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Landmark cases on death penalty in India

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Death penalty
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This article has been written by Oishika Banerji of Amity Law School, Kolkata. This article discusses a list of landmark judgments surrounding death penalty with respect to India. 

This article has been published by Sneha Mahawar.

Table of Contents

Introduction 

In India, capital punishment is a legal penalty for certain penal offences under the Indian Penal Code, 1860 and associated laws, carried out by means of hanging by neck as provided under Section 354 (5) of the Code of Criminal Procedure, 1973. In India, there are presently 403 prisoners on death row, whose executions are left to be carried out. Section 354 (3) of the 1973 Code specifies that the death sentence is rarely used and is reserved for exceptional circumstances only. This provision also puts restrictions on the exercise of courts discretion in this context. A court must weigh the offender’s personality against the circumstances, events, and reactions in order to determine the proper punishment to be imposed. In doing so, it was determined by the Supreme Court of India in the landmark case of Bachan Singh v. State of Punjab (1980), that the death penalty does not violate Article 21 of the Indian Constitution if it is used only in the most extreme of circumstances. This article details out the landmark judgments that have been delivered by the Indian courts concerning death penalty from time immemorial.  

Landmark cases on death penalty in India

The Supreme Court of India while deciding on the case of Ramnaresh and Ors v. State Of Chhattisgarh (2012), laid down five principles that are to be followed as guidelines by courts across India for determining whether death sentence is to be awarded or not: 

  1. The Court must use the standard to decide if this was the ‘rarest of rare’ cases in which a death sentence should be imposed.
  2. The Court believes that any further sentence, such as life imprisonment, would be insufficient and would not serve the interests of justice.
  3. The death penalty is an exception rather than the norm.
  4. Given the nature and circumstances of the crime, as well as other relevant considerations, the option of imposing a life sentence cannot be used with caution.
  5. The technique (planned or otherwise) and manner (amount of violence and inhumanity, etc.) in which the crime was perpetrated, as well as the circumstances surrounding its occurrence, need to be taken into account.

Keeping these principles in mind, we must proceed with the landmark decisons by the Indian courts with respect to death penalty, under different headings, as provided hereunder. 

Constitutionality of death penalty

Numerous legal experts have argued that the retention of the death sentence in Indian criminal legislation violates one’s Right to Life as guaranteed by Article 21 of the Constitution. However, it is certain that nothing in the Indian Constitution specifically declares capital punishment to be illegal.

Jagmohan Singh v. the State of Uttar Pradesh (1973)

The Appellant was condemned to death under Section 302 of the Indian Penal Code, 1860. The Supreme Court granted limited leave to appeal on the issue of punishment. Arguments were made that the death sentence was unconstitutional because judges had too much authority as no standards or norms were available, and that violated Articles 14, 19, and 21 of the Indian Constitution of 1950.

Observations made by the Supreme Court of India

A bench of Justices Sikri, S.M., Ray, A.N., Dua, I.D., Palekar, D.G., Beg and M. Hameedullah made the following observations in light of the case of Jagmohan Singh v. State of Uttar Pradesh (1973): 

  1. Articles 72(1)(c) and 134 of the Indian Constitution, as well as entries 1 and 2 in List III of the Seventh Schedule of the Constitution, reveal that the framers of the Constitution recognized the death penalty as a legal punishment and included provisions for appeal, reprieve, and other measures. However, more significant than these provisions in the Constitution is Article 21, which states that no one shall be deprived of his/her life except in accordance with legal procedures. The connotation is unmistakable. Deprivation of life is constitutionally permitted if done in accordance with legal procedures. Given these hints of constitutional postulates, it will be difficult to argue that the death penalty is seen as irrational or not in the public interest per se.
  2. In the framework of our criminal system, which punishes murder, one cannot overlook the reality that life imprisonment equates to a dozen years in jail in most situations, and it may be seriously questioned if that is a sufficient substitute for the death penalty. Parliament has refused to accept proposals to abolish it. In this situation, it is impossible to argue whether capital punishment is irrational or not, in the public interest.
  3. Although a crime may appear to be similar on the surface, the facts and circumstances surrounding it are vastly different, and since a court’s decision on a penalty is based on a thorough examination of all the facts and circumstances, there is no basis for a challenge under Article 14.
  4. Courts have the power to impose the death penalty after weighing aggravating and mitigating factors, and this decision cannot be described as unguided. Furthermore, the Code of Criminal Procedure, 1973 lays out certain procedures for when a death sentence can be imposed, and the imposition of a death sentence in accordance with the law cannot be considered unconstitutional.

Vikram Singh and ors. v. the State of Punjab (2015)

This was an appeal from the High Court of Punjab and Haryana’s denial of the appellant’s writ petition challenging the legality of Section 364 A of the Indian Penal Code, 1860. The High Court presented the following viewpoints: 

  1. There are moralists who believe that because God gave life, he alone has the authority to take it away and that no human being may usurp this privilege. Others argue that the death penalty cannot be used as a retributive or deterrent measure since statistics demonstrate that the threat of death has never served as a deterrence to major crime. Taking these two perspectives in view, the Court concluded that as the commonly accepted idea in India is that the death penalty as a deterrent is in the law books, it must be used if the circumstances merit it. 
  2. On the basis of the foregoing reasoning provided above, the High Court decided that after it had evaluated the nature of the offence and its seriousness, the Court was affirmed by the fact that the appellants merited the maximum sentence specified for the charges brought against them.

Subsequently, a writ petition was filed before the Supreme Court of India, which affirmed the appellant’s conviction and death sentence issued under Sections 302, 364 A, 120 B, and 201 of the Indian Penal Code, 1860. 

Observation of the Apex Court

A bench of Justices T.S. Thakur, R.K. Agrawal, and Adarsh Kumar Goel, made the following observations in light of the case of Vikram Singh and ors. v. the State of Punjab (2015).

  1. Section 364A of the Indian Penal Code, 1860 was enacted in response to an increase in the number of kidnappings and abductions for ransom. Terrorism began to rear its head, posing a threat not only to residents’ security and safety but also to the country’s sovereignty and integrity, necessitating immediate action to combat what has the ability to destabilize any government. The gradual escalation of the threats posed by kidnapping and abductions for ransom, not only by ordinary criminals for monetary gain or as an organized activity for economic gain, but also by terrorist organizations, necessitated the inclusion of Section 364A and harsh punishment for those who engaged in such activities.
  2. Given the context in which the aforementioned law was enacted, as well as Parliament’s concern for citizens’ safety and security, as well as the country’s unity, sovereignty, and integrity, the punishment prescribed for those who violate Section 364A cannot be deemed so outrageously disproportionate to the nature of the offence as to render it unconstitutional. The judicial discretion granted to the courts to pick one of the two penalties provided for individuals who violate Section 364A will very certainly be utilised along judicially recognized lines, with death sentences only being awarded in the rarest of situations. But just because the sentence of death is a possible punishment that may be awarded in appropriate cases cannot make it per se inhuman or barbaric.
  3. The appellants, in this case, were found guilty not only of violating Section 364A of the IPC but also of murder under Section 302 of the IPC. Even by the criteria of the rarest of rare situations developed and applied by the Apex Court, the death sentence handed to the appellants, was found just, fair, and reasonable. The Court went on to state that the present case was not one in which the victim averted his fate and lived to tell the tale of his ordeal. Instead, was a case in which he was sentenced to death, which appears to have influenced the judges’ decision to impose the death penalty on the appellants. 
  4. A death sentence in a murder case may be rare, but if the courts have determined that it is the only penalty that can be given, based on the facts and evidence, it is difficult to review that matter in collateral procedures like the present case. Hence awarding of the death penalty was held to be constitutionally valid. 

Chhannulal Verma v. the State of Chattisgarh (2019)

The Sessions Court found the appellant guilty of murder under Section 302, attempted murder under Section 307, threatening to kill under Section 506 (2), and house trespass under Section 450 of the Indian Penal Code, 1860, thereby sentencing him to life imprisonment, fines, and also awarded death sentence. The way the appellant also picked and chose the people to cause grave injuries indicated that the act was pre-meditated. Because the appellant was brutal throughout the process, the Court classified the case as one of the rarest of the rare, and the appellant was therefore sentenced to the death penalty. The High Court while confirming the conviction and death sentence relied upon the aggravating and mitigating circumstances surrounding the incident. The learned senior counsel of the appellant had pointed out that the conviction and sentencing hearings were held on the same day, in violation of the guidelines provided in Bachan Singh v. State of Punjab (1980) and that the appellant should have been given ample time to present mitigating evidence before being heard on the question of sentence.

Observations of the Supreme Court of India

Justice Kurian of the Supreme Court of India while deciding the present case of Chhannulal Verma v. the State of Chattisgarh (2019), had upheld the appellant’s conviction  but commuted his sentence to life imprisonment, based on the following reasons:

  1. A proper psychological/psychiatric evaluation was not carried on the appellant, but the latter’s behaviour in jail was excellent.
  2. The High Court neglected the procedural inequity of not having a separate hearing for sentence at the trial stage. It is an essential requirement that the conviction and sentence hearings be separated. The Trial Court erred by scheduling the sentencing hearing on the same day as the hearing of the appeal, denying the appellant the opportunity to present material pertinent to punishment and mitigation.

The views of the Apex Court have been listed hereunder:

  1. Resistance to taking a life through the instrumentality of law is predicated on genuine and persistent respect for the dignity of human life. This should only be done in the most extreme of circumstances when there is no other viable option. In the sphere of this negative precept, the “rarest of rare situations” is an extremely limited aperture. Another requirement that qualifies this opening is “where the alternative choice is certainly foreclosed.”
  2. The restorative and rehabilitative parts of justice are lost in the concentration on the death sentence as the final measure of justice for victims. The use of the death penalty diverts focus away from other issues plaguing the criminal justice system, such as inadequate investigation, crime prevention, and victim rights. To rehabilitate victims of crime, the state must implement efficient victim compensation programs. Simultaneously, it is critical that courts employ the authority afforded to them by the Code of Criminal Procedure, 1973, to provide proper compensation to victims in relevant circumstances.
  3. Given the Law Commission of India’s 262nd Report, which stated that the constitutional regulation of capital punishment attempted in Bachan Singh case (1980) failed to prevent death sentences from being “arbitrarily and freakishly imposed”, Justice Joseph stated that it was time to reconsider the death penalty as a punishment, although, majority opinion on this point stated that there was no need to re-examine the constitutionality of the death penalty in light of the decision in Bachan Singh (1980).

Death penalty as a last resort

In India, capital punishment, sometimes known as the death sentence, is still a contentious issue. Despite global efforts to abolish the practice, India continues to carry it only in “rarest of rare” circumstances. The “rarest of the rare” doctrine, which was established in the case of Bacchan v. State of Punjab (1980), signifies that the crime was “exceptionally violent,” and that the accused deserved the death punishment because of the same.

Ediga Anamma v. the State of Andhra Pradesh (1974)

The appellant, a simple young lady who had been whipped out of her husband’s home by her father-in-law, was living with her parents and her sole kid. She committed a  premeditated, cleverly planned murder of another young woman and her child because of rivalry between the appellant and the murdered woman for the affections of an illicit lover. The death sentence was handed out by the Sessions Court and affirmed by the High Court. A bench of Justices Krishnaiyer, V.R. Sarkaria, and Ranjit Singh of the Supreme Court of India while debating on the issue of punishment, had compiled a list of “positive indicators against the death penalty under Indian law” in the present case of Ediga Anamma v. the State of Andhra Pradesh (1974). 

Observations of the Apex Court 

  1. Modern criminology considers crime and criminality to be equally important when determining the appropriate sentence, despite the fact that our procedural system lacks comprehensive provisions and adequate machinery for collecting and presenting the criminal’s social and personal data to the extent required in the sentencing verdict. The obvious shift in legislative focus is that life imprisonment for murder is now the rule, with the death penalty being  reserved for certain circumstances. The State’s troubled conscience on the thorny issue of a legal danger to life in the form of a death sentence has attempted to express itself through legislation, with the trend toward cautious partial abolition and a retreat from absolute retention.
  2. The Supreme Court determined that the convict’s age, both young and elderly, would be an important element to evaluate in her favour. It also said that socio-economic, psychological, or penal compulsions’ that may not be sufficient to justify a legal exemption might nonetheless be considered as sentencing considerations. Other favourable circumstances mentioned by the Court were the guilt of other accused people, the absence of premeditation, and the length of time spent under a death sentence. On the other hand, the way in which the crime was committed, the weapon used, and the nature of the victim would all be important elements in imposing a harsher penalty.
  3. The matter at hand must be resolved with respect to the Code of Criminal Procedure, 1973 and the Court must rely on the judicial procedural technique of imposing or avoiding the death penalty, helped by the circumstances that are present on the record for the aim of establishing guilt. In this case, the criminal’s social and personal factors, such as her feminity and youth, her unbalanced sex and expulsion from the conjugal home, and her status as the mother of a young boy are individually inconclusive and cumulatively marginal facts and circumstances, which all point to a life sentence instead of the death penalty. 
  4. The larger idea that swift punishment, even if only for a life sentence, is more deterrent than a leisurely judicial death sentence with liberal executive clemency, and that stricter police checks on illicit weapons deter better as a social defence against murderous violence than a distant death sentence, is not an afterthought in a court decision on the appropriate form of punishment.
  5. As crime and punishment are functionally tied to society, the current societal conditions must be considered, and the deterrent element of punishment must be balanced with the possibility of individual reformation. The death penalty was converted to life imprisonment in this instance taking into account the facts of the case.

Shankar Kisanrao Khade v. the State of Maharashtra (2013)

Shankar Kisanrao Khade and his wife Mala Shankar Khade were charged with offences punishable under Sections 363, 366-A, 376, 302, and 201 read with Section 34 of the Indian Penal Code, 1860 for kidnapping a juvenile girl, raping her multiple times, and strangling her to death. For the rape and murder of the child with intellectual disabilities, the appellant was found guilty and condemned to death. The sentence was converted to life in prison by the Supreme Court.

Observations of the Supreme Court of India 

The observations made by a two-judge bench of the Supreme Court of India comprising Justices K.S. Radhakrishnan and Madan B. Lokur, in the present case of Shankar Kisanrao Khade v. State of Maharashtra (2013) have been provided hereunder:

  1. The “crime test,” “criminal test,” and “R-R test,” were ruled to be the tests that must be applied when imposing the punishment, instead of the “balancing test”. This meant that even if aggravating factors were present to the maximum degree possible and there were no mitigating circumstances in the accused’s favour, the court had to use the “rarest of the rare” principle before imposing the death penalty.
  2. The application of the “rarest of rare” standard, according to the Court, was contingent on whether society would support the death penalty being imposed or not. Justice Lokur noted in his concurring opinion that the Indian Law Commission might look at whether the death sentence is a deterrent punishment, retributive justice, or fulfils an incapacitative objective. It’s worth noting that, in Mahesh Dhanaji Shinde v. the State of Maharashtra (2014), the Supreme Court stated that the observations in Shankar Kisanrao Khade v. State of Maharashtra (2013) may be contrary to Bachan Singh v. the State of Punjab (1980), which cautioned against treating aggravating and mitigating circumstances as watertight compartments.

Manoharan v. State by Inspector of Police (2019)

In the present case of Manoharan v. State by Inspector of Police (2019), the Supreme Court of India was considering the appeal of a convict sentenced to death for the rape and murder of a minor girl and the murder of his minor brother. A huge number of witnesses were questioned by the prosecution. The trial court subsequently found the appellant guilty under Sections 120-B, 364-A, 376, 302 read with Section 34, and 201 of the Indian Penal Code in a lengthy ruling. The Appellant was sentenced to life in prison under Section 376 of the Indian Penal Code, and to death under Section 302 of the same Code. The Appellant’s convictions under Sections 120-B and 364-A of the Penal Code were overturned by the High Court of Madras, but the penalties under Sections 376 and 302 read with Section 34 were upheld. The death sentence given by the trial court was eventually affirmed by the High Court after examining aggravating and mitigating factors. 

Observations of the Apex Court 

  1. The Supreme Court, in a majority judgement written by Justice Nariman, maintained the appellant’s death sentence. On the issue of sentencing, Justice Sanjeev Khanna dissented and preferred the lower term of life in prison without the possibility of parole. Justice Khanna emphasised in his dissenting opinion that the Apex Court in Machhi Singh v. State of Punjab (1983) required two questions to be answered in order to establish whether a case was the rarest of rare. These questions were whether the crime was unusual enough that life imprisonment was insufficient and if the circumstances of the crime were such that there was no other option than to inflict the death penalty.
  2. The five elements mentioned by the Court in Machhi Singh v. State of Punjab (1983) (manner of commission of murder, the purpose of murder, the anti-social or odious character of the crime, the enormity of the crime, and victim’s personality) are relevant to the first issue, according to Justice Khanna. The second question must also be addressed, and this can be done by referring to mitigating factors. He stressed that the death penalty could only be applied if the possibility of a life sentence was ruled out.
  3. Justice Khanna observed in the circumstances of the case that the Appellant had freely confessed to the offence before a magistrate and that this was the first step back into society and should be viewed as a mitigating element. As a result, he believed that the proper sentence, in this case, would be life in prison without the possibility of parole.

Alternatives to death penalty 

Content under this heading is a continuation of the previous discussions. The two landmark decisions that are discussed hereunder reflect the Apex Court’s willingness to use the death penalty as a form of deterrence rarely. 

Rajesh Kumar v. State through Government of NCT of Delhi (2011)

The case of Rajesh Kumar v. the State through Government of NCT of Delhi (2011), concerned an appeal by a death row inmate who was sentenced for the murder of two minor children. The Supreme Court in this present case had based its judgement on the reason that if the court is persuaded that the prosecution’s account is true, the conviction must follow. The matter of sentencing must be decided based on whether there are any mitigating circumstances that may be argued to alleviate the gravity of the crime and not on the amount or nature of the evidence presented by the prosecution in support of the prosecution case.

Supreme Court’s observations 

  1. The atrocities were carried out with extreme severity and brutality, without provocation, and on purpose. In a criminal trial, the type and intensity of the offence, not the offender, are relevant in determining the proper penalty. If an adequate penalty is not given for a crime committed not only against the individual victim but also against the society to which the perpetrator and victim belong, the Court will be failing in its duty. The penalty for a crime must not be arbitrary; it must correspond to and be commensurate with the cruelty and brutality with which the crime was committed, the enormity of the crime warranting public revulsion, and it must “respond to society’s demand for justice against the guilty.”
  2. The State had failed to prove that the appellant is a continuing threat to society or that he was incapable of reform and rehabilitation in this case. The fact that there was no evidence to prove that the accused was incapable of being reformed or rehabilitated in society was obvious from the High Court’s decision, which was viewed as a neutral situation. In the opinion of the Supreme Court, the High Court made an obvious mistake. Because the State had not shown any proof to the contrary, the fact that the accused could be rehabilitated in society and was capable of being reformed was unquestionably a mitigating element that the High Court had neglected to consider. The death sentence given by the High Court was not upheld by the Apex Court, and the appellant’s death sentence was replaced with a life term.

Rajendra Pralhadrao Wasnik v. the State of Maharashtra (2019)

The Supreme Court was considering a review petition filed by a man who had been condemned to death for the rape and murder of a minor, in the present case of Rajendra Pralhadrao Wasnik v. the State of Maharashtra (2019). 

Observations of the court of law 

  1. ‘The likelihood (not possibility, improbability, or impossibility) that a criminal can be reformed and rehabilitated in society must be carefully and genuinely weighed by the courts before giving the death penalty,’ the Court had concluded after reviewing many earlier Supreme Court rulings while deciding the present case.
  2. It went on to say that in order to carry out this duty, the prosecution must demonstrate to the Court, by evidence, that the prisoner cannot be reformed or rehabilitated. Importantly, the Court decided that the criminal might also testify about his or her efforts to change.
  3. It was also decided that even if the convict’s social reintegration is impossible, the choice of a lengthier sentence is admissible. As a result, the Court mitigated the death penalty to life imprisonment without the possibility of parole till the end of one’s natural life.

The procedure that follows a death warrant

The procedure that follows a death warrant is a complex one and demands proper understanding. The case laws discussed hereunder will guide the reader through the same. 

Shabnam v. the Union of India (2015)

In the present case of Shabnam v. the Union of India (2015) two death row inmates filed a writ petition in the Supreme Court of India, contesting the execution warrant issued by the trial court barely six days after their appeal was denied by the Supreme Court.

Supreme Court’s observations 

  1. When judicial and administrative remedies in a death sentence case are still pending, the Court ruled that issuing an execution warrant is illegal. It was found in this case that the petitioners had to be allowed the limitation period for submitting a review and then a fair time to file a mercy petition.
  2. The Supreme Court also endorsed the Allahabad High Court’s recommendations in the case of Peoples’ Union for Democratic Rights (PUDR) v. the Union of India and Ors. (2015), making them necessary in all cases:
  1. The prisoner must be notified of the warrant that will be issued by the Sessions Court so that she can retain legal representation.
  2. The execution date and hour must be included in the death warrant.
  3. There must be a fair amount of time between the date of the warrant’s order and the execution date so that the convict can seek legal redress and visit her family.
  4. Where required the convict must be provided with legal aid.
  5. The prisoner must be given a copy of the warrant right away.

Yakub Abdul Razak Memon v. the State of Maharashtra (2015)

In the present case of Yakub Abdul Razak Memon v. the State of Maharashtra (2015), without notifying the petitioner, the trial court issued a death warrant against him, with a 90-day execution date. Meanwhile, the petitioner’s curative plea had been dismissed, so he filed another mercy petition after his first had been denied.

Observations by the Supreme Court of India

  1. As the first mercy petition had already been denied and the petitioner had not appealed that denial, the Supreme Court concluded that the pendency of the second mercy plea would have no effect on the death warrant.
  2. Furthermore, it was decided that the fact that the petitioner was not given notice before the issuing of the death warrants did not invalidate it (as per the law in Shabnam (2015)) because the petitioner had exercised his legal rights afterward by filing a curative petition.
  3. The second mercy petition was likewise denied after this ruling was issued, and the petitioner then went back to the Apex Court, asking for more time to appeal the refusal. The Supreme Court declined to postpone the execution warrants once more, citing the fact that the initial mercy petition’s denial had not been contested.

Same day sentencing in death penalty cases

Same day sentencing in death penalty cases leaves room for negligent decision-making by the courts of law leading to defect in the justice delivery system. The Supreme Court of India has time and again intervened in rectifying the same.  

Santa Singh v. the State of Punjab (1976)

In the present case of Santa Singh v. the State of Punjab (1976), the appellant was found guilty of killing his mother and his second spouse. He was convicted by the trial court and was condemned to death on the same day. The Sessions Court found the appellant guilty of violating Section 302 of the Indian Penal Code, 1860 and condemned him to death as well. His lawyer was not present on the day of the hearing. As required by Section 235(2), Cr.P.C., 1973, the trial court did not provide the accused with a chance to be heard in relation to the sentence. In addition, the appellant did not assert his right to be heard. The same was also not taken up by the accused before the High Court. 

Observations by the Supreme Court of India

  1. Under Section 235(1), the court must give a decision condemning or acquitting the accused in the first instance. If the accused is found not guilty, the case is to be closed. If the accused is found guilty, he must be given an opportunity to be heard on the penalty, and the court can only pass a sentence after hearing him. Section 235(2) is a new provision that aligns with current criminology and sentencing practises. Sentencing is a vital step in the administration of criminal justice, and it should not be overlooked.
  2. The terms “hear the accused” in Section 235(2) of the Code of Criminal Procedure, 1973, indicates that the accused had to be given the chance to present numerous factors relevant to the sentencing before the Court and that this opportunity was not limited to merely an oral hearing. It was also noted that failure to comply with Section 235(2) does not constitute an irregularity punishable under Section 465 of the Code of Criminal Procedure, 1973, because it relates to the omission of an important step of the trial.
  3. In his concurring judgement, Justice Fazl Ali observed that an opportunity to provide evidence in relation to a sentence may demand an adjournment, which should normally be for no more than 14 days to prevent delay. The case was finally remanded to the Trial Court to provide the accused a chance to make a statement about the sentencing.

Ajay Pandit v. the State of Maharashtra (2012)

Ajay Pandit @ Jagdish Dayabhai Patel was sentenced to death by the Bombay High Court for double murder in two different events, one for the murder of Nilesh Bhailal Patel and the other for the murder of Jayashree. The appellant, a dentist who was found guilty and sentenced to death on the same day for drugging and murdering two people for money while claiming to be able to assist them, acquired a visa through his contacts at the American Embassy.

Decision by the Supreme Court of India

  1. The Supreme Court affirmed the conviction in the present case of Ajay Pandit v. State of Maharashtra (2012). The death sentence, however, was overturned, and the case was sent to the High Court for consideration of the penalty. 
  2. The Apex Court had viewed that the High Court had made no serious effort to obtain any information from the accused or the prosecution on the existence of any factors that would influence the court to avert the death penalty. 
  3. The Apex Court had further declared that the death penalty is an exception rather than a rule and that it should only be used in the “rarest of rare” instances. It stressed the High Court’s duty and obligation to obtain crucial facts even if the accused has remained completely mute in such cases.

Md. Mannan @ Abdul Mannan v. the State of Bihar (2019)

In the present case of Md. Mannan @ Abdul Mannan v. the State of Bihar (2019), the Supreme Court of India was considering a petition for review in which the petitioner was convicted and sentenced to death for the rape and murder of a minor.

The Apex Court and its observations

  1. The Supreme Court in the present case held that imposing a death sentence on the same day as a conviction does not invalidate the sentence if the convict is given a meaningful and effective hearing on the question of sentence under Section 235(2) of the Code of Criminal Procedure, 1973, with the opportunity to present mitigating evidence. 
  2. The Apex Court further stated that the trial court’s preponement of the hearing under Section 235(2) on short notice, effectively no notice, had denied the petitioner an effective hearing since the hearing under Section 235(2), and the same had been reduced to a mere formality. 
  3. The death penalty was reduced to life in prison without the possibility of parole by the Supreme Court of India.

Death sentencing and its procedure 

The Code of Criminal Procedure, 1973 lays down the procedure that needs to be followed in sentencing death to an individual, which along with the principles of just, fairness and reasonability needs to be followed. The judgments discussed hereunder provide an overview of the same. 

Mukesh and Anr. v. the State for NCT of Delhi and ors. (2017)

In the present case of Mukesh and Anr. v. State for NCT of Delhi and ors. (2017), the appellants were convicted for the rape and murder of a 23-year-old woman.

Supreme Court’s observations

  1. The Supreme Court noted that the lower courts did not follow Section 235 of the Code of Criminal Procedure, 1973, since aggravating and mitigating factors were not weighed for each individual accused in the present case. 
  2. The Court ruled that there are two ways to correct sentencing errors:
  1. Remand the case; and
  2. Require the accused to furnish appropriate facts and advance the argument on the sentencing issue. 

Following the second method, the Court allowed the accused to produce affidavits as well as papers outlining the mitigating circumstances. The accused’s attorneys were given daily visits to the jail to meet with the accused and file the necessary affidavits and paperwork. The final judgement, in this case, was delivered on May 5, 2017, reported as Mukesh and Anr. v. State (NCT of Delhi) (2017). 

In Re-Inhuman Conditions in 1382 Prisons (2019)

In 2013, Retd. Justice R.C. Lahoti’s letter to the then-Chief Justice of India was accepted as a writ petition, requesting that the inhumane circumstances in India’s 1382 prisons be addressed. Between 2016 and 2018, a succession of directives was issued to correct the situation.

Supreme Court’s ruling

  1. The Supreme Court in light of the present case of In Re-Inhuman Conditions in 1382 Prisons (2019) ruled that inmates on death row are entitled to meetings and interviews with their attorneys, close family members, and even mental health specialists within the terms of the current decree. 
  2. The view expressed in Francis Coralie Mullin v. State (UT of Delhi) (1981) was held to be equally applicable to death row inmates for meeting mental health professionals for a reasonable period of time and with a reasonable frequency so that their rights could be adequately protected at all stages.

Public opinion concerning death sentencing 

The judgments discussed hereunder reflect the relation between the role of public opinion and death sentencing.

Dhananjoy Chatterjee alias Dhana v. State of West Bengal (1994)

In the present case of Dhananjoy Chatterjee alias Dhana v. State of West Bengal (1994), for the rape and murder of an 18-year-old girl, the appellant was found guilty and condemned to death which was later upheld by the Calcutta High Court.

Supreme Court’s judgement

  1. While upholding the death penalty, the Supreme Court stated that the punishment must be proportionate to the offence in order for the courts to reflect popular disapproval of the act. 
  2. It was determined that while deciding on a suitable punishment, courts must consider not only the criminal’s rights but also the rights of the victim and society as a whole.

M.A. Antony v. State of Kerala (2010)

In the present case of M.A. Antony v. State of Kerala (2010), the petitioner was found guilty of murdering six people and was sentenced to death. The Kerala High Court upheld the conviction and death sentence, and the Supreme Court upheld it afterward. The Supreme Court was hearing a petition for reconsideration of its own decision sustaining the death penalty.

Apex Court’s decision 

  1. The Supreme Court of India modified the death sentence to life in prison, noting that the trial court erred by considering the crime’s impact on society’s collective conscience. 
  2. It was decided that while punishing a defendant convicted of a heinous act, judges should avoid referring to public opinion and what they regard to be the collective conscience of society. 
  3. The Supreme Court agreed with the decisions in Bachan Singh v. State of Punjab (1980) and Santhosh Kumar Satishbushan Bariyar v. State of Maharashtra (2009) that judges should not become public figures and should maintain judicial restraint.

Invoking appellate and review jurisdiction by the Supreme Court

The Supreme Court was considering a petition for review in the case of Babasaheb Maruti Kamble v. the State Of Maharashtra (2018), in which the petitioner had been condemned to death for rape and murder. The Supreme Court had dismissed the appeals in limine in 2015. (dismissed at the threshold without reasons). 

The Court rescinded the in limine dismissal of the Special Leave Petition (SLP) and reinstated its original number. Following that, the Court remitted the death sentence to at least twenty-five years in jail. The Court also looked at a number of decisions to support the idea that, in death penalty cases, an independent assessment of the evidence must be made, unconstrained by the trial and High Court conclusions. The Court concluded that an SLP filed in a case involving a death sentence should not be dismissed without cause, at least in terms of the death penalty.

Associating mental health with death penalty

The aspect of mental health has been in existence for a long but has received attention a few years ago. The judiciary has successfully related the same with the death penalty. 

Shatrughan Chauhan and Another v. Union of India and Others (2014)

The Supreme Court heard a group of writ petitions filed by or on behalf of 15 death row inmates contesting the Governor and President’s rejection of their mercy applications, in the present case of Shatrughan Chauhan and Another v. Union of India and Others (2014). Commutation of a death sentence to life imprisonment was requested in two of these petitions on the grounds of mental illness.

Observations by Supreme Court of India

  1. Insanity/mental illness/schizophrenia is a critical supervening condition that a court should examine while evaluating whether a death sentence might be reduced to life imprisonment under the facts and circumstances of a particular case. 
  2. The Supreme Court further stated that holding a person in suspense for several years while the President considers his mercy appeal imposes anguish, as well as harmful physical and psychological stress on the convict who is serving a death sentence. 
  3. The Apex Court observed that it could forgive the torturous delay imposed to the convict only on the basis of the seriousness of the offence when reviewing the President’s denial of the mercy plea under Article 32 read with Article 21 of the Constitution.

Accused X v. State of Maharashtra (2019)

In the present case of Accused X v. State of Maharashtra (2019), the Supreme Court was considering a petition for review in which the petitioner was found guilty and sentenced to death for the rape and murder of two underage girls. One of the issues before the Supreme Court was whether the accused’s post-conviction mental illness might be cited as a mitigating factor in reducing his death sentence to life in prison.

Observations of Supreme Court of India

  1. In this case, the Supreme Court acknowledged post-conviction mental illness as a mitigating reason for the death penalty to be commuted to life imprisonment. 
  2. The Supreme Court, observing that there appear to be no standard disorders/disabilities for judging “serious mental disease,” established a “test of severity” as a guiding criterion for identifying mental illnesses that qualify for an exemption. These diseases, according to the court, include schizophrenia, other significant psychotic disorders, and dissociative disorders associated with schizophrenia.

Conclusion

In this article, the subject matter of the death penalty has been discussed in detail keeping in mind the various aspects associated with it. Each case has its own traits to be a landmark in nature as they have contributed significantly in framing the death penalty jurisprudence in India. 

References

  1. https://www.legalserviceindia.com/legal/article-5346-constitutional-validity-of-capital-punishment.html.
  2. https://theprint.in/theprint-essential/rarest-of-rare-history-of-death-penalty-in-india-and-crimes-that-call-for-hanging/383658/.
  3. https://www.indianbarassociation.org/constitutionality-of-death-penalty/.

https://www.ijlsi.com/wp-content/uploads/2019/07/Death-Penalty-in-India-An-Overall-View.pdf.


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All you need to know about registrar and transfer agent

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Client’s Work
Image source - https://bit.ly/2Bhveiz

This article has been written by Himanshu Mishra, pursuing a Diploma in Advanced Contract Drafting, Negotiation, and Dispute Resolution. This article has been edited by Tanmaya Sharma (Associate, Lawsikho), Ruchika Mohapatra (Associate, Lawsikho), and Indrasish Majumder (Intern, Lawsikho).

This article has been published by Shoronya Banerjee.

Introduction

In the economic world, shares and stock exchange(s) are extremely important. Earlier, investors used to get a physical shares certificate whenever they bought securities. Transfer agents now issue shares in the book-entry form, which is an electronic means of registering ownership of securities. With increased investment in mutual fund schemes, publicly listed companies, and other publicly accessible high-yield return products, investors conduct transactions including buying/selling, changing bank mandates, swapping units, and so on. Registrars and transfer agents are hired by mutual fund institutions to keep a proper record of these transactions.

3I Infotech, CAMS (computer age management services), and SAG Infotech are among India’s most well-known registrar and transfer agents. These are third-party companies that specialise in keeping accurate records of client/investor information. The role of the registrar and transfer agent, as well as the services they give to mutual fund houses, will be discussed further in this article.

Who are registrar and transfer agents (R&TA)?

  • R&TAs or registrar and transfer agents are the intermediaries registered with SEBI.
  • Registrar and transfer agents act as a mediator between a mutual fund company and investors.
  • Mutual fund houses hire RTAs due to their expertise in handling information related to investors’ transactions and changes in personal information.
  • Their expertise in the maintenance of data on a professional basis contributes to cost-saving and the time involved in maintaining such data.
  • The transfer agent is in charge of mutual fund share purchases and redemptions, while the registrar is in charge of keeping records
  • There are 79 RTAs recognised by SEBI.

Role of registrar and transfer agent in mutual fund houses

Their primary function is to serve as a back-end solution for mutual fund houses, streamlining the data management process. RTAs have a large network of offices in Tier 2 and Tier 3 cities, making them more accessible to low- and middle-income investors and assisting mutual funds in attracting more business from these areas. Even if investors have invested with various AMCs, they can use them as a single-window solution.

Functions of RTAs

The SEBI (Registrars to an Issue and Share Transfer Agents) Regulations, 1993 defines registrars or transfer agents as institutions that register and keep full records of investor transactions for mutual fund firms’ convenience.

Registrar to an issue under Regulation 2(f) of SEBI (Registrars to an Issue and Share Transfer Agents) Regulations, 1993

  • To collect applications from investors in respect of an issue.
  • keeping a proper record of application and monies received from investors or paid to the seller of securities.
  • Assisting body corporate or group of persons in determining the basis of allotment in consultation with stock exchange.
  • Finalising list of persons entitled to allotment.
  • Processing and dispatching allotment letters, refund orders or certificates, and other related documents in respect of an issue.

Share transfer agent under Regulation 2(g) of SEBI  (Registrars to an Issue and Share Transfer Agents) Regulations, 1993

  • Transfer agents on behalf of any body-corporate deal in matters connected with the transfer and redemption of securities issued by such body corporate.
  • Cancel the name and certificate of the shareholder who had sold the shares of securities, and replace it with the new shareholder.
  • Inform investors of new fund offers.
  • Transmission, consolidation, sub-division of securities.
  • Transfer of securities and record-keeping for investors.

Why do mutual fund houses appoint R&TAs?

Every day mutual fund investors do several transactions, like buying, selling, or switching units. Besides these financial transactions, they also do non-financial transactions like a change in bank details, change in contact details, or address. Each such request needs to be recorded and the fund house is supposed to maintain records of each such transaction.

Since most MFs may not want to invest in these processes nor do they have the expertise to handle these huge transactions on a professional basis, they outsource this work. The registrar and transfer agents (R&T agents) help them perform this job.

Benefits of a registrar and transfer agent for mutual fund house

Shareholders have a right to receive truthful information about their investments. Mutual fund houses execute hundreds of transactions per day, and managing and maintaining a reliable record of these transactions can be quite time-consuming for them due to their lack of data handling competence. While some fund houses opt to function as their own transfer agents, others engage or outsource registrar and transfer agents to handle the record-keeping service since it is more convenient for them and relieves them of the burden. Other advantages of hiring a registrar and transfer agent include the following:

  • Better accessibility at a lower cost,
  • Helps in maintaining records of investors’ transactions like buying/selling, change in personal information, bank mandate, etc.,
  • Helped mutual fund tide over the skilled manpower,
  • Helps in generating business from tier-2 and tier-3 cities,
  • Provide single-window solution,
  • Helps in saving time, 
  • Timely updating investors about their investment, 
  • Help investors who are not investment savvy with filling up details regarding their investment like applications, forms, etc.,
  • Investors can invest in different schemes of different mutual fund companies with RTAs without having to deal with each fund house separately,
  • Transfer agents furnish shareholders with annual reports and the company’s audited financial statement.

The mutual fund houses pay the registrar and transfer agent for their services. This cost is ultimately passed on to the investor as part of the annual fee imposed by mutual fund companies. Equity funds have a fee of roughly ten basis points (bps). One-tenth of a percentage point is equal to one bps. It’s roughly 5-7 basis points for debt funds and 3-4 basis points for liquid funds.

Services provided by RTAs

The major function of a registrar and transfer agent is to assist the mutual fund company or any other financial institution that hires them with various financial and non-financial transactions of investors, including keeping and maintaining correct records of their data.

Other services provided by RTAs

  • Providing information about new fund offers and schemes to investors,
  • Cancellation or stoppage request of an ongoing SIP (systematic investment plan) or SWP (systematic withdrawal plan) or STP (systematic transfer plan),
  • Change in investor’s bank account or address,
  • Consolidation of all investor folios under a single folio, an investor can study these statements to review their mutual fund portfolio,
  • Nomination form,
  • Updating records of a minor to a major for an individual,
  • Redemption,
  • CKYC (Central know your customer),
  • Dematerialization of shares through depositories (CDSL or NSDL), 
  • Regulatory reporting, 
  • Share certificate transfer, 
  • Investor record keeping & transfer of securities,
  • Payout of dividend/interest.
  • Common shareholders have the right to vote on major corporate decisions like mergers and acquisitions, etc. Their votes are facilitated through transfer agents who send e-voting information to shareholders to cast their vote.

Capital adequacy requirement for registration

Condition precedent, under Regulation 7 of the SEBI (Registrar to an issue and share transfer agent) Regulation 1993, required for registration. The Securities and Exchange Board of India is the regulatory body for all the securities market-related institutions. Before filling up the application form the applicant must have the capital adequacy of Rs 50 lakhs for Category 1 and 25 lakhs for Category 2. After meeting this criterion a Registrar and transfer agents can make their applications to SEBI in either of the two categories using Form A accompanied by the depositing of non-refundable fees of Rs. 6 lakhs for Category 1 and Rs. 2 lakhs for Category 2.

Category I: to carry on the activities as a registrar to an issue and share transfer agent.

Category II: to carry on the activity either as a registrar to an issue or as a

share transfer agent.

Regulation 7 of SEBI (LODR) Regulations provide that certain provisions of share transfer agents must be followed

  1. Appoint a share transfer agent or manage the share transfer facility in-house
  • If the listed entity has less than or equal to one lakh shareholders: Entity shall appoint a Share Transfer agent or manage the facility in-house
  • If the listed entity has more than one lakh subscribers: Entity shall either register with the Board as category II share transfer agent or appoint a Registrar to an issue and Transfer agent registered with the Board
  1. Within 30 days of the end of the financial year, the listed entity must submit a compliance certificate to the exchange, duly signed by both the listed entity’s compliance officer and the authorised representative of the share transfer agent, if applicable.
  1. All activities related to the share transfer facility must be kept in-house or by a registrar to an issuer and share transfer agent registered with the Board.
  1. In case of any change or appointment of the new share transfer agent, the listed entity must enter into a tripartite agreement with the existing share transfer agent, the new share transfer agent, and the listed entity in the event of a change or appointment of a new share transfer agent. The agreement referred to above must be put into between the listed entity and the new share transfer agent if the present share transfer facility is managed in-house.

5. Further, the listed entity shall intimate such appointment to the stock  exchange(s) within seven days of entering into the agreement

6. Further, the above-mentioned agreement will be included in the board of directors’ next meeting. Except for units issued by mutual funds that are listed on a recognised stock market, the requirements of this regulation do not apply.

SEBI in the matter of Sharepro services said that;

“These institutions have a sacrosanct duty to preserve that trust by upholding institutional integrity, fairness, and professionalism in the conduct of their business at all times and costs as these values lie at the core of their functioning and are beyond compromise.”

Conclusion

Mutual fund investing is becoming more popular among young investors, and as an investor, it is critical to be aware of local registrars and transfer agents because they can be a great source of investment information. RTAs assist in the completion of forms, the making of investments, and the updating of personal information. RTAs will also inform you of schemes or funds that are appropriate for your income and goals.

References 

1. https://groww.in/p/registrar-and-transfer-agents

2. Regulation 7 SEBI (LODR) Regulations, 2015

3. https://www.sebi.gov.in/order-in-the-matter-of-sharepro-services


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Mohamed Obedulla Chinoy v. Rasubai Chinoy : case study

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This article is written by Dnyaneshwari Patil, from RTMNU Babasaheb Ambedkar College of Law, Nagpur. In this article, she analyses the case of Mohamed Obedulla Chinoy v. Rasubai Chinoy. It took over three decades for the judgement to be pronounced in this matter. 

Introduction

The primary aim of the judicial system is to make the adjudication on the matter simpler, faster, uncomplicated, and inexpensive for the common person. It has been rightly said that justice delayed is justice denied. In a recent event, an utmost disappointment is expressed regarding a judgement passed by the Bombay High Court in the case titled Mohamed Obedulla Chinoy & Ors. vs Rasubai Suleman Chinoy (2021), which was pending in the High Court for over thirty-one years. As expressed by the Bombay High Court, the case indeed involved a question of law; however, the answer to it was neither complex nor new. Ironically so, the answer to the question was older than the petition and has been in existence since 1905.

Facts of the case

In this case, one Rasubai Suleman Chinoy formed a Will in Urdu. She belonged to a religious denomination that is Sunni Hanafi Mahomedan. The Will was made in Mumbai on 20th December 1980. Rasubai died on 10th October 1989, and there were no executors and witnesses under the will. Here, Rasubai Chinoy received all the inheritance from her aunt and thus desired through her will to give back to the charitable trust named after her aunt. Based on an objection by the Registry, the matter came forward before the Bombay High Court. The Registry expressed their concerns as the Will was without any attestation by two witnesses and was not in conformity with Section 63 of the Indian Succession Act, 1925. Four of her five sons approach the Bombay High Court to ensure that the Will of their mother gets fulfilled, and additionally, they have no claim in the said Will.

Issues involved in the case

  1. Whether Part VI of the Indian Succession Act 1925, in fact, applies to a person of this religious denomination, i.e. a Sunni Hanaf Mahomedan? 
  2. Whether under the law governing Sunni Hanafi Mahomedans, is there any requirement of the attestation of a Will at all?

Summary of the arguments

It was observed that Section 63 of the Indian Succession Act, 1925, requires attestation of the witnesses for the unprivileged Wills. However, this Section 63, falling under Part VI of the Indian Succession Act 1925, covers those people falling under Section 57 of the said Act, 1925. According to Section 57, it makes it abundantly clear that the provisions of this part under Schedule III apply to Hindus, Buddhists, Jaina, and Sikhs. Thus, Section 63 applies to Hindus, Buddhists, Jaina and Sikhs and would be inapplicable to the Will made by Mohammedans. Further, according to Section 213 of the Indian Succession Act 1925, sub-clause (i) mentions that the right of an executor and legatee could be established when the court of competent jurisdiction grants probate or a letter of administration with will annexed. However, sub-clause (ii) clearly mentions that the above requirement is not applicable in the case of wills made by Mohammedans. 

If we briefly summarise it, we can observe that Section 63 of the Indian Succession Act requires attestation of the will by at least two witnesses. However, the people belonging to the religious denomination of the Mohammedan sect don’t come under the ambit of the same Section. Therefore, Section 63 would not be applicable to the Will made by Mohammedans. Further, Section 213 of Indian Succession Act, 1925 mentions that the will made by Mohammedans doesn’t mandatorily require probate. 

The question arose regarding the personal laws governing persons belonging to the religious denomination of Sunni Hanafi Mahomedan. In our case, the testator, including the parties, involved belongs to the Cutchi Memon and therefore are governed by the Cutchi Memons Act, 1938. According to the said Act of 1938, Cutchi Memons are governed by Mohamedan’s laws when the issue pertains to succession. Mulla’s commentary on the principles of Mahomedan law, 20th Edition, divides Mahomedans into two principal sects, the Sunnis and Shias. The Cutchi Memon belongs to the Sunni sect and similarly comes under the Hanafi School.

Further, the “Vasiyat,” i.e. the will, can be made verbally or in writing. It does not demand any particular form of will. Therefore, there is no such compulsion that the will should be made only in writing. The vital ingredient to look at is the intention of the testator. 

Judgement 

Justice Gautam Patel relied on the 1905 judgement of Justice Badruddin Tyebji in the case of Aba Satar Haji Aboobuker. In this case, a similar question arose i.e., whether under Mahomedan law attestation was necessary for a Will. In this, the testator also belongs to a Cutchi Memon religious denomination and the problem regarding the attestation of the Will came forward before the Registry. The Registry had the same doubts regarding the unattested will and whether the same can be granted probate. At that time, the religious denomination of Cutchi Memon was governed by Hindu personal law, which, after the passing of the Cutchi Memons Act 1938, is now governed by the Mahomedan personal law. The single-judge Bench, in the above-referred case, Mr. Justice Tyabji held that, “To my mind, there is nothing in the Mahomedan law which requires attestation of Wills. However, I have looked into the law books to satisfy myself, and I am confirmed in my original idea that the Mahomedan law does not require any attestation in regard to written wills. The document, which is the Will of a Mahomedan gentleman, requires to be proved by our Anglo-Indian Law of Evidence in the same way as any other document; but it does not require to be attested, so far as Mahomedan law is concerned.” 

Further, the question was regarding compulsory attestation of the will by the Mahomedans. It was observed that the Succession Act does not apply to Mahomedans. The Probate and Administration Act, 1977 does not require the Mahomedans to attest their Wills. Conclusively it is not mandatory for Mahomedans to attest their Wills. 

Justice Patel also relied on Sarabai Amibai vs Mahomed Cassum Hajiman Mahomed (1918) and Niaz Deen & Ors vs Bir Deen & Anra (2015), which reaffirmed the position of law, which has not changed since Aba Satar. In conclusion, it was found that Rasubai Chinoy was a Cutchi Menon, governed by the Mohammed Law, and therefore her Will did not require attestation. Justice Patel recorded the Testamentary Department’s head’s statement which confirmed that the Will shall be probated by 19th March 2021. 

Cases where the court remarked on the delayed case proceedings

In Sridhar Swain vs State of Odisha (2021), the Orissa High Court allowed a 31-year-old Criminal appeal, in which Appellant 2 was accused of abetting Appellant 1 in committing the offence of corruption regarding the execution of the repair works. The accused moved to the High court against the order passed by a special judge. In this judgement, Justice Sahoo remarked that the case has been proceeding at a “snail pace” because the FIR was registered on 5th January 1989, whereas the final order was passed on 4th January 2021. Therefore the High court acquitted the Appellant accused of corruption after 31 years of the proceedings.

Further, Justice Sahoo said that the Court’s valuable time must be saved, and action should be taken for the fast disposal of older criminal cases. Similarly, this could be possible only through preparation, commitment, discipline, and active cooperation from the members of the bar. Otherwise, the Court stated, “all the planning, mechanism and infrastructure development would fail to yield the desired result in docket management.”

In a similar court, Justice Sahoo acquitted the appellant from the charges of attempt to rape which was filed 30 years ago. The High Court after finding that the victim’s version in the court was at variance from what was recorded by the police during the investigation as evidence. Therefore, the victim was not held to be a truthful witness. (Satrughana Nag vs the State of Odisha (2020). 

Conclusion 

To provide justice through fair and just trial to all the people of India, the Indian judiciary system plays an important and dynamic role. Speedy and fair trials are essential for the citizens though not explicitly mentioned, come under the ambit of Article 21 of the Indian Constitution.

However, by referring to the above-mentioned case we can notice that the Indian judiciary system suffers from several structural problems, which consequently hampers its functioning. This includes delays and the backlog of several cases. As per the statistics in 2018 about 30 million cases were pending in numerous Indian courts. In the said case, while passing the judgement on an uncontested petition which was pending in the court for 31 years, Justice Gautam Patel remarked that “it is truly inexplicable, apart from being a tragic and terrible commentary on our justice delivery system, is that, though uncontested, the matter has been pending in this Court for the last thirty-one years.” Further while granting probate he also remarked that “at this stage perhaps I should enter only one solitary comment: nothing changes even after 150 years.”

Thus, the delays in court proceedings are endemic. Therefore, the judiciary should focus on the pendency of the cases as it is essential for ensuring the public’s confidence in the judicial system. Lawyers and academicians need to explore and innovate models to reduce pendency in our judicial system so that the efficacy and effectiveness of the judicial system can be retained. 

References


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All you need to know about an Annual Maintenance Contract

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Ex-post-facto law

This article has been written by Oishika Banerji of Amity Law School, Kolkata. This article provides a detailed analysis of an Annual Maintenance Contract.

This article has been published by Sneha Mahawar.

Introduction 

An Annual Maintenance Contract (AMC) is an agreement between your organization and a service provider for the repair and upkeep of property owned by your organization. Any property held by your firm may be serviced, from the massive production machinery that creates your products to the PCs and printers in your offices. Service to the structure, the land, the parking lots, and other areas can also be included. In order to assure product and process quality, a firm that cares about improving day-to-day operations should have an AMC. The present article provides a detailed analysis of annual maintenance contracts and everything associated with it. 

Advantages of an Annual Maintenance Contract 

AMCs are widespread in a variety of industries including healthcare, information technology, and retail. An AMC agreement for property maintenance is a broad notion that can be used in a variety of situations. Service support is often included in AMCs, however, you may add a  Comprehensive Maintenance Contract (CMC) to encompass IT support and replacement as well. The long-term repeatability of any machine determines the quality of its output. The key to a high level of performance of any machinery is proper machine maintenance. To guarantee that a machine is operating properly, you require the greatest employees with the most skill and experience.

As conditions fluctuate from company to company, each annual maintenance contract will be slightly different. It may, for example, cover the upkeep of a specific piece of equipment used by the company. AMCs usually cover such things. When it comes to how we maintain our equipment, we undertake routine maintenance as needed, similarly, servers and networks require routine maintenance rather than being set and forgotten.

To terminate an AMC, a corporation will send the service provider a maintenance contract termination letter. The parties’ relationship will come to an end with the signing of this contract. Before writing this letter, your organization should inform the provider of how they are failing to fulfill your standards and/or the grounds for terminating the AMC as a professional courtesy. 

Annual Maintenance Contract vis a vis Comprehensive Service Contract 

  1. While an Annual Maintenance Contract is a good approach to cover basic product service, a Comprehensive Maintenance Contract (CMC) covers any additional spare parts, labor, or transportation charges that arise while technicians are maintaining those items. A non-inclusive agreement will only cover the services themselves, all extra costs that may arise throughout the process will be the responsibility of the company.
  2. Comprehensive contracts are frequently more expensive than AMCs because of the range of coverage they provide. 
  3. CMCs are normally valid for a year after signing, although both parties may agree to extend the period to three to five years on rare occasions. An AMC can run anywhere from one to three years, depending on the parties’ agreement. If you wish to keep using the service, you can extend the term.
  4. Many firms will prefer CMCs over AMCs to gain the most coverage, even though AMCs demand less commitment from the service provider.

Working of prices in an Annual Maintenance Contract : an insight

Annual and Comprehensive Maintenance Contracts can be structured in a variety of ways by corporations and service providers. They’re usually worked out depending on what’s best for both the company and the service provider. A hybrid model or a single parameter can be used to shape pricing. For example, you may charge based on your hourly rate, or you could charge based on your hourly rate plus a shipping or replacement part cost.

Time-based

Hourly rates or rates for certain time units are established in contracts (weeks, months, days, etc.). Each hour of work is assigned a predetermined price, which is computed annually for the overall number of hours worked. This price model is typically employed in instances when labour hours are the most valuable maintenance resource.

Based on the life of equipment

A prorated fee depending on the estimated lifetime of the device or equipment covered might be included in contracts. For example, if something is towards the end of its useful life, the AMC might be higher.

Per device

Contracts provide a cost per line item for each device or piece of equipment covered by the contract. When it comes to finding or fixing components, this sort of pricing is quite important.

Additional services

Additional conditions based on the services you give to your consumers might be included in contracts. Several ancillary services, such as the shipment of replacement components, may be included by the contract. Instead of being paid individually, the company might pay more to have transportation and replacement components included in the contract.

Replacement v. repair

Contracts might change depending on the sort of service provided. An AMC, for example, may have various criteria for replacing and repairing defective equipment or components, with replacement being more expensive traditionally.

Pros of an Annual Maintenance Contract 

Saves money and simplifies budgeting

When you know who you’ll be paying for your maintenance requirements and how much you’ll be spending, it makes budgeting for your company a bit easier, which is something that shouldn’t be overlooked. It will not only make financial administration easier, but it will also reduce the amount of unpredictability in your organization. Furthermore, many businesses discover that having a dependable AMC in place allows them to save money. You’ll know what you’ll be spending for the coming year, and those rates won’t climb abruptly, costing your company a lot of expenditure.

Maximizes the performance of your hardware

If you rely on your gear and facilities, you’ll want to make sure you’re getting the most out of them every day. Having your network properly maintained regularly is one way to guarantee you get the most out of it. They’ll be more efficient and consistent in their performance this way. Even if you aren’t aware of inefficiency issues, it doesn’t imply they aren’t occurring or having an impact on your organization. This won’t be a problem if you maintain it properly and on a regular basis, because it will be taken care of by someone who understands what they’re doing.

Concentrate on other things and delegate maintenance to professionals 

It’s critical that you concentrate on the most crucial components of operating your company, that is, the things that only you, as the owner, can perform. It’s far more productive for you to focus on these things than worrying about keeping your technology and equipment up to date all of the time. It’s also less expensive than paying someone to take care of such stuff for you on a full-time basis at work. That’s why many people believe AMCs to be the ideal choice for keeping their equipment, tools, and technology in good working order.

Professional technicians at your service 

It’s usually a good idea to have a pool of qualified IT workers at hand when you need them. It may be a huge comfort to know that you can call them and trust them to execute the correct type of work for you. It’s not difficult to discover an AMC that has a large number of qualified professionals on staff. Make the most of this opportunity since recruiting such outstanding people to work for your company full-time would cost you a lot more money.

When you need it, you’ll get it 

You never know when an emergency may strike, and you must be prepared for it. Nobody likes to be caught off guard and remain unsure of what needs to be done when their equipment or technology breaks down, and having an AMC in place is one way to avoid this. You’ll be able to call on the maintenance workers who are assisting you, and they’ll be able to take care of any issues that arise.

Cons of an Annual Maintenance Contract

Some say that paying for continuous maintenance is a waste of money because you’ll be paying for upkeep when no real work is necessary most of the time. But there’s no way of knowing whether there’s a problem that has to be fixed until those maintenance checks are completed. You must determine whether you want the peace of mind that comes with knowing you can rely on a high-quality maintenance service or face otherwise. That comfort is exactly what some individuals want and need, and it is not a waste of money for them. In the end, you’ll have to pick which method is best for you.

The format of an Annual Maintenance Contract

The typical annual maintenance contract format includes: 

  1. The names and addresses of the parties engaged, which are generally a business and the service provider.
  2. The contract price.
  3. The terms and conditions of the Annual Maintenance Contract
  4. Penalties for breaching or terminating the contract.
  5. Expectations for how often your technicians will be required to service goods.
  6. Definition of whether the deal is a Comprehensive Maintenance Contract (CMC) or not.
  7. A list of the equipment that will be serviced.
  8. A timeline for how long the service will continue and how long it will generally take.
  9. A place for both parties’ signatures and the date.

A draft format of an Annual Maintenance Contract can be available here.

Conclusion 

No matter what type of maintenance we’re talking about, it’s essential. That is why AMCs are so popular and vital. When a company has this in place, it can be assured that its maintenance requirements will be met throughout the year. That may apply to everything from IT gear maintenance to building upkeep and everything in between.

References 

  1. https://freshdesk.com/fsm/annual-maintenance-contract-blog/#:~:text=An%20annual%20maintenance%20contract%20is,company%20purchases%20from%20the%20provider.&text=For%20example%2C%20an%20office%20building,that%20built%20their%20HVAC%20system
  2. https://uiic.co.in/sites/default/files/uploads/tender/AMC%20agreement%20format%202018-19.pdf
  3. https://www.advancedtech.com/blog/benefits-of-annual-maintenance-contracts-for-your-plant/

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Sanjoy Narayan Editor in Chief Hindustan v. Hon. Allahabad High Court (2011) : case study

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juristocracy

This article has been written by Anindita Deb, a student from Symbiosis Law School, NOIDA. The objective of this article is to analyse one of the landmark cases of freedom of speech and expression under the Indian Constitution. 

Introduction

People must have the right to express their feelings and make their opinions known to the general public in order to preserve the democratic way of life. The press, as a potent medium of mass information, should be allowed to play a part in the development of a strong and sustainable society. Denying citizens journalistic freedom would inevitably weaken their ability to influence public opinion and would go against the spirit of democracy. This case deals with the exercise of reasonable restrictions on the freedom of speech and expression of the press. 

The freedom of the press is a part of the fundamental right of freedom of speech and expression enshrined in Article 19(1)(a) of the Indian Constitution, as was declared in the case of Romesh Thapar v. the State of Madras in the year 1950. However, the right to freedom of speech is subject to some reasonable restrictions contained in Article 19(2) which states that the right to freedom of speech and expression may be limited in the interest of the sovereignty and integrity of India, security of the state, public order, decency and morality and also in the light of certain provisions under the Contempt of Courts Act, 1971 and defamation.

The case of Sanjoy Narayan, Editor in Chief Hindustan v. Hon. Allahabad High Court is used to date as a landmark judgement by lawyers to put forward their arguments in cases involving the Constitutional right of freedom of speech and expression. In this case, the Supreme Court acknowledged the importance of balancing the right to free speech and press with the right to privacy. The lawsuit arose after a newspaper report regarding the then-Chief Justice of the Allahabad High Court was determined to be factually inaccurate. Given below is the case analysis for the same. 

Facts of the case

In September 2010, the Appellants, the Hindustan Times, issued a newspaper report on 20th September 2010, about the then-Chief Justice of the Allahabad High Court. The report was incorrect and based on prejudiced charges and supposition, according to the Allahabad High Court, and was sufficiently defamatory in nature to impair the Chief Justice’s reputation. As a result, the Chief Justice initiated a contempt proceeding against the Appellants for tarnishing his and the institution’s reputations. Following that, the Appellants issued an apology for the publication of the disputed piece. The Allahabad High Court dismissed the application, prompting the current appeal.

Issue

The issue at hand, in this case, was whether the Appellants’ freedom of the press enshrined as a part of freedom of speech and expression under Article 19 of the Constitution can be subject to reasonable restrictions.

Judgment

While the media, as the “fourth pillar of democracy,” was responsible for moulding public opinion, upholding state accountability, and ensuring individual participation in governance, the Court noted that it also had a considerable responsibility in honestly carrying out that role. Under Article 19(1)(a) of the Constitution, the right to free expression was limited by the state and public interest, as well as contempt of court and defamation.

The Court went on to say that the sole reason the Appellants’ apology to the Chief Justice and the Allahabad High Court was rejected was that it wasn’t unqualified. The Court decided that it was reasonable to accept the Appellants’ unqualified apology after they filed an affidavit later, and consequently ordered the contempt proceedings against them to be dismissed on the condition that the apology is published at some prominent place of the Lucknow edition of the Hindustan Times newspaper. 

Observations of the Court

While deciding the case, the following observations were put forth by the Apex Court in the matter:

  • The media, whether electronic or print, is commonly referred to as the fourth pillar of democracy. The media, in all of its forms, whether electronic or print, has the onerous task of keeping the public informed and engaged.
  • The media has a responsibility to ensure that they do not provide the public with information that is factually incorrect, biased, or simply unsubstantiated because of the enormous volume of data they handle.
  • The media’s power must be properly regulated and balanced against an individual’s fundamental right to privacy. Any inaccurate or prejudiced information presented has the potential to harm the otherwise clean and decent reputation of the person or institution being scrutinized.
  • A newspaper piece, which appeared to be based on assumptions and conjectures rather than facts and figures, was used to smear the image of then-Chief Justice of the Allahabad High Court. The dignity of the courts, as well as the public’s trust in government, must not be compromised by biased and unverified reportage.

Analysis

The Court noted in its decision that press and media freedom needed to be effectively regulated in order to prevent invasions of personal privacy and reputational injury. It went on to say that, while the right to information and freedom of the press are basic democratic values, they can be curtailed for a variety of reasons, including those listed in Article 19(2) and the right to privacy. The Court thus connected the right to reputation with that of privacy. 

In allowing the apology and dismissing the appeal, the Court has also tried to convey that the judiciary must be generous in accepting an apology submitted in the form of a duly sworn affidavit expressing regret for the publication. This shows that they are aware of their error and wrong. The Court mentioned that it has also stated time and time again that it is not hypersensitive in matters involving the Contempt of Courts Act, and that it has always shown magnanimity in accepting the apology.

Conclusion

Freedom of the press has been established as an integral part of the right to freedom of speech and expression provided under Article 19. The press enjoys the same freedom and regulation of speech as any ordinary citizen and is subject to reasonable restrictions under Article 19(2) of the Constitution. The legal system of India has witnessed various landmark judgments that have granted the freedom of speech to the press in order to maintain transparency in the system and to keep the citizens informed which is essential for the functioning of a vibrant democracy. However, the Apex Court has also imposed restrictions on this right so there is no exploitation of this freedom by the press. This system of check and balance is important to ensure that the media does not propagate unverified and biased news to the population of the country. 

References


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Re : Destruction of Public & Private Properties v. State of A.P. and Ors. : case study

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This article is written by Adhila Muhammed Arif, a student of Government Law College, Thiruvananthapuram. This article seeks to analyse the recommendations of the K.T. Thomas committee and the F.S. Nariman committee and the guidelines issued in the case of Re: Destruction of Public & Private Properties vs. State of A.P. and Ors. (2009), and its aftermath. 

This article has been published by Sneha Mahawar.

Case name: Re: Destruction of Public & Private Properties vs. State of A.P. and Ors.

Date: 16 April 2009

Citation: WRIT PETITION (Crl.) NO. 77 OF 2007

Court: Supreme Court 

Bench: Arijit Pasayat, Lokeshwar Singh Panta, P. Sathasivam

Introduction

India has always had a tense political climate, leading to several instances of arson, rioting, and vandalism during protests and hartals in different parts of the country. With such instances, it is common to witness the destruction of properties, particularly public properties. It is necessary for us to reevaluate what our law says about such activities. Section 425 of the Indian Penal Code, 1860 recognizes the damage caused to anyone’s property as ‘mischief’. It is punishable under Section 426, which prescribes imprisonment for a period of three months, a fine or both. There is also special legislation called the Prevention of Damage to Public Property Act, 1984. Under Section 3 of the Act, whoever causes any harm or mischief to public property shall be punished with imprisonment for a term that may extend up to five years and with a fine. However, there have been concerns raised over the effectiveness of this legislation in dealing with public property destruction, leading the Supreme Court of India to take up suo moto proceedings. 

Background of the case 

The Supreme Court, taking various instances of large-scale destruction of public and private properties during protests and agitations into consideration, initiated suo motu proceedings on the 5th of June, 2007. The Court felt that the provisions in the Prevention of Damage to Public Property Act, 1984 were inadequate and that there is a need for change. As a result, two committees were set up by the Court, which was headed by a retired Judge of this Court Justice K.T. Thomas, and the other by senior advocate F.S. Nariman, to suggest amendments. Dr. Rajiv Dhawan was the amicus curiae in this case, who also suggested some guidelines for amendment. 

Findings of the committees 

K.T. Thomas Committee

The report by the K.T. Thomas Committee contained the following recommendations: 

  1. The PDPP Act must be amended so as to incorporate a rebuttable presumption that the accused is guilty of the offence, after the prosecution proves that the accused had participated in such an event. Putting it simply, first, the prosecution must prove that public property was destroyed in a direct action called by an organisation of which the accused was a part, and that the accused had participated in the direct action. Once the prosecution successfully proves it, then the court is empowered to presume whether the accused is guilty or not, and this presumption could be rebutted by the accused. The accused must prove that he was not connected with the action called by his political party, or that he took all the reasonable steps to prevent causing damage to public property in the direct action called by his organisation. 
  2. For leaders of the organisation that calls for action, there must be a provision for convicting them guilty of abetment of the offence. In most cases, it is the leaders of the organisation that instigate such actions, though they do not physically act, and order the grass root level workers to participate. In order to effectively put an end to such activities, it is necessary to hold such leaders accountable. However, the involvement of the leaders must be proven by direct evidence. No innocent person who is a leader of the organisation should be convicted merely because members of his organisation took part in such actions. 
  3. There must be an amendment that enables police officers to arrange videography of the activities that involve damaging public property. The police officer who has the responsibility to act upon the direct action must avail the services of the videographer to accompany him or any other police officer deputed by him to the site or any place from where they can arrange videography. This is to be done either on receiving the information or on having a reasonable apprehension regarding the damaging of public property. The police officer shall authenticate the video by producing the videographer, along with the original tapes or CD or other material before the Sub Divisional or Executive Magistrate who shall record his statement regarding what he did. The Magistrate may entrust such CD/material to the custody of the police officer or any other person to be produced in court at the appropriate stage. 
  4. The Committee also felt that there should be stricter provisions for securing bail for an accused who is arrested for damaging public property and that he should be granted bail only in circumstances where it is safe to assume that he is innocent. 
  5. The Committee also believed that for a convict with imprisonment below the minimum period, the court must record special reasons. 
  6. The Committee recommends that courts must be empowered to impose a fine that is equivalent to the market value of the property damaged during the event. On default, the offender shall undergo imprisonment for a further period which shall have a deterring effect, that encourages him to pay the fine. 
  7. The Committee suggested several preventive measures that could be taken, which are the following: 
  1. The organiser of a demonstration shall meet the police to review the route to be taken for facilitating a peaceful march or protest. 
  2. All weapons, including knives, lathis and the like must be prohibited.
  3. The demonstration shall be supervised by the SP when the event is confined to the district, and the highest police officer in the State if it goes beyond. There must be marshals at each relevant junction. 
  4. The police and the state government must ensure that the videography of the event is available. 
  5. In case if the event turns violent, the officer in charge shall ensure that a video of the event is captured by the media. The officer can also request further information from the media and other people on the incident in question. 
  6. The police shall also inform the state government about it and about the damages caused. The state government shall make a report from such police reports and other information, and file a petition in the high court or the Supreme Court. 

F.S. Nariman Committee 

The following are the guidelines proposed by the Nariman Committee: 

  • Those who take part in such violent protests or organise them must be held strictly liable for the destruction of the public and private property that occurs as a result of it. 
  • The Committee discussed the links between crime and tort and its relation with awarding damages as a deterrent in detail. The Committee was of the opinion that damages must be paid for the losses caused to properties in violent protests. Compensation must be paid by way of damages that puts the party who has suffered the damages in the same position as he would have been before the damage was caused. 
  • The Committee also recommended that the Supreme Court set up the machinery to investigate the damage caused and to award compensation. 
  • The Committee discussed in-depth the role of the media in reporting such incidents to the public. The Committee highlighted the need to regulate the media so that violent and sensitive incidents are reported in a balanced and objective manner. The Committee also suggested that journalists must operate as trustees of the public, reporting incidents independently with integrity. There must also be a mechanism for addressing complaints in a fair manner. 

Verdict 

Finally, in 2009, the Supreme Court also issued some guidelines after taking the recommendations of the committees into consideration, which are as follows: 

  1. Whenever such incidents happen that lead to the mass destruction of properties, the High Court of the concerned state must take suo moto action. The High Court must also set up the machinery to investigate the destruction caused, to estimate the damages or compensation to be awarded. 
  2. When the incident has occurred over multiple states, the action must be taken by the Supreme Court. 
  3. The court that is taking the action must appoint a sitting or retired High Court judge or a sitting or retired District judge as a Claims Commissioner to investigate the damages and liability. 
  4. Along with the Claims Commissioner, an assessor may be appointed who can assist him. 
  5. Both the Claims Commissioner and assessor may seek instructions from the court that appointed them, to receive the videography or any such recordings to find out the perpetrators and the damages caused.  
  6. The principle of absolute liability must be applied once the link between the event and the damage caused. 
  7. The liability is to be shared between the actual perpetrators of the crime and the organisers of the event. 
  8. Exemplary damages may also be awarded, which is not greater than twice the amount of the damages to be paid. 
  9. The damages shall be assessed based on the damage caused to the public and private properties, damages caused by the injury or death of persons. This also includes the cost of the actions that authorities had to undertake in efforts to prevent or counteract the incident. 
  10. The Claims Commissioner shall make a report to the concerned court, which will help in determining the liability of the parties. 

However, the Court stated that such guidelines will be applicable only when there is an absence of legislation. Moreover, when appropriate legislation that is consistent with the guidelines is put into effect, the guidelines will cease to be operative. It was left to the authorities to implement the guidelines. 

Aftermath

Draft Prevention of Damage to Property Act (Amendment) Bill, 2015 

After the guidelines were issued, we have never had any legislation that incorporated the aforementioned guidelines. There was a draft Prevention of Damage to Property Act (Amendment) Bill, 2015, drafted by the Union Ministry of Home Affairs. However, the Bill was never tabled in Parliament. The following are some of the amendments suggested in the draft: 

  1. Section 4A must be inserted, which provides for shifting of the burden of proof on the accused. 
  2. Section 4B must be inserted, which holds the leaders or office bearers of the organisation liable for the damages. 
  3. Section 4C must be inserted, which provides for convicting abettors. 
  4. Finally, Section 4D must be inserted, which provides that the office in charge of a police station must arrange videography of the event if there is reason to suspect that it might turn violent. The officer must also deposit soft copies of the videography and record the statement of the videographer before the Sub-Divisional Magistrate or the Executive Magistrate. The Sub-Divisional Magistrate or the Executive Magistrate may also entrust the police officer with the videography. 

State legislation 

The Punjab Government in 2017 had taken the guidelines into consideration while amending its Punjab Prevention of Damage to Public and Private Property Act, 2014. It also provided for the payment of damages for the destruction of public or private property. 

Related case laws 

In the case of Kodungallur Film Society & Anr. vs. Union of India & Ors. (2018), the petitioners sought the Supreme Court to issue directives to the Union and State Government for implementing the guidelines. The Supreme Court bench issued some recommendations which are supplementary to the guidelines in Re: Destruction of Public and Private Properties. The guidelines were related to compensation, the responsibility of police officers, and preventive measures The Court also issued directives for implementing the recommendations to the Union and State governments. 

Though the Re: Destruction of Public and Private Properties guidelines are very comprehensive, it is very difficult in implementing the guidelines and fulfilling the objectives. In most instances, it is difficult to identify the leaders or organisers behind an action. In the case of Koshy Jacob vs. Union Of India (2017), the petitioner claimed he was stuck on the road for more than 12 hours due to agitation. He was not granted any compensation since the organisers of the agitation were not present before the Court. However, the Court reiterated that the law must be amended to include all the guidelines issued by the Court. 

Critical Analysis

The guidelines and recommendations by the committees and the courts should be incorporated into the Prevention of Damage to Public Property Act urgently. The draft PDPP (Amendment) Bill, 2015 must be aligned with the Supreme Court guidelines and introduced in the Parliament. As instances of political violence never seem to stop, it is crucial for the law to be more comprehensive to protect properties from being vandalised. It is necessary to consider the nature and behaviour of crowds before drafting measures to counteract violence. For instance, when the police show aggression towards protesters, it is more likely to aggravate and prolong the protests.  

Moreover, the legislators must ensure that the measures do not go against the freedom of speech and expression of the citizens, as guaranteed under Article 19 of the Constitution. The right to form a peaceful assembly is an integral part of Article 19. The legislators must keep in mind that there should be a balance between the need to protect properties from vandalism and the freedom of speech and expression.

Conclusion 

To conclude, the guidelines issued by the Supreme Court, in this case, must be incorporated into the legislations of the respective governments. However, it is also important to protect the freedom of the citizens to protest and express their criticism regarding certain government policies as a democratic country. The laws must strike a balance between protecting properties from destruction and preserving the democratic values adopted by the Indian Constitution. 

References 


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M&A boosting purchasing capacity of the company

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Image source: https://blog.ipleaders.in/structure-merger-acquisition/

This article is written by Muskan Khandelwal, pursuing a Diploma in M&A, Institutional Finance, and Investment Laws (PE and VC transactions) from Lawsikho. The article has been edited by Tanmaya Sharma (Associate, LawSikho), Ruchika Mohapatra (Associate, LawSikho), and Indrasish Majumder (Intern at LawSikho).

This article has been published by Shoronya Banerjee.

Introduction

Mergers and acquisitions (hereinafter referred to as “M&A”) are deals in which two or more firms merge in some way. Even though the terms mergers and acquisitions (M&A) are sometimes used interchangeably, they have distinct legal definitions. Two firms of equal size unite to establish a distinct single company in a merger. A merger occurs when the board members of two firms agree to merge and request necessary approvals from the shareholders. For instance, in 1998, the Digital Equipment Corporation and Compaq agreed to merge, with Compaq absorbing the Digital Equipment Corporation. An acquisition, on the contrary, occurs when a larger corporation buys a smaller corporation and absorbs the smaller corporation’s operations. M&A transactions can be amicable or hostile, based on the target company’s board of directors’ consent. In a straightforward acquisition, the purchasing corporation acquires a majority interest in the acquired company, which retains its name and organizational structure. Manulife Financial Corporation’s acquisition of John Hancock Financial Services in 2004 is an instance of this sort of deal, in which both firms kept their identities and organizational structures.

Types of M&A

For several objectives, businesses will combine and purchase one another. Here are four of the most common methods for businesses to collaborate:

1. Horizontal merger / acquisition

A horizontal merger occurs when two firms are in direct competition with one another. Horizontal mergers are used to gain market share, create economies of scale, and take advantage of merger synergies. Compaq Computers was purchased by Hewlett Packard in 2002 for $24.2 billion. By integrating the PC products of both firms, the goal was to establish the leading personal computer provider.

2. Vertical merger / acquisition

A vertical merger occurs when two firms that operate in a similar supply chain combine forces. A vertical merger is the joining of firms in a company’s manufacturing and distribution processes. Higher quality control, greater circulation of knowledge along the supply chain, and merger synergies are all reasons for a vertical merger.

In the year 2000, America Online and Time Warner merged vertically for the first time. Because of each company’s various activities in the supply chain – Time Warner supplied information through CNN and Time Magazine, while AOL delivered information via the internet – the transaction was classified as a vertical merger.

3. Conglomerate merger / acquisition

To increase their variety of services and goods, two firms in different industries combine forces or one takes over the other. By merging back-office tasks and functioning in a variety of sectors, this method may help cut costs and risk.

4. Concentric merger / acquisition

Two firms may share consumers yet provide distinct services in specific instances. Sony, for example, is a DVD player manufacturer that also owns the Columbia Pictures film studio, which it purchased in 1989. Sony could now make movies that could be played on its DVD players. Furthermore, this was a crucial component of Sony’s Blu-Ray DVD player launch plan.

Reasons for M&A

There are numerous reasons behind an M&A deal. The most common reasons are mentioned below:

1. Unlocking Synergies

Mergers and acquisitions (M&A) are commonly used to produce synergies that make the merged firm worth more than the two enterprises separately. Synergies can occur as a result of cost savings or increased income.

Cost synergies are achieved through economies of scale, whereas revenue synergies are achieved by cross-selling, expanding market share, or boosting pricing. Cost synergies are easier to quantify and estimate of the two.

2. Higher growth

When opposed to organic growth, inorganic growth from mergers and acquisitions (M&A) is typically a speedier technique for a firm to obtain bigger sales. A corporation can benefit from purchasing or merging with a corporation that has cutting-edge capabilities rather than risk cultivating those skills organically.

3. Stronger market power

A horizontal merger will provide the new organization with a larger market share and the ability to affect prices. Vertical mergers also provide a corporation with more market power since it has more control over its supply chain and can prevent outside supply disruptions.

4. Diversification

Companies in cyclical sectors feel compelled to diversify their cash flows to prevent severe losses during a downturn. A corporation can diversify and decrease market risk by buying a company in a non-cyclical sector.

5. Tax benefits

When one firm has a lot of taxable income and another has a lot of tax-loss accruals, the tax incentives are investigated. The acquirer can use the tax losses to reduce its tax burden by acquiring the firm with the tax losses. Mergers, on the other hand, are rarely done only to save money on taxes.

M&A effects

1. Capital structure

M&A activity has longer-term consequences for the acquiring business or the prevailing organization in a merger than for the target firm in a merger or the organization that is swallowed in a merger.

An M&A deal provides the acquired corporation’s shareholders with the option to cash out at a high premium, — particularly if the acquisition is all-cash. The target firm’s investors get a share in the acquirer and hence have a real stake in its long-term performance if the acquirer pays half in cash and half in its own shares.

The consequence of an M&A deal on the buyer is determined by the deal size concerning the corporation’s size. The danger to the buyer increases as the prospective target grows greater. A corporation may be capable of surviving a small-scale acquisition catastrophe, but a large-scale acquisition failure might risk the corporation’s long-term viability.

Based on how the M&A deal was structured, the acquirer’s capital structure will fluctuate when the deal closes. An all-cash transaction will significantly decrease the acquirer’s cash reserves. However, few corporations have enough cash on hand to pay for an acquired company in full, all-cash mergers are frequently funded through debt. While this raises a company’s debt, the increased cash flows generated by the acquired corporation may justify the greater debt load.

Several M&A deals are funded in part with the acquirer’s shares. An acquirer’s shares must frequently be premium-priced, to begin with, if it is to be used as payment for an acquisition; otherwise, making acquisitions would be excessively dilutive. In addition, the target company’s managers must be persuaded that taking the acquirer’s shares rather than actual money is a sensible option.

2. Market reaction 

Market reaction to the announcement of an M&A deal can be positive or negative, based on market people’s perceptions of the deal’s characteristics. Usually, the target’s shares will climb to a value near that of the acquirer’s bid, given that the acquirer’s bid is a large premium to the target’s prior share price. Indeed, the target’s stock may trade above the initial offer if it is believed that the buyer has undervalued the target and will be obliged to increase it, or if the target firm is prized enough to draw a competing bid.

In some cases, the target firm may trade at a lower price than the offer price. This usually happens when a portion of the acquisition price is paid in the acquirer’s stock, and the stock drops when the acquisition is publicized. Assume that Targeted ABC Co.’s acquisition price of Rs. 25 per share is made up of two stocks of an acquirer for Rs. 10 each and Rs. 5 in cash. Targeted ABC Co. will most probably be valued at Rs. 21 rather than Rs. 25 if the acquirer’s stock is only worth Rs. 8.

Whenever a buyer publishes an M&A acquisition, its stock may drop for a variety of factors. Perhaps market players believe that the buying price is too high. Alternatively, the transaction may be viewed as being not advantageous to earnings per share (EPS). Alternatively, investors may feel that the buyer is trying to take on too much indebtedness to fund the deal.

The purchases that an acquirer undertakes should preferably improve the acquirer’s economic capabilities and earnings. Because a succession of acquisitions can disguise degradation in a firm’s core sector, investors and analysts frequently look at the company’s “organic” revenue and operating margin growth rate, which eliminates the influence of M&A.

When a buyer makes a hostile offer for a target firm, the latter’s executives may suggest that the purchase be rejected by its stakeholders. Amongst the most prevalent causes for such refusal is that the acquirer’s offering is significantly undervalued by the target’s leadership. However, as the famous Yahoo-Microsoft example demonstrates, rejecting an unexpected offer can occasionally backfire.

M&A : an important instrument for business expansion and boosting purchasing capacity

M&A may be a powerful tool for boosting purchasing power, establishing scale, boosting a target’s productivity, and reducing surplus industry resources, as well as fueling long-term, profitable expansion. By analysing the reason for M&A and its effect, we deduce that M&A transactions lead to the growth of the company which boots its purchasing capacity. It increases its revenue and thus, leads to an increase in purchasing capacity.

The market reaction, if favorable to the company, also boosts its purchasing capacity. M&A should be considered as a key arrow in the business bow, ready to be released when needed, because of its multiple economic advantages. The attraction of M&A is enhanced by the slow rate of global economic expansion. In reality, the most popular motivations given by CEOs for investing in M&A are to increase purchasing capacity, acquire access to new client bases, enter more geographic marketplaces, and enhance goods and services.

When two companies merge, by consolidating marketing expenditures, it may lower its costs and overhead. Due to the huge number of purchases, the company will have more purchasing power and reduced purchasing expenses. As a result, the more money the company has, the simpler it is for the company to save money. Another benefit of M&A is that larger order size and accompanying bulk-buying discounts result in purchasing economies.

Conclusion

In this article, we have critically analysed what are the reasons for M&A and what are its effects. We can finally conclude that it has a significant impact on the purchasing capacity of the company. It boosts the company’s purchasing power tremendously. Reasons for the boost are an increase in revenue and growth, purchasing economies, discounts, synergies, etc. M&As are one of the best tools for growth and increased purchasing capacity. 

References


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

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

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Exemplary damages in defamation suits in India

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This article has been written by Kartikey Baid.

This article has been published by Sneha Mahawar.

Introduction

The law of Defamation is a kind of abnormality among laws, for despite being defined under Section 499 of the Indian Penal Code, it not only has a criminal aspect but rather a civil aspect also.

Under Criminal law, it is a bailable, non-cognizable, compoundable offence punishable under Section 500 of the IPC which prescribes simple imprisonment up to 2 years or with a fine, or both. Under Civil law, it is dealt with under the Law of Torts where damages can be awarded to the claimant. Defamation is also one of the exemptions under Article 19(2) which puts reasonable restrictions on Freedom of Speech and Expression under Article 19(1)(a) of the Constitution.

Types of damages in civil defamation 

Nominal damages 

This type of damages is granted by the court to acknowledge the fact that violation of a legal right has occurred, however, the court is of the view that no actual damage has taken place due to such violation.

Contemptuous damages

This type of damages is awarded when the court holds a very low opinion of the Plaintiff’s claim. The court recognizes that although the plaintiff has suffered substantial loss but doesn’t deserve to be compensated to full restitution.

Compensatory damages

In contrast to Nominal Damages, this type of damages is awarded by the court in order to compensate the aggrieved party for some actual and substantial loss caused due to violation of a certain legal right. Expenses like medical costs, job loss, lost income can be covered. The goal is to bring the aggrieved party to the condition it would be in had the violation of his/her right not taken place.

Aggravated damages

Such damages are awarded to compensate for intangible or non-pecuniary losses in addition to tangible losses suffered by the aggrieved party. The goal is to make good for deprivations such as loss of reputation, humiliation, mental distress, etc.

Exemplary/Punitive damages

This type of damages is awarded in order to punish the defendant and make an example out of him/her. The amount awarded in such cases exceeds the actual loss suffered by the aggrieved party. In Mathias v. Accor Economy Lodging, Inc., it was observed by the 7th Circuit Court of the United States that one of the functions of Exemplary or Punitive damages is to relieve some pressure of the criminal justice system by the way of providing a Civil alternative to minor crimes. It was also observed that such damages limit a tortfeasor’s ability to profit from illicit activities.

Exemplary/ Punitive damages in India

It is a settled point of law in most common law countries such as India and England that Exemplary or Punitive damages can only be awarded in a limited set of situations and with great restraint. The House of Lords in the landmark case of Rookes v. Barnard laid down three circumstances in which Exemplary damages can be awarded-

  1. Oppressive, arbitrary, or unconstitutional action any the servants of the government;
  2. Wrongful conduct by the defendant which has been calculated by him for himself which may well exceed the compensation payable to the claimant; and
  3. Any case where exemplary damages are authorised by the statute.”

The latter case of Cassell & co. ltd. v. Broome upheld the aforementioned categories while also making important clarifications as to what factors are to be dealt with while deciding if the aggrieved party qualifies to receive Exemplary Damages or not. The court gave out the following factors to be considered-

  1. The burden of proof is to be laid on Plaintiff.
  2. The mere fact that the case falls under one of the categories laid down in Rookes (Supra) doesn’t automatically qualify it for Exemplary Damages.
  3. The Jury/Judge must be satisfied that the exemplary or punitive component is not satisfied by the figure compensating actual damages caused to the plaintiff.
  4. The total figure awarded to the plaintiff as exemplary damages should be substituted for the adequate solatium and not an addition to it.
  5. The word ‘fine’ shall not be used synonymously with exemplary or punitive damages.

In India, the Supreme Court has adopted the principles laid down in Brookes and Cassel in a number of cases (Ghaziabad Development Authority v. Balbir Singh; Lucknow Development Authority v. M.K.Gupta). However, it is worth noting that the Apex court has borrowed these principles in cases of abuse of authority causing a violation of constitutional rights by public authorities. It is yet to be found out if the same standards are to be applied by the court in other cases such as libel or slander of goods. 

High Courts, however, have applied the same principles in tort suits such as libel and have thought them to be a befitting test to determine the applicability of Exemplary Damages. In the Hindustan Unilever Limited v. Reckitt Benckiser India Limited, the Delhi High Court reaffirmed the principles laid down in Brookes with reference to those laid in Cassel and applied the same to award exemplary damages to the plaintiff. 

The Bombay High Court in the Case of Rustom K. Karanjia and Ors. v. Krishnaraj M.D. Thackersey and Ors. clarified that the factor of insult or mental distress caused by the actions cannot be accounted for while determining Exemplary damages. Observing- 

“Therefore, aggravated damages may be awarded within the compensatory principle in circumstances specifically referred to above, viz., if there has been any kind of highhanded, oppressive, insulting or contumelious behaviour by the defendant which increases the mental pain and suffering which is caused by the defamation.”

Indian Courts alongside English and American courts have recognised the difficulty faced by corporations in proving the exact quantum of damage caused to them and also recognised the importance of reputation, not only for individuals but also for corporations. Hence, allowing approximate calculation of damages. As noted in Story Parchment Co. v. Paterson Parchment Paper Co., 

“The wrongdoer is not entitled to complain that they cannot be measured with the exactness and precision that would be possible if the case, which he alone is responsible for making, were otherwise… If the damage is certain, the fact that its extent is uncertain does not prevent a recovery.”

Conservative approach 

The courts, both in England and India have taken a very tempered and restrictive approach while awarding Exemplary damages. Courts in both jurisdictions have accepted and thoroughly applied principles laid down in Brookes and Cassel. 

Delhi High Court in the case of Hindustan Unilever Limited (Supra) noted with caution-

“….most crucially-the punitive element of the damages should follow the damages assessed otherwise (or general) damages; exemplary damages can be awarded only if the Court is “satisfied that the punitive or exemplary element is not sufficiently met within the figure which they have arrived at for the plaintiff’s solatium”.

The court further observed in the same judgment,

“The danger of not following this step by step reasoning would be ad hoc judge centric award of damages, without discussion of the extent of harm or injury suffered by the plaintiff, on a mere whim that the defendant’s action is so wrong that it has a “criminal” propensity or the case merely falls in one of the three categories mentioned in Rookes.”

The United States Supreme Court in the case of Exxon Shipping Co. et al v. Baker et al observed,

“The real problem, it seems, is the stark unpredictability of punitive awards. Courts of law are concerned with fairness as consistency, and evidence that the median ratio of punitive to compensatory awards falls within a reasonable zone, or that punitive awards are infrequent, fails to tell us whether the spread between high and low individual awards is acceptable. The available data suggest it is not.”

Even in Cassel (Supra), the court took a doubtful view of the extent to which Exemplary damages can be awarded in the cases concerning the second category given in Rookes (Supra). Noting that it is a contentious position to decide as to who should pocket the exemplary damages and finally settled on the opinion that the aggrieved party, however not ideal, is the best available place for such compensation to land.

The conventional wisdom applied in India and elsewhere while awarding exemplary damages is one of restraint and mindful of not using them as a way to replace or subvert criminal punitive measures. The courts have time and again opined that such damages are to be awarded as an exception rather than a norm.

Conclusion

Hence, the guidelines laid down in two landmark English cases which we have discussed extensively, i.e., Rookes (supra)  and Cassel (supra)  have been widely followed by courts in India.

However, there is still a need for the courts to layout clear-cut guidelines tailored to suit Indian circumstances. The Supreme Court has done so in the cases of the first category given out in Rookes (supra). The same is warranted for cases falling under the second category so that the courts around the country can use a uniform test to determine the need or lack thereof to grant Exemplary Damages.


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Difference between void agreement and void contract

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This article is written by Sahaja, from NALSAR University of Law, Hyderabad. This article points out the difference between a void contract and a void agreement.

This article has been published by Sneha Mahawar.

Introduction

It is important to understand the difference between the terms agreement and contract, although they are used interchangeably in common parlance. In legal jargon, the phrases agreement and contract have different connotations. A proposal that is accepted is a promise in a legal sense. The promisor is the person or party who offers to do something or get something done, and the promisee is the person or party who accepts the offer. An agreement is a promise backed by consideration from both the promisor and the promisee. A contract is an enforceable agreement in which the parties seek legal backing and certain regulations are laid down that need to be followed.

Section 2(e) of the Indian Contract Act, 1872 (hereinafter “The Act”) defines agreement and Section 2(h) defines a contract. From the definitions given in the two subsections of Section 2, it is evident that a contract cannot be created until and unless there is a valid agreement in place and this particular agreement is backed by consideration. 

Void agreements

According to Section 2(g) of the Act, a void agreement is an agreement that cannot be enforced by the law. This means that it is void-ab-initio (void from the beginning) and cannot become a contract. An agreement that is void does not bind the parties to the agreement. It is intrinsically illegal and unenforceable, and the injured party has no legal recourse if it is violated. According to Section 10 of the Act, an agreement must fulfill all the elements of a legal contract in order to be enforceable. If these prerequisites are not met then the agreement is null and void.

Certain agreements that are made have been particularly classified as void agreements under the Act. Such agreements and cases will be dealt with in the following sections.

Capacity to contract

Section 11 (“Who are competent to contract”) of the Act defines the competence to contract. Under this Section, a minor, a person of unsound mind, and a person disqualified by a law to which they are subject to are incompetent to contract. Any agreement made by an incompetent person is void-ab-initio and does not have the capacity to become a contract at the first place as it does not cater to the essentials of a valid contract. An agreement made by a minor and a person of unsound mind is subject to certain circumstances under which the contract will not be completely void but can be voidable at the option of parties or in some situations, valid.

In Mohori Bibee v. Dharmodas Ghose, (1903)a minor, D executed a mortgage deed in favour of a money lender. Money lender was aware of the fact that D was a minor, he still lent the money. D later asked for termination of the contract since he was a minor. Lender said that the contract was only voidable and not void. The privy council held that the agreement was void ab initio and the lender was not entitled to repayment of the money.

Bilateral mistake as to the matter of fact

When the parties to an agreement are under different impressions about a matter of fact that is essential to the agreement, the agreement is void. This has been pointed out by Section 20 of the Indian Contract Act The explanation to the same Section also implies that an erroneous opinion as to the value of a material that is the core of a contract cannot be considered as a bilateral mistake that renders the agreement void.

In James Cundy v. Lindsay (1878), a person sent an order to a firm in writing asking to buy handkerchiefs, the purchaser had written the correct address, but the order was delivered to some other company with the same name as given in the address. Therefore, the company had sold the goods to another company. The delivery party traced the goods from this innocent party and sued the company that had sold them. Here it was held that there existed no contract between the first company and to which the delivery was made. Thus, no contract had arisen between them, identity was important in this case and the contract was held to be void.

Considerations rendering agreements void

When the consideration for an agreement is unlawful or the object of the agreement is unlawful, the agreement is considered to be void. Section 23 of the Act mentions the objects and considerations and Section 24 states that an agreement is void if the consideration and objects (as mentioned under Section 23) are unlawful.

Consideration is one of the most essential prerequisites to form a valid contract. An agreement without consideration is a void agreement according to Section 25 of the Act, although some exceptions to an agreement without consideration do apply which does not render the agreement void. These exceptions are also mentioned under Section 25. 

Agreements in restraint of marriage

According to Section 26 of the Act, any agreement which restricts the marriage of an adult is void.

An agreement must not restrain trade

According to Section 27, any agreement prohibiting anybody from engaging in a lawful profession, trade, or business of any type is null and void to that extent. Every man shall be free to work for himself, and shall not be free to deprive himself or the state of his labour, skill, or ability by any contract he enters into, according to public policy. This section also has an exception to it conforming to which, a seller of a business’s goodwill may agree with the buyer to refrain from carrying on a similar business within specified local limits. This can be done only as long as the buyer, or any person deriving title to the goodwill from him, carries on a similar business. But such limits must appear reasonable to the court, taking into account the nature of the business.

Nordenfelt v Maxim Nordenfelt Guns & Ammunition Co. (1894)The case involved a sale of goodwill by an inventor and a manufacturer of guns and ammunition to a buyer who agreed with the following conditions: 

  • not to practice the same trade for 25 years, and 
  • not to engage in any business competing or liable to compete in any way with the business for the time being carried on by the company. 

He afterward entered into an agreement with another manufacturer of guns and ammunition and the company brought an action to restrain him. It was held that the first part of the agreement was valid, being reasonably necessary for the protection of the purchaser’s interest. But the rest of the covenant by which he was prohibited from competing with the company in any business that the company might carry on was held as unreasonable and, therefore, void.

Agreements that restrain legal proceedings

A contract that restricts a party’s right to a legal remedy or limits the amount of time a right can be enforced in a court of law is void. The only exception is that the parties may include an arbitration clause to send existing or future conflicts to arbitration. (Section 28)

Esso Petroleum Co Ltd v. Harper’s Garage (Stourport) Ltd, (1976)- In this case, the Lordships struck down an exclusive dealing agreement because it extended to a period of 21 years, which was unreasonable. A five-year period would have been held to be reasonable. In holding that the doctrine applied to exclusive dealing agreements they opened up the possibility that it might be extended to every sort of contract because all contracts must involve a restraint of some sort.

Uncertain and ambiguous agreement

A contract whose aim and meaning are vague and unknown, and which cannot be judged properly, is void according to Section 29 of the Act.

In Gunthing v. Lynn (1831), for example, the parties agreed to pay $5 more than the horse’s purchase price if it proved lucky. The court ruled that the contract was vague because there was no process in place to determine how the horse would bring luck to the party.

Wagering agreements

Wagering agreements are contracts between two parties in which the first party pays the second party money if in future an uncertain event occurs, the second party pays the first party money if the event does not happen. According to Section 30, such agreements are void.

According to the Section, wagering agreements are void, and no action may be brought to recover anything allegedly gained by a wager, or entrusted to any person to abide by the outcome of any game or other uncertain event on which a wager is made.

Agreement to do an impossible act

According to Section 56, an agreement to do an act that is impossible in itself is void. 

Void contract

As specified in Section 2(j) of the Indian Contract Act, 1872, void contracts are contracts that are legally enforceable at the time of their creation but are annulled afterwards. When entered into, void contracts are legitimate because they meet all of the conditions of enforceability set forth in Section 10 of the Act and are binding on the parties, but they become void later due to the inability to execute. 

Void contracts are not to be mistaken with voidable contracts. Unlike a void contract, a voidable contract is one that can be confirmed or rejected at the discretion of one of the parties. Only one of the contracting parties is obligated. The contract may be repudiated (rejected) by the freed party, in which case the contract becomes void. A contract is regarded as voidable when it is entered into without the parties’ free consent. A voidable contract is enforceable by law at the option of one or more parties but not at the option of the other parties, according to the Act’s description. If the aggrieved party does not rescind the contract within a reasonable time, it may be declared valid.

When one of the parties to a contract is unable to fully appreciate the agreement’s implications, the contract becomes void. A mentally ill or inebriated person, for example, may not be able to comprehend the terms of the agreement, rendering it void. Such contracts become void in the following circumstances:

Supervening impossibility/ frustration

Frustration is an idea that applies only at the stage of the performance of a contract. It is concerned with the idea of a supervening impossibility which is beyond the control of the parties. The doctrine of frustration is applied when the contract is created validly but the parties cannot perform their obligations. Frustration has a very high threshold. This is dealt with under Section 56. In case of an initial impossibility, the agreement will be void. However, in case of a subsequent impossibility, the contract becomes void when it becomes impossible for one of the parties to perform their duty under the contract.

Taylor v. Caldwell (1863)– in this case, the defendants let the plaintiffs use a particular music hall. The plaintiffs were to hold a concert there on certain dates. But before the first day of the concert, the hall was destroyed by fire without the fault of either of the parties. The plaintiffs sued the defendants for their loss. It was held that the contract was not absolute, as its performance depended upon the continued existence of the hall. Therefore, the contract was frustrated and thus void.

Change of laws

While a contract may not be void at the time of its creation, it may become void due to other circumstances. New laws may be enacted that render a contract null and void instantly. Furthermore, information that was previously unknown to the contracting parties can render the contract unenforceable. Because every contract is different, determining its validity can be difficult.

Metropolitan Water Board v Dick Kerr & Co Ltd (1918)– a firm was given the task of building a water tank within 6 months. While it was being built, an order was passed by the military that the work needed to be stopped. The firm claimed frustration. The Court said that, in the contract, the term “within 6 months” was important. It was impossible to finish the construction within 6 months after the intervention of the army. Thus, there was a frustration of the contract due to which it was rendered void.

Contingent contract

The fulfilment of a contract is sometimes perfectly achievable, but the value of the performance is destroyed due to the non-occurrence of an event anticipated by both parties as to the cause for the contract. When the anticipated event becomes impossible to be achieved, the contract becomes void.

Other grounds

Some other grounds of frustration that render a contract void are death or incapacity of a party, destruction of the subject matter of the contract, the intervention of war and government or administrative intervention.

Morgan v. Manser (1948)- In this case, a person had entered into a service contract for 10 years. Under this contract, he said that he shall not undertake any professional engagement during the currency of the contract. But before the expiry of 10 years, this person was called to serve in the army during the war. After he came back from war, he got engaged in some other work and refused to engage with the initial service. The initial employer sued him for breach. The court held that the contract was frustrated when the person was called to serve in the military forces. Therefore, the contract was deemed to be void.

V.L. Narasu v. P.S.V. lyer (1952) In this case, one of the walls of a cinema hall collapsed. It then became dangerous for customers to visit and avail the services. The license of the cinema hall was cancelled. The owner was informed that the license will remain cancelled until the wall is rebuilt. He was in a contract with a person to play his film. He couldn’t fulfill it because the wall had collapsed. He pleaded for frustration. The Court held that the owner could take any amount of time to rebuild his wall. The cinema hall was a subject matter that had been destroyed and when the subject matter was destroyed the contract was frustrated and thus had become void.

Key differences

Void AgreementVoid Contract
An agreement that is void ab initio i.e., at the time of its creation is a void agreement. A void contract is one that is valid at the time of its creation but becomes void due to supervening circumstances.
It is neither enforceable nor does it create any legal consequences for the parties.A void contract is enforceable until a superseding event or circumstance renders it to be void.
A void agreement is void due to the absence of one or more necessary elements that result in a contract.A void contract is one that becomes void due to the impossibility of performance.
In the case of void ‘agreement’, there is no remedy available in law. Restitution or restoration is not granted in the case of void agreement, although in certain circumstances, restitution is permitted on equitable grounds.A remedy is available in law only to the extent to restore any benefit received by the party, on the grounds of equity.
The main cause of the agreement being void is due to deficiencies with respect to the agreement during the time of its creation.The main cause of the annulment of a contract is the change in the country’s law, supervening impossibility, or inclusion of unlawful objects.

Conclusion

To summarise, a void agreement and a voidable contract have different meanings and legal implications. A void agreement is a dead agreement since it has no legal foundation, although a voidable contract may have legal standing. Some agreements are declared void by law because they are illegal and contrary to public policy, as well as to safeguard the lives and liberty of individuals. The consequences of void ab initio agreements and void contracts are different. Contracts that become void are unenforceable contracts, whereas void agreements are those that are not enforceable.

References


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Advantages of choosing mediation as a method of dispute resolution in India

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Image Source: https://rb.gy/olclba

This article is written by Shloka Rajpure, pursuing a Diploma in Law Firm Practice: Research, Drafting, Briefing and Client Management from LawSikho. The article has been edited by Tanmaya Sharma (Associate, LawSikho), and Ruchika Mohapatra (Associate, LawSikho).

This article has been published by Shoronya Banerjee.

Introduction

Alternate Dispute Resolution (ADR) is a legally permitted informal but structured means of settling disputes outside of the courtroom. This is a relatively new trend in India. With the increase in the number of cases filed every day, inordinate delays, and the increasing burden on courts, ADR in India is gaining more popularity. While courts follow complicated, rigid, and long procedures; ADR is more informal, flexible, and quick. The problem with taking a matter to litigation is that there has to be blame put on one of the parties and that blame has to be proved. Such a case can be exhausting for both parties as it is an expensive and lengthy process. 

The main characteristics of mediation are that it provides; a voluntary, confidential, non-binding, and interest-based procedure. No decisions are imposed on the parties and it is at their discretion to accept the outcome. Parties wishing to avoid the glare of publicity can use mediation to keep their disputes confidential and personal. Out of all the methods of dispute resolution, mediation is the most preferable and convenient. 

History of mediation in India

Mediation is an age-old practice in India dating back to the Vedic period. In Hinduism, a lot of significance is given to the elderly and their expertise, experience, and knowledge. Seeking their advice for family disputes has been a practice since time immemorial. A similar form of dispute resolution can be witnessed in the panchayat system. 

Types of alternate dispute resolutions

There are four types of alternate dispute resolutions which are as follows- 

Arbitration

It is a procedure in which one or more arbitrators are selected mutually by both the parties to whom the dispute is submitted. Their decision is final and binding. The administration of arbitration is in accordance with the procedure of an institution (tribunal). 

Negotiation

Through direct or indirect communication the parties with conflicting views discuss the form of action to agree to resolve the dispute amicably. Negotiation is the first step towards solving an existing dispute before having any third-party involvement. 

Conciliation

One party who initiates to resolve the dispute communicates to another party the subject matter of the dispute through a written agreement. When the other party agrees a conciliator is appointed. Two or more conciliators can be appointed if both parties agree to such a requirement. The advice given by the conciliator is non-binding on the parties. 

Mediation

It is the most informal way of dispute resolution. Two parties come together to appoint a mediator who is unbiased in facilitating dispute resolution amicably. This method is generally preferred in family and matrimonial disputes especially in divorce cases. 

What is mediation? 

Mediation is a private but structured method of dispute resolution. It is a voluntary process in which both the disputing parties come together to find a solution to their problem by entering into a written contract and appointing a mediator who assists parties in reaching an amicable settlement. A mediator can be of any designation and can be appointed either formally or informally. Contrary to conventional courts, the decision of the mediator is not imposable and the decision-making power rests in the disputing parties. Mediation provides the parties to express their emotions, interests, end goal, and opinions which are often not given importance in the conventional courts. 

There are no fixed and rigid proceedings in alternate dispute resolution and mediation is the most flexible of all these methods making it the most desirable one. It is a party-centric and neutral procedure. Parties can withdraw from the procedure of mediation at any stage without stating any explanation. All the information and evidence presented during mediation is kept confidential thus outside parties do not have access to the mediation proceedings. Data given to the mediator cannot be used for any other purpose besides helping the mediator to reach an appropriate resolution. This ensures that nobody’s public image gets tarnished in the process. 

One of the major advantages of mediation is that neither of the parties loses and the interests of both the parties are conserved. It is a win-win situation for both parties. The parties control the end result of the mediation and either party has the advantage of terminating the mediation without giving any reason. 

Types of mediation

Court referred mediation

In India, mediation is legitimised by Section 89 of the Civil Procedure Code, 1908 which empowers the court in matters where it appears to exist as a component of a settlement that would be acceptable to both parties, the Court shall articulate the terms of a possible settlement and refer the same for mediation for which procedure may be prescribed by the court itself. In the case of Salem Advocate Bar Association, Tamil Nadu v. Union of India, Supreme Court held in reference to the matter of mediation that conciliation and arbitration are mandatory for court matters. This judgment has granted legal and social recognition to mediation as a dispute resolution in India. This type of mediation is often utilised in matrimonial and family disputes, particularly divorce cases. 

Private mediation 

In private mediation, a qualified mediator is appointed by the parties on a fixed-fee basis. Both the parties come together to resolve the issue amicably. A mediator can be of any designation and anyone can appoint them to resolve disputes through private mediation. It is a time-saving mechanism and gives various creative outcomes for parties to choose from. The decision of the mediator is not ultimate and hence not binding on the parties.

Advantages of mediation

Cost efficient and time saving

The cost incurred in the mediation process is nominal compared to judicial procedures. It is not mandatory to appoint legal counsels in mediation thus a huge cost is saved. There are no obligatory procedures like conventional courtrooms hence saving procedural cost fees. The dispute resolution process is quicker due to the least legal formalities and procedural flexibilities. A mediator has the liberty to consider those issues she/he deems significant to bring parties to the agreement, time-consuming evidence is generally avoided, thereby saving time and resources. 

Flexible and creative solutions

There exists no set procedure for mediation thus providing parties access to a wide range of outcomes. Different mediators have different styles which are often amended as per the requirements of the specific case. The resolutions achieved by the process of mediation sometimes aren’t possible through arbitration or judicial procedures. Both the parties work together to resolve the dispute among themselves and are free to formulate customised solutions as per their requirements. 

Confidentiality and privacy 

All the information and evidence presented during mediation is kept confidential thus outside parties do not have access to the mediation proceedings. Data given to the mediator cannot be used for any other purpose besides helping the mediator to reach an appropriate resolution. In fact, there is such secrecy that there is unique confidentiality between one party and the mediator i.e. if one party provides information to the mediator, it can be kept confidential from the other party subject to specific conditions. Another significant benefit of mediation in India is that it is completely private and helps to protect the public image of the parties. Only the disputing parties and the appointed mediator is present during the process making it personal and private. 

Restoration of relationship

In conventional court proceedings blame is put on one of the parties which is often detrimental to the relationship of the parties. The final decision of the court is imposed on both the parties and it can be undesirable because one party always loses. On the contrary in mediation parties alone are responsible for their own decision and can choose to not accept the final settlement brought about by this process. This helps parties to come to a solution peacefully and amicably. Even if the relationship between the parties was compromised due to existing issues it can be restored by the process of mediation as it upholds the interests of both parties. 

Control and dominion

The parties can choose the time, location, and the duration of the proceedings giving parties a lot of control. Courts have their own schedule that is to be adhered to by everyone hence it is not as convenient. Contrary to the judicial system parties in mediation are not opponents but are collaborators striving to find a resolution that is mutually acceptable. One of the major advantages of mediation is that neither of the parties loses and the interests of both the parties are conserved. The parties control the end result of the mediation and either party has the advantage of terminating the mediation without giving any reason. 

Conclusion 

Mediation in India is gaining popularity as it is a low-cost, party-centric and neutral procedure. There is a need for dedicated law enacted to formalize the process of mediation. To have a better understanding of their rights parties can hire legal professionals specially trained in ADR to represent them and explain the situation in a professional way to the mediator. For all these benefits of mediation, in the coming future, it will be the most common method of dispute resolution especially in corporate affairs and family disputes. 

References

  1. https://www.mediate.com/articles/mediation-in-india-articile.cfm#:~:text=One%20of%20the%20primary%20benefits,the%20parties%20personal%20and%20private.&text=A%20mediator’s%20role%20is%20both%20 facilitative%20and%20evaluative
  2. https://viamediationcentre.org/readnews/MjUx/BENEFITS-AND-ADVANTAGES-OF-MEDIATION
  3. https://www.systech-int.com/insights/thoughts/mediation-advantages-and-disadvantages 
  4. https://www.legalserviceindia.com/legal/article-2762-mediation-in-india.html 
  5. https://www.legalserviceindia.com/legal/article-3383-mediation-as-a-form-of-alternate-dispute-resolution-and-its-advantages.html

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