Trademark infringement in the case of AGL v Greenpeace Australia Pacific Limited

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January 1, 2022

This article is written by Ananya Singh, pursuing a Diploma in Intellectual Property, Media, and Entertainment Laws from Lawsikho.com.

This article has been published by Shoronya Banerjee.

Table of Contents

Introduction

This article will cover the Australian climacteric case of AGL Energy Limited v. Greenpeace Australia Pacific Limited [2021] to understand what constitutes trademark infringement. AGL sued Greenpeace for allegedly infringing its copyright and trademark pertaining to posters made by Greenpeace with AGL’s logo in it. Greenpeace utilised various visual media on different platforms using, inter alia, AGL’s logo with the tagline ‘Australia’s Greatest Liability.’

As we know, intellectual property is one of the significant vital assets of an organisation, and it only makes perfect sense that companies go an extra mile to stop people or entities from infringing their intellectual property. The case study of AGL v. Greenpeace is a perfect example to understand the contours of fair dealing in copyright infringement, and what constitutes criticism or review and parody or satire, and the scope of trademark registration.

Factual description

To give you a brief background, following the release of a report commissioned by Greenpeace raising concerns about AGL’s ongoing operation in its coal-burning power stations vis-a-vis its commitment to renewable energy targets, Greenpeace launched an advertising campaign in May 2021, on multiple platforms targeting AGL. These advertisements mimicked the visuals of AGL’s advertisements with tweaked taglines like “Generating Pollution For Generations” and “Still Australia’s Biggest Climate Polluter.” The advertisements used AGL logo mockingly modifying it by referring AGL as “Australia’s Greatest Liability.”

The advertisements used the AGL logo, mockingly modifying it by referring to AGL as

Image 1: Online Banner Advertisement

“Australia’s Greatest Liability.” Within two days of launching the advertisement campaign, AGL filed an application in Court against Greenpeace. The Court proceeded with the final hearing of AGL’s claim in less than a month rather than hearing AGL’s interlocutory injunction application. The images of the alleged infringing creatives are attached below:

Image 2: Street Poster

Arguments extended by the parties

AGL

It stated that it does not want to prevent Greenpeace from spreading information or disturb the public debate around the issue. However, it seeks to prevent usage of its modified logo in Greenpeace campaign materials. AGL argued that such usage amounts to trademark and copyright infringement since the original logo is a registered trademark and an artistic work under copyright law. In addition, it also argued that its registration, among other things, also covers educational services pertaining to the environment; therefore, Greenpeace cannot use the logo concerning the environment.

Greenpeace

It argued that their use of AGL’s logo could not be considered an infringement because they did not use it as a trademark. In other words, their usage of AGL’s logo was not intended to be accredited as a source identifier of AGL’s goods and services. Moreover, the modified logo fell within the exception of “fair dealing” is a copyrighted work as it was used for purposes of “parody or satire” or “criticism or review.”

Court analysis and judgment

The Australian Federal Court sided with Greenpeace and opined that a trademark could be infringed only if it is used in relation to the goods and services covered by such trademark registration. Accordingly, Greenpeace did not use AGL’ logo concerning its claimed goods and services covered in AGL’s trademark registration. Using a corporate logo for environmental activism or to protest against climate change is reasonably permissible under both trademark and copyright law if that use constitutes a “fair dealing” for the true purpose of criticism or “parody or satire. The Court also stated that the use of corporate logos for criticism or review will not automatically fall under the exception of fair dealing, and due consideration has to be given to intended use on a case-to-case basis. Additionally, “the separate fair dealing exception for the purpose of criticism or review applies to criticism or review of a copyright work, and not to criticism of a person (or organisation) generally.”

As per the Federal Court’s view, on looking at Greenpeace’s street posters and banner advertisements, consumers will not see them as advertisements or promotion of AGL’s goods and services. Moreover, Greenpeace used the AGL’s logo to criticize AGL’s products by providing factual information to the Australian consumers on the negative environmental impact in Australia. Under no circumstances would consumers think that Greenpeace was promoting or offering any goods or services of their own by referencing the AGL’s logo.

With respect to Greenpeace usage of modified logo that constituted “parody” or “satire” for the purposes of statutory “fair dealing”,, the Court relied on the cases Pokémon Company International, Inc. v Redbubble Ltd, [2017] and Network Ten Pty Ltd v TCN Channel Nine Pty Ltd and Ors, [2004] and held that “the use of an artistic work for the purpose of parody or satire may be one where the impugned work is used ‘to expose, denounce or deride vice’, often in the context of a humorous or ridiculous juxtaposition.”

The Court further noted as follows:

The purpose of the impugned works must be objectively considered from the perspective of an ordinary man and how they would construe such impugned works when exposed to it. Subjective considerations such as alleged infringers believing its works to be satire or parody are not determinative.
Even if the impugned works have multiple purposes such as to engage in satire or parody and simultaneously entertain or to bring about change or do news reporting, the same does not prevent the exceptions satire or parody being applicable.

Following these observations, the Court found some usage, and not all of it, to fall under these two exceptions. Particularly, Greenpeace materials mimicking AGL’s corporate branding style since the designs of these materials:

“[j]juxtaposes the AGL corporate branding style with an obviously non-corporate message, creating an incongruity that is striking to the viewer. The ridicule potent in the message is likely to be immediately perceived… Many would see these uses of the modified AGL logo as darkly humorous… AGL is exposed to ridicule by the use of its corporate imagery including by use of the modified AGL logo to convey a message that AGL would not wish to send. Furthermore, the words “Presented by Greenpeace” are positioned closely proximate to the modified AGL logo… The viewer would understand that the message came from Greenpeace.”

For other materials that did not form a part of satire or parody, the Court considered the alternate exception of fair dealing for “criticism or review” of copyright works. It held that this exception would not apply to such materials.

While referring to Section 40 (2) of the Australian Copyright Act, which enumerates certain factors such as:

“(a) the purpose and character of the dealing;

(b) the nature of the work or adaptation;

(c) the possibility of obtaining the work or adaptation within a reasonable time at an ordinary commercial price;

(d) the effect of the dealing upon the potential market for, or value of, the work or adaptation; and

(e) in a case where part only of the work or adaptation is reproduced—the amount and substantiality of the part copied taken in relation to the whole work or adaptation.”

The Court held that there was no copyright infringement and further noted as follows:

Irony, sarcasm, or ridicule are an inherent part of parody and satire, and solely because such work results in damage to the copyright owner do not mean that work can be tagged as “unfair.” Notwithstanding the evidence that Greenpeace’s internal documents indicated its intention to declare AGL brand as “toxic”, the Court considered it as “colourful language, perhaps rhetorical hype of a type typically used in advertising and also environmental campaigning…that would assist Greenpeace in criticising AGL’s conduct and provoking debate.”
The nature of the work is the entire corporate logo; Greenpeace using the whole logo (work) without transforming it does not make the use “unfair.”
Even though AGL’s significant reputation is tied to its logo, unlike trademark, copyright only protects the artistic expression of the logo and not the brand reputation. The harm done to AGL is not because its logo was used but because of the content of the advertisement campaign.
Each advertisement indicated that Greenpeace is the source of such a campaign, and no reasonable, sensible person would see it otherwise.
Realistically, it seems implausible that Greenpeace would have gotten permission to use work by AGL.
Greenpeace is a non-profit organization and not a competitor of AGL.

Concerning AGL’s trademark registration for educational services, among other things, the Court held that:

“[I]t is apparent that not every communication of information will amount to ‘education’. Nor does the provision of information about particular topics in the context of a media campaign naturally amount to the provision of ‘education services’ or ‘information and consultancy services’ relating to these things. None of the elements concerning the systematic imparting of instruction or the presence of a curriculum that one might expect to accompany the provision of education services and to fall within the definition of the provision of education services are present. Nor…what is offered by Greenpeace in the context of the impugned conduct should be understood to be in relation to ‘scientific and technological services’ or ‘industrial and research services’ …not satisfied that Greenpeace is using the trademark… in relation to such services.”

The Court accordingly dismissed the claim for trademark infringement.

Conclusion

Ordinarily, using the corporate logo in informational material directly works as a source of revenue generation and to generate goodwill and brand value for corporations. On the face of it, such use without permission is copyright infringement unless it squarely falls within the scope of the exceptions, which is decided on a case-to-case basis. As observed in AGL vs. Greenpeace, not all the materials fell within the exception of fair dealing because the intended use did not reflect that. Notwithstanding anything contained to the contrary, copyright will always remain an effective tool to protect and restore brand value and reputation. Suppose any advertising is deceptive or gives misleading and factually incorrect information. In that case, brand owners can claim trademark or copyright infringement, although AGL did not argue this.

References

HOAD, R., ADAMS, K. and WU, M., 2021. Brand-jamming, free speech and satire: Federal Court finds Greenpeace’s use of AGL’s logo is (mostly) fair and darkly humorous – Knowledge – Clayton Utz. [online] Claytonutz.com. Available at: <https://www.claytonutz.com/knowledge/2021/june/brand-jamming-free-speech-and-satire-federal-court-finds-greenpeace-s-use-of-agl-s-logo-is-mostly-fair-and-darkly-humorous> [Accessed 18 November 2021].
Herbert Smith Freehills | Global law firm. 2021. Not all’s “fair dealing” in war and Greenpeace: Federal Court confirms limits of the “parody or satire” exception to copyright infringement. [online] Available at: <https://www.herbertsmithfreehills.com/latest-thinking/not-all%E2%80%99s-%E2%80%9Cfair-dealing%E2%80%9D-in-war-and-greenpeace-federal-court-confirms-limits-of-the-> [Accessed 16 December 2021].
Legislation.gov.au.Copyright Act 1968. Available at: <https://www.legislation.gov.au/Details/C2017C00180> [Accessed 21 December 2021].

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Doctrine of separability in arbitration : an overview

By

Sneha Mahawar

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January 1, 2022

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This article is written by Shristi Roongta of Amity Law School, Kolkata. This article discusses the meaning of the doctrine of separability in arbitration along with other important aspects such as need, laws, and judicial pronouncements.

This article has been published by Sneha Mahawar.

Table of Contents

Introduction

When a dispute arises between two parties, they choose to go for arbitration, as agreed and mentioned in their agreement. While entering into an agreement, there are certain clauses and conditions by which the parties agree to be bound. In case of termination of an agreement, the clauses come to an end either by mutual consent or due to breach of a condition. However, there are certain clauses that survive even after the termination of the agreement. Herein the doctrine of separability comes into play, it lays out that an arbitration clause or an arbitration agreement is a separate and autonomous clause and survives the termination, breach and invalidity of the contract. However, why this doctrine is important and how it affects the contract will be discussed in the latter part of the article.

What is doctrine of separability

As mentioned earlier, the doctrine of separability states that an arbitration clause/agreement is separable from the main contract and therefore survives the termination of a contract. It is one of the conceptual and practical foundations of international arbitration. The main aim of this doctrine is to ensure that in case a party claims that there has been a breach of a condition and the contract will be terminated, then, despite this termination of the contract, the arbitration clause survives to determine the mode of settlement. Judge Stephen Schwebel of the International Court of Justice said, “The very concept of and phrase ‘arbitration agreement’ itself imports the existence of a separate or at any rate separatable agreement, which is or can be divorced from the body of the principal agreement if need be”.

Emergence of doctrine of separability

The doctrine originated in France. The judgment of Gosset laid the foundation of this doctrine. Later, the US Supreme Court also recognised the doctrine in the case of Prima Paint Corp. v. Flood & Conklin Mfg. Co. (1967), since this judgment various courts, legislatures and institutionalised arbitration centres had started recognising the separability of arbitration clauses.

Several arbitral institutions and legislatures recognise the concept of the doctrine. The English Arbitration Act, 1698 which is the first arbitration legislature, treated the arbitration clause as separable from the main contract. The first arbitral institution which is the International Chamber of Commerce also recognised it. The UNCITRAL Model law also reflects this doctrine under Article 16 which incorporated the doctrine as ‘an arbitration clause which forms part of a contract shall be treated as an agreement independent of the other terms of the contract’. Article 23(2) of the LCIA Rules of arbitration also deals with the same concept.

Is the doctrine of separability and doctrine of severability the same

The doctrine of severability as stated by Article 13 of the Indian Constitution means when a provision of a statute offends or goes beyond the constitutional limits i.e., beyond the limits of Fundamental Rights then only such provision shall be declared void or unconstitutional and not the whole statute. In other words, the provision is separate from the statute and the statute cannot be held invalid for the inconsistency of a particular provision.

Therefore, it is clear that the doctrine of separability and the doctrine of severability has similarities. As it is mentioned earlier, the doctrine of separability means the arbitration clause is separate from the main contract.

Coming to the differences, both the doctrines propound a similar meaning i.e., the clause or the provision is separate from the main contract or statute. However, in the case of the doctrine of severability, if the provision is inconsistent with the fundamental right then it shall be considered void/constitutional whereas in the doctrine of separability if the contract terminates, the arbitration clause survives.

Rules and laws

Various other rules of different nations recognise the concept of the doctrine of separability. Such as:

Section 7 of the Arbitration Act, 1996 (of England).
Section 16 of the Indian Arbitration and Conciliation Act, 1996.
Article 178 of Switzerland’s Federal Code on Private International Law.

Recognition in the Indian law

The Indian arbitration law recognises the doctrine as in Section 7(1) of the Arbitration and Conciliation Act, 1996 (“the Act”) which defines the term arbitration agreement and clause (2) of Section 7 specifies that “an arbitration agreement may be in the form of an arbitration clause in a contract on in the form of a separate agreement”. As stated earlier, Section 16 of the Act deals with the notion of the doctrine of separability. After a combined reading of both the above-mentioned sections, it is clear that the arbitration clause/agreement is separate from the main contract and both of these forms independent contracts.

Need of this doctrine

Since the emergence of this doctrine, it has become a significant part of arbitration. The doctrine of separability aids the arbitral tribunal to function when its jurisdiction is challenged. Let’s say a party in a dispute says that since the main contract is not valid which invalidates the arbitration clause or agreement as well, therefore, in this case, the arbitral tribunal pursuant to the clause in the main contract (which became invalid) also does not have jurisdiction to render an award. This will lead arbitration to a lethal end because that is a powerful argument. Further, if the arbitration clause is not different from the main contract then its legality could suffer the same illegality suffered by the main contract as the parties could avoid arbitration by simply pointing out doubts with respect to the validity of the main contract which ultimately will not meet the parties intention of solving disputes through an arbitration process.

Judicial pronouncements

The judiciary around the world have viewed and opined that the arbitration clause/agreement and a contract which the parties enter into are two different contracts. Some of the case laws are discussed below:

Smith Corey & Barrett v. Becker Gray & Co. (1916)

In this case, it was held that the parties are bound by the arbitration clause as the main contract which contained this clause was valid. However, if the contract was invalid then the arbitration clause would have no effect.

Heyman v. Darwins (1942)

In this case, the respondents, who were steel manufacturers, appointed the appellants as their selling agents. The appellants were to sell the products in the name of the respondents. They entered into a contract containing an arbitration clause which stated any disputes arising between the parties with relation to the contract or its provision shall be referred to arbitration.

The respondents alleged that the appellants had involved them in certain liabilities improperly and therefore they refused to pay the appellants their commission. In this regard, the appellants initiated a court action against the respondents. The respondents contended that the dispute should fall under the arbitration clause whereas the appellants contended otherwise.

It was held by the House of Lords that the contract entered by the parties was valid and binding. The only issue arisen between them was only related to whether either side had breached the contract or whether the incidents that arose led to the discharge of either party from the further performance of the contract. Lord Macmillan approved the doctrine and said that:

“I venture to think that not enough attention has been directed to the true nature and function of an arbitration clause in a contract. It is quite distinct from other clauses. The other clauses set out the obligations, which the parties undertake towards each other, but the arbitration clause does not impose on one of the parties, an obligation in favour of the other. It embodies the agreement of both parties that, if any dispute arises with regard to the obligations, which the one party has undertaken to the other, such dispute shall be settled by a tribunal of their own constitution…. It survives for the purpose of measuring the claims arising out of the breach, and the arbitration clause survives for determining the mode of their settlement. The purposes of the contract have failed, but the arbitration clause is not one of the purposes of the contract.”

Harbour Assurance v. Kansa General International Insurance (1993)

In this case, the plaintiffs, Harbour Assurance, are an insurance and reinsurance company and the defendants, Kansa Insurance, are Finnish insurance and reinsurance companies. The dispute that arose between them is mainly within the scope of the principle of separability of the arbitration clause in an integrated contract in written form. It was held by the Court of Appeal that if the arbitration clause is not impeached directly then an arbitration agreement will survive the invalidity of the contract.

View point of the Indian judiciary

National Agricultural Co-op Marketing Federation of India Ltd. v. Gains Trading Ltd. (2007)

In this case, the plaintiff (National Agricultural Ltd.) and the defendants (Gains Trading Ltd.) entered into an agreement, according to which the defendants had agreed to purchase a certain amount of the plaintiff’s products. It was alleged by the plaintiffs that the defendants failed to take the delivery of the cargo due to which the plaintiffs suffered losses that were to be paid by the defendants. However, the defendants refused to pay the same which led to the initiation of the court action. The contract contained an arbitration clause stating that the dispute arising, if any, shall be resolved through arbitration.

One of the issues that arose, in this case, was whether an arbitration clause would come to an end if the contract containing such clause is repudiated?

The Supreme Court held that an arbitration clause is a collateral term that is related to the dispute resolution and not the performance. The Court also observed that even if the contract is repudiated or comes to an end still the arbitration clause would survive for the resolution of the disputes which arise out of or in connection with the main contract. The Court then referred to Section 16 of the Act and opined that the arbitration clause has to be treated separate or independent of the main contract and that “the contract is null and void” shall not entail ipso jure the invalidity of the arbitration clause”.

M/s Magma Leasing & Finance Ltd. & Anr. v. Potluri Madhavilata & Anr. (2009)

The case dealt with a core question that whether the arbitration agreement survives for the purpose of resolution of disputes arising under or in connection with the contract, even if it has come to an end due to termination, because of the breach of contract? The brief facts of the case were: the appellants (Magma Ltd.) and the respondent (Potluri) entered into a hire purchase agreement for the purchase of a motor vehicle and the price was to be paid in installments. However, the respondent committed a default for which the appellants terminated the contract. As a result, the respondent filed a suit against them.

The Supreme Court held that even though the contract has come to an end due to termination, however, the arbitration clause survives for the purpose of resolution of the dispute.

Mulheim Pipecoatings GmbH v. Welspun Fintrade Ltd. (2013)

In this case, the Bombay High Court framed the rule of doctrine of separability and held that “for an arbitration agreement to be null and void, requires a direct impeachment of the arbitration agreement and not simply a parasitical impeachment based on a challenge to the validity or enforceability of the main agreement”.

Conclusion

It can be concluded that the arbitration clause is independent of the contract and survives termination or if the contract comes to an end. However, there are arguments against the applicability of this doctrine because it contradicts the arbitration law approach and also it takes away the right of approaching the courts. Nevertheless, even being in negative arguments, the doctrine is widely popular which can be perceived in the rules and the acts of different nations.

References

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Maharashtra cabinet on death penalty : an overview

By

Sneha Mahawar

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January 1, 2022

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Death penalty — Image Source: https://rb.gy/9uoga8

This article has been written by Oishika Banerji of Amity Law School, Kolkata. This article provides a detailed analysis of the Maharashtra cabinet’s view on death penalty.

This article has been published by Sneha Mahawar.

Table of Contents

Introduction

While showing their support for the death penalty reserved by the Bombay High Court to Kolhapur sisters, Reuka Shinde and Seema Gavit, who abducted and killed children between 1990 to 1996, the Maharashtra government reflected their vision concerning death penalty which resulted in bringing about an amendment of the existing Shakti Act, 2020. The Shakti Criminal Laws (Maharashtra Amendment) Bill, 2021 brings in a plethora of changes which has been highlighted in this article. The article also aims to draw the readers’ view on Maharashtra cabinet’s perception surrounding death penalty and th possible outcome of such viewpoint.

Maharashtra cabinet on death penalty

In an effort to reduce horrific crimes against women and children in Maharashtra, the state cabinet adopted a draft Bill, for making changes to existing Shakti Act, 2020, that includes provisions for harsh punishment for criminals, including death penalty, life imprisonment, and substantial fines, as well as expedited trials. For the proposed law’s implementation in the state, the draft Bill aims to change pertinent provisions of the Indian Penal Code (IPC), 1860, Criminal Procedure Code (CrPC), 1973, and the Protection of Children from Sexual Offenses (POCSO) Act, 2012. The state had stated in December 2019 that it will introduce a law similar to Andhra Pradesh’s Disha Act, 2019. The Shakti Criminal Laws (Maharashtra Amendment) Act was overwhelmingly enacted by the Maharashtra Assembly on December 2, 2021. After Andhra Pradesh, it became the second state in India to accept the death sentence for egregious rape and gangrape offences with the approval of the Bill.

The government cited a spike in the number of incidents of violence, particularly sexual assault against women and children, as the primary motivation for enacting the new legislation. According to the Bill’s Statement of Objects and Reasons, it is necessary to complete the investigation and trial of heinous sexual offences against women and children in a timely manner in order to deter perpetrators from committing such crimes. It is necessary to impose severe penalties, such as large fines and death sentences.

Shakti Criminal Laws (Maharashtra Amendment) Act, 2021

The Shakti Criminal Laws (Maharashtra Amendment) Act, 2021 which still remains a Bill, have been analysed hereunder from different viewpoints. The showstopper in this analysis is the positive advocacy concerning death penalty that the present legislation voices for. That remains the sole reason as to why the Maharashtra cabinet’s take on this reformative legislation has been much in discussion.

Changes in existing laws

Changes to the Indian Penal Code, 1860 the Code of Criminal Procedure, 1973, and the Protection of Children from Sexual Offenses Act, 2012 are proposed in the draft Bill. Changes to current provisions on rape, sexual harassment, acid attack, and child sexual abuse are proposed.

The Bill recommends that Section 375 of the IPC, which lays down the offence of rape, be amended to provide an explanation. In situations where rape is committed under circumstances that include, but are not limited to, some form of assurance, such as a promise of marriage or understanding between the parties, where they are consenting adults, and from conduct it appears that act has been committed with the consent or ‘implied consent,’ valid consent may be presumed. In such instances, the present legislation does not imply a blanket assumption of permission. Under Section 326A, the punishment for serious bodily harm caused by acid attacks has been increased to a minimum of 15 years, which can be extended to the perpetrator’s natural life, plus a fine. The penalty for willfully throwing acid or trying to hurl it has been increased to a minimum of seven years and a maximum of 10 years under Section 326B.

The Bill proposes changes to the CrPC, requiring that an investigation in certain instances be completed within 15 days after the filing of an FIR, with a seven-day extension possible. If it is not completed within this period, the investigating officer must provide a written report to the commissioner of police or special inspector general explaining the reasons. A trial must also be finished within 30 days of the charge sheet being filed against an accused, according to the Bill. It is intended that an appeal filed with a higher court be resolved within 45 days. The Bill proposes that exclusive courts be established for this purpose.

While the POCSO Act, 2012 has provisions for quick case disposition and the establishment of special courts, the disproportionate ratio between cases filed and available infrastructure, notably in forensics and the judiciary, results in increased pendency. The Bill highlights the same as well.

Loyal advocates of the death penalty

The Bill proposes death sentence for rape, gang rape, rape by individuals in power, severe sexual assault of children, and acid attacks that result in serious harm. The death penalty is to be advocated “in terrible situations where sufficient solid evidence is available and circumstances necessitate exemplary punishment.”

Robust deterrents

According to the draft Bill, special police teams and specialized courts would be established to investigate and prosecute incidents involving women and children. The Bill also recommends that anyone found guilty of the aforementioned offences face a severe punishment of up to Rs 10 lakh. The old legislation provided for a fine, although most parts did not specify the amount. In cases of acid attacks resulting in serious harm, a fine of up to Rs 10 lakh is suggested to be paid to the sufferer for medical care, including plastic surgery and reconstruction. In serious incidents of sexual violence, the Bill proposes to increase the sentence from five to seven years in some areas of the present legislation, and from seven to 10 years in others.

The Bill also proposes the creation of a “Women and Children Offenders Registry” that would be linked to the National Registry of Sexual Offenders and will provide law enforcement authorities with information on anyone convicted of sexual assault against women and children. Each district will also have its own police unit to investigate similar instances. According to the bill, the government would establish institutions such as the “One Stop Centre” to provide victims with rehabilitation, legal assistance, counseling, and medical assistance. Many of these have already been suggested in the state under various programs such as the Manodhairya scheme.

A lookout for crimes in digital space

The draft Bill suggests enacting new legislation to address online harassment of women. Intentionally inducing “a feeling of danger, intimidation, or dread in a woman,” as well as insulting her modesty by any act, deed, or words, including offensive communication, will be an offence punishable with up to two years in prison and a Rs 1 lakh fine. The offence is inclusive of uploading modified videos of women or threatening to upload images or films that might cause libel, embarrassment, or breach their privacy. The Bill also makes it essential for internet, telephone, and social media companies to submit electronic records and data for investigations in incidents of sexual abuse against women and children within seven days, or if otherwise, face a fine of up to Rs 5 lakh and a one-month jail sentence.

Death penalty : a solution or hurdle

The issue of deterrence has always been a central subject in death penalty debates. The debate centers on whether or not the death sentence has the ability to deter future heinous crimes. Most states are used to enacting rules to deter potential criminals from conducting illegal acts. The fact that governments implement such a statute in situations of heinous crimes demonstrates that the state is committed to eliminating the same, and hence is adopting the most severe punishment available to deter them, which is the death penalty. The argument here is that if a rapist is sentenced to death, those who wish to do the same act would think twice before killing since they don’t want to lose their lives.

When it comes to delicate matters like the death sentence, policymakers have a propensity to ignore the primary point. What policy should be adopted is determined by how an issue is characterized. If the death sentence is characterized as a human rights issue at the problem description phase, most of the arguments (such as cost and deterrent) will be overlooked. The argument that the death sentence should be used to punish criminals for murder is incredibly naive. If states don’t favor losing people, then the death sentence should not be used as a punishment for heinous crimes like rape. As a result, academics across the world continue to explore alternatives to the death sentence for such crimes.

Loopholes in the proposed Bill

Age is a crucial aspect to consider while sentencing and the Supreme Court had viewed in Bachan Singh v. State of Punjab (1980) that “whether an accused is young or elderly, he shall not be condemned to death.” The argument is that young people have their entire life ahead of them, and the criminal justice system in such situations tends to favor reform. It is also considered that young people are highly vulnerable in society, and that punishing them in the same way as older individuals would be excessive. Furthermore, elderly people cannot be regarded as a significant threat to society, thus capital punishment is not justified on the ‘crime prevention’ or ‘incapacitation’ theories of punishment. The Bill does not provide any age limit for granting the death penalty and therefore leaves it for the courts to interpret.
The Bill does not consider the factor of economic vulnerability while imposing robust deterrents including the death penalty for the offences embraced by it. As the cases of the detainees progressed through the court hierarchy, the difficulties imposed by the criminal justice system would further heighten the prisoner’s economic vulnerability.
The quality of legal representation given to death row inmates is an essential criterion for assessing the fairness of India’s death penalty administration. Given the socio-economic character of death row inmates, attorneys must play a critical role in addressing the alienation that these individuals feel from the criminal justice system. However, there has been an increase in the lack of engagement with inmates and their families, as well as frequent demands for money and defence lawyer failure of duty. The Bill fails to highlight this aspect while clearly laying down the death penalty as a deterrence measure for heinous offences.
There is very little information available about the treatment of death row inmates in Indian jails. One of the most noticeable elements is that inmates sentenced to death are handled differently from the time the trial court issues the death sentence, despite the fact that the law clearly states that all death judgments issued by trial courts must be confirmed by the High Court. In prisons, this disparity in treatment has very serious effects on the prisoner, such as the inability to work, lack of engagement with the general jail population, and ban from engaging in prison activities, among other things. The Bill’s silence in this aspect is not very welcoming.
While the Bill very well states the need for speedy trials in heinous offences committed against women and children, it fails to base its utopian thought of promoting the death penalty as a means to end the commission of such grave offences with realism. There exists no such statistics or evidence that can showcase the fact that the promotion of the death penalty as a foremost measure of punishment has contributed to reducing the rate of commission of inhuman offences against women and children in the nation. Instead, the Bill will take the shape of a toothless tiger as soon as it wears codified clothes (becomes an Act).

Conclusion

While Maharashtra became the second state after Andhra Pradesh to bring in changes in the existing statutory laws to govern rape cases stringently, the reason as to why the remaining 25 states of India have not adopted such robust laws draws attention. Maharashtra cabinet’s decision to promote the death penalty as a stringent deterrent to curb rape cases in the state is indeed socially awakening but must be implemented cautiously and with necessary precautions so as to avoid the legislation from taking a draconian shape.

References

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

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Government’s Golden Powers on FDI during COVID-19 emergency in Italy

By

Abanti Bose

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January 1, 2022

0

1495781168_N9trTU_1495776794_ViE5dh_fdi-ST — Image Source: https://bit.ly/376R7eU

This article is written by Abhishek Verma, pursuing Diploma in International Business Law from LawSikho.

This article has been published by Abanti Bose.

Table of Contents

Introduction

The outbreak of COVID-19 was not only a public health crisis but had also severely shattered the global economy and financial markets. It was the time where each of the affected countries’ focus was to safeguard the health of its citizens somehow and at the same time to manage their economy. The prime focus at that time of the world was the healthcare sector, as people were exploiting it, which raised serious concern among the governments and various organizations who work for the welfare of the people. The European Union Commission also showed concern about certain important sectors of its Member States. The Healthcare sector was prime in its Communication letter to the Member States outlining the need to regulate the foreign direct investment and free movement of capital from third countries through FDI Screening Regulation. The Government of Italy expanded the ambit of its pre-existing regime of Golden Power law and inserted in various sectors of strategic importance.

Role of FDI in Italy and its economy

Italy has a very open and welcoming economy for investors. It has been working towards gaining investors’ trust and confidence and has taken significant steps. As a result, it has been ranked 8th globally and 4th in the EU in the 2019 FDI Confidence Index.

Businesses in Italy have duty-free access to more than 30 national markets within the European Economic Area and over 500 million high-earning consumers.

In the last few years, worldwide direct investments in Italy have grown more than its GDP and exports, making it one of the main drivers of globalization.

Impact of COVID-19 on Italy’s economy

The outbreak of the COVID-19 virus led many European countries to lock down significant parts of their economies to contain the virus outbreak. And these lockdown measures have had a marked adverse impact on the Italian economy.

Lockdown in the whole country was imposed from March 9, 2020, until the end of May 2020, which resulted in a decline of Italian GDP by 5.4% in the first quarter of 2020 and in the second quarter by 12.4%.

Due to this crisis, the European Union (EU) Commission felt a need to regulate the market/economy of its Member States. In furtherance of that, on March 25, 2020, it laid down specific measures/guidelines for screening the Foreign Direct Investment to protect their critical assets and technologies, especially of the medical sector, from becoming controlled by foreign entities during the COVID-19 pandemic. As a result, and by adopting these guidelines from the EU Commission, the Government of Italy enacted a series of emergency regulations aimed at safeguarding the Italian economy, which included the exercise of the Golden Power to regulate the Foreign Direct Investment, especially from the non-EU countries.

Role of European Commission

The European Commission is the European Union’s politically independent arm established in the year 1958 to promote the general interest of the EU by proposing and enforcing legislation as well as by implementing policies and the EU budget. In addition, it represents the EU countries internationally by speaking on their behalf in particular areas of trade policy and humanitarian aid and negotiates international agreements for the EU.

Golden Power of government in Italy

The Golden Power of the Italian Government enables it to regulate the Foreign Direct Investment (FDI) and corporate transactions by limiting or stopping them.

The concept of Golden Power came into existence pursuant to Law Decree No. 21 dated March 15, 2012, which was converted into law by Law No. 56 on May 11, 2012.

Initially, through Law Decree no. 21/2012 (which was converted into Law no. 56/2012), the Italian Government was allowed to exercise the Golden Powers to prohibit or to put restrictions on the purchase of a company’s shares with regard to the companies operating in the energy, transport and communications sectors by any non-European entity, and as to the defence and national security sector, the same powers could have been exercised by the Italian Government whenever the purchaser was an entity other than the Italian state.

Amendment by Law Decree no. 105/2019, converted into Law no. 133/2019

This amendment was made to extend the Italian Government’s powers to companies active in:

i. Critical infrastructures (physical or virtual), including energy, transportation, water, health, communications, media, data processing or storage, aerospace, defence, electoral, financial infrastructures, sensitive areas, as well as investments in land and buildings essential for the use of such infrastructures; and

ii. Critical technologies and dual-use products, including artificial intelligence, robotics, semiconductors, cyber security, aerospace, defence, energy storage, quantum and nuclear energy, as well as nanotechnology and biotechnology.

Current ambit of Golden Power review in Italy

Considering the shattering situation of the economy during the peak of the COVID-19 pandemic, on April 9, 2020, the Italian Government decided to expand the ambit or scope of application of the Golden Power through a temporary regime established by Law Decree No. 23 of 2020, under which a filing obligation is triggered upon:

EU and non-EU investors, in case of direct or indirect acquisitions of a controlling interest; and
Non-EU investors only in the case of direct or indirect acquisitions of non-controlling minority stakes (acquisition of at least a 10 percent shareholding or 10 percent of the voting rights, and when the following thresholds are exceeded: 15 percent, 20 percent, 25 percent, 50 percent), provided that the value of the investment exceeds €1 million.

This temporary regime is applicable only up to December 2021, and the standard regime will be applicable from January 2022 unless any extension on the current temporary regime is being notified/communicated.

Scope of Golden Power review of Italy

The Golden Power Law of Italy enables its Government to review any transaction which could be a material threat to the essential or fundamental interest of its nation. The fields and the sectors on which this power applies have already been mentioned above under the heading: Golden Power of the Government in Italy and its amendments till date. But here are some common transactions that come under the ambit of the Golden Power of the Italian Government and for which pre-clearance is mandatory:

Purchase of stock or assets, mergers, and joint ventures in which the investing partner in the Italian assets is a foreign entity or partner
Any kind of agreements or contracts with non-EU persons relating to 5G technology, components, services, or any kind of infrastructure thereof.

If any of the above-mentioned transactions are to be executed, any of the sellers or purchasers may make the filing to get the clearance.

Also, there are certain different triggering points of filing different kinds of transactions under different sectors, which are mentioned herein below:

– If there is an acquisition or any other transaction in the defence and national security sectors where even certain minimum non-controlling stakes are acquired.

– If a controlling stake is acquired by an EU entity or if a stake of no less than 10% is acquired by a non-EU entity in a sector other than defence and national security sectors.

The purchaser in any of the above transactions would be liable for monetary sanctions of not less than 1% of the cumulative turnover realized by the companies involved in the transaction or up to twice of the value of the transaction, or between 25% and 150% of the value of the transaction, solely with respect to 5G technology transactions.

Golden Power review process

The process of exercising Golden Power review must be initiated within ten days of the signing or adoption of any corporate resolution (subject to review) approving the transaction. After taking up the transaction for the purpose of review under its Golden Power, the Government has a period of 45 days, during which any voting rights attached to the acquired interests are frozen until the clearance is given.

The Review Period may be extended only once, for a maximum of:

(i) 10 business days if the Italian Government requests additional information from the filing person and

(ii) 20 business days if the Italian Government requests additional information from a third party (a party other than the filing party).

Although other EU member states or the EU Commission can take up the required transaction to be reviewed either independently or at the request of the Italian Government, the final decision of authorizing the foreign investment would be of the Italian Government only. But at the same time, those member states or the EU commission may raise concerns or issue advisory upon any such transaction.

EU screening guidelines and regulations for FDI

In pursuant to the FDI Screening Regulation, issued in March 2019, the European Union has established an EU-wide mechanism/framework through which the European Commission and other member states can coordinate their actions on foreign investments. The Commission and the Member States have come up with certain necessary operational requirements for the full and ideal application of the Regulation. These requirements are:

Regularly intimating the Commission about their existing national investment screening mechanism.
Establishing formal contact points and secure channels with the Commission and the other Member States to exchange information and analysis.
Developing procedures for the Member States and the Commission to quickly react to FDI concerns to issue opinions.
Updating the list of projects and programs of Union interest annexed to the Regulation.

Following these recommendations, the Member States have agreed to comply or coordinate (informally) where the FDI transactions impact the EU.

Conclusion

Italy has been a very appealing and welcoming place for investors, and it has been working for a long time towards gaining the trust and confidence of investors. But at several times, the European Union Commission, being a body established to promote the general interest of the European Union, has shown concern about the economy of its Member States. Hence, at times it has laid down certain guidelines for its Member States outlining the need to regulate certain sectors by restricting Foreign Direct Investments from different EU and non-EU countries. The Italian Government extended “Golden Powers” on FDI during COVID -19 emergency, which has led to an increase in its ambit. During the outbreak of the COVID-19, the EU Commission felt a need to safeguard certain sectors of strategic importance among which the healthcare sector was of prime importance at that time, for which it laid down guidelines for its Member States to regulate those sectors of prime importance and also the need to review the FDI Screening. Italy being a Member State of the European Union has legislated certain laws to do the same. For that, it has passed a decree which provides the Government to exercise the Golden Power Law, which enables it to regulate the FDI transactions through restricting and prohibiting certain kinds of transactions which are pertaining to the sectors which are crucial for the Government and the said transaction could be a threat to the nation’s interest. It is for a temporary period. While appreciating the Government’s efforts to complete and clarify the regulatory framework, there are still uncertainties as to the subjective and objective scope of the Golden powers, which will require case-by-case analysis.

References

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What are the legal challenges imposed by smart contracts

By

Shoronya Banerjee

-

December 31, 2021

0

This article is written by Swesh Saurabh, pursuing a Diploma in Cyber Law, Fintech Regulations, and Technology Contracts from LawSikho.com.

This article has been published by Shoronya Banerjee.

Table of Contents

Introduction

The term “smart contract” was first introduced by computer scientist and cryptographer Nick Szabo some 20 years ago as a graduate student at the University of Washington.

Whenever we talk about any legal work or documents, the first thing which comes into our mind is “a lot of paperwork”. The smart contract could be the game-changer here as it can reduce or say can help us get rid of paperwork completely.

A smart contract is an agreement that gets executed automatically. This automatic execution is made possible through computer code which translates the terms of the contract into an executable program. To perform such execution it is required to have control over the necessary physical or digital objects and this program helps in getting that control.

The smart contract is used to automatically execute any agreement when predetermined conditions are met. This helps participants in receiving the outcome immediately without the involvement of any third party or any intermediaries.

The smart contracts work on a simple format of “if/when….then..” statements that are written into code on the blockchain. Let’s understand this with a very common example i.e. A rents his apartment to B. They both agreed that if B fails to pay the rent then A will be entitled to lock the door of the apartment. Further, they agreed to enforce this agreement through a smart contract that will automatically lock the door if B fails to pay the rent. Now, when we have the basic idea of what a smart contract is, let’s see what the legal issues that smart contracts cause are.

Smart contract : a piece of code

As the smart contract is nothing but an agreement that runs on a code, it does not have the means to determine whether the agreement in which the parties are entering creates any legal obligation or not. Neither it has any means to check and verify that the parties who decide to make use of a smart contract have validly given their consent to do so. There are chances that the parties may have not understood the terms of the contract and how it works. Smart contracts do only those things which it has been told to do. However, it does not mean that if a smart contract has the power to do something then it is legal or right too. Code is not a law. If we take the above example in which A and B enter into a smart contract and the terms of the contract are that if B fails to pay rent then the door of the apartment will get locked till the payment is made. In this case, if B fails to pay the rent he will be immediately evicted from the apartment. Indian laws regarding this matter state that the owner must inform the tenant before a particular time period which is mentioned in the law before evicting the tenant. The example thus shows that there is a need for a legal system for smart contracts to determine whether they are valid or invalid, legal or illegal.

Automated nature of smart contracts

The ability of smart contracts to automatically execute transactions is the key feature of it. However, because of this the parties entering into the contract could face some difficulties. We know that in traditional contracts if any breach occurs then it can be simply excused by the parties by not enforcing the penalties.

If a payment is delayed by any valued customer then in that case the vendor can make a real-time decision and preserve the long-term commercial relationship as for a vendor it is more important than imposing any late fee or terminating the contract. But if this relationship is reduced to a smart contract then in that case this option of not enforcing the contract in case of any delay is not available to the vendor. So if any late payment is made then the late fee will be deducted from the customer’s account automatically. This feature of smart contracts is not the way the business works in real life.

Legitimacy of multilingual contracts

A contract that includes provisions that are expressed in different languages is not generally effective under local laws. Because of that, a contract in which provisions are expressed in code can be seen as a contract that is expressed in different languages. And hence there is a possibility that contracts which are partly in code and partly in natural language may not be effective either.

Mutual understanding of coded terms by the parties

For an agreement to be legally valid, it is very important that the parties to the agreement mutually understand the terms of the contract. But the problem which parties face in a smart contract is that the provisions are written in code and that becomes difficult for the parties to understand. It becomes a matter of contract law such as whether there was sufficient mutual understanding between the parties regarding the terms of the contract to form a contract at all.

Amending and terminating smart contracts

Presently there is no such way to amend a smart contract which creates challenges for the parties contracting. For example, in a traditional contract if the parties of the contract mutually agree to change any provision of the contract or if there is any change in law then they can draft an amendment to address that change.

But when we talk about smart contracts, it doesn’t offer such flexibility. Once a smart contract is made then it becomes so complicated to modify it as it resides on blockchains that are immutable. Even if somehow the parties managed to amend then it will cost much more than amending a traditional contract.

Similar challenges can be faced by the parties while terminating a contract. Projects are currently underway to create smart contracts that are terminable at any time and more easily amended.

How should legislators identify smart contracts?

Smart contracts are accepted legally by very few numbers of countries currently.

For example-

1. Japan

There isn’t any governmental definition of ‘ blockchain’ and smart contracts in Japan. However, the Japan Blockchain Association provides a working definition of ‘blockchain’ in Japanese but smart contracts are yet to be defined. The definitions are also absent from the main text and legal summary and analysis of the Virtual Currency Act. The reason behind this is that there is not yet a consensus on a legal definition for a ‘smart contract’ in Japan.

2. USA

Unlike Japan, the USA masters a nice example of both application and definition. In the USA, smart contracts are not regulated by any federal law but there are new laws on a state level. Tennessee was one of the states to adopt the legal concept of smart contracts. State law identifies smart contracts as an event-driven computer program, that executes on an electronic, distributed, decentralized, shared, and replicated ledger that is used to automate transactions, including, but not limited to, transactions that:

Take custody over and instruct transfer of assets on that ledger;
Create and distribute electronic assets;
Synchronize information; or
Manage identity and user access to software applications.

Law also states that smart contracts may exist in commerce. No contract relating to a transaction shall be denied legal effect, validity, or enforceability solely because that contract is executed through a smart contract.

Smart contract and India

In India, for the regulation of any contract, we have The Indian Contract Act 1872. It lays down the basic elements which are essentials for any contract to be valid.

According to Section 10 of the Act, “all agreements are contracts if they hold the free consent of parties willing to contract, for a lawfully accepted consideration and with an object.”

We can infer from the definition that Smart contracts are allowed under the Indian contract Act, 1872 as smart contracts consist of the offer, acceptance, and consideration.

However, if we are talking about contracts that are coming into existence through electronic means, we must refer to Section 10A of the Information Technology Act. It talks about the validity of a contract formed through electronic means. It says that while forming a contract, for example, communication of proposals, acceptance of proposals or the revocation of proposals and acceptances are being done through electronic mode, then such contract is valid and it shall not be deemed to be unenforceable just because of the reason that its formation was done through electronic means.

Even under the Indian Evidence Act, an e-contract has the same legal effect as a paper-based agreement. Section 65B(1) talks about it. It says that if any information is contained in electronic form is also deemed to be a document and shall be admissible in any proceedings.

Regulatory issues, however, exist, especially in India where there are no regulations regarding the finer details of a smart contract. If specific regulations are not made, a wide-ranging adoption of the technology will require the government to make amendments to the Indian Evidence Act, 1872, and the IT Act.

Risks of smart contracts

Smart contracts are called smart but it doesn’t mean that they do not contain risks. Smart contracts are tasked especially to manage the User’s fund and it will be very irresponsible if we ignore the risks or threats which come with these autonomous programs. The adaptability and strength of the smart contract mainly depend on the coding skill of the developer. It requires a level of experience and knowledge that many blockchain developers do not possess in this era of copy-paste.

Ethereum has been praised by many as having a superior code to that of Bitcoin. But still, that same “bullet proof” smart contract code was attacked by a hacker who stole around $60 million in just the first 12 hours of the attack. There is no doubt that smart contracts are of great use but still, there are risks because of which the users can suffer a huge loss if they are not resolved. Since smart contracts and blockchain technology are still in the maturing state, we should wait and see how the legal systems across the world will handle these agreements in terms of taxation and other laws.

Conclusion

There is no doubt that smart contracts have caught the attention of the global legal industry. To understand how smart contracts and blockchain works, many of the largest firms are partnering with initiatives such as the Ethereum Enterprise Alliance and the R3 consortium’s Legal Centre of Excellence. Only by understanding the working of smart contracts, we can solve many issues which arise out of it. The rest of the problems regarding the legality of the smart contract can be solved only by making separate regulatory rules.

Problems regarding the termination and amendment of smart contracts are the major issue and changes should be made to overcome this issue. There is no question that the implementation and growth of smart contracts is the next step of innovation and can lead directly to billions of overhead costs being minimized while making the whole system more efficient. Finally, we found a revolutionary solution, but we are still just at the beginning of its implementation!

References

1. The Enforceability Of Smart Contracts In India – Corporate/Commercial Law – India (mondaq.com)

2. Smart contracts: a boon or bane for the legal profession? – Taylor Vinters

3. An Introduction to Smart Contracts and Their Potential and Inherent Limitations (harvard.edu)

4. Smart Contracts: Key Legal Issues | by Smartz | Smartz Platform Blog | Medium

5. https://searchcompliance.techtarget.com/definition/smart-contract

6. https://www.coindesk.com/people/nick-szabo/

7. https://thelawreviews.co.uk/title/the-virtual-currency-regulation-review/japan

8.https://neo-project.github.io/global-blockchain-compliance-hub//japan/japan-smart-contracts.html

9.https://www.wallerlaw.com/news-insights/3189/Tennessee-becomes-one-of-first-states-to-approve-blockchain-smart-contractstennessee-becomes-one-of-first-states-to-approve-blockchain-smart-contracts/

10. https://legislative.gov.in/sites/default/files/A1872-09.pdf

11. https://www.indiacode.nic.in/show-data?actid=AC_CEN_3_20_00035_187209_1523268996428&sectionId=38613&sectionno=10&orderno=10

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Role of NGOs in human rights

By

Rachit Garg

-

December 31, 2021

0

This article is written by Ishan Arun Mudbidri, from Marathwada Mitra Mandal’s Shankarrao Chavan Law College, Pune. This article talks about NGOs and human rights issues in modern times and the impact these organisations have on the protection of human rights.

Introduction

“To deny people their human rights is to challenge their very humanity”

-Nelson Mandela

Human rights are necessary for the survival of mankind. These rights protect our right to freedom, right to life and liberty, freedom from slavery and torture, etc. These are universally accepted principles governed by International law. However, there seems to remain a gap between actual acceptance of these rights and laws which mention them. Weaker sections of the society many times cannot cope with the existing legal structure on human rights. Hence, this is where Non-Governmental Organisations (NGOs) intervene.

What are NGOs

The NGO sector is developing rapidly across the globe. What started as a cure to tackle poverty, illiteracy, and other social evils today has extended to global trade, finance, the environment, and building international relations. So what are NGOs? NGOs in simple words are organisations that think beyond money or financial profit and work towards helping people grow. A very well-defined meaning of the term NGO is given by the World Bank as, private organisations which conduct activities to promote the interests of the poor, provide social services, and undertake community development. According to the NGO Advisor’s 2021 statistics, the Bangladesh Rehabilitation Assistance Committee, also known as (BRAC) an NGO placed in Dhaka Bangladesh was voted the best NGO in the world. Among the much-appreciated work done by the BRAC, providing aid to the Rohingya, at a time when the world is fighting for solutions against the humanitarian crisis, stood out. This was just one example of the tremendous work these NGOs do, and across the globe, the number of NGOs is also increasing. As more NGOs have entered the frame, their scope as mentioned above has also grown wide.

Lending a hand in international trade

Certain NGOs around the world have entered into international trade. The World Trade Organisation also has readily accepted the participation of NGOs in world trade issues and debates. The Public Forum, which is the WTO’s largest outreach event, gives an opportunity for various organisations to publicly debate on trade issues across the globe. Various NGOs have participated in this event since 2001 and given their views. Further, Article 5(2) of the Marrakesh Agreement states that the General Council of the WTO shall consult and cooperate with the Non-governmental organisations on matters related to the organisation. Hence, due to strong relations with the WTO, various NGOs have widened their scope to international trade including, Action Aid International, Consumers International, Evian Group, etc.

Helping in environmental protection

A well-established NGO in the vicinity can be of huge help to the environment. Raising environmental issues in the society, creating awareness among the public, conducting timely research on various environmental aspects and reporting it, protecting the wildlife, etc. are some of the work which environmental NGOs do. Increased awareness regarding environmental protection can be seen amongst the youth. An example of this is Greta Thunberg, an 18-year-old environmental activist whose School Strike for Climate movement has been lauded around the world. Some of the biggest environmental NGOs around the world include The World Wildlife Fund, Greenpeace, Friends of the Earth, and Natural Resources Defence Council.

How are NGOs financed

NGOs work for the betterment of the society and not for monetary requirements. However, to run the organisation, funding becomes pretty obvious. The majority of NGOs depend on common sources of funding like subscription, donation, membership fees, etc. Other sources include aid from international organisations like The UN, World Bank, International Monetary Fund, and at times grant-in-aid by the government.

Legal status

International law does not mention the legality of NGOs. However, as NGOs are spread out in many countries, national laws do regulate NGOs as legal entities. For example, in India NGOs come under the purview of different legal enactments like the Income Tax Act 1961, the Societies Registration Act 1860, the Companies Act 2013, and the Public Trust Acts of that particular state. Giving a universal legal recognition to the NGOs under international law is necessary because this will ensure the participation of more NGOs in the administration and their decision-making process, which will, in turn, help the political leadership of the country. Further, people will also start trusting these organisations more and will take help from them.

Human rights activism

Despite there being documents imposing individual rights like The Magna Carta(1215), The English Bill of Rights(1689), The French Declaration on Rights of Man and Citizen(1789), and the US Constitution on Bill of Rights(1791), it took two devastating World Wars for the people to actually believe human rights should be brought up as an issue on the World stage.

The birth of the United Nations in 1945, was a step to recognize human rights issues around the world. UN member states pledged to establish and promote human rights to all. Further, in 1948, the UN adopted the Universal Declaration of Human Rights with a vote from a majority of 56 member nations. Its main concern was the recognition of human rights on the global stage. The preamble of the UDHR itself mentions, recognizing equal rights to all members of a family is needed for maintaining freedom and peace in the world.

Human rights covenants and conventions

Keeping in mind the principles of the UDHR, various covenants and conventions were established. The European Convention on Human Rights was adopted in 1950 by 40 European nations including the United Kingdom. The main objective of this convention was to ensure the protection of human rights in Europe. Further, the UN drafted the International Bill of Rights which included two treaties namely, the International Covenant on Civil and Political Rights (ICCPR), and the International Covenant on Economic, Social, and Cultural Rights (ICESCR). Both these covenants focus on giving basic rights like food, shelter, education, freedom of speech, religion. In addition to this, the UN has adopted other conventions for social evils like child abuse, genocides, refugees, etc. which include the Convention Relating to the Status of Refugees, 1951, the Convention on the Elimination of All Forms of Discrimination against Women, 1979, the Convention on the Rights of the Child, 1989.

Important human rights issues around the world in recent times

Despite there being steps taken for ensuring human rights across the globe, human rights violations have been eminent.

Rohingya crisis

“The world must never forget the one million Rohingya from Myanmar”, quite rightly stated by UN human rights expert Tom Andrews after his recent visit to Bangladesh. Bangladesh, the same country where a large number of a Muslim minority group called the Rohingyas fled to from their home country Myanmar, back in 2017. This was due to a genocidal attack on the community done by the military. Currently, these Rohingya are staying in overcrowded refugee camps in Bangladesh. Denied Myanmar citizenship numerous times, these people are stateless, homeless, without freedom of movement, and basic necessities. This crisis has posed a lot of questions on human rights to world leaders and continues to do so.

Afghanistan takeover

The Taliban captured Afghanistan a couple of months back. What was promised as a truce by the Taliban, ended up becoming human rights violations. The extrajudicial killings, injustice against Afghan women and children, all call for a serious humanitarian issue to which no one seems to have an answer.

Ethiopian crisis

Political disagreements for a long time led to infighting between the rebel forces in the Tigray region which is the northern part of Ethiopia and Prime Minister Abiy Ahmed’s military. Further, there were reports of sexual violence and torture against Ethiopian women and children. The rebel forces in Tigray are opposing the reforms started by the PM, leading to an all-out offensive in the country.

Uighur Muslims issue in China

Xinjiang province, a north-west region in China is where the Muslim minority group Uighurs reside. The Chinese administration has been detaining Uighurs in camps close to the north-west province. Various allegations of rape, torture, forced sterlizations have emerged against the Chinese. Various countries including the US, UK, Canada, and the European Union have imposed sanctions against Chinese officials orchestrating these human rights abuses. However, the Chinese have denied such allegations and have imposed sanctions of their own on European officials. Amidst all this drama, the Uighurs continue to suffer.

Role of NGOs in protection of human rights

As mentioned above, the scope of NGOs has widened. The Vienna Conference in 1993 conducted by the United Nations, which was attended by roughly around 840 NGOs around the world, pledged for a combined human rights mission. Human rights NGOs work towards the betterment of humanity and help in providing assistance to victims suffering from human rights violations, collecting information on persons violating human rights and reporting the same to various agencies, spreading awareness, and educating about the importance of human rights. In 2007, the United Nations established the Human Rights Council for the protection of human rights around the world. NGOs played an important role by participating in various discussions of the Council. They were instrumental in bringing to the notice of the Council various human rights violations around the world, suggesting different kinds of solutions, and approving certain resolutions. They have been key for putting pressure on their respective governments as well as the UN organs for the protection of human rights above all.

Amnesty International

Amnesty International is one of the biggest human rights NGOs in the world. Founded in 1961, this organisation has been pivotal in promoting the protection of human rights around the world. AI has exposed human rights violations by governments, armed militias, political groups, etc. the AI strictly adheres to the principles mentioned in the UDHR and ensures that they are followed. In 1977, Amnesty International was awarded the Nobel Peace Prize. Recent projects taken by the organization include ensuring human rights are not violated in Israel and Palestine-occupied areas, pressing for an international investigation into last year’s Beirut explosion in Lebanon, providing humanitarian aid to war-torn Syria, helping with COVID-19 relief work, ensuring LGBTQ equality, and sexual reproductive rights around the world.

Impact in India

International Human Rights Day is celebrated on 10th December around the world with the aim of creating awareness among people about these rights. Kailash Satyarthi, an Indian human rights activist, won the Nobel Peace Prize in 2014 for his efforts against child trafficking and exploitation. However, in India the scenario on human rights is tense. Various human rights issues like extrajudicial killings, rape, domestic violence, custodial deaths, etc. still prevail. In 2019, the National Campaign against torture reported around 125 custodial deaths in India. Further, the South Asian Terrorism Portal reported deaths of 63 civilians due to terrorism and insurgency in Kashmir and Maoist hit areas. The COVID-19 pandemic ravaged the country, the Commonwealth Human Rights Initiative in India reported 15 casualties during the nationwide lockdown due to police beatings. The political leadership has time and again ensured to address human rights issues at all levels of the country, but there seems to be no avail. However, human rights NGOs have played an important role in providing aid to those suffering from human rights violations. Mentioned below are some of the top human rights-based NGOs doing a phenomenal job in India:-

Milaan Foundation

Milaan Foundation is an NGO that basically works towards empowering small girls across the country. This organisation ensures underprivileged girls get all the basic requirements and proper training to stand up for themselves in the future. Till now, the organisation has worked and helped around 40,000 children in the country.

Child In Need Institute

Child in need institute is a non-profit organisation registered under the Societies Registration Act,1860 in India. This organisation works towards the betterment of poor children in the country. The main motive is to break the chain of social issues like poverty, illiteracy, unemployment amongst the underprivileged in the country.

Acid Survivors Sahaas Foundation

The Acid Survivors Sahaas Foundation provides treatment to acid-attack victims. It also ensures employment and other assistance. This NGO is based in Mumbai and provides aid to around 50 acid-attacks victims across four states in the country.

Committee for Legal Aid to the Poor(CLAP)

The CLAP works towards providing legal assistance to the poor. It works towards protecting human rights through the process of law.

Conclusion

The legal status of NGOs in international law is not yet clear. Still, NGOs across the world are doing a great job in protecting the environment, building international relations by helping various UN organisations, helping the economy prosper, and last but not the least, the protection of human rights. Human rights violations tend to occur at an alarming rate and NGOs provide for an important and effective defence mechanism against this.

References

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

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Scariest criminal cases in India

By

Sneha Mahawar

-

December 31, 2021

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criminal justice — Image Source: https://bit.ly/2xuVCQP

This article is written by Jagriti Sanghi, an Advocate practising in the Courts of Telangana and Ross Denny, a final year law student. In this article, she discusses the spookiest criminal cases with elements of witchery, black magic, evil spirits, exorcism, sorcery.

This article has been published by Sneha Mahawar.

Table of Contents

Introduction

India is a country known to uphold its culture, traditions, customs and rituals. But what happens when it comes to an intersection with humanity? Below is a collection of cases that has a certain spooky element to them. Let us see what blind belief, fallacies and superstitions can do to a human’s ability of judgment.

Cases with spooky/scary elements

Sanjay Nagorao Pote v. State of Maharashtra (2018)

In this case, on the 17th of October, 2014, the accused Sanjay Nagarao entered the house where his uncle Ramdas and his children (including the deceased) resided. He then proclaimed that Lord Hanuman had entered into his body and that there was a ghost in the house of Ramdas which had to be removed by him, as asked by Lord, by performing an exorcism.

Following this, Sanjay slapped all the family members, commanded them to take a bath, poured water on his head, and even sprinkled some on all of them. He also operated the water pump in the courtyard and drenched them in water. He then went on to thrust the water pipe into the mouth of Vitthal- the son of Ramdas and the deceased in this case; sat on his chest and proclaimed again that he would remove the ghost from Vitthals’s body which ultimately led to the death of Vitthal. The accused also hit Ramdas with a stone due to which he sustained injuries. As soon as the villagers arrived at the crime scene, the accused announced that no one was to enter the compound as God was inside his body. The post-mortem suggests the cause of death as asphyxia due to aspiration of water and also a homicidal one.

When Ramdas- who was the primary witness was deposed, he stated that the accused had been dancing, chanting the name of Lord Hanuman, and behaving abnormally 10-12 days before the crime; after some time, he would also regain senses and behave normally. The accused, when examined by a doctor, suggested that the abnormality in behaviour could be a result of trauma due to his brother’s death that happened only a couple of weeks before the crime or even schizophrenia.

The trial court had convicted Sanjay on accounts of Section 302 and Section 324 of Indian Penal Code, 1860 (IPC) but when appealed to the High Court of Bombay, the judgment of the trial court was set aside and the accused was acquitted on the grounds of Section 84 of IPC which discusses the act being done by a person of unsound mind is no offence and that there was no evidence on the preparation of crime, no motive, and no mens rea.

Vidya Vinod Dhakate and Others v. State of Maharashtra (2008)

This is another case where superstitious beliefs resulted in an unfortunate death. Here, the deceased is Vinod Dhakate and the accused are his wife Vidya Dhakate and eight others. It was a known fact that the deceased had been mentally unstable for a long time and in pursuit of this, he was alleged to be violent and beat others. So, the primary accused i.e. the wife of the deceased was persuaded by the rest, to bring the victim to the seat of Lord Dattatray which was at the residence of the co-accused to perform pooja and aarti. The accused believed that her husband was possessed by an evil spirit and by doing so, the ghost would leave his body. Thereafter, the victim’s hands and legs were tied to a pole, he was placed in the said area that was an open courtyard, without a shed, in the scorching sun when the temperature was around 40℃. He was not given food or water and this plight of his continued for five consecutive days until he succumbed to death. The autopsy reported the cause of death to be cardiorespiratory arrest secondary to deprivation of food, water, and exposure to high environmental temperature. The skin was said to be dry, wrinkled, and inelastic; stomach and intestine- empty; and all vital organs shrunk and pale.

There were 17 prosecution witnesses out of which 4 had turned hostile. According to the witnesses, there was crying for food and water, and a few neighbours even came to offer water to the deceased but were stopped by the accused. On the morning of the day that the victim died, one of them even lodged a written report in the police station but no action was taken. Another witness stated that the house of the co-accused was often used to treat cases of possession of ghosts by pooja, aarti, black magic, etc.

Further, the accused went for an appeal to the Bombay High Court. It was held that the question of whether the death of the victim was homicidal, was not paid attention to by the trial court. Although the accused lacked intention, there was knowledge of a likely death under the hostile conditions. Thereby, the omission to care does amount to homicidal death. The next question to be answered was whether this amounted to murder? The Court’s answer was a no because of the fact that the deceased was alive 5 days prior; one could not infer that he would die. Thereby, the accused were convicted under Section 304 and Section 342 of IPC.

Additionally, the accused went for an appeal to the Supreme Court who set aside the conviction under Section 304 part II and said the accused be held punishable only under Section 304 A of IPC and the sentence for imprisonment be only for the period already undergone.

The State of Maharashtra v. Dyaneshwar Haribhau Kulal (2008)

This is a case of a merciless homicide wherein the accused, on accounts that the victim had, by means of black magic, killed his father in the year 1972, went on to murder the victim. According to the statements of a number of witnesses, there had been arguments between the accused and the victim, and the victim even agreed to conduct a Jatra ceremony to neutralize the effects of the black magic. However, the accused went on to threaten to kill the victim on the morning of the day he committed the crime. It was also inferred that a skull and other articles were lying around the field where the body was recovered; the head of the deceased was completely severed from the body and was held by the hair and flashed to a witness in this case who was threatened to have the same fate if he were to complain about the incident. It is also known that the accused had his sickle sharpened five days before the murder; he also used the sickle to behead a she-goat; he was absconding after committing the crime and was also on bail for another murder case.

The post-mortem suggests that the injuries sustained on the victim’s body were inflicted by the sickle recovered. Further, the Court held that it is evidently a clear case of pre-mediated, calculated, cold-blooded murder. The trial court convicted him of the death penalty under Section 302 of IPC. The accused then appealed to the Bombay High Court who upheld the judgment of the trial court.

Jitu Murmu v. State of Odisha (2020)

This is yet another case that involves superstitions. The deceased in this case- Sambari Murmu had gone to her maternal uncle- Rame Murmu’s residence who was locally known to be a self-studied supernatural medicine expert. On account of unwellness, she wished to receive indigenous treatment. On the pretext of this, Rame Murmu and his family tied the victim’s legs and hands and assaulted her with a Trishul/Trident, rope, and iron rod. This resulted in gruesome injuries and ultimately the death of the victim. The accused and his family had performed an exorcism on the victim on the belief that she was possessed with an evil spirit that had resulted in her abnormal behaviour. As she started to shout, they believed that she was possessed by an evil spirit. And in order to retrieve the remnants of the “evil spirit” from her body, the accused had done the said act. Each of the accused has also admitted to practising such techniques with another woman of the same village.

The autopsy reveals that the victim had been inflicted with penetrative injuries even in her chest wall and lungs. And that the said injuries were caused by Trident, Gainthi, and Sabala. The accused were convicted under Sections 34, 302, 307, 323, 324, 325, 326, 342, of IPC and Sections 5 & 6 of the Odisha Prevention of Witch-Hunting Act, 2013.

Ram Swaroop v. State (2019)

Vimla, the deceased in this case, was married to the son of the accused- Ram Swaroop. After four days of the said marriage, the victim contacted her family on account of being assaulted by her father-in-law on the pretext that she was afflicted by ghosts. When her father and brother intervened, the accused told them not to interfere and that he will relieve her of the evil spirits completely. The incident happened once more and the same reply was given by the accused.

On the day of the murder, while the victim was eating with her family, the accused comes in and hits her with an iron rod. He was also heard telling the witnesses to keep away or the spirits might afflict them too. The accused had created a situation of terror to the extent that none of the witnesses reported the incident. The deceased was cremated the very next day without performing an autopsy. After a few days, it was the victim’s brother that mustered the courage to report the incident and thereby led to the arrest of the accused. Additionally, he also submitted CDs and photos as evidence of assault on the deceased. The accused was convicted under Section 302 of IPC. Further, on appeal, the High Court of Rajasthan sided with the appellant’s counsel who stated that it was to be considered as an act of ignorance and that it was a usual practice in the village by Bhopal and Tantriks to repel evil spirit and even occasionally indulge in the beating because they’re convinced that doing so will alleviate the symptoms. One fact that the victim or her parents did not disclose is that she suffered from seizures or fits. Therefore, the accused considered seizures as a sign of evil spirit and due to illiteracy had committed the crime. Further, the High Court also toned down the grounds of conviction to Section 304 Part II of IPC and reduced the period of sentence to the one already undergone by the accused and thereby officiated his release.

Lachhman Dass Alias Lakha v. State Of Himachal Pradesh (2008)

The accused in this case had come in contact with the victim on a bus ride and he claimed to be a sorcerer as well as a tantric. The victim- Lata Devi was at her parent’s home for the festivities of Navaratri and subsequently had contacted the accused for performing Puja. However, the accused did not leave even after Dussehra. One night, the accused pointed to a mark he made in the backyard and asked the victim’s father to dig so as to find idols of deities. However, only a stone was found and it was taken by the accused to the puja room of the house. A day after this incident, the deceased started behaving abnormally; she began scratching her head rigorously and hit her hands and wrists on the ground. The accused on seeing this told her family members that she is possessed by an evil spirit and that because he knew exorcism, he could retrieve the evil spirit from it if he were given the whole night. He then took her to the pooja room and beat her with tongs and a chain and told the others that if they were to interfere, they would be afflicted with the evil spirit as well. The next day, the victim seemed silent and emotionless only to go back to being abnormal at night. The accused again took her to the puja room on the pretext of retrieving the remnants of the evil spirit from her body. The next day, the deceased laid in the puja room, motionless, and was subsequently taken to the hospital where she was declared brought dead. The accused went to the extent of again stating that he would revive her with his powers.

The post-mortem suggested that there were abrasions and contusions on the body, blood-tinged froth in the nose and mouth and that the death was caused due to vasovagal shock due to repeated hitting of the victim with the tongs. The tongs and chains were retrieved from the crime scene where the accused was present.

The Court held that due to the absence of intention, it is a case of culpable homicide not amounting to murder and convicted the accused under Section 304 Part II of IPC.

Measures to curb such inhumane practises

Mental change is the requirement to remove such dehumanising superstitious practices.
People in rural areas, as well as urban areas, have to be made aware of the ethics of such brutal practices and be made aware by sensitization campaigns on the same.
India needs specific legislation as the Indian Penal Code is not sufficient to tackle crimes on account of black magic and superstitions.
A central legislation is the need of the hour that takes into account the victim’s mental state.
Reasons for failure of implementation of state laws should be examined to understand the ground realities.

Conclusion

Indian case records have a large number of cases with the spooky elements of witchery, black magic, evil spirits, exorcism, sorcery, etc. As the number of cases are not small, India has regulations to curb these unethical practices too. The reason for these many cases is blind faith and superstition. This blind faith clouds people’s judgment and thereby instigates them to commit such inhumane crimes. Another reasoning would be illiteracy. There are a number of cases that go unreported too. Although wiping out unethical age-old rituals and practices is a difficult task, it is very much a necessity too. Otherwise, innocent people will have to suffer the plight. Moreover, a well-established mechanism for the implementation of the existing laws, and the creation of new ones is of utmost importance.

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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Drafting important clauses of a manpower consultancy agreement

By

Abanti Bose

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December 31, 2021

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This article is written by Hraday Pratap Singh, pursuing Certificate Course in Advanced Commercial Contract Drafting, Negotiation & Dispute Resolution from LawSikho.

This article has been published by Abanti Bose.

Table of Contents

Introduction

In any organisation, business deals happen on a regular basis out of which some are tightly roped into an agreement while few happen through handshake deals. These types of handshake deals might work for some organisations or people. However, without a solid consulting agreement in place, signed by both the parties, organisations and people entered the transaction and put themselves and businesses at risk. That’s why an Optimal Manpower Consultancy Agreement is required to be executed to cover the risks which might arise out of the dispute during the business.

In India, there is always a risk that a consultant can be deemed to be understood as an employee of the organisation as a classic case of misclassification. This misclassification is generally due to the error in determining the level of control and supervision exerted over by the organisation engaging the people. This is one of the most important risks involved while drafting a manpower consultancy agreement and any other general employment agreement. Most of the time the organisations and the manpower consultants underestimate the scope of the job to be covered under the consulting agreements. The aim of this article is to clearly illustrate the important clauses of the manpower consultancy agreement.

What is a manpower consultancy agreement?

A manpower consultant agreement is a kind of agreement that is executed between an organisation and a person looking out for a job. This agreement basically acts as an intermediary between a corporate looking to hire staff and the people looking forward to joining as a staff. The relationship established in the manpower consultancy agreement is that of a business relationship. Unlike a normal employment agreement, the relationship between the client and the consultant should be of an independent contractor. In comparison to an employee, the consultant will have more flexibility in completing the assigned tasks. The consultancy agreement is made between the company and the consultant. It outlines the scope of work to be performed by them and other terms and conditions related to their appointment in the company.

What are the concerns that need to be addressed while drafting a manpower consultancy agreement?

Few important concerns that need to be addressed while drafting a manpower consultancy agreement are to cover the aspect of what would happen if the client wants to add additional work mid-project. So, the agreement should be drafted in such a way that the additional scope of work can be added to the agreement if both the parties mutually agree on the same. There should always be an exit clause in a sense if the client decides to pull out from the job during the validity of the terms and conditions of the agreement. The clause should be drafted in such a manner that if the client wants to quit in the middle of the job, he can do the same upon fulfilling all the requirements along with them and if there is any breach, the damages can be claimed by the other party to the extent of the damage.

Another important issue that should be kept in mind while drafting the manpower consultancy agreement is that the draftee should keep in mind to distinguish between one-time setup services and ongoing services if any of the consultancy agreement.

Important clauses of a manpower consultancy agreement

An effective consulting contract needs few components to get the job done. A few of these components are strictly legal considerations, but most of them are critical to the day-to-day nature of your work with a client.

Name of all the parties: In a consulting agreement, the drafter should list out all parties which are involved in the contract which must include their official names and locations.
List of services which consultant would be required to provide to the client: Types of services which are being offered shall be distinguished from each other. The agreements should include and involve both an initial one-time project along with ongoing monthly services which need to be separated as well as any other service type within the contract. Therefore, without these differentiations, the agreement can run into problems wherein the client demands extra work or claims that he has not understood that they were agreeing to the ongoing work. If everything is clearly mentioned in the contract then in case a dispute arises in future, you can simply show the other party the terms of the agreement or contract and can get things cleared up.
Specify all required contributions by the client: This clause is a very common and important part of running a service business which can be solved preemptively in the agreement by writing down all the important and required contributions and actions on the part of the client or the other party.
Compensation and payment terms: Payment terms should be illustrated exhaustively so no dispute as to the payment arises in future.
Termination clause: Every detail of grounds and procedure of termination should be clearly written in the contract preferably in the draftee’s favour.
Ownership rights of material and information: Clients mostly understand the nature of the manpower consulting relationship, but no assumptions should be made beforehand. Different clients have different ideas about their ownership of the materials. This also extends to the ownership of materials created or used during the engagement of the corporate consultants.

Sensitive and proprietary information is mostly shared between the client and the company during a consulting engagement. This is therefore protected via a non-disclosure agreement/NDA, but if your engagement doesn’t call for a more advanced NDA, you can simply add a non-disclosure clause to the agreement.

Limitation of liability clause: A “Limitation of Liability” clause is a very important clause that can help protect the parties from frivolous cases and lawsuits. If the nature of your services is such that it creates some sort of real potential for damages, it becomes important to mention this clause in a clear-cut manner to limit the liability.
Terms for resolving and handling dispute: if you do decide to pursue legal action, you’ll want to cover all your bases and ensure that should you succeed in court, you will be compensated for every area that you have lost time and money in pursuit of the payment owed to you. Also, A strong alternate dispute resolution mechanism should be drafted to handle the dispute in a timely and effective manner rather than running into litigation which is a time consuming and expensive affair.
Boilerplate clauses: These clauses are very important with respect to the completion of the agreement with all legal formalities. The boilerplate clause includes a severability clause, entire agreement clause, force majeure clause etc.

Significant case laws

Dhrangadhra Chemical Works v State of Saurashtra (1954 AIR 264), the Supreme Court of India has held that the test which determines and distinguishes an independent contractor from an employee is the right and extent of control of the employer over the manner in which the work is to be done.

In Lakshminarayan Ram Gopal & Sons Ltd v Government of Hyderabad, the various factors distinguishing an employee from a contractor were set out by the Supreme Court in:

• Generally, an employer can tell the employee what to do and how to do it.

• Generally, a contractor can be given instructions, but cannot be told how to carry them out.

• An employee is under more comprehensive control than a contractor. (1954 25 ITR 449 (SC).)

Ram Singh v Union Territory of Chandigarh (2004 1 CLR 81) the Supreme Court held that these factors to be considered shall include:

• Level of control over the worker.

• Integration of the worker within the employer’s business.

• The power to appoint and dismiss.

• The responsibility to pay remuneration and deduct social security contributions.

• The responsibility to organise work and supply equipment.

• The nature of the mutual obligations between the parties.

• The terms of the contract between the parties.

Conclusion

One important thing to note and remember while drafting the agreement is that a contract gives very limited protection if a legal action arises, therefore it’s a last resort and both parties should avoid it at every step. Consultancy agreement should be used to produce before the other party if they inevitably forget regarding the content as the other party can be very shrewd and can deviate from the terms which were decided earlier, so to avoid complexities, the clauses should be very crisp and clear. It’s very important to clearly communicate expectations to the other party to the contract.

It is important for a company to choose the right consultancy according to its need and it is sometimes difficult for companies to choose the right one but if it decides to engage the services of corporate consultants, they need to make sure that the transaction should be a two-way process and every possible way should be unearthed to make such a relationship successful. A company can get sure success out of the relationship with the corporate consultant only if it chooses one carefully and diligently. A manpower consultancy can recruit the correct and right talent for the company only if it understands the business and culture of that company.

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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How to claim ancestral property in India – a guide

By

Rachit Garg

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December 30, 2021

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363600-hindu-succession-act — Imagesource: https://bit.ly/3iooLmw

This article is written by Adhila Muhammed Arif, a student of Government Law College Thiruvananthapuram. This article explains the concept of ancestral property and how one can claim rights over it.

Table of Contents

Introduction

The word ‘property’ has its roots in the Latin word ‘properietat’, which means ‘something owned’. On the death of a property’s owner, the property does not get destroyed. The ownership is simply passed on to the owner’s legal heirs. In India, inheritance and succession of property are governed by personal laws. According to Hindu law, there are two types of property – joint family property and separate property. Joint family property, which is also called coparcenary property, is again classified into ancestral property, property jointly acquired by the coparceners of a family, and separate property blended into the joint family property. Ancestral property is the most common kind of joint family property. But in Muslim law and Christian law, there is no such distinction made. Ancestral property is treated the same as self-acquired property, and there is no concept of joint family property in Muslim law and Christian law.

The Hindu Succession Act, 1956 is the law that governs the inheritance laws among Hindus in India. It contains the provisions regarding the partition, distribution, and inheritance of both joint family property and separate property. The Act, however, has not defined the term ancestral property. Other relevant statutes that concern partition are the Partition Act, 1893, and the Civil Procedure Code, 1908.

Ancestral Property – Meaning

Ancestral property refers to the property inherited by a Hindu from his or her father, father’s father, or father’s father’s father by birth. It is basically the undivided property of a Hindu family of four generations. Property inherited from other relations is not considered to be ancestral property.

When it comes to property inherited from maternal grandfather, it is considered as separate property, and not ancestral property. This has been confirmed in the decisions of Md. Hussain v. Kisheva (1937) and Maktul v. Manbhari (1958). The share that is allotted to a coparcener on partition, loses the status of ancestral property and becomes a separate property. The property inherited from female ancestors is also to be treated as separate property.

Characteristics of an ancestral property

The following are the essential features of an ancestral property that distinguishes it from other kinds of property:

It is held by four generations of a Hindu joint family.
It should be an undivided property. Once a joint Hindu family property gets partitioned, each coparcener gets to treat his share as his separate property.
The ownership is joint in nature. Four generations of a joint Hindu family have a joint interest and joint possession of it.
One acquires a right in the ancestral property of his family by birth, and not by the death of their predecessors.

Who can claim ancestral property?

The term ‘coparcener’ refers to the title given to those members of a Hindu joint family that have an interest in the joint family property. The term ‘Karta’ refers to the father or the oldest male coparcener of the family, who has the right of possession and management of the property. In the case of Rohit Chauhan v. Surinder Singh & Ors (2013), the Supreme Court stated that coparcenary property essentially consists of the ancestral property of a family. The Court also provided the definition of a coparcener as someone who shares with others the inherited estate of a common ancestor equally. Coparcenary is the term for the narrow body of members of a joint family, who have an interest in the coparcenary property. The Court also defined the share of a coparcener as fluctuating, which changes with births and deaths in the coparcenary. The court also defined the interest of a coparcener in his or her property as ‘undivided’.

Only coparceners can claim rights over ancestral property. Other members of the joint family only have the right to claim maintenance. Since the non-coparcener members of a joint family have no interest in the ancestral property, they do not have the right to claim the ancestral property.

Conditions to be a coparcener

Firstly, for a member to be a coparcener in the ancestral property, he or she must have inherited the property from his or her paternal ancestor.
In a Hindu joint family, the ancestral property is held by four generations. Thus, the second condition is that such a member must belong to one of the four generations that come after the original owner, who owned it as separate property.

Rights of coparceners over ancestral property

Coparceners have the following rights over ancestral property:

Right of joint possession and joint enjoyment of the ancestral property.
Right to ask for accounts related to the management of the ancestral property.
Right to alienate one’s share of interest in the property with the consent of other coparceners.
Right to set aside the alienation done by Karta or any coparcener.
Right to enforce partition or division of the ancestral property.
Right to give up his interest in the property for other coparceners.

Do daughters have a claim over ancestral property?

The Hindu Succession (Amendment) Act, 2005 introduced some changes in Section 6 of the Act. Before the amendment, only male descendants could be coparceners to joint family property. With the amendment, even female descendants got the right to be coparceners and got the same rights and position as male coparceners. The amendment also brought other changes such as the change in the devolution of interest in joint family property on a coparcener’s death. Before the amendment, the devolution was by way of survivorship and the amendment modified it to devolution by testamentary or intestate succession. However, it is to be noted that the property inherited from female ancestors does not have the status of ancestral property. It will only be treated as separate property. Only the property inherited from paternal ancestors can have the status of ancestral property.

Can minors and children born after partition claim over ancestral property?

Minority is no exception to a coparcener’s right to claim ancestral property. Thus, if a partition agreement involved a minor coparcener, it is still binding unless the agreement was against the interests of the minor. Even children in the womb are not restricted from ancestral property being allotted to them. A share in the ancestral property can be reserved for children in the womb and if not, they can demand the partition to be reopened.

How to claim ancestral property

A coparcener can have a claim over the entire ancestral property of his family if he is the sole surviving coparcener of the family. When there are multiple coparceners, he is only entitled to one share of the property. A coparcener can claim his share by asking for the partition of the ancestral property.

Partition of ancestral property

Partition is effected by an unequivocal intention by any coparcener to divide the ancestral property.

Modes of partition

The following are the modes by which a coparcener can demand partition:

Partition by suit
Partition by arbitration
Partition by family settlement
Partition by a partition deed
Partition by agreement

All the above modes of partition are legally recognized. However, partition deed and partition by suit are the most preferred modes for partition.

Partial partition of ancestral property

Generally, partition cannot be imposed on other people. Thus, in a situation where one or more coparceners want partition, and the others do not, the ones who want it can take their share in the ancestral property and own them as their separate property, while the others continue as coparceners on the remaining property.

Procedure followed in a suit for partition

One of the modes for partition of ancestral property is to file a civil suit in a court that has territorial or pecuniary jurisdiction. This mode is chosen when there is a dispute or disagreement. regarding the partition of ancestral property. The following are the steps involved-

Filing a plaint: The first step is to file a complaint by the plaintiff, expressing his claims and cause of action. The document contains information about the name of the court, name and address of parties, facts related to the cause of action, description of the property, value of the subject matter, etc.
Hearing: On the first day of the hearing, the court examines the merits of the case. If the court admits the suit, a legal notice will be issued to the defendants to present their arguments, and another date of hearing will be fixed.
Written Statement: The defendant files a written statement acknowledging the legal notice, to disprove the plaintiff’s arguments in the plaint. The defendant will be allowed to have a period of 30 days to file a written statement, which can be extended to 90 days in certain circumstances.
Replication by plaintiff: Then, the plaintiff has to reply to the written statement, denying all the allegations in it.
Filing of relevant documents: Both the parties have an opportunity to file all the relevant documents related to the suit to substantiate their claims.
Framing of issues: The court frames the issues on which the arguments of the plaintiff and defendant and the witnesses would be examined.
Examination of witnesses: The witnesses are presented and examined before the court.
Final hearing: On the day of the final hearing, the counsels of both plaintiff and defendant will argue for them on the basis of the issues framed, and the court would pass the final order.
Certified copy of the final order: Then, the court will issue a certified copy of the order to the parties.

Partition deed

Executing a partition deed is another mode of partition of an ancestral property, which requires the consent of all the coparceners. A partition deed is needed to create a clear division of shares in the ancestral property. For a partition deed to be legally valid, it must be registered with the local sub-registrar in the area where the property is located. The parties to the deed must also pay the stamp duty and registration charges.

Reopening of partition

Usually, once an ancestral property is partitioned, it loses its undivided nature, and hence it becomes a separate property. In certain cases where there are slight inequities, for example, when some property was left out from partition, readjustment is possible. However, in certain exceptional cases where mere readjustment of assets is not possible, coparceners can sue for reopening ancestral property that was already partitioned. The following are the situations where a partitioned ancestral property can be reopened:

Fraud, coercion, and undue influence: In cases where there were fraudulent and malicious practices while partitioning an ancestral property, the affected coparcener can ask for reopening of the partition.
Disqualified coparcener: When the disqualification against such a coparcener is removed, he can file for reopening of partition.
Child in the womb at the time of partition: This category of coparceners can also demand reopening of the partition if they had no share reserved for them.
Minor coparcener: In instances where the partition was done in a manner that was against the interests of a minor coparcener, he can sue for reopening on attaining majority.
Adopted child: If an adopted child did not have any share reserved for him, he is entitled to claim reopening of partition.

Conclusion

To conclude, ancestral property can be claimed only by coparcenary members of the four generations of a Hindu joint family who inherited it. It is also necessary that the property was inherited from the paternal ancestor of the claimant. Property inherited from female ancestors and maternal ancestors have the status of separate property. To claim a share in the ancestral property, there are various modes. It can be claimed through a verbal agreement with the other coparceners or through an informal family settlement. However, it is more suitable to execute a partition deed. When other coparceners are not willing, one can file a civil suit for partition. It is also possible to carry out partial partition where only the person claiming gets his share as his separate property, meanwhile the others continue to be coparceners to the remaining ancestral property. We can see this only in Hindu law. In other personal laws, there is no concept of ancestral property, and every property is treated as separate property.

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:

https://t.me/lawyerscommunity

Follow us on Instagram and subscribe to our YouTube channel for more amazing legal content.

What are the challenges faced in India in an effort to stop illegal shell companies

By

Shoronya Banerjee

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December 30, 2021

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This article is written by Shreya Kasale, pursuing 6-Month Growth Camp: Preparation for LLM Abroad from LawSikho. The article has been edited by Prashant Baviskar (Associate, LawSikho), Smriti Katiyar (Associate, LawSikho) and Indrasish Majumder (Intern at LawSikho).

This article has been published by Shoronya Banerjee.

Table of Contents

Introduction

It is possible for a shell corporation to be legal or illegal. Many shell businesses operate within the confines of the law. A corporation may, for example, establish a subsidiary to handle exclusively its HR operations and not engage in its primary trade or business. It would be a shell corporation, but not in the sense that it would be unlawful.

However, the phrase “shell company” is most commonly associated with unlawful shell firms, which should be recognised based on the reason for their formation. The goal is to divert money for tax evasion, channel money earned from unlawful operations to official financial institutions, and move assets from one business to another without transferring the old firm’s responsibilities in order to save money on taxes.

These firms are usually merely on paper; they are primarily based in tax havens, and they are mostly utilised to conduct financial transactions with no economic activity. Shell firms must be dealt with in order to combat black money and money laundering, to ensure “ease of doing business,” to safeguard investors’ interests, and to expand the tax base.

Shell companies in India

In the Companies Act of 1956, the Companies Act of 2013, or any other Indian statute, there is no precise definition of a shell company. To comprehend this phrase in the Indian context, court judgements (for example, Assam Company India Ltd. and Anr. v. Union of India), definitions in foreign legislation, or literature are utilised.

In India, shell firms are increasingly being used to conduct GST fraud. Shell corporations are formed using PAN cards and IDs of unaware employees (such as domestic help) to raise invoices and claim input credits against those invoices without delivering any goods or services, despite the fact that the Indian Corporate Registry provides good visibility into the ownership of registered entities. The tax authorities have suffered huge losses as a result of these crimes, which amount to thousands of crores of rupees. The government has entrusted regulators like the Income Tax Department, GST Department, SEBI, and law enforcement agencies like the CBI, FIU, and SFIO with identifying and scrutinising these pass-through organisations with no legitimate commercial interests.

Conducting business using shell corporations that have unclear beneficiaries might result in harsh fines, a ban, and a loss of reputation from regulators. Understanding who a company’s ultimate benefactor is critical to securing sanctions and regulatory compliance. Essentra FZE, a UAE-based firm, was sanctioned by the OFAC (Office of Foreign Assets Control – Sanctions Programs and Information) late last year for doing business with a Chinese shell company whose ultimate beneficial owners happened to be from North Korea, which was at the time an OFAC sanctioned nation.

Background

Originally, these businesses have been set up to take advantage of favourable tax treaties. This accounted for the lack of economic activity. However, over time, these seemingly innocent businesses were utilised for nefarious purposes.

The development of a shadow economy is no longer surprising. Though this structure has existed since the term “economy” was coined, the rapid growth of shell corporations throughout the world is startling. During times of financial turmoil, the clandestine activities that rule these shell organisations thrive, such as carrying out cash business transactions, avoiding taxes, and skirting authorities.

Purpose of forming a shell company

The following reasons are outside the legal bounds and can lead to the formation of unlawful shell firms:

Companies are founded as numerous layers to conceal the names of the real/beneficial owners, making it impossible to pinpoint ownership, individuals, or company operations.
Tax evasion/avoidance is a term that refers to the act of avoiding paying taxes
For the purpose of money laundering and syphoning off black money. This is one of the main reasons why, during the November 2016 demonetization effort, shell firms began to be identified all of a sudden. A large number of shell companies were formed to deposit extra funds in order to prevent excessive cash deposits by the original holders. Shell firms have been founded using stolen/fake identities of persons who had no knowledge of how their identification cards were being exploited.
For the purpose of Pyramid schemes. Shell corporations can be used to swindle people through Ponzi schemes, such that when the scam is detected, the box or the company is all that is left, and the true persons behind the entity have disappeared, most often out of the country.
For the purpose of relocating income to tax-free areas. This occurs in overseas transactions to avoid paying taxes in the destination country.

Violations of the laws

The following are the primary laws that shell corporations with links to India have broken by engaging in the aforementioned activities in an unauthorised manner:

The Companies Act Rules, 2017.
Securities and Exchange Board of India Act.
Benami Transactions Prohibition (Amendment) Act, 2016.
Prevention of Money Laundering Act, 2002.
Black Money and Imposition of Tax Act, 2015.
Indian Penal Code, 1860.
The Income Tax Act, 1961.

In India, there are several challenges relating to the shell companies

To begin with, under the Companies Act of 2013, or any other corporate legislation, there is no legal definition for a shell company. Moreover, there is no unique legislation that governs exclusively shell corporations. The current processes are governed by the Benami Transaction (Prohibition) Amendment Act of 2016, the Prevention of Money Laundering Act of 2002, the Companies Act of 2013, and the Black Money (Undisclosed Foreign Income and Assets) and Taxation Act of 2015.

Lastly, gathering transaction data and distinguishing between legitimate and criminal shell firms is challenging. Tracking transactions from several accounts may be tricky. It is particularly difficult to locate shell businesses in India due to the country’s complicated corporate structure.

The following are some instances of major fraud discoveries involving Shell companies:

Offshore Leaks in 2013:

More than 120,000 offshore corporations and trusts were described in a major leak of 2.5 million privately owned business papers, revealing the hidden transactions of politicians and billionaires throughout the world. The International Consortium of Investigative Journalists (ICIJ) discovered hacked papers that revealed facts and numbers of cash transactions, formation dates, and linkages between organisations and persons that show how offshore financial secrecy has grown rapidly throughout the world. Offshore holdings in more than 170 nations and territories were revealed in the documents.

Panama Papers in 2016:

The Panama Papers were a significant leak of financial records from Mossack Fonseca, the world’s fourth-largest offshore law business. The data were released to the German publication Süddeutsche Zeitung anonymously (SZ). The documents revealed a network of 214,000 tax havens including affluent individuals, government officials, and companies from over 200 countries. The papers were leaked by an unidentified source from Panama, thus the moniker Panama Papers. The majority of the records revealed no evidence of wrongdoing, but some of Mossack Fonseca’s shell firms had been used for fraud, tax evasion, or evasion of international sanctions.

The government has recently taken the following steps to combat shell firms:

With an iron fist, the centre is dealing with shell firms. The Ministry of Corporate Affairs has terminated the registrations of nearly 163k businesses for failing to file financial returns for the previous two fiscal years. The following are the primary steps done by the centre:

In February 2017, a ‘Task Force on Shell Companies’ was established under the joint chairmanship of the Revenue Secretary and the Secretary of the Ministry of Corporate Affairs to effectively combat shell company malpractices.
The government had asked the Reserve Bank of India (RBI) to freeze the accounts of defaulting firms that had missed the deadline for filing financial statements and reports under the Companies Act.
SEBI has requested exchanges to engage an independent auditor to assess the credentials and fundamentals of questionable entities. The stock can be delisted if exchanges cannot uncover adequate fundamentals concerning the company’s existence.
As part of Operation Clean Money, the government has taken action against almost two lakh shell firms.
The Ministry of Corporate Affairs (MCA) and the Central Board of Direct Taxes (CBDT) has inked an agreement to share tax information automatically and on a regular basis. The goal of the MoU is to reduce the threat of shell businesses, money laundering, and black money in the country, as well as to prohibit shell corporations from abusing corporate structures for different illicit reasons.
According to the Income Tax Act, a company is considered to be resident in India if it meets one of the following two criteria: it is an Indian company or the control and management of its operations are located entirely in India within a given financial year. Shell firms are formed as a result of the second criterion. As a result, the government passed the Finance Act 2015, which states that a firm is considered to be a resident of India if its Place of Effective Management (PoEM) was in India the previous year.
The Office of Serious Fraud Investigations is compiling a database of shell corporations.

Steps that should be taken include the government considering establishing legislation that is particular to shell firms

Apart from the obligation of submitting returns, this regulation can offer a precise definition of shell firms based on characteristics such as revenues, assets, and staff strength.
The government must ensure that every firm, even those with little income, reports information to the tax department.
A permanent entity under MCA may be established to monitor all agencies in order to improve cooperation.
Negotiating double tax treaties with tax havens and requiring shell businesses to meet minimal operational expenditure standards. Finally, the government can streamline corporation structures and consider/make attempts to pursue tax evaders using big data.

Shell companies v. dormant corporations

A business that does not have a substantial financial activity or has been inactive can apply to the RoC (Registrars of Companies) to be designated as a dormant company under Section 455 of the Companies Act, 2013. An inactive company is identified in one of two ways: it has applied to the RoC for ‘dormant’ status, or it has not submitted financial statements or annual reports for two consecutive financial years, in which case the RoC will give notice and include it on the register of ‘dormant’ firms. A shell firm, on the other hand, is usually associated with criminal activity.

Assam Company India Ltd. and Anr. v. Union of India

In this instant case, the Petitioner was a company with multiple tea estates in Assam, he is involved in the business of tea cultivation and manufacturing. Respondent No. 2, the Securities and Exchange Board of India (SEBI), had started proceedings against Petitioner No. 1 by instructing the Bombay Stock Exchange, National Stock Exchange, and Metropolitan Stock Exchange to restrict and/or suspend trading of Petitioner No. 1’s shares based on a letter received from the Government of India’s Ministry of Corporate Affairs forwarding the database of 331 listed shell companies for initiating necessary action.

The question to explore in this case was whether the SFIO was right in branding a corporation as a shell company. Was it also fair for the SEBI to investigate the petitioner Company as a shell company?

In the Court’s judgement, given the severe consequences of being labelled as a shell business, the SFIO or SEBI were not justified in treating the petitioner Company as a shell company right away and then launching an inquiry to justify such branding. Petitioner No.1 should have been given notice and a reasonable chance to respond as to why and on what grounds it was suspected of being a shell business, and only if the response was determined to be unsatisfactory could such a finding have been recorded, according to natural justice principles.

Given the negative ramifications and substantial repercussions, a judgement of a shell corporation dehors any notice or hearing would not be justifiable. The conditions and context in which the petitioner Business was designated a shell company is a virtual condemnation, but it is condemnation without a hearing. Aside from that, there’s the issue of the State or its agencies employing a term that isn’t specified in any legislation.

The court quashed the letter branding the Petitioner’s company as a shell company, given by the Government of India.

Conclusion

Shell companies are being prosecuted aggressively in India to protect investors’ interests and ensure ease of doing business. Reducing the threat of black money will result in increased tax revenue, which will help the government increase public spending while also lowering the tax burden on honest taxpayers.

References

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