited, mainly revolves around the issue of the extent of the power of the arbitrator under Section 33 of the Arbitration and Conciliation Act, 1996. Section 33 of the Act empowers the arbitrator to correct or interpret an award. The arbitral tribunal can correct any computation, clerical, typographical, or any other error of a similar kind. A party within thirty (30) days of the receipt of the award (unless otherwise agreed by the parties) after sending a notice to the other party may request an arbitral tribunal to correct the award and the tribunal may correct the award within thirty (30) days which can be later extended by the tribunal.

The tribunal may correct the award and remove the imperfections only if it does not affect the main decision. Where in the case there is a clerical mistake or an error from an omission or an accidental slip, the same can be rectified either by the tribunal or with the intervention of the court. The arbitrator cannot modify the award to allow a claim made by a party. Even if there are no grounds as stipulated under Section 33, the court may modify an award as per the parties’ compromise.

Facts of the case

Gyan Prakash Arya (appellant) and M/s Titan Industries Limited (respondent) entered into an agreement dated 09.07.2003. The respondent invoked the arbitration clause when a dispute arose between the parties relating to the recovery of pure gold weighing 3648.80 grams in possession of the appellant. The respondent filed a claim petition before the learned arbitrator seeking the following reliefs: –

To direct respondent (Mr. Gyan Prakash Arya) to deliver pure gold weighing 3648.80 grams or in alternative pay a sum of Rs. 27,00,112.00 towards the cost of pure gold calculated at the rate of Rs. 740 per gram.
To pay a sum of Rs. 11,74,545.00 towards the interest amount due on the said amount of Rs. 27,00,112.00 from June 2003 till the date of filing the claim and further interest at 18% per annum during the pendency of the proceedings.
To pay a sum of Rs. 26,50,338.00 towards the loss which has been caused to the claimant on account of the defaults committed.
Award costs of the proceedings and such other and further reliefs which are just in the interest of justice and equity.

The arbitrator passed an award directing the appellant to return within three (3) months from the date of award the pure gold along with interest @ 18% per annum from 24.07.2004. In the alternative, the appellant shall pay the respondent within three (3) months the market value of the pure gold with interest @ 18% per annum calculating the value of the gold at Rs. 740 per gram from 24.07.2004 till the date of payment.

Subsequent to this, the respondent filed an application under Section 33 of the Act to modify the award by correcting computational/arithmetical/clerical error by deleting “at Rs. 740 per gram” and substituting the same by “Rs.240,727/- per 10 grams”. The said application was allowed by the learned arbitrator and corrected the award.

Being aggrieved, the appellant under Section 34 of the Act filed a suit before the City Civil Court which was further dismissed. Appellant filed an appeal under Section 37 of the Act before the High Court which was also dismissed. The Appellant preferred an appeal feeling aggrieved and dissatisfied by the order passed by the High Court of Karnataka at Bengaluru. The High Court dismissed the appeal and confirmed the order passed by the XXIXth Additional City Civil and Sessions Court. The XXIXth Additional and City Civil and Sessions Court dismissed the arbitration suit under Section 34 of the Act and confirmed the Arbitral Award dated 04.12.2010.

Feeling dissatisfied, the appellant further approached the Supreme Court.

Issues involved

Whether the appeal made by the appellant is maintainable or not?
Whether the judgment and order passed by the City Civil Court and the High Court are liable to be quashed and set aside or not?
Whether the modified award passed by the learned arbitrator is liable to be set aside and quashed or not?

Arguments on behalf of appellant

Shri Sukumar Pattjoshi, learned Senior Advocate representing the appellant contended that the order passed by the learned arbitrator allowing the application under Section 33 and subsequently modifying the original award is beyond the scope and ambit of the jurisdiction of the learned arbitrator under the said provision. He further contended that there was no arithmetical and/or clerical error in the original award passed by the learned arbitrator and the award was passed as per the original claims made by the respondent/claimant and even the discussion by the learned arbitrator was on the claim as made by the original respondent/claimant after the discussion on merits and on appreciation of the evidence on record. Under Section 33 of the Act only arithmetical and/or clerical error can be corrected whereas in the instant case the respondent/claimant came all together with a new claim which is not permissible under the said provision and therefore the City Civil Court and the High Court have erred in upholding the order passed by the learned arbitrator.

Arguments on behalf of respondent

Shri Sajan Poovayya, learned Senior Advocate appearing on behalf of the respondent contended that what has been modified by the learned arbitrator on an application filed under Section 33 of the is in the context of the alternative prayer and the relief being granted by the learned arbitrator. Even if the original award stands as it is, the respondent shall be entitled to the return of the gold which was the first and primary relief claimed and granted by the learned arbitrator.

Judgment

The judgment was passed by J. Mr. Shah and J B.V Nagarathna. The Hon’ble Court observed that the original award passed by the learned arbitrator was as per the original claim made by the respondent and there was a specific finding by the learned arbitrator on the alternative relief of the payment of the value as, “No doubt, the market value of gold has increased to a great extent as on today but in the absence of any reliable proof in this behalf I find that as claimed in the claim statement it is just and reasonable to allow interest on the market value of the balance gold in question at Rs. 740 per gram as claimed in the claim statement and also interest on this amount at 18% per annum from the date of the claim statement and up to the satisfaction of the reliefs to be granted under this award issue Nos. 3 and 3a are answered accordingly.”

Since the original award was passed as per the original claim made by the respondent, therefore, subsequently allowing the application under Section 33 of the Act to modify the Award in the exercise of the powers of the said provisions is not sustainable. Only in the cases of arithmetical and/or clerical error, the award can be modified and in the instant case, there was no such error. Thus, the award passed by the learned arbitrator in the application under Section 33 of the Act is beyond the scope and ambit of the said provision and both the City Civil Court and the High Court have committed a grave error in dismissing the arbitration suit/appeal under Sections 34 and 37 of the Act respectively.

The appeal made by the appellant was allowed and the impugned judgment and order passed by the High Court in an appeal under Section 37 of the Act and the City Civil Court in arbitration suit under Section 34 of the Act and the order passed by the learned arbitrator dated 14.01.2011 modifying the original award were thereby quashed and set aside. Consequently, the original award passed by the learned arbitrator dated 04.12.2010 stood restored.

Judgment analysis

The appellant aggrieved by the decisions of the Arbitral Tribunal and the lower courts preferred an appeal to the Apex Court. The respondent made an application under Section 33 of the Act requesting to change the amount of the claim awarded by the tribunal stating it to be an error as per the said provisions. The tribunal accepted the application, modifying the award. The appellant approached the City Civil Court and the High Court wherein his appeal was dismissed.

The Apex Court read the award in light of Section 33 of the Act and very rightly quashed the modified award and the orders passed by the lower courts. The judgment pronounced by the Apex Court is in conformity with section 33 of the Act and the Court provided the appropriate relief to the aggrieved party as the provision allows modification of the award in the case of arithmetical and/or clerical error.

Before this judgment, Section 33 of the Act could have been easily misused by the parties to harass the other. The Hon’ble Court in the instant case rightly limited the scope of misuse and abuse of the said provision. The said judgment will hold a landmark value in future cases of modification of the awards.

Conclusion

An arbitral award is final and binding upon both parties, Section 33 is incorporated in case there is a human error made in the award. Section 33 enables the Arbitration Tribunal to modify the award in case of any arithmetical and/or clerical error. It safeguards the interests of the parties and prevents arbitral tribunal from making mistakes. No party should be harmed due to the error in the award made by the arbitrator.

The said provision should not be irrationally used by a party just to modify the amount of the claim or modify the award just to gain a benefit out of it. In the instant case, allowing the application by the tribunal and thereafter modifying the award is a travesty of justice.

References

CIVIL APPEAL NO.6876 OF 2021.
Bjorn-Jensen & Co v. Lysafght (Australia) Ltd, (1979) 1 Llyod’s Rep 494.
Hindustan Vidyat Products Ltd. v. M.P. Housing Board, (1999) 3 SCC 536
Munshi Ram v. Banwari Lal, AIR 1962 SC 903.

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Assault under Section 7 of POCSO Act and Section 354 of IPC

By

Rachit Garg

-

February 16, 2022

0

This article has been written by Ria Verma, a student at Symbiosis Law School, Noida. This article aims to differentiate between Section 7 of the POCSO Act and Section 354 of the Indian Penal Code. It also analyzes the court’s interpretation of Satish v. State of Maharashtra.

Table of Contents

Introduction

A recent judgment of Satish v. State of Maharashtra (2020) given by the Bombay High Court was widely disputed. A heated debate took place to determine whether ‘skin-to-skin’ contact would come under the purview of sexual assault. The judgment was then overruled by the Supreme Court.

This article deals with the difference between Section 7 of the Protection of Children from Sexual Offences Act, 2012 (POCSO Act) and Section 354 of the Indian Penal Code, 1860. It also throws light upon whether or not a flawed interpretative method was used by the High Court to decide the case and the subsequent judgment interpreting the scope of Section 7 of the POCSO Act given by the Supreme Court.

Assault under the POCSO Act

To deal with the increasing cases of child sexual assault, harassment, and pornography the POCSO Act was enacted in 2012. It is a gender-neutral law, that is, the victim and the accused can either be a male or a female. It is a victim-centered piece of legislation and focuses on protecting children’s interests through every step and stage of the judicial process. They have incorporated child-friendly mechanisms for recording evidence, reporting, investigation, and conducting speedy trials in designated special courts.

Under the POCSO Act, a child is defined as any individual who has attained the age of 18 years. It elucidates different types of sexual abuse such as penetrative and non-penetrative assault, sexual harassment, and pornography.

Section 7 of the POCSO Act

Section 7 of the POCSO Act defines the ambit of sexual abuse against children. It states that “Whoever, with sexual intent, touches the vagina, penis, anus or breast of the child or makes the child touch the vagina, penis, anus or breast of such person or any other person, or does any other act with sexual intent which involves physical contact without penetration is said to commit sexual assault.”

Conditions for committing the offense of sexual assault under the POCSO Act

From the above provision, four essentials to constitute the offense can be determined:

Sexual intent of the offender,
Touching the private parts of the child,
Making the child touch their private parts or of some other individual,
Commits any other act that entails physical contact without penetration.

Therefore, establishing the sexual intent of the offender is vital and the other essentials would fall into place.

Assault under the Indian Penal Code

Section 354 of the Indian Penal Code

Section 354 defines assault or criminal force on a woman to outrage her modesty. The Section states that: “Whoever assaults or uses criminal force to any woman, intending to outrage or knowing it to be likely that he will thereby outrage her modesty, shall be punished with imprisonment of either description for a term which may extend to two years, or with fine, or with both.”

The offense under this Section is cognizable and non-bailable in nature with the prescribed period of imprisonment and fine, triable by the Magistrate.

Conditions for committing the offense of sexual violence under the Indian Penal Code

Certain conditions need to be fulfilled by the prosecution to establish that the offense has been committed. The three conditions are:

The victim must be a woman

Section 354 expressly states that the aggrieved person must be a woman and the age is not expressly fixed in the provision. Therefore, it is not a gender-neutral offense and in case a man is subjected to assault or criminal force, he would not be entitled to relief under this Section since it would not be considered as an offense.

In the case of Girdhar Gopal v. State (1952), the constitutionality of the Section was questioned as it violates Article 14 (Right to Equality) and Article 15 (the right not to be discriminated against) of the Constitution.

The Court referred to the case of Raning Rawat v. State of Saurashtra (1952), wherein, the ambit of Article 14 was interpreted. The legislature can make certainly reasonable classifications such as treating men and women differently in terms of outraging modesty, by making it assault only when it is committed against women. Therefore, the provisions of the Code cannot be said to have infringed on the rights enshrined under Articles 14 and 15.

In Girdhar Gopal’s case, the Bench stated that the offense could be committed both by a man as well as a woman. The Court further stated that the pronoun ‘he’ used in the provision has to be read together with the definition provided by Section 8 of the IPC, wherein the pronoun ‘he’ refers to both male and female individuals. Therefore, the Section clearly mentions ‘whoever’, and hence, is applicable to everyone. It would not absolve the liability of the offender in case she is a woman.

Assault or use of criminal force against the aggrieved

The onus of proof is on the prosecution to prove whether the accused has committed an act that can be classified as an assault or criminal force against the aggrieved person. The terms ‘assault’ and ‘use of criminal force’ have been defined in Sections 350 and 351 of the Penal Code respectively.

Section 350 defines criminal force as, “Whoever intentionally uses force to any person, without that person’s consent, in order to the committing of any offense, or intending by the use of such force to cause, or knowing it to be likely that by the use of such force he will cause injury, fear or annoyance to the person to whom the force is used, is said to use criminal force to that other.”

Section 351 defines assault as, “Whoever makes any gesture, or any preparation intending or knowing it to be likely that such gesture or preparation will cause any person present to apprehend that he who makes that gesture or preparation is about to use criminal force to that person, is said to commit an assault.”

Therefore, by merely reading the provisions it can be inferred that any gesture that causes reasonable apprehension in the mind of another or using force intentionally, would amount to an offense under these provisions.

The act was intentional or done with the knowledge that it would constitute an offense or outrage the modesty of a woman

There are two vital aspects of the Section:

The act must be committed intentionally or with the knowledge that it would outrage the modesty of a woman

The provision clearly states that the primary ingredient of the offense is having the intention to commit the act or having the knowledge that the act would amount to outraging the modesty of an individual. It is important to prove that the accused committed the act with this intention or knowledge. It is not sufficient for the woman to feel that her modesty was outraged. ‘Modesty’ is a subjective term and there is no one definition that fits all. What might be offensive to one individual might not be offensive to the other individual. Therefore, the reaction of the individual is not an essential ingredient.

The terms ‘outrage her modesty’ and ‘intending to or knowing it to be likely that he will thereby outrage her modesty’ clearly indicate that it is the intention or the knowledge of the accused that needs to be scrutinized. The consequent reaction of the victim is not relevant.

The intention and knowledge of the accused cannot be directly ascertained by using the evidence at hand. It is important to look at the facts and circumstances of each and every case. It must be ascertained whether a reasonable man would think that the act committed by the offender was committed with the intention or the knowledge to outrage the modesty of the aggrieved person.

In State of Punjab v. Major Singh (1966), a landmark judgment, the prominent issue raised was whether the accused’s act of injuring the private parts of a seven and half-month-old female would fall under the purview of outraging her modesty. The Supreme Court used the test of ascertaining whether the modesty of the victim was outraged from the perspective of a reasonable man. The provisions of this Section would be applicable when a reasonable man believed that the act committed is sufficient to tarnish the modesty of the victim.

The Court held that despite the victim not having developed a sense of shame and awareness of sex, she possesses modesty from her very birth. Whatever little modesty the victim had, the accused clearly had an intention to tarnish it. Therefore, he was convicted of committing the offense within the ambit of this Section.

Interpreting the term modesty

This particular Section was laid down with the objective of protecting the interests of women and normalizing decent behavior in public. Modesty is used as an attribute of a female, irrespective of the fact whether she is mature or has acquired sufficient understanding of the negative implications of the act.

In Mrs. Rupan Deol Bajaj v. Kanwar Pal Singh (1995), a man slapped a woman on her posterior in front of a crowd. The question raised was whether this act would constitute an offense within this Section. To interpret the word modesty, the Supreme Court referred to the definition of modesty given in the Oxford Dictionary (1993 edition). It defined modesty as “womanly propriety of behavior; scrupulous chastity of thought, speech and conduct; reserve or sense of shame proceeding from indistinctive a version to impure or coarse suggestions”.

The Court stated that the act of blemishing the modesty of a woman must be determined keeping in mind the common notions, that is, the current societal standards. It was held that the act of the offender must be such that it shocked the sense of decency of the woman.

On applying this test to the facts of the case, the Court held that the act of slapping the woman on her posterior would fall within the purview of outraging her modesty, since not only was it an insult to the sense of decency as per the current standards, but also an insult to the dignity of the woman.

Satish v. State of Maharashtra

In this case, the accused lured the victim to his house under false pretexts of giving her guava. He pressed the victim’s breasts while trying to remove her salwar. The question raised before the Court was whether this act would fall under the purview of sexual assault as per Section 7 of the POCSO Act.

An appeal against the Session Judge’s order was heard by a single judge Nagpur Bench of the Bombay High Court. Sections 342 (punishment for wrongful confinement), 354, and 363 (punishment for kidnapping) of the Indian Penal Code were attracted.

According to Section 7 of the POCSO Act, any individual who touches the private parts of a minor or does any other act with sexual intent has committed the offense of sexual assault. The Court acquitted the accused from the charge under Section 7 and upheld the conviction of the accused under Section 354 of the IPC.

A major distinction between the offense in the two statutes is that in Section 354 of the IPC, the wrongdoer is imprisoned for a tenure of one year, whereas as per Section 7 of the POCSO Act, the punishment is of three years. The Court acquitted the accused from Section 7 due to the following three reasons:

The prosecution did not present the argument that the accused removed the top of the victim before molesting her.
The punishment must be proportional to the offense committed. Under Section 7, more stringent punishment is given, therefore, cogent evidence is required to be presented.
It was unclear whether the accused put his hand inside the victim’s top with the objective of molesting her. So, ‘skin-to-skin’ contact would prevent such an act committed from being an offense under Section 7.

Stating these reasons, the Court held that the accused is guilty of outraging the victim’s modesty under Section 354 of the IPC.

It was argued that ‘skin-to-skin’ contact is necessary to constitute the offense of sexual assault under Section 7 of the POCSO Act. In the second part of the Section ‘contact’ was preceded by ‘physical’. Therefore, it can be inferred that skin-to-skin contact is necessary. Further, under Section 354 even touching the clothes would be considered as a criminal force.

The Court asked why there is a difference being made out between ‘touch’ and ‘physical contact’. Why would the legislature use two different terms when their meaning is the same? Can it be interpreted that physical contact is less than touch?

The counsel on behalf of the accused stated that ‘physical contact’ is necessary otherwise day-to-day activities could also be criminalized. Contact is qualified by physical contact, on the other hand, touch is not.

The Court observed that different situations must be relied upon to see if this interpretation is logical. They also stated that there is no need to stretch one’s reasoning and rely on other provisions when the offense has been clearly laid down in one provision.

The Court illustrated this with the help of an example that if an individual pokes another individual with a pen, there is no skin-to-skin contact. No sexual assault can be said to have taken place according to the arguments previously stated. However, the privacy of the child along with the modesty is violated.

The Court finally held that the accused was guilty under Section 342 and 354 of the IPC and sentenced him to rigorous imprisonment for a tenure of one year and a fine of Rs. 500 which was to be paid if the accused defaults to suffer rigorous imprisonment for one month.

Why was the judgment widely disputed

The judgment was widely disputed stating that the Courts used a flawed interpretative method while addressing the issue.

In Jagar Singh v. State of Himachal Pradesh (2014), the High Court of Himachal Pradesh negated the essential of skin-to-skin contact to attract Section 7 of the POCSO Act. The Section does not provide for touching the naked private parts of an individual. Even when the victim is wearing clothes, an act of touching their private parts would be enough to attract the provisions of Section 7.

In the case of Geetha v. State of Kerala (2020), the High Court of Kerala set aside the bail order that was granted by the Session Court Judge on the grounds that the gravity of the sexual crime would not be any less if the touch was through the victim’s dress. Therefore, the absence of skin-to-skin contact would not be a relevant indicator of the seriousness of the crime.

In the United Kingdom, Section 79(8) of the Sexual Offences Act, 2003, defines touching. It includes touching with any body part, through anything. It particularly includes touching amounting to penetration. It can be clearly inferred that despite the victim being clothed, touching any body part would still constitute the ‘touching’. It is imperative that lawmakers take note of this fact and add a similar provision in the Indian statutes to prevent such illogical interpretations in the future.

In Regina v. H (2005), it was held by the England and Wales Court of Appeal held that “where a person is wearing clothing, we consider that touching of the clothing constitutes touching for the purpose of the Section 3 offense” of the Sexual Offences Act, 2003.

The Court’s unwillingness towards punishing the accused under POCSO was on the grounds of stringent punishment of three years as compared to one year under IPC. Section 42 of the POCSO Act talks about alternative punishment and states that when an act is an offense under both IPC and POCSO, the accused, if found guilty, must be punished under the act that awards greater punishment. Therefore, the Court could have punished the offender under both provisions of the POCSO as well as the IPC. Merely reading Section 42 directs the reader’s attention towards the usage of the word ‘shall’ which makes it mandatory for the court to award more stringent punishment. But the Court used the same fact to convict the offender of punishment to a lesser degree.

In Lok Prasad Limboo v State of Sikkim(2019), the victims were minor girls who had been groped. The Sikkim High Court held that the sentence given under both IPC and POCSO should be awarded parallelly.

Under Section 29 of the POCSO Act, the burden of proof is not on the victim but on the accused. When an individual is accused of committing an offense under Sections 3,5,7 and 9 of the POCSO Act, it is necessary that the court assumes that the accused is guilty unless the accused is able to prove his innocence.

In Justin Renjith v. Union of India (2020), the Kerala High Court held the constitutionality of Section 29 on the grounds that the victim is a minor, and the occurrence of the alleged instance once established leaves it to the accused to rebut those claims. Therefore, in the case, it was established that a minor was molested but the Court’s incorrect reasoning of requiring ‘strict proof and serious allegations’ was incorrect since the onus was on the victim to prove the guilt of the accused.

The judgment also leads to a wrong precedent as keeping ‘skin-to-skin’ contact as a requisite and granting immunity to those offenders who inappropriately touch a minor who is wearing clothes. It would cause a gross miscarriage of justice and the intention of the statute, that is, preventing sexual abuses against children, is undermined.

Judgment overruled by the Supreme Court

The Supreme Court in the case of Attorney General for India v. Satish and another (2021), heard the appeals filed by the Attorney General of India, the National Commission of Women, and the State of Maharashtra against the above-discussed judgment of the Bombay High Court.

The bench comprising of Justice Umesh Lalit, Justice S Ravindra Bhat, and Justice Bela M Trivedi held that the entire objective of having an act to protect children from sexual offenses would be destroyed if the interpretation of touch or physical act under Section 7 of the POCSO Act is constricted. The flawed interpretation of the Bombay High Court would not only impose limits on the law to safeguard the citizens from harm but would also overthrow the intention of the legislature in its entirety.

The Supreme Court stated, the reasoning in the High Court’s judgment quite insensitively trivializes – indeed legitimizes – an entire range of unacceptable behavior which undermines a child’s dignity and autonomy, through unwanted intrusions.

The very object of the act would be undermined in case someone touches the sexual or nonsexual parts of the body of a child with gloves, condoms, sheets, or with a cloth. The sexual intent is present but according to the Bombay High Court’s interpretation, it would not amount to an offense of sexual assault under Section 7 of the POCSO Act.

The Supreme Court stated that the most important ingredient for constituting the offense of sexual assault under Section 7 of the POCSO Act is the ‘sexual intent’ and not the ‘skin to skin’ contact with the child. The prosecution is not required to prove a skin-to-skin contact to prove that the offense has taken place.

The Supreme Court held that Section 7 of the POCSO Act would cover both direct and indirect contact, that is, irrespective of whether there was skin-to-skin contact or not, an offense under this section would be constituted. The intention of the offender to touch a child inappropriately is enough to attract the provisions of this section. Therefore, the court clarified and widened the interpretation of Section 7.

Key differences between Section 7 of the POCSO Act and Section 354 of the Indian Penal Code

The case of Satish v. State of Maharashtra makes the distinction between the two Sections even clearer. The key differences between Section 7 of the POCSO Act and Section 354 of the Indian Penal Code are as follows:

Offense punishable under the Section

Section 7 of the POCSO Act deals with intentional assault with sexual intent, whereas Section 354 of the Indian Penal Code deals with outraging the modesty (not the body) of a woman.

Gender of the victim

Section 7 of the POCSO Act is gender-neutral, whereas Section 354 of the Indian Penal Code is women-centric.

Quantum of punishment

Under Section 7 read with Section 8 of the POCSO Act, the offender is punished with imprisonment of either description for a term which shall not be less than three years but which may extend to five years, and shall also be liable to fine. On the other hand, under Section 354 of the Indian Penal Code, the offender shall be punished with imprisonment of either description for a term which may extend to two years, or with fine, or with both.

Sexual intent as a pre-requisite

Sexual intent is an essential condition under Section 7 of the POCSO Act whereas, under Section 354 of the Indian Penal Code, the sexual gratification of the accused is irrelevant.

Burden of proof

Under the POCSO Act, the burden of proof is on the accused. Section 29 of the POCSO Act states that “when a person is prosecuted for committing an offense of sexual assault against a minor, the special court trying the case shall presume the accused to be guilty.” On the other hand, under Section 354 of the Indian Penal Code, the burden of proof is the accuser.

Conclusion

The reasoning of enacting a separate statute with the objective of decreasing sexual crimes against children was undermined by the High Court’s interpretative methodology. The judgment could have had far-reaching negative socio-legal implications and it would be common for offenders to take advantage of the fact that privacy, bodily autonomy, and integrity could only be violated when the victim is not wearing clothes. The final decision taken by the Supreme Court was much needed and prevented the gross miscarriage of justice.

Therefore, in the future, similar situations may arise wherein both Section 7 of the POCSO Act and Section 354 of the Indian Penal Code overlap. The key differences between the two Sections must be scrutinized to ascertain what offense has been committed by the accused.

References

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Section 494 IPC : essential elements and case laws

By

Rachit Garg

-

February 16, 2022

0

This article is written by R Sai Gayatri from Post Graduate College of Law, Osmania University. This article talks about the offence of bigamy in India and its provisions, its essential elements, the status of a second wife and the effect of bigamy on conversion and live-in relationships.

Table of Contents

Introduction

Bigamy is the act of marrying one person when the individual is already legally married to another person. For example, if A is legally married to B and he proceeds to marry C during the subsistence of his marriage with B then A will be liable for bigamy. However, if the first marriage is declared void due to any reason, then such two individuals have the freedom to marry any person of their choice. When a couple is undergoing the procedure of divorce, neither of them can marry until and unless the divorce is final in the eyes of the law. In the present day, bigamy is penalized in many countries as their ideology is favourable towards monogamy however there are certain countries where bigamy is allowed legally. Let us know more about bigamy and the laws dealing with it in detail through this article.

Bigamy in India and its history

The presence of bigamy in India can be traced back to ancient times when the warrior sects and rich merchants had more than two living wives at the same time. This was done due to many reasons such as the expansion of ruling territory, for sealing peace pacts, for increasing the exchequer of the territory, etc. The rule of marriage however was always based on the concept of monogamy since the period of Manusmriti but with the exception of polygamous marriages.

The texts from Manusmriti, which is one of the primary sources of the Hindu Marriage Act, 1955 distinctly mention that if the wife is suffering from some disease, or if she cannot give birth to a child, or of such vicious nature that she could be superseded then the husband of such wife can marry another woman i.e, the second marriage will be considered legally valid. The condition however is that the first wife shall always be superior to the second wife and the first-born son of the first wife shall have primacy over the other sons of such husband. However, with the advent of British rule in India, the law was altered wherein a Hindu male who is already married once may marry again without any justification or the consent of his wife.

As time passed by, the personal laws of various religions were being given primary importance which in turn had several provisions that declared bigamy an offence. The laws such as the Parsi Marriage and Divorce Act (1936), Bombay Prevention of Hindu Bigamous Marriage Act (1946) and the Madras Hindu Bigamy (Prevention and Divorce) Act (1949) were the first among the several laws which recognized and penalized the offence of bigamy.

The Hindu Marriage Act, 1955, makes monogamy the mandate for all Hindus, Buddhists, Jains, and Sikhs. If a Hindu male marries another woman during the existence of his first wife, he shall be liable under Section 494 of the Indian Penal Code, 1860. Similarly, as per the Special Marriage Act, 1954, any marriage that is solemnized as per the provisions and the conditions of the said Act would be prohibited from taking the form of bigamy.

When it comes to the personal law of Muslims i.e, the Sharia law the practice of polygamy is legally allowed however the practice of polyandry is strictly prohibited. The Holy Quran governs all Muslims and the same states that a Muslim male may marry up to four women at the same time however he must be able to maintain and take care of them. Therefore, it can be understood that Islam does not prohibit bigamy.

In the case of Radhika Sameena v. SHO Habeeb Nagar Police Station, (1996), it was held that a Muslim male married under the Special Marriage Act, 1956 would be guilty under Section 494 of the IPC if he enters into another marriage as per the Muslim Law. Since his previous marriage was done as per the Special Marriage Act and not under Muslim Law, the provisions of the Special Marriage Act shall be applicable and not of the Muslim Law, thus the respondent’s marriage was held void.

Bigamy and the provisions of IPC

Section 494 of the Indian Penal Code, 1860

The Indian Penal Code, 1860 explains bigamy under Section 494. The said provision states that any person who already has a wife or husband living, further proceeds to marry another person while being lawfully wedded to such wife or husband shall be punished with imprisonment of either description for a term which may extend to seven years, and shall also be liable to fine. Moreover, such marriage shall be considered void in whatsoever case.

There are certain exceptions to the aforementioned provision wherein the person who marries another individual shall not be liable for bigamy. The exceptions are as follows –

The said provision does not extend to any individual whose marriage with their partner from the prior marriage has been declared void by a court of competent jurisdiction.
The said provision does not extend to any individual who contracts a marriage during the lifetime of their former partner wherein such partner at the time of such individual’s second marriage was not heard of for a period of seven years or wherein there is no information of them being alive. By virtue of presumption provided under Section 108 of the Indian Evidence Act, 1872, it may be concluded that a person who has been missing for more than seven years is presumed to be dead and that when the individual contracts a second marriage, it shall be understood that no husband or wife is living at the time of the second marriage and thus, the offence of bigamy is not constituted. The condition that is inclusive of this exception is that the individual contracting the second marriage must, before the second marriage takes place, inform the person they are about to marry about the facts to the best of their knowledge regarding their previous partner.

Section 495 of the Indian Penal Code, 1860

Section 495 of the Indian Penal Code, 1860 further talks about the offence of bigamy but with the addition of the vice of concealment. When an individual does the act of bigamy by concealing the fact of their former marriage from the person with whom they contract their second marriage then such individual shall be liable under Section 495. Such individuals shall be punished with imprisonment of either description for a term which may extend up to ten years and shall be liable to fine or both. In addition to this, a complaint about cheating can be filed under Section 415 of IPC in case the individual conceals the fact of first marriage.

Essential elements to constitute the offence of bigamy

As per Section 494 of the Indian Penal Code, 1860, the following are the essential elements to constitute the offence of bigamy –

Existence of a prior lawful marriage

In the offence of bigamy, one of the essential elements is that of the existence of a prior lawful marriage. The mere subsistence of a prior lawful marriage itself declares the subsequent marriage void because it confirms the existence of a living wife or husband of such individual. In case the prior marriage is not valid in the eyes of the law then marrying again will not be labelled as bigamy.

Validity of subsequent marriage

It is understood from the first element that the prior marriage must be a lawful one, however, the second essential element is that the subsequent marriage in question must also be a lawfully valid one. The couple willing to marry must take part in all the mandatory rituals and ceremonies as required in the personal law that governs their marriage. In case the subsequent marriage is contracted without following or performing the required rituals then it shall be void in itself which in turn declares that the offence of bigamy cannot be constituted.

This element can be well understood through the case of Satya Devi v. Khem Chand (2013), wherein the wife filed a case against her husband for the offence of bigamy as well as cruelty. However, since she could not prove that her marriage was contracted in accordance with the law, the second marriage remained valid and her marriage was declared void. Therefore, the case was dismissed.

Existence of the partner from prior lawful marriage

The sole basis of the second marriage being void shall be due to the existence of the partner from the prior lawful marriage. This means that the wife or husband of such individual from the prior lawful marriage must be alive during the time of the subsequent marriage to declare it void and establish a case of bigamy. It is pertinent to note that this element does not apply to the cases where subsequent marriages are allowed by personal laws such as Sharia law.

Procedure to file a complaint against bigamy

The aggrieved person can record a case of bigamy either in the police station or at the court. The father of such an aggrieved female can likewise make a complaint under Section 494 and Section 495 of the Indian Penal Code, 1860. A request for declaring the subsequent marriage void can be recorded by the parties of such subsequent marriage and not the first partner.

Conversion and bigamy – the legal paradox

As the Hindu law strictly prohibits bigamy, the men belonging to the Hindu religion started to convert to Islam to be able to marry again during the subsistence of their first marriage. Since these men converted to Islam which permitted the practice of polygamy they could conveniently escape the legal consequences arising from the provisions of Hindu law which penalize bigamy.

In the landmark case of Sarla Mudgal v Union of India (1995), the Hon’ble Supreme Court dealt with the question of whether converting to Islam and contracting second marriage will be considered valid or not and if not, then will such individual be held liable for bigamy as per Section 494 of the Indian Penal Code, 1860 or not. In an attempt to answer these questions, the Apex Court stated that when two individuals marry each other as per the provisions of a particular personal law then such marriage shall continue to be governed under the same personal law irrespective of the fact that one of the individuals to the marriage has converted to another religion. Therefore, the individual who converts to another religion and attempts to or marries again during the subsistence of their first marriage will be held liable for bigamy. Such individuals shall not escape the legal consequences as elucidated under Section 494 of the IPC.

The case of Sarla Mudgal v Union of India thus established that by merely converting to another religion, no person can escape the liability for committing the offence of bigamy and the conversion itself does not free such person from the tenets of their first lawful marriage.

Status of a second wife in India

Even in the present day, various negative aspects come along when we think about the condition of second wives in our society. These may be the lack of recognition of the marriage, the burden of bearing the shame and hate from people, the pain of not being able to give her children a legal status which includes the problem of the succession of property, etc.

The Indian Penal Code, 1860 strictly prohibits bigamy and due to this reason there is no possibility of gaining legal recognition for the second wife, however, as per the circumstances of her marriage, she may be given certain rights and legal support. One of the instances where the second wife may claim rights and legal support is when the husband conceals the fact of his first marriage. In such a situation, the husband of the second wife will be liable under Section 495 of the Indian Penal Code, 1860.

Maintenance to the second wife

In a prima facie case of a second marriage, it might first appear that the second marriage is null and void as per the laws and thus the second wife shall not be entitled to get any maintenance but the Hon’ble Supreme Court through the landmark case of Pyla Mutyalamma @ Satyavathi v. Pyla Suri Demudu & Anr (2011) stated that even the second wife can claim maintenance from her husband. It further held that the claim of maintenance cannot be refused on the ground of the validity of the marriage.

In the aforementioned case, the appellant Pyla Mutyalamma alias Satyavathi was the second wife of the respondent Pyla Suri Demudu. The two parties got married in a temple as per the Hindu rites in the year 1974. They had three children and after 25 years of their marriage, the respondent deserted her. After hearing both the parties, the Trial Court in Andhra Pradesh awarded Rupees 500/- as maintenance and on appeal by the respondent the Andhra Pradesh High Court set aside the order holding that since the appellant was the second wife of the respondent she was not entitled to maintenance. Aggrieved by the order of the High Court of Andhra Pradesh, the appellant appealed before the Supreme Court.

The Supreme Court held that if the second wife was deserted by her husband, she will be entitled to get maintenance from him under Section 125 of the Criminal Procedure Code, 1973, irrespective of the validity of the marriage. Section 125 of Cr.P.C. functions on de facto marriage and not marriage de jure. Hence, the validity of the marriage cannot be a ground for refusal of maintenance if other requirements of Section 125 Cr.P.C. are fulfilled. In the present case, the Hon’ble Apex Court allowed the second wife’s appeal and restored the Trial Court’s order which granted her Rupees 500/- as maintenance.

Rights of children born out of second wedlock over father’s property

The children born out of second wedlock will have the right to inherit their father’s property. In the case of Revanasiddappa v. Mallikarjun (2011), it was held that children born out of second wedlock will have the right to their father’s ancestral property. Further, the Hindu Marriage Act under Section 16(3) does not mention any restriction on the property right of an illegitimate child. However, such property rights only extend to the property of the parents of such illegitimate children. Thus, such children will have the right over the property of their parents whether self-acquired or ancestral.

In the case of Vidyadhari & Ors v. Sukhrana Bai & Ors. (2008), it was held by the Supreme Court that the children born of second wedlock are entitled to a share in the property of their father, though the second marriage itself is void. If an individual marries a second time during the subsistence of his first marriage, the children born out of such wedlock will still be legitimate.

Will attending a second marriage amount to abetment or not?

Attending a second marriage will not amount to abetment of the same as there is no instigation or preparatory act present on the part of the attendees during the happening of such second marriage. In the case of Manju Verma and Ors. v. State & Anr. (2012) it was held that the mere participation of the attendees in the second marriage shall not amount to abetment as there is a lack of support, preparation or active suggestion towards the commission of bigamy on part of such attendees or relatives.

Further, in the case of Muthammal and Ors. v. Maruthathal (1981), it was held that only when there is evidence to prove that the attendees have in fact abetted or instigated the acts of the principal offender towards the commission of the crime of bigamy, only then such people will be held liable for abetment of the second marriage.

Live-in relationships and bigamy

Live-in relationships have been considered taboo in Indian society for a long time and the main factors for the non-acceptance of such relationships are the lack of legal recognition, pre-marital sex and illegitimate children. But the main question here is whether the anti-bigamy laws apply to live-in relationships or not. The offence of bigamy does not extend to live-in relationships because there is no presence of a legally valid marriage contracted between the two parties.

The Supreme Court in the case of Khushboo v. Kanniammal & Anr (2010) opined that when a man and woman live together without marriage, it cannot be considered as an offence. The Apex Court had also held that there was no law that prohibits or restricts live-in relationships or pre-marital sex.

Further, in the case of Tulsi v. Durghatiya & Ors (2008), it was held that the children born out of live-in relationships are not to be treated as illegitimate. However, there are certain conditions such as the parents must have cohabited for a considerable amount of time under one roof so that the society recognizes them as husband and wife i.e, there is a presumption of marriage between such couple. Another important case when it comes to live-in relationships is the case of Rameshchandra Daga v. Rameshwari Daga (2004) which recognized and upheld the maintenance rights of the women who are tied in invalid marriages or other such informal relationships.

Conclusion

Bigamy is the act of marrying one person when the individual is already legally married to another person. The Indian Penal Code, 1860 explains bigamy under Section 494. The said provision states that any person who already has a wife or husband living, further proceeds to marry another person while being lawfully wedded to such wife or husband shall be punished with imprisonment of either description for a term which may extend to seven years, and shall also be liable to fine. Moreover, such marriage shall be considered void in whatsoever case.

Section 495 of the Indian Penal Code, 1860 further talks about the offence of bigamy but with the addition of the vice of concealment. When an individual does the act of bigamy by concealing the fact of their former marriage from the person with whom they contract their second marriage then such individual shall be liable under Section 495. It is important to have stringent laws to prevent and penalize the offence of bigamy thus the presence of the Indian Penal Code, 1860 is essential to prohibit people from using the conversion of religion as a license to commit the offence of bigamy.

References

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Section 506 IPC : punishment for criminal intimidation

By

Shoronya Banerjee

-

February 16, 2022

0

This article is written by Ashutosh Singh, a student at Amity Law School, Amity University, Kolkata. This article explains the offence of criminal intimidation under Section 506 of the Indian Penal Code, 1860 along with judicial opinions in the matter.

This article has been published by Shoronya Banerjee.

Table of Contents

Introduction

The provisions for criminal intimidation are given under Section 503 to Section 507 under the Indian Penal Code, 1860 (IPC). The general public sometimes gets confused between extortion, assault and criminal intimidation. Section 503 of IPC, 1860 describes what is criminal intimidation and Section 506 and Section 507 are the penal sections that state the punishment for the offence of criminal intimidation.

Intimidation in layman terms means to threaten somebody and thereby to make them act or react in a particular manner. In other words, threaten somebody so they do as per the desire of the intimidator and they are made to do an act they are not legally bound to or omit to do so to avoid the threat. Section 503 describes what constitutes criminal intimidation. To understand the punishment for criminal intimidation under Section 506 of IPC, it is also important to learn about Section 503 which defines what criminal intimidation is.

Description of Section 503 IPC, 1860

Section 503 of IPC explains that whosoever threatens another person or a person they are interested in with:

An injury to his/her person,
An injury to his/her reputation,
An injury to their property,
An act to cause alarm to that person,

and makes them do something which he/she is legally not bound to do, or to omit to do any act which he/she is legally entitled to do, to avoid the execution of such threat is committing an act of criminal intimidation.

Illustrations

A thief entered the house of ‘X’ and robbed the house and also threatened to kill him and his wife if they raised an alarm or complained to the police when they caught him stealing. After the robber left they immediately called the police and as soon as the police caught the culprit, he was charged with robbery and criminal intimidation. However, the accused got bail but he was finally held guilty by the Court on charges of criminal intimidation and robbery.
It was alleged that Mr. ‘A’, the cousin of a blind girl touched her hand when she was asleep and further proceeded to remove her quilt and insert his hand inside her dress. He also threatened to kill her if she disclosed his identity to anyone. The girl’s family filed a complaint against Mr “A”. The Court held that Mr “A” was guilty of criminal intimidation under this section, apart from other offences.
Z’s neighbour ‘Y’ had built a garage without informing him while he was on a holiday. When ‘Z’ returned, he protested against this act of ‘Y’ because this had damaged the part of the property that belonged to ‘Z’. ‘Y’ also abused ‘Z’ with filthy language and threatened to get ‘Z’ beaten and killed by Y’s hooligans and gunda friends. ‘Z’ was advised by his lawyer to take the matter to Court. The Court held that the threat to beat up ‘Z’ and get him killed was a clear case of criminal intimidation, however, the abuses would not amount to an offence under this section.
Mrs. “A” and her husband had an inter-caste marriage after running away from home as their families did not want them to get married. After a year, Mrs “A” received letters from her father and brother saying that they will come to separate Mrs “A” and her husband. They threatened to burn Mrs “A”’s house and kill her husband as they were still angry at Mrs “A” for eloping with her husband. Mrs “A” and her husband were scared and approached a lawyer who helped them to file a case of criminal intimidation against the family members threatening to harm them and their property.
‘D’ and his friends decided to file a case against a clothes shop where the shopkeeper took some photos of ‘D’s friend ‘F’ while she was changing and trying out new clothes. When ‘D’ and his friends were caught by the shopkeeper, the shopkeeper threatened that he would leak the pictures of ‘F’ and also hurt ‘D’ and his friend’s family members if they approached the police. Despite the threat, ‘D’ and his friends approached the police in the first instance. They went to Court and initiated a criminal procedure suit against the shopkeeper. The shopkeeper was charged with voyeurism along with criminal intimidation.

Essentials of Section 503 IPC, 1860

A threat under IPC doesn’t need to be direct. Even if a threat is made in public or to a third person, it may fall under criminal intimidation. It is also important to note that the nature of such a threat should be real. If the individual who is intimidating the other is not capable of executing that threat at all, then he/she will not be held guilty for an offence of criminal intimidation under Section 503 of IPC.

For an offence to attract Section 503 of IPC, the following have to exist:

A person should be threatened with bodily injury,
A person’s reputation or property should be threatened.
The threat should be with the intention to cause harm.
The intimidation should be an act to cause alarm to that person.

The act that causes a person to end up doing something he/she is not legally bound to do for avoiding the harm that may arise if he does not do it, or cause that person to omit something he/she is legally bound to do under fear of harm to them by the person intimidating them is criminal intimidation. Both the ingredients should essentially exist together for the offence to be complete. The non-existence of any one of them may refute the charge against the accused. The communication of the threat may happen either orally, in written form or even by gestures. Thus, even showing provoking gestures can be intimidating. Even a threat to hurt the reputation of a deceased person in whom the threatened person is interested is covered under Section 503. Let us understand some terms used in Section 503 IPC, 1860.

Alarm

Earlier it was mentioned by the Orissa HC in the case of Amulya Kumar Behara v. Nabaghana Behara Alias Nabina (1995) that threat causes a lot of mental anxiety and stress to a person which may be alarming but the degree of alarm may vary from person to person. The alarm caused by the intimidator should be of such a nature that it unsettles the threatened person to such an extent that he/she loses control over his/her free voluntary actions. A threat in this case is measured considering a person of common firmness, of reason, and prudence.

Injury

Section 44 of IPC defines injury. It means any harm that is illegally caused to any person’s body, mind or repute.

Intimidation

According to Webster’s dictionary intimidation means to make another person afraid or force them with violence and compel them to do an act.

Intention

It is a mental condition. Intention plays an essential role in ascertaining whether the accused is guilty or not and the same can be clarified taking into consideration the facts and circumstances of the case.

Threat

It originated from the Anglo-Saxon word “threoton to lire”, (harass). It is the plan of or a purpose to inflict loss, pain or punishment on another person.

Case laws

Vikram Johar v. State of Uttar Pradesh (2019)

The Apex Court, in this case, observed that simple usage of filthy language does not meet the fundamental necessities of criminal intimidation. The accusation was that the defendant went to the home of the plaintiff and insulted him in filthy language with a gun. The defendant even threatened to attack the plaintiff, however, the defendant escaped from that place when the neighbours arrived. The bench decided that the above-mentioned claims prima facie do not constitute an offence.

Manik Taneja v. State of Karnataka (2015)

In this case, the Supreme Court said that written statements concerning unfair treatment by the police to a person on their Facebook website would not amount to criminal intimidation. The appellant met with a road accident with an auto-rickshaw. The appellant on learning that the passenger of the auto-rickshaw was injured paid for the expenses of the passenger’s treatment and the passenger was subsequently admitted to a hospital and no FIR was lodged.

Nevertheless, she was asked to come to the police station and was supposedly threatened by the police. Feeling aggrieved and with nowhere to go, she posted comments on the Facebook page of Bangalore traffic police about their harsh treatment and harassment of her. The police filed an FIR and registered a case under Sections 353 and 506 of the IPC against the appellant. However, the bench held that there was no instance of criminal intimidation in this case.

Romesh Chandra Arora v. State (1960)

In this case, the Supreme Court elaborated on the scope of Section 503 of IPC where the accused intimidated a person ‘X’ and his daughter, of injury to their reputation by circulating a nude picture of the girl with a boy if the money was not paid to him. ‘X’ had made the boy and girl take off their clothes and then he took their nude pictures by threatening to circulate the nude pictures and make them public if they did not pay him money. The accused appellant was charged with criminal intimidation with the intent to cause alarm. The Court stated that the purpose of the accused was to cause alarm to get the money by threatening to post the damaging photographs on a public platform. Therefore, the Supreme Court convicted and punished the accused under Section 506 for criminal intimidation and Section 384 of IPC for extortion.

Description of Section 506 IPC, 1860

The first part of Section 506 of IPC, 1860 states that when a person is guilty of the offence of criminal intimidation he/she shall be punished with imprisonment for a term which may extend to two years, or with a fine, or with both fine and imprisonment for the offence.
The second part of Section 506 is attracted if a person threatens to cause death or grievous injury or destruction of any property by fire, then the offence is punishable with imprisonment for a term which may extend to seven years or fine or with both.
The offence under the first part of Section 506 is a compoundable offence if the parties compromise and settle the matter and the complainant agrees to have the charges dropped against the accused.
When a person intends to threaten unchastity to a woman, then the punishment is imprisonment of either description for a term which may extend to seven years, or with fine, or with both.
An offence under Section 506 is non-cognizable, bailable and compoundable by the person who was intimidated when it falls under the first part of Section 506 and non-compoundable when it falls under the second part of Section 506.

Shrikrushna S/o Babulaji Tawari v. the State of Maharashtra, Criminal (2020)

In this case, the applicant was convicted for offences punishable under Sections 354, 509 and 506 of IPC, 1860.

Mrs. ‘S’, aged 45 years is very happy in her marriage with Mr. ‘R’, her husband. It was stated in the complaint that the applicant had approached Mrs.’S’ when she was washing utensils and tried to give her a chit. Mrs. ‘S’ however, refused to accept the same and then the applicant threw the chit on her and left muttering to himself that he loved her. The following morning the applicant returned and gesticulated obscenely to her, warning her not to tell anyone about what was written in the chit. Mrs.’S’ alleged that earlier in this incident, the applicant used to sometimes flirt with her and used to throw small pebbles on her. After investigation, when the final report has submitted the applicant denied guilt stating that he was a neighbouring grocery store owner and Mrs.’S’ used to purchase groceries from him on credit and did not want to pay the applicant the due money, hence she lodged a false complaint against him.

Going by the chits at hand and other materials brought on record, the Magistrate and the Appellate Court held the applicant guilty of offences that were punishable under Sections 354, 506 and 509 of the IPC, 1860.

The Nagpur Bench of Bombay High Court, however, held that the conviction recorded under Section 506 of the IPC was unsustainable because as per the evidence on record, the applicant threatened Mrs. ‘S’ not to disclose the contents of the chit. The bench said that it was open to speculation about the nature of the threat and whether the words used were such as would cause alarm and whether Mrs. ‘S’ as a fact was alarmed.

Exception

Pursuant to Section 320 of the Code of Criminal Procedure, 1973, the offence under Section 506 (part 2) cannot be lawfully compounded. Nonetheless, in a legitimate situation, a withdrawal from the prosecution may be permitted. If the bail is denied by a Magistrate of First Class, the application processes may be initiated in the Sessions Court. If still unsuccessful, the case may be taken to the High Court.

Nature and extent of the threat

The description of the current section 506 is practically new since the words “distress” and “terror” have been substituted with the word “alarm” that is confined to the offence where the effect is to cause more pain. The words used earlier were not so alarming and did not describe the extent of the threat that a person suffered. This was done because the anxiety and mental torment caused by an injury under this section due to threatening/intimidating may often be as or even greater than the actual injury.

In the case, Ghanshyam vs. State of Madhya Pradesh (1989), the accused entered a house in the middle of the night, carrying with him a knife and threatened to kill the residents. This was held by the Madhya Pradesh HC to be criminal intimidation under part two Section 506 of IPC.

Nature of the threatening words or action

The threat as mentioned in Section 503 and 506 of IPC should be such that the person threatening can carry the threat out and it must be made with the intention of alarming the complainant in regard to being prosecutable. A vague statement where the accused said that he/she would exact vengeance by filing false charges cannot be taken as criminal intimidation since mere words with no intention to carry out the threat doesn’t cause any harm or alarm. A simple reading of Section 503 discloses that the threat must be made with the intention of causing injury to a person’s body, reputation, or property. Furthermore, the intent has to be to coerce that person to do something that is illegal, that he/she would not have done if not intimidated, or to omit something he/she is legally bound to do. The nature of the threat, the language used for threatening and the terms used were enough to cause fear/alarm, are issues that are up to speculation.

Description of Section 507 IPC, 1860

Both Sections 506 and 507 of IPC have provisions for the punishment for the offence of criminal intimidation as defined in Section 503 of IPC.

Section 507 is actually a corollary to Section 506 and has provision for criminal intimidation through anonymous communication and criminal inducement Many people do not have the courage to intimidate a person directly and so they resort to criminal intimidation by an anonymous letter or by a letter signed with a made-up name or conceal their identity and place of stay. In such instances, the offence attracts a punishment of 2 years imprisonment in addition to the punishment given under Section 506. An offence under Section 507 is non-cognizable, bailable, not compoundable and triable by a Magistrate of the first class. The main essentials of this Section are the same as that of Section 503 but the threat is given either by an anonymous communication or having taken care to conceal the name/abode of the person who gives the threat. It is not necessary that both the abode and name need to be concealed for an offence to be punishable under this section. An offence under Section 507 attracts a harsher punishment than Section 506 as the punishment under Section 507 is clubbed with the punishment under Section 506.

Steps to be taken when faced with criminal intimidation

Where both the accused and victim are involved in a matter coming under the IPC it becomes a serious case to deal with. A person who is charged with an offence of criminal intimidation is liable to face a severe penalty if convicted. The victim should instantly contact a lawyer and directly approach the police authorities or magistrate in a criminal intimidation case since such a case would involve a non-cognizable offence. A person who is involved in such a case must know all of his/her rights before and after the arrest. The intimidated person or victim should prepare a timeline of the events and note it down on a piece of paper to make it easier to brief the lawyer about the case.

Scope of Section 506 IPC under different State Governments

Some state governments by notification in the official gazette and the exercise of powers conferred by Section 10 of the Criminal Law Amendment Act, 1932 have declared that any offence punishable under Sections 186, 189, 188, 190, 295A, 298, 505, 506 or 507 of the IPC, 1860 when committed in an area specified in the notification shall be cognizable while such notification remains in force and be deemed to be amended accordingly. The State Government thus has the power to declare that an offence punishable under Section 188 or Section 506 of the Indian Penal Code shall be non-bailable.

The reason for taking such a step is because India is a very diverse country and an offence that is not very serious in one part of the country may be considered very offensive by the society in another part of the country. Thus, the State Governments were given the power to change the classification of certain offences under Section 10 of the Criminal Law Amendment Act, 1932. In Uttar Pradesh, Uttarakhand, Meghalaya, Andhra Pradesh, Telangana and Maharashtra Section 506 of IPC is cognizable and non-bailable. However, in Meghalaya, the punishment is imprisonment of 3 years or fine or both.

Important judgments

Shri Padma Mohan Jamatia v. Smt. Jharna Das Baidya (2019)

In this case, Sri Jamatia had filed a complaint petition under Section 190 of the CrPC, 1973 against the accused-respondent, Smt. Baidya was a Member of Parliament and CPI (M) party leader. In one of the rallies, she delivered a certain speech in which it was alleged that the accused-respondent was threatened, that after the 2018 assembly elections were over, the president of the State BJP party and its chief campaigner would not be in the State but the local BJP party workers would remain in the State and would have to face dire repercussions. In this case, to attract the ingredients of Section 503, Section 504 or Section 506 there must be a provocation of such a serious nature that it would compel someone to inflict bodily harm to a person or grievous hurt to them. The Tripura High Court in its judgement said that mere use of abusive words or filthy language and body posture during the speech of a political leader would not come within the ambit of the provisions of Sections 503, 504, 506 IPC. In this case, the complainant himself was not a witness to the speech which was delivered by the respondent. He heard the contents of the speech on television and also gained knowledge about the speech from the newspaper. Moreover, the complaint could not show any instance of justifying the provocation, made from either of the parties, i.e., BJP or the CPI(M) to cause any harm or grievous hurt to public peace. Also, in the complaint, the complainant neither expressed any fear for his life nor did he ask for any police protection. In the contents of the complaint, it is evident that the respondent did not appeal to her supporters to instantly attack or cause harm or injury to any of the supporters of the complainant.

Amitabh Adhar v. NCT of Delhi (2000)

In this case, the complainant was Ms Bharti Saran who was married to the accused Sudhanshu Saran. The married life of Sudhanshu Saran and Ms Bharti Saran, according to the prosecution, lacked conjugal contentment and was marked by constant bickering and quarrels. The cause for this discord was the perverted sexual behaviour of the accused Sudhanshu Saran and the demand for dowry. The step-brother and the step-sister of the accused Sudhanshu Saran were the petitioners. The complainant lodged a written complaint to the Police against her husband and both the petitioners. Investigation in the matter culminated in the submission of a charge sheet under Sections 498A, 406, 506, 509, 34 of IPC against the accused persons. The charges made in the FIR and in the case diary statement of the complainant against the petitioners did not satisfy the essential ingredients of the offences punishable under Sections 506 and 509 IPC. The threats which were alleged to be given to the complainant by the petitioners also did not fall within the definition of criminal intimidation because the complainant nowhere stated that the threats given by the petitioners caused an alarm to her in any manner. Therefore, it was held that a mere threat does not amount to criminal intimidation but it should also have an intention to cause alarm to the person threatened.

Subramanian Swamy (Dr.) v. C. Pushparaj, (1998)

In this case, the Madras High Court held that if the complaint and statements of the respondent are taken together then there were no allegations in the whole complaint, that the petitioner ever made any attempt to act in pursuance of his alleged expression which the respondent perceived as intimidation. Even the actual words used by the petitioner were not stated either in the complaint or in the depositions. In the absence of these ingredients, a mere mentioning of Sections and putting a person to face the trial was nothing but an abuse of the process of the Court of law. Thus, the High Court of Madras held that part two of Section 506 IPC was attracted over here only if the criminal intimidation included a threat to cause death or grievous hurt. A mere outburst would not fall within the mischief of Section 506 of IPC.

Kanshi Ram v. State (2000)

In this case, the complainant Isran Ahmed said in his case diary statement that at the relevant time the petitioner had urged his security personnel to thrash the journalists. According to the complaint, the exact words used by the petitioner were “Maro Salon Ko”. But the complainant in his statement nowhere stated that the alleged threat had caused an alarm to him. On the opposite, the case clearly showed that even after the alleged threat, the complainant or other media persons did not retrace their steps. Thus, the Delhi High Court said that mere threat is no offence. Therefore, the threat which was supposedly given by the petitioner did not fall within the mischief of Section 506 IPC. Subsequently, no charge under Section 506 IPC could be framed against the petitioner on the basis of the said evidence.

Tilak Raj v. The State of Himachal Pradesh (2016)

In this case, the Appellant developed intimacy with the prosecutrix about two years prior to the incident. He lured her on the pretext of marriage. The prosecutrix alleged that the Appellant had sexually and physically violated her at her home. On the next day, the prosecutrix decided to approach the police station to register an FIR for rape. However, the Appellant apparently threatened her with death against making a complaint and therefore, she did not complain. The appellant who had promised the prosecutrix marriage, however, did not return. On 6^th January 2010, the prosecutrix complained to the police that she had been raped by the appellant. She also alleged sexual exploitation on the promise of marriage by the appellant. Considering the evidence, the Trial Court which was Sessions Court, Chamba acquitted the appellant of all charges, giving him the benefit of doubt. However, on the prosecution’s appeal, the High Court of Himachal Pradesh partly allowed the same. While the HC upheld acquittal by the Trial Court for an offence punishable under Section 376 IPC, it convicted him under Sections 417 and 506 IPC.

Conclusion

Section 506 IPC is divided into two parts, where part one is a lesser form and part 2 is a graver form of criminal intimidation and thus punishment is given accordingly. In IPC, the offence of criminal intimidation is expressly laid out and tries to cover all aspects of criminal intimidation. Being charged with a crime, whether major or minor, is a matter of seriousness. A person facing criminal charges under section 506, risks severe penalties and consequences, such as jail time, even having a criminal record if convicted, and loss of relationships and future job prospects, among other things. In fact, complaining under criminal intimidation itself is being used by many in false cases to take vengeance. With subsequent amendments, it is hoped that Section 506 becomes more inclusive and in keeping with the technological advances, social media crimes and changes in society in general.

References

Gaur, K. D. Textboook on the Indian Penal Code. Universal Law Publishers, 2011
Criminal laws (Meghalaya amendment ) act, 2013
https://megpolice.gov.in/sites/default/files/Criminal_Laws_Meghalaya_Amendment_act_2013_act_8_of_2014.pdf
https://tilakmarg.com/answers/section-506-ipc-whether-bailable-or-non-bailable/
“Manupatra – An Online Database for Legal Research.” Manupatra – An Online Database for Legal Research. Accessed 9 January 2022.
https://www.manupatrafast.com/?t=desktop.
https://lexforti.com/legal-news/section-506-ipc-criminal-intimidation/
https://www.mondaq.com/india/crime/989624/anti-cyber-bullying-laws-in-india–an-analysis
https://www.livelaw.in/news-updates/offence-punishable-us506-ipc-committed-uttar-pradesh-cognizable-offence-allahabad-high-court-189068

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All you need to know about hypothecation

By

Shoronya Banerjee

-

February 16, 2022

0

This article has been written by Pooja Wagh, pursuing a Diploma Course in Advanced Contract Drafting, Negotiation, and Dispute resolution from LawSikho. This article has been edited by Aatima Bhatia (Associate, Lawsikho), and Arundhati Das (Intern at Lawsikho).

This article has been published by Shoronya Banerjee.

Table of Contents

Introduction

Goods financed by banks in India are often hypothecated to the bank as security/ collateral till the loan covering it is repaid by the borrower. Hypothecation is used when a debtor wants to obtain a loan and use a certain property or asset as a security or collateral. It can help reduce mortgage fees and interest and help those who may not look their best on paper to obtain a loan. This article deals with everything you need to know about hypothecation. If you are someone who wonders if hypothecation is the best route for you to secure financing, this article is for you!

What is hypothecation?

Hypothecation generally means a fixed or floating charge on certain types of immovable properties and tangible movable properties, whether existing or future, which is created by a security provider in favour of a lender without actual delivery of possession of the underlying asset to the lender. Hypothecation comes into the picture when an asset is pledged as collateral to secure a loan. Income generated by the asset such as title, possession or ownership rights, etc is not given up by the owner of the asset. However, if the terms of the agreement are not met, the lender can seize the asset.

For example, a rental property may undergo hypothecation as collateral against a mortgage issued by a bank. The bank has no claim on rental income that comes in while the property remains collateral. However, the bank may seize the property if the landlord defaults on the loan.

You can ease your lender’s concerns and receive mortgage approval by offering other assets as collateral. You do entertain the risk of losing your piece of collateral when you are entering into a hypothecation agreement, whether it is for commercial or residential investments. Therefore, you need to be prepared to lose the asset if you are unable to repay your lender.

When are hypothecation agreements used?

The hypothecation agreement between the borrower and the lender isn’t a verbal agreement. Rather it is done through a document called hypothecation deed. A hypothecation agreement or hypothecation letter specifies the terms of the hypothecation and conclusively determines the rights and liabilities of parties to the agreement. The most common use of hypothecation is in the financing of cars and motorcycles in India as well, as while purchasing commercial real estate property. Often, hypothecation is used when a debt is to be secured and the creditor asks for collateral or security of sorts to help mitigate his risk. Hypothecation is also widely used in consumer and business finance, in the financial industry as well as in the investment market.

Hypothecation in investing

Hypothecation is most commonly used for real estate investments. Lenders often require additional collateral with commercial real estate investments. These types of investments and properties can pose a higher risk because the loan payment relies on the success of a commercial business. The lender may request collateral of higher monetary value depending on the perceived value of the investment location or type of property. There are several reasons why you will want to make a hypothecation agreement instead of other agreements. The reasons include the following:

1. Reduction of down payment

The amount of down payment that a borrower owes can be reduced by hypothecating an asset because the borrower is pledging a high-value asset to guarantee his loan, rather than in a traditional mortgage, which uses loan-to-value ratios and credit score to vet a borrower. Hence, borrowers choosing to hypothecate an asset to secure a loan may be eligible for reduced down payments and this can make it easy to secure financing.

2. Retain the title

Borrowers can retain the title, i.e. total ownership rights of their hypothecated assets. If you are sure that you will be able to pay off your loan, you don’t need to worry about the possibility of a third party holding the title to your asset.

3. Greater security for lenders

Hypothecation provides security for lenders on high-risk loans, especially for commercial mortgages where the loan payment relies on the success of a commercial business.

Difference between hypothecation, pledges, and mortgage

Hypothecation is creating a charge against the security of movable assets. The possession of the security remains with the borrower. In case of default by the borrower, the lender (i.e. to whom the goods/security has been hypothecated) will have to first take possession of the security and then sell the same. For example, cars/vehicles remain with the borrower but the same is hypothecated to the bank or financer. In case, the borrower defaults, the bank takes repossession of the vehicle after following due process of law. Generally, hypothecation also covers loans against stock and debtors. Sometimes, borrowers may, without authorisation, sell goods hypothecated to a bank in which case a bank may convert the goods to a pledge.

Pledge is used when the lender (pledgee) takes actual possession of assets (i.e. certificate, goods). Pledge is movable security and the possession of the security remains with the lender (i.e. the pledgee). In this case, the pledgee retains the possession of the goods until the pledgor (i.e. the borrower) repays the entire debt amount. In case there is default by the borrower, the pledgee has a right to sell the goods in his possession and recover outstanding dues. Some examples of pledging are gold/jewellery loans, advance against goods/ stock, advances against National Saving Certificates, etc.

A mortgage is immovable security, which may include land, buildings, factory premises, godown/ warehouse, or anything that is attached to the earth or something permanently fastened to anything that is attached to the earth. The possession of the security in the mortgage usually remains with the borrower. Hypothecation is movable security (e.g. stocks, accounts receivables, small machines, etc) and the possession of the security remains with the borrower. The tenure of hypothecation is generally shorter than the tenure of home mortgage loans, like in the case of the tenure of a vehicle, and it is renewable after a year or half-year. In a mortgage, loans are of longer tenure as compared to loans against hypothecation and the tenure varies from 10 to 20 years.

Indian laws covering hypothecation

Previously, hypothecation was not defined for a long time under Indian law and it was more on the basis of practice and usage. However, now under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interests Act (SARFAESI), hypothecation is defined as “a charge in or upon any movable property, existing or future, created by a borrower in favour of a secured creditor without delivery of possession of the movable property to such creditor, as a security for financial assistance, and includes floating charge and crystallization into fixed charge on movable property.”

Formalities for creation of hypothecation

In hypothecation, a “deed of hypothecation” is executed by the security provider in favour of the lender. The charge created under the deed of hypothecation is governed by the terms of the document, which provides in detail the powers and provisions safeguarding the interest of the lender. Hypothecation over a motor vehicle must be noted on the registration certificate of the motor vehicle.

The other formalities for hypothecation include payment of appropriate Stamp Duties as per rates in each state and in case of companies, filing with ROC will be required. After 2016 and the formation of CERSAI (under SARFAESI) Central Registry of Securitisation and Asset Construction and Security Interest of India, a government body set up for such purpose, it is mandatory to file creation, modification, or satisfaction of security interest in hypothecation of plant and machinery, stocks, book debts, and receivables.

How is hypothecation removed?

You can remove the hypothecation by paying off the entire loan amount. The bank will issue a No Objection Certificate (NOC) to you. This document will state that no dues are pending. You can submit the copies to the Regional Transport Authority and the insurance company so that the registration and insurance can be converted in your name instead of the bank’s name.

Conclusion

Hypothecation is a way in which the borrower can raise funds by providing movable security as collateral. The borrower still gets to use it since the possession usually remains with the borrower himself. This loan (hypothecation) is provided by either the bank or the financer at a rate lower than the unsecured loan as it provides a sense of security to the lender. However, the lender takes a risk as there may be instances where the borrower sells off the hypothecated asset without the knowledge of the lender. To provide protection to a large extent to both, i.e., the borrower and the lender, the lender shall conduct periodic checks and the parties shall add proper clauses in the hypothecation agreement.

References

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All you need to know about a Repurchase Agreement

By

Rachit Garg

-

February 15, 2022

0

This article is written by Shreya Pandey, from RamSwaroop University, Lucknow. The article talks about a repurchase agreement, it’s important clauses, its types, and how to draft while also shedding some light on the advantages and disadvantages of a repurchase agreement.

Table of Contents

Introduction

When a company is in an urgent requirement of capital without selling its long-term securities then the best option available in this case is to form a repurchase agreement. A repurchase agreement is formed when a party seeking immediate cash sells its securities to another party with a condition that the seller shall repurchase the same security at a higher price at a future date.

This article talks about the types, features, and risks involved in this agreement. It also talks about the pros and cons of repurchase agreements.

Understanding a Repurchase Agreement

A repurchase agreement is an agreement that involves the sale and subsequent repossession of that same security that was earlier sold and then re-buying it at a higher price at a future date. A repurchase agreement is an exchange of security in return for cash that is often used to provide short-term liquidity. In this agreement the security functions as collateral, therefore it is a safe investment. It is also known as a ‘repo’ or ‘sale-and-repurchase agreement’. The party who is selling the repo is borrowing while the other party buying the security is lending. The interest rate that is decided upon the agreement is known as the repo rate. These agreements are short-time agreements and their maturity period is known as ‘rate’, ‘term’ or ‘tenure’.

The difference between repurchase agreements and collateralized loans is that the repurchase agreements are actual purchases where the buyer has temporary ownership over the security. Therefore, this agreement is treated as a loan for tax and accounting purposes. The other difference between repo and the collateralized loan is that during bankruptcy the repo investors can sell their collateral whereas in collateralized loans the bankrupt investor is subject to an automatic stay.

In a repurchase agreement, the buyer (lender) gives cash to the seller (borrower) in exchange for collateral security, and then at a future date, the borrower repurchases that security by paying cash along with an interest to the lender.

Example of a Repurchase Agreement

Mr. X wants to start a business for which he needs an investment of Rupees 50 Lakhs. He has 20 lakhs but gets short of 30 lakhs. So he asks his friend Mr. Y to lend him 3 lakhs. Mr. Y agrees to give him 30 lakhs but in exchange, he asks for Mr. X’s house property papers as collateral. Mr. X agrees to the same but with a condition that he will pay back the money along with an interest of 3 lakhs in six months and Mr. Y has to return his house property papers to him. Mr. Y agreed to it and they both signed an agreement.

How to draft a Repurchase Agreement

Take the above example for drafting the repurchase agreement. The repurchase agreement can be drafted in this way:

THIS AGREEMENT is made on the 8th day of July in the year 1998, between the Party Mr. X, owner of X Pvt. Ltd., and Party Mr. Y.

INITIATION, CONFIRMATION, TERMINATION

The agreement can be entered orally or in writing at the initiation of the buyer.
Mr. X shall deliver written confirmation to Mr. Y upon agreeing to enter into the agreement.

The confirmation shall include:

Purchase date
Purchase price
Repurchase date, if already decided
Repo rate
Details of bank account
Additional terms or conditions

On the purchase date, the seller shall transfer the security amount to the buyer and in return, the buyer shall transfer the amount of the purchase price to the buyer.
Termination of the agreement shall occur at the demand of either of the parties or at the maturity date.

MARGIN MAINTENANCE

If in case the market value of the security decreases and gets lesser than the repurchase price then the seller shall transfer to the bank an aggregate margin value of the purchased securities.

PAYMENT

The payment shall be made by the transfer through book entry.

REPRESENTATIONS

Each party shall:

Be authorized to execute and deliver this agreement
Engage in this agreement and transactions contemplated
Party or its legal representative shall execute the agreement

DEFAULT PROVISIONS

In a case where Mr. X makes default in the agreement then Mr. Y can file a case for specific performance of the contract.
In a case where Mr. Y makes default in the agreement then Mr. X can file a case against Mr. Y and ask for compensation.

NOTICES

If in case either party wants to terminate the agreement then he may give notice to the other party showing his intention to terminate the agreement.

IN WITNESS whereof the parties have hereunto agreed upon the agreement on the 8th July 1998.

For Mr. X

In the presence of :

Witness 1: ___________

Witness 2: ___________

For Mr. Y

In the presence of:

Witness 1: ____________

Witness 2: ____________

Essentials of a Repurchase Agreement

Following are the essentials of a repurchase agreement:

Selling securities: Certificates of bond, deposits, and stocks are sold to a financial institution by promising that the security will be repurchased by the borrower at a higher price.
Buying back the security: It is agreed upon by the parties that the securities sold to the lender shall not sell to anyone else and the borrower shall repurchase it from the lender.
Repo rate: It is the interest rate that is applied upon the money given by the lender to the borrower upon the selling of a security. Eg: A repo rate of 15% higher than the selling amount is decided for the repurchase of the security.
Margin payment: In case the value of security declines then the borrower has to pay a margin amount to the financial institution or the lender.
Default provisions: In a case where either of the parties makes a default then the default provisions come into action that provides for the remedy for the aggrieved party against any default.

Features of a Repurchase Agreement

Following are some of the features of a repurchase agreement:

In a repurchase agreement, there is a high premium in this market.
In an open repo, the agreements get renewed daily unless it is terminated by either of the parties.
The interest rate in the repo is lower than in an unsecured loan.
Since the interest rate is less in repo therefore the collateral of high quality is offered.
In a repo, there is a slight risk of loss for the lender as there is a chance of default from the side of the borrower and the securities are of dynamic nature so if the value of the securities depreciates it can cause loss to the lender.
If the borrower commits a default then the lender has to suffer a lot while selling the securities.
The repo rate changes according to the security offered by the borrower.

Risks involved in repo

The risk of default is the most common risk in the repo. The default can be done from either of the parties. A borrower can make default by not repurchasing the security at the maturity date. A lender can make default by not selling the securities back to the borrower in case the market value of the security increases above the amount decided in the agreement.
The other risk in this agreement is liquidation risk where the lender sells the security in order to recover the amount.
Since the security’s value is not stable it is risky for the lender because if the value of security declines, it increases the chance of default from the side of the borrower.
Another risk is under-collateralization where the amount received is the same or lesser than the amount lent.

Lifecycle of a Repurchase Agreement

This process involves a party selling securities to the other party by signing an agreement to rebuy the same security at a decided future date and at a higher price. The hike in repurchasing amount reflects the time value of the money.

Parties to a Repurchase Agreement

In this agreement, two parties are involved:

Seller: Seller is the person who sells its securities to the other party in order to receive cash in exchange. Later, this party repurchases back the securities he sold at a future date.
Buyer: Buyer basically acts as a lender here that purchases the securities sold by the seller and has its ownership and possession for a short time unless the seller buys it back from the buyer at a future date by paying the cash along with the accrued interest.

Central Banks, money market funds, corporate treasurers, insurance companies, etc can be parties to this agreement.

Types of Repurchase Agreements

Following are the few types of repurchase agreements:

Third-party repo: It is also known as a tri-party repo. It is the most common agreement in the market where a third party acts as an intermediary between the seller and buyer. Usually, a clearing agent or bank acts as an intermediary that protects the interests of both parties. The security or the collateral is handed over to the intermediary. It ensures that the party selling its securities should receive the cash at the starting of the agreement that is paid by the buyer and should receive back its securities after the agreement gets matured or terminated. The intermediaries value the securities and ensure that a specific margin is applied during the repurchase.
Equity repo: In an equity repo, equity functions as collateral where the company’s stock acts as a security in the transactions. The equity repo is considered to be risky as the stock market keeps fluctuating and there is a high risk of loss if the stock value decreases.
Specialized delivery repo: It is an uncommon type of agreement that requires a bond guarantee. In this agreement, a third party guarantees interest and principal amount before the beginning of the agreement and at the maturity time.
Held-in custody repo: In this agreement, the security remains with the seller itself and the buyer pays cash to the seller without taking possession of the securities. It is quite risky as the seller has money and security and the buyer has nothing in his hand. Therefore this kind of agreement is rarely used.
Whole loan repo: In this kind of agreement, a loan or debt obligation acts as collateral, instead of security.
Sell/Buy or Buy/Sell repo: In Sell/Buy repo securities are firstly sold and then repurchased. In buy/sell repo securities are bought initially and then sold. They are different from normal repo as it is transacted in the market.
Reverse repo: A reverse repo is an agreement that is viewed from the perspective of the lender. In this agreement, the lender purchases the security from the borrower with an agreement that the borrower will repurchase the same security at a higher price at a fixed date of maturity.
Securities lending: In this agreement, the investor borrows the security and hands it back to the lender when the transaction is completed. It is done when the investor does not have sufficient security.
Due bill: In this agreement the borrower gives possession of the security to the lender in another bank account that is in the name of the borrower itself. It is a risky agreement for the lender.

Types of Repurchase Agreements on the basis of tenor

Tenor is a term used to indicate the time period of the repurchase agreement. The tenor of a repo can be from an overnight to even a year. On the basis of tenor, there are two types of repurchase agreement:

Term Repo: The agreement that has a fixed start and the fixed end is known as a term repo. It can be for a night or a day or two or may extend to a year. In this agreement, the buyer purchases the security on the condition that the seller shall repurchase those securities at a higher price at a specific fixed date. In the term repo interest rate is fixed and the seller has to repurchase the securities by paying the principal along with the interest at the maturity date of the agreement. It is used to invest cash or finance assets for a specific and fixed period of time.
Open Repo: This agreement has a longer maturity. They do not have a fixed start and fixed end date. It is also an on-demand repo. It functions similar to the term repo. The only difference between open repo and fixed repo is that the buyer and seller agree to the transaction without fixing any maturity date. The open repo gets terminated by a notice by one party to the other before the agreed-upon daily deadline. If the notice is not served then the agreement will roll upon the next day and continue until the notice of termination is served. In this, interest is paid monthly and the interest rate increases periodically by a mutual agreement.

Advantages of a Repurchase Agreement

Repurchase agreements are useful for collecting short-term capital for any individual seeking money.
It is a safe investment as the security acts as collateral in this agreement.
A repurchase agreement is a secured loan.
This agreement is a win-win situation for both parties as the intention behind this agreement gets fulfilled after the security gets repurchased by the seller.
This agreement provides safety to the buyer that if in case the seller makes default then the buyer can sell the securities.
It provides easy liquidity to the seller and secure funding to the buyer.

Disadvantages of a Repurchase Agreement

This agreement is subject to counterparty risk.
Where a party makes default, the loss that might be incurred cannot be calculated unless the process of selling the securities starts.
In a case where the seller turns bankrupt then the buyer suffers a loss of not only interest but also of the principal amount.

Conclusion

A repurchase agreement fulfills the immediate need of the company without selling its securities. Understanding risks in this agreement it can be said that this agreement can be an option where the party is in need of cash and is ready to repurchase the security at a higher price without making any default. This agreement can be a win-win situation for both parties as the party selling its security only transfers the possession without losing the ownership of the security and the other party receives the principal along with the interest in a specified period of time.

References

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