This article is written by Harshita Agrawal. It explores the significance and features of trademarks, with a specific focus on Section 103 of the Trade Marks Act, 1999. The article delves into the penalties associated with the application of false trademarks, misleading trade descriptions, and other related violations.
Table of Contents
Introduction
The Trade Marks Act, 1999 provides the owners of the trademark with the exclusive right to use their marks, thereby safeguarding them from unauthorised use or any similar marks that may create confusion among customers or be used for the purpose of deceiving customers. The purpose of the Trade Marks Act is to protect the rights of trademark owners and their property, as well as to ensure legal protection for enforcing these rights. The Act empowers the police to make an arrest for the infringement of a trademark, clearly defining what constitutes such infringement.
It also provides penalties and punishments for offenders, extends the duration of the registration period, and allows for the registration of non-traditional trademarks. This legal protection ensures the integrity of the business and upholds consumer trust. As we delve further into the article, we will explore the scope and legal implications of violating the provision indicating penalties under the Act for applying false trademarks or descriptions therein and the judicial precedents therein. The article also explains its importance in maintaining the rights and interests of trademarks in India.
All we need to know about trademark
Before 1940, India did not have specific laws related to trademarks. Issues concerning the infringement of both registered and unregistered trademarks were addressed under Section 54 of the Specific Relief Act, 1877, while matters related to registration were handled under the Registration Act, 1908. The introduction of the Trade Marks Act in 1940 marked a significant step towards addressing these issues more effectively. This Act brought attention to the need for protecting trademark rights and ensuring their proper use in trade. Later, the Trade Marks Act, 1999 replaced the earlier Trade and Merchandise Marks Act, 1958 to provide better protection and prevent the deceptive use of marks on goods. The Parliament enacted this new legislation to comply with the TRIPS (Trade-Related Aspects of Intellectual Property Rights) Agreement, as recommended by the World Trade Organization.
Meaning of trademark
As defined under Section 2(1)(zb) of the Act, a trademark is a symbol or design that can be visually represented and is capable of distinguishing the goods or services of one person from those of others. This may include the shape of goods, their packaging, or a combination of colours.
In relation to Chapter XII (excluding Section 107), a trademark refers to a registered mark or a mark used in business to indicate a connection between the goods or services and the person having the right as proprietor to use the mark.
For other provisions of this Act, a trademark refers to a mark used or intended to be used in relation to goods or services for the purpose of indicating a connection between the goods or services, as the case may be, and the person with the right to use the mark, whether or not the identity of that person is indicated. This also includes certification trademarks and collective marks.
Essentials of a valid trademark
The essential criteria for a valid trademark are as follows:
The trademark must consist of a symbol, word, or combination that the court or trademark office deems eligible for protection.
It must be used for commercial purposes.
It must identify and differentiate the goods, products, or services of one party from those of others.
It must be unique.
Misuse of trademark
Any misuse of the registered trademark is penalised under the Act. Chapter XII of the Trade Marks Act, 1999 deals with offences, penalties, and procedures. This section deals with the consequences of using false trademarks, tampering with a registered trademark, misleading consumers, and representing a false trademark. The primary purpose of this chapter is to protect the rights of the true owners of the trademark and to maintain trust in the marketplace, ensuring that all trademarks are used in a correct manner. It upholds the credibility of trademarks and establishes the proper legal consequences for deceiving customers. A brief overview of the penalties lying under various sections of Chapter XII of the Act.
Section 103 of Trade Marks Act, 1999
Section 103 of the Trade Marks Act 1999, outlines the penalties for applying false trademarks, trade descriptions, and related offences:
Falsifying a trademark;
Falsely applying a trademark to goods or services;
Making, possessing, or using any tool, machine, or other instrument with the intent to falsify a trademark;
Applying a false trade description to goods or services;
Misrepresenting the country of origin, details of the manufacturer, or any required information under Section 139 by providing false indications of such country, name, place, or address;
Tampering with, altering, or removing an indication of origin on goods where such indication is required under Section 139;
Causing any of the above actions to be committed
The punishment for these offences includes imprisonment for at least six months, which can be extended up to three years, and a fine between fifty thousand and two lakh rupees unless the person can prove they did not intend to deceive. However, if there are special reasons, the court may choose to give a lighter sentence, such as less than six months in jail or a fine of less than fifty thousand rupees.
In the landmark case of Cadbury India Ltd. vs. Neeraj Food Products (2001), the court held that the accused, Neeraj Food Products, was misleading customers by using deceptively similar trademarks, thereby violating the provisions of Section 103 of the Trade Marks Act, 1999. The court ordered penalties for the infringement and ensured the protection of trademark rights from false trademarks.
Objective of Section 103 of Trade Marks Act
Section 103 deals with penalties for applying false trademarks, trade descriptions, and related offences. The main objectives of this provision are to protect the interests of the customers, maintain the integrity of the marketplace, and ensure safeguarding of the rights of each customer by performing fair trade practices. The main aim is to prevent any kind of deception that misleads customers regarding the quality and origin of products.
This section ensures that only those who have a certified legal right to a trademark can use it, thereby maintaining the authenticity of goods and services. Violations of Section 103, including illegal use of a trademark or any kind of resemblance towards the registered trademarks, are penalised to ensure that the rights of the brand owners are upheld. These penalties include fines and imprisonment, intended to maintain the quality and safety of products and punish those engaged in unethical activities.
Clause-wise explanation
Section 103 outlines various clauses that are designed to address and penalise different forms of falsification and misrepresentation of trademarks. Each clause addresses specific illegal activities that undermine the integrity of trademarks and mislead consumers. Here is a clause-wise explanation that provides a detailed breakdown of the offences covered under this section:
Clause (a):Falsifies any trademark
This clause refers to any act of altering or imitating a registered trademark to make it look like the original without authorisation. For example, if a person makes any changes to a logo to make it resemble a well-known trademark, this would violate the clause. It is illegal to change any registered trademark to ensure the authenticity of the product and prevent deceiving customers.
Clause (b): Falsely applies to goods or services any trade mark
This clause involves using a trademark on goods or services without having the right to use that trademark, thereby misleading consumers about the authenticity of the product. For instance, if a company uses a well-known trademark to deceive customers about the authenticity of the product, it violates this clause. The key application is to prevent unauthorised use which leads to confusion in customers.
Clause (c): Making, disposing of, or has in his possession any tool for falsifying a trademark
This clause targets those who make, sell, or possess tools or equipment used to produce counterfeit trademarks. For example, if a person is caught using machinery or related products to counterfeit trademarks, then he/she is violating this clause. The application of this clause seeks to eliminate tools that disrupt the entire supply chain of the related products thereby used.
Clause (d): Applying a false trade description to goods and services
This clause involves putting misleading or incorrect descriptions on goods or services to deceive consumers about their nature, quality, or origin. For example, if a company falsely describes certain goods to deceive customers when in reality the origin of the said product was somewhere else, this leads to the violation of the said provision and disrupts the transparency allowed for the customers.
Clause (e): Applying a false country of origin or details of the manufacturer
This clause addresses false labelling regarding the country of origin or the manufacturer of goods as required under Section 139. For example, if a product is manufactured somewhere else or its origin belongs to a certain different place and the product is labelled with a false origin or manufacturer’s details, it leads to a violation of this provision. This allows the customers to make informed decisions.
Clause (f): Tampering with, altering, or removing an indication of origin
This clause involves tampering with or removing any required indication of origin that should be applied under Section 139. For example, if someone removes a sign that indicates the origin of a product and labels the product with a false origin to deceive the customers in said way to make them believe in a different origin, then this involvement is a chain of falsification. Here, the involved person would be held accountable. The provision addresses not only those who directly commit such an offence but also any kind of indirect offences that undermine the integrity of the product or marketplace.
Clause (g): Causing any of the above-mentioned offences
This clause includes anyone who assists or encourages any of the actions mentioned in the previous clauses. The aim of the application of this clause is to make sure that all individuals involved in the chain of falsification of trademarks or deception of customers are held accountable, not just those directly committing the offence.
The penalties for these offences include imprisonment for a term not less than six months, which may extend up to three years, and a fine of not less than fifty thousand rupees. However, the court may reduce the sentence for adequate and special reasons.
Related provision : Section 139 of Trade Marks Act, 1999
Since clauses (e) and (f) of Section 103 talk about Section 139, it is only relevant to explain this provision. Section 139 deals with the power to require goods to show an indication of origin. The section states as follows:
The Central Government may, by notification in the Official Gazette, require that certain imported or locally made goods, from a date as may be appointed by the notification (not being less than three months), must bear an indication of where they were made or the name and address of the manufacturer, or the person for whom the goods were produced.
The notification may specify how the indication shall be applied, whether directly on the goods themselves or by other means, and the times or occasions when the indication must be present, such as during importation or at the time of sale, whether wholesale, retail, or both.
A notification under this section shall be issued unless an application is made by persons or associations that significantly represent the interests of dealers, manufacturers, producers, or users of relevant goods, or unless the Central Government is otherwise convinced that it is necessary to issue the notification is necessary in the public interest, with or without inquiry as the Central Government may deem fit.
The provisions of Section 23 of the General Clauses Act, 1897 shall apply to the issue of the notification under this section in the same manner as they apply to the making of a rule or bye-law, which require prior publication.
Any notification issued under this Section shall not apply to goods manufactured or produced outside the territorial limits of India and imported into India, provided that at the time of importation, the Commissioner of Customs is satisfied at the time of importation that the goods are intended for exportation, whether after transshipment in or transit through India or otherwise.
The case of Cadila Healthcare Ltd. vs. Cadila Pharmaceuticals Ltd. (2001)involved allegations of false representations related to trademark records and documents, questioning the status and ownership of certain trademarks. The case focused on violations of the provisions of Section 139 and the penalties laid therein for failing to comply with regulations concerning the maintenance of trademark records. The court held the accused liable and ordered them to take corrective measures. The court also mandated that they be accountable for their actions to ensure fair competition and protect the rights of trademark owners.
Relevant case laws
Piyush Subhashbhai Ranipa vs. The State of Maharashtra (2021)
Whether the offence under Section 103. of the Act is a bailable offence.
Judgement of the case
The single bench of the Bombay High Court after hearing the contention of the parties and referring to other previous decisions of the court on the same issue including the case of Nathu Ram v The State of Rajasthan (2021), held that offences that are punishable with imprisonment for up to 3 years are non-bailable since imprisonment of exactly 3 years can be imposed for such offences. Accordingly the court by holding that since the imprisonment for an offence under Section 103 is up to 3 years, it is a non-bailable offense and rejected the anticipatory bail.
Shivlal vs. State & Anr (2013)
Facts of the case
In the case of Shivlal vs. State & Anr. (2013), Shivlal was accused of selling fake cement bags under the well-known brand name, J.K. Cement. After the officials came to know of the said offence, they seized the products and charged him under Section 103 of the Trade Marks Act, 1999. After the investigation was complete the police filed the charge sheet before the Trial Court under Section 420 IPC read with sections 103 and 104 of the Act. The Trial Court ordered the framing of charges, aggrieved by which the petitioner/accused filed for revision before the Session Court. However, the Session Court dismissed the revision petition. Consequently, the petitioner preferred the criminal appeal before the High Court of Judicature for Rajasthan
Issue
Whether the Trial Court erred in framing charges against the accused for an offence under Sections 103 and 104 of the Act read with Section 420 of the IPC.
Judgement of the case
The court examined the contentions of the petitioner and the provisions contained under Section 115 of the Act in relation to Section 103 of the Act. After such examination, the Court held that the use of a false trademark with the intention to deceive consumers is a cognisable offence under this section. When the police officer had received information from the respondent with regard to the commission of offences as provided under sections 103 and 104 of the Act, which are cognizable, then no fault can be found in the action of the said police officer in raiding the premises and seizing the goods having a fake trademark. It has been established that whenever the police officer receives information regarding the commission of a cognizable offence, Section 154 of the CrPC authorises him to receive any such information and Section 156 of the CrPC empowers him to investigate the case involving a cognisable offence. Therefore, the court held that since the offence under Section 103 of the Act is congnisable offence, Section 115 of the Act can not restrict the power of the police officer to receive information regarding the commission of an offence, search the premises and seize the goods as per the procedure provided under Chapter XII of the CrPC.
Prateek Chandragupt Goyal vs. The State of Maharashtra and Anr. (2021)
Facts of the case
In the case of Prateek Chandragupt Goyal vs. The State of Maharashtra and Anr (2021), the FIR was filed by the respondent against the petitioner on the ground that he had committed an offence under Section 103 of the Act by falsely applying trademark of Sakal Group in two articles authored by him and published in the news portal called ‘Newslaundry’. The trademark was printed on the two articles written and published by the petitioner.
Issue
Whether the articles written by the petitioner, wherein the alleged trademark was printed fall under the categories of goods and services as defined under Section 2(j) and 2(z).
If so, whether applying a trademark resembling a registered trademark could be said to have falsely applied with the intent to deceive the customer as provided under Section 103.
Judgement of the case
The FIR was filed for an alleged offence under Section 103 of the Trade Marks Act, 1999. The court held that the articles that were written and published by the petitioner neither qualify as goods nor as services. On the basis of this, the court further held that merely applying a mark resembling a registered trademark on the articles authored and published by the petitioner in the newspaper does not “fit into the definition of false application of the trade mark in relation to goods or services”. Therefore, the use of mark in such a manner would not be sufficient to constitute it an offence. It should be proven that the mark was used with fraudulent intent to cheat the consumers. The intention must be to mislead customers or create confusion among them in order to prove mens rea under this section.
Conclusion
Section 103 of the Trademarks Act, 1999 aimed at safeguarding the interests and rights of consumers. It also highlights the consequences of applying false trademarks and the penalties imposed therein either on individuals or entities to prevent the unauthorised use of a trademark that is already registered or a mark that is deceptively similar to a registered trademark. The Section concludes that trademarks are not mere commercial symbols but act as foundational pillars of the business. It seeks to prevent violations of registered trademarks to ensure the value of the business and preserve the rights withheld therein.
Frequently Asked Questions
Which courts have jurisdiction under Section 103 of the Trade Marks Act, 1999?
Under Section 103 of the Trade Marks Act, 1999, the High Court has jurisdiction over matters related to trademarks, including cases of infringement of trademarks or offences related thereto as per the provisions of the Act. The jurisdiction of the court generally lies either where the incidents have taken place or where the registered office of the defendant of the said case is located.
How does Section 103 of the Trade Marks Act, 1999 affect owners and manufacturers?
Section 103 of the Trade Marks Act, 1999 does not directly affect the owners and manufacturers. However, it safeguards the rights and interests of the owners of the related trademarks and protects the individuality of their products. They have to follow the procedures and requirements set out in the Act.
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This article is written by Soram Agrawal. It defines the arbitration clause, its importance, and the rules and guidelines on how to use them, the difference between binding and non-binding agreements and the rules for international arbitration. It also discusses how these arbitration clauses work and why they are important in resolving disputes. This article also describes agreements for conflict resolution and the importance of arbitration clauses in modern contracts.
Table of Contents
Introduction
A part of a contract or a contractual element known as an arbitration clause requires disagreements to be settled by arbitration as opposed to litigation. If disputes emerge between parties, the arbitration clausesspecify the methods, regulations, and arbitration procedure to be followed by the disputing parties. Different types of arbitration clauses can be arranged to meet the specific needs of the parties involved. These include mandatory, voluntary, and multi-tiered clauses.
To guarantee justice and efficiency in the settlement of disputes, it is important to carefully examine jurisdiction, selection of arbitrator, and procedural norms when drafting arbitration agreements. These provisions are very important because they provide parties with a faster, more affordable, and more confidential option to traditional litigation. Well-drafted arbitration clauses within important agreements like commercial arrangements, international trade transactions, employment contracts, and joint venture agreements give certainty and clarity to the parties.
What is an arbitration clause
A contract provision known as thearbitration clause indicates when the dispute must be arbitrated. It means the part of the contract that explains what can be done if any legal dispute arises. Most of the arbitration contracts preclude the suing of the parties against one another. So, instead of going to court, they settle disputes by arbitration.
Arbitration is a formal method of dispute resolution wherein parties choose a neutral third party called the arbitrator, who makes a final binding decision. The ruling of a third party is referred to as the ‘arbitrators,’ ‘arbiters,’ or the ‘arbitral tribunal,’ who gives a decision in the form of an ‘arbitration award.’ An arbitration decision or award is legally binding upon both parties and is enforceable in court unless all parties agree in advance and stipulate that the process and decision of arbitration are non-binding.
Usually, one or more independent third parties, an arbitrator, or an arbitration panel conduct the arbitration. The parties may choose the arbitrator(s), or the institution may suggest them; for example, in the United States, it is the Financial Industry Regulatory Authority, FINRA. The arbitrators review the case and reach a decision that subsequently becomes legally binding for both parties. It is a very flexible method of dispute resolution that can be applied to many types of disputes: commercial, labour, consumer, and international. Being an alternative method of dispute resolution to conventional litigation, it provides a lot of advantages, such as flexibility of procedure, more confidentiality, speedier resolution, and an opportunity to pick arbitrators with specific expertise relevant to the case.
Nevertheless, arbitration has its drawbacks. A major disadvantage occurs when the result of the arbitration goes against a party because there is limited scope for appeal. It can also be very costly at times, and issues related to the neutrality of arbitrators may come up. Awards are very tough to enforce, especially in international matters. Hence, while there are several advantages to arbitration, care should be exercised that the parties who enter this process weigh the pros and cons properly before entering the process.
Non-arbitrable matters
Non-arbitrable matters, or matters that are not capable of settlement by arbitration under Indian law, include the following disputes:
Rights in Rem;
criminal offences;
matrimonial disputes;
Guardianship matters;
Insolvency and winding-up matters;
Testamentary matters;
Eviction or tenancy matters governed by special statutes;
Cases arising out of trust deeds;
Antitrust and competition matters;
Bribery and corruption issues; and
Fraud disputes.
Components of an arbitration clause
An arbitration clause is one of the most important components of a contract that describes how disputes will be resolved outside the general court litigation process. It may be possible for the parties, through careful drafting, to have a really strong arbitration clause that enables efficient and effective dispute resolution with the least likelihood of litigation, thereby ensuring clarity in the arbitral process.
Binding agreement
The clause should express that the decision of the arbitrator will be binding on both parties so that the award rendered becomes enforceable in the court of law.
Consent to jurisdiction
The parties shall consent to the jurisdiction of the arbitration tribunal, which may emanate from mutual agreement or upon a court order that might refer the case to arbitration.
Number of arbitrators and method of appointment
The number is usually odd, and the method of appointment should be stated. The clarity ensures that doubt is taken away as to who is to resolve the dispute.
Seat and venue of arbitration
The “seat of arbitration” is the legal jurisdiction and the venue is where the arbitration process is physically anchored. The seat of arbitration must be specified, as it defines the procedural laws under which the arbitration process will operate. This involves the applicable rules that govern the conduct of arbitration and the ability to enforce the arbitral award or have that award challenged in local courts.
Language of proceedings
It is the clause that should specify the language in which the arbitration is to be conducted to avoid any misunderstanding and in which all parties can participate effectively.
Governing law
There must be a mention of the substantive law that is going to govern the arbitration agreement. This avoids all sorts of complications regarding legal interpretations arising in disputes to be taken up in the future.
Type of arbitration
The clause may provide that the arbitration shall be institutional, under the rules of an established arbitration institution, or ad hoc, specially arranged for the dispute at hand.
Finality of award
It should emphasise that the award of the arbitrator shall be final and binding, further manifesting the undertaking towards the settlement of disputes through arbitration.
Interim relief
Interim relief provisions should be provided to enable the parties to apply for interim measures from the court or the tribunal pending the final award. The dispute must precisely be defined in scope so that there is no ambiguity of disputes later on and all relevant issues are taken care of.
These components, when combined, will provide the parties with a sound arbitration clause that will enable them to have a fair and efficient dispute resolution process.
Sample arbitration clause
Any dispute or difference arising out of or relating to this Agreement shall be settled by arbitration in accordance with the provisions of the Arbitration and Conciliation Act, 1996. The seat of arbitration shall be at _____________(City), India. The arbitration shall be conducted in English/Hindi and the parties shall appoint one/three arbitrator(s) from the panel of arbitrators maintained by _______________(Name of Arbitration Institution, if any). The award shall be final and binding on both parties.
Binding and non-binding arbitration clause
A clause pertaining to arbitration may be binding or non-binding. Let us see what it means:
Binding of an arbitration clause:In binding arbitration, the disputing parties waive off their right to trial as they agree to stand by the decision made by the arbitrator. Binding arbitration is more suitable to expedite some outcomes where two parties need to resolve internal conflicts in regards to business disputes.
For example, a contractor had accepted to do building work for a retailer but had misunderstood the terms of their contract as to the form payment would take. It is in the interest of the contractor to get those stores open as quickly as possible, and it is within the construction company’s interest to get paid. As such, binding arbitration suits both parties because the continuation of the work is invaluable to both of them, which could not be done without the resolution of the misunderstanding.
In general, the decision of the arbitrator in binding arbitration may not be appealed against, except in very unique circumstances, for example, when fraud or an infringement of public policy can be proved. It has to be noted that anyway, even when appealed, national courts tend to respect the arbitrator’s expertise and judgement.
The Arbitration and Conciliation Act, 1996, is silent on disputes that are non-arbitrable. However, it has been accepted as a basic principle that all other disputes are arbitrable as long as they are capable of being resolved by arbitration, e.g., disputes that are essentially disputes concerning the rights of third parties or have an erga omnes effect. The erga omnes effect means a legal right or obligation that is not only executable between the parties to the case but also towards or against all persons and entities. Rather, such issues must be adjudicated by courts or appropriate judicial forums. Arbitration is a means of settling private disputes between identifiable parties, whereas issues with the erga omnes effect are those wherein the public interest is involved, which requires the supervisory function of the courts for consistency and public policy or which are relatable to sovereign functions and public functions or inalienable functions of the state and would generally be treated as non-arbitrable.
The Supreme Court has applied the doctrine of “group of companies” to allow the extension of the arbitration agreements to non-signatory companies constituting a part of the same corporate group. Recently, in Chloro Controls India Private Ltd. vs. Severn Trent Water Purification Inc. and Others (2013), the Indian Supreme Court applied this principle to hold that there could even be a fastening of non-signatories to an arbitration if there is a direct relationship with the signatory company, commonality of the subject matter, and interdependent agreements. In the case of Cheran Properties Limited vs. Kasturi And Sons Limited (2018), the Court reiterated that the doctrine simply enforces the common intention of the parties to the effect that both signatories and non-signatories were intended to be bound by the arbitration agreement.
In brief, this doctrine finds its application when there exists a direct relationship with the signatory company, commonality of the subject matter, and interdependent agreements. This doctrine is used to bind all the parties by their common intention so that no party escapes the agreement of arbitration, whether a signatory or non-signatory, to efficiently resolve disputes within the corporate entities.
S.No.
Basis
Binding Arbitration
Non- Binding Arbitration
1.
Definition
The award made by the arbitrator is usually final and binding.
Arbitrators’ awards do not carry the force of law and are thus advisory.
2.
LegalEnforceability
The parties are then mandatorily bound by the determination of the arbitrator enforceable in courts of law.
Parties can accept or refuse the decision and, when not content with it, can appeal in the courts of justice.
3.
Finality
Provides a definitive resolution to the dispute.
This means after arbitration, it might be allowed to negotiate or litigate further.
4.
Cost and Time efficiency
Generally, quicker and cheaper than litigation, although its binding nature may mean higher costs.
It is often cheaper initially but could eventually become more expensive, considering further legal steps to be undertaken.
5
Right of Appeal
Very limited
Decisions can be ignored, thus allowing parties to seek other possible legal remedies.
Classification of arbitration clauses
There may exist three classes of arbitration clauses: simple, general, and comprehensive ones. All of them were made for specific purposes or applications depending on the particular circumstances and needs of the parties involved.
Simple clauses
Simple clauses are the minimum provisions required to have a binding agreement to arbitrate. They usually contain the basic essentials that one would need in an arbitration clause,such as the process for resolving disputes, the administering institution, and the seat of arbitration. Basic clauses are generally used in normal contracts. Institutions like the Chartered Institute of Arbitrators or the London Court of International Arbitration provide these kinds of provisions.
General clauses
General clauses are wider in scope and include other provisions like language, venue, designation, and governing law. It could also provide for preliminary steps before entering into arbitration, such as mediation or negotiation. Major transactions usually make use of general clauses. Many agreements in the energy sector incorporate such general clauses as joint operating/drilling contracts, supply contracts for natural gas, and construction contracts for power plants.
Comprehensive clauses
The complexity of anarbitration clause may be quite detailed, as its extent is usually determined. These range from issues of confidentiality and discovery of evidence to handling multi-party disputes; consolidation of several claims in one arbitration proceeding; adoption of split clauses, which reserve the possibility for certain issues to go to litigation while others must be resolved before arbitrators; use of expert determination in relation to technical matters; stipulations on determinations of arbitrability of dispute; provisions as to waiver of appeals or consent to appeal; provision to enable the arbitrator to fill up contractual lacunae or complete incomplete terms of contract, etc. Such clauses seek clarity, efficiency, and thoroughness in dispute resolution by way of arbitration, thus accommodating the diverse needs and complexities of present-day commercial contracts. A high level of customisation and control over how arbitration should be conducted are desired by parties in complex clauses, which are usually used in high-stakes/high-value transactions.
Types of arbitration clauses
This provides an overview of different types of arbitration clauses utilised for the resolution of contractual disputes. Such are standard, ad hoc, institutional, multi-tiered, and opt-out clauses in arbitration. Further, the paper explains each procedure itself, along with its benefits and probable drawbacks. More than that, it tells about legal precedents and emphasises careful drafting of the clauses to avoid conflicts. In addition, it describes how flexible and inexpensive the arbitration technique is compared to traditional litigation procedures. It further adds some real-world examples and judicial interpretations.
Standard arbitration clause
The standard arbitration clause is a contractual provision that compels the parties to resolve their dispute through arbitration rather than going to court for litigation. This is a private, cost-effective, and quicker alternate dispute resolution method. It then provides the full details of the dispute resolution procedure, including the arbitral institution, number of arbitrators, legal seat, arbitration rules, and contract governing law. In addition, it saves money and time compared to going to court for lawsuits. It is therefore private and flexible because the parties could decide how they want their case managed. Common applications include maintaining privacy in divorce proceedings, insurance disputes, business partner conflicts, requiring an employee’s signature, and avoiding civil court for personal injury cases. The decision of the arbitrator is finally authoritative; hence, disputes are brought to a close.
Ad hoc arbitration clause
Ad hoc arbitration is a tailored form of dispute resolution that the parties may institute independently of any institutional guidelines. It, above all, makes the process of choosing arbitrators and deciding on a procedure flexible so that the parties to the dispute can set an arbitration procedure to suit their own requirements and needs. In theory, the process should be perfectly adapted to one’s needs and the nuances of the dispute. International arbitration is seen to be among the fastest supplements in court litigation processes, particularly where parties are of different nationalities. Many advantages exist with an ad hoc process, including that it is less expensive because parties avoid administrative fees; it allows for increased speed because parties may proceed as quickly as possible without institutional involvement; it is more flexible to accommodate any party’s needs; and it offers more confidentiality protection. Disadvantages, however, include that because of a lack of institutional support, it may complicate things for parties, put a greater burden on the parties to manage it themselves, and increase the risk of unfairness since it all depends on the parties to elect the arbitrators and decide on the procedural rulemaking.
Institutional arbitration clause
In opting for institutional arbitration, the contracting parties undertake to adopt a given institution’s procedural rules and to have that institution administer and supervise the conduct of any arbitration commenced under the arbitration agreement. It may also involve institution administration, typically excluding the actual appointment of arbitrators or the determination of their costs; guiding, where its rules so provide, arranging collection of deposits and payments; making logistic arrangements for hearings; and possibly reviewing the draft of the award to make sure it is executable.
This is a preference that should be decided at the time that contracts, treaties, or separate arbitration agreements for institutional arbitration are negotiated. The clause should, however, be included only if both parties desire it.
Arbitration organised by an established arbitral institution like the American Arbitration Association, the London Court of International Arbitration, or the International Chamber of Commerce is simply referred to as institutional arbitration. That is why institutional arbitration is generally preferred over ad hoc, where the process is managed by the parties, because it relieves the burden on the parties of needing to draft their own set of procedural rules, providing an effective and well-established framework for the resolution of various disputes.
Multi-tiered dispute resolution clause
Multi-tiered dispute resolution clauses are even termed escalation, multi-step, or “ADR first” agreements. Both parties understand that if an issue arises, they will use a process-based approach, which may include negotiation, mediation, or conciliation, along with expert determination or arbitration, if appropriate. Multi-tier dispute resolution clauses provide for different procedures to be used in the resolution of disputes, progressively starting with one stage and then moving to the next if the first one fails. Failure to comply with the steps as agreed upon may affect the enforceability of the dispute resolution clause, hence complicating the process should a party fail in the same.
Despite the growing usage of multi-tier dispute resolution clauses around the world because of their flexibility in dealing with a wide range of issues, a few countries remain unclear on how to enforce the clauses. The legal status of pre-arbitration procedures in India is uncertain. Courts generally have taken two approaches. For the most part, courts have ruled that all pre-arbitration procedures must be carried out, including things like gathering evidence and issuing subpoenas.
In M.K. Shah Engineers & Contractors vs. State of M.P. (1999), a private company, M.K. Shah Engineers & Contractors, pitted against a government entity, the State of Madhya Pradesh. It was related to a contractual agreement entered into by both parties for the construction of a road project. An arbitration clause therein provided that any dispute arising out of, in relation to, or in connection with the contract shall be resolved through arbitration. The dispute was that the state of Madhya Pradesh did not want to pay the contractor for work done at a particular amount stipulated in the contract. The contractor, M. K. Shah Engineers & Contractors, filed a petition before the arbitrator, praying for an award of the amount due from the State. The Supreme Court held that the prerequisite procedures mentioned in the arbitration clause are essential in nature. Parties cannot bypass or skip the prerequisites to invoke arbitration directly.
However, there are certain high courts that have delivered judgments that are partly different in nature when deciding the question of the mandatory or directory clause. The validity of the aforementioned issue was examined by the Bombay High Court on 8 February 2017 in the case ofS. Kumar Construction Co. & Anr vs. Municipal Corporation of Greater Bombay & Ors. The said case was a challenge to a Supreme Court decision for the execution of an arbitration clausein a construction contract between a private company and a municipal authority. It underlined the need for due care while inserting the arbitration clause in any contract to avoid possible disputes regarding its interpretation and application.
The key question that arose in the case of S. Kumar Construction Co. & Anr vs. Municipal Corporation of Greater Bombay & Ors. is, under the judgement of the Bombay High Court dated 8 February 2017, the validity and interpretation of an arbitration clause in a construction contract. Yet, the court has made it clear that every such arbitration clause has to be drafted with a due degree of precision and clarity; otherwise, due to the vague wording of some provisions, controversies with respect to their interpretation and application may arise even at a stage beyond the commencement of the actual arbitration proceedings. On these grounds, the parties have been warned to be cautious when formulating the arbitration provisions so as to avoid possible disputes and legal uncertainties. The ruling also highlighted the question of whether prerequisites stipulated inarbitration clauses are mandatory or not, which greatly affects their enforceability and procedural adherence.
Opt-out arbitration clause
Arbitration agreements provide for an “opt-out” provision within 30 days after signing, which would allow the signing party to retain the right to file a class-action lawsuit with respect to a particular matter. Very often, such an opt-out clause would mandate on a user’s part the sending of a written letter or email at a particular address, citing that it is opting out of the arbitration clause. The provisions relating to arbitration and opt-out can often be really buried. Thus, if one is presented with a contract or terms of service and has any concerns, an attorney should be consulted right away.
How to draft fool-proof arbitration clauses
Such arbitration clauses should be drafted with skill to avoid associated pitfalls. This includes omissions of the place or rules of arbitration and over-specificity, which renders clauses quite impracticable. The setting of unrealistic expectations, as regards the course of the arbitration, can result in longer, more labyrinthine proceedings. Overreaching tends to compromise fairness and neutrality, giving an edge to clauses for the party that has drafted them. Such errors may be avoided, and only sound arbitration agreements may be established, protecting the efficiency and fairness of dispute resolution if the parties do not deviate from the established model clauses. The following points should be kept in mind to avoid common mistakes while framing thearbitration clauses:
Omission
One of the common drafting omissions is missing an essential or useful element in the arbitration clause. This can lead to a clause that conveys an agreement to arbitrate but not how or where. It is much better to include at least the bare minimum basics in the arbitration clause to establish arbitration without resorting to the courts. Key provisions that must be taken into consideration in an arbitration clause include the place of arbitration, the rules that are to be applied, the number of arbitrators, and the manner in which they are selected. These elements ensure that an arbitration process may proceed in the most painless and efficient way possible.
the agreement to arbitrate,
the rules that will govern the arbitration,
the institution, if any, which will administer the arbitration,
the place of arbitration,
in an international agreement, the language of the arbitration,
the applicable law, if not provided elsewhere in the agreement,
the procedural law that will apply to the arbitration,
the number of arbitrators and how they shall be selected, and
an agreement that judgment may be entered upon the award.
Over-specificity
The opposite of omission is over-specificity. Instead of too little information, they provide too much. Sometimes, creating an arbitration clause becomes an exercise that includes as many terms as possible. This has the potential to create a clause that is just about impossible to enforce in practice. Put simply, it is a fundamental error to overdraft an arbitration clause. If the arbitration clause is overly detailed, those layers of detail can thwart or prevent arbitration of a dispute when one arises. The model clauses suggested by the major arbitral institutions are used by many experienced people because they are battle-tested by the courts and they work.
Unrealistic expectations: It is no exception that the wording of the arbitration clause raises unrealistically broad, extensive, time-consuming, and costly procedures; some even reach complete failure of the arbitral procedure. These include unrealistic expectations, such as the tight time frames given to the arbitrators while submitting an award, and over-specific provisions in terms of adhering to rules that are wholly unnecessary. Another burden on the parties is unrealistic deadlines to be met for submitting one’s claims or raising defences. It is the unreasonable demands of arbitrators to follow some procedures strictly or to issue an award within a certain timeframe that again multiply the menace. Thus, such unrealistic clauses make arbitration inefficient and costly for all parties.
Courtroom idealisation: Such provisions are a mine of trouble for this reason: they provide for the arbitration to be conducted under the rules of litigation. This means that the arbitrators will predictably but hopelessly waste a lot of money on unnecessary “wheel-spinning” over the question of how court rules are applied. It may also ensconce disputes linked to the discovery stage and other aspects of litigation-related matters that arbitration is supposed to avoid.
Overreaching: It has been termed one of the major pitfalls in drafting arbitration clauses. It follows that overeager drafters are looking toward manipulating the wording of the clause for the betterment of their clients. Indeed, this is a very unethical situation that more often than not happens with contracts of adhesion where one party is in a superior position to impose unilaterally unjust conditions on the other. In so doing, one can manipulate the arbitration clause in favour of their clients at the cost of fairness and neutrality, which are foundational ingredients for the institution called arbitration. The consequence might be to hold proceedings that are biased and delegitimise faith in the institution of arbitration, resulting ultimately in dispute resolution unjustly and inequitably.
Advantages and disadvantages of arbitration clauses
Commercial contracts benefit greatly from arbitration clauses because they offer a fast and effective alternative to the traditional judicial system for settling disputes. There are several ways to view the significance of arbitration clauses:
Preservation of business relationships: Arbitration clauses help business people preserve business relationships by avoiding a more adversarial process than litigation for resolving disputes. In fact, this collaborative aspect of arbitration seeks to foster cooperation among the parties to find a mutually acceptable solution with a reduced prospect of harming ongoing business relations. With arbitration being private and confidential, sensitive business information is kept out of the public domain, preventing potential reputational harm.
Flexibility and customisation: Arbitration is a more flexible process and allows the parties the opportunity to have the procedure of dispute determination done according to their care and desire. This is a process in which the parties may contract that the objectors may be selected, the rules to employ in the process, and the place where the process will take place.
Flexibility undoubtedly stretches to procedural matters amongst parties, where they are in a position to design a procedure suiting the schedules and requirements of the parties. This makes it more effective and flexible, unlike the quite rigid structure followed by court-litigation procedures.
Efficiency and expediency: Arbitration is generally faster than litigation. Having the hearings at the convenience of the parties and the arbitrator and using a less formalistic procedure generally leads to a faster resolution of disputes. This hastens the process, allowing parties to spend the least possible time embroiled in disputes and maintain productivity while keeping up their business operations.
Cost effectiveness: Although there are some associated costs, like the fees for the arbitrators, arbitration may turn out to be cost-effective compared to litigation in the long run. The faster process reduces legal costs and other expenses related to long court cases. Moreover, arbitration minimises the likelihood of protracted and tedious appeals; hence, it controls costs and offers financial predictability for the parties involved.
Expertise and specialisation: It enables the parties to choose arbitrators with specialised knowledge that may assist in resolving their disputes. This is especially applicable to commercial or technical disputes, in which it is vital to insist on certain kinds of specialised knowledge to comprehend the issues at hand. Expert arbitrators would yield more knowledgeable and, hence, accurate decisions that would come across as more just and fair.
Confidentiality and privacy: One of the most important advantages of arbitration is the confidentiality accorded to the parties. Unlike court processes, which are usually open to the public, the process of arbitration is private. This ensures that sensitive business information and trade secrets are well protected from possible disclosure to the public. Initial confidentiality in arbitration helps maintain the privacy of the parties involved and shields them from potential reputation damage.
Enforceability of awards: Arbitration awards are generally more easily enforced around the world than court judgments. Under the provisions of the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, enforceability extends to more than 160 countries. It improves the chances of enforcement, gives the parties involved better faith in collection, and therefore can instil trust in dispute resolution.
Reduced appeal risk: The grounds of appeal from an arbitral award are usually restricted as against court judgments. This finality deters the risk of extensive litigation and offers the parties an effective final resolution to their disputes. A reduced chance of appeal enhances the efficiency and cost-effectiveness of the process, avoiding delays and costs connected with different levels of appeal.
Provisions for drafting international contracts
One should be aware that certain strategic decisions are often being made at the drafting stage, long before a dispute arises, which can substantially impact future arbitration. Of these, the following are some of the most important for international contracts:
Arbitral institutions: They differ not only by cost but also on relevant strategic issues, including multi-party arbitration, confidentiality, the interviewing of arbitrators and witnesses, and privileged information. One should be aware of the key procedural differences between the institutional rules. In a future column, we will examine the differences between the major arbitration rules and the advantages and disadvantages of choosing ad hoc arbitration rather than institutional rules like ICC or AAA.
Place of arbitration: Very importantly, the place of arbitration entails actionable and strategic issues. It should notably be stated to have an advantage of enforceability as a matter of treaty rights. It should also be in a country where the courts will support and not obstruct the arbitral process. It means that the procedural disputes are governed by any courts of the place of arbitration, and such courts are the appropriate forum to decide the question of the judicial revision of the award. The procedural law is normally the arbitral law of the place of arbitration. In case of non-selection of any substantive law by the parties, the law of the place of arbitration may well be applied by the arbitrators. Finally, the cost factor should also be a consideration that parties must consider when choosing the place of arbitration.
Language: The choice of language should be such that it allows flexibility to the drafters at the time of selection of arbitrators without unnecessarily enhancing the costs for translations. In the absence of a common language, drafters usually choose English as the language for arbitration. Although the choice of language, such as English, provides a wider choice of arbitrators, if the parties are not from English-speaking countries or if the transaction and evidence are not in English, then the cost of arbitration could be increased.
Confidentiality: Even though most of the institutional rules of arbitration do not bind the parties to confidentiality as regards the arbitral proceedings, the parties may, in any case, wish to deal specifically with the question of confidentiality: the procedure itself; the documents used or exchanged in the arbitration; and the arbitral award.
Discovery: Whereas discovery in US litigation is normally very broad and very strictly regulated, under international practice, it is much narrower and less rigid. As the rules of most arbitral institutions do not mention the availability and scope of discovery, this issue should be stipulated in the arbitration clause.
Excluding punitive and consequential damages: As some courts, such as the US Supreme Court, allow arbitral tribunals to grant punitive damages in cases where the parties’ agreement does not prohibit this, it may be worthwhile for parties to include a provision explicitly prohibiting this. How the arbitration clause and associated provisions are drafted can make all the difference in the ultimate resolution of disputes. The parties should hence, be very careful in addressing, amongst others, the nature of disputes to be referred for arbitration, the procedure by which such arbitrations are to be conducted, and the appealability of arbitration awards.
While there may not be any universal or ‘model’ arbitration clause, all arbitration clauses should nevertheless be drafted bearing the foregoing principles in mind. In all but a few instances, parties to such a contract should seek the advice of experienced international arbitration counsel.
Relevant case law
Gujarat Composite Limited vs. A Infrastructure Limited & Ors., 24 July, 2018
A Infrastructure Limited availed the corporate loan of Rupees 500 lakh from the Bank of Baroda, duly secured by a first charge against the fixed assets of Gujarat Composite Limited.
It was agreed that Gujarat Composite Limited would create a first charge on its fixed assets in the name of Bank of Baroda and that it would release the first charge with prior approval from A Infrastructure Limited only.
During the term of the licence agreements, A Infrastructure Limited and Gujarat Composite Limited had agreed that the latter would not give title deeds to the land to any other party.
The dispute cropped up when A Infrastructure Limited invoked clause 3 of the original licence agreement and called upon Gujarat Composite Limited to extend the term of the licence agreement. Gujarat Composite Limited denied the proposal and claimed that the licence had expired by the end of time without any extension.
Gujarat Composite Limited filed a composite arbitration petition before the Gujarat High Court, challenging A Infrastructure Limited and its sister concern. A Infrastructure Limited raised the lack of arbitrability argument on the ground that the dispute, in the event, was incurably linked with otherwise related transactions at that time. The agreement therefore dictated any jurisdiction by the arbitrator.
A Infrastructure Limited filed a commercial civil suit before the Commercial Court at Ahmedabad against Gujarat Composite Limited, Bank of Baroda, Real Home Corporation, M/s. Raj Corporation, and RJD Buildcon Ltd. This suit sought for recovery of Rs. 32.66 crores, a declaration that the conveyance deeds executed by Gujarat Composite Limited in favour of other defendants are null and void, and an order to restrain Gujarat Composite Limited and other defendants from disturbing or obstructing occupation and possession of the suit property.
Issues
Arbitrability of dispute
The issue involved in the case was whether the dispute between Gujarat Composite Limited (GCL) and A Infrastructure Limited (AIL) could be resolved through arbitration. GCL had invoked the arbitration clause in their licence agreement with AIL to settle their dispute. However, AIL contested that it was a dispute running intermittently with several other transactions allied with the licence agreement on grounds of arbitrability.
Power of the court to serve issues and parties
The question then was if the court could bifurcate the parties and the subject matter and refer only a part of the dispute to arbitration. On this, the Supreme Court has also clarified that there is no provision in the Arbitration and Conciliation Act, 1996, under which the court can bifurcate disputes and parties and refer them to partial arbitration. The further clarification from the Court was that when the requirements under Section 8 are fulfilled, the discretion of the court is imperative, and the whole dispute has to be referred to arbitration.
Judgement
The decision regarding the arbitration clauses under Gujarat Composite Limited v. A Infrastructure Limited & Ors. is clearly explained with respect to the arbitrability of disputes, the conduct of arbitration, and the award. These decisions also help in elaborating on the role of arbitration in dispute resolution and the requirement for painstaking reasoning and fairness in the arbitral process.
The judgement addresses the issue of the arbitrability of the dispute. While the parties had submitted to arbitration under the agreement, the respondent, A Infrastructure Limited, claimed that Gujarat Composite Limited’s claim was inextricably linked with the claims coming from transactions outside the four corners of their licence agreement, making the dispute nonarbitrable. A Infrastructure filed a civil suit, praying for various reliefs relating to the recovery of dues and nullifying certain conveyance deeds involving several parties and agreements. The Supreme Court therefore, agreed and held that the cause of action in the dispute was beyond the scope of thearbitration clausein the licence agreement, ruling that matters concerning non-signatory parties and multiple transactions can never be arbitrated but have to be decided only by the courts.
It is in these circumstances that the respondent, A Infrastructure Limited called upon the appellant to extend the term of the licence agreement, relying on clause 3 of the original licence agreement. The appellant refused and the respondent continued to hold possession of the premises. The arbitral award that was passed in the case. The award was challenged by the respondent, A Infrastructure Limited, before the Bombay High Court, which the single judge dismissed. The respondent thereafter preferred an appeal to the Division Bench, which allowed the appeal by setting aside the award. Further, upholding the order of the Division Bench in appeal, the Supreme Court held that as the arbitral award was silent about the method of computation of damages, it was therefore deficient. The Supreme Court also made it clear that while applying the principles of reasonableness and fairness, every possible reasoning has to be made in the arbitral process.
Result of the violation of the arbitration clause
Under Indian law, there are serious legal consequences in the case of failure to comply with an arbitration clause, which primarily revolves around the validity of the arbitration agreement. The Courts would intervene in the non-compliance by a party to the terms of the arbitration clause if it finds that the arbitration clause is unconscionable or arbitrary.
From the decisions of the Supreme Court, it follows that an arbitration clause has to meet the constitutional norms, more particularly the right to equality under Article 14. For instance, in Lombardi Engineering Ltd. v. Uttarakhand Jal Vidyut Nigam Ltd., the Supreme Court held that a condition that insisted on a pre-deposit of 7% of the claim amount was liable to be struck down as being arbitrary and, thus, violative of equality before the law. Such a holding emphasises that arbitration clauses cannot be utilised to impose unreasonable conditions on access to arbitration which would serve to defeat the policy supporting the alternative dispute resolution mechanisms.
The clause would also be liable to be struck down and therefore unenforceable if, apart from that, it is manifestly arbitrary or even violative of the Constitution. The courts can also look into the fairness and reasonableness of the terms in the arbitration agreement, and upon failure of the same, they might refuse to enforce such a clause and permit the parties to litigate the case.
In other words, the avoidance of an arbitration agreement in India encourages courts to engage in a form of judicial review, whereby such arbitration clauses may be rendered unenforceable if they cannot pass constitutional muster. This reiterates that the art of drafting arbitration clauses must be such that the clauses passed can be termed fair, reasonable, and in consonance with principles of the rule of law to avoid disputed cases and have an effective resolution mechanism.
Additional key points with respect to the violation of arbitration clauses: judicial pronouncements
Arbitrability of disputes
Arbitrability of disputes refers to the capacity of a particular type of dispute to be resolved through arbitration rather than through traditional court litigation. This concept is fundamental in arbitration law, as it determines whether an arbitral tribunal has the jurisdiction to hear a case.
The Supreme Court has held that even if there is an arbitration clause, the court can examine whether the dispute is arbitrable or not. In Booz Allen & Hamilton Inc. vs. SBI Home Finance Ltd. (2011), the court laid down categories of disputes that are not arbitrable, such as criminal offences, matrimonial disputes, guardianship matters, insolvency and winding up, etc.
Unconscionable clauses
Unconscionable arbitration clauses refer to those that are unfair in their making or terms that it would be unfair to enforce. Courts may invalidate such clauses. Where the arbitration clause reveals both procedural and substantive unconscionability, a court may decline to enforce it on grounds of unconscionability. The doctrine ensures one of the parties does not have a unfair advantage over the other during the arbitration process.
They have the effect of arbitration clauses, which are unfair and unreasonable and can be struck down by courts. In Perkins Eastman Architects DPC vs. HSCC (India) Ltd. (2019), the Supreme Court held that an arbitration clause empowering one party to unilaterally appoint an arbitrator is unconscionable.
Public policy
Public policy, in the context of arbitration, is a generic term that usually refers to the basic principles and norms of the legal system of a country and thus reflects the community values of a society. This is the reason why public policy is one of the critical grounds available for challenging an arbitration award under Section 34 of the Arbitration and Conciliation Act in India. An arbitration award that is against public policy, that is, against basic principles of morality or justice or the fundamental policy of Indian Law, may be set aside.
The arbitration award can also be challenged under Section 34 of the Arbitration Act if it is opposed to the public policy of India. While considering this, the Supreme Court in Associate Builders vs. DDA (2014) held that an award would be opposed to public policy if the same shocks the conscience of the court.
Non-availability of arbitrator and non-independence
Non-availability of arbitrators and issues pertaining to non-independence are considered defects that may render the arbitration award under Section 34 of the Arbitration and Conciliation Act void or unenforceable in Indian courts because they go to the root of the legitimacy of the entire arbitration proceedings.
An arbitration clause has to be independent, unbiased, and impartial. In TRF Ltd. vs. Energo Engineering Projects Ltd. (2017), the Supreme Court explained that a person who is ineligible to act as an arbitrator under Section 12(5) cannot be appointed even with the consent of parties.
Severability
The doctrine of severability is a cornerstone in the law of arbitration, aimed at securing the integrity of the arbitration process by keeping the arbitration agreement independent of the main contract. It allows the arbitration to proceed even if the underlying contract is disputed.
If a portion of the arbitration clause is held to be unconstitutional or unenforceable, the courts are empowered to sever such portions and enforce the remainder of the clause. In Duro Felguera, S.A. vs. Gangavaram Port Ltd. (2017), the Supreme Court upheld the severability of the arbitration clauses.
Put differently, while party autonomy is the backbone of arbitration, Indian courts can always intervene to strike down arbitration clauses that are unconstitutional, unconscionable, against public policy, and in violation of the principles of natural justice and due process. The balancing act pursued by the courts is one between strengths brought in by arbitration and protection of parties from unfair and unreasonable terms.
Conclusion
In a nutshell, drafting a commercial agreement with an arbitration clause primarily entails significant deliberations between the two parties over various aspects. An arbitration clause is usually contained in international agreements over the manner in which disputes ought to be settled; assuming such a clause exists and applies universally may get you into serious trouble later.
The parties are required to first discuss and agree on essential issues, such as the applicable law governing the arbitration, rules and provisions regarding how the arbitration will be conducted, and the jurisdiction governing the arbitration, before coming up with an arbitration clause. It also includes the language of the arbitration proceedings and the code of conduct for the arbitration process, among other important components that must be well-defined and mutually agreed upon.
It is very crucial because all these elements are not just mere formalities; they are essential components to ensure that both parties are on the same page in terms of expectations and understandings with regard to how potential disputes will be handled. Where an arbitration clause is properly articulated, it provides a uniform and efficacious procedure for dispute settlement, providing legal redress that is generally faster and cheaper than conventional litigation. However, the full potential of arbitration can only be materialised if the clause is drafted with specific needs and circumstances relevant to the particular contract.
Second, the constraints and any possible risks of arbitration are pinpointed, which vary according to the type of contract and sectors concerned. In sum, as business practices change and new issues crop up, so does the methodology in designing arbitration agreements, in order for it to continue being efficient and germane to provide just and equitable dispute resolution.
Basically, it will be the quality of negotiation and drafting of an arbitration clause that will ensure its success. The parties need to openly and frankly discuss the matter with no word, phrase, or line left to ambiguous interpretation that may defeat the very purpose of arbitration in efficiently and effectively disposing of disputes.
Frequently Asked Questions (FAQs)
What is an arbitration agreement?
Basically, an arbitration agreement is a clause in the contract stating that agreements are going to be settled through the process of arbitration and not by going to court. The agreement identifies the terms, methods, and regulations that shall govern the conduct of arbitration. This refers to the terminology used throughout the proceedings, the venue or seat of arbitration, the selection of the arbitrator, and the laws applied. By entering into an arbitration agreement, parties undertake to resolve all disputes other than in the courts and instead opt for a more obscure, efficient, and often cost-effective alternative. Arbitration clauses are applied to most forms of contracts, including employment, consumer, and commercial agreements.
Does the arbitration clause decide the number of arbitrators?
Yes, the number of arbitrators is normally specified in the very text of the arbitration agreement. The parties may agree on a sole arbitrator for less complex disputes. Otherwise, and more commonly in larger and more complex cases, there would be three arbitrators. That is how the process regarding the selection and qualifications of the arbitrators is addressed in thearbitration clause itself.
How long does an arbitration clause have a binding effect on parties?
The force of an arbitration clause continues until the contract is dissolved and may be amended or rescinded concurrently by both parties.
Are arbitration clauses purely legal?
Yes, arbitration clauses, in many places, are normally legal and effective unless against public policy and do not meet the legal requirements standards.
Is it okay if I sign an arbitration agreement?
It does, however, normally give up your right to take it to court when having a dispute.
Does the arbitration clause include a challenge before taking it to court?
Yes, there are reasons you can file a case with a court for challenging the arbitration clause, such as unconscionability, ambiguity, or on the basis of a lack of mutual consent.
What courts have jurisdiction over arbitration clauses?
The courts in the jurisdiction agreed upon in the contract or where the arbitration is taking place typically have jurisdiction over arbitration clauses.
What can and cannot be subjected to the arbitration clause?
Most commercial disputes can be arbitrated, but matters such as criminal cases, family law, and some statutory rights may not be subject to arbitration.
Who can be an arbitrator?
Any party in mutual agreement can be an arbitrator. Thus, it can be an expert of law or the concerned industry. Typically, arbitrators will be independent and will possess a degree of expertise in the matter being dealt with.
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India, the 5th largest economy in the world, has led the industrial growth and capacity building in the last decade at the global level. On the back of this rapid industrial expansion, India has achieved tremendous heights, but at the same time, there is a growing concern regarding environmental pollution and its long-term effects on the health of the environment and people alike. The crossroad between development and environmental degradation has posed questions to policymakers, activists, and business owners. Corporates being major contributors to pollution are and have been under growing pressure from the government and environmental activists to implement the rules and regulations strictly and without delay to mitigate damage to the already fragile environment. The legal framework established in India through a series of legislations, notifications, rules, and regulations to govern the corporate side of the growing problem of corruption. These laws play a pivotal role in the protection of the environment and enforce compliance on the part of corporations.
Corporate pollution
Industries, the materials needed, and the methodology involved in manufacturing, processing, and packaging have been major contributors to pollution in India. These include air pollution, water pollution, land degradation, and improper waste disposal mechanisms. These pose a serious and immediate risk to the health of people. Major contributors to pollution are power generation, manufacturing, mining, textiles, chemicals, and cement production.
Primarily there has been a growing concern about air and water pollution in India. As per the 6th Annual World Air Quality Report 2023, India is the third most polluted country in the world in terms of air pollution. The industrial sector coupled with vehicular emissions is a sizable source of particulate matter (PM2.5 and PM10), sulphur dioxide (SO2), and nitrogen oxides (NOx), all of which contribute to respiratory diseases and environmental damage. On the same footing, water pollution is also of grave concern. Discharge of untreated industrial waste and effluents into water is a leading cause of pollution of rivers, lakes, and groundwater sources.
With an eye on these issues and their serious implications cutting across the sections of population, the government has taken steps to prevent and mitigate loss to the environment due to the actions of industries and corporations.
Legal frameworks governing pollution control in India
The fundamental aspect of the legal framework towards protection of the environment has been provided for in the Constitution of India itself. Article 48A directs the state, in principle, to protect and improve the environment and safeguard forests and wildlife. Article 51A also provides for a fundamental duty of every citizen to protect and improve the natural environment. With reference to these, India from time to time has developed several laws and regulations with special emphasis on pollution control by industries and corporations.
The Environment (Protection) Act, 1986
The Environment (Protection) Act, 1986 is an effort for a holistic approach towards environmental protection in India and includes aspects related to air, water, and soil pollution. It was implemented as a response to the Bhopal Gas Tragedy (1984). The Act empowers the government to take necessary measures to prevent environmental hazards and to impose stringent rules and regulations on industries. It entrusts the government with the power to make industry-specific laws and keep a check on the compliance of the set standards. It provides for punishment in the form of imprisonment, monetary fines, or both in case of violation or non-compliance of the rules and regulations. This Act imposes absolute liability on the industries for any loss and damage, immediate or remote, caused due to their direct or indirect actions.
The Water (Prevention and Control of Pollution) Act, 1974
The Water (Prevention and Control of Pollution) Act, 1974, focusses particularly on curbing water pollution. It is one of the earliest legislations to combat pollution. This Act established the Central Pollution Control Board (CPCB) and State Pollution Control Boards (SPCBs). These two statutory bodies are responsible for monitoring, controlling, implementing and enforcing the regulations as per the Act and any subsequent Notifications by the appropriate government. The Act provides for various compliances that have to be met by the Industries with respect to discharge and disposal of effluents into water bodies. Compliances such as compulsory treatment of water to nullify any chemical or harmful components and their effect on the water body, creatures in the water body, and the public at large; compulsory permission of the relevant authorities and Pollution Control Board before discharging industrial effluents in the water. The Act prescribes heavy penalties, fines, and imprisonment of various terms for non-compliance.
The Air (Prevention and Control of Pollution) Act, 1981
The Air (Prevention and Control of Pollution) Act, 1981, was enacted in order to take concrete steps for the prevention, control, and abatement of air pollution in India. It grants powers to the Central Pollution Control Board and State Pollution Control Boards to set standards to be followed and regulate emissions from the industries. As per the World Air Quality Report, 2023, 26 Indian cities are part of the Top 30 most polluted cities when it comes to PM 2.5 air pollution. This shows the serious nature of pollution that India is battling with. Major contributors to air pollution is caused by industries involved in manufacturing and processing, followed by vehicular emissions. The Act imposes severe punishment in the form of heavy penalties, fines, and, in some cases, imprisonment up to the term of 5 years.
Hazardous and Other Wastes (Management and Transboundary Movement) Rules, 2016
The Hazardous and Other Wastes (Management and Transboundary Movement) Rules, 2016, were formulated to deal with the industries that produce hazardous waste materials. The Rules provide for the regulation of such industries with respect to generation, handling, storage, transportation, and disposal of hazardous waste. Corporates are under strict supervision and are required to obtain permission from designated authorities to handle hazardous waste and dispose of such hazardous material in an environmentally sound manner. The Rules also regulate the transboundary movement of materials, including hazardous waste.
The Companies Act, 2013: Corporate Social Responsibility (CSR)
The Companies Act, 2013, introduced mandatory corporate social responsibility for certain corporations. Section 135 of the Act requires companies meeting specific financial thresholds to allocate at least 2% of their average net profit towards CSR activities, which may include environmental sustainability initiatives. CSR is not strictly a pollution control method; it incentivises corporations to invest in environmentally friendly projects and initiatives and in turn contribute to the pollution control efforts.
Compliance mechanisms
To comply with these legal frameworks, the corporations must undertake several measures aimed at reducing their environmental impact. These measures include:
Environment Impact Assessment (EIA): A mandatory provision established under the Environment Protection Act, 1986, EIA is a process in which industries are required to assess the impact their projects or products will have on the environment, which includes habitat, wildlife, and human life. Only after such assessment and upon satisfaction of the concerned authority or ministry regarding requisite compliance can the project proceed to the next stage. The report must consist of all the environmental risk factors and mitigation measures that will be taken by the corporation. The EIA process makes sure that the companies adhere to the protocols and consider the environmental consequences of their actions.
Environmental Management System (EMS): At times, corporations adopt Environmental Management System (EMS) as a part of their efforts towards compliance. An EMS is a well-laid-out system that the corporations follow in order to improve their environmental compliance performance. The ISO 14001 standard, an internationally recognized certification, provides a framework for developing an effective EMS. ISO 14001 provides guidance on how to consider multiple aspects of your business—procurement, storage, distribution, product development, manufacturing, etc.—so that it reduces its impact on the environment. Indian companies, particularly those engaged in global trade, often seek ISO 14001 certification to demonstrate their commitment to environmental sustainability.
Monitoring and Reporting: Corporates at all times have to strictly monitor their waste management, disposal, emissions, and discharge and report to the concerned authority on a regular basis regarding the same. They have to publish these reports and measures taken to deal with issues at hand as a part of their annual reports. The CPCB and SPCBs have developed guidelines for the installation of Continuous Emission Monitoring Systems (CEMS), which allow for real-time monitoring of emissions. This helps both corporations and the government act and analyse in a time-bound manner and resolve any challenges that may be posed to them.
Challenges in compliance
Although such robust and extensive legal mechanisms exist, compliance within the sphere of corporations remains shaky. Several reasons can be listed out in this regard:
Weak Enforcement: Enforcement on the part of the authorities is often found lacking on all fronts. This has been attributed to a lack of resources, which includes both human and monetary resources. Inadequate staffing and pressure from powerful businessmen and politicians often render these boards and authorities toothless. As a result, industries and corporations evade their responsibilities and compliances, resulting in rampant pollution of natural resources and ill effects on the human population.
Lack of Awareness and Technical Expertise: Technical expertise comes into question with respect to small and medium manufacturing enterprises (SMEs). They fundamentally lack the know-how and, at times, cannot afford to hire the required experts. Thus fail to implement pollution control measures, which in turn translates to poor compliance, especially amongst industries that operate in the far-flung areas.
Corruption and Bureaucratic Delays: Unchecked corruption at all levels of the government and lethargy of authorities in clearing or sanctioning of the orders and reports lead to exhaustion of owners of industries and corporations. They choose evasion of these requisite clearances and sanctions to keep their businesses running. Some operate with expired clearances, and some operate without them, posing a serious threat to the environment and human beings.
Cost of Compliance: Implementing pollution control measures at times is very expensive and cumbersome. This may be with respect to upgrading infrastructure or hiring skilled workers. The cost of installing high-end machinery and sensor-based machinery comes at a dear price, especially to SMEs. The cost-benefit analysis by such industries and corporations may opt for noncompliance as the easier path to run their businesses.
The way forward
There are plenty of ways in which corporate compliance can be improved by bypassing all these challenges. Some ways to achieve that are:
Incentivise environment-friendly technology and adaptation: The government must take concrete steps to help the corporations and the industries to setup and use eco-friendly technology. The government, in the form of tax benefits and subsidies, must provide some monetary relief and benefit to industries adopting ‘green technology’. This may include the installation of solar panels to draw electricity, reduced import duties on advanced machinery, and setting up of community wastewater treatment plants as a part of corporate social responsibility.
Strengthening Regulatory Institutions: The regulatory institutions must be given adequate manpower and financial resources to keep a check on compliance of the regulations by the corporations and industries. The authorities must be given better pay and incentives to minimise corruption. Effective usage of technology must be inculcated to make the process of compliance clearance and certifications more transparent.
Corporate Leadership in Sustainability: In recent times, association of the word ‘Sustainability’ with a business provides it with a brand value in the market. This is true especially in the case of multinational companies (MNCs). Companies seeking to take advantage of this brand marketing are willing to adopt environmentally friendly measures and invest in infrastructure and practices. The government must recognise such efforts, incentivise, and promote such businesses for a much bigger impact.
Creation of public awareness: The government and activists alike must make a concerted effort to raise public awareness regarding environmental compliances and malpractices of the corporations. Reporting of any irregularities must be rewarded. Social media must be used as a tool to create public opinion and awareness regarding efforts of the government and corporations to preserve and conserve the environment. Public awareness and demands may pressurise the corporations into adopting environmentally friendly decisions.
Conclusion
Pollution control in the corporate sector is of paramount importance for safeguarding the nation’s natural resources and public health. India has a well-established legal framework to deal with the issues at hand. Effective enforcement and plugging the loopholes in the statutes must take primacy in order to fight the ever-increasing threat and associated risk of pollution. Technological advancement and early adoption of such technology by the corporations as a responsibility is a useful tool in achieving meaningful pollution control. As corporations face growing environmental challenges and regulatory scrutiny, adopting sustainable practices is not only a legal requirement but also a strategic imperative for the long-term growth of the companies.
This article has been authored by Janvi Badiyani. The article explores Sections 143 and 143A of the Negotiable Instrument Act, 1881. It aims to clarify these provisions, their significance and difference, while also examining key judgments that have shaped their interpretation. The article also discusses the necessity of summary trials under the Negotiable Instrument Act, 1881, emphasising their role in ensuring swift and efficient resolution of cheque dishonour cases.
Introduction
The Negotiable Instrument Act, 1881 (hereinafter referred to as “the Act”), is a foundational piece of legislation in India that governs the use and regulation of Negotiable Instruments such as promissory notes, bills of exchange, and cheques passed in order to establish a unified legal framework, the Act makes sure that these instruments are standardised and enforceable by law, which enables financial transactions to go smoothly.
Over the years, the Act has undergone numerous amendments to address the evolving needs of commerce and to incorporate technological advancements in banking and finance.
Section 13 of the Act defines a “Negotiable Instrument” as a written document guaranteeing the payment of a specific amount of money to the bearer or to the order of a specific person. A key feature of negotiable instruments is their transferability, enabling the holder to claim the specified amount from another party. This transferability is a key feature that makes negotiable instruments an indispensable tool in both domestic and international trade.
Thus, a signed agreement that guarantees payment to a specified individual or assignee is referred to as a negotiable instrument. It’s just a formalisation of an ‘IOU’, which stands for “I OWE YOU”. IOUs are formal contracts that acknowledge debt. They are frequently seen as informal rather than legally binding. IOUs are still in use today and in corporate transactions, they might be followed by a formal agreement that binds the parties to the conditions of the debt.
The Negotiable Instruments (Amendment and Miscellaneous Provisions) Act, 2002, (hereinafter referred to as “Amendment Act, 2002”) introduced Sections 143 to 147 to address the prevalent issues in cheque dishonour cases, a significant concern in business operations. These Sections were added to streamline the court process, reduce the backlog of cases, and enhance penalties for violations. This amendment aimed to preserve the integrity of the Act and ensure they served their intended purpose effectively.
The Act also outlines the penalties for dishonour of these instruments, thereby protecting the interests of the payee and ensuring trust in financial transactions. The amendment has significantly strengthened the legal framework by addressing issues such as cheque dishonour and expediting the legal process. Thus, the Act not only underpins the operational dynamics of modern commerce but also enhances the credibility and efficiency of financial transactions in India.
Overall, the Act continues to be a vital element of India’s financial legal framework, enhancing trust and efficiency in business transactions. The implementation of Section 143 (power of the court to try cases summarily) has been particularly impactful, providing a mechanism for the swift resolution of cheque dishonour cases and effectively meeting contemporary economic challenges.
Let’s delve into these provisions in detail:
Section 143 of Negotiable Instrument Act
Section 143 provides that the cheque dishonour cases under the Act must be tried in a special court. These cases should be heard by either a Judicial Magistrate of the first class or a Metropolitan Magistrate. These courts are designed to handle these cases more efficiently. The trial should follow a quicker process (summary trial) as outlined in Sections283 to 288 of the Bharatiya Nagarik Suraksha Sanhita, 2023 (hereinafter referred to as BNSS). If the Magistrate finds the case suitable for summary trial, they can impose a maximum sentence of up to one year in jail or a fine greater than Rs 5000. However, if during the trial the Magistrate feels that the case might require a longer sentence or that a summary trial is not appropriate, they can switch to a regular trial after informing all parties and taking necessary steps to ensure fairness.
Further, it talks about the continuation of the trial, which should continue day-to-day until it is completed, ensuring minimal delays. And if an adjournment (postponement) is necessary, the Magistrate must record the reason in writing. The law strongly states that these trials should be conducted as quickly as possible, with the goal of completing them within six months from the date the complaint was filed.
The Amendment Act, 2002 introduced Section 143 to the Act with the principal objective of accelerating the judicial process for cases of cheque dishonour under Section 138 (Dishonour of a cheque for insufficiency of funds in the account). Before this change, there was insufficient legal framework to handle matters involving cheque dishonour, which resulted in drawn-out and ineffective court proceedings. The incapacity to follow a streamlined procedure resulted in court disputes continuing for years, which damaged the Act’s efficacy and the legitimacy of cheques as a trustworthy form of payment. The protracted delay in reaching a decision resulted in financial and psychological distress for the complainant, as well as an increased workload for the judiciary.
In order to particularly address these deficiencies, Section 143 was added which offers a fast-track option for the trial cases involving cheque dishonour. It requires that cheque dishonour cases be handled summarily, following the guidelines set forth in Sections 283 to 288 of BNSS for summary trials. The Judicial Magistrate or the Magistrate of the First Class will oversee these trials in accordance with Section 143, which ensures that the procedures are conducted with the appropriate court.
History behind Section 143 of Negotiable Instrument Act
Let’s understand how the provisions related to summary trial in the Negotiable Instruments Act were evolved:
Negotiable Instrument Act (1881)
In order to establish a legal framework for the proceeding of negotiable instruments, including promissory notes, bills of exchange, and cheques, the Negotiable Instrument Act of 1881 was passed. Its main goal was to ensure consistency and dependability in commercial operations by standardising the legal procedures related to these financial transactions. The purpose of the Act was to provide clear guidelines for the transfer and enforcement of these instruments in order to allow seamless financial activities.
Banking, Public Financial Institutions and Negotiable Instrument Laws (Amendment) Act, 1988.
The 1988 Amendment was introduced in response to increased concerns about cheque dishonour. Despite the original framework, cases of cheque dishonour continued to rise leading to financial disputes and inefficiencies in the judicial system. The 1988 Amendment aimed to address this by strengthening the laws, making it easier for affected parties to receive compensation, and reducing the overall frequency of such incidents. The purpose of these amendments was to improve the efficiency of the Act in handling financial conflicts and offering prompt remedies.
Challenges and High Court’s interpretations
Following the 1988 amendments, different High Courts began interpreting the Act’s provisions in varying ways. This inconsistency created confusion and complicated legal landscape for cheque dishonour cases. The lack of uniformity in judicial interpretations led to difficulties in enforcing the Act and hindered its effectiveness in resolving disputes efficiently. Businesses and individuals faced uncertainty regarding the application of the law.
The need for further reforms in cheque dishonour cases has been highlighted through key judicial decisions. In Kusum Ingots and Alloys Ltd. vs. Pennar Peterson Securities Ltd. And Ors. (1999) the Delhi High Court ruled that a cheque dishonoured due to a “stop payment” instruction by the drawer would still attract criminal liability under Section 138 of the Act. This ruling highlighted the law’s purpose of making sure that payment obligations through cheques cannot be easily avoided.
The Supreme Court, in M/S Modi Cements Ltd. vs. Kuchli Kumar Nandi(1998), further clarified this position by resolving conflicting interpretations from various High Courts. It held that even a “stop payment” instruction could constitute an offence under Section 138. This decision reinforced the purpose of the Act by ensuring that drawers could not evade liability merely by issuing stop payment instructions after issuing a cheque.
In Shri Vinod Tanna and Ars. vs. Shri Zaher Siddiqui and Ors. (2002), the Bombay High Court emphasised the critical importance of following procedural mandates under the Act, particularly the timely issuance of statutory notices. The court stressed that strict adherence to the prescribed time frame is essential for the effective enforcement of Section 138.
Further reforms are also necessary when considering Section 143 of the Act, which deals with the summary trial of cases related to cheque dishonour. Although intended to expedite the process, delays in the judiciary often undermine the efficiency of such trials. Amendments aimed at enhancing procedural efficiency and reducing judicial backlog are crucial for ensuring that justice in cheque dishonour cases is swift and effective. Strengthening the mechanisms for enforcing Section 138 alongside reforming the trial process under Section 143 will contribute significantly to addressing the loopholes and delays currently present in the system.
Negotiable Instruments (Amendment and Miscellaneous Provisions) Act, 2002
The Amendment Act, 2002 was passed as a reaction to these issues. This extensive modification aimed to close the loopholes found in earlier clauses and expedite the handling of cases involving cheque dishonour. The addition of Section 143 was one of the main characteristics of this amendment. In an effort to ensure a speedy and effective resolution of instances involving cheque dishonour.
Section 143 was created to require summary trials in these types of matters. It mandated ongoing daily hearings and set a six month deadline for completing trials. Section 143 also gave judges the authority to give particular punishments, like fines and jail terms, in order to expedite justice and lighten the load on the courts.
Advantages of Section 143 of Negotiable Instrument Act
Section 143 of the Act offers several advantages, aimed at expediting the legal process for cheque dishonour cases and ensuring timely justice. Below are some key benefits:
Expedited legal process- Previously, cases involving the dishonour of cheques often experienced significant delays, causing frustration and financial strain for the complainant. To address this issue, Section 143 was introduced to allow for summary trials, which are quicker and involve a more simplified procedure compared to regular trials.
Reducing burden on courts- The rising number of cheque dishonour cases was overwhelming the courts, resulting in significant case backlogs and extended delays. By providing for summary trials, Section 143 helps to ease this burden by being quicker and involving a more streamlined process compared to regular trials.
Use of modern technology- Earlier, the legal process in cases involving negotiable instruments followed a traditional approach, which was time-consuming and inefficient. To address this, Section 144 of the Act now allows the use of speed post, courier service, and electronic means for serving summons. Additionally, they permit the examination of witnesses through video conferencing under Section 310(3) of BNSS These changes make the process more efficient and in line with contemporary practices, significantly reducing the time and effort required for legal proceedings.
Clarity and legal certainty– Confusion and unpredictability were frequently caused by the conventional legal process’s tendency to handle cases in an unclear and inconsistent manner. Section 143 provides clear guidelines on how these cases should be managed. This ensures that legal decisions are predictable and consistent, in addition to providing parties with a clear understanding of their rights and obligations and contributing to the development of confidence in the legal system.
Facilitating financial transactions- The lengthy legal process required to resolve dishonoured cheques had undermined the credibility of cheques as a reliable payment method. Section 143 restores confidence in the use of cheques for financial transactions by ensuring a more efficient and reliable resolution process, by expediting trials and reducing delays, this Section helps maintain the integrity of financial transactions and support the smooth functioning of commerce.
In summary, the modern provisions introduced in Section 143 enhance the efficiency of the legal process, provide clarity and consistency in legal proceedings, and restore confidence in the use of cheques. These improvements are essential for maintaining trust in financial transactions and the overall effectiveness of the legal system.
Expeditious disposal of a matter under Section 143
Section 143 of the Negotiable Instruments Act, 1881, is designed to ensure that cases related to the dishonour of cheques, as outlined in Section 138, are resolved quickly. Below are the points explaining the methods for expeditious disposal of these matters:
Six-Months time limit for trial conclusion
Section 143(3) mandates that trials under Section 138 should be concluded within six months from the date the complaint is filed. This provision is crucial for expediting the legal process and ensuring timely justice for the complainants. By setting a clear timeline, it aims to reduce unnecessary delays and provides swift resolution of cases related to the dishonour of cheques.
Restriction on adjournments
Section 143(2) prevents unnecessary delays, the court can grant adjournments only if the application for adjournment is accompanied with sufficient reasons. These provisions ensure that trials progress efficiently and discourage tactics that could prolong the legal process. By limiting adjournments, the law seeks to maintain momentum in the proceeding and avoid disruptions that can impede the timely delivery of justice.
Expedited examination of witnesses and recording of evidence
In addition, Section 143 facilitates the prompt examination of witnesses and the recording of evidence on oath. This streamlines the trial process, helping to avoid prolonged litigation. By ensuring that witnesses are examined and evidence is recorded efficiently, the legal process becomes more effective, reducing the time taken to reach a conclusion.
Apex court clarification on flexibility
In the case ofRakesh Rajan Shrivastava vs. State of Jharkhand (2024) the Supreme Court has clarified that the provisions of Section 143 are directory, not mandatory, This means that courts have the flexibility to apply these provisions based on the specific circumstances of each case. This flexibility prevents the law from becoming too rigid and allows for adjustments that suit the unique aspects of individual cases, ensuring that justice is served in a fair and balanced manner.
Supreme Court direction for further expediting
The Supreme Court issued guidelines to expedite the disposal of cases under Section 138 of the Act in the case ofIndian Bank Association & Ors vs. Union of India & Ors (2014). These guidelines include completing the examination-in-chief, cross-examination, and re-examination of the complainant within three months from the date of filing the complaint. By setting clear expectations of the duration of these processes, the Supreme Court aims to enhance the efficiency of the legal system and ensure that cases are resolved promptly.
If we see in Section 138 it deals with the definitions, conditions and penalties for the offence of cheque dishonour. It helps to outline the steps required to initiate legal action but does not detail the trial process. Whereas after the addition of Section 143, it focuses on the procedural aspects of conducting trials for offences under Section 138. It aims to ensure swift and efficient disposal of cases through summary trials, strict timelines, and limited adjournments while providing flexibility through judicial discretion.
Section 143A of Negotiable Instrument Act, 1881
Section 143A of the Act allows a court to order the accused to pay interim compensation to the complainant in cases involving dishonour of cheques. This provision applies when the accused pleads “not guilty” and the trial is ongoing.
In simple terms, when someone is accused of issuing a cheque that bounces, and they claim they are not guilty, the court can still direct them to pay some compensation upfront. This compensation can be up to 20% of the cheque amount. The idea behind this rule is to provide some financial relief to the person who filed the complaint (the payee) while the case is being heard.
If the accused is later found not guilty, they can get the compensation amount refunded. However, if they are found guilty, this amount will be deducted from the final penalty or fine. This provision helps to reduce delays and ensures that complainants don’t suffer long financial losses while waiting for the trial’s outcome.
The legislative amendment of Section 143A was inserted into the Act through the Negotiable Instrument (Amendment Act 2018) Act. This Amendment was made to address the issue of delay in cases of Section 138 and to provide interim relief to complainants in cheque dishonour cases.
The amendment came into force on September 1, 2018. By allowing the court to order interim compensation, it aimed to reduce the financial burden on complainants and address delays in the legal process and to mark a significant step towards a more efficient and equitable legal framework for handling cheque dishonoured cheques.
Section 143A(1) of the Act is a crucial provision that allows for the grant of interim compensation to the complainant in cheque dishonour cases. This Section is generally considered to be a directory rather than mandatory as clarified in the case of Rakesh Ranjan Shrivastava vs. State of Jharkhand (2023). This interpretation means that while the provision empowered the court to order interim compensation of up to 20% of the cheque amount, it does not impose an obligatory duty on the court to do so in every case.
The use of the term “may” in the language of the Section indicates judicial discretion, allowing the court to assess the circumstance of each case before deciding whether to grant interim compensation. This discretion ensures that the provision is applied equitably, taking into account the specific facts and context of each case, rather than mandating a uniform application irrespective of individual case details. Therefore, Section 143A(1) is designed to provide flexibility and fairness in the judicial process, enabling courts to offer interim relief where deemed appropriate while avoiding a rigid, one-size-fits-all approach.
In the case of Surinder Singh Deswal @ Col.S.S Dsawala and Ors. vs. Virender Gandhi and Anr. (2019) the Supreme Court ruled that Section 143A of the Act applies only to offences committed after the enactment of the Negotiable Instrument (Amendment) Act, 2018. This decision ensures that the interim compensation mechanism does not retroactively affect cases where the offence occurred before the amendment. This means that only new offences, occurring after the amendment, are subject to the provisions of Section 143A. The judgement highlighted the importance of giving prompt financial relief to complainants while also considering the right of the person who issued the cheque. This decision has significantly impacted the judicial process by ensuring that complainants in cheque dishonour cases receive time assistance, leading to faster and fairer resolution.
In the case of Rakesh Ranjan Shrivastava vs. State of Jharkhand (2023) the Supreme Court ruled that the provisions under Section 143A of the Act are discretionary rather than mandatory in nature. This means that while courts have the authority to award interim compensation, they are not required to do so in every case. The court emphasised that trial courts should carefully assess the specific circumstances of each case before deciding on interim compensation, considering all relevant factors and the particular context of the situation of interim compensation.
Payment timeline
Section 143A mandates that interim compensation must be paid within 60 days from the date of the order, with a possible extension of an additional 30 days for sufficient cause. The objective here is to enforce timely payment of compensation, preventing unnecessary delays and ensuring that the complainant receives financial relief.
Procedural safeguard
Section 143A(5) is essential for enforcing interim compensation in cheque dishonour cases. It integrates with Section 461 of BNSS which provides a procedure for recovering fines imposed by a court. Section 461 allows the court to attach and sell the property of the defaulter to recover unpaid fines.
By linking with this Section, 143(5) ensures that interim compensation awarded for dishonoured cheques can be effectively endorsed. If the drawer fails to pay the interim compensation within the 60 days time frame, the court can use the measures outlined in Section 461 to seize and sell the drawer’s property to secure the payment.
Examining Section 507 of BNSS with Section 143A of the Act provides a strong mechanism to enforce compensation orders, ensuring complainants receive the awarded amount promptly. This enhances the credibility and effectiveness of the judicial process in cheque dishonour cases.
Differences between Sections 143 and 143A of Negotiable Instruments Act
Basis
Section 143
Section 143A
Objective
Guarantee the prompt adjudication and resolution of cases involving Section 138 (cheque dishonour.
Provides for interim compensation to the complainant during the pendency of the trial.
Application
It applies to the overall trial procedure for cases under Section 138.
It applies to ongoing trials, providing interim relief.
Nature
It governs how the trial should be conducted.
It deals with compensation during the trial process.
Trial type
Summary procedure for quick disposal.
No specific trial, it is centred solely on interim compensation.
Time limit
It should be concluded within 6 months from the date of filing the complaint.
Not applicable.
Adjournments
Limits adjournments to those with sufficient cause to avoid delays.
Not applicable.
Judicial discretion
Allows flexibility based on cases specified.
Allows courts to order interim compensation at their discretion.
Refund in cases of acquittal
Not applicable.
If acquitted, the complainant must refund the interim compensation at their discretion.
Relevance of summary trial in the cases of cheque dishonour
Within the statutory framework of Section 143, the importance and efficiency of summary trials have been highlighted by High Courts in seminal decisions such as Damodar S. Prabhu vs. Sayed Babalal H. (2010) and Indian Bank Association and Ors vs. Union of India and Ors (2014). These incidents demonstrated how crucial it is to have a streamlined legal procedure for matters involving cheque dishonour in order to ensure speedier outcomes and decrease the load on the courts. These decisions uphold the expeditious and effective resolution of these disputes through the endorsement of summary trials, hence, preserving the legitimacy and dependability of cheques as a means of payment.
Procedure under BNSS
A summary trial is a legal method for swiftly resolving minor and less complex offences, as established by Section 283 to 288 of BNSS In accordance with it, judges may hold summary trials under this Section.
Power to try case summarily
Section 283 of BNSS grants certain judicial authorities the power to conduct summary trials for specific offences. A Judicial Magistrate of the first class or a Metropolitan Magistrate is authorised to try summarily the offences listed under this section. These offences usually include minor offences and other crimes that can be punished with up to two years imprisonment. The rationale behind this provision is to expedite the judicial process for less severe cases, thereby reducing the burden on the courts and ensuring swift justice.
Summary trial by Magistrate of second class
Section 284 of BNSS allows Magistrates of the second class to conduct summary trials for specific offences. These Magistrates can handle cases where the punishment is only a fine or imprisonment for up to six months. This means that minor offences can be resolved quickly and efficiently, without the need for a lengthy trial process.
Procedure for summary trials
Section 285 of BNSS is crucial for handling summon cases in India. It sets out the procedure for summary trials, which are faster and less complicated ways to resolve criminal cases. Here is a simple breakdown of the process:
Steps in summary procedure
Initiation proceeding: For minor offences, summary trials are held; the penalties may include fines, imprisonment for a maximum of two years, or both. A police report or a complaint submitted directly to the Magistrate can start the process.
Jurisdiction: Summary trials can only be held by a particular Chief Magistrates, and other First-Class Magistrates.
Issuance of summons: The accused is served with a summons to appear in court. Since these are not warrant cases, the process is less formal and does not involve the arrest of the accused unless necessary.
Trial procedure: Instead of a formal charge sheet, the Magistrate explains the nature of the accusation to the accused. The accused may be questioned, and the Magistrate records the essential facts of the case. Witnesses are examined, and evidence is presented in a straightforward manner with less emphasis on formalities. The Magistrate maintains a concise record of the proceedings including the substance of the evidence and findings.
Judgement: The judgement is delivered promptly, either immediately after the trial or as soon as possible thereafter. The Magistrate meticulously documents the findings of the case, detailing the evidence and the conclusion drawn from it. If a sentence is imposed, it is clearly mentioned in the judgement, specifying the nature and duration of the penalty, whether it be imprisonment, a fine, or both and through documentation it ensures transparency and provides a comprehensive record of the judicial decision.
Limitation on sentencing: In a summary trial, the maximum sentence that can be imposed is limited to three months of imprisonment, a fine, or both. Sentences exceeding this limit are not permissible under the summary procedure, ensuring that only minor offences are handled through this expedited process.
Right to appeal: The accused has the right to appeal against the judgement; however, the scope for appeal is limited due to the minor nature of the offences and the brevity of the trial process.
Record in summary trials
Section 286 of BNSS deals with record keeping for every case tried summarily. This requirement ensures that all pertinent details of the trial are accurately documented. The Magistrate is obligated to record the following information in a prescribed form:-
The serial number of the case,
The date on which the offence was committed,
The date of report or complaint,
The name, parentage, and residence of the accused,
The offence alleged and any examination of the accused,
The findings of the case,
If the accused is convicted, a brief explanation for the conviction,
The sentence or other final order,
The date on which the proceedings were concluded.
This comprehensive record-keeping ensures transparency and provides a clear account of the summary trial process, which is crucial for maintaining the integrity of the judicial system.
Judgement in cases tried summarily
Section 287 of BNSS outlines the requirement for maintaining detailed records in summary trials. Even though these trials are expedited, the judgement must still include the essential elements of the evidence presented and a brief explanation of the reasons for the court’s findings. This ensures that the judgement is not only quick but also well-reasoned and transparent.
By requiring a reasoned judgement, the law protects the rights of the accused, providing a clear basis for the court’s decisions. This clarity and transparency help maintain fairness in the judicial process, ensuring that even in summary trials, the decisions are just and understandable.
Language of record and judgement
Section 288 of BNSS specifies the language in which records and judgement in summary trials should be written. It mandates that the language of the record and judgement must be the same as the language of the court. This ensures consistency and clarity in the documentation and helps in maintaining a standardised approach across all summary trials. The requirements aim to avoid confusion and ensure that all parties involved, including the accused, legal representatives, and appellate courts can easily understand the trial proceedings and judgments.
Important precedents related to Section 143 of Negotiable Instruments Act
We are aware that Section 143 of the Act addresses the manner in which an offence under Section 138 is tried, with particular emphasis on summaries of trials. The interpretation and implementation of Section 143 have been affected by a number of significant cases. Here are a few noteworthy ones:-
Adalat Prasad vs. Rooplal Jindal (2004)
Facts
In this case, the complainant, Rooplal Jindal, filed a complaint against Adalat Prasad under section 138 of the Act alleging dishonour of a cheque issued by Adalat Prasad. The Trial Court, after taking cognizance of the complaint, issued a summons to Adalat Prasad. Subsequently, Adalat Prasad moved an application under Section 582 of BNSS to quash the summons, arguing that there was no sufficient ground to proceed against him.
Issue
The primary legal issue in this case revolved around whether the Magistrate, after issuing the process (summon), had the authority to recall or review the order issuing the summons if it was later found that no sufficient ground existed for proceeding with the case. Specifically, the case questioned the interplay between the powers under Section 143 of the Act which allows for a summary trial of cheque dishonour cases, and the inherent powers of the Magistrate to recall a process under Section 227 of BNSS
Judgment
The Supreme Court of India in this case ruled that once the Magistrate has issued proceedings under Section 227 BNSS, the Magistrate does not have the power to recall the order or review the issuance of summons. The court held that the only remedy available to the accused, if he believes that the process should not have been issued, is to approach the High Court under Section 582 BNSS to quash the summons. The court emphasised that Section 143 of the Act which provides for a summary trial of cases, does not give the Magistrate any inherent power to recall a process, and any correction of the order can only be sought through the High Court’s intervention. This judgement reinforced the principle that once a process is issued, the trial should proceed unless quashed by a Higher Court.
Damodar S. Prabhu vs. Sayed Babalal H.( 2010)
Facts
In this case, the respondent, Sayed Babalal H, filed a complaint under Section 138 of the Act after a cheque issued by Damodar S. Prabhu was dishonored. During the proceedings, Damodar S. Prabhu sought to settle the matter by paying the cheque amount to the complainant and requested the case be quashed. The key aspect of the case involved the imposition of costs while compounding the offence, which is permitted under Section 147 of the Act.
Issue
The main issue in this case was whether the courts should impose costs or conditions when allowing the compounding of offences under Section 138 Negotiable Instruments Act, and if so, what the appropriate quantum of Costs should be. The court also examined how Section 143 of the Act, which allows for summary trials, should be applied in the context of compounding offences.
Judgment
The Supreme Court of India in this case held that while compounding of offences under Section 138 is permissible, it should not be unconditional, especially at later stages of the litigation process. The court laid down guidelines for the imposition of graded costs for compounding offences at different stages of the trial. The court emphasised that these costs are necessary to discourage undue delays and to ensure that the provisions of Section 143, which aims at a speedy trial, are effectively implemented. The judgement underlined that compounding should be encouraged early in the process, and any delay should attract higher costs, thereby promoting swift justice and reducing the burden on the judicial system.
Although the verdict was upheld, the Supreme Court established standards for compounding. The following are the guidelines for compounding:
At the Trial Court: If an offence is compounded at the first instance, the accused has to pay 10% of the cheque amount as a cost.
At the Appellate Court: If the matter is settled at the appellate stage the compounding fee increases to 15%.
At the High Court: If the matter is settled at the High Court, the fee is 20%.
At the Supreme Court: If the matter is settled at the Supreme Court, the fee is 25%.
The Supreme Court‘s guidelines are designed to encourage timely settlements and reduce litigation costs.
M/S. Mandvi Co-Op. Bank Ltd vs. Nimesh B. Thakore (2010)
Facts
In this case M/S. Mandvi Co-Op. Bank Ltd. filed a complaint against Nimesh B. Thakore under Section 138 of the Act after a cheque issued by Nimesh B. Thokre was dishonored. During the proceedings, the accused sought to challenge the admissibility of evidence in the form of an affidavit filed by the complainant. The crux of the issue was whether such an affidavit without the need for the complainant to appear in person for examination-in-chief.
Issue
Whether, under Section 145 of the Act which allows evidence on affidavit, the complainant’s affidavit could be treated as evidence in a trial under Section 138, without the need for personal examination-in-chief. Additionally, the case examined how Section 143, which provides for summary trials, should be interpreted in the context of accepting evidence by affidavit.
Judgment
The Supreme Court of India, in its judgement, upheld the admissibility of evidence by affidavit under Section 145 of the Act in trials conducted under Section 138 of the Act. The court ruled that the affidavit submitted by the complainant could be accepted as sufficient evidence during the trial and that the complainant was not required to appear in person for examination-in-chief unless specifically summoned by the court. The judgement reinforced for cases related to cheque dishonor, by allowing the use of affidavits to streamline the process. This decision was significant in reducing the procedural delays in section 138 cases, aligning with the legislative intent to expedite the resolution of such disputes.
India Bank Association & Ors vs. Union Of India & Ors (2014)
Facts
In this case, the India Bank Association, along with other petitioners, filed a Public Interest Litigation before the Supreme Court of India against the Union India of India. The petitioners argued that the judicial system was overburdened with a large number of cases filed under Section 138 of the Act related to the dishonor of cheques. They contended that the existing legal framework under Sections 138 and 143 of the Act, which provided for summary trials and the speedy resolution of cases, was not being effectively implemented. As a result, there were significant delays in the disposal of cheque dishonor cases, affecting both the complainants and the efficiency of the judicial system.
Issues
Whether the procedural mechanism under Sections 138 and 143 of the Act were adequate to ensure the timely resolution of cheque dishonor cases.
Whether the judiciary and executive had taken sufficient steps to address the delays in the adjudication of such cases.
Whether additional guidelines or directions were needed to streamline the process and expedite the disposal of cases under section 138 of the Act.
Judgment
The Supreme Court of India, recognizing the importance of the issues raised, issued a series of directions aimed at speeding up the resolution of cheque dishonor cases. The court highlighted the legislative intent behind Section 143, which mandates summary trials for cases under Section 138, and strongly states the need for its strict implementation. The court directed that:
When a complaint under Section 138 of the Act is filed, the Metropolitan Magistrate or Judicial Magistrate must review the complaint on the same day. If the complainant is supported by an affidavit and all necessary documents are in order, the Magistrate should acknowledge the complaint and issue a summons.
The Metropolitan Magistrate or Judicial Magistrate use a practical and realistic approach when issuing summons. Summons should be correctly addressed and sent both by post and email, using the addresses provided by the complainant.
In certain cases, the court may seek assistance from the police or a nearby court to serve the notice to the accused. A short date should be set for the notice of appearance. If the summons is returned unserved, immediate follow-up action should be taken.
The court may indicate in the summons that if the accused applies for compounding of offences at the first hearing, appropriate orders may be passed promptly.
When the accused appears, the court should direct them to furnish a bail bond to ensure their appearance during the trial. The court should also serve notice under Section 274 of BNSS allowing the accused to enter a plea of defence and schedule the case for defence evidence unless the accused applies under Section 145(2) to recall a witness for cross-examination.
The court must ensure that the examination-in-chief, cross-examinations, and re-examination of the complainant are completed within three months of assigning the case.
The court may accept affidavits from witnesses instead of in-person testimony, but witnesses for both the complainant and the accused must be available for cross-examination when directed by the court.
M/S. Meters And Instrument Private Limited & Anr. vs. Kanchan Mehta (2017)
Facts
In this case M/S. Meters and Instrument Pvt Ltd, along with another party, had issued a cheque to Kanchan Mehta. The cheque was dishonored, leading Kanchan Mehta to file a complaint under Section 138 of the Act. The accused parties sought to compound the offence, but the complainant initially did not consent to compounding. The trial was initiated, and during the proceedings, the accused offered to pay the cheque amount along with interest and cost.
Issue
Whether the offence under Section 138 of the Act, could be compounded by the court even after the initiation of criminal proceedings and without the consent of the complainant.
Whether the Magistrate could close the case if the accused paid the cheque amount with interest and cost during the trial.
Judgment
The Supreme Court held that the offence under Section 138 of the Act is primarily a civil wrong, and criminal proceedings are meant to ensure payment rather than punishment.
The court observed that Section 143 of the Act, which allows for summary trials, implies that the focus should be on ensuring the payment of the cheque amount. Therefore, if the accused is willing to pay the amount due with interest and cost, the Magistrate has the discretion to close the case even if the complainant does not consent to compound.
It also emphasised the importance of speedy disposal of such cases and recognized that allowing compounding at any stage of the proceedings, including after conviction, would serve the interests of justice.
The judgement further clarified that in cases under Section 138, the Magistrate could pass an order of conviction if the offence is proved but can also decide on compounding or closure of the case in the interest of justice, following the accused’s payment.
Conclusion
The Act particularly Sections 143 and 143A, are important legislative attempts to improve and speed up the legal system’s ability to handle cheque dishonour issues in India. Section 143 focuses on the summary trial of certain cases, which streamlines the necessary procedure to allow for quicker decisions. This clause guarantees that matters be handled effectively, lighting the load on the legal system and giving complainants prompt justice.
However, Section 143A, which was included by the 2018 Amendment, gives the court the authority to grant the complaint temporary compensation in order to alleviate any immediate financial hardship brought on by the dishonoured cheque. While the trial is pending, this interim compensation, which can be up to 20%of the cheque amount, is due. Even though Section 143A is optional rather than required, it is essential for giving the complainant relief while upholding the accused’s right to a fair trial.
When considered together, these elements highlight the legislative intent to promote financial discipline, protect the integrity of cheque transactions, and provide a quicker and more efficient legal system for cheque dishonour cases.
A law can be misused and rendered ineffective if it lacks severe penalties for violations. Enacting legislation without proper enforcement mechanisms is futile. Section 143A of the Act addresses this by imposing a deterrent penalty for non-compliance, stipulating interim compensation in cases of cheque dishonour. This provision fosters trust among financial institutions and businesses and acts as a deterrent for habitual offenders who issue post-dated cheques without intending to honour them.
There can be no true reformation without the use of deterrent punishment. Reformation works best for people who inadvertently commit crimes, not for repeat transgressors. Repeated economic offenders cannot be changed without suffering severe repercussions. Thus, the intent behind drafting Section 143A is undermined in the absence of sanctions for non-compliance.
It should not be necessary for complainants to fight for temporary relief intended to last until the trial. To guarantee adherence to the court order, harsh penalties and restrictions on the accused’s rights should be applied instead. This would guarantee that everyone abides by the law and respects the rulings of the court.
Frequently Asked Questions (FAQs)
Is Section 143 of the Negotiable Instrument Act, 1881 an interlocutory order?
Yes, an interlocutory order is issued under Section 143A of the Act Directing interim compensation during a trial for cheque dishonour under section 138. This compensation, up to 20% of the cheque amount, provides temporary relief to the complainant.
In G.J Raja vs.Tejaraj Surana(2019), the Supreme Court clarified that such orders are interlocutory, meaning they are temporary and have different appeal procedures compared to the final order.
What are the key differences between Section 143A and 148 of the Negotiable Instrument Act?
Section 143A and Section 148 of the Act address different stages of cheque dishonour cases. Section 143A, introduced in 2018, allows courts to grant interim compensation up to 20% of the cheque amount during the trial, providing immediate relief to the complainant.
In contrast, Section 148 applies during the appeal stage, requiring the appellant to deposit at least 20% of the trial court’s fine or compensation before their appeal is considered. This ensures the appellant is serious about the appeal and offers financial security to the complainant who has already won the trial.
In essence, Section 143A offers relief during the trial, while Section 148 secures compensation during the appeal process, enhancing the effectiveness and reliability of cheque-related legal proceedings.
Can interim compensation be ordered to be paid only after the accused pleads not guilty?
Yes, only after the accused enters a not guilty plea can interim compensation be granted under Section 143A of the Act once the accused enters a not guilty plea to Section 138 accusation and the trial has begun, the court may order the drawer of the cheque to provide interim compensation to the complainant in accordance with Section 143 A’s provisions.
This process requirement makes sure that interim compensation is only taken into account following the formal charge contestation by the accused, which starts the trial process. This method strikes a balance by guaranteeing that interim compensation will not be granted too soon and will remain accessible as a remedy in the event that the accused refutes the charges and the matter goes to trial.
There are numerous court rulings, such as the Supreme Court‘s ruling in G.J. Raja vs.Tejraj Surana (2019), which elucidated the procedural and application features of Section 143A, have concurred with this interpretation.
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This article is written by Arya Senapati. It attempts to analyse the provisions of the 106th Constitutional Amendment, which dealt with reservation of women in legislative bodies and the political participation of women. This article also discusses the representation of women in politics, objections raised against passing such a reservation and the bill, and the recommendations made by the Geeta Mukherjee Committee along with the benefits of the bill. This amendment is also known as the Women’s Reservation Bill, 2023. It attempts to analyse the barriers to political participation of women and the implications of the amendment on such socio-political factors.
Table of Contents
Introduction
The first Lok Sabha formed in 1952 had 24 women Members of the Parliament, and currently, in the year 2024, the Lok Sabha comprises only 74 women Members of the Parliament. In nearly 75 years of Indian politics, the representation of women in the House of People, the legislative institution, still remains less. Even though the number of women voters who exercise their right to vote is higher as compared to male voters and will surpass the margin substantially by the next general elections, their representation in the decision-making bodies still lacks adequacy. Due to multiple social factors, norms, and stereotypes, women either lack access to the forums of politics or face systemic disabilities while participating in the process of election. Owing to such factors, the necessity for reserving seats for women in the Indian Parliament was felt.
The discourse regarding the necessity for gender-based reservation in legislative bodies finds its origin loosely in the year of 1996 when the then-Deve Gowda-led United Front government introduced the 81st Constitutional Amendment Bill, 1996 for the reservation of women in Parliament. The bill failed to gain support in the Lok Sabha. The discourse arose multiple times and many political parties sought to take credit for passing the Women’s Reservation Bill but due to debates and concerns, the bill stayed dormant. In 2021, the National Federation of Indian Women filed a PIL (Public Interest Litigation) in the Apex Court seeking the reintroduction of the bill to reserve 33% of seats for women in the Lok Sabha.
The Apex Court demanded a response from the government but did not receive any for two years and ultimately, in 2023, both houses of Parliament passed the 106th Constitutional Amendment Act, 2023 which came to be known as the Women’s Reservation Act, 2023 (hereinafter mentioned as ‘the Act’). Even though it came as a surprise after its tumultuous history, it was welcomed as a positive action aimed at improving the political participation of women and representation of women in decision-making bodies. The Act received the assent of the President on 28th September, 2023 and thereby became operational from the said date. Its implementation is yet to be determined and the nation is yet to observe the effectiveness of its provisions but initial observations suggest a balance between its promising potential and equally concerning are some of the considerations that have been ignored.
Why reserve seats for women
In the global political scenario, through thorough observation of the freedom struggles and other major political events, the role of women has been sacrosanct. One cannot ignore the reigns of powerful female leaders in various movements that bore fruitful results and brought ideal social change in world dynamics. The world as we know it today strives towards equality and equity. Equality is perceived in terms of many identities, i.e., gender, class, caste, ethnicity, religion, race, etc. Gender equality has been recognised as a pivotal necessity for creating an egalitarian society.
The Universal Declaration of Human Rights, which is regarded as the prime authority in human rights law from which other international human rights laws emerge, necessitates state action for protection of rights of women and facilitating gender equality. Especially in Article 2, it states that everyone is entitled to all rights and entitlements without any form of discrimination based on race, colour, sex, language, religion, origin, and other status. Similarly, Article 7 states that everyone is equal in the eyes of the law and is entitled to equal protection of the law without any form of discrimination. Article 21 states that everyone has the equal right to participate in governance either directly or through freely elected representatives. It also promotes the idea of universal and equal suffrage. Considering the overall implications of all these articles, it is clear that the primary source of human rights regards the necessity for a state to take appropriate actions for increasing accessibility of women in forums of political participation and lawmaking.
It is evident that women form almost half of the entire population of India (as per the latest census, they constitute 48% of India’s population). In an ideal democratic situation, diversity and inclusion are highly upheld. People from various backgrounds constitute a lawmaking body to allow for the free flow of diverse ideas and opinions, which ultimately reflect in the policy measures and state actions undertaken by the government. Therefore, ideally, a democracy with a 50% female population should have close to 50% female political representation to adequately address the needs and demands of women. Even though we do not live in an ideal world, one can try to reach as close to it as possible. Therefore, globally, through suffragette movements, women first demanded the right to vote, and then, through multiple waves of feminism, women demanded a seat in decision-making bodies to represent themselves efficiently.
The primary reason for having reservations for women is to ensure that the problems and concerns of almost half of the population are represented by someone who understands the concerns. It goes without saying that one cannot solve a problem completely without having faced it personally. In the Indian context, gendered issues range from bodily crimes, inequalities in education, employment and access to services, domestic violence, safety, and many others. Largely, a male dominant legislature allows for men to make laws on women’s bodies and women’s issues without having experienced it themselves. Therefore, having an adequate representation of women in policymaking and law bodies will solve the issues in a more efficient and impersonal manner. The primary role of reservation of seats for women in Parliament is equitable representation with an aim for an efficient solution.
Provisions of the Act
It is important to analyse the provisions mentioned in the law to understand its imminent effects in a clearer picture. The amendment brought about multiple changes in the Indian constitution. The provisions are:
Section 1 of 106th Amendment Act, 2023
The first section is the short title of the Act, and it states that the Act is referred to as the Constitution (One Hundred and Sixth Amendment) Act, 2023. It also states that the Act shall come into force on the date on which the Central Government notifies it through an official gazette.
Section 2 of 106th Amendment Act, 2023
The second section deals with an amendment to clause 2 of Article 239AA of the Indian Constitution. The unamended clause 2 of Article 239AA deals with special provisions regarding the Union Territory of Delhi and states that:
As per the 69th Constitutional Amendment Act, 1991, the Union Territory of Delhi shall be referred to as the National Capital Territory of Delhi, and the administrator of Delhi appointed as per the process of Article 239 shall be referred to as the Lieutenant Governor.
(a) The National Capital Territory of Delhi shall have a Legislative Assembly to draft laws and policies for its governance, and the body shall consist of members who are directly elected from the electoral constituencies of the territory.
(b) The total number of seats in the legislative assembly of the National Capital Territory of Delhi, the seats reserved for Scheduled Castes (SC), the division of the territory into constituencies, and other similar functional matters shall be dealt with in accordance with the laws made by the Parliament.
(c) The Articles 324 to 327 and 329 will be applicable to the National Capital Territory and the Legislative Assembly as well as the members of the assembly in so far as they apply to other states, state legislative assemblies and members of state legislative assemblies.
Now the amendment called for the insertion of subclauses ba, bb, and bc in clause 2 of Article 239AA. They are:
(ba) The Legislative Assembly of the National Capital Territory of Delhi shall reserve seats for women in the legislative body.
(bb) At least one-third of the seats that are reserved for the Scheduled Castes in the National Capital of Delhi Legislative Assembly must be reserved for women.
(bc) At least one-third of the total seats that are supposed to be filled by direct election to the legislative assembly of the National Capital of Delhi, including those seats that are reserved for women belonging to the Scheduled Caste. The form of reservation shall be determined by the Parliament.
So consequently, the effect of Section 2 of the Amendment falls largely on the Delhi Legislative Assembly, which was created by the 69th Constitutional Amendment. It simply makes it clear that the reservation for women in parliamentary bodies would also apply to the special case of the National Capital Territory of Delhi as it would to other states. There is an intersectional approach taken here by reserving seats for women belonging to Scheduled Castes too. It allows for better representation of multiple identities and social communities in lawmaking bodies. 1/3rd of the seats from the SC reservation get reserved for women, and 1/3rd of the other seats filled by direct election also get reserved for women.
Section 3 of 106th Amendment Act, 2023
Section 3 of the Amendment Act inserted a new article into the Indian Constitution. Article 330A was inserted vide the amendment, and it stated that:
Demands the reservation of seats for women at the House of People, i.e., Lok Sabha
As close as possible, one-third of the seats reserved under Article 330(2) shall be reserved for women belonging to the Scheduled Caste or Scheduled Tribe.
As close as possible practically, one-third of the seats (including the number of seats reserved for women of scheduled castes and scheduled tribes) that are filled by direct election must be reserved for women in the House of People (Lok Sabha).
This Section’s primary focus is the central legislative body, which is the Lok Sabha. It basically enacts a new provision that states that there shall be gender-based reservation of seats for women in Lok Sabha. In terms of the extent of reservation, it states that 1/3rd of the total number of seats reserved for people belonging to Scheduled Caste and Scheduled Tribe shall be reserved for women belonging to Scheduled Caste and Scheduled Tribe to facilitate an intersectional approach towards decision-making and representation.
Secondly, it states that from all the other seats which are filled by direct elections in the Lok Sabha, one-third seats, including those reserved for women belonging to Scheduled Caste and Scheduled Tribe, shall be reserved for women.
Section 4 of 106th Amendment Act, 2023
Section 4 of the amendment inserts Article 332A into the Indian Constitution. It states that:
Demands for reservation of seats for women at State Legislative Assemblies of every state.
Further, as far as practicable, one-third of the total number of seats that are reserved for people belonging to Scheduled Caste and Scheduled Tribe shall be reserved for women belonging to Scheduled Caste and Scheduled Tribes.
As far as practicable, one-third seats, including those reserved for women belonging to Scheduled Caste and Scheduled Tribe, which are filled by direct election in the State Legislative Assemblies, shall be reserved for women.
While the previous Section 3 focused on the Central Legislative body, i.e., the Lok Sabha, Section 4 focusses on State Legislative Assemblies. It allows for multi-tier representation of women in both the centre and state. It follows the same pattern of reservation where one-third seats are reserved for women belonging to Scheduled Castes and Scheduled Tribes from the total number of seats reserved for the people belonging to Scheduled Castes and Scheduled Tribes. Secondly, one-third seats are reserved for women (including seats reserved for women belonging to Scheduled Castes and Scheduled Tribes) from the seats that are filled by direct election to the state legislative bodies.
Section 5 of 106th Amendment Act, 2023
Section 5 introduced a new article to the Indian Constitution. Article 334A was inserted after Article 334. Article 334A states that:
The effect of the previous provisions regarding reservation of seats for women in Lok Sabha, State Legislative Assembly, and Legislative Assembly for the National Capital Territory of Delhi shall ensue only after a delimitation exercise is carried out and relevant data is collected from the first census conducted after the commencement of this particular constitutional amendment. It shall also cease to have effect after the expiration of 15 years from the commencement of this Act.
With regards to the provisions of Article 239A, 330A, and 332A, the reservation of seats for women in the Lok Sabha, State Legislative Assembly and Legislative Assembly of the National Capital Territory of Delhi will continue till the date that the Parliament decides by law.
Rotation of the reserved seats for women shall take place in the Lok Sabha, State Legislative Assemblies, and the Legislative Assembly of the National Capital Territory of Delhi after the delimitation exercise is carried out as per the Parliament.
Nothing contained in this article shall have any effect whatsoever on the representation of Lok Sabha, State Legislative Assemblies and Legislative Assembly of the National Capital Territory of Delhi till the existing forum is dissolved and a new forum is constituted.
This article deals largely with the technicalities, process of implementation, and extent of the law. It makes it clear that the law is not to take immediate effect. Rather, a delimitation exercise is to be carried out once the first census is released after the commencement of the Act and after the present houses and assemblies are dissolved, and then the law is to take effect. It also specifies that the law is to be operational for 15 years from its commencement and will enjoy such functionality till the time that the Parliament decides by law.
Section 6 of 106th Amendment Act, 2023
Ultimately, the last Section of the Amendment Act specifies that the provisions would not affect any representation in the Lok Sabha, State Legislative Assemblies, or Legislative Assembly of National Capital Territory of Delhi until they are dissolved and newly formed.
This provision acts as a savings provision, which is important to prevent any confusion and avoid operational challenges that could arise due to the immediate implementation of the law on the present bodies and their constituents.
History of representation of women in political bodies in India
Initially, in the first Lok Sabha, which was formed in the year 1952, there were only 2 women MPs, and there was no substantial improvement in the representation of women in the subsequent elections as well. Considering the circumstances, it was concerning to see such a low level of representation of a significant group of citizens (women) in decision-making bodies. In 1975, the Committee for Status of Women showed great concern for the lack of representation of women in policy-making bodies. Contrasting to the concern, the committee was not in favour of creating reservations for women in Legislative Assemblies or the Houses of Parliament but rather sought reservations in the third tier of governance, which is the Panchayat and local self-governing bodies.
During this period, Indira Gandhi was the Prime Minister, and a report titled “Towards Equality” was published, which highlighted the status of women in every field and social institutions. This report generated a huge discourse regarding representation of women and reservation of seats, but the committee members were opposed to the idea of reserving seats for women. The mass opinion was that women sought to enter politics through their own accord and not through reservations aimed towards uplifting them into decision-making bodies.
During the tenure of Rajiv Gandhi in the 1980s, he tried to pass a bill to reserve one-third seats for women in Panchayat and local body elections but stood against the reservation of seats for women in State Assemblies. At a later point, certain states like Karnataka, Maharashtra, and Kerala accepted reserving 30% of seats for women. Many claimed this action as a strategic move by the government to tackle and defeat the opposition, disguising it as an effort to empower women through reservation in political bodies.
In the year 1992, the Parliament passed the 73rd and 74th Constitutional Amendment Act, which aimed at providing adequate representation to women in Panchayati Raj bodies and other urban self-governing bodies. Once such reservations were made, demand regarding the reservation of seats for women in the Parliament and State Legislative Assemblies increased significantly. This led to the discussion regarding the Women’s Reservation Bill during the tenure of Prime Minister Atal Bihari Vajpayee in the year 1996. Considering that the government did not have a majority at the time, the bill couldn’t be passed. Therefore, the discussion regarding reservation of seats for women has lasted for a time frame of 30 years in the Parliament.
After the tenure of the Prime Minister Atal Bihar Vajpayee, on 12th September, 1996, the government led by Prime Minister H.D. Deve Gowda tabled the Women’s Reservation Bill in Parliament and it included provisions for 33% reservation of seats for women in Assembly and Parliament. The Bill was the 81st Constitutional Amendment Bill, which did not pass in Parliament and therefore, it was handed over to a joint special committee led by Geeta Mukherjee. During this time, over 106 women’s organisations sent memorandums to Geeta Mukherjee regarding the matter of women’s representation in decision-making bodies.
Considering the opinions of many women, the committee decided to finalise the bill on 9th December, 1996. The Committee had also received many letters written in the blood of women stating that they would not rest until this right of representation was granted to them. Geeta Mukherjee was also determined at making it happen, but it failed due to the opposition of multiple parties. The primary ground for opposition was that it was not feasible to provide a quota within a quota for these women. The bill did not pass due to a lack of consensus.
Women across the nation were agitated by the failure of this bill and the avoidance strategy used by the Parliament. In 1977, during the budget session, the All India Women’s Association marched with 10,000 women across the country towards the Parliament. The women were lathi charged and were subjected to tear gas and water cannons to curb the protest. Many women were injured and were hospitalised by the actions of the state. The then Prime Minister, I.K. Gujral, had to issue an apology for the incident and about 1.5 lakh signatures were submitted to the Speaker of the Lok Sabha in the form of a petition demanding the passage of the Women’s Reservation Bill. In the year 1997, several women’s organisations sent letters to all national political parties demanding to pass the bill.
In the year 1998, the Atal Bihari Vajpayee government again tabled the bill in the Parliament, but due to the opposition of certain parties, the bill failed to pass again. In the same year, several women’s organisations protested this move and criticised the government for turning down such an important step towards gender equality. The campaign came to be known as Chetna Yatra, and it took its journey from Delhi via Ernakulam to Chennai and back to Delhi.
In 1998, women representatives of many national parties held conferences in Hyderabad and expressed their support for the cause of reserving seats for women in higher decision-making bodies. After the immense pressure, the Atal Bihari Vajpyee-led NDA government reintroduced the bill in the 12th Lok Sabha, yet the bill did not pass. It was further introduced in 1999, 2002, and 2003 but it did not see the face of success. The lack of consensus was given as an excuse each time the bill failed.
The discourse was reignited during the UPA government’s tenure led by Dr. Manmohan Singh. The bill was reintroduced in the Rajya Sabha in 2008, and three days later, it was referred to a standing committee. The report of the committee was submitted in 2009 and received approval from the Union Cabinet in 2010, and the Women’s Reservation Bill was passed in the Rajya Sabha in 2010. Unfortunately, the bill was never tabled in the Lok Sabha, and then it was dissolved in 2014; therefore, the bill failed to pass once again. The bill has been introduced in Parliament a total of 8 times, but it could never become a law until 2023. In September 2023, the bill was passed in both houses of the Parliament and it came to be known as the Nari Shakti Vandan Act. Out of 456 MPs present in the Lok Sabha, 454 members voted in favour and all 214 MPs of the Rajya Sabha voted in favour of the bill. The bill turned into an Act.
However, a delimitation of seats is to be carried out after the first census is conducted prior to the passage of the Act. The law still has a long road to traverse, and it will most likely be implemented in the Lok Sabha elections of 2029. The bill was passed after multiple amendments were made to it, which included provisions for reservations for Other Backward Classes (OBCs) within the 33 percent quota reserved for women. It was made clear that the 33 percent quota would not be applicable to the Upper House of the Parliament, i.e., the Rajya Sabha.
Recommendations of the Geeta Mukherjee Committee
The Joint Select Committee, which was created to develop a consensus regarding the reservation of seats for women in the Lok Sabha and State Legislative Assemblies, was headed by Geeta Mukherjee. She was a Member of Parliament from the Communist Party of India. The body comprised 20 members from the Lok Sabha and 10 members from the Rajya Sabha. Out of the 30 members, 13 were women, including various women MPs who campaigned for the reservation. The discussions of the committee began on 23rd October 1996 and revolved around two issues: the issue of implementation of reservations in the Rajya Sabha and the issue of reservations for OBCs. Finally, after the conclusion of the discussions, the committee recommended the passage of the bill and suggested that the reservations for OBCs must be done at a later point in time. The suggestions given by the committee included:
A parliamentary review of the enactment and its provisions after 15 years from the date of the commencement of the Act to analyse its effectiveness and implementation and to judge whether it should be carried forward. This suggestion sought the reservation of seats for women to be a temporary measure and not of a permanent kind. It is worth noting that 15 years simply implies 3 elections, as the tenure of the Lok Sabha is of five years. Currently, the government aims to implement the Act in 2029.
The committee recommended replacing the phrase “not less than one-third” with “as nearly as possible, one-third,” as it felt that the former phrasing could lead to ambiguities due to its vague nature and can pave the way for faulty interpretations and executions. They believed that such phrasing could affect the proper implementation of the provisions, and therefore, it was necessary to attain clarity in the provisions themselves to prevent any kind of confusion in the implementation phase.
It also recommended the extension of reservation of seats for women as envisioned in the Bill to extend to the Rajya Sabha and State Legislative Councils as well. It recommended that the government figure out the modalities and extend the affirmative action to the Upper House of the Parliament as well. In contrast to the suggestion, the current form of the Act does not extend to the Rajya Sabha or State Legislative Councils. It only affects the Lok Sabha and the State Legislative Assemblies. Therefore, this recommendation was not taken into consideration.
It suggested relevant amendments to the Bill to extend the provisions for reservation to women in those States and Union Territories where the number of seats in Lok Sabha is less than three, as they viewed such a move as unfair to women. They suggested that even if the seats for a particular State or Union Territory are less than 3, at least one seat must be reserved for women so as to allow them to benefit from affirmative action.
They suggested that the system of rotation should also apply to the members of the Anglo-Indian Communities to ensure that one of the nominated members is a woman.
The committee also suggested the extension of the provisions for the reservation for women towards the Union Territories of Delhi and Pondicherry, both of which have a Legislative Assembly to ensure representation.
The committee also suggested omitting the provision to sub-clause 3 of Article 332A, which stated that no reservation for women shall be made in the State Legislative Assembly of a State whether the number of seats allotted to such a state is less than three, as no such state existed in reality. This suggestion was taken into consideration and was implemented in the final form of the Act.
Objections faced by the Women’s Reservation Bill
The Women’s Reservation Bill faced multiple objections, which ranged from laxity on the part of the drafters regarding the correction of obvious errors to significant criticisms regarding the substantial provisions of the law. During the parliamentary discussions and debates regarding the bill, a large number of opponents of the bill used the excuse of technical errors in the draft that could lead to potential ambiguities when the bill gets passed and sent for execution. The primary technical defect pointed out by the opponents was that clause 3 of Article 332A called for the exclusion of states where the seats are less than three. Such a proviso was touted as superfluous, as no state has a Legislative Assembly of less than three members. The exclusion of Union Territories from the purview of the Bill also leads to a significant reduction in its effect since many Union Territories, like Pondicherry, have a Legislative Assembly.
Furthermore, the fixing of the number of seats for women at one-third of the total number of seats to be filled by direct elections to the Lok Sabha and State Legislative Assemblies was not based on any demographic data or any other reasonable nexus. This was simply extracted from the figures of reservation given to women in panchayats and other local self-governing bodies in the third tier of governance. The objection was that when the Constitution itself recognises the basis of reservation to be proportion of population, why weren’t 50% of the seats reserved for women in the Lok Sabha when at least half the population of the nation is women? It is worth noting that the number 33% is anyway higher than the recommended 30% participation threshold set by the United Nations Commission on the Status of Women.
The next set of objections was regarding the “one-out-of-three” formula used for reservation of seats for women. It creates a special set of problems for states like Goa, Sikkim, and other north-eastern states that elect less than 3 members to the Lok Sabha. The only possible solution to this problem could be the reservation of seats for women in one term and de-reserving them for the next two terms. The bill recognised a differential treatment for such States and Union Territories but the final form of the Act has no such mentions.
Many opponents found the extension of reservation provisions only to the directly elected Lok Sabha and State Legislative Assemblies and the exclusion of the Upper House of Parliament and State Legislative Councils to be erroneous. It is worth noting that, in a similar sense, the reservations for Scheduled Castes and Scheduled Tribes have existed for a long period of time and extend only to the Lok Sabha and not to the Rajya Sabha. Even though the Rajya Sabha functions on nominations, no efforts have been made to improve the representation of women in the Upper House. There is a need to have significant legislation in place to protect the representation of women in the Upper House of the Parliament. It is also significant to note that the Rajya Sabha has almost an equal say in every major decision. Therefore, lacking a strong representation in Rajya Sabha, the advantage gained by women in Lok Sabha becomes futile and insignificant.
The next point of objection was that the bill did not mention any renewal plan or timeline. It was compared to the fact that even though the reservations for SC/ST communities were planned for ten years, they were extended through subsequent amendments and have continued beyond fifty years from the commencement of the Constitution. Even though the final form of the Act mentions a timeline of 15 years for women’s reservation, the bill made no such remarks or promises. It was inserted only after the recommendation of the Joint Select Committee.
The next significant criticism was regarding the rotation of the seat system. The rotation system involves selection of seats for reservations through a lottery in every term, where one-third of the constituencies are selected and the de-reservation in the next term and further selections being made from the remaining two-thirds of the constituencies through the lottery was criticised to be impractical and ambiguous. The reservation of one-third of seats from the one-third of seats reserved for women belonging to Scheduled Castes or Scheduled Tribes further complicates the system and makes the implementation difficult in every sense.
These modalities were challenged, and a clear process for the implementation was demanded by the opponents of the bill as this system raised several concerns. The process of seeking reservation within reservation was not viewed amicably by many opponents of the bill. In this kind of a system, the representatives would have no motivation to responsibly manage and nurture their constituencies, as there would always be a possibility of de-reservation in the next term.
These were the major objections faced by the biIl during the discussion phase.
Objections to reservation for women
One of the primary concerns raised against the idea of reservation for women was that it would not transcend beyond the general perspective of women as daughters, mothers and sisters. In a society where men are traditionally seen as the breadwinners and women as the nurturing caregivers, it is tough to properly create a hold for women in the field of politics. Even if the women find access to political and decision-making forums, their opinions in most cases would be controlled by their husbands, fathers or brothers. This creates a ground for dynastic politics to allow women from their families to contest elections for the reserved seats and ultimately get controlled by the male relatives who have had a long standing in the field of politics.
Some opponents also state that reservation for women can pose a threat to national unity as it would consequently manifest divisive tendencies in the field of politics, which is already a very divisive arena. Many argue that sex should not be the sole basis of reservation and that it must be intersected with other social identities, but this argument is unsubstantial as the bill is proposed for both horizontal and vertical reservation. The bill creates a system where caste and sex are intersected to reserve seats for women belonging to Scheduled Caste and Scheduled Tribe communities, and therefore the principle of demarcation is quite valid. It is also worth noting that the constituent assembly promoted the idea of reservation for disadvantaged groups in accordance with democratic ideals and the principles of social justice. Due to a faulty gender power imbalance, women find themselves in a disadvantaged position and therefore, it won’t be wrong to give them affirmative action in the form of reservation.
The next set of objections were that the reservation of seats for women in legislatures will lead to most seats getting occupied by people from an upper caste and upper class background, and it would lead to a stronger impediment for people belonging to scheduled castes and lower class. On the contrary, this argument is valid not just for seats reserved for women but for all seats of Lok Sabha in general. There is a clear impediment for disadvantaged minorities to access political forums. This argument was further substantiated by demanding reservations for OBC women but the bill only viewed women belonging to SC and ST communities for intersectional reservations and paid no heed to OBCs. While constitutionally, reservation for OBCs is seen in fields of education and employment, in the field of politics, only SC and ST reservations are envisaged.
The greatest obstacle that women have while accessing the field of politics is the patriarchal mindset of their own families. In most rural areas and even in urban settings, women are still responsible for housework even if they are employed. They have to undergo a gruesome second shift at home because of the traditional gender roles, which are confined to the ideas of patriarchy. Women, from a very young age, are indoctrinated to believe that they are inferior to men, and this mindset is ingrained in their beliefs and actions. Consequently, very few women break the chains of patriarchal mindsets and enter the field of politics. Closely linked to this argument is the primary argument that men in politics will simply forward their female relations to contest elections and ultimately use them as puppets to exercise their power. This possibility always remains true but in contrast, we also have examples of great female leaders who have contributed substantially to society and nationhood.
The feminist opposition to women’s reservation is that it would lead to a sort of political “ghettoisation,” which is basically a situation where women are pitted against each other and instead of working towards a common cause, they would be put in a situation that makes them rivals. So in essence, it may not take forth the interests of women but rather hamper it by creating conflicts between them. The potential of alliances between women, which could help them foster change, gets substantially weakened by the strong sense of rivalry that politics creates between opponents.
Many argue that till the introduction of reservations, women have been representatives of people. By creating separate constituencies for women, it narrows down their perspective and their representation potential to a large extent to just women. This argument is not valid as it sees the interests of women separate from the interests of society. This mindset does a huge disservice towards the entire idea of an egalitarian society as it creates a division of interests based on gender. By empowering women in the fields of economics, politics, education, and employment, society itself grows and gets empowered. The real progress of a society should be judged by the status of women in it.
Many argued that it has been seen that when a specific group is given a reservation, other groups demand the same too. That phenomenon would lead to quite an unrest and create complicated and divisive situations in the arena of politics. Another concern was that in the past we have seen that once a reservation is granted to a group, it becomes extremely difficult to end the reservation and it continues for an indefinite period. Women have been contesting as equals to men in the field of politics and by providing reservations, they may get viewed as unequals in some situations, which would hamper their perception in the field of politics. This argument holds no ground as the situation of women has not quite improved in the past years. May it be in politics or society in general, women often find themselves in a position of disadvantage and therefore reservations would not lead to inequality but inequality leads to reservation. It is a necessary affirmative action to cure decades of injustice being meted out to women in society.
Highlights of the Act
Almost thirty years ago, the Parliament had enacted the 73rd and 74th Constitutional Amendment Acts, and those enactments focused on the establishment of self-governance institutions, and it was made mandatory for these bodies to reserve at least one-third of the seats and the post of chairperson for women. Additionally, reservations were also made of Scheduled Castes and Scheduled Tribes considering their population percentage in those states. These changes resulted in the representation of almost 30 lakh elected representatives, of whom almost 50% were women. The fulfilment of any constitutional reform is based on its expanding and inclusive nature towards diversity in opinion and representation.
Even though the Central Government’s 2009 Constitutional Amendment focused on an increase of 33% seats for women to 50% seats being reserved in local government, many states passed Acts that reserved 50% seats for women in their local self-governing bodies. As a consequence, local self-governing bodies witnessed a combination of both horizontal and vertical representation in their systems. In a similar manner, the Women’s Reservation Act, 2023 is close to its 2009 version, where it follows the system of differential reservation for women, but it doesn’t provide reservation of seats for OBC women and is limited to SC and ST women only.
Reservation for women in the Lower House
The Bill provided for the insertion of Article 330A in the Indian Constitution, which gets its derivation from Article 330. In the said Article, it provides for reservations of seats for the Scheduled Castes and Scheduled Tribes in the Lok Sabha. The Act provides for seats that are reserved for women to be implemented on a rotation basis in various constituencies in the States and Union Territories of India.
Reservation for women in State Legislative Assemblies
The Act also enacts the provision for introduction of Article 332A, which makes it mandatory to reserve seats for women in all the State Legislative Assemblies. Apart from the said reservations, it also calls for the reservation of one-third of the seats reserved for people belonging to Scheduled Castes and Scheduled Tribes for women belonging to Scheduled Caste and Scheduled Tribe communities. One-third of seats that are filled by direct election to the State Legislative Assemblies are also reserved for women. This allows for both vertical and horizontal reservation for women for an equitable gender and caste representation.
Reservation for women in the Legislative Assembly of the National Capital Territory of Delhi
With the introduction of Article 239AA in the Indian Constitution, special status was granted to the Union Territory of Delhi as the National Capital due to its extreme significance in the field of administrative and legislative functions. The Women’s Reservation Act amended Article 239AA(2)(b), and added that the laws made by the Parliament regarding the reservation of women shall also be applicable to the National Capital Territory of Delhi. As regards these provisions, one third of the seats shall be reserved for women from the seats filled by direct election in the Legislative Assembly of Delhi, and one-third of the seats reserved for members of the Scheduled Castes and Scheduled Tribes shall be reserved for women belonging to those communities.
Implementation of reservation
The Act clearly states that the provisions regarding reservation will be effective only after the first census is conducted following the passage of the bill and a delimitation exercise is carried out on the basis of the said census to reserve seats for women. It specifies that the period of such reservation will be for 15 years and will continue till the time that the Parliament decides by the exercise of law. The Bill also specified that the seats reserved for women will be rotated after each delimitation based on the census and such rotation shall be determined by the Parliament.
Reasons for seeking reservation of seats for women
In a patriarchal and heteronormative society with a history of systemic position, women often find themselves more disadvantaged as compared to men in the balance of gender. This imbalance in power dynamics between two genders results in ineffective actions taken by men for women even though they do not personally understand the problems faced by the opposite sex. The gender gap is evident in multiple institutions. May it be education, employment or politics, the gender gap finds a prominent place in all of them. Not just in India, globally many countries reflect a poor representation of women in political forms and decision-making bodies. Especially in the Arab countries, the situation is much worse than the global average.
Despite the constitutional proclamation of India to seek social, economic, and political justice as well as equality of status and opportunity for all citizens, women still do not find an inclusive arena in the field of politics and decision-making. Even though situations are slowly changing, it is still a far-fetched idea to achieve equality in representation between both genders. The participation of women and female leadership in a country are significant indicators of a healthy, diverse, and inclusive democracy. While most male Member of Parliaments across the globe make strong remarks in support of women’s empowerment to guarantee votes, their willingness to sacrifice a seat for a woman is filled with hesitation.
The clear lack of nexus between the promises of the political parties and actual ground level execution leads to a sad state of affairs for women. In the context of the Women’s Reservation Act, 2023, it is worth noting that the bill was passed after decades of its introduction. Nearly 7 decades after becoming a functioning democracy, India sought actions towards empowering women by reserving seats for them in decision-making bodies. This delay is significant to reflect upon to understand that the field of politics creates in itself an unequal playing field for women. Therefore, it is necessary to have important safeguards and reservations in place in the form of affirmative action to ensure that women have better access to such important positions.
Benefits of passing the bill
There are multiple benefits of the Women’s Reservation Act towards empowering women and making fields of politics accessible to them. Some of them are:
Enhancing governance measures
Some proponents of women’s reservation argue that due to the innate ability of women to be more concerned about management and accountability, they can provide greater attention to important issues like health, education, social welfare, environmental conservation, social justice, and reforms for a positive administration. They can ensure the creation of bodies with greater integrity and accountability and foster collaborative efforts with others for a holistic change.
Local representation
As per the consequences of the 73rd and 74th Constitutional Amendments reserving seats for women in local self-governing bodies, it has been witnessed that the gender quotas increased the representation of women and their participation in the field of politics. Therefore, local constituencies are ready to have women’s representation in higher bodies of political nature to allow more consequential changes and the betterment of civic systems. By disseminating the benefits of reservation in all tiers of governance, women can truly create an inclusive political system that allows for positive changes and reforms in society.
Labour force participation
As per observations made through the consequences of reserving seats for women in panchayats and local self-governing bodies, it has been clear that women in decision-making bodies challenged gender stereotypes and paved the way for inclusion of women in economic spaces. The labour force participation of women significantly increased with the advent of reservation of women in the third tier of governance. Therefore, it is expected that with the representation of women in legislatures, there will be a positive change by seeing an increase of women in economic spaces where they contribute to nation-building and development of the national economy thoroughly. These women MPs will serve as a role model for young women to do away from the confines of a patriarchal mindset and live up to their fullest potential.
Creating safe spaces for women
Most of our social institutions are ingrained with vices that affect women. In marriage, women are met with domestic violence, cruelty, dowry deaths, and so on and so forth. In the institution of family, women have a burden of work and responsibilities that is unequal and are treated inferior to their male counterparts. In education, the literacy rate shows inequality at the grassroots level. In employment, they have to face sexual harassment at the workplace and a gender wage gap. With the inclusion of women in the decision-making bodies, they will represent these concerns in a better manner and design fruitful solutions to overcome these challenges in a more pragmatic and practical way, which will prevent any sort of social injustice in any social arena. It shall also have a beneficial effect on public services like sanitation and healthcare, where women will not only be beneficiaries of the schemes but the frontrunners of change in their communities and localities.
Conclusion
The impact of the reservation for women is a multidimensional one. It will only be assessed once it is implemented. One can simply make assumptions now regarding the effects of the 106th Constitutional Amendment on the position of women, but one can never be sure of the positive effects as it largely depends on implementation, action and various stakeholders who influence the process. Overall, the move seems to be promising for substantially increasing the status of women in society and breaking traditional narrative regarding gender roles and socialisation. The delimitation exercise planned by the government must be carried out with finesse so as to implement the provisions of the law effectively without any hindrance. By including more women in decision-making bodies, the nation is not only empowering women but society at large. Intersectional empowerment and opportunity creation have always fostered beneficial changes in the world.
Hopefully India will be able to witness a similar transformation in the field of politics through this aspirational move towards the betterment of women. Even though there exist controversies and concerns regarding linking women’s reservation with a politically charged delimitation process, the ultimate result is yet to be seen. The concerns regarding representation of women in Rajya Sabha and State Legislative Councils must also be duly addressed to create an ideal situation of representation in the decision-making bodies. The government must invest in raising awareness and providing education regarding the field of politics to increase the participation of women in contesting elections and also exercising their voting rights. Through such measures, the government can ensure a collective concerted and collaborative effort towards nation building without limiting the role of women to the confines of their home when they wish to step out of it and create tangible change in the world.
Frequently Asked Questions (FAQ)
What is the 106th Constitutional Amendment Act otherwise known as?
The 106th Constitutional Amendment Act is a result of the 128th Constitutional Amendment Bill, otherwise known as the Women’s Reservation Act, 2023.
Which are the bodies on which the provisions of the law shall be made applicable?
The provisions of the Women’s Reservation Act shall be applicable to the Lower House of the Parliament, i.e., the Lok Sabha, the State Legislative Assemblies and the Legislative Assembly of the National Capital Territory of Delhi.
Which bodies are excluded from the ambit of the Act?
The Upper House of the Parliament, i.e., the Rajya Sabha and the State Legislative Councils of states with a bicameral legislature are excluded from the ambit of the provisions of the Women’s Reservation Act.
What is the extent of reservation envisaged by the Act?
The Act envisages a reservation of one-third of the seat, reserved for scheduled caste and scheduled tribe members for women belonging to scheduled castes and scheduled tribes. It also envisages the reservation of one-third of the seats, which are filled through direct election to the bodies.
When will the Act be implemented?
The Act is supposed to be implemented by 2029 after the first census is conducted post the passing of the Act and a delimitation exercise is carried out by the government.
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This article is written by Anupam Bhaduri and further updated by Aadrika Malhotra. It talks about the process of obtaining child custody in India in detail. The article also talks about the rights of both the parents in the custody of their minor child and the types of child custody under Indian laws.
Table of Contents
Introduction
The custody of a child after the separation of the parents is of the utmost consideration in India. Often, movies and books have quoted the amount of trauma that a child has to go through to see the bitter process of their parents separating. The issue of the custody of a child arises after the completion of the divorce or the judicial separation and is one of the most important issues on which the court must decide.
Custody of a child refers to the right given to a parent by the court to look after the child (if the child is less than 18 years of age). The parent in whom the custodial right is vested is supposed to look after the financial security and maintenance of the child with regard to proper lifestyle, healthcare, emotional, physical and medical development. The other parent is provided with the only right to access and meet the child. The family courts, while debating on the issue of custody, base their decision on the best interests of the child in question.
What is child custody
The simple meaning of the term ‘custody’ is to look after someone or something and have immediate control over them. In terms of children, custody simply means that a person is bestowed with the legal obligation to take care of them and provide for them in a reasonable manner. The person who has the child’s custody also gets the right to make legal decisions for the child and cover their expenses. Normally, both parents have an inherent right to joint custody of their child. Although, if the parents get separated, the child custody either goes to one or remains with both the parents, as and when the courts decide upon it. Custody does not mean that if one parent has it, the other does not get a say in their child’s life. It simply means that one parent has the larger share of decision-making power for the child. The child can still live or spend time with the other parent.
The parent or person with custody of the child is called the legal custodian. This person or parent is appointed by the court to take care of a minor child, an incapacitated person, or somebody’s personal assets. The legal custodian has the right to make decisions for the child, such as:
The child’s expenses,
Medical care,
Educational facilities,
Religion, and
Overall life.
Child custody is one of the most important aspects of a divorce for both parents and children. It has a direct impact on their lives and can be very difficult to decide in certain cases. In India, child custody is decided in each case differently, and there is no uniformity in how the courts determine whether a parent deserves custody or not. Usually, the courts prefer that the parents agree to joint custody since it would be much better for the upbringing of the child. Regardless, it is not always possible for the parents to come to a unanimous decision, and therefore, one or the other ends up getting the sole custody of the child. In determining which parent gets custody, the court takes into consideration solely the benefits and interests of the child. The court considers the child’s legal expenses and his/her overall physical and mental well-being when giving custody to the parents. Therefore, custody arrangements are made by careful and meticulous deliberation only, thereby making them lengthy procedures.
Importance of proper child custody
Child custody is a very emotional and legally complex issue. Both parents would want to win custody of the child, but they might not be able to provide for their children with the best care after divorce. There are several issues, such as the division of parental property, adequate and healthy child care, visitation rights, decision-making rights, alimony, and overall child safety, that make parents fight against each other in court for custody. This is the reason why Indian law ensures that both parents have certain rights over their child.
Child custody simply ensures the physical presence of either one of the parents in the child’s life at all times. Irrespective of a divorce or separation, both parents will be the guardian of the minor child. The only difference is that the custodial parent becomes the primary caretaker of the child, and the other parent retains his/her right to meet the child. In some cases, the court might find that both of the parents would not be able to take proper care of the child. Therefore, in such circumstances, the other relatives or grandparents of the child are given custody. If the whole family of the child is not competent to take care of him/her, then the court will give the custody of the child to a third party or foster care.
A proper child custody agreement and settlement is therefore very crucial for the upbringing of the child to:
Define the roles and responsibilities of both the parents towards the child,
Lay down in detail the schedules for visitation of the child,
Allow both the parties to exercise their parental rights over the child,
Protect the visitation rights of the non-custodial parent,
Provide the custodial parent with the support to get proper child care from the non-custodial parent through the appropriate laws,
Designate one of the parents responsible for making major life decisions for the child.
Factors courts take into consideration for the welfare of a child
The courts have time and again stated in several cases that the welfare of the child is of paramount consideration. In the case of Shazia Aman Khan and Anr. vs. The State of Orissa and Others (2024), the Supreme court held that lower courts have to take into consideration the welfare of the child over the supremacy of personal laws when deciding cases for child custody. The courts sometimes take into consideration the child’s wishes over personal laws and who the child wants to live with while giving custody. If neither of the parents are capable of taking care of their child, the courts will deny custody to them.
In case a child is less than five years of age, the mother will always be given the child’s custody except for some grave circumstances like child abuse as per Section 6(a) of the Hindu Minority And Guardianship Act, 1956. Fathers usually get the custody of older boys, whereas mothers get the custody of older girls. In most cases, the courts favour the choice of a child who is above a certain years of age to decide who he/she would like to live with as per Section 6.
Therefore, the following factors contribute to the decision made by the courts for child custody:
Stable and healthy environment to stay at the parent’s home.
Strength of the parent-child relationship.
Parent’s willingness to stay with the child.
Child’s willingness to stay with the parent.
Physical, emotional, and mental well-being of the child.
Any evidence of domestic verbal, mental, or physical abuse on the child.
Ethical upbringing and safety of the child.
Any wishes of the deceased parent with respect to the child.
In the case of siblings, the court will grant custody to keep them together with one parent.
The ability of the parent to grant a good education to the child.
The financial status of the custodial parent.
Denial of child custody
There are several circumstances where the courts can deny child custody to either of the parents. In denying child custody, the court takes into consideration the personality of the parent and his/her living conditions.
A parent can be ousted from custody by the court if he/she is accused of inflicting domestic violence on the other spouse or the child.
Substance abuse like alcohol or drugs is taken very seriously when it comes to child custody. Any parent who has a dangerous level of addiction to drugs or alcohol can be eliminated from child custody immediately.
Any parent who neglects or abandons the child will also be ousted from custody of the children.
If the parent is physically unfit to keep the child, the court will not consider him/her for custody as well.
The parents cannot disregard the court’s orders for the custody of their child. If any parent does so by violating the visitation rule or custody, the court will revoke his/her custody. A similar instance can be seen in the case of Geeta Vohra @ Geeta Chopra vs Nitin Chopra (2020), where the court stated that not complying with the court’s orders for custody can lead to sanctions levied on the parents.
Parents have to maintain stable living conditions for the child, and if a parent fails to do so, the court will deny custody to that parent.
Inherent right over minors after divorce
A person who is under the age of 18 is considered a minor in family law. In the case of a minor child, both parents have equal rights over the child after divorce. Here, equal right refers to the right to the custody of the child. However, the Family court gets the last say in this regard. The central piece of legislation having provisions to address the issue is the Guardians and Wards Act, 1890, which is primarily secular in nature. In addition to this Act, the Hindu Minority and Guardianship Act, 1956, is also the primary piece of legislation for child custody under Hindu law. This Act is supposed to be read with respect to the Guardians and Wards Act, 1890 as mentioned under Section 2 of it. However, the provisions of this Act are often in stark contrast to the provisions of the statutes dealing with personal laws. The oversight of the Family court is important in this regard because while pronouncing its verdict, the court aims to strike a balance between the two. The custody of the child is given to any one parent at a time based on the previous factors mentioned above. The other parent is given the right to access to stay in touch. The right to access is a potent right in the hands of the other parent because it makes sure that the parent with the custodial right actually takes care of the child. The conditions of the visiting rights are, however, set by the court. The provision of access rights ensures that the child gets the love and affection of both parents. The Act also provides other regulations and redressal mechanisms for other child custodial issues. The issue of religion does not affect the rights guaranteed under this Act, and it is also read along with the other personal laws governing child custody.
Types of child custody
Child custody is given by courts on several grounds and several arrangements. These custody arrangements have to be very well-drafted so as to meet the requirements of the child adequately. Until the court pronounces a final order based on the above-stipulated conditions, the parent who is vested with the custody of the child ends up with the physical custody as well as the legal custody of the child. Any other form of custody or any other arrangement will be made clear by the court and the changes thus made are informed to both the parents. A petition for child custody can be filed by either of the parents in the court. Section 10 of the Guardians and Wards Act, 1890, states that as per the Code of Civil Procedure, 1908, the petition must include all particulars about the children and the grounds for submitting the petition in court. The parent has to submit their IDs, evidence of residence, the certificate of birth of the children, and the details of the other parent.
Legal custody
Legal custody means having a legal responsibility for the child and making major legal decisions about the child. It gives a parent the right to make long-term decisions about their child. These decisions include several aspects of the child’s life, like his/her education, healthcare, religion, and other important aspects of the child’s upbringing. The court determines which parent to give the legal custody to by putting the best interests of the child ahead and deciding which parent is more competent to make legal decisions about the child. Although, having legal custody of a child does not mean that he/she will live with the legal custodial parent. The parent who has legal custody will get the right to make all the important legal decisions about their child until he/she turns the age of 18.
Joint legal custody
A joint legal custody arrangement gives both parents the authority to make legal decisions for their child. The child will reside with only one parent primarily, but both parents can make major life decisions for the child.
Sole legal custody
Oftentimes, parents come to a decision to get joint legal custody of their child but are not able to decide upon these sensitive topics. Therefore, the court grants one parent the physical custody of the child, and the other parent gets the child’s legal custody. In most cases, legal custody is given to both parents, but in situations where the parents cannot cooperate, the court usually chooses a sole custodian to give the legal custody of the child.
Physical custody
Physical custody is the physical responsibility of the parent to provide a home for their child. It gives a parent the right to keep their child with him/her most of the time. The process of physical custody ensures that a child grows up in a safe and sound environment with the other parent also being an active part of his/her life.
For example, if one parent has the legal custody rights of the child and the other has the physical custody, the parent with whom the child is living at the time will get to make important decisions. If the child is in urgent need of medical care, the parent with physical custody of the child can make decisions about the child’s treatment.
Sole physical custody
Physical custody can be given solely to one parent, but it is very rare that only one parent retains the sole custody of the child at all times. However, in circumstances where the parent is unfit to keep the child, the court does grant one parent permanent sole physical custody. In most situations, parents share the physical custody of their child and decide upon which parent has to keep the child with them primarily.
Visitation rights
The other parent who does not have physical custody will be allotted visitation rights as decided by the court. The duration is often decided in terms of days, weeks, or months. courts mostly try to follow this method of custody because it ensures that the child is treated properly and is not neglected. If the physical custody schedules are not robust, the parent, the child residing with the most, will be considered as his/her primary residence. Mostly in physical custody, one parent is given the right to keep the child, and the other parent gets visitation rights to meet the child at regular intervals.
Joint physical custody
Generally, the courts do not want to sever the parent-child relationship and try to ensure that both parents have the right to make decisions about their child. Regardless of what physical custody arrangement the court gives, the parents’ duties will eventually overlap. Therefore, joint physical custody gives both parents the right to keep their child in their physical presence. Whichever parent has the child at a specific point of time in their custody, they will get to make decisions about the child.
Joint custody
Indian courts believe that joint custody is the most favourable outcome for a minor. It ensures that both parents take care of the child in turns while keeping him/her in their custody weekly or monthly. The process of joint custody, thus, ensures that both parents get to be in their child’s lives and the child gets to live with both parents. The custody arrangement may also be for longer durations, such as the child residing for six months with the mother and the next six months with the father. A mutual agreement is signed between both the parents at the time of their separation for joint custody of their child. In this process, the parents also share the decision-making rights of their child with each other. The parents would not have to stay at the same place to care of their child after divorce under joint custody. They can keep their rights over their child as per the terms of the contract of the custody arrangement. Section 26 of theHindu Marriage Act, 1955 and Section 38 of theSpecial Marriage Act, 1954 talks about the concept of joint custody.
Third-party custody
Third-party custody is where a third party who is not a biological parent of the child gets the child custody. It is a type of non-parental custody where the custody of the child is given to the child’s relative or grandparents and not the parents. The court may also give the child’s custody to another third party, like foster care, if it deems that the whole family of the child is unfit to take care of him/her. A third-party guardian will only be appointed by the court if it deems that neither the mother nor the father is capable of keeping the child in a safe environment. The wishes of the child will also be taken into consideration when granting third-party custody. If a child has mostly lived with his/her grandparents, then custody can directly be given to the grandparents as well.
Special guardianship
It is a type of third-party custody given by the court that allows the child to live with a third party who is not the parent of the child. The person with whom the child lives in this kind of arrangement becomes his/ her special guardian. The special guardian will have all the legal rights over the child until they want to provide that care and support for the child. However, if, for instance, the special guardian does not want to continue with this arrangement, the court will terminate the guardian’s legal rights over the child immediately.
Sole custody
Sole custody is the type of custody where the child is handed over to one single parent, and the other parent has no influence over the child’s life. This situation usually arises when the court finds that the other parent is not supportive, is abusive, is incapable, or is neglectful towards his/her child. The other parent will also not be able to visit the child at all. The decision to give sole custody to one parent is made very meticulously by the court while considering the other parent’s history with his/her mental status and substance usage, if any. The sole parent will have all the rights for the upbringing of the child without having the need to consult with the other parent at all.
Alternative/ divided custody
It is a type of sole custody where the child solely lives with one parent for some time and then solely with the other parent. The parents take turns having the sole custody of the child as scheduled by the court. The non-custodial parent, during the time of the other parent’s sole custody, will have visitation rights over the child. For instance, the mother may have sole custody in the odd months of the year, and the father may have sole custody of the child in the even months of the year.
Split custody
Split custody is majorly seen in cases where a couple has multiple children. If a couple has more than one child, then the custody of the children will be divided and alternated among the couple. One parent will get the custody of some children, and the other parent will get the custody of the other children. The court may order the children to live permanently with their allotted parents, or it may also order the parents to rotate their custodial duties among their children. Split custody is generally not favoured by most courts in India because it separates siblings from each other. Although, this type of custody may prove to be very beneficial in some circumstances. The custody is agreed upon by a joint agreement between the parents.
Bird’s nest custody
This is the rarest type of custody given in India. In this type of custodial arrangement, the child continues to reside in the family home after the divorce of the parents. The parents have to live with their child in the family home itself alternatively as decided by the court. When one parent is living with a child in the family home, the other parent lives elsewhere. The parents are the ones who move in and out of the house, not the child. Bird’s nest custody is mostly given when the courts cannot come to an agreement to provide any other form of custody to the parents.
This custody arrangement is called so because baby birds usually stay in their nests until they are able to feed themselves. A bird nest, in the context of child custody, is the permanent place of residence of the child. The parents of the child have to visit the child at their marital home itself. There is an agreement to decide upon a schedule that is set by the court to make sure that the child is not neglected. The parents come into a shared agreement and take the burden of the divorce rather than putting it on the child.
Interim custody/ temporary custody
Due to technicalities, divorce and child custody battles stretch out for years, and during this time, the children get dragged into their parents’ brawl. Either of the parents can file for interim custody in that period to ensure the welfare of the child. Section 12 of the Guardians and Wards Act, 1890 empowers the court to pass orders with temporary or partial custody, keeping in mind the person and property of the child. The court can pass any order necessary for the welfare of the child under the provision and can grant interim custody to anyone and not only the parents. Interim custody is also treated as the same as giving guardianship of the child to someone. Interim and permanent custody can go to different parents of the child depending on the outcomes of the case. If the court grants interim custody of a child to one parent and after the case finally finishes, the parent is no longer eligible to keep the child, the permanent custody will go to the other parent or a third party. Furthermore, Section 26 of the Hindu Marriage Act, 1955 empowers the court to pass interim orders for matters relating to child custody from time to time. This includes all aspects of the child’s life and maintenance, like his/her healthcare, education, etc.
Child custody without divorce
Parents can file for child custody without their divorce, as well. Such a situation usually occurs when one parent wants a divorce, and the other does not. Both parents can file for judicial separation and attach an application for child custody with it. A parent can also file a separate petition for child custody. In most custody applications filed separately, the mother remains the child’s natural guardian. Once the father has established his legal paternity for the child, the courts presume the custody to be a joint custody arrangement between the parents. The rest of the custody arrangement and visitation rights are decided by the court taking the best interests of the child into consideration.
People eligible to fight for child custody
The custody of a child can always be claimed by a mother or a father after divorce. If both of them or either of them are not in the picture due to unforeseeable circumstances, the maternal and paternal grandparents would be the first to be eligible to fight for child custody. In the absence of all of the above, the relatives of the child can also file for custody out of compassion and care for the child until he/she turns 18. The Family courts have, in several cases, also appointed a third person to take care of the child. Section 17 of the Guardian and Wards Act, 1890 emphasises the welfare of the child, and the Family courts try their best to fulfil their duties regarding that. The opinion of the child also matters as much as his/her welfare does when the courts decide the eligibility of people to fight for child custody. Similarly, Section 13 of the Hindu Minority and Guardianship Act, 1956, states that a person cannot be the guardian of a child if the court does not deem them fit for the welfare of the child.
In most cases, if the parents are willing to compromise and look away from their differences, the Family courts grant the child custody to both of them. It is only in extreme circumstances, such as when the parents are not able to reconcile their differences for their child, that the courts grant custody to either one of them or to a third party.
Priority claim
As per Section 6 of the Hindu Minority and Guardianship Act, 1956, the custody of a child below five years of age is generally given to a mother. In cases of older boys, the fathers are generally given custody while the mother is awarded the custody of older girls. During the process of determining a child’s custody, the child’s views are also taken into consideration if the child is old enough to form an intelligent preference under Section 17(3) of the Guardians and Wards Act, 1890. Since the main criterion is the well-being of the child, mothers who have been abusive, negligent, irresponsible, or could not provide for the welfare of the child in the past are not given custody rights after separation.
Step-mother child custody
Usually, custody of children under the age of 5 years is given by default to the mother under Section 6 of the Hindu Minority and Guardianship Act, 1956. However, there might be circumstances where the mother would not be financially stable enough to provide for the child. Giving the custody rights to the mother in such a situation would not be in the best interest of the child. On the other hand, if the father has already remarried and has kids of his own, it would not be favourable to give the custody of the child completely to the father. The High court, in the case of Smt. Mamoni Pal (Biswas) vs Sri Samir Pal (2022) stated that a mother cannot be discarded as the child’s guardian only because the father is in a more stable financial condition. If the father has kids from his second marriage, the step-mother’s affection will naturally go to her own kids. Therefore, the mother of the child is best suited to get custody of the child, and the father would have to bear the child’s maintenance expenses.
Child custody laws
The Guardians and Wards Act, 1890 is the general law for deciding child custody regardless of religion in India. Divorce is a serious matter in India, and therefore, there are different religious sentiments related to it as well. It is dealt with differently in different religions practised in the country. Each religion has its own personal laws, and there are corresponding legislations applicable to them. Child custody is also dealt with and is also practised according to different religions in India.
Guardians And Wards Act, 1890
Ordinary place of jurisdiction for child custody
Taken together with the personal laws of the country, this Act is read in a bid to determine what sort of child custody will be provided in every case. Basically, the determination of which court has jurisdiction to entertain a child custody case for foreign children in India is governed by what is termed as ‘ordinary residence’ under the Act. Section 9 of the Act defines what can be considered as the ordinary place of residence for a child. The section does not talk about the temporary place of living of a child, even if that child has resided at that temporary residence for some time. The jurisdiction of a court is limited to only the district or place where a minor usually resides most of the time.
Part V of the Act spells out the jurisdiction of the court in respect of custody cases based on Section 19 of the Act. The Section points out certain circumstances where the court cannot appoint a guardian for a minor’s property. The court cannot appoint a guardian if a female minor who is married has her spouse looking after her. A minor whose property is under the superintendence of a court of Wards cannot be decided upon by any other court. The Section also states that the court cannot appoint another guardian if an unmarried female can be taken care of by her parents. There is a huge gender bias prevalent in Hindu laws regarding child custody. Section 19 of the unamended Guardians and Wards Act, 1890 was discriminatory against mothers as they clearly claimed that the father is a natural guardian of the child without giving any consideration to the mother. The National Commission for Women amended Section 19 of the Guardians And Wards Act. They updated it and brought the mother’s child custody at par with the father’s.
If the application to the court is made with respect to the minor concerned, the court that is nearest to the minor’s permanent residence and that has jurisdiction for it under the law for that specific area will be the one to make the final decision on the custody of the child. Now, regarding the concept of ‘ordinary residence,’ it is further explained that it does not mean ‘habitual residence.’ The meaning of ordinary residence is taken from English law. As per English laws, the ordinary residence of a person is the place where he ordinarily resides in his day-to-day life. A minor’s ordinary residence, in this case, is the place where he/she resides mostly with his/her family. A child’s ordinary residence changes in accordance with the change in the parent’s residence as well.
In the case of Ruchi Majoo vs Sanjeev Majoo (2011), the Supreme Court amplified the concept of the ordinary place of residence in the case of a minor child. The court explained the difference between ‘sufficient’ and ‘insufficient’ residence and detailed it. The court previously decided that ‘resides’ means much more than a casual stay at a particular place. The court, therefore, in the present case, held that residency means the residence where a person declares his permanent stay. The permanent residence or temporary residence of a person will always depend upon a case-to-case basis, and the court would have to interpret the minor’s custody accordingly as well. The fundamental difference between a sufficient residence and insufficient residence would completely depend upon the permanent stay at that particular place.
In the case of Kuldip Nayar vs Union of India (2006), the court held that permanent residence is transitory, and therefore, a child’s permanent residence cannot be determined merely by placing them somewhere else.
The other important concepts that the Indian courts take into consideration in determining jurisdiction on child custody are two Latin maxims, namely ‘parens patriae’ and ‘habeas corpus’. Of the two principles, the first grants the state authority to act in a given situation to discover that a child has been neglected. Where situations like the above arise, the courts have to come up with decisions to protect the child in an emergency. Moreover, in such a circumstance, it may also take jurisdiction for the child custody by the court to which the child is physically present rather than the original place where the child may have lived.
The other one, Habeas Corpus, is a special writ remedy that can be applied in child custody cases. These proceedings are not initiated to examine the legality of child custody. It is a medium through which the people associated with the child can discuss the custody arrangements in court. The writ is prerogative and gives remedies to people where the ordinary remedies given are not fruitful in a particular case. This writ can be used in cases where a minor is detained by a person who does not have child custody. The Supreme court also elaborated on this matter in its judgement for the case ofRajeshwari Chandrashekhar Ganesh vs State of Tamil Nadu (2021). This case deliberated on the issue whether a writ of habeas corpus can be filed for child custody matters. The appellants in the case were the grandparents of the child and were given the child’s custody. They appealed against the High court’s decision in the Supreme court, contending that the writ of habeas corpus shall not be used in child custody cases. There are other remedies present under the Hindu Marriage Act, 1955 and the Hindu Minority and Guardianship Act, 1956. The Supreme court affirmed the High court’s decision and stated that the writ is maintainable in cases where a minor child is detained by a parent or is illegally confined against the law.
Examination of the child
The court needs to examine the minor thoroughly before making a decision for custody or guardianship. Child custody is a crucial question, and the courts need to scrutinise every detail in order to make the decisions about the child. Section 17 of the Guardians and Wards Act, 1890 lists certain factors that the courts need to take into consideration before making decisions for child custody. It emphasises that the court must scrutinise the matter of consideration when deciding whether a guardian is chosen for the welfare of the child. Since minors cannot take care of themselves, the court has the power to make decisions for them. Although, the welfare of the minor should be taken in its widest sense and meaning. Sub-Section 4 of the provision states that the court cannot make a decision that the child opposes. The welfare of the child typically includes factors like the age of the child (under 18), safety, nutrition, basic amenities that he/she would need, ethics, financial needs, properties that he/she would be entitled to, how the guardian behaves, or how attached the child is with the guardian. If these factors are not taken into consideration, the courts cannot possibly make a decision for the welfare of the child.
Special Marriage Act, 1954
This Act concerns marriage, divorce of parents, children’s rights and child custody where the parents belong to different religions. As per Section 38 of the Act, District court is empowered to make interim orders and pass decrees for care and maintenance of a child. Frequently, the applications for the maintenance of the child must be disposed of within a duration of sixty days from the date of service of notice.
Hindu laws
Hindu Marriage Act, 1955
This Act is only applicable to children whose parents follow the Hindu religion and have been married or divorced under the Hindu religion itself. Other religions, like Buddhism and Sikhism, also come under Hinduism. Section 26 of the Act is related to the maintenance and education of minor children. The courts are empowered to pass amendments regarding the support of the child and custody of a minor at any time. courts also have the ability to review or overturn a pending decree within 60 days without any form of notification. The court can also revoke or suspend any other previous orders that the court had made with respect to the guardianship.
Hindu Minority And Guardianship Act, 1956
This Act only governs child custody and guardianship for children whose parents belong to the Hindu religion. It does not allow custody to anyone else other than biological parents. Section 6 of the Act states that minors under the age of 5 will mandatorily reside with their mothers. courts have to keep in mind the welfare of the child as per Sections 13 and 17 of the Hindu Minority and Guardianship Act, 1956. They can also give the custody of the minor to the father under circumstances where the mother is unable to keep the child. Under Hindu law, the father is the ultimate guardian and has the natural right to keep the children. The father gets the custody of minor legitimate children under the age of 18 and above the age of 5. The mother will get them only after the father dies or if the child is illegitimate. The courts may also grant third-party custody where the parents cannot be granted guardianship. The grandparents of the child are awarded custody under the Act when there are circumstances where a parent cannot be given custody.
Even the mother of a child of tender age can be denied custody if she is not able to provide for the child in a proper manner. In such a case, the custody and the visitation rights can go to the father itself. However, it is the discretion of the court to modify the rights as it may deem fit. A noteworthy case of this nature can be explained while citing the case of Vikram Vohra vs Shalini Bhalla (2010). In this case, the mother emigrated to Australia along with the child. According to the prior decision, the father then had visitation rights which were then changed accordingly. Since the mother was now residing in Australia, the child’s residence was changed as well. The father would also have to make specific arrangements in this case to meet the child. So, the court altered the schedule of visitations of the father.
Muslim laws
According to Muslim laws, even though there is the right of the father to see his children, child custody belongs solely to the mother. Child custody under muslim laws is determined by the muslim personal laws, Guardianship and Wards Act, 1890, and Special Marriage Act, 1954. As under Section 38 of the Special Marriage Act, 1954, the custody of the children shall be determined by the district court. The District courts can affirm or refuse decisions in matters of interim orders as well as concerning the guardianship, education and keeping of minor children.
Hizanat
According to Shia law, the mother has the right of custody of minor male till the age of 2 years and minor females till nine years of age. Under Muslim law, the guardianship of minors is called ‘hizanat’. Hizanat is basically the right of raising the children up to majority given to the mothers inherently. The age of puberty is also considered the age of majority under Muslim law for child custody. According to Radd-ul-Muhatar, this right of the mother will extend to her inherently until and unless she is an apostate.
According to Hizanat rules, the mother has authority and right for the minor boy up to 7 years and of the minor female up to the time she attains her puberty or majority age according to the Hanafi Law. Under Shia laws, the mother has this right until the minor boy attains the age of 2. The mother cannot be denied this right unless a decision was made to do so, on grounds of her being unfit. In the case that the mother divorces the father and later gets married again; then custody goes back to the father’s side. The consent of the child will be looked into by the court depending on its merit. If the child is tutored or coaxed, the consent he gives loses its validity. Specifically, the court might take a position not to grant custody of the child if the parent is unable to promote the child’s best interests. In this case, the grandfather gets the custodial rights of the children when both parents are unable to take care of the children. In the Maliki school of muslim law, the grandmother or the mother’s grandmother, the mother’s own sister or the one related from the maternal line, father’s own sister, paternal aunt, maternal aunt, full blooded sister, or a consanguine sister gets the rights of custody in absence of the mother.
Father’s rights of hizanat
The father can also gain custody of the child, especially when the mother and the other females in the child’s life are unavailable. There is a possibility that testamentary guardians may be appointed by the courts if the father desires to do so. When the father is unavailable, the nearest related paternal grandfather, brother’s son, brother to the father, sibling, or father’s brother’s son holds the custody rights of the child.
Applicability of Shariat in custody matters
As per Section 4 of the Guardians and Wards Act, 1890, a minor is a person who has not attained majority under the provisions of the Indian Majority Act, 1875. As per Section 3 of the Act, every person domiciled in India has to attain the age of 18 to attain the age of majority. It is a set precedent that a minor is a person who is below the age of 18, but muslim law considers children who reach the age of puberty to have attained majority. Shariat (muslim law) in this case might not be valid on child custody principle based on this. Section 6 of the Guardians and Wards Act, 1890 states that personal laws applicable for child custody can be overshadowed by the Guardians and Wards Act, 1890 if both the laws are in contradiction to each other. However, Section 17 of the Guardians and Wards Act also states that personal laws have to be scrutinised to give child custody. The judicature in the case of Akhtar Begum vs Jamshed Munir (1978), clarified this matter. The court held that the minor’s personal laws have to be considered while deciding an application for child custody. If this mandate is not taken into consideration, the court will be acting irregularly. The court further stated that as per Section 2 of the Indian Majority Act, 1875, the Act’s provisions do not override matters related to marriage, dower, divorce, and adoption. Therefore, the Act cannot be taken into consideration while ascertaining the age of a minor and the personal laws will be given a higher concentration.
Loss of custody rights
A female who has custody rights under Muslim laws is called the hazina, and the male is called the hazin. The courts consider several factors before denying custody to a hazina or hazin based on the welfare of the child. As per the Shia law, a person who has ceased to be a Muslim will not be allowed to keep the child. The court can also take away the rights of a hazina who marries a person not related to the child in degrees of prohibited relationship. The rights of hizanat are dependent on the welfare of the child. Although, a hazina or hazin cannot be denied custody if they do not have sufficient funds to maintain the child solely. The mother and the father cannot remove the child from the matrimonial home as well. A hazin who is profligate and unsound mind cannot maintain child custody. Profligates are people who have an utterly immoral character in terms of the major public view.
Guardianship
Under Muslim law, guardianship and custody are given separately to the parents. Guardianship is a broader term that includes the overall maintenance of a child, whereas custody of a child under Muslim laws is limited to only the day-to-day well-being of a child. Guardianship includes making decisions about the child’s healthcare, education, property, and overall welfare. Guardianship is of three types:
Guardianship of person (Wilayah al-nafs): It involves making decisions about the care and upbringing of a minor, such as his/her welfare, guidance, healthcare, and education. The father is usually the natural guardian of the children, followed by the paternal grandfather and the paternal uncles.
Guardianship of property (Wilayah al-mal): This type of guardianship involves managing a child’s estates and property. The guardian has to fulfil the child’s financial needs and administer his/her property until he/she reaches the age of majority.
Guardianship of marriage (Wilayah al-nikah): This type of guardianship arrangement is associated with a marriage agreement between a minor and the guardian. The former guardians of the minor female have the capacity to give the consent of marriage to the next guardian of the minor female.
The people who have the guardianship of the minors are called legal guardians or Wilayat-e-mal. There are four types of legal guardians:
Natural/legal guardian
The natural/legal guardian can monitor and supervise the activities of a minor. In all schools of Muslim law, the father is considered as the legal guardian of all the minors. As long as the father is alive, he is the sole guardian of his children. A mother is not considered as the legal guardian of her children but is given their custody. In the absence of the father, the father’s executor will be the legal guardian of the child appointed by the father. However, in Shia law, the guardianship of the children passes to the grandfather even if the father has named an executor for the children.
Testamentary guardians
A testamentary guardian is appointed for a minor through a will. The father can appoint a testamentary guardian for his children in the absence of a paternal grandfather. Mothers do not have the right to appoint testamentary guardians except for in two cases. A mother can appoint the testamentary guardian if she is the general executrix by the will of the children’s father. If the mother has properties that will devolve to her own children, she can still appoint an executor.
Guardians appointed by court
A court can appoint a guardian for the minor or his/her property if the legal or testamentary guardians are not present. This appointment is made by the Guardians and Wards Act, 1890. These guardians are called statutory guardians. The court will take into consideration the welfare of the minor and appoint a guardian for him/her.
De facto guardians
A de facto guardian is a guardian who themselves assume the guardianship of the child. It is an unauthorised person who has custody of the child. Such a person has no authority to be a guardian of the child but has taken such authority under certain circumstances. In the case of Md. Amin v. Vakil Ahmad (1952), the minor child’s brother, entered into an agreement on behalf of the minor child. The court held that such an agreement is valid until the de facto guardian transfers the rights of the minor’s property.
Christian laws
The custody of children in Christian laws is governed by the Divorce Act, 1869. Section 41 of the Act lays down the essentials of child custody. It states that the court must make interim orders for the maintenance of the child from time to time during the suit of separation of the parents. Section 42 of the Act gives the court the authority to pass orders for the child’s maintenance and welfare, like healthcare and education, after a decree of judicial separation.
Parsi laws
Parsi laws give child custody to parents under the Guardians And Wards Act, 1890 based on the child’s best interests. The provisions in regard to the custody of children are defined under Section 49 of the Parsi Marriage and Divorce Act of 1936. Here, the court can make orders of paternity and of placement of the child pending trial and must discharge such order within sixty days. Section 31 of the Act relates to the suits for dissolution for the absence of the parents from the child’s life. In this case, the parents can be taken out of the custody rights by the court if they have not been in the child’s life for a long time.
Rights of child custody
A parent is given several rights over their child when custody of that child is awarded to them.
If awarded physical custody, the parent has the right to make day-to-day decisions about the child’s life and live with him/her.
If awarded legal custody, the parent has the right to make all legal decisions about the child’s life and other major decisions like education and healthcare.
The parents with any type of custody over the child also get the right to make basic decisions about the child’s education and monitor his or her educational or extra curricular activities as well.
Custodial parents also have the right to make basic healthcare decisions about the child, such as the types of medication and amenities the child needs.
A custody arrangement also gives a parent the right to make decisions about the child’s religion.
The court can also give a particular parent the right to relocate to another place or visit a particular place with the child.
Legal custody also gives either of the parents the right to maintain the finances of the child.
Parents will also get the right to protect their child by any means when given the child’s custody.
Rights of custodial mothers
Mothers are given child custody by the courts primarily because they are considered as the children’s guardians. Usually, mothers get custody of younger children because mothers are the most capable of raising children. These mothers have the rights and responsibilities as a custodial parent as well. The courts make sure that the mothers have all the rights to make decisions in their child’s best interest. If mothers have physical custody of their children and do not have a stable income, the fathers have an obligation to pay all the financial support to the mother for the children. The courts can order any type of financial assistance under Section 125 of the Code of Criminal Procedure, 1973. Custodial mothers have certain rights over their child’s life:
Providing for their basic needs and amenities.
Supporting their emotional and physical development.
Providing maternal care, especially for infants.
Fulfilling their primary caregiver role, especially for children under five years of age.
Rights of custodial fathers
The courts have always favoured mothers over fathers as primary caregivers for their children. Recent cases have pointed out that the courts have become flexible in giving custody to fathers as well. Fathers can claim custody of their children and rights in the following ways:
The court may grant the custody of the child to the father if the mother voluntarily surrenders her custody over the child.
The father may be granted custody if the mother is unwell or is not able to take care of the child under any circumstances.
If the mother is an alcoholic or drug addict, the court may grant custody to the father as well.
The father may get custody if the mother’s financial incapacity is affecting the well-being of the child.
The father may get custody of the children if the mother is a convict or has been imprisoned for some crime.
What if the father’s name is not on the birth certificate
Fathers also have the right to fight for custody if their name is not listed on the child’s birth certificate. Normally, courts give the fathers who are listed on their child’s birth certificate the custody rights of the child. Although, if the father listed on the child’s birth certificate is not the child’s biological father, the court can still grant him the child’s custody. The father who gets custody will also have to pay child support and maintenance as well. If the father’s name is not on the child’s birth certificate, the court may not grant any type of custody to him. The court will direct the father to take a paternity test to give him custody rights for the child. If the paternity test portrays that the father is the biological father of the child, the court can grant him child custody as well.
Landmark cases
Surindar Kaur vs. Harbax Singh (1984)
The appellant and the respondent were married to each other under sikh traditions and shortly moved to England in this case. After a while, the relationship between the two began to deteriorate, and the husband was allegedly planning to kill his wife through a hitman. Consequently, the husband was found guilty and was given a sentence of three years. However, the wife later asked for the husband to be released on probation. One day, when the wife was at work, the respondent took their child from England and came back to India. The wife filed a suit against the husband for illegally taking their child away from her.
In this case, the Supreme court held that the place where the child lives or is resident will be the place or location for the court to decide custody as well. Here, the spouse’s matrimonial home was in England; therefore, the father could not deny the English courts the right to pass custody decisions. The court stated that a child’s welfare will be promised only to the mother as decided by the English courts. The provisions cannot take over the paramount concern of the welfare of the child.
Gita Hariharan vs. Reserve Bank of India (1999)
The petitioner in the case approached the defendant to issue bonds for his son and signed off as his guardian. The defendant sent the application to the petitioner and demanded that she show her guardianship proof from a competent authority in order to be the son’s guardian in the bank. RBI deemed that the father of the child was the natural guardian as per Section 6 of the Hindu Minority and Guardianship Act, 1956. As per the provision, the mother is the next in line to be the guardian of her child after the father. The petitioner challenged this claim in the Supreme court for the violation of the right to equality under Articles 14 and 15 of the Constitution of India. The court held that both the father and the mother are the guardians of the child, and the mother can claim her right over the child whenever she wants. The mother was then allowed to sign off as her son’s guardian for the bail bonds.
Sheila B.Das vs. P.R.Sugasree (2006)
The parties in this case were married to each other under the Special Marriage Act, 1954. One day, the wife left the matrimonial home with their child and relocated to Kerala. The respondent accused the wife of wrongfully taking their child away from his custody. The Supreme court held that the custody of minor female children was given to the father as per the choice of the child with the observation that the child was highly intelligent and was in a position to make intelligent choices. It is neither the welfare of the father nor the welfare of the mother that is the paramount consideration for the court.
Gaurav Nagpal vs. Sumedha Nagpal (2008)
According to the appellant, the respondent in the present case had abandoned their child and then later filed for custody. The appellant was granted interim custody earlier, and the respondent wanted some maintenance and guardianship of the child as well. Therefore, the District Judge held that taking the child away from the father would not be in the best interest of the child. The respondent further filed a SLP stating that their child was taken from her absence by the father forcefully, and later on, the father shifted to Bahadurgarh with the child. Here, the appellant did not really have a fixed place of residence where he could keep the child and was constantly moving from one place to another.
The Supreme court laid down several principles regarding child custody. The court stated that every child custody case needs to take into consideration the welfare of the child and the upbringing of the child as the utmost factors for giving custody. The welfare of the child is of paramount consideration. Regarding the present case, the Supreme court gave the child custody to the mother, stating that the father was not capable of caring for the child and did not have a stable home.
Conclusion
The custody of a child remains one of the most sensitive and convoluted issues caused due to the separation proceedings of the parents. The custody, as seen, is guided mainly by the middle ground established by the judges in this regard. There has been a marked controversy between the various religious laws and the uniform legislation enacted by the State. However, the controversy regarding the various viewpoints of law should not compromise the future of the child. While resolving various pieces of legislation, it should be remembered that the welfare of the child, along with assured social security, is the prime motive behind the custody of a child. Hence, any hindrance caused by law on this front should be addressed and then rectified.
Frequently Asked Questions
How does the court decide upon visitation rights?
The courts take into consideration several factors before granting visitation rights to the parents, such as the age of the child, the distance between the parent’s home and the child’s, the schooling of the child, and the relationship the child has with the parents.
What if the child does not want to meet the parent who has the visitation rights?
The visitation rights of the parents cannot be revoked only because the child doesn’t want to meet them, as often the children are coaxed by the other parents. If the court feels that the visitation rights of the parent will harm the child, the court has the power to revoke the visitation rights.
How does the court calculate child maintenance?
The court considers the financial status of the parents of a child before deciding the child’s maintenance. Necessities of the child, like support, education, healthcare, and accommodations, will be covered in the maintenance.
Does a parent with better financial stability get custody of the child?
The financial status of the parent does not give a parent the custody of the child. The court takes into consideration whether the parent would be able to raise the child according to his/her welfare.
Does an unmarried mother have to file for child custody?
An unmarried mother is the child’s guardian automatically and does not have to file for it.
The most common transactions in everyday life are the purchase and sale of movable goods. The Sale of Goods Act, 1930, governs the sale and purchase of movable goods. Any agreement or contract entered into for such purpose may be referred to as a sale of goods contract. One of the biggest risks involved in such a contract is a misrepresentation; it happens before the contract has been finalised. Misrepresentations induce a contracting party into entering a disadvantageous contract by false statements of law or facts. Such false statements of truth may be made intentionally or unintentionally. It is important to examine this particular risk in a contract for the sale of goods to understand its implications and remedies available.
Misrepresentation
The definition of misrepresentation is given under Section 18 of the Indian Contract Act. The concept of misrepresentation pertaining to contracts has been defined as any innocent or intentional false statement made by one party to induce the other into entering into the contract. Misrepresentation induces a party into entering into a contract that they otherwise wouldn’t have entered into and because of this, they suffer a loss. The party making the statement may believe his/her words to be true, in which case it would be an innocent misrepresentation, however, it can also be intentional and fraudulent.
When does it arise
Misrepresentation arises during the negotiation and discussion stage before the formation of a contract. Statements and claims made at this stage influence the other party to enter into the contract, so it arises before the formation of the contract itself. False statements of facts and mistakes of facts related to the contract are made at the early stage of contractual discussions.
Illustration: X and Y are discussing the sale of X’s boat to Y. X mentions to Y that his motor boat can go up to a speed of 80 km/hr; however, he does not mention that he hasn’t driven it in over a year and his claim is only an estimation without literal confirmation. Y agrees to purchase the boat and comes to realise that the speed of the motorboat is only 50 km/hr. Here, X misrepresented the speed of the boat and this misrepresentation induced Y to buy it.
The misrepresentation will be the basis for a breach of contract and Y can exercise the remedies available to him holding X liable.
Types of misrepresentation
Misrepresentation can be classified into three types:
Innocent misrepresentation
Innocent misrepresentation is the representation of false facts due to lack of knowledge that the statement is untrue.
The remedy for innocent misrepresentation is either rescission or cancellation of the contract.
The Derry vs. Peek case is a very good example of innocent misrepresentation. Here the defendant had a tramway company and genuinely believed that approval for steam trams was mere formality advertised, that the company had been granted permission. Ultimately, the permission was not granted and the plaintiff who bought the company shares suffered a loss. The court held that the company wasn’t liable since they genuinely believed the permission was a formality.
Fraudulent misrepresentation
When a defendant engages in fraudulent misrepresentation, they knowingly make a false statement with the intent to induce another party into entering into a contract. This type of misrepresentation is particularly egregious because it involves a deliberate attempt to deceive and mislead. To establish fraudulent misrepresentation, several key elements must be proven. First, it must be shown that the defendant made a false statement of fact. This statement can be either oral or written, and it must be material to the decision-making process of the other party. In other words, the false statement must have been a significant factor in inducing the other party to enter into the contract. Second, it must be proven that the defendant knew the statement was false or had reckless disregard for its truth or falsity. This means that the defendant either knew that the statement was false or that they had no reasonable basis for believing it to be true. Third, it must be shown that the defendant intended to induce the other party into entering into the contract through their false statement. Finally, it must be proven that the other party relied on the false statement and suffered damages as a result. If these elements are established, the injured party may void the contract and seek damages from the defendant. Damages in a fraudulent misrepresentation case may include compensation for economic losses, such as out-of-pocket expenses and lost profits, as well as compensation for non-economic losses, such as emotional distress and damage to reputation.
Negligent misrepresentation
In any contract of sale, exercising reasonable care holds paramount importance. The seller has an obligation to furnish accurate and essential information about the goods being offered for purchase. Furthermore, any existing damages or defects must be explicitly disclosed to the customer. If the seller makes any statement without verifying its authenticity, and that statement significantly influences the buyer’s decision to enter into the contract, the buyer may incur losses due to the false representation. In such instances, the buyer bears responsibility for failing to take reasonable care while evaluating the information provided.
The legal remedies available to the buyer in cases of negligent misrepresentation vary depending on the specific circumstances. Primarily, the buyer has the right to rescind the contract, effectively nullifying its existence. This remedy allows the buyer to withdraw from the agreement and return the goods to the seller. Additionally, the buyer can seek compensation for damages incurred as a result of the seller’s misrepresentation. These damages may include financial losses, emotional distress, or any other harm suffered by the buyer due to the false statement.
The burden of proof lies with the buyer in cases of negligent misrepresentation. The buyer must demonstrate that the seller made a false statement, that they relied on that statement when entering into the contract, and that they suffered damages as a direct consequence of the seller’s misrepresentation. It is crucial for buyers to exercise due diligence and make informed decisions when purchasing goods. Thorough research, seeking professional advice, and carefully reviewing the terms and conditions of the contract are crucial steps in safeguarding one’s interests. By taking reasonable care, buyers can minimise the risk of falling victim to negligent misrepresentation and protect their legal rights.
Sale of goods contract
Contracts for the sale of goods are governed by the Sale of Goods Act of 1930. The act encompasses provisions on the formation of a contract of sale, the effects of such a contract, its performance, along with rights and duties of paid as well as unpaid sellers, and remedies for breach of contract.
A contract for the sale of goods includes two parties, one a buyer and the other a seller, who form a contract. In this contract, the seller agrees to transfer some goods to the buyer at a price. Price is the consideration for the transfer. The presence of two parties, a transferable good, and price as consideration are essential to a contract of sale of goods.
The essentials of a valid contract include:
An offer
Acceptance of the offer
Intentions to create a legal relationship
A consideration
Misrepresentation in sale of goods contract
Section 3 of this Act states that the provisions of the Indian Contract Act, 1872, will apply to any contract of sale of goods provided it is not inconsistent with any provisions of the Sale of Goods Act. This provision allows suit under Section 18 of the Indian Contract Act in case of misrepresentation in a contract for the sale of goods. The injured party can seek remedy in a court of law even though there is no specific provision for false representation given in the Sale of Goods Act.
A contract of sale may be absolute or conditional. Conditions are discussed and negotiated before the contract is finalised. It is during discussions and negotiations that one party is able to influence the other and any statements made at this stage should be legitimate and well informed to avoid future risk.
It is the duty of the buyer as well as the seller to make credible statements while forming the contract. Statements of partial truth and any omissions will also cause false representation.
Consensus ad idem
In the realm of contract formation, a fundamental requirement for the validity of an agreement is a shared understanding or “consensus ad idem” between the contracting parties regarding the subject matter of the contract. This shared understanding is crucial to ensure that both parties enter into the contract with the same intention and expectations. However, mistakes of facts can arise when there is a misunderstanding or misapprehension between the parties concerning the subject matter. These mistakes are essentially misrepresentations that induce consent to contract.
Mistakes of facts can occur for various reasons. Sometimes, communication problems or differences in understanding can lead to a misunderstanding of the subject matter. For example, if one party believes they are purchasing a specific model of a car, but the other party intends to sell a different model, a mistake of fact has occurred.
Another common cause of mistakes of facts is the exclusion or omission of vital facts. If one party fails to disclose material information or makes a false representation about the subject matter, this can induce the other party to enter into the contract based on a mistaken belief. For instance, if a seller fails to disclose a known defect in a product, the buyer may purchase the product under the mistaken assumption that it is free from defects.
Mistakes of facts can have significant legal implications. In some cases, a mistake of fact can render the contract void or voidable. This is particularly true if the mistake was material to the contract, meaning that it significantly affected the substance or essence of the agreement. For example, if a mistake of fact relates to the identity of the subject matter, such as purchasing a counterfeit painting instead of an original, the contract may be void.
In other cases, a mistake of fact may not render the contract void but may give rise to a claim for rescission or damages. Rescission is the process of canceling or unwinding the contract, restoring the parties to their original positions before the contract was entered into. Damages, on the other hand, seek to compensate the party who suffered a loss due to the mistake.
To minimize the risk of mistakes of facts, it is crucial for parties to a contract to communicate clearly and accurately about the subject matter. They should also exercise due diligence by thoroughly investigating and verifying the relevant facts before entering into the contract. This can help ensure that both parties have a common understanding of the subject matter and that the contract is based on accurate information.
Voidable
According to Section 19 of the Indian Contract Act, when a contract is formed by false representation of facts, the injured party may choose to void the agreement after discovering the misrepresentation. A contract formed by misrepresentation is voidable; the injured party may otherwise choose to demand the performance of the contract as if the representation made had been true.
There are, however, some exceptions to rendering a contract voidable:
The agreement shall not be voidable if consent was acquired due to the silence of the defendant suppressing vital facts. The contract is not voidable if the injured party had the ability and resources to discover such false representation but did not take reasonable care or diligence to investigate the truth.
In the landmark case of Horsfall vs. Thomas (1862), the court grappled with the intricate issue of whether a mere failure to disclose a defect constitutes misrepresentation or fraud.
The case centered around a sale of goods, where the buyer, Mr. Horsfall, purchased a quantity of copper from the seller, Mr. Thomas. Unbeknownst to Mr. Horsfall, the copper contained a latent defect, rendering it unsuitable for its intended purpose. After discovering the defect, Mr. Horsfall brought an action against Mr. Thomas, alleging misrepresentation and fraud.
The court meticulously examined the circumstances surrounding the transaction, paying particular attention to the conduct of the seller. It determined that Mr. Thomas had not deliberately concealed the defect but had simply failed to point it out to Mr. Horsfall. The court reasoned that a mere failure to disclose a defect does not, in itself, amount to misrepresentation or fraud.
Crucially, the court emphasised that the defect in question was not hidden or disguised by Mr. Thomas. It was a latent defect, discoverable upon careful inspection. The court held that Mr. Horsfall had an obligation to exercise due diligence and conduct a thorough examination of the goods before entering into the contract.
The court’s decision in Horsfall vs. Thomas established the principle that a seller is not liable for misrepresentation or fraud solely based on a failure to disclose a defect that is not deliberately concealed. This principle underscores the importance of caveat emptor, or “buyer beware,” in commercial transactions. It places the onus on the buyer to conduct their due diligence and carefully inspect the goods before making a purchase.
Nevertheless, the court’s ruling did not absolve sellers of their responsibility to act honestly and transparently in their dealings. While a mere failure to disclose a defect may not constitute misrepresentation or fraud, sellers are still bound by the duty of good faith and fair dealing. They cannot actively mislead buyers or engage in deceptive practices to induce a sale.
The Horsfall vs. Thomas case remains a significant precedent in the law of misrepresentation and fraud, guiding courts in their analysis of similar cases. It highlights the importance of striking a balance between protecting buyers from unscrupulous sellers and promoting fairness and certainty in commercial transactions.
The contract is also not voidable if consent is not made because of the misrepresentation. When a sale is discussed between a buyer and seller where the seller misrepresents something innocently or fraudulently, the buyer enters into the contract in spite of identifying the misrepresentation. In this case, the buyer took the risk knowingly and hence cannot render the contract voidable later on.
Legal remedies
Rescission
Rescission is a remedy that allows the parties to terminate the contract and go back to their initial position before the contract was formed. It makes the contract null and void and frees the non-liable parties from their obligations. When a contract of sale is rescinded, the purchased good shall be returned to the seller and the seller shall refund the price paid to the buyer.
Affirmation
To enforce affirmation as a remedy, the injured party must be aware of the misrepresentation or breach of contract. While there is time, if they choose to affirm, the contract will continue as if the misrepresentation were true. However, if the claimant doesn’t choose to either rescind or affirm for a long time since the breach of contract, it is assumed that s/he affirms and wishes to continue the contract.
In this case of misrepresentation, the plaintiff bought a lorry from the defendant at half the price, noticing some defects. The plaintiff discovered some serious issues with the lorry’s mileage and notified the defendant, after which he gave it to his brother for a business trip when it broke down. Following this incident, the plaintiff wanted to rescind the contract. However, the court dismissed the plaintiff’s claim, stating that the plaintiff had an opportunity to rescind it when the innocent misrepresentation was discovered; however, he continued to use it and even lent it to his brother; lending it to the brother was considered an act of affirmation.
In a sale of goods contract, limitations of liability and remedies can be included to deal with a claim of misrepresentation. The clause limiting the remedies and liability for breach of contract must be reasonable and fair.
Difference between fraud and misrepresentation
Fraud and misrepresentation are both intentional acts that can deceive others, but there are key differences between the two.
Fraud
Fraud is a deliberate act that is intended to deceive someone for personal gain. It can involve lying, cheating, or stealing. Fraudulent acts can be criminal or civil, and they can result in serious consequences, such as fines, imprisonment, or loss of reputation.
Misrepresentation
Misrepresentation is a broader term that encompasses any false statement or omission of fact. It can be intentional or unintentional, and it can be either material or immaterial. Material misrepresentations are those that could reasonably be expected to influence a person’s decision, while immaterial misrepresentations are those that are unlikely to have any impact.
Key differences
The key differences between fraud and misrepresentation are:
Intent: Fraud is always intentional, while misrepresentation can be either intentional or unintentional.
Materiality: Fraudulent acts are always material, while misrepresentations can be either material or immaterial.
Consequences: Fraud can have serious consequences, such as fines, imprisonment, or loss of reputation, while misrepresentations may not have any consequences at all.
Examples
Here are some examples of fraud and misrepresentation:
Fraud: A car salesman who lies about the condition of a used car is committing fraud.
Misrepresentation: A job applicant who exaggerates their qualifications on their resume is making a misrepresentation.
Fraud: A company that knowingly sells a product that is defective is committing fraud.
Misrepresentation: A restaurant that advertises a dish as being “made with fresh ingredients” when it is actually made with frozen ingredients is making a misrepresentation.
Conclusion
Misrepresentation is a false statement of fact made or indicated while forming a contract. It is possible to misrepresent by omission of vital facts. It can cause one party to a contract to suffer losses while the other may enjoy some profit. It is especially important to examine all the facts and statements made while forming a contract to ensure that the facts are credible and true. False statements may be made innocently or with carelessness or fraudulent intent, it is the duty of a competent party to take all reasonable precautions before entering an agreement. Goods are sold and purchased by everyone in their daily lives; informed decisions must be made while purchasing goods. False representation induces a party to enter a contract s/he otherwise would not; however, on discovery of the misrepresentation, the injured party has the option to rescind the contract or affirm it and demand continuation of the contract. Misrepresentation is a basis for breach of contract.
This article is written by Gauri Gupta. It aims to provide an in-depth analysis of the different labour laws applicable in the State of Karnataka. It highlights the different acts, rules, and regulations pertaining to labour laws applicable specifically to the State of Karnataka.
Table of Contents
Introduction
The most populous country of the world, India, is home to the second highest working population on the planet. The labour force of any nation is vital for furthering its economic interests in all domains including investments, production, savings, and the formation of capital. The laws regulating the employment relationship between the labourers and the employers is known as the Industrial Law or Labour Law in India. Industrialisation has led to reduced cordial relationships between the employers and employees, causing numerous labour issues within the country. As a result, labour laws were enacted with the objective of promoting social welfare and securing of the underprivileged and vulnerable workers in the country. The rationale behind enacting these laws was to protect the workers from exploitation and ensure that their rights and interests are safeguarded.
The Constitution of India has placed an obligation on the States to ensure the welfare and protection of its labourers and workers. The duty of the State is to formulate and enact laws in accordance with the Directive Principles of State Policy enshrined under Part IV of the Constitution of India, 1950, especially with respect to Articles 39, 41, 42, 43, and 43A. Labour has been categorised as a subject under the Concurrent List of the Constitution of India which enables both the Central Government and the State Governments to frame laws on the subject. It is crucial to note that various international conventions, particularly those of the International Labour Organisation are a major source of various labour regulations in India.
Before analysing the various labour legislations in the State of Karnataka, it is pertinent to note that the employment legislation in India can be categorised into the following categories:
Norms and Standard Legislation,
Legislation regulating the terms and conditions of the service,
Social Security Legislation,
Contract Legislation, and
Training and Development Legislation.
It is pertinent to note that the existing businesses in the State of Karnataka, or companies planning to establish their businesses in the State of Karnataka have to comply with the labour laws applicable to the State. In other words, the labour laws of Karnataka regulate the functioning of the establishments in the State. These laws cover various domains including minimum wages, industrial relations, social security, working conditions of the labour, and trade practice among others. The labour regulations in the State were enacted with the objective of improving the working conditions of the labourers, ensuring a cordial relationship between the employer and employee and furthermore, to ensure compliance with the safety and security of the workers along with protecting their trade practices.
Elements of Labour Laws
Industrial or labour laws in any country including India revolve around the following areas:
Employment:
Before the Great Depression, the employment sector focused primarily on preventing excessive unemployment. However, there has been a massive shift in the contemporary era with the labour laws now emphasising on creating opportunities for economic stability.
Employer-employee relationship:
The historical concept of the master-servant relationship in labour law involved contractual obligations between these parties. However, the evolution of labour laws has introduced concepts such as limiting freedom of contract, especially in domains like termination, dismissal procedures, minimum wages, and rights with respect to social security.
Remuneration and wages:
The labour laws on wages cover payment methods, protection against unlawful deductions, minimum wage arrangements, and income policies as deliberate instruments for economic stability and growth.
Conditions of work:
This area is rooted in the industrial revolution and deals with the protection of the interests of the workers by addressing the working hours, rest periods, vacations, prohibition of child labour, employment regulations for young persons, and special provisions for women. This aspect of labour law has been evolving and is now adaptive to the modern sectors and changing social norms.
Health, safety, and welfare:
This area covers occupational health, accident prevention, and regulations pertaining to the same, including specific rules for hazardous jobs such as mining and construction work. Furthermore, it ensures safety regarding machinery, dust, noise, vibration, and radiation risks.
Social security:
In labour laws, social security ranges from employers’ liability for accidents to comprehensive schemes covering sickness, unemployment, retirement, injury, maternity, survivor benefits, and medical care.
Trade unions and industrial relations:
In the domain of industrial relations, labour law revolves around the legal aspects of trade unions, employers’ organisations, collective bargaining, agreements, representation of employees, joint consultation, co-determination, workers’ participation, and prevention and settlement of labour disputes.
Administration of labour law:
It revolves around organisations and the functioning of various authorities like labour departments, inspection services, and other enforcement organs. Furthermore, it encompasses labour courts responsible for settling grievances and industrial disputes between the management of an organisation and its labourers.
Special categories of workers:
The last crucial area of labour law revolves around specific occupational groups that are a part of the general code or special legislation. The same is common in sectors such as mining, transportation, commerce, and agriculture and involves distinguishing between blue-collar workers, salaried employees, and other employment categories.
Labour Law and industrial relations
What are industrial relations
Industrial relations connote how different workers behave in organisations where they are employed. Experts in the domain of industrial relations aim to understand the differences in the working conditions of these employees, their say in the decision-making process, the role of the labour unions and the resolution of conflicts between the employers and their employees. Furthermore, the experts in this domain aim to understand how these interactions affect the outcome of any organisation, including those related to the satisfaction of the workers, their job security, organisational efficiency, and the impact of all of these on the community and society as a whole.
Industrial relations play a key role in:
Facilitating communication between the workers and management to establish positive communication and relationships.
Fostering collaboration between the managers and their employees.
Harnessing the positive influence of trade unions to prevent conflicts.
Protecting the interests of both the workers as well as the management.
Preventing unethical and unhealthy environments in the industry.
Developing measures to ensure the promotion of understanding, creativity, and cooperation to enhance industrial productivity.
Ensuring increased participation by the workers.
The current landscape of industrial relations and labour laws is shaped by the contemporary developments and expansion of the industrial sector. The growth of this sector has introduced a significant impact on the landscape of employment, influencing the economic conditions of the workers and their relationships with their respective organisations.
Every industry in the market operates under specific rules and regulations that ensure compliance with both national and regional laws and policies. Industrial relations are evolving at a rapid rate in India, and the country has been able to keep up with this pace by developing and enhancing the existing legislative frameworks to address these relations.
Trade Union Act, 1926
The Trade Union Act, 1926 deals with the registration of trade unions, their rights, liabilities and responsibilities to ensure that the funds are utilised efficiently. The Act bestows legal and corporate status to the registered trade unions and seeks to protect them from prosecution. Furthermore, it empowers them to carry out legitimate activities for the benefit of the labourers. The Act extends to the whole of India and is applicable to the union of workers as well as the association of employees.
Karnataka Trade Unions Regulations, 1958
The Karnataka Trade Unions Regulations, 1958 (“Regulations”) were established under Section 29 of the Trade Unions Act, 1926 (“Act”) to ensure compliance with the provisions of the Act. The regulations are applicable to the State of Karnataka and provide for the application and registration of trade unions in the State. Furthermore, it lays down the process for the cancellation and transfer of the registration of the trade unions established within the State of Karnataka.
In other words, the Regulations provide for the manner in which Trade Unions and the rules of Trade Unions shall be registered within the State of Karnataka. Furthermore, it provides clarity on the fees and transfer of registration from the State of Karnataka to another.
The Regulations also provide for the qualifications of the persons responsible for auditing the accounts of the registered Trade Unions and the conditions subject to which the documents are inspected by the Registrars.
The Industrial Employment Standing Orders Act, 1946 (“Standing Orders Act”) lays down the framework for regulating the conditions of employment in various industries. The Standing Orders Act applies to all establishments where ten or more employers are employed and defines an “industrial establishment” as one where at least 50 persons are employed at any time during the preceding 12 months.
The objective behind enacting the Standing Orders Act was to improve the living and working conditions of the workers by providing them with better pay and benefits such as paid leaves, healthcare benefits, safe working conditions, social security benefits and education benefits, among other facilities. Furthermore, the Standing Orders Act plays a crucial role in ensuring that employers do not abuse their power by making unilateral decisions on employment conditions without consulting their employees or their representatives.
The Standing Orders Act regulates the conditions of service of the workers employed in industrial establishments. It lays down the procedure for the settlement of disputes between employers and their employees. It was enacted to promote a better understanding between employers and their industrial workers on various employment conditions and matters related to them.
The Central Government is empowered to make rules for regulating the wages and other conditions of service of the employees in any establishment established under the Standing Orders Act. These rules are issued by the Ministry of Labour and Employment and are known as the “Standing Orders.”
The Standing Orders Act is vital for the employees because it lays down a uniform standard applicable to all the establishments within the territory of India. Furthermore, it provides for settling disputes between employers and employees through conciliation or arbitration, thus establishing an effective machinery for the efficient resolution of disputes.
On June 30th, 2020, the Government of Karnataka introduced amendments to the Karnataka Industrial Employment (Standing Order) Rules, 1961 (“Rules”) enacted under the Standing Orders Act. The objective of introducing the amendment was to introduce the concept of fixed-term employment in the State of Karnataka. This model of employment is not new and is followed in the States of Maharashtra, Gujarat, Bihar, Goa and Punjab.
The Rules have introduced a new category of fixed-term employment to the existing classification of employees as permanent, casual, temporary, badli, apprentice, and probationers in nature. The Rules define a fixed-term employment workman as a workman engaged on the basis of a written contract with an employer for a fixed period of time.
The working hours, wages, allowances, and other benefits of an employer engaged in fixed-term employment should not be less than that of a permanent workman. Furthermore, such an employer is eligible for all the statutory benefits that are available to a permanent workman on a pro-rata basis, irrespective of the period of their employment.
The Rules clearly stipulate that an employer engaged under full-term employment shall not be entitled to any notice or pay if his services are terminated due to non-renewal of a contract of employment or when the existing contract expires. However, the services of an employer engaged under a fixed-term employment contract shall not be terminated as a way of punishment, and he should be given a fair opportunity to be heard on the alleged charges, if any. It is crucial to note that all the establishments in Karnataka, including non-profit trusts, societies, and companies that have fifty or more employees, are included in the ambit of these Rules. These amendments have opened up more employment opportunities and have provided a flexible alternative to employers who now employ workers on the basis of their necessities. Furthermore, the employers are not obligated to keep the workers beyond their payment, which has led to a sudden increase in the ease of doing business in the State and has been extremely crucial for the Micro, Small, and Medium Enterprises (MSMEs).
However, the amendment is silent on the termination of the contract prior to the expiry period, raising gaps for legal consultation. Furthermore, the Rules do not provide for the payment of gratuity to these employees and are silent regarding the tenure-based statutory benefits.
Industrial Disputes Act, 1947
The Industrial Disputes Act, 1947 (“1947 Act”) was one of the last legislations passed before India achieved independence in 1947. It governs the labour regulations for all workers working within the territory of India and was enacted to examine and settle workplace disputes. The objective behind enacting the 1947 Act was to ensure industrial peace and harmony by establishing apparatus and procedures to investigate and resolve industrial disputes through debate and discussions. The legislation is applicable to only the organised sector of the Indian economy and lays down precise instructions and guidelines to establish healthy employer-employee relationships as well as with respect to the works committee for businesses and workers.
The 1947 Act is applicable to the whole of India and applies to every industrial establishment that is carrying out business, trade, manufacturing activity, or distribution of goods and services, irrespective of the number of workmen employed in these establishments. It does not extend to those employed at managerial and administrative capacity or those engaged in a supervisory capacity in an establishment.
Industrial Disputes and Certain Other Laws (Karnataka Amendment) Ordinance, 2020
Chapter VB of the 1947 Act provides that an establishment must have 100 employees for the organisation to lay off its employees or shut down the establishment without seeking government approval. The Ordinance has enhanced this threshold to 300 employees.
The term “factories” after the amendment includes 20 or more employees for manufacturing processes being carried out with the aid of power and 40 or more employees for manufacturing processes being carried out without the aid of power.
The Ordinance amended the Factories Act, 1948 to increase the total number of overtime hours in a quarter to up to 15 hours.
The Contract Labour (Regulation and Abolition) Act, 1970 will now be applicable to every establishment which has 50 or more workmen.
The ordinance will be applicable to non-profit organisations. In other words, the Ordinance amends the above-mentioned three legislations and provides that these laws will now be applicable to non-profit organisations.
The amendments have brought significant relaxation to labour laws, furthering the ease of doing business in the State of Karnataka. However, experts are worried that these laws lean towards the exploitation of the rights of the labourers. An example of this is the maximum number of permitted working hours per day as per the International Labour Convention, which is 9 hours per day, but the same has now been increased, making the workers vulnerable.
Labour laws on social security
The concept of social security has been evolving since the primitive times when mankind was struggling to protect itself from nature and cope up with its daily necessities. It was during this time that the concept of community was first involved, which led to the creation of families to provide adequate social measures to human beings.
The International Labour Organisation has given due importance to the concept of social security and has defined it as “security that the society furnishes through appropriate organisations against certain risks to which its members are exposed, i.e., the security is furnished by the society to the members of the society.”
The National Commission on Labour states that the rationale behind the idea of social security is to contribute to the welfare of the country by protecting the citizens against certain hazards.
All social security measures are threefold in nature:
Compensation: All social security legislations aim to substitute income due to the interruptions in earrings because of unemployment, sickness, permanent disability, old age, etc.
Restoration: The social security measure of restoration is to provide certain services, including education, and medical care to the sick and to ensure that the needy and vulnerable individuals are rehabilitated.
Prevention: Social security measures provide relief during monetary strains and prevent workers from falling into a debt cycle. Prevention is designed to avoid the loss of productive capacity that occurs due to sickness, unemployment, or invalidity and to use the existing available resources for the well-being of the community.
The ultimate objective of social security measures is to ensure livelihood, which is in consonance with Article 21 of the Constitution of India, which provides that every citizen has the fundamental right to life, which includes the right to livelihood as directed by the Supreme Court of India. Further, the Directive Principles of State Policy as enshrined under Part IV of the Constitution of India, are based on socialistic patterns and embrace the principles and policies of social security.
Article 43 of the Constitution of India provides that the States should strive to secure to its workers not only work but also a living wage and decent conditions of work to ensure a decent standard of life along with leisure and social and cultural opportunities.
In the landmark judgement of Standard Vacuum Refining Co. of India vs. Workmen (1961), the Supreme Court of India held that every workman shall have wages that will maintain them in the highest state of industrial efficiency, will provide for their families all that is necessary for their health and physical well being and is sufficient for them to discharge their duties as a citizen.
Thus, social security measures are crucial for introducing elements of stability and protection in the strains of modern life and the lack of these measures will impede production and prevent the formation of a stable and efficient labour force.
Karnataka Labour Welfare Fund Act, 1965
The Karnataka Labour Welfare Fund Act, 1965 (“Fund Act”) is a crucial component of the labour laws of Karnataka. It is a state law and is funded by the state authorities. The objective behind enacting the Fund Act was to constitute a labour welfare fund for conducting and financing activities to promote the welfare and security of the labour force in the State of Karnataka. It is applicable to organisations that have more than 50 employees in the preceding 12 business months. All the employers and employees in an organisation are required to donate to the fund to support and improve the working conditions and to ensure social security.
Employers and employees are required to donate Rs. 40 and Rs. 20 respectively and the same shall be made to the Board established under the Fund Act once a year by 31st December of every year. The employer must file returns with the Board by 15 January of the subsequent year. It is pertinent to note that employee contributions can be withheld in the form of wage deductions and thus, employers are required to maintain a record of employees to whom the Fund Act does not apply.
The following establishments are covered under the Fund Act:
A factory under the Factories Act, 1948 employing one or more persons,
A motor omnibus service employing one or more persons,
A plantation or workshop employing one or more persons.
Any person who is employed for wages to do any skilled, manual, unskilled, or clerical work in any of the establishments as mentioned above will be covered under the Fund Act.
The Karnataka Labour Welfare Fund Rules, 1968
The Karnataka Labour Welfare Fund Rules, 1968 (“Rules”) were enacted with the objective to finance and conduct activities to promote the welfare of labour in the State of Karnataka. These Rules mandate that employers contribute money to the Labour Welfare Fund to ensure the welfare of the workers and to provide benefits to the workers and their dependents including educational assistance, medical aid, and accident benefits among others. These Rules outline the structure and functioning of the Karnataka Labour Welfare Board. The Board is responsible for administering the Labour Welfare Fund and using it to establish various welfare schemes and benefits. These Rules play a crucial role in specifying the requirements of timely payment of fines and unpaid accumulation by the employers, submission of contribution statements, and maintenance of records by the employers.
In other words, the Rules aim to establish the framework for collecting contributions and administering a welfare fund to support the social and economic well-being of the workers in the State of Karnataka.
Maternity Benefit Act, 1961
The Maternity Benefit Act, 1961 (“1961 Act”) was enacted with the objective of protecting the rights of women in India. It provides numerous benefits to employed women during the time of their maternity. The 1961 Act is applicable to any establishment that employs more than 10 employees and is crucial legislation to protect the dignity of mothers. The 1961 Act plays a crucial role in not just protecting the rights of women but also taking care of their finances by providing them with various maternity benefits.
The 1961 Act is applicable to all establishments including factories, mines, and plantations. Further, it applies to government establishments and any organisation with more than 10 employees.
In order to avail of benefits under the 1961 Act, the woman employee must be employed with the establishment for a period of 80 odd days in the preceding 12 months.
As per the 1961 Act, women are entitled to 12 weeks of maternity leave which is now increased to 26 weeks as per the Maternity Benefit (Amendment) Act, 2017. The 1961 Act is also applicable to women who miscarry or get an abortion and are entitled to a maximum of 6 weeks of paid leave.
The 1961 Act is a progressive legislation as it provides women with the opportunity to work from home during their pregnancies. The conditions with respect to the same must be mutually agreed upon between the employer and employee.
The 1961 Act lays down a foundation for women to be secure and confident in their workplace even during pregnancy. It not only safeguards motherhood but also provides a stable financial environment to the mothers.
Rule 6(A) providing for creche facilities in all workplaces was inserted. As per the rule, every employer is under a mandate to provide and maintain a creche facility for children below the age of 6 years. Furthermore, there shall be one creche for every thirteen children below the age of six years. Such creche facilities shall be provided to the children of all employees irrespective of the nature of employment.
The creche facility must be located within 500 metres of the premises of the establishment.
It is mandatory for the creche facilities to be constructed out of heat resisting materials and to be waterproof. Furthermore, the ecosystem of these facilities must be clean, safe, and child friendly in nature.
Every creche facility must have a woman employee who has received a certification from the government after completing her training in “Early Childhood Care and Education” or “Teachers Course Higher ” or equivalent qualifications. Further, the facility must have a creche attention with basic midwifery qualifications or training as an attendant for children. In case the creche facility has more than 10 children, female ayahas shall assist the creche attendant.
The creche facilities shall be functional for the working hours of the mother or the parents of the children.
The creche facilities are under a mandatory obligation to keep the basic medical records of the children admitted to the facility. Further, every child must be medically examined before being admitted and there shall be a periodical check every two months.
B) Rule 6(B) was inserted and it provides for supplying milk and refreshments where a minimum of 250 ml of pure hygiene milk shall be made available to every child every day.
C) Rule 6(C) of the Rules provides that creche staff must have access to clothes, soap and oil. The same must be available for children admitted to the creche.
Payment of Gratuity Act, 1972
The Payment of Gratuity Act, 1972 (“1972 Act”) was enacted for the welfare of the retired employees. It provides financial security to these employees by providing them with a certain amount of money after their retirement to live their lives peacefully after retirement.
The 1972 Act was introduced by the Central Government to provide one-time gratuity to the employees at the time of their retirement. The legislation is considered to be progressive in nature and falls within the ambit of social insurance and social assistance legislation.
The 1972 Act applies to all the employees working in mines, factories, old fields, plantations, and other related sectors. The legislation facilitates a mandatory law wherein all employees serving for more than five years in any firm will receive a gratuity at the time of retirement. Furthermore, the legislation also provides gratuity to retired employees due to superannuation, death, or resignation.
The gratuity is calculated depending on the service tenure of the employee. It employs a formula specifying 15 days’ wages for every completed year. Furthermore, the 1972 Act imposes a stringent temporal constraint, mandating the prompt payment of gratuity within 30 days from an employee’s retirement, resignation, or demise. The 1972 Act also allows the employees to nominate an individual to receive gratuity on their behalf in case of their demise. It is pertinent to note that gratuity is paid only in cases involving retirement, death, disability due to an accident or disease, resignation, termination or lay off due to retrenchment.
The 1972 Act plays a vital role in promoting the welfare of the employees and has undergone crucial amendments including provisions for female employees for maternity leave. The legislation has several limitations since it does not take into consideration organisations with less than ten employees. It is important to ensure that the implementation of the legislation is ensured and improved so that the companies follow the legislation universally within the territory of India.
The Government of Karnataka vide its powers under Section 4A of the Payment of Gratuity Act, 1972 has notified the Karnataka Compulsory Gratuity Insurance Rules 2024 (“2024 Rules”). These 2024 Rules are applicable to the existing establishments to whom the 1972 Act is applicable to obtain insurance policies for the payment of gratuity. As per these rules, every new establishment or existing establishment must mandatorily obtain its insurance policy for the payment of its gratuity within 30 days on which these rules become applicable. All the establishments which are under the control of either the Central or State Government will not be covered under these 2024 Rules.
Furthermore, every employer who has obtained insurance for payment of gratuity should pay the premium in full amount before the expiry of the policy. The employers are also under the mandatory obligation to inform the Controlling Authority of the area about the payment of the premium within 15 days from the date of renewal of the policy. However, there are certain challenges that have come up with these new rules.
There is a massive increase in the compliance burden on account of registration of establishment, submission of employee details and informing the department about the renewal of the policy. The 2024 Rules are silent about the periodicity of sharing updates about the changes in the employees and policies. Furthermore, the new gratuity funds will be exempted from the provisions of these rules only if the number of employees is 500 or more than 500. Any establishment of irrevocable trust also adds to the compliance activities for the employers.
The Unorganised Workers Social Security Act, 2008
The International Labour Organisation explains social security as a comprehensive approach designed to prevent deprivation and to give individuals a basic minimum income to ensure the protection of their families from uncertainties.
The pandemic has had adverse effects on the informal workers in the rural and urban areas causing a rise in unemployment.
The Government of India enacted the Unorganised Workers’ Social Security Act, 2008 (“2008 Act”) to provide social security and welfare to the unorganised workers in India. As per 2008 Act, a National Social Security Board is to be constituted at a Central Level to recommend the formulation of various social security schemes that cover areas such as life cover, health and maternity benefits, old age protection and any other benefits as the government may provide from time to time to the workers in the unorganised sector.
Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY) and Pradhan Mantri Suraksha Bima Yojana (PMSBY): These schemes cover the life and disability of workers working in the unorganised sector. The risk coverage under the PMJJBY scheme is for Rs. 2 Lakhs in case of the death of the insured, due to any reason. The annual premium for the same is Rs. 436. Furthermore, the PMSBY scheme provides that the risk coverage is Rs. 2 Lakhs in case of accidental death or permanent disability and Rs. 1 Lakhs for partial permanent disability at a premium of Rs. 20 per annum.
The Ayushman Bharat – Pradhan Mantri Jan Arogya Yojana (AB-PMJAY) provides for the health and maternity benefits of up to Rs. 5 Lakhs per family for secondary and tertiary care related hospitalisation.
Pradhan Mantri Shram Yogi Maan-Dhan Yojana (PM-SYM): The scheme provides for old age protection to the workers working in the unorganised sector. The scheme launches a pension scheme which provides a monthly pension of Rs. 3000/- after they attain the age of 60 years to the unorganised workers.
Building and Other Construction Workers (Regulation of Employment and Conditions of Service) Act, 1996
The legislation is a social security statute that was enacted by the Government of India to provide a safe and healthy environment to workers who are engaged in construction activities. The Building and Other Construction Workers (Regulation of Employment and Conditions of Service) Act, 1996 (“1996 Act”) was enacted to regulate the employment conditions of the construction workers engaged in construction activities.
The 1996 Act is applicable to every establishment that employs or has employed ten or more workers in any building or any other construction work on any day in the preceding 12 months. These workers include persons who are employed to do any skilled, semi-skilled, unskilled, manual, supervisory, technical or clerical work for hire or for reward in connection to any building or construction work.
The 1996 Act does not include within its ambit workers who are employed mainly in a managerial or administrative capacity or are employed in a supervisory capacity drawing wages that exceed one thousand six hundred rupees (Rs.1600) per month or exercising functions that are purely managerial in nature.
Furthermore, the 1996 Act provides for establishing the Central Building and Other Construction Workers’ Advisory Committee, also known as the Central Advisory Committee for ensuring the administration of the provisions of the 1996 Act. Similarly, a State Advisory Committee is to be constituted to ensure that the provisions are enacted efficiently within the states in India.
A building worker must have completed the age of eighteen years to be eligible for getting registered as a beneficiary under this legislation. Further, he should not be more than sixty years of age.
Significant areas of improvement were suggested by the Ministry of Labour and Employment in the Building and Other Construction Workers Related Laws (Amendment) Bil, 2013 which provides for changing the ambit of establishments, enhancing the scope of the 1996 Act, empowering the Central Government to notify the percentage of the total expenditure incurred by the State Welfare Board and empower the Complaint Redressal Mechanism in order to ensure speedy resolution of disputes.
Building and Other Construction Workers Welfare Cess Act, 1996
The Building and Other Construction Workers Welfare Cess Act, 1996 was enacted with the objective of levying and collecting cess on the cost of construction which is incurred by the employers. This cess is used to augment the resources of the Welfare Boards established under this legislation for the benefit of the workers as well as for laying down welfare schemes for them. As per the legislation, the Central Government is empowered to notify a cess rate between 1-2% of the total cost of construction incurred by the employer. The employers are required to pay the cess, furnish the returns, and comply with the other administrative requirements. The failure to do so attracts hefty penalties. Every state government is required to appoint inspectors and registering officers to enforce various provisions of this law.
Labour laws on wages
The Central Government and the State Governments have control over fixing the minimum wages of employment in India. These wage rates differ across occupations, skills, sectors, and regions. The wage and salary structure in India is dependent on the following criteria:
State of employment,
The area within the state based on the developmental level,
Industry in which the individual is employed, and
Skill-set
Every state government in India is empowered to fix the minimum wage rates by taking into consideration the time employed in finishing the work, the piece/ amount of work completed, and the overtime hours employed in completing the work. Furthermore, the nature of employment, geographical location, and the age of the employee also play a crucial role in determining the wages of the employees in India. The following legislations are enacted in India to ensure a minimum wage is guaranteed to every individual within their jurisdictions. The legislative framework aims to ensure fair and timely distribution of wages, prevention of discrimination, and ensuring social safety nets for workers across the country. Employers are under a mandate to follow these laws to avoid heavy penalties and to ensure harmonious relations with their employees.
Equal Remuneration Act, 1976
The Government of India passed the Equal Remuneration Act, 1976 (“Remuneration Act”) with the objective of bridging the gap between male and female workers. The legislation provides for equal wages for men and women on the basis of employment, equal working opportunities for men and women, protecting individuals against discrimination at their places of employment, and ensuring that no individual is discriminated against and unfairly dismissed from employment on the basis of their sex.
Remuneration refers to the basic wage/ salary and any additional emoluments that are payable either in cash or in-kind to any person employed in respect of employment if the terms of the contract of employment are fulfilled.
As per this law, no woman shall be paid less than what is being paid to their male counterparts of a corresponding grade employed in the same employment in the same nature of the employment.
The legislation is a comprehensive law that deals with women’s rights and provides them equal pay for equal work. The main disadvantage of this legislation is that it is not applicable to all people who are working in the private sector and only to private companies that employ more than ten employees. Furthermore, proving discrimination is difficult because of the number of staff in a company and other different factors involved in proving whether someone is being discriminated against.
The legislation marks a milestone in the journey of enacting gender equality laws by addressing discrimination in the workplace. However, there are challenges such as the persistence of societal biases and the need for better enforcement mechanisms. By upholding the provisions of this legislation and fostering a culture of fairness, organisations and society as a whole can create more equitable opportunities for their employees.
The Remuneration Act has been divided into two levels:
Central sphere: It is being implemented by the Central Government with respect to the employment which is carried under the authority of the Central Government, railway administration, banking companies, mines, oil fields, major ports, or any corporation established under the Central Act. The enforcement of the Remuneration Act is entrusted to the Chief Labour Commissioner who heads the Central Industrial Relations Machinery. Labour enforcement officers or inspectors are appointed to investigate the production of registers and records pertaining to the Remuneration Act.
State sphere: With respect to the employment except the ones where the Central Government is the appropriate authority, the authority to implement is with the State Governments. The Central Government monitors the implementation of the Remuneration Act through the State Governments.
The key provisions of the Remuneration Rules are as follows:
The Remuneration Rules provide for details regarding the forms that are to be filed with the appropriate authority in order to address the complaints regarding the violation of the provisions of the Remuneration Act.
The employers are required to maintain a record in the registers elaborating on the details regarding the number of men and women employees, their job categories, and the remuneration period.
The employers face hefty penalties of up to Rs. 10,000 and imprisonment for a period of one month for offences including the failure to maintain registers or produce relevant documents.
Furthermore, discriminatory practices such as gender discrimination during hiring can result in penalties amounting from Rs. 10,000 to Rs. 20,000 and an imprisonment of 3 months which may extend to a period of one year.
To summarise, the Remuneration Rules provide for the procedural framework for filing complaints, maintaining records, and enforcing the provisions of the Remuneration Act, both at the central and state levels.
The Karnataka Payment of Subsistence Allowance Act,1988
The Karnataka Payment of Subsistence Allowance Act, 1988 (“Allowance Act”) was enacted with the objective of providing payment of subsistence allowance to employees during the period of their suspension. As per the Allowance Act, employee refers to any person who is employed in an establishment and does not include a person who is employed in a managerial or administrative capacity. Furthermore, it does not include an employee engaged in a supervisory capacity drawing wages that exceed five hundred rupees per exercise.
Any employee who is placed in suspension shall be paid a subsistence allowance equal to 50% of the wages drawn by the employee, immediately before such suspension. The same is applicable for the first ninety days only. In case the period exceeds ninety days and is less than one-eighty days, then after the completion of the first ninety days, the employee shall be entitled to 75% of the wages. If the suspension period exceeds one hundred and eighty days, the employee shall be provided with the subsistence allowance at the rate of 90% of the wages drawn by the employee.
The Karnataka Payment of Subsistence Allowance Rules, 2004
The Government of Karnataka enacted the Karnataka Payment of Subsistence Allowance Rules, 2004 (“Subsistence Allowance Rules”) to ensure the implementation of the Allowance Act. These Subsistence Allowance Rules are applicable to all the employees, whether permanent, temporary, on probation, or suspended from duty. The employees are entitled to receive 50% of their basic wage and dearness allowance during the first three months of suspension. After the expiry of these three months, the allowance can be increased to up to 75% of the basic wages and the dearness allowance at the discretion of the employer.
Furthermore, the subsistence allowance must be paid on the usual pay day of the establishment. In case the suspension goes beyond the period of three months, the allowance must be paid by the 7th of the following month.
It is pertinent to note that the authority which placed the employee under suspension must review the case every three months and decide whether to revoke or continue the suspension. In case the employers fail to pay the subsistence allowance, they can be fined up to Rs. 500 or be imprisoned for six months or both.
In conclusion, the Subsistence Allowance Rules outline the procedures and requirements for providing the suspended employees with subsistence allowance including the amount, timelines for making payments, and review of the suspensions.
Minimum Wages Act, 1948
The Minimum Wages Act, 1948 (“MWA”) was enacted to set a minimum amount of wages that an organisation has to pay to a particular employee, whether skilled or unskilled for a specific job at a particular time. This minimum amount cannot be reduced by any contract or collective agreement. The purpose behind enacting the transaction was to prevent the exploitation of the employees and to ensure a decent standard of living for them. The MWA empowers both the central and state governments with the jurisdiction to fix the minimum wages. It is pertinent to note that the legislation is clear on the point that the payment of wages below the minimum wage rate established by the government is forced labour.
The MWA provides for three kinds of wages:
Living wage: It refers to the level of income for workers to ensure a basic standard of living including good health, education, dignity, comfort, education and provisions for contingency.
Fair wage: Wages paid to the employees that are more than the minimum wage are known as fair wages. Fair wage seeks to maintain a level of employment in the industry and also looks after the capacity of the industry to pay sufficient remuneration to the employees. Fair wages are agreed upon by both the employer and the employee and is the wage above the minimum wage and below the living wage.
Minimum wage: They are the minimum amount of remuneration that an employer is required to pay wage earners for the work that is performed during a given period.
The MWA is a pivotal legislation under the labour laws of India. It provides a guarantee of minimum remuneration for the work done by the employees. The legislation also fixes working hours, provides for a day off after every six days of work, and provides for payment of overtime. The legislation ensures the economic as well as the social interests of the labourers.
The Code on Wages, 2019 has repealed the MWA to consolidate all the laws pertaining to wages into one code. However, it has not been enforced yet.
Minimum Wages (Karnataka) Rules, 1958
The MWA has empowered the Karnataka government to set minimum wages for the employees who work in various scheduled jobs. These have been put forth in the Minimum Wages (Karnataka) Rules, 1958 (“Karnataka Rules”). The Karnataka Rules provide that every employer is under a mandate to pay a minimum wage to the employees. These wages are stipulated by the State Government. Furthermore, if the employees are working overtime, the workers have to be paid for the number of hours he has worked overtime. Furthermore, the pay period cannot exceed one month and for the companies with less than 1000 employees and other companies, the employees are to be paid before the 7th day of the month. The deadline for the rest is on the 10th day of the last day of the previous pay period. In the event of termination of the employment, the employees are entitled to remuneration within two working days from the date of termination of employment. The Labour Department of Karnataka has proposed the revised rates of minimum wages in eight scheduled employments including automobile engineering, clay pots, ceramics stoneware, and other allied industries, fish/ shrimp/ crab catching and processing, foundry, industry, security agencies, employment in clearing toilers and scavenging of underwater drains, urban local bodies, town and village panchayats. These amendments have been just proposed and are yet to be finalised.
Payment of Wages Act, 1936
The Government of India enacted the Payment of Wages Act, 1936 (1936 Act”) with the objective of helping the industrial workers and prohibiting arbitrary wage deductions and eliminating unnecessary delays in paying the wages. The 1936 Act is applicable to all the employees working in a factory, through a subcontractor, or directly with the railway administration, or those operating in the industrial sector.
It is pertinent to note that the provisions of the 1936 Act will be applicable only to individuals who earn less than Rs. 24,000 per month. The wages can be paid on a day-to-day basis, week-to-week basis, monthly basis, or fortnightly basis. The period of payment should not exceed one month.
The legislation is a crucial framework with contemporary workforce dynamics. The Ministry of Labour and Employment introduced the Payment of Wages (Amendment) Bill, 2017 (“Amended Act”). In light of the technological advancements, the Amended Act eliminates the requirement of written consent before paying salaries through cheques and direct bank deposits. Furthermore, the Amendment Act emphasises the commitment of the government to advance the digital economy by mandating electronic modes of compensation.
The 1936 Act is a multifaceted approach providing for the provisions of non-compliance along with fostering industrial peace and harmony. Further, the amendments portray the flexible nature of the legislation, thus, showcasing its evolving nature.
Karnataka Payment of Wages Rules,1963
The Karnataka Payment of Wages Rules, 1963 (“Wages Rules”) are applicable to employees who earn wages by working in factories, industries, or other facilities and earn wages of up to Rs. 24,000/- on a monthly basis. The objective behind enacting these Wages Rules was to ensure regular and timely payments to the employees and to prevent arbitrary deductions and fines. The employers are under a mandate to provide the wages of all the employees on a monthly basis and the same cannot exceed a period of one month. The wages are to be paid by the 10th day of every month. In case the employee is terminated, the employer is under a mandate to pay the wages within two working days after the termination of the employment relationship. It is crucial to note that the employer is entitled to allowable deductions from the salary of the employees under the provisions of this legislation. However, they should ensure that these deductions are not arbitrary and unauthorised in nature. The fines imposed on employees cannot exceed 3% of the pay during the payment period. The employers are required to maintain a record of the penalties, losses, or deductions for damages and deposits, record the wages and submit an annual report with respect to the same at the end of every financial year.
Labour laws on working conditions
The Central Government and various State Governments have enacted labour laws on working conditions with the objective of laying down a framework to ensure decent and safe working conditions for the employees. These legislations protect the health, safety, and welfare of the workers in different sectors and industries. These laws play a crucial role in safeguarding the dignity of workers, ensuring their rights are protected, and preventing them from being exploited, especially in the unorganised sector. Furthermore, it promotes a culture of occupational health and safety for the overall productivity and economic development of the industry. The employers are under a legal mandate and moral and social responsibility to ensure compliance with these laws. As the economy continues to grow, the amendments in the existing legislation are addressing the emerging challenges and safeguarding the interests of the workforce in India and different states.
Beedi and Cigar Workers (Conditions of Employment) Act, 1966
The Beedi and Cigar Industry is an unorganised sector. Workers in this industry earn significantly less than the workers in the other industries, leading to significant economic disparity. The Beedi and Cigar Workers (Conditions of Employment) Act, 1966 (“Beedi and Cigar Workers Act) provides for the welfare of the workers in the beedi and cigar establishments and regulates their working conditions. The legislation forms a part of the State List and thus, the State Government is empowered to make laws in the domain. As per the legislation, every industrial premise must be kept clean and free from odours from any drain, privy, or other nuisance. Further, they should maintain a standard of cleanliness and maintain lighting, ventilation, and temperature of the premises. It is pertinent to note that every employer is under a mandate to take practical measures and precautions to keep away dust, fumes, or other impurities and buildup in any room since the same is detrimental to those employed in such industries. In case an employee is working overtime, he shall be paid double of his regular pay. The employers are under a mandate to provide washing facilities for the use of the employees in every premises where tobacco is blended or sieved or beedi is warmed in hot ovens.
The legislation plays a crucial role in ensuring the safety of the workers and enhancing their well-being in such establishments. Further, it governs the working conditions of the organisation and makes arrangements for various amenities including drinking water, latrines, urinals, washing facilities, creches, first-aid, and canteens.
Although the Beedi and Cigar Workers Act was enacted a long time ago, the working conditions of the workers in this industry continue to be a matter of concern. The working conditions in the beedi and cigar industry still remain poor with harsh long working hours, low wages, and poor health safety conditions. Thus, although the Beedi and Cigar Workers Act was enacted to protect the rights of the workers in the beedi and cigar industry, it has a limited impact on the lives of these workers who are still being exploited by the employers.
The Beedi & Cigar Workers (Conditions of Employment) (Karnataka) Rules, 1969
The Government of Karnataka enacted the Beedi & Cigar Workers (Conditions of Employment) (Karnataka) Rules, 1969 to ensure the implementation of the provisions of the Beedi and Cigar Workers Act. As per these rules, the employers are required to obtain a licence to use the premises for the manufacturing of beedi and cigars. This licence has to be issued annually. Further, the employers are under a mandate to maintain records of the working periods, leave with wages, and issue leaves to the employees. It is pertinent to include the overtime wages and weekly holidays for the same. The rules provide that strict supervision is necessary when distributing raw materials to the workers, and limitations are to be imposed on the rejection of the finished products as sub-standard. The employers are under a mandate to provide fire-fighting equipment and submit monthly and annual returns to the authorities. The rules play a crucial role in the labour legislative framework of India by providing for details on the licensing, health, safety, welfare, and administrative requirements for the manufacturing establishments in the State of Karnataka, supplementing the central legislation.
Child Labour (Prohibition and Regulation) Act, 1986
Child labour practices are a hindrance to the mental and physical development of children as it deprives them of their crucial phases of life. The Child Labour (Prohibition and Regulation) Act, 1986 was enacted to safeguard the rights of children below the age of 14 years and to prevent them from working in hazardous industries. Furthermore, it aims to regulate the working hours and conditions of the child workers.
An amendment was introduced to this legislation in 2017 which placed a complete prohibition on the employment of children below the age of 14 years. They are allowed to work on family businesses or enterprises or other industries if they are below 18 years of age only if the industry is non-hazardous. Furthermore, the Government of India has imposed stricter penalties for the violation of the provisions of this law. The employment of adolescents between the age of 14-18 years is barred in hazardous conditions. As per the amendment, the violation of the provisions of the act is a cognizable offence and the district magistrate or a subordinate office is empowered to enforce the provisions. Following the amendments, the Child Labour (Prohibition and Regulation) Amendment Rules, 2017 were enacted. These provide for a broad and specific framework for the prevention, prohibition, rescue, and rehabilitation of children and adolescent workers. It also lays down the specific responsibilities and duties of the law enforcement agencies to ensure the effective implementation and compliance with the Act.
Child Labour (Prohibition and Regulation) (Karnataka) Rules, 1997
The Child Labour (Prohibition and Regulation) (Karnataka) Rules, 1997 (“Child Labour Rules”) were enacted by the Government of Karnataka to provide details for the implementation of the Child Labour Act, 1986. The Child Labour Rules outline the specific requirements and restrictions around employing children below the age of 14 years in Karnataka in consonance with the central legislation. Further, they lay down the standards for health, safety, and welfare measures to be provided by the employers where children are legally permitted to work. It also provides for the establishment of the District Child and Adolescent Labour Rehabilitation Fund Scheme providing for financial and other assistance to child labourers. The key protections available to children under the Child Labour Rules focus on prohibiting the employment of children below 14 years of age in hazardous workplaces, regulation of working conditions, the establishment of enforcement authorities like the District Magistrate to look into the inspection of workplaces to take necessary and appropriate action, rescue and rehabilitation of working children and harsh penalties for violating these rules and the central legislation. In summary, the rules were enacted to supplement the central legislation and to ensure that the laws are applicable at the grassroots level as well.
Contract Labour (Regulation and Abolition) Act, 1970
The Contract Labour (Regulation and Abolition) Act, 1970 was enacted to regulate the employment of labourers employed on a contractual basis and to provide for its abolition in certain circumstances. This legislation is applicable to every establishment wherein twenty or more workers are employed or were employed on any day in the preceding twelve months as contractual labour. Furthermore, it is applicable to every contractor who employs twenty or more workmen as contractual labour on any day in the preceding twelve months. It is not applicable to establishments that perform an intermittent or casual nature of work, which is decided by the appropriate authority after consultation with the Central or State Board, as the case may be. The employer is under a mandate to provide essential amenities like canteens, restrooms, drinking water facilities, and first aid facilities to their employees. The expenses incurred on the amenities by the employer can be recovered from the contractor either by deducting the amount which is payable to the contractor under any contract or as a debt payable by the contractor.
The objective behind enacting the legislation was to prohibit the exploitation of the labourers and to abolish the practice of contract labour where the work is perennial in nature, is incidental to and necessary for the work of the factory, is of the nature that it can employ a considerable number of workmen for a whole time and the work which can be done by ordinary or regular workmen.
The legislation is crucial in a country like India where labourers employed on a contractual basis suffer from a lack of security and harsh economic conditions. They are exploited and not paid for the work even when they undertake as much work as the workers do when employed by the industrialists. Thus, the law plays a crucial role in dealing with such issues and regulating the conditions of these labourers in India.
Contract Labour (Regulation and Abolition) Karnataka Rules, 1974
The Government of Karnataka enacted the Contract Labour (Regulation and Abolition) Karnataka Rules, 1974 to provide details for the implementation of the Contract Labour (Regulation and Abolition) Act, 1970. These rules provide that the principal employers are required to register their establishments and the contractors supplying labourers on a contractual basis are under a mandate to obtain a licence from the Licensing Officer. The licence is valid for a period of 12 months after which it shall be renewed. Furthermore, the contractors are required to provide facilities like canteens, restrooms, clean and safe drinking water, latrines, urinals, washing facilities, and first-aid kits. In case the contractor fails to provide these, the onus falls upon the principal employer. The contractors are required to maintain registers which would provide for details regarding the workers including their wages and overtime rates etc. The appropriate authority established under these rules i.e., the authorised offices can inspect the establishments and seize the documents in case the provisions of the central legislation and these rules are violated. Thus, these rules play a crucial role in providing for the procedural framework for the registration of these establishments, licensing of contractors, provisions of welfare measures, maintenance of records, and enforcement of the central law.
Inter-State Migrant Workmen (Regulation of Employment and Conditions of Service) Act, 1979
The Inter-State Migrant Workmen (Regulation of Employment and Conditions of Service Act, 1979 (“Migrant Workmen Act”) regulates the employment and working conditions of the migrant workmen. The legislation was passed to provide a framework for regulating the employment of migrant workers in India and to ensure that their rights and interests are protected. Furthermore, it safeguards these workers against exploitation and abuse by their employers and ensures that they are treated fairly and equitably in the workplace.
The Migrant Workmen Act provides that every migrant worker has to be registered with the district magistrate before he can be employed in any establishment. Further, the employers are required to obtain a licence from the appropriate authorities before employing the migrant workers. Although the legislation protects the rights and interests of these workers and ensures that they are given fair and equal treatment, the Migrant Workmen Act is often considered discriminatory in nature since it is only applicable to the migrant workers and does not cover the local workers. Furthermore, due to its rigid nature, it makes it difficult for the employers to adapt to the practice and processes to ensure effective implementation of the provisions of this legislation. There is a massive scope for improvement in the legislation. The author believes that the migrant workers should be given the same benefits as that of the other labourers in India. Every state government must operate internet portals providing for the registered employers, contractors, businesses, and inter-state workmen. Furthermore, the employers and contractors should be under a mandate to be audited by the state government authorities on an annual basis to ensure that the interstate workers are deployed lawfully and further submit an annual compliance report. It is pertinent to establish a mechanism for certain necessary services like health insurance and education to ensure safety and equality for these workers.
Inter-State Migrant Workmen (Regulation of Employment and condition of service), Karnataka Rules, 1981
The Inter-State Migrant Workmen (Regulation of Employment and Conditions of Service) Karnataka Rules, 1981 were enacted by the Government of Karnataka with the objective of regulating the employment of inter-state migrant workers in establishments in Karnataka. These rules provide for a system of registration of establishments that employ these workers and place a mandate on the workers to provide facilities like the canteens, restrooms, safe and clean drinking water, sanitation, and first-aid by contractors or principal employers. Further, they lay down the duties and obligations of the contractors and principal employers on matters pertaining to maintaining a record of the workers, wage payments, and reporting. They empower the authorities to inspect establishments, investigate violations, and take appropriate and necessary action in case of violation of the provisions. These rules were framed to supplement and ensure the implementation of the central legislation i.e., the Inter-State Migrant Workmen (Regulation of Employment and Conditions of Service) Act, 1979. Thus, by supplementing the central law, the rules provide for the procedural framework for the registration of establishments, licensing of contracts, provisions for the welfare of these workers, maintenance of records, and enforcement of the Migrant Workmen Act.
Karnataka Industrial Establishments (National & Festival Holidays) Act, 1963
The Karnataka Industrial Establishments (National & Festival Holidays) Act, 1963 (“Holidays Act”) provides for granting national and festival holidays to those employed in the industrial establishments in Karnataka. As per the Holidays Act, the minimum number of holidays to be granted is 10 in a calendar year, including the national holidays on Republic Day, Independence Day, and Gandhi Jayanti. The provisions of the Holidays Act are applicable to the following establishments in Karnataka:
Any shop or commercial establishment as provided under the Shops and Commercial Establishments Act, 1961
Any factory as provided under the Factories Act, 1948 or any other place deemed to be a factory under Section 85 of the Factories Act, 1948
The employers are under a mandate to prepare a tentative list of holidays and consult with the employees and their representatives before finalising it. In case the employees object to the same, the state government is responsible for intervening and finalising the holiday list. Wages are to be paid to the employees for all these holidays. In case the employee is working on these days, he/she shall be paid twice the wages and avail wages for a substitute holiday on any other day. Further, no holiday will be provided to the employees on days other than Republic Day, Independence Day, and Gandhi Jayanti, unless the employee is in service for a period of 30 days within a continuous period of 90 days immediately preceding such holiday.
Karnataka Industrial Establishments (National and Festival holidays) Rules 1964
The Karnataka Industrial Establishments (National and Festival Holidays) Rules, 1964 (“Karnataka Holidays Rules”) were established by the State Government of Karnataka under the Karnataka Holidays Act, 1963 to provide further details on the implementation of the Holidays Act. As per the Karnataka Holidays Rules, employers are required to prepare a tentative list of the holidays and communicate the same to the employees and their representatives. Furthermore, they are required to seek the objectives of the employees within 15 days of communicating the tentative list to them. If the employees do not object to the same, the employers can finalise the list. On the other hand, if the employees object to the list, the employers are required to take necessary action on the same. As per the Karnataka Holidays Rules, the employers are required to display the final list of national and festival holidays in English and Kannada language on the notice boards of the industrial establishments before 31st December of each year. Furthermore, the government of Karnataka can exempt certain cases of establishments including cinemas, restaurants, hospitals, shops at transport hubs, petrol pumps etc. from the grant of holidays. To conclude, the Karnataka Holidays Rules provide for the procedural framework for the employers to consult and finalise the holiday list with the employees, display the list on the notice boards, and enable the enforcement of the provisions of these rules through the appointment of inspectors.
Karnataka Shops and Commercial Establishments Act, 1961
The Karnataka Shops and Commercial Establishments Act, 1961 (“Commercial Establishments Act”) was enacted with the objective of regulating the operations of the shops and commercial establishments. The legislation was introduced to regulate the working hours, annual leave with wages, compensation and wages along with the employment of women and children in shops and commercial establishments. It is pertinent to note that the commercial establishments in India are required to abide by the Weekly Holidays Act, 1942 which was enacted by the Central Government to govern the grant of holidays. The Commercial Establishments Act is applicable to all the shops and commercial establishments except the following:
Offices of or under the Central/ State Governments or under the Local Authorities,
Any railway service, water transport service, postal, telegraph, or telephone service, any system of public conservancy or sanitation or any industry, business or undertaking which supplies power, light, or water to the public,
Railway dining cars,
Establishments for the treatment and care of the sick, infirm and mentally unfit,
Establishments of the Food Corporation of India,
Offices of legal practitioners and medical practitioners wherein no more than three persons are employed,
Offices of the banking companies,
Any person employed in any business as mentioned above
Persons occupying the positions of management in any of the establishments,
Persons who are directly engaged in preparatory or complementary work.
It is mandatory for all the shops and establishments except those mentioned above to be registered under the Commercial Establishments Act. The same has to be done within a period of 30 days from the date of starting the business. Upon receiving the registration, the certificate is to be mandatorily displayed in the premises. The provisions prohibit the employment of children who have not completed the age of 14 years in any of the establishments. Furthermore, women and young people are not allowed to work as employees in these establishments during the night. Further, employees can work for only nine hours any day and forty-eight hours in a week. All the establishments are required to remain closed one day a week and every employee is to be given at least one whole day in a week for rest. An establishment can remain open on all days only if it has additional staff.
Furthermore, in case of termination, an employer must pay an employee the amount payable before the expiry of the second working day from the day of termination. In case the employee resigns, the amount is to be paid before the next pay day.
Karnataka Shops and Commercial Establishments Rules, 1963
The Karnataka Shops and Commercial Establishments Rules, 1963 were enacted to supplement the Commercial Establishments Act and to ensure the implementation of the provisions of central legislation in the state of Karnataka. Under these rules, the employers are required to maintain registers and records for leave with wages and registers for attendance, wages, overtime, etc. Furthermore, the establishments are required to undertake measures to ensure the health, safety and welfare of their employees. Thus, they are under a mandate to ensure cleanliness, proper lighting, fire safety, and other precautions. Furthermore, sufficient provisions are to be made for staircases, emergency exits etc. In summary, these rules provide for the registration process, requirements for keeping the necessary records, health and safety standards, enforcement mechanisms, and other procedural aspects for the effective implementation of the central legislation in the State of Karnataka.
Motor Transport Workers Act, 1961
The Motor Transport Workers Act, 1961 is a central legislation aimed at regulating the employment of motor transport workers and their working conditions. It provides for the registration of the motor transport undertakings and workers and sets out the duties and responsibilities of the employers and employees with respect to the employment of motor transport workers. Furthermore, the law provides for the settlement of the disputes through alternative dispute resolution mechanisms including arbitration and conciliation. The act also lays down the rules for the payment of wages, working hours leaves, and other conditions of service of the motor transport workers. Further, the employment of children below the age of 14 years is prohibited in the industry. The workers engaged in the motor transport industry are covered under the Payment of Wages Act, 1936. The legislation was enacted to ensure the welfare of the workers in the motor transport industry employing five or more workers in all states in India.
Motor Transport Workers (Karnataka) Rules, 1964
The Motor Transport Workers (Karnataka) Rules, 1964 were enacted by the State Government of Karnataka to further the implementation of the Motor Transport Workers Act, 1961. It lays down details on the procedures and requirements of the registration of the motor transport undertakings in the state of Karnataka, appointment of inspectors, provisions for the welfare of the workers, regulation of the working hours, payment of wages, and enforcement of the central legislation in the state. The rules also lay down harsh penalties for violating the provisions of the Central legislation or these rules including obstructing the inspectors, employing workers without proper registration, etc. These rules play a crucial role in ensuring the safety and well being of the motor transport workers in Karnataka.
Plantations Labour Act, 1951
The Plantation Industry is one of the largest private employers in India. However, the plantation workers are among the most exploited workers and their wages are amongst the lowest when compared to other workers and their working conditions. The Parliament passed the Plantations Labour Act, 1951 (“PLA”) with the objective of ensuring the welfare of the labourers and regulating the conditions of the workers in the sector. The PLA empowers the State Governments to take all the necessary steps to improve the conditions of these workers. It is applicable to any land that is used or intended to be used for growing tea, coffee, rubber, cinchona, cardamom or any other plant that measures 5 hectares or more where 15 or more workers are employed on any day in the preceding 12 months. The employers are under a mandate to ensure that safe and clean drinking water, accessible latrines, medical facilities, etc are made available to the workers. Further, the establishments should have canteens, creche facilities, recreational facilities, and educational and housing facilities for the employees and their children. Further, the PLA provides that no worker will work for more than 5 hours before he/she has had an interval of 30 minutes for rest. Women and children are not required or allowed to work during the night shifts. The legislation also provides that an adult worker is entitled to one day of paid leave after every twenty days of work. Furthermore, every worker is entitled to a sickness allowance. Although the PLA is a progressive legislation, the benefits under the legislation are highly unachieved due to the ignorance of the workers about their rights under the law.
Plantations Labour (Karnataka) Rules, 1956
The Government of Karnataka enacted the Plantations Labour (Karnataka) Rules, 1956 to ensure the effective implementation of the PLA in the state of Karnataka. As per these rules, the plantation owners are required to register their establishments and provide details on the nature of the plantation, the area used, the maximum number of workers employed, etc, following which a certificate of registration shall be issued. This certificate shall be renewed periodically. The rules also outline the procedures for issuing, maintaining records, and replacing the lost certificates of the health records of the workers. Furthermore, the rules authorise the inspectors to inspect the plantations, examine records, and take enforcement action. To conclude, these rules outline the registration process, and measures for ensuring the safety, health and welfare of the workers, lay down the responsibilities of the employers, and provide for the enforcement mechanisms for implementing the provisions of the central law in the state of Karnataka.
Amendments in Labour Laws in Karnataka
Licence extension under the Karnataka Factory Rules
The Government of the State of Karnataka in 2020 amended Rule 5(2) of the Karnataka Factory Rules, 1969 which increased the period for licensing renewal to 10 years or more. Furthermore, it provided that the same should not exceed 15 years and such a licence renewal application has to be made along with the payment of fees under sub-rule (1) of Rule 5.
Factories (Karnataka Amendment) Act, 2023
The Government of the State of Karnataka introduced various amendments to the provisions under the Factories Act, 1948 (“1948 Act”) which are as follows:
Section 54
Under Section 54 of the 1948 Act, sub-clause 2 has been included and it provides that the State Government may by notification in the Official Gazette extend the daily maximum working hours provided for under this provision up to twelve hours inclusive of the intervals for rest on any day. The same is subject to a maximum of forty eight hours in any week as specified under Section 51, with respect to any group, class or description of factories on such conditions as it may deem expedient. It is subject to the written consent of the workers and the remaining days of the said week for the worker shall be paid holidays.
Section 55
Sub-clause 3 was included in Section 55 which provides that the State Government may by notification in the Official Gazette extend the total number of working hours of a worker without an interval to six hours in respect of any group, class, or description of factories on such conditions as it may deem necessary and expedient.
Section 56
The amendment introduced sub-clause 2 of the provision which provided that the State Government may by notification in the Official Gazette increase the spread over up to 12 hours inclusive of his interests for respect in respect of any group, class, or description of factories on such conditions as it may deem expedient.
Section 59
Under Section 59 of the 1948 Act, sub-clause 1 was substituted and it was provided that where a worker works in the factory for:
More than nine hours on any day or for more than forty eight hours in any week or works for six days a week,
More than ten hours on any day or for more than forty eight hours in any week or works for five days in any week,
More than eleven and a half hours on any day working for four days in any week, or working on days of paid holidays
shall be entitled to wages at the rate of twice his ordinary rate of wages in respect of overtime work.
Section 66
The entire provision was substituted by the amendment and the following changes were introduced:
Working hours: The amendment provided that no woman shall work in a factory except between 6 A.M. and 7 P.M. Women are allowed to work between 7 P.M. and 6 A.M. only subject to certain conditions.
Prevention of sexual harassment: Employers are responsible for ensuring the prevention and deterrence of sexual harassment acts. They are required to lay down procedures for resolving, reporting, and prosecuting such acts of sexual harassment. Furthermore, the amendment prohibits sexual harassment in any form including unwelcomed behaviours, advances, demands for sexual favours, sexually coloured remarks, or any unwelcomed contacts or gestures.
Working conditions: The employers are responsible for ensuring that the working space is not hostile towards women. Furthermore, the factors are required to establish a complaint redressal mechanism for ensuring time-bound treatment of complaints. These mechanisms should include a Complaint Committee, a special counsellor, or other support services and ensure that confidentiality is maintained at the same time. Furthermore, sufficient restrooms must be made for female workers.
Security: Sufficient security must be deployed at the entry and exit points of the factors during night shifts. Female employees must be allowed to raise sexual harassment issues in worker meetings and other forums. Furthermore, women should not be employed in batches of less than ten to ensure their safety and protection.
Supervision and safety: The provision provides that at least 1/3 of the supervisory staff during the night shifts should be women. The personal contact information of the women should not be disclosed to unauthorised persons. The routes for dropping women home should be selected carefully to ensure that no women are picked first or dropped last. Night shifts are not mandatory for women. A written consent has to be obtained from those who are interested in working during the night shifts.
Shops and Establishments Act, 1961
The Government of State of Karnataka introduced an amendment under the Shops and Establishments Act, 1961 (“1961 Act”) in 2021 to limit the overtime working hours and provided that an employee in an establishment shall not be required or allowed to work for more than nine hours on any day. Furthermore, no employee shall be required or allowed to work for more than forty-eight hours a week. Moreover, the 1961 Act further provided that the total working hours including the overtime hours will be ten hours except on days of inventory and account preparation days. Furthermore, the total overtime for employees for a period of three consecutive months should not exceed fifty hours.
Karnataka Tax on Professions, Trades, Callings and Employments Act, 1976
The Commissioner of Commercial Taxes declared that from April 1, 2022, every employer liable to be registered under the Karnataka Tax on Professions, Trades, Callings and Employments Act, 1976 (“1976 Act”) shall submit an application for a certificate of registration, electronically through the internet in the prescribed manner. Every employer has to open the official website and submit the application form consisting of the following details:
Legal name of the employer,
Permanent account number or tax deduction account number or tax collection account number of the employer,
Trade name of his/ her company, if any;
Constitution of profession, trade, etc,
Nature of the profession, trade, etc,
Full postal address and telephone numbers of the main place of work and the additional places of work,
Required details of the authorised signatory,
Scanned documents, and
Consent.
In other words, every employer who is liable to be registered under the 1976 Act shall submit an application for getting registered in the prescribed manner along with the above mentioned details.
Landmark judgements
Bengaluru Water Supply and Sewerage Board vs. A Rajappa (1978)
In this landmark judgement, there was a major dispute between the Bengaluru Water Supply and Sewerage Board, its management who were the appellants in this case, and the employees of the Board who were the respondents. The Board has levied a penalty on the employees for some kind of misconduct and recovered hefty penalties in the form of money from them. Aggrieved by the decision of the Board, the respondents reached the labour court under Section 33C(2) of the Industrial Disputes Act, 1947 alleging that the imposition of the fine was against the principles of natural justice.
However, the appellants argued that the Board was a statutory body serving the citizens, and thus it does not fall within the ambit of the term “industry” as has been defined under the Industrial Disputes Act, 1947. The labour court rejected the contentions of the Board and observed that it falls within the ambit of “industry” as defined under Section 2(j) of the Industrial Disputes Act, 1947.
Aggrieved by the decision of the labour court, the appellants approached the High Court of Karnataka which upheld the decision of the labour court.
The appellants then approached the Supreme Court of India wherein the Apex Court laid down the “Triple Test Method” to determine what activities are covered within the ambit of industry. The test can be summarised in the following points:
Whether there is a systematic activity being carried out on the cooperation between the employer and employee for the purpose of production and services for satisfying the wants and wishes of the human being,
It is crucial to know whether there is an objective of gaining profiles behind the establishment of the cooperation or the venture,
The major focus should be on the relationship between the employer and employee, and
If the organisation is for the purposes of trade or business and would not cease to be the one based upon philanthropic nature.
This implies that an organisation having all these above-mentioned elements would be considered an industry for the purposes of Section 2(j) of the Industrial Disputes Act, 1947. As a result, the Bengaluru Water Supply and Sewerage Board falls within the ambit of industry for the purposes of the Industrial Disputes Act, 1947.
M/S Automotive Axles Ltd. Bengaluru Water Supply and Sewerage Board vs. Shri. N. Sandeshkumar (2018)
In this case, the services of the respondents were terminated without any justification following which they raised an industrial dispute by way of an appeal which was referred to the High Court of Karnataka by the Government of Karnataka under Section 10(1)(c) of the Industrial Disputes Act, 1947. The management contended that the respondents did not fall within the ambit of “Workman” under Section 2(s) of the Industrial Disputes Act, 1947 since they were the managerial staff. Thus, the issue before the court was whether the respondents were falling within the ambit of the definition of “workman” under Section 2(s) of the Industrial Disputes Act, 1947. Furthermore, the counsel for the management contended that if the labour court proceeds to assume the jurisdiction over a non-industrial dispute, the same would be challenged as was observed by the Supreme Court of India in the case of Management of Express (Pvt) Ltd., Madras vs. Workers and Others (1963).
The High Court of Karnataka observed that the labour courts are established under the provisions of the Industrial Disputes Act, 1947 to ensure speedier and efficient adjudication of industrial disputes to the exclusion of the civil courts. Furthermore, an issue which can be decided on the basis of the material on record can be tried as a preliminary issue especially in cases where the fate of the main matter depends on the answer to the same. Where the issue in hand involves disputed questions of facts which would be established only after the trial, the consistent view of the Courts is that the main matter itself should be set out for a trial.
Furthermore, the High Court observed that the reference in this case was made by the State Government of Karnataka to look into whether the dispute in hand involves a question on industrial disputes. Herein, the court observed that the issue is a mixed question of law and fact especially when the claimants have disputed the assertion of the management. The court observed that this is an industrial dispute and should not undergo the split stages of a mini trial for deciding the preliminary issue and a trial for deciding the main matter. As a result, the court dismissed the written appeals and pending interlocutory applications.
Private Hospital and Nursing Homes Association vs. the Secretary, Labour Department, Government of Karnataka (2019)
In this case, the issue before the High Court of Karnataka was whether there could be different rates of minimum wages for different localities in the same state. The High Court observed this matter following the judgement of the Supreme Court of India in the matter of Bhikusa Yamasa Kshatriya vs Sangamner Akola Taluka Bidi Kamgar Union (1963) and held that different rates of minimum wages can be fixed for different locations within the same state. The rationale provided for the same was that every place has its own cost of living and depending on the prevailing economic conditions, the minimum wages are to be decided. Furthermore, on the question of whether the fixation of wages under the Minimum Wages Act, 1948 is a legislative function or not, the Karnataka High Court relied on the judgement of its co-ordinate bench in the case of Mangalore Ganesh Beedi vs. the State of Karnataka (2003) and observed that the power of fixation of wages by the appropriate government does not fall within the ambit of a quasi-judicial function or an administrative function but is a legislative function. Furthermore, it was observed that with respect to the interference of the court in case of a notification fixing minimum wages, the court’s interference is ultra vires the Minimum Wages Act, 1948.
Critical analysis
Labour laws play a crucial role in creating harmonious relationships between the employers and employees in any organisation. These relationships are crucial for minimising conflicts and building an environment of understanding and cooperation in an establishment. The author firmly believes that labour laws play a crucial role in contributing to the success of any organisation. Implementing these laws aids the establishment of cordial relations and enhances work efficiency by increasing productivity and success for any company.
Furthermore, labour laws play a crucial role in enhancing working conditions, health and safety of the workers, and ensuring social security by providing them wages, thus, providing them with economic and non-economic benefits. Laws of labour play a crucial role in preventing industrial disputes, and in case the disputes arise, provide for easy and efficient dispute resolution mechanisms where the conflicting parties can settle their disputes cordially.
However, the existing labour legislation in India has led to certain issues including the poor implementation of laws which leaves the employees vulnerable and exploited. Further, the lack of information and awareness regarding the rights of labourers devoid these workers of monetary and non-monetary benefits. Furthermore, the poor literacy rates lead to little to no importance and consideration for labour rights. One of the greatest challenges is the lack of unity among the workers. People are divided on the basis of their race, religion, caste, language, etc which leads to the creation of formal and informal groups within the organisations. This lays down the ground for weak trade union organisations, as a result of which, the employers take advantage of their workers and neglect their rights.
Conclusion
India is a labour surplus nation and has all types of labour including the skilled, semi-skilled, and unskilled labour force available at low costs. The majority of labourers come from rural India and are not aware of their rights. Thus, it is crucial to ensure that their rights are safeguarded and a correct mechanism is established to protect them from exploitation. Safeguarding their rights is important to ensure that their needs are not neglected and they are granted social security benefits and welfare schemes. Labour legislation in India is complex in nature and thus, has retarded the growth of the production sector.
Although amendments have been introduced in the existing labour legislation framework of India, the provisions failed to address the challenges associated with the terms and conditions of employment. Thus, the government needs to address these issues and ensure that all the actors of industrial relations including the employees, employers, and government are working hard towards ensuring the rights of the workers and making their workplace safe, healthy, and secure for them.
Frequently Asked Questions (FAQs)
What is the purpose and objective of the Factories Act, 1948?
The Factories Act, 1C948 is applicable to all factories wherein (a) 10 or more workers are employed in the preceding 12 months and where manufacturing processes are carried out with the aid of power, and (b) 20 or more workers are employed in the preceding 12 months wherein the manufacturing processes are carried out with the aid of the power.
What compliances are crucial under the Factories Act, 1948?
As per the Factories Act, 1948, the occupier is required to obtain a licence to establish and operate a factory. The application for the licence has to be made 15 days prior to the occupation or use of the premises of the factory. Furthermore, the occupier or the manager is under a mandate to maintain a register of the workers employed in the factory. There is also a requirement of displaying a notice regarding the abstract of the same to be displayed in English and vernacular languages in a convenient place in the factory.
Who is the authority responsible for the payment of wages under the Payment of Wages Act, 1936?
The managers of the factories or the supervisors of an industry are the relevant authorities responsible for the payment of wages as an employer for factories, industries, or any other establishments. The employer is required to pay the minimum wage on time as per the provisions of the Act.
Who is responsible for fixing the minimum wages under the Minimum Wages Act, 1948?
As per the Minimum Wages Act, 1948, the Central Government and the State Governments are responsible for fixing the minimum rate of wages. The minimum wages are to be fixed through notifications on all the occupations which fall within the authority of these governments.
What are the duties of an occupier under the Factories Act, 1948?
As per the Factories Act, 1948, the occupier has certain basic duties and responsibilities including-
maintenance of machineries to ensure that the workers are safe and there is no risk to their health,
making arrangements in the factory to ensure the safety and absence of risks to the health of the workers in connection to the use, handling, storage, and transport of articles and substances, and
providing information, instruction, training and supervision to the workers which is necessary to ensure the health and safety of all workers at work.
Which matters are governed by the Industrial Disputes Act?
The matters which are governed by the Industrial Disputes Act, 1947 include the settlement of disputes between the employer and employees, the regulation and prohibition of strikes and lockouts by the workers, the workers’ rights in cases of lay off or retrenchment by the employers along with the regulation and prohibition of unfair labour practices by the employers.
What is the purpose and applicability of the Shops and Establishments Act?
The main objective of the Shops and Establishments Act is to regulate the payment of wages, terms of service, leaves, work conditions, and certain other benefits to all those employed with shops and commercial establishments. Each state in India has its own legislation with respect to the same and is applicable to all the shops and commercial establishments from where any business, trade, or profession is carried out.
What are the occupations to which the Minimum Wages Act, 1948 is applicable?
The Minimum Wages Act, 1948 is provided in the schedule attached to the Act which includes employment including tea or coffee plantation, construction or maintenance of roads and buildings, mining, loading and unloading of the goods in ports and agriculture, etc.
What are the obligations and duties of the employer under the Maternity Benefit Act, 1961?
As per the Maternity Benefit Act, 1961, an employer has the following duties and obligations:
An employer cannot knowingly employ any woman in an establishment during the six weeks immediately following the date of delivery or miscarriage,
The employer is required to pay maternity benefits at the range of the average daily wages for the period of a woman employee’s actual absence immediately preceding and including the day of her delivery and six weeks immediately following that day and,
An employer cannot discharge or dismiss a woman who absents herself from work for maternity leave in accordance with the provisions of the law.
What is the applicability of the Contract Labour (Regulation and Prohibition) Act, 1970?
The Contract Labour (Regulation and Prohibition) Act, 1970 is applicable to the following:
Every commercial establishment wherein 20 or more workers are or were employed on any day of the preceding 12 months as contract labourers, or
Every contractor who has employed or had employed 20 or more workers in any of the preceding 12 months.
Furthermore, the provisions of this Act are applicable to all the workers who are employed in any establishment to do any skilled, unskilled, supervisor, technical, or clerical work for reward. However, it is crucial to note that it is not applicable to workers who are employed in a supervisory, managerial or administrative capacity or are drawing a wage of Rs. 5000 or more per month.
Is there any provision for equal pay for both men and women?
The Equal Remuneration Act, 1976 provides that every employer has to pay equal remuneration to both men and women employees. The remuneration has to be equal for the same work being done by them and there should be no discrimination in case of recruitment or in terms of service for men and women as per the provisions of this Act.
This article is written by Gauri Gupta. It provides a detailed analysis of the basic concepts of trademarks and trademark laws in India and elaborates on the goods covered by Class 6 trademarks. Trademark Class 6 falls within the scope of the NICE Classification system and includes within its ambit a range of metal items, including building equipment, hardware, containers, and other metal items required for construction. It plays a crucial role in the registration of trademarks as it helps in distinguishing the metal-based products.
Introduction
The concept of a trademark is not a relatively modern concept. In ancient times, when people used to acquire goods from local craftsmen, the creative entrepreneurs made sure they marked the goods beyond their localities and sometimes over considerable distances. 3000 years ago, craftsmen in India used to inscribe their signatures on their masterpieces before exporting them across borders, mostly to Iran. During the Middle Ages, when trade was flourishing, merchants and manufacturers used these signs to distinguish their goods from others.
However, it was during the time of industrialisation that the trademarks gained immense significance. Since then, trademarks have become a significant element of international trade and commerce in the contemporary world and market-driven economies.
Industrialisation and the expansion of market-driven economies provided manufacturers and traders with the opportunity to provide their customers with a wide range of goods and services within the same category. However, these goods differed in quality, price, and other characteristics, which the consumer could not make out very often. This made it clear that there was an increasing need to guide customers and give them the choice to consider their alternatives so that they could make informed choices between the competing goods. This means that the products are required to be identified, and the method for identifying these products was to name them in the marketplace through trademarks.
Trademarks play an important role for businesses as they help in individualising their products. This helps them reach out to the customers and communicate with them. Thus, trademarks play an important role in rationalising the commercialisation of goods by serving the economy.
Trademarks play a significant role for both consumers and manufacturers. They enable consumers to make informed choices about the goods that are available in the market and, furthermore, encourage manufacturers to maintain and improve the quality of goods that are sold under their trademarks, thus ensuring high-quality goods are produced and economic progress is stimulated.
In common parlance, a trademark can be understood as a sign that individualises the goods of one business and distinguishes them from the goods of other businesses, which are the competitors of the given business. This definition provides for different functions of a trademark. The functions of a trademark are interdependent but are to be looked at together for practical purposes.
The origin function mentioned above pertains to the ability of the trademark to differentiate the goods and services of one business from those of others, thus enabling customers to distinguish the products and services that are sold under that trademark from those of other enterprises. This perspective is outlined in Section 1(1)(a) of the WIPO Model Law for Developing Countries on Marks, Trade Names and Acts of Unfair Competition of 1967 (“Model Law”).
Furthermore, it is crucial to highlight that enterprises are responsible for marketing their products and services, and thus, the enterprise can either be a manufacturer or a merchant.
Functions of a trademark
Trademarks have several functions. The primary function of trademarks is to indicate the origin of the goods and distinguish them from other goods. This forms the basis of legal protection and plays a crucial role in ensuring that customers can rely on the high and consistent quality of goods that are being offered under that trademark. The same is sometimes referred to as the quality function or the guarantee function of the trademark.
Further, the owner of the trademark uses it to communicate with consumers in advertising, sometimes referred to as the advertising function of the trademark. Trademarks can also become a valuable piece of property for the owner because of their acquired reputation, thus allowing him to licence or franchise them and, thus, make them available for commercial use. This implies that trademarks serve economic functions that are not safeguarded by the trademark law.
Instead, it relies on how the owner uses the trademark. The same is applicable to the quality function of the trademark. When a consumer assesses the quality of a product, it is crucial for them to understand that they need to take actions based on unfair competition laws or on specific consumer protection legislation, as the trademark law does not provide for remedies in these cases.
Need for legal protection of a trademark
It is crucial to legally safeguard the trademarks to ensure that they can perform their distinguishing functions, thus allowing customers to make informed decisions between various similar kinds of products that are available in the market. In cases where trademarks are not protected, competitors use identical signs to sell the same or similar kinds of goods on the market. This leads to confusion among the competitors regarding the origin of the goods and services.
In most cases, the customer or consumer who has been deceived does not realise that the goods he purchased or the services he availed of are not of the same origin as indicated by the trademark. As a result, trademark owners are held accountable if their product does not meet the expected standards of consumers. Even in cases where the consumer realises that they were misled into purchasing a product because of a confusingly similar trademark, it can be challenging for them to take action against the one who infringed their right. Therefore, the practice is that the owners of the protected trademarks have the right to prevent their competitors from using identical or confusingly similar trademarks for goods and services that are similar or identical to those covered by their own trademark. This provides for the exclusive rights of the trademark owner.
How to safeguard your trademark
Trademarks can be safeguarded either on the basis of their use or on the basis of registration. These two approaches have been developed across the world historically. However, even in contemporary times, trademark protection systems across the world encompass both of these ingredients.
The contracting parties are under an obligation to register their trademark as per the Paris Convention for the Protection of Industrial Property of March 20, 1893 (“the Paris Convention”). More than a hundred states are signatories to the Paris Convention, and nearly all the countries across the globe provide for the registration of the trademark to ensure its full protection.
However, it is crucial to note that “use” plays a significant role in protecting the trademark. What is pertinent to note here is that all the countries that have traditionally based trademark protection on use get their trademarks registered only to confirm that trademark rights have been acquired by them by using the said trademark. This means that in cases of trademark disputes, priority is given to the first user rather than the individual who registered the trademark first. This principle is practised in the United States, the Philippines, Indonesia, and other countries that follow the traditional British Model, including Hong Kong, Singapore, and India.
On the other hand, there are a few countries, such as the Maldives and Bhutan, that have no trademark registration at all. This approach assumes that trademark registration is in place within the participating countries and focuses on issues related to the registration of trademarks and the rights arising from them.
Service marks and other signs
In the contemporary era, customers have an extensive range of goods and services available at both national and international levels. Therefore, it is crucial to differentiate between various types of services, such as those provided by insurance companies, car rental agencies, airlines, and others. These identifiers are known as service marks and serve to indicate the origin of the services and distinguish them in the same way trademarks distinguish goods.
It is important to recognise that modern trademark laws protect service marks in the same way they protect trademarks for goods. Furthermore, there are many other distinctive signs that hold significant economic value. These include collective marks, certification marks, appellations of origin and trade names, among others. These signs have certain common features with trademarks and often an enterprise uses the same sign as both the trademark and trade name or collective mark. However, it is crucial that these signs are distinguished from each other.
Registrable trademarks
It is pertinent to note that there must be two elements in a trademark for it to be eligible for registration. These two elements include (i) a sign and (ii) distinctiveness.
Signs: Any sign that is capable of distinguishing the goods of one business from its competitors is capable of being registered as a trademark. Therefore, trademark laws should not provide a comprehensive list of signs that are capable of registration. Further, if illustrations are provided, they should signify the practicality of what can be registered but should not be exhaustive in nature. Furthermore, in case there are limitations, they should be based only on practical considerations.
The following types and categories of signs can serve to distinguish the goods of one enterprise from another. This is not exhaustive in nature.
Words: This category includes the names of the companies, surnames, given names, geographical names, along with any other word or phrase, whether invented or not, along with slogans. An example of the same is brand names, including Apple and Gabbana.
Letters and numerals: It includes single or multiple letters, single or multiple numerals, and any combination of letters and numerals. The half-eaten apple with a leaf, which is the logo of the brand Apple, is an example of the same.
Devices: The category of devices covers artistic devices, drawings, and symbols, along with both two-dimensional and three-dimensional representations of goods and containers. A popular example of device marks includes the symbol of Android.
Combinations: A combination of any of those mentioned above, including different types of logos and labels, functions as distinctive signs. The most famous example of a combination being trademarked is that of the golden arch of the McDonald’s logo, which has the text of McDonald’s underneath it.
Three-dimensional signs: These encompass the shapes of products or their packaging. A famous example is that of the three-pointed Mercedes star, which serves as a trademark.
Audible signs (sound marks): Sound marks can be categorised into those that can be transcribed into musical notes or other symbols, such as an animal’s cry. The sound of the twentieth-century fox, consisting of the sounds of drums and strings, is an example of a registered sound trademark.
Olfactory marks or smell marks: This includes the scents, such as those of the fragrance of a perfume, that the customers are able to recognise. Customers easily recognise the smell of Play-Doh and can associate it with the brand Play-Doh, which is a popular example of a registered olfactory mark.
Other signs: These include invisible signs such as those recognised by touch.
Countries all across the globe set up certain limitations on the registration of trademarks and the same is done for practical purposes. In common parlance, countries permit the registration of those signs, which can be represented graphically. The rationale behind the same is that the particular sign can be registered physically and can be published in the trademark journal. As a result, it is capable of informing the public that the same has been registered with the appropriate authority and is thus a registered mark.
Most countries provide for the registration of three-dimensional trademarks. However, the applicants are required to submit a two-dimensional representation, a description, or both of the three-dimensional signs. In practice, there is always confusion about what can be protected as a three-dimensional sign.
A famous example of the same is the two-dimensional representation of the bottle of Coca-Cola, which is registered as a trademark in Switzerland. To comply with the trademark laws of the contemporary era, the Coca-Cola Company is required to use these two-dimensional drawings for the packaging of their products. This approach fails to meet the practical needs of trade and industry. The rationale behind the same is that if a three-dimensional mark is registered using a two-dimensional representation, it has to be protected in its three-dimensional form. The use of these three-dimensional forms must be considered the use of the registered trademark. However, modern laws fail to reflect the same.
Similar issues exist with audible signs. An example of the same is the sequence of musical notes, which can be registered as a device mark. This registration does not protect the actual musical phrases expressed, but rather protects the sequence of notes that can be registered as a device mark. This illustrates the limitations of the current trademark laws in addressing the practical realities of how these trademarks are to be used in the industry. They further highlight the need for evolving the current legislation surrounding trademarks to ensure that they better align with contemporary business practices.
Unregistrable signs
As explained above, registrable trademarks must always have two elements. This includes a sign and further enhances the ability of that sign to be distinguishable. If the sign is not distinctive in nature, it will not function as a trademark and will not be registered. However, it is not always important for the applicant to prove the distinctiveness of the sign. It depends on the discretion of the registrar. It is important to note that, in case of doubt, the registrar must always register the trademark. Certain trademark laws, including the British Trade Marks Act, 1938 and countries following the British approach, provide that the onus of showing that the mark ought to be registered is on the applicant.
Herein, it is relevant to note that trademarks that are likely to be deceptive to the public due to their nature, quality, or any other characteristic such as their geographical origin will not qualify for registration since they are deceptive to the public and thus against public interest.
The test for determining whether the sign is deceptive or not is intrinsic deception. It is inherent in the trademark itself. It is important to note that the test of intrinsic deception should be clearly distinguished from other tests, such as the test for the risk of confusing consumers or customers by the use of identical or similar trademarks for identical or similar goods.
It is important to note that the more misleading a trademark is, the easier it is to misuse it. This is because the trademark does not correspond to the actual characteristics of the good it describes. A popular example of the same is the trademark ORWOOLA, which is applicable in the case of clothing. This trademark is fully descriptive and applicable to goods that are made entirely of wool. It provides for non-woollen goods, but it is misleading on the face of it.
The general rule to be followed is that acquired distinctiveness cannot be a reason for allowing a deceptive mark to be registered. Further, it is important to note that trademarks lose their deceptiveness through long and extensive use, which can become an exception to the general rule in certain cases.
Trademark registration in India
As per Section 2(zb) of the Trademarks Act, 1999, “a trademark is a distinctive mark that is capable of distinguishing the products or services of one enterprise from its competitors in the market.” The registration of trademarks plays a crucial role in protecting the rights of an enterprise. This is because the enterprise that has its trademark registered can use the mark in association with its goods and services. Thus, the registered trademark provides him with a shield against infringement and empowers him to take legal action against the unauthorised use of his registered trademark. It is crucial to note that the registration of a trademark is valid for a period of ten years, following which it can be renewed for an indefinite period.
Who is eligible to apply for the registration of trademarks in India
In India, trademark registration is available for a wide range of entities, including the following:
Individuals
Joint owners of a company
Proprietorship firms
Partnership firms (with a maximum of ten partners)
Limited liability partnerships (LLPs)
Indian companies
Foreign companies
Trusts
Societies
The legislation has made a deliberate attempt to include various businesses and entities in this list to ensure that their brands and identities are safeguarded through the registration of trademarks.
Types of trademarks registrable in India
Various types of trademarks or brand name registrations serve different needs and purposes. The aim is to ensure that customers are able to recognise the products and services that are associated with specific manufacturers and service providers. In India, the following categories of trademark registration are available:
Product mark: A product mark is attached to goods and products that help in identifying their origin and maintaining the reputation of the company. Trademark applications under classes 1 to 34 fall within the category of product marks as they provide for tangible items.
Service mark: A service mark functions in similar ways to that of a product. However, it is used to identify the services rather than the physical products or the goods. Trademark applications in classes 35 to 45 fall within service marks.
Collective mark: A collective mark provides for particular attributes of products and services that are linked to a specific group. It allows individuals and organisations to collectively protect and represent the goods and services of these individuals and organisations. The holder of a collective mark can be an association, a public institution, or a corporation.
Certification mark: A certification mark is issued to provide information about the designs of the product, their composition, quality, and other relevant details. These certification marks set standards for products and assure consumers that the product adheres to established quality benchmarks. Certification marks can be found on packaged goods, toys, and electronics.
Shape mark: Shape marks are used to protect the unique shapes of the product, allowing consumers to easily identify it as that of a particular manufacturer. It is important to note that the registration depends on the shape, which is being recognised as distinctive in nature.
Pattern mark: These marks are applied to products that have distinctive, designed patterns and help in distinguishing them. The patterns must be clearly identifiable and unique to quality for registration.
Sound mark: These are unique audio sounds that are associated with the products and services of specific providers. These audio cues are also referred to as audio mnemonics and are typically found at the beginning or end of advertisements. The IPL tune is one of the most popular examples of sound marks.
How to choose the correct trademark class
Trademark classes are crucial for registering the trademark. This is because the goods and services are divided and categorised into 45 different classes. It is important to choose the right class of trademark since it determines the validity of the trademark registration. It is necessary to keep in mind the competitor’s mark and the possibility of expanding the company while choosing the class within which the trademark can be registered. Some of the most commonly used trademark classes in India include:
Class 9 provides for computer software and electronics.
Class 25 provides for clothing.
Class 35 provides for the management of businesses and advertising.
Class 41 pertains to education and entertainment.
Searching a trademark
It is essential to conduct a thorough and comprehensive trademark search to preserve the identity of the brand, its uniqueness and its integrity. The process of searching for a trademark involves submitting the brand name along with the corresponding class for examination. The importance of a trademark search lies in its capacity to identify the already existing trademarks on the market. Additionally, it also helps in evaluating potential conflicts, thus safeguarding the brand and its identity.
Documents and details required for trademark registration
The following documents and details are required for the registration of a trademark:
Name of the applicant: The name of the individual, company, or organisation that is seeking the registration of a trademark.
Types of business: Applicants must identify the nature of their business entities such as whether they are sole proprietors, partnerships, private limited company, etc.
Business objectives: Applicants are required to provide an overview of their business activities.
Brand/ Logo/ Slogan name: The name, logo, and slogan that the applicant has the intention to trademark.
Registration address: The applicants are required to provide the official address of the entity for which they are applying for the registration of the trademark.
The applicants are also required to submit certain documents, including a PAN card if an individual, an Aadhar card, a GST certificate in the case of a proprietorship, an incorporation certificate of the company, a PAN card of the company, an MSME certificate, a logo, partnership deeds of the partnership firm, a partnership PAN card, a limited liability deed in the case of a limited liability partnership, a trust deed, and a trust PAN card.
Trademark classes
Trademarks are categorised into various classes on the basis of the goods and services they represent. A trademark classification has been established by the WIPO and is popularly known as the NICE Classification. There are 45 different classes as per this classification, with each category representing a specific category of goods and services.
The class list of trademarks provides for a comprehensive framework wherein goods and services are divided into different categories. This class list plays a significant role for businesses that aim to safeguard their intellectual property rights and, furthermore, helps in identifying the category that is best suited for a particular good or service.
Trademark Class 6
Trademark Class 6 is one of the NICE Classification that plays an important role in the manufacturing and construction industry, ranging from large architectural structures to everyday tools. It provides for a wide range of products, including common metals and their alloys and ores, metal materials for building and construction, transportable buildings of metal, non-electric cables and wires of common metal, small items of metal hardware, metal containers for storage or transport, and safes. It includes mainly unwrought and partly wrought common metals, including ores, as well as certain goods made of common metals.
Common metals and their alloys
This includes iron, steel, aluminium, and other metals and their alloys. It includes metal items such as nails, screws, wire, and pipes that are essential in construction and manufacturing.
Example: Tata Steel is one of the largest producers of steel in the world and is engaged in the business of steel bars, sheets, and other metal building materials, steel nails, and solid fasteners for carpentry and construction projects.
Metal building materials
This class includes metal products that are used in construction, including roofing materials, gutters, fencing, metal beams, sheets, and structural elements.
An example of the same is the Steel Authority of India Limited (SAIL), which is one of the largest state-owned steel-making companies in India and is engaged in the manufacturing of metal sheets, bars, rods, and other steel products for industrial use.
Transportable buildings of metal
This includes prefabricated metal buildings and metal sheds that allow for quick and efficient construction of warehouses, hangers, and other temporary structures.
An example of the same is Thyssenkrupp, which is a German multinational conglomerate in industrial engineering and steel production, metal building materials, and metal structures.
Non-electric caves and wires of metal
This category includes non-electric metal cables and wires that are used in lifting, securing, and transporting heavy loads, which are crucial for the logistics and transportation industries, such as metal ropes and cables.
An example of the same is KEI Industries Limited, which is an established player in the stainless steel wire segment and is among the largest stainless steel wire manufacturing companies in India.
Small items of metal hardware
This category includes various metal tools and hardware, including hinges, locks, and hand tools, screws, nails, bolts, and hinges.
Transport and storage containers
This includes products that range from metal barrels, metal tanks, cans, and boxes to shipping containers that facilitate transportation and storage. An example of the same is JSW Steel, which is one of the leading integrated steel manufacturers in India engaged in the business of steel drum containers used for storing and transporting liquids and bulk materials.
Safes
This category includes metal safes and strongboxes, which protect valuables, documents, and other important items, ensuring their safety against damage and theft. Godrej and Boyce is an example of one of the most trusted brands in India that is engaged in the manufacturing of high-quality locks.
Inclusions and exclusions under Trademark Class 6
Trademark Class 6 includes the following:
Metals that are in foil or powder form intended for further processing, such as in the case of 3D printing,
Metal construction materials, including components for railway tracks, metal pipes and tubes,
Small metal hardware items, including bolts, screws, nails, furniture casters, and window fasteners,
Portable metal buildings or structures, like prefabricated houses, swimming pools, animal cages, and skating rinks,
Metal dispensing apparatus, which can either be manual or automatic, such as towel dispensers, queue ticket dispensers, dispensers for dog waste, and toilet paper dispensers.
Various products that are made from common metals that are not categorised by their specific function or use, including general-purpose metal boxes, metal statues, busts, and metal artwork.
However, Class 6 excludes the following specifically:
Metals and ores utilised in industry or scientific research for their chemical properties, such as bauxite, mercury, antimony, and alkaline or alkaline-earth metals, fall under Class 1.
Metals in foil and powder forms intended for use in painting, decorating, printing, and art are categorised under Class 2.
Certain dispensing devices are classified based on their specific function or purpose, including fluid dispensing machines for industrial applications (Class 7), electronic ticket dispensing terminals (Class 9), medical dosage dispensers (Class 10), and adhesive tape dispensers (Class 16).
Electric cables are classified under Class 9, while non-electric cables and ropes, not made of metal, are under Class 22.
Pipes that are components of sanitary installations fall under Class 11, while flexible pipes, tubes, and hoses, not made of metal, are under Class 17, and rigid pipes, not made of metal, are classified under Class 19.
Cages designed for household pets are categorised under Class 21.
Certain items made from common metals are categorized according to their function or purpose, such as hand-operated tools (Class 8), paper clips (Class 16), furniture (Class 20), kitchen utensils (Class 21), and household containers (Class 21).
Who can file an application under Trademark Class 6
Section 16 of the Trademarks Act, 1999, provides for the application of the trademark. It stipulates that the following can apply for an application for the registration of a trademark:
any person who is claiming to be the proprietor of the trademark that is either used or proposed to be used by him, or
who has the desire to register it.
Trademark filing process in India for Class 6 Trademarks
Once the search for a trademark is complete, the next step is to file the application for registering the trademark with the Registrar.
The process of Vienna Codification
The Vienna Codification is also referred to as the Vienna Classification and is an international system that categorises the figurative components of trademarks. Once an application for the registration of the trademark is submitted to the registrar of trademarks, the Vienna Codification is applied to the figurative components of the trademark.
Trademark search
A detailed trademark search is required to be conducted to ensure that the proposed trademark is unique and does not conflict with the existing trademarks under Trademark Class 6. This search can be conducted online through the official website of the trademark registry.
Prepare and draft the trademark application
For preparing and drafting the trademark application form (TM-A), the following information and documents are required to be collated:
A clear representation of the trademark
Details of the applicant, including the name, address, and nationality
Description of the goods and services that are associated with the trademark
Date of first use (if it is applicable)
Power of Attorney (if it is filed through an attorney)
Digital signature of the applicant
The application can be filed online through the official website or a physical application can be submitted at the nearest Trademarks Registry office.
Submission of the trademark application
The trademark application can be submitted online or offline by paying the requisite fees. The fee varies depending on whether you are an individual, a startup, a small enterprise, or a large corporation.
Trademark examination
After the completion of the Vienna Codification, the trademark registration application is assigned to the registrar’s office, which is then required to access the application for accuracy. After accuracy is established, the registrar generates a trademark examination report. It is on the basis of this report that the application is accepted or rejected. Once accepted, it is allowed for trademark journal publication, wherein further objections can be raised before the completion of the registration process.
In cases where there are objections to the registration of a trademark, the applicants can address these concerns before the trademark officer. If the trademark officer is of the opinion that the justification of the applicant is satisfactory in nature, the trademark will be approved for publication in the trademark journal.
Publication of the trademark in the trademark journal
After the trademark registration application is approved by the registrar, the trademark is published in the trademark journal. This journal is released weekly and consists of information on all trademarks that have been submitted for registration and have been approved by the registrar. Once the trademark is published in the journal, the public has the opportunity to file objections in case they believe that the registration of that particular trademark may negatively impact their interests. Furthermore, it is important to note that if no objections are raised within a period of 9- days from the date of publication, the trademark is eligible for registration and will be registered for a period of twelve weeks.
Trademark hearing
In case a third party objects to the registration of the trademark, a meeting is to be scheduled by the trademark hearing officer. The applicant and the opposing party are given a chance to present their arguments in this meeting, and it is on the basis of this hearing and the evidence presented that the trademark hearing officer decides whether the application is accepted or rejected.
Trademark registration
A trademark registration certificate is to be prepared and issued in case there are objections or oppositions to the registration of a trademark. Once the trademark registration certificate is issued, the trademark is considered to be officially registered. At this juncture, it grants the owner exclusive rights to the mark. For example, if no objections or oppositions are posed to the registration of a logo as a trademark, a trademark registration certificate is issued, following which the logo will be a trademark.
Trademark objection
One of the initial stages in the registration process pertains to the objections to the registration of the trademark. The register, instead of simply denying the registration process, seeks valid reasons and explanations regarding the registration of the trademark.
What is opposition to trademark
It is when the third party files an objection against the registration of a trademark that the opposition to the trademark occurs. This opposition is accepted by the registry from any natural or legal person, which can include individuals, businesses, partnership firms, and trusts.
Registration certificate
If there are no valid objections or if the objections are resolved, the registrar will issue a certificate of registration for a Trademark under Class 6. This registration certificate confirms the exclusive right to the mark being within Trademark Class 6.
Trademark renewal
Once the trademark is registered successfully, it remains valid for a period of ten years from the date on which it is filed. To ensure that the trademark is continuously protected, it is to be renewed after a period of ten years, following which it will be protected for an indefinite period.
Detailed list of goods classified under Trademark Class 6
Conclusion
Trademark Class 6 forms a strong foundation upon which industries are built. Businesses that are aiming to register trademarks under Class 6 are usually involved in a wide range of metal products, ranging from raw materials to finished goods. In other words, for businesses that are operating in metal goods, trademarks under Class 6 are crucial since they establish the recognition of the brand and trust.
Trademark Class 6 forms a strong foundation upon which industries are built. All the businesses that aim to be registered under this class are involved in a wide range of metal products, which range from raw materials to finished goods. In simpler words, all businesses working with metal goods are required to register themselves under Class 6 to ensure that the brand is protected and their customers trust them.
The scope of Class 6 encompasses a wide array of metal products, including raw materials such as ores and allows, semi-finished products such as metal sheets and rods, and finished goods such as non-electric cables, hardware items, and containers. The inclusive characteristics of this list explain the significance of this class for various industries, including construction and infrastructure industries, automotive and aerospace industries, and hardware and packaging industries, among others.
It is pertinent to note that the advantages of protecting trademarks under Class 6 go beyond the recognition of the brand and the trust of customers. It plays a significant role in facilitating the expansion of markets and safeguarding brands from infringement and misuse by competitors.
The registration of a trademark, thus, not only secures the identity of the brand but also paves the way for the sustainable growth of the business in the industry. Companies and brands can use their trademarks to enhance their visibility, protect their intellectual property, and build long-term trust for their customers, thus ensuring profitability and leadership in the economy.
Frequently Asked Questions (FAQs)
What is the definition of a trademark?
A trademark is a distinguishing mark that helps distinguish the goods and services of one enterprise from those of its competitors. It can be a word, phrase, symbol, design or a combination of any of these. It is crucial to note that it should be able to distinguish the goods or services and associate them with a particular brand.
Why is it important to get the trademark registered?
The registration of trademarks plays a crucial role for all brands and businesses. The rationale behind the registration of a trademark is to protect the right of the trademark owner or proprietor to use the mark and ensure that the same is not misused or infringed by the competitor. Furthermore, registration of a trademark provides the proprietor with recourse to legal remedy in case of infringement or misuse of the trademark. It is crucial to get the trademark registered since it protects the right of the owner to use the mark and further provides legal recourse against infringement. The registration is valid for a period of ten years and can be renewed after that.
Who can apply for the registration of a trademark in India?
As per the Trademarks Act, 1999, the following are eligible to apply for the registration of trademarks in India: a) individuals, b) companies, c) proprietorship firms, d) partnerships, e) limited liability partnerships, f) Indian and foreign companies, g) trusts, and h) societies.
Why is the search for a trademark necessary?
It is crucial to conduct a trademark search before filing an application for the registration of a trademark with the trademark registrar. A trademark search plays a crucial role in ensuring the uniqueness and exclusivity of the brand since it helps in identifying the pre-existing trademarks in the market.
What is NICE Classification?
The system of NICE Classification is an international system of classification wherein goods and services are classified for the purposes of registration. It provides for a list of trademark classes, which are attached with explanatory notes highlighting the list of goods and services in alphabetical order. The class headings provide for the nature of the goods and services.
What are the details and documents that are required for the registration of the trademark in India?
For a trademark to be registered in India, the applicant is required to furnish the following details and documents: a) the name of the applicant; b) the type of business; c) the objectives of the business; d) the brand, logo or slogan name; and e) the address of registration.
The documents required for the registration of the application vary according to the type of applicant filing for registration. The documents that are always required, irrespective of the type of application filed for registration, include: a) PAN card; b) Aadhar card; c) GST certificate; d) incorporation certificate; and e) partnership deed.
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This article is written by Shruti Kulshreshtha and is updated by Dilpreet Kaur Kharbanda. This article is an effort to delve into the procedure that has to be followed while filing for the removal of a registered Trade Mark under Section 47 of the Trade Marks Act, 1999 and the different aspects to be considered while doing so. Furthermore, a series of important judgements are also discussed to understand the evolution that the subject has undergone over the years.
Table of Contents
Introduction
The Trade Marks Act, 1999 serves two primary purposes, firstly to safeguard the exclusive rights of registered trademark owners and secondly to prevent the creation of monopolies by these holders. A trademark, regardless of its registered status, holds significance only when it is actively used in connection with specific goods or services. If a trademark falls out of use and the associated goods are no longer available for sale, the trademark effectively loses its relevance and purpose. This cessation of use can lead to a trademark losing its distinctiveness, particularly when the misuse is due to the registered owner’s inaction rather than due to external factors beyond their control.
Upon interpretation of the Act, it can be observed that certain user requirements must be complied with, in order to bring forth a mechanism for non-use of the registered trademark. The trademark user requirement is a period of time in which the registered trademark is imperative to be used, failing which it is subject to cancellation. The courts have made it aptly clear that these requirements are a must and should be strictly adhered to the removal of the trade mark on the basis of non-use by the person or the company is enunciated under Section 47 of the Act. The requirements of Section 47, the specific jargon used in the provision and the interpretations given by the courts have been dealt with in detail in the article.
Section 47 of Trade Marks Act : removal from register and imposition of limitations on ground of non-use
A trademark is valid for a period of 10 years after which it needs to be renewed for using it again. If a trade mark holder fails to use the trade mark or fails to renew it, the trade mark is liable to be cancelled or removed from the trade mark registry. Chapter VI of the Trade Marks Act, 1999 deals with the use of trade mark and registered users and Section 47 permits the removal of the trade mark upon non-use.
Under Section 47, an application may be filed by any person aggrieved with the registration of a trade mark in a company or proprietor’s name and wants to get that trade mark removed from the register. This application can be made before the Registrar of trade marks or the High Court (after the Tribunals Reform Act, 2021). Earlier, the powers were given to the Intellectual Property Appellate Board for the removal of the trade mark from the register.
Let’s breakdown the provision in simpler terms to understand it in depth:
Grounds for removal of a trade mark
Section 47(1) outlines two scenarios under which a registered trademark may be subject to removal. The circumstances in which a registered trademark can be considered for cancellation are as follows:
Absence of bonafide intention
Under Section 47(1)(a), when it is put forth by the applicant that the trade mark was registered in the absence of a bonafide intention, then a trade mark can be removed. This bonafide intention is in the context of the use of the trade mark. This means that if the person who registered the trademark didn’t plan to actually use it for the goods or services listed, and in fact, hasn’t used it up until three months before someone applies for its removal, the trade mark can be taken off/ removed from the register.
For example, when a trade mark is registered in 40 classes but is used only with regard to 2 classes, this is a defensive registration. This rule applies to companies and registered users where no bonafide use is observed in relation to the goods and services for a period of 3 months before the date of application.
Non-use of the trade mark
Section 47(1)(b) provides another ground for removal, wherein, if it is put forth by the applicant that there has been no bonafide use of the trade mark for a continuous period of 5 years from the date of registration of the mark and 3 months prior to filing the application for registration.
This means that when the trade mark has not been used with a bonafide intention for a continuous period of 5 years and 3 months, it is liable to be removed.
Exception to Section 47(1) of the Act
There are certain exceptions to the general rule of non-use laid down by Section 47(1). A registered trademark may not be removed if the circumstances meet the conditions outlined in the proviso to Section 47(1) read with Section 46 of the Act, which include:
A company is in the process of being incorporated under the Companies Act, 1956, and the current owner of the trademark plans to transfer the trademark to this new company soon.
The trademark owner plans for the trademark to be used by a registered user after the trademark’s registration.
The applicant has been allowed to register an identical/ similar trade mark under Section 12 of the Act.
If the trade mark is used bonafide for similar or associated goods or services, the High Court or the registrar might decide not to remove it.
Further, Section 47(3), provides another exception to removal of the trade mark due to non-use. It provides that if there are special circumstances, like legal restrictions or regulations preventing the use of the trade mark, and most importantly, these circumstances are not created with an intention to stop using the trade mark, then in that case, the non-use would not count against the trade mark owner. The essential point is, if there is a valid reason why the trade mark could not be used, the owner would not lose the trade mark because of non-use.
Imposing limitations on the use of a trade mark
Under Section 47(2), if a trade mark hasn’t been used in specific areas or for particular markets, whether inside or outside India, and another person is allowed to register a similar trade mark under Section 12 of the Act, then the tribunal may impose restrictions on the original trademark on the basis of an application moved to the High Court or the registrar. These restrictions ensure that the original trade mark’s registration does not cover those areas or markets anymore.
Let’s understand with an illustration, if a company ‘ABC’ has not used its trade mark in the Southern region of India or for exports to a specific country, and another company ‘XYZ’ wants to use a similar trade mark in the southern India, then the original trademark of ‘ABC’ company might be restricted so it doesn’t cover those regions where ‘XYZ’ company wants to run business under similar trade mark.
In simple words, this provision ensures that trade marks are actively used and are not just registered without any real intention to be used. If a trade mark has not been used by a company or a proprietor in a long time, it can be removed from the register. However, an exception can be made if there is a genuine issue or a reason because of which the trade mark could not be used.
Interpretation of key terms
Aggrieved person
The Act does not anywhere define the term ‘aggrieved person’, but the courts have interpreted it to mean a person whose substantial interest lies in the removal of the trade mark from the register or those persons who would suffer damage if such trade mark remains in the register.
The Hon’ble Supreme Court in the case of National Bell Co. Ltd. vs. Metal Goods Mfg. Co. Ltd. (1970), observed that the expression ‘aggrieved person’ has been given a broad interpretation by the courts in previous years. The term ‘aggrieved person’ also includes those individuals who have used the trade mark before its registration. Further, it also covers those who are facing or have been warned about infringement actions by the registered trade mark owner. The court held that such a liberal interpretation of the term ensures that both the prior users and those who might be threatened with legal action are equally protected.
Further, the Hon’ble Delhi High Court in the case of A.K. Al Muhaidib and Sons vs. Chaman Lal Sachdeva (2024), while interpreting the term ‘aggrieved person’ referred to the judgement of Hon’ble Supreme Court in the case of Infosys Technologies Ltd. vs. Jupiter Infosys Ltd (2010), where the court while defining the ‘person aggrieved’ under Section 46 and Section 57 of the Trade Mark Act, 1999, observed that the person must be one whose interest is affected in some possible way and not just a fanciful suggestion of grievance. The test of locus standi may be met when there is a likelihood of some injury or damage to the applicant if such trade mark remains on the register.
Furthermore, the court admitted the definition given in Kerly’s Law of TradeMarks and Trade Names (11th Edn.), “the persons who are aggrieved are all persons who are in some way or the other substantially interested in having the mark removed, where it is a question of removal from the register; including all persons who would be substantially damaged if the mark remained, and all trade rivals over whom an advantage was gained by a trader who was getting the benefit of a registered trade mark to which he was not entitled”.
The application cannot be filed anonymously, since the onus of proving the damage from the non-removal of a trademark lies on the affected party. Moreover, the application mandates the name of the party aggrieved to be mentioned in the form (discussed further in the article) for making it a valid application for the purpose of Section 47. This is done to ensure that a random third party who is not even affected by the trademark does not file such an application for ulterior motives. Hence, this ensures the sanctity of the procedure.
In the case of Wright, Crossley and Company’s Trade mark Re, 1898(15) RPC 131, the court observed that a person is said to be aggrieved when in some way he is damaged or injured if the trade mark is allowed to stand and it should be seen in a practical sense, and not merely in a fantastic view.
Further, the Hon’ble Supreme Court in the case Kabushiki Toshiba vs. Tosiba Appliances Co. (2008), held that the person filing the application has to show to the court that he suffered or would suffer some damage or injury due to the trademark that is registered and it should be removed.
Non-use of the trade mark
With regard to Section 47 of the Act, non-use of a registered trade mark occurs when it is not used for more than 5 years and 3 months.
To understand the real connotation of the term non-use, it is important to first of all understand what actually the use of a trade mark means. ‘Use’ of a trade mark means that when there is a bonafide intention for the use of the mark in the ordinary course of trade and not only to reserve the right to use the mark. In the case of M/S J. N. Nicholas (Vimto) Ltd. vs. Rose and Thistle & Anr. (1993), it was held that use of a trade mark does not necessarily mean a physical sale. Even if the mark has been used for the purpose of advertisement in the said period of 5 years and 3 months, without even having the existence of the goods, fulfils the requirement of being used under the Act.
Generally, the responsibility to demonstrate that a trademark has not been used falls on the individual or entity that initiates the application for rectification of register under Section 47 of the Act, however, this burden of proof can be transferred to the trademark owner as well. In such a case, the owner has to bring forth some evidence to show that the trademark has been actively used. If the owner fails to prove this, the trademark may be removed from the register.
The proof of use and non-use of a mark must be clear and convincing to the Court. ‘Bonafide use’ means the use that is honest and genuine and ‘not pretended’. The substantiality of use judged by ordinary commercial standards, depending upon the nature and circumstances of the case may be relevant to determine whether it was in fact bonafide.
In the case of Hermes Societe Anonyme vs. B H Ries Limited, 1982 RPC 425, the Court observed that the assistant registrar was right in stating that the words ‘in the course of trade’ must be given a wider interpretation to include the steps that are essential for the production and the actual positioning in the market.
In the case of Express Bottlers Services Pvt. Ltd. vs. Pepsico Inc. & Ors. (1988), the bench rejected the contention of the petitioner and held that the Trade Marks Act nowhere mentions that the word ‘use’ means actual sales of goods in the market to the public. The respondent had made sales of goods to the limited and restricted market available to him during the statutory period, even though it was sold to privileged persons only. This was held as a valid use of the trade mark.
Cases like these imply that the Courts have given a broad interpretation to the word ‘use’ with respect to trade marks.
The Hon’ble Delhi High Court in the case of Rong Thai International Group Co. Ltd. vs. Ena Footwear (P) Ltd., (2023), put forth that Section 47(1)(b) of the Act provides that a trade mark can be removed from the register if it had not been used bonafide for a continuous period of five years or more. The period of non-use for a trade mark for it to be cancelled has to be calculated from the date which it was entered in the register. Furthermore, the end point for the calculation has been defined by the court to be 3 months before the date of the application for removal.
The court further stated that under Section 47(1)(b) of the Act, a trade mark is afforded a ‘grace period’ during the initial five years following its registration, which protects it from being cancelled on the ground of non-use. After this grace period, the trade mark becomes susceptible to removal due to non-use. The court also clarified that for a removal challenge to be successful, it must demonstrate continuous non-use of the trade mark for at least 5 years from the date of its registration up to 3 months before the application for cancellation. Any genuine use of the trade mark during this period would break the continuity of non-use and would render the cancellation application invalid.
The Hon’ble Supreme Court in the case of Cycle Corporation of India Ltd. vs. T.I. Raleigh Industries Pvt. Ltd.,(1996) held that the initial burden is on the applicant who is seeking rectification of the register, to show that the registered owner has no intention to use the trade mark during the relevant period and in fact, has failed to do so. After this, the onus shifts to the registered proprietor who has to prove the use of the trade mark during the relevant period.
Further, in the case of Shell Transource Limited vs. Shell International Petroleum Company Ltd. (2012), the Intellectual Property Appellate Board observed that the burden of demonstrating ‘non-use rests with the party asserting it. However, if the applicant claims non-use, the opposing party must explicitly contest this claim. If they fail to do so, the court may assume that the allegations are true. Essentially, while the responsibility to prove non-use lies with the claimant, the respondent must actively refute these allegations, or risk them being accepted by the court as uncontested.
High Court
We are all aware what a High Court is. However, the question with respect to the Trade Marks Act, 1999 is, which High Court would have the jurisdiction to deal with the removal or rectification of a trade mark.
The Trade Marks Act, 1999 has nowhere given a precise definition of the High Court. However, the General Clauses Act, 1897 under Section 3(25), defines the High Court as the highest civil court of appeal, excluding the Supreme Court. The definition extends to the parts of India to which the General Clauses Act, 1897 apply.
The issue with regard to the jurisdiction of the High Court came before the Hon’ble Delhi High Court in the case of Dr. Reddy Laboratories Ltd. vs. Fast Cure Pharmacy and Anr. (2023). In this case, the Court dealt at length with which High Court would have the jurisdiction to decide the matter with regard to Section 47 and Section 57 of the Trade Marks Act, 1999. The Court referred to the judgement of Giridhari Lal Gupta vs. K.Gian Chand & Co. (1978), where the court while deciding on the issue of jurisdiction under the Designs Act, 1911 for cancellation of a registered design, held that the jurisdiction is not limited only to that High Court under whose jurisdiction the Controller of designs office fall. The High Courts within whose jurisdiction the dynamic effect of the registration can be felt, they equally have the jurisdiction to try the matter.
Further, the court held since there is no specific definition provided under the Trade Marks Act, 1999 and even at the time of passing of the Tribunal Reforms Act, 2021 and revival of the power of the High Court under Section 47 and 57 of the Act, it clearly implies the intent of the legislature that it did not want to exclude any High Court from exercising its jurisdiction under the Trade Marks Act, 1999.
Therefore, the geographical location of the High Court and the Registrar need not be the same and the High Court to have jurisdiction need not have territorial dominion over the Registrar with respect to Section 47 and 57 of the Trade Marks Act, 1999.
The procedure as per Trade Marks Rules, 2017
The Trade Marks Act, 1999 does not give the procedure to be followed while filing an application for the removal of a trade mark under Section 47. For this, the Trade Marks Rules, 2017 are to be taken into consideration.
Rule 97 of the Trade Marks Rules, 2017
Rule 97 of the said Rules deals with the application to be filed for the rectification or removal of a registered trade mark. This rule sets out the following procedure:
An application in Form TM-O is to be filed with the Registrar for the varying of any entry relating to a trade mark or collective trade mark.
The application is to be accompanied by a statement that provides the nature of the applicant’s interest, the complete facts and the relief sought by him.
If the applicant is not a registered proprietor of the impugned trade mark, then the application along with the statement is required to be left at trade marks Registry.
If the applicant(s) is/are a registered user(s) then the application and statements are required to be accompanied by as many copies as the number of registered users.
The copy of the application and statement is delivered to the registered users and the registered proprietor by the Registrar within one month. This is done after the due verification of the application under Rule 43 (i)(c) of the Rules.
Rule 98 of the Trade Marks Rules, 2017
Rule 98 gives the further procedure to be followed after the filing of the application in the prescribed format. The Registered proprietor shall file a counterstatement within 2 months of the receipt of the application from the Registrar. This counterstatement shall consist of the grounds on which the application is contested. If no such counter-statement is made within 3 months of the date of receipt of an application under Rule 97, then the applicant can file evidence supporting the application for the rectification of the Register.
Rule 99 of the Trade Marks Rules, 2017
Pursuant to Rule 99, any third party can intervene in the proceedings alleging an interest in the registered trade mark and can apply in Form TM-O for the leave to intervene. The Registrar may grant the leave or refuse it after hearing the parties concerned. The order passed by the Registrar is appealable within 90 days to the IPAB, but the order of IPAB is not further appealable. For challenging the order of IPAB, a writ petition shall be filed in the High Court.
The Second Schedule of the Rules contains Form TM-O which deals with the application for rectification of the Register and the application for filing of the counter statement. In the Trade Marks Rules of 2002, these applications had separate forms, but after the amendment, both of the forms required for the purpose of Section 47 are dealt in the same form to avoid confusion. The First Schedule of the Rules gives the prescribed fees to be paid upon the filing of the applications. Entry No.2 of this schedule provides the fees of Form TM-O which is ₹3,000 for physical filing and ₹2,700 for e-filing of the application. This fee is for a single application of counter-statement, as the case may be.
Landmark judgments
Vishnudas Trading as Vishnadas Kishendas vs. Vazir Sultan Tobacco Co. Limited (1996)
Facts of the case
In this case, the applicant filed for limiting the use of the trade mark ‘Charminar’ which was used for the manufacturing of cigarettes. This trademark was also registered in other classes of zarda and quiwam, which were intended to be used by the proprietor but were never actually used.
Issues Involved
Whether the trademark issued to the defendant ‘Charminar’ be removed under Section 47 of the Trade Marks Act, 1999 on the ground of non-use with respect to some of the goods which were not being manufactured under the said trade mark?
Judgement of the case
The Supreme Court was applying the provision of non-use under Section 47 of the Act. It held that if a person is trading or manufacturing only one or a few goods and has no bonafide intention to actually trade in the rest, but has a trademark registered for several goods, this registration may be subject to rectification or removal. The registration should only cover the classes of goods that are actually used by the proprietor.
Hardie Trading Ltd. and Anr. vs. Addison’s Paint and Chemicals Ltd. (2003)
Facts of the case
In this case, the trade mark in question ‘Spartan’ was invented by James Hardie and Co. and the company dealt with paints and lacquers under the said name. In December 1976, Addison Paints and Chemicals Ltd. put up an application to register a trade mark for ‘Spartan’, but the same was rejected. Then, Addisons Paints and Chemicals Ltd. moved an application under Section 47 of the Trade Marks Act, 1999 to remove the trade mark from the register on the ground that it was not used by the company for the last 5 years.
Issues Involved
Whether the trademark issued to the plaintiff be removed from the register under Section 47 of the Trade Marks Act, 1999 for non-use and are there any exceptions to this provision?
Judgement of the case
The Supreme Court gave a detailed judgement on Section 47 of the Trade Marks Act, 1999. The court put forth a triple test, the three essentials of filing an application of removal under Section 47 of the Act,
That the application is filed by the ‘person aggrieved’,
That the trade mark has not been used by the proprietor for a continuous period of at least five years and three months prior to the date of the application and
There were no special circumstances which affected the use of the trade mark during this period by the proprietor.
The Hon’ble Court further explained that the responsibility to prove the first and second condition clearly rests with the applicant. Conversely, the onus of demonstrating the existence of special circumstances falls on the trade mark proprietor. These conditions must be established sequentially rather than collectively. The third condition can only be addressed once the second condition has been proven. Similarly, the second condition will not be considered unless the High Court or the Registrar is convinced of the applicant’s legal standing (locus standi).
The court took into consideration the argument put forth by the Hardie Trading Co. that due to import restrictions, it was economically unfeasible for them to import the products into India. The court considered this as a special circumstance and refused to remove their trade mark from the register.
Pfizer Products Inc. vs. Rajesh Chopra (2007)
Facts of the case
In this case, the challenge was on the proprietary rights of a drug named Geodon that was registered by the plaintiff on 18th July 1996 in India. The defendant’s argument was that they had been using the trademark ‘Geodon’ since 1st June 2003. Furthermore, they contended that the plaintiff has failed to show the use of the trademark for the past years, making it liable to be removed from the register as per the provisions of Section 47 of the Trade Marks Act, 1999.
Issues Involved
Whether the trademark issued to the plaintiff be removed from the register under Section 47 of the Trade Marks Act, 1999?
Judgement of the case
The plaintiff in this case had a global market and succeeded in proving the use of the trade mark globally in 40 countries, if not in India. Hence, the Delhi High Court refused to remove the trade mark from the registry. Therefore, the defendant’s application was dismissed.
M/s Kellogg Co. vs. M/s Pop Foods Products Pvt. Ltd. (2018)
Facts of the case
In this case, the appellants manufactured chewing gums, bubble gums and dairy products under the trademark name POPS. M/s Kellogg Co. served the appellants with a notice claiming that they are the proprietors of the trade mark POPS in relation to cereal derived breakfast food. Furthermore, the respondent applied for registration of their mark back in the year 1989 but did not ever use it and over and above that, there was no evidence of sale of their products in India between 1989 and 2011.
The appellants’ argument was that there is very little probability that it would create any confusion in the minds of the people with regard to the products of Kellogg Co., as they offer breakfast products, which are completely different from theirs. The matter was heard byIntellectual Property Appellate Board and the decision was passed in the favour of the M/s Pop Foods Products Pvt. Ltd. and ordered the removal of the trade mark issued to Kellogg Co. on the ground of non-use under Section 47 of the Trade Marks Act, 1999. The respondents filed a writ petition before the Hon’ble Delhi High Court against the order of the board.
Issues Involved
Whether the trademark issued to Kellogg Co. be removed on the ground of non-use under Section 47 of the Trade Marks Act, 1999?
Whether M/s Pop Foods Products Pvt. Ltd. falls under the definition of ‘person aggrieved’ under the Act?
Judgement of the case
The Hon’ble Delhi Court ordered the removal of the trade mark of Kellogg Company under Section 47 of the Act for non-use of the trademark for a period of 22 years. Further, the court held that when the respondent admits that the mark has not been used, then the question of proof of non-user is unnecessary. Furthermore, the respondent was a registered proprietor of the trademark “POPS”, which the respondent used with respect to chewing gums and bubble gums. The respondent had applied for the registration of the impugned trademark in respect of confectioneries similar to that of the petitioner and that is what made the parties come to court. Thus, court held that respondent is an aggrieved person upheld the order passed by the Intellectual Property Appellate Board to remove the trade mark issued to Kellogg Co. on the ground of non-use under Section 47 of the Trade Marks Act, 1999.
Conclusion
The main objective of this provision is to safeguard the bonafideusers of trade mark from those who are using it with a malafide intention. Section 47 of the Trade Marks Act, 1999 lays down that mere registration and no use of a trade mark can land a registered proprietor in trouble. This situation can obviously be avoided by timely renewal of the trade mark and ensuring bonafide use of the registered trademark. This mechanism serves as an effective defence system against the malicious use of an important asset of a business.
The interpretation of the law and the provisions is a continuous process and meaning of the terms like aggrieved person, use and non-use of trade mark has seen a lot of changes over the last decade and has only changed for the greater good and the interest of the public at large.
Frequently Asked Questions (FAQs)
What is a trademark?
In simple words, a trade mark consists of features or combinations of features that can differentiate the products and/or services of one business from those of other businesses. Trademarks are considered a form of intellectual property and are safeguarded by both national and international legislation. Section 2(1)(zb) of the Act, defines a trade mark as a mark:
which is capable of being represented graphically,
which is capable of distinguishing the goods or services of one person from those of others and
which may include the shape of goods, their packaging and combinations of colours.
Some of the best examples of trademarks are the logo of an eaten apple that belongs to Apple Inc., the swoosh sign of Nike, the distinct purple colour used by Cadbury for its chocolate packaging, and the slogan ‘I’m lovin it’ of McDonald’s.
Is the Registration of a trade mark mandatory in India?
No, it is not mandatory to get the trade marks registered in India. But, it is advisable to do so as, without registration, no suit can be instituted in the case of infringement of the trade mark. The main reasoning behind the same is that the registration acts as evidence of the proprietorship of the trade mark.
What are the grounds for the removal or cancellation of a trade mark under the Trade Marks Act, 1999?
One of the grounds for the removal of the trade mark is the non-use of that trade mark provided under Section 47 of the Act which is dealt with in detail above in the article. A trade mark may be subject to cancellation if it is used in a way that deceives or confuses the public. Additionally, if the owner misrepresents or fails to disclose significant facts during the application process, and if those facts were correctly presented, would have led to a different decision regarding the registration.
Further, changes in circumstances after the registration that undermine the validity of the trade mark can also be grounds for cancellation. Lastly, if there is a condition that Register of trade marks specifically provides to be fulfilled, then that needs to be met and in the case of it’s violation, the cancellation of the registration of the trade mark can be applied for.
Does the Limitation Act, 1963 apply to Section 47 of the Trade Marks Act, 1999?
Section 46 of the Trade & Merchandise Marks Act, 1958 already specifies a particular period of non-use required to maintain such an application, introducing an additional limitation period would contradict the legislature’s intent. It was observed that Article 137 of the Limitation Act, 1963 does not apply to applications filed under Section 46 of the Trade & Merchandise Marks Act, 1958.
Therefore, it can be concluded that the Limitation Act, 1963 does not apply to Section 47 of the Trade Marks Act, 1999.
What is the relation between Section 47, 57 and Section 124 of the Trade Marks Act, 1999?
Section 124 of the Trade Marks Act, 1999 provides the procedure when a trademark’s registration is challenged during an infringement lawsuit. It specifically deals with scenarios where the legitimacy of a registered trademark is questioned by either party in the suit. If there are ongoing rectification proceedings before the Registrar or the High Court when an infringement case is filed, the court must suspend the infringement proceedings until the rectification matter is resolved. On the other hand, if no such proceedings are pending, and a party raises a validity challenge during the lawsuit, the court first assesses whether the challenge is reasonably plausible. If it is, the court can then set this issue for consideration and suspend the proceedings for three months. This suspension allows the concerned party to seek rectification of the trademark with the appropriate authority, such as the Registrar or High Court.
Section 57 empowers the Registrar or the High Court to annul or modify the registration of a trademark and amend the Register accordingly. Section 47 deals with the removal of a trade mark from the Register on the grounds of non-use.
In the judgement of Anubhav Jain vs. Satish Kumar Jain & Anr. (2023), the Hon’ble Delhi High Court, while addressing the interplay between these three sections held that the rights under Section 57 to cancel a mark or rectify the Register are available independently of Section 124. However, if an infringement suit raises a validity challenge as part of its defence, then in such a case, the plaintiff gains an additional right under Section 124 (ii) to seek rectification from the High Court.
Thus, Section 124 was viewed as an additional legal recourse rather than an exclusive remedy, and it does not supersede the provisions of Section 57 and Section 47. The Court stressed upon the importance of harmonising the interpretation of these sections and observed that these sections do not conflict with one another, rather they provide distinct remedies in different situations. The court accepted that these Sections overlap in their application, but pointed out that each Section addresses different aspects of trademark disputes.
Therefore, Section 124 was held to be relevant only when a validity challenge arises within a suit and does not otherwise restrict the application of Sections 47 and 57.
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