State v. Dilip Kumar Yadav (2021) : case analysis

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December 4, 2021

This article has been written by Oishika Banerji of Amity Law School, Kolkata. This article discusses the recent ruling by Special POCSO Judge Shashi Kant Rai of Bihar with respect to the POCSO Act 2012.

Table of Contents

Introduction

The number of cases under the Protection of Children from Sexual Offences (POCSO) Act, 2012 has increased dramatically recently. However, according to a recent poll conducted by the Praja Foundation, over 99 percent of POCSO cases are still pending and are scheduled to be tried in 2021. According to the data, there were 16,667 cases of crimes against children (CAC) before courts till December 2020, with 99 percent of them still undergoing trial. Special Courts for serious crimes against children have been formed, with a focus on POCSO cases that must be handled within a year. According to data, over 77 percent of POCSO cases in the capital city take 1-3 years to reach trial, with over 16 percent taking up to 5 years. Amidst these depressing statistics, the responsible duty executed by a Special POCSO Court Judge in Bihar while deciding the case of State v. Dilip Kumar Yadav (2021) provides a ray of hope for a better tomorrow. In just one day of trial, Judge Shashi Kant Rai handed down one of the quickest verdicts by sentencing a man to life imprisonment for raping an eight-year-old child. This article discusses the aforementioned case in its length and breadth.

Relevance of the POCSO Act, 2012 in recent times

The POCSO Act of 2012 is a comprehensive law that provides for the protection of children from statutory offences, molestation, and pornography, while also safeguarding the interests of children at every stage of the judicial process by incorporating child-friendly mechanisms for reporting, recording of evidence, investigation, and speedy trial of offences through designated Special Courts. The said Act defines a child as someone under the age of eighteen, and defines various types of regulatory offences, such as penetrative and non-penetrative assault, as well as sexual harassment and pornography, and considers a statutory offence to be “aggravated” in certain circumstances, such as when the abused child is unstable, or when the abuse is committed by someone in a position of trust or authority toward the child, such as a loved one, police officer, or teacher. The POCSO Act, 2012 imposes severe penalties that are graded according to the severity of the offence, with a maximum sentence of life in prison and a fine.

Legislation alone is insufficient to prevent and protect minors from sexual offences. It is also necessary to comply with the Act’s obligations in a proper manner. Sensitization and understanding of such crimes, as well as sex education, are crucial in preventing minors from being involved in criminal activity. Child abuse should not be overlooked by the government or the judiciary, since it is the most serious criminal and social ill. Rather, it must try to prevent the same from happening. The judgment and the delivery of the same in light of the present case in discussion is a reflection of effective implementation of both substantive and procedural aspects of the POCSO Act, 2012.

All in one day : in light of effective justice administration

A Special POCSO Judge Bench of Bihar consisting of Judge Shashi Kant Rai had disposed of the case of State v. Dilip Kumar Yadav (2021) within one day thereby carrying out all procedural stages, starting from its opening to that of examining all the ten witnesses presented by the prosecution followed by which the judgment was delivered on 4th October 2021. It is to be noted that in the year 2019, the Supreme Court of India had observed that there is no obstacle to a pre-sentencing hearing taking place the same day as the judgment of conviction, if both the accused and the prosecution are prepared to present their views.

Facts of the case

On the evening of July 22nd, the aggrieved party went to wash the pots at a nearby tap. When she returned home after cleaning the pans, the accused, Dilip Yadav, took advantage of her isolation. The perpetrator snatched the victim’s hand and dragged her inside the residence, where she was raped forcibly. When the victim’s mother heard shouting, she dashed into the courtyard. After that, she entered the home and saw her daughter unconscious on the cot with her clothing drenched in blood. The victim was taken to the local doctor for treatment with the aid of the neighbouring people. The situation of the victim started worsening due to the continuous flow of blood.

Dilip Yadav, the accused, also arrived at the Purnia Hospital, where the victim was being treated. When the victim regained consciousness, the name of Dilip Yadav, who had committed the rape with her, came up. The accused departed the hospital after hearing the same. Furthermore, Dilip Yadav’s cousin brother offered the victim’s mother Rs 150,000 in exchange for the case being closed, which the victim’s father refused. The physicians at the hospital were the ones who had called the Forbesganj Police and told them about the occurrence.

Contentions of the prosecution

The Special PP found that the prosecution’s case had been proven beyond a reasonable doubt, that the victim was under the age of 12, and that the medical evidence, as well as visual evidence, led to the accused’s guilt.
In her Examination in Chief, the victim testified that the accused Dilip Yadav raped her and went on to describe the circumstances in which she was raped by the accused. The Court noted that she had remained solid and consistent throughout the proceedings and that nothing had been elicited to undermine her integrity and veracity.
Under Section 164 of the Criminal Procedure Code, 1973, her evidence was determined to be compatible with her statement. The Court also considered the evidence of the victim’s 9-year-old brother, who stated that he saw the accused Dilip Yadav in the room where the incident occurred. He also testified that the accused smacked him and it is understandable that he fled the scene of the incident out of fear.

Contentions of the accused

The accused, Dilip Yadav had pleaded not guilty of the charges framed against him which comprised of punishment for sexual assault under Section 376 AB of the Indian Penal Code, 1860 and punishment for penetrative sexual assault as provided under Section 4 of POCSO Act, 2012.
The case of the defence was the general denial of the whole of the prosecution case and the accused had taken the plea of innocence at the time of recording his statement under Section 313 Code of Criminal Procedure, 1973. The defence did not adduce any evidence as well.
The learned counsel appearing on behalf of the accused submitted that the medical report did not point to recent sexual intercourse or assault and penetration. It was therefore contended that the absence of the same neither can attract Section 375 of the Indian Penal Code, 1860 nor the ingredient of Section 3 of the POCSO Act, 2012 to put in motion the penal provision of Section 376AB of IPC, 1860 and Section 6 of the POCSO Act, 2012.

Issues heard

Whether the accused, Dilip Yadav committed rape upon Miss ‘X’ (victim) who is almost 8 years of age?
Whether the accused committed aggravated penetrative sexual assault upon Miss ‘X’ (victim) who is below 12 years of age?

Judgment by the Special POCSO Judge, Bihar

The observations that were made by Judge Shashi Kant Rai while disposing of the case have been provided hereunder:

The Court had observed that the victim while being testified for her Examination-in-Chief was steadfast and consistent regarding the accused and his actions with her throughout and nothing has been elicited in order to demolish her trustworthiness and credibility. Along with the minor victim, her brother and parents were also testified and both the parents had provided relevant answers and repeatedly established the fact that the accused, Dilip Yadav had raped their sister and daughter respectively. The victim’s testimonies in view of Sections 161 and 164 of the Cr.P.C. were consistent in nature. Similarly, the statement of the mother and father of the victim was also found consistent and no inconsistencies had been brought by the defence in the cross-examination.
The Special Judge had observed that as the accused defence pleaded that there were no concerns about any hostility between the victim and the accused, the same could not be adopted at any level of argument without confronting the witness about any animosity. There was no logical explanation why the accused would be involved in a fake case of such gravity. If there was motivation, it could not be projected during the witnesses’ cross-examination. Despite her tender age, the victim was educated enough to recognize that the accused’s actions were terrible. The victim’s mother’s testimony also shows that she went to the scene of the crime after hearing the victim scream and witnessed bleeding from the victim’s private parts.
On a detailed examination of the victim’s testimony, it was clear that the Investigating Officer had well proven the site of occurrence, and the accused had pointed out no error in the investigation, and the defect that had been brought out was not a substantial one. The location of the sexual event and the area where it occurred was not contested by the defence as well.
The victim of the current case stated that after taking her into the house, the accused removed her panty, inserted and rubbed his penis in her vagina, which attracts the ingredients of Section 3 of the POCSO Act, 2012. The Judge further held that there was nothing to disbelieve her piece of testimony, which was reliable and acceptable beyond all reasonable doubt. In this case, the victim’s constant statement throughout the examination process, together with corroboration, renders her story a trustworthy and accepted piece of evidence.
The victim said unequivocally that the perpetrator had put his penis into her vagina in the matter at hand. As a result, the male sex organ is implanted into the female sex organ, which meets the requirements of Sections 375(a), (b), and (c) of the Indian Penal Code, 1860, and the victim is under the age of 12, which meets the requirements of Section 376(AB) of the aforementioned Code. That the victim was originally a minor below the age of 12 years, had been shown beyond a reasonable doubt by the prosecution counsel and therefore clause (m) of Section 5 of the POCSO Act, 2012 and the components of Section 6 of the POCSO Act, 2012 were met with. Apart from that, the provision of the Cr.P.C. specified in Section 221(2) Cr.P.C. also allows flexibility to enhance the charge based on facts and evidence. Thus, on the reliance of this provision Section 6 of the POCSO Act, 2012 became relevant and admissible.
Dilip Kumar Yadav was held guilty of committing an offence punishable under Section 376(AB) IPC and Section 6 of the POCSO Act, 2012. The Special POCSO Court’s Single Judge bench explained that because the Court was exercising its authority under Section 221 of the Criminal Procedure Code, 1973 the accused could be found guilty under Section 6 of the POCSO Act, 2012, even if charges were not filed under that provision.
In addition to life in prison, Special POCSO Court Judge Shashi Kant Rai ordered the accused to pay a fine of Rs 50,000 and compensation of Rs 7 lakh for the survivor’s rehabilitation.

Conclusion

The common phrase often associated with the Indian courts is ‘justice delayed is justice denied’. The discussed judgment has not only proven that fast justice delivery is beneficial but also encouraged other courts across the nation to accept the need for the speedy delivery of justice. The POCSO Courts especially have been set up to provide a quick rendering of justice and compensation to the aggrieved party. Delay in the same not only affects the purpose for its formation but also the spirit of the law in hand. Thus, this decision will remain a notable precedent.

References

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Domestic Violence Act : a glimmer of hope

By

Oishika Banerji

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December 4, 2021

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This article is written by Astitva Kumar, a student at Guru Gobind Singh Indraprastha University. The article is the outcome of detailed research and analysis on domestic violence as well as the legislation that surrounds it and punishes the culprits thereof.

Table of Contents

Introduction

Approximately 86% of women, who were victims of violence, never sought help, and 77% of the victims never told anybody about the incident(s). Domestic violence isn’t a new issue; it’s been around for a long time. An alarming spike in incidences of domestic violence in India has recently become a major source of concern during the shutdown era. Nonetheless, this evil has spread over the world and continues to develop.

Women are the most susceptible in such situations and are frequently targeted, but this does not exclude men. Most countries have laws in place to deal with such situations; India, for example, has a thorough statute called The Protection of Women from Domestic Violence Act, 2005. (hereinafter, referred to as DVA).

What is domestic violence?

Causing mental or physical harm, injury, or risk to life, limb, health, safety, or well-being.
Causing the lady pain, injury, or danger to coerce her or any other person related to her to satisfy any dowry demand.
Assault, criminal intimidation, and criminal force are all examples of “physical abuse.”
Forced sexual intercourse, forcing the aggrieved person to watch pornography or other obscene material, forcibly exploiting women to entertain others, or any other act of sexual nature, abusing, demeaning, degrading, or otherwise violating one’s dignity are all examples of ‘sexual abuse.’
Accusation/aspersion on character or conduct, insult for not bringing dowry, Insult for not having a male child, etc. Forcing a woman to not attend school, college, or indeed any educational institution, blocking her from getting a job, making repeated threats to harm anyone she likes, and preventing her from marrying a man she likes. There are a lot of scenarios that include economic exploitation that is mostly related to the maintenance of basic needs for a woman and her children. Not providing shelter and throwing them out of the house, not giving food for having the basic nutrients in the body, restricting or obstructing one from accessing or using any part of the house, preventing or obstructing one from working, non-payment of rent in the case of rented accommodation, selling or pawning stridhan or any other valuables without informing and agreement. Taking away a person’s salary, income, or pay without their consent. Other bills, such as electricity, remain unpaid.

Domestic violence as a criminal act

Domestic violence is described as aggressive and threatening behaviour occurring well within the house, most commonly including the serious assault of a spouse or partner. Except for a few nations in the Middle East, Western Asia, and Sub-Saharan Africa, most countries have condemned it as a heinous and horrific crime. At some period of life, it is estimated that 35% of women globally have encountered physical and/or sexual established relationship violence or sexual violence by a non-partner (excluding sexual harassment). However, according to certain national studies, up to 70% of women have experienced physical and/or sexual violence from an intimate partner at some point in their lives. Domestic violence not only harms a woman physically but also has serious mental health ramifications. Serious, long-term domestic violence can lead to PTSD, notably battered woman syndrome, in which the survivor fears there is no way out and suffers in silence. This one hurts one’s consciousness, ego, and confidence.

Domestic violence is affected by a multitude of circumstances, including alcoholism, drug abuse, substance misuse, loveless marriages, mental illness, patriarchy, and so on. It is a severe crime that destroys a person not only physically but also psychologically, which is why it is illegal.

History of domestic violence

Domestic violence in India is an odd argument: it is both the most common and the least reported and publicised of basic human rights abuses. Traditional Indian culture’s strictly patriarchal rules and structure, as well as the stark divide between public and private life, have made the issue of domestic violence a complex and nuanced one, resulting in a long list of victims. As examples of custodial rape and dowry-related violence were broadcast in the media, the subject of violence against women grabbed national emphasis, resulting in high-profile legal prosecutions. The rape case in Mathura in 1972 sparked nationwide protests calling for rape laws to be changed and for the government to accept responsibility for crimes perpetrated by its agents. During this time, the death of married women in cooking fires had also begun to become more common. These fatalities, nicknamed ‘dowry deaths’ and ‘bride burnings,’ were swiftly linked to brides being abused for failing to transfer money, assets, and wealth from their natal to marital families. In addition to the politicisation of such instances by women’s activists, the protestors exposed the multiple forms of discrimination that women face, a subject that is important to the women’s question. Though the term “domestic violence” did not exist in legal vernacular until 2005, the enactment of sections 498A and 304B of the Indian Penal Code in 1983 was a step in the right direction. Cruelty to wives became a non-bailSble criminal offence punishable by up to five years in jail after the passage of Section 498A. Section 304B made dowry deaths a crime punishable by a minimum of seven years in prison, with the possibility of life imprisonment. The National Democratic Alliance (NDA) ruling government tabled the ‘Protection for Domestic Violence Bill, 2001 in the Lok Sabha on March 8, 2002, eight years after the Lawyers Collective submitted a draft of the domestic violence bill. Instead of protecting women from domestic violence, the new bill was designed to keep the family together. On several fronts, the Bill was a setback; the rights of the offended person were disregarded, and the time frame for completing legal procedures was not mentioned. The clauses were evaluated by the Parliamentary Standing Committee to which the bill was referred, and the National Commission for Women’s opinions were consulted as well. Nothing significant happened in the intervening two years. One of the key priorities of the UPA government was the enactment of civil legislation on domestic violence, as stated in its Common Minimum Program. The draft received approval from the cabinet in June 2005. The bill was signed into law as the Protection of Women from Domestic Violence Act, 2005, after it was passed by both Houses (namely: Lok Sabha and Rajya Sabha) and received Presidential approval. It came into effect on the 26th of October 2006.

Domestic Violence Act, 2005

The provisions of the Act are undoubtedly so in terms of their increased reach and the amount to which they contradict heteronormative patriarchal notions of family and a woman’s “natural” position within it, bringing rights politics into the home. Domestic violence is now defined as violence in all forms of domestic relationships, including abuse in a woman’s natal home and relationships in the “nature of marriage”, according to the Act. Aside from child abuse, the Act also considers the prevalence of violence against older women. The Act broadens the scope of redress by granting women the right to live in shared households regardless of who owns the property. The Act divides men into perpetrators and women into victims, and it establishes a time limit for cases to be resolved.

Atrocities faced by women leads to domestic violence

Intimate partners are responsible for up to 38% of all female killings worldwide. In addition to domestic violence, 6% of women worldwide say they’ve been sexually assaulted by someone who isn’t their spouse, while data on non-partner sexual violence is scarce. Men are the most common perpetrators of intimate partner and sexual violence against women. Women’s exposure to abusive partners and multiple risk factors has led to the rapid development of the COVID-19 epidemic and its social and economic consequences, while their access to treatment has been limited. Humanitarian crises and displacement can increase current kinds of violence, such as violence perpetrated by intimate partners and non-partner sexual abuse, and can also result in the launch of various forms of violence.

Potential causes for both intimate partner and sexual violence

Lower levels of education;
A history of child maltreatment;
Witnessing family violence;
Antisocial personality disorder;
Harmful use of alcohol;
Harmful masculine behaviour, including having multiple partners or attitudes that con don violence;
Low level of gender equality;
Low levels of women’s access to paid employment etc.

History of exposure to violence, marital disagreement and discontent, communication issues between couples, and male domineering behaviours towards their spouses are all factors linked to intimate partner violence.

Health consequences

Women suffer substantial short- and long-term physical, mental, sexual, and reproductive health problems as a result of intimate relationships (physical, sexual, and psychological) and intimate violence. They also have an impact on the health and well-being of their children. Women, their families, and societies bear tremendous social and economic costs as a result of this abuse.

Have fatal consequences, such as homicide or suicide.
Intimate partner violence causes injuries, with 42% of women who have experienced it reporting a due to the severity of it.
Maternal deaths, stillbirths, ovarian issues, and sexual transmission illnesses, including HIV, are all repercussions. Women who had been physically or sexually abused were 1.5 times more likely to have a sexually transmitted pathogen and, in some parts of the world, HIV, as shown in 2013 WHO study on the health burden associated with violence against women.
Premature babies, stillbirths, preterm delivery, and low-birth-weight kids are all increased by domestic violence during pregnancy. According to the study, women who experienced domestic violence were 16% more likely to miscarry and 41% more likely to give birth prematurely.
These forms of violence can lead to depression, post-traumatic disorder (PTSD) and other anxiety disorders, sleep difficulties, eating disorders, and suicide attempts. It is found that women who have experienced domestic violence were almost twice likely to experience depression and drinking problems.
Domestic/sexual violence, particularly during childhood, can lead to increased smoking, substance use and risky behaviour. It is also associated with the perpetration of violence for males and being a victim of violence for females.

Impact on children due to domestic violence

Children growing up in violent families are more likely to exhibit a variety of psychological distress and emotional stress. These can also be linked to later in life perpetrating or experiencing violence.
Intimate partner violence has also been linked to higher rates of infant and child mortality and morbidity (due to diarrhoea or malnutrition, for example), as well as poorer immunisation rates.

The economic and social cost

Intimate partner and sexual violence have tremendous social and economic costs that have far-reaching consequences. Separation, reluctance to work, financial loss, lack of engagement in usual activities, and restricted ability to care for themselves and their children are all potential consequences for women.

Who is covered under this specific Act

A woman may make a complaint on her behalf if she believes she has been subjected to domestic abuse by the offender. A child is also entitled to redress under the Domestic Violence Act. On behalf of her minor kid, the mother of such a child can apply to the court (whether male or female).
The children can be included as co-applicants in contingencies when the mother files an action against the defendant on her behalf.

Who can file the complaint?

A woman may make a complaint on her behalf if she believes she has been the victim of domestic violence by the perpetrator or another person.
Under the Domestic Violence Act, a child is also entitled to protection. On behalf of her minor kid, the mother of such a child can apply (whether male or female).

A complaint can be filed against:

Any adult male member of the family who has had a household relationship with the woman.
Relatives of the husband or current partner include both male and female relations of the male partner.

Domestic relationship

‘Domestic relationship’ refers to a relationship between two individuals who live or have lived together in a shared household at some point along the way. Consanguineous marriage, relationships, unions, and interactions like marriage are all included. A shared household is one in which the woman resides or has lived in a domestic partnership with the man.

She may or may not be living in the shared home at the time of the application for relief, but as long as the domestic relationship exists, she is entitled to remedy under the Domestic Violence Act. Even though she has no right, title, or interest in the shared residence, every woman in a domestic relationship has the right to live there.

Provision for a shelter house as well as medical assistance

An aggrieved person, or a Protection Officer or service provider acting on her behalf, can submit a request to the person in charge of a shelter house or a medical facility, for shelter or medical assistance.

Why do women stay?

Economic reliance has been identified as the primary cause. Women who lack the financial means to support themselves are obliged to stay in violent situations and are unable to be free of abuse. Women do not like the option of separation or divorce due to deeply ingrained values and culture.

They are also afraid of the repercussions of reporting abuse and express a desire to avoid the stigma of being labelled as battered women. Women are also forced to suffer silently within the four walls of their homes due to a lack of information about alternatives. Some women may believe that they deserve to be beaten because they did something wrong.

Other women keep quiet about the abuse because they are afraid of retaliation from their partners if they divulge family secrets, or they are ashamed of their situation. Women’s rights are violated when they are subjected to violence. It is a disgrace to states that fail to prohibit it, as well as to society that tolerates and even perpetuates it. It must be eradicated by political will, as well as legal and civil action across the board.

Who is eligible to make a magistrate’s application?

An aggrieved person, a Protection Officer, or anybody else acting on their behalf may apply regularly to coerce with the magistrate.
It is the protection officer’s and service provider’s responsibility to support the woman who is a victim of domestic violence in any way possible.

Orders that can be passed by Magistrate under the act

The magistrate may:

Direct the respondent or the aggrieved person to get counselling, either individually or jointly.
Direct that the woman not be evicted or ostracised from any portion of the household.
The proceedings may be ordered to be performed in-camera if it is deemed essential.
Issue a protective order, ensuring the woman’s safety.
Grant interim custody of any child or children to the aggrieved individual through custody orders.
Compensation/damages for the injuries should be awarded. This includes mental anguish and emotional distress produced by the respondent’s actions of domestic violence.
Breach of a Magistrate’s order is a criminal offence that is punishable by law.

Domestic Incident Report

When a wife files a domestic violence complaint under Section 12 of the Domestic Violence Act against her husband and other relatives, various documentation is included in the case application, including a Domestic Incident Report (DIR). It is, in fact, the case file’s prima facie document.

The concern is that, in the vast majority of domestic violence situations, no accused is ever summoned for an investigation. The concerned Protection Officer (short for “PO”) does not go to the house where the alleged domestic abuse took place. For the production of such a DIR, the PO does not call the accused husband’s parents, relatives, or neighbours.

Why is DIR required?

The proviso to Section 12(1) of the Domestic Violence Act states, “Provided that, before passing any order on such application, the Magistrate shall take into consideration any domestic incident report received by him from the Protection Officer or the service provider,” implying that the Honorable Magistrate must consider the DIR even before passing any order under DV application u/s 12 of the DV Act.

Preparation of DIR

The preparation of a DIR is a court action, and the PO is a public official who is completely under the direction and supervision of the concerned Magistrate, as stated in Section 9 of the DV Act.

After an unbiased investigation and study of facts, communication with both parties, and a visitation to the shared residence where suspected domestic abuse occurred, it is the responsibility of the Protection Officer (PO) to bring the truth to light. The fundamental goal of the DIR preparation provisions is to reveal the truth and determine if the application is false or frivolous. It has the potential to save the respondents from pain and humiliation. The main consequence of calling such a report must be the disclosure of facts. In other words, the act of summoning a DIR (including the production of the report) should result in the advancement of justice. The compilation of the DIR is not something that should be done regularly. Any DIR that has not been investigated shall be viewed as a normal violation of the Hon’ble Court’s processes. The concept of due process is included in the Natural Justice Principle, and most crucially, the processes should be conducted in a way that is fair to all parties, as expressed in the Latin maxim Audi alteram partem, which means “let the other side be heard as well.”

In the case of Delhi Transport Corporation v. DTC Mazdoor Congress, it has been held by Supreme Court that violation of rules of natural justice results is arbitrary and discriminatory in the same way where discrimination is the result of the state action; it is a violation of Article 14, and therefore, a violation of the principle of natural justice by state action is a violation of article 14. Article 14, however, is not the sole repository of the principle of natural justice. What it does is that any law or state action violating them will be struck down. The principles of natural justice, however, apply not only to the legislation and the state action but also where any tribunal authority or body of men, not coming within the definition of “state “ Article 12 is charged with the duty of deciding the matter. In case the principle of natural justice requires that it must decide such a matter fairly and impartially.

The Supreme Court, in the case of Santosh Bakshi v. State of Punjab and others, emphasised that investigation is a serious matter in a domestic violence case and DIR cannot be submitted without paper verification and investigation.

The Supreme Court, in the case of State of Orissa v. DR. Bina Pani Dei (1962) 2 SCR 625, held that even an administrative order or decision in matters involving civil consequences has to be made consistently with rules of natural justice.

Rights that are recognised by this law

The law is so liberal and progressive that it recognizes a woman’s right to live in a joint household with her husband or partner even if there is a legal conflict. As a result, it prohibits husbands from throwing their wives out of the house when there is a disagreement. A husband’s behaviour will now be considered unlawful, and not just unethical. Even though she is a victim of domestic violence, she has the right to live in a shared home, which she shares with an abusive partner. Section 17 of the law, which grants all married women or female partners in the mystic partnership the right to do well in the home (known as the shared household in legal terms), applies regardless of whether she has any right, title, or beneficial interest in the residence.

The legislation stipulates that if an abused woman demands alternative housing, she must be given it, and in such cases, a partner must be for both the condition and her support.

Significantly, the law recognises the necessity for emergency relief by the abused woman, which must be provided by the husband. A lady cannot be prevented from filing a domestic abuse complaint or application. She has a legal right to the protection officer’s and service providers’ services and assistance, as defined by the law.

Domestic abuse victims have the right to seek help from the police, shelters, and medical facilities. She also has the option of filing her complaint under Section 498A of the Indian Penal Code at the same time. Sections 18-23 provide a plethora of legal recourse possibilities. She can seek Protection Orders, Residence Orders, Monetary Relief, Child Custody Orders, Compensation Orders, and Interim/Ex parte Orders through the courts.

It will be considered a punishable offence if a husband abuses any of the foregoing rights of the injured woman. In addition to the charges made under this Act, the magistrate might make charges under Section 498A. In addition, the crimes are both cognizable and non-bailable. Violations of the rights listed above could result in a one-year prison sentence and/or a maximum fine of Rs 20,000.

Case references

SR Batra v. Taruna Batra (2006)

The Supreme Court ruled that because the definition of common household in S.2(s) contains drafting flaws, it shall be interpreted reasonably.

“In terms of Section 17(1) of the Act, we believe the wife is only able to claim a right to reside in a shared household, which we define as the house that the husband owns or rents or the house that belongs to the joint family of which the husband is a member. In this scenario, the property in question does not belong to Amit Batra, was not rented to him, and is not a joint family property in which the spouse Amit Batra is a part. It is the sole property of Appellant 2, Amit Batra’s mother. As a result, it can’t be considered a “shared household”.

Satish Chandra Ahuja v. Sneha Ahuja(2020)

In this recent judgment, the Supreme Court held, a shared household can be any premise if the couple has lived there together for a considerable period, even if the owner is of MIL or FIL.

Lalita Toppo v. State of Jharkhand (2018)

In this case, the Supreme Court held that live-in partners and estranged wives are included in the definition of “aggrieved person” under Section 2(a) of the Act.

Sandhya Wankhede v. Manoj Bhimrao Wandkhade (2011)

Section 2(q) of the statute was questioned as to whether it covered female relatives of the respondent. According to the Supreme Court judgment, the term “related” has not been given a limiting connotation, nor has it been precisely defined in the Domestic Violence Act of 2005 to make it only apply to men. In these situations, it is evident that the legislature never meant for female relatives of the husband or male partner to be excluded from the scope of a complaint that might be filed under the domestic violence regulations.

Conclusion

One key piece of legislation that has aided grieving women in our society is the Protection of Women from Domestic Violence Act. It has given courage to every woman who has been victimized by violence since it has safeguards that protect women in every home. It has been a long-standing issue in a patriarchal society, which has degraded women’s dignity. Domestic abuse legislation has had a long path that began with the Indian women’s movement and culminated in a successful law. No law is flawless in and of itself, but we as citizens of the country must recognize the challenges that they face daily.

Sections 20 and 22 provide women with economic freedom and security, as well as a sense of mental serenity. The Act has aided Indian women in ways that are beyond comprehension. Domestic abuse issues have tested women’s tolerance, which is why every woman who has experienced it is now standing up to the demons in their happy light.

Domestic violence legislation is a tool in the hands of women who are subjected to physical, emotional, and financial abuse at home. In developing nations like India, where women are still denied several basic human rights in the guise of tradition, religion, and customs, such legislation is beneficial in allowing women to live in dignity.

Protection orders, monetary relief orders, custody to coerce orders, residence orders, compensation orders, and provisions for victim counselling are among the Act’s remedies that protect and offer relief to such women. Various studies have found that during the lock-down time, there was a significant increase in domestic abuse instances, making their situation more susceptible owing to the breakdown of social and protective networks.

References

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Balancing intellectual property rights and right to health

By

Abanti Bose

-

December 4, 2021

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This article is written by Abhishek Sharma, pursuing Diploma in Intellectual Property, Media and Entertainment Laws from LawSikho. The article has been edited by Aatima Bhatia (Associate, LawSikho) and Ruchika Mohapatra (Associate, LawSikho).

Table of Contents

Introduction

Most modern nations practice some elements of what is considered a welfare state. However, the term is often used derogatorily to describe a situation in which the government in question creates unjustified incentives and the unemployed earn more than workers who are in need. Welfare states are sometimes criticized as “nanny states” where adults are spoiled and treated like children. Though in a strict sense, we must ask, how can there be any conflict between the welfare state and intellectual property rights, since the welfare state loves to give rights to its subjects and IPR is also a crucial right in these times. However, the COVID-19 Pandemic and the subsequent problems with the vaccine roll out in India, as well as the rest of the world, have ignited the debate on which one to favour, right to health or IPR.

Issue of health around the world

Despite recent advances in prevention and treatment in many parts of the world, diseases such as HIV/AIDS, tuberculosis (TB) and malaria continue to plague the poorest and most vulnerable people in the world. The majority of patients with these illnesses live in developing countries, and low wages, high drug prices, and poor access to health care limit access to many life-saving drugs currently available in developed countries. In fact, about one-third of the world’s population does not have access to essential medicines. Currently, 80% of the world’s population lives in developing countries but consumes less than 20% of all medicines.

Provisions in intellectual property

Firstly, the development of medicines requires significant expenditure, exceptionally refined techniques and access to information. Secondly, to secure the underlying speculation, the worldwide drug industry practices Intellectual Property Rights (IPRs) like licenses and passes on this cost (and utilizing enormous benefits) to conclusive buyers. Thirdly, worldwide economic alliances require nations with vaccine producing capacities to give patent assurance under the WTO settlement on exchange related parts of licensed innovation (TRIPS).

In this unique situation, IP laws are needed to advance development in the R&D of new medication or immunizations. In any case, it is because of these IPRs laws that the worldwide drug industry sets up a restraining infrastructure over life-saving medications. This, therefore, creates billions of dollars in income for investors. However, this likewise obstructs new makers from entering the Pharma research space.

How patent hinders right to health

High prices for branded and patented medicines often make access difficult in developing countries. The patent monopoly protection of the new drug gives the inventor enough time to amortize his controversial estimated R&D costs. However, sponsors often require additional patent payments for innovation through a number of existing “loopholes”. For example, companies often use bilateral trade agreements to price new drugs based on pharma co-economic evidence such as efficacy, safety, and cost-effectiveness compared to equivalent existing therapies. Such tactics make patented drugs affordable for people in poor countries. As a result, international trade agreements have become a very important issue for access to essential medicines and medical services. Moreover, under the Trade Related Aspects of Intellectual Property Rights (“TRIPS”) Agreement, the World Health Organization (WHO) has only non-voting observer status in the WTO’s major political bodies, and the most important WTO documents are international economic, social and international rights to health.

Exclusive patent protection and minimum 20-year term under TRIPS Agreement

A drug that is patented can only be made, used, imported/exported or sold by the patent holder, subject to certain public interest exceptions. Under the TRIPS agreement, governments are required to recognise patents on products and processes in most areas of technology and to confer rights to the patent holder for a given period of time. This stipulation serves to guard the patent holder from another party making, selling or importing the drug during the time period it is still under patent. Frequently, patent protection ends up in significantly higher prices for patented medicines than within the context of market competition.

TRIPS covering public health

The TRIPS agreement indicates that patent rights have to be balanced against other important interests, like public health. In shaping their laws to evolve to TRIPS standards, countries ‘may take measures necessary to guard public health’. These standards don’t seem to be always appropriate for poor countries which lack health infrastructure and have unfulfilled developmental demands, developing countries can employ certain TRIPS provisions to safeguard public health. Such options relevant to accessing essential medicines include; exclusions to patentability, exceptions to patent rights, parallel importing, compulsory licensing and promotion of generic drugs.

Despite these provisions, there have been concerns about the impact of TRIPS on access to essential medicines, especially in developing countries. These issues were raised at the WTO Ministerial Conference in Doha, Qatar in June 2001. WTO Ministers should implement and interpret the TRIPS Agreement in a way that promotes access to public health and medicine. This agreement is enshrined in the Doha Declaration on TRIPS and Public Health, which reinstates the sovereign rights of countries to take action, especially through compulsory implementation and parallel imports, to protect public health and prioritize intellectual property. Specifically, the Declaration states that the TRIPS Agreement “does not prevent or prevent members from taking steps to protect public health especially to promote access to medicines for all.”

Of particular interest is the interpretation of Article 31 (f) of the TRIPS Agreement, which states that enforcement should be applied “mainly for supply to the domestic market”. To this end, the government can license local manufacturers while offering low rates to originators. In fact, enforcement essentially lowers consumer prices by creating competition in the market for patented products. The WTO has also agreed to change the TRIPS clause on compulsory licenses, as many developing countries lack the domestic capacity and technical know-how to manufacture patented medicines. A temporary exemption was introduced in August 2003, allowing locally manufactured countries to issue compulsory licenses and export medicines to countries where they cannot be manufactured domestically. TRIPS Agreement leaves members free to determine the appropriate method of implementation within their national legal systems as long as TRIPS’ minimum standards are guaranteed.

Lessons learnt from the COVID-19 Pandemic

Monopolization at the cost of human lives

Backers of general wellbeing and researchers have contended for a long time that restraining infrastructures kill, by denying admittance to life-saving medications. The licenses are forestalling competition and undermining both the moderateness and the stock of new medications. PCV13, the current multi-strain pneumonia medicine restricted to infants, costs many dollars since it is the property of Pfizer.

In India, more than 100,000 infant deaths from pneumonia are recorded each year, most of which are preventable, while antibody medicine generally gets $5 billion in income for Pfizer yearly. The monopoly over innovation has affected the fight against COVID-19. The quick rollout of additional testing units, the respirator or N95 veils has made it harder for new makers to make clinical-grade facial coverings at scale. Different licensees are in power for three of the most encouraging medicines for COVID-19 — Remdesivir, Favipiravir, and Lopinavir/Ritonavir.

Moving towards a solution

Costa Rica’s administration as of late approached the WHO to build up a willful pool of IP privileges for COVID-19 medicines, which would permit different producers to supply new medications and diagnostics at more reasonable costs.

Patent pool

Through the Medicines Patent Pool, the United Nations and the WHO have for quite a long time looked to expand admittance to medicines for HIV/AIDS, hepatitis C, and tuberculosis. Patent pools, prize assets, and other comparable ideas are essential for a more extensive plan to change how life-saving medications are created and made accessible. The objective is to supplant a syndication driven framework with one dependent on collaboration and shared information. Accordingly, patent pooling should now be extended to cover vaccines for COVID-19 immunization.

Vaccine bonds

Inventive money instruments have been fruitful in bringing capital for immunizations up previously and ought to be utilized to subsidize the development of COVID-19 vaccines. The International Finance Facility for Immunization (IFFIm) raises capital for developing vaccines. These securities are dispatched with unique responsibilities, where the investors provide funds to vaccine makers and, in return, the vaccine makers sign a lawfully restricting obligation to give the vaccines at a value reasonable to low-income and middle-income nations.

Where does India stand?

India is among the biggest producers of nonexclusive medications and vaccines on the planet. It is home to about six significant vaccine producers and a large group of more modest ones, manufacturing dosages against Polio, Meningitis, Pneumonia, Rotavirus, BCG, Measles, Mumps and Rubella, among different infections. For instance, the Serum Institute of India is the world’s biggest vaccine creator by the quantity of portions delivered and sold universally. Following its status of being a pharmacy to the world, India has effectively chosen to accelerate vaccination drives; more than six firms are in the fight as of now. The Government of India can convey the TRIPs-agreeable instrument of obligatory authorisation to empower the vaccines to be created by outside makers at reasonable costs.

Conclusion

The question is whether the right to health and Patent (IPR) can exist together. The issue of admittance to reasonable drugs in non-industrial nations zeroing in on the right to wellbeing as set out in the ICESCR and patent norms as needed by the TRIPS Agreement. In a severe sense, there is no contention between the right to wellbeing and licenses. ICESCR and TRIPS don’t contain totally unrelated commitments. Notwithstanding, it has been shown that pressure emerges from the use of the two deals. There must be a balancing Act by States to decide what it is that is of prime importance, especially in the time of an ongoing crisis like Corona. At the same time, the question and concern related to individual rights and IPR must also be suitably addressed, for achieving the welfare of all.

References

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Reconsideration of addition of Section 29A in IBC : analysis of various attacks on validity of the provision

By

Oishika Banerji

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December 3, 2021

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IBC (1) — Image Source: https://rb.gy/bsjphu

This article has been written by Hardik Nanda Sawant pursuing the Certificate Course in Insolvency and Bankruptcy Code from LawSikho. This article has been edited by Prashant Baviskar (Associate, Lawsikho) and Ruchika Mohapatra (Associate, Lawsikho).

Table of Contents

Introduction

Section 29A of the Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as the ‘Code) has emerged as one of the key aspects in determining the Eligibility of the Potential Resolution Applicants in a tedious attempt to save the company in question under the Corporate Insolvency Resolution Process (CIRP). This brought in considerable delays right at the stage of admission of the resolution plans that would come in. The Code, in its originality, at the time of enactment did not have any provision to keep defaulting promoters or their associates out of the process, which would otherwise mean Repeating the mistakes of the Past regimes to save ‘Sick’ companies. This provision was brought forth by subsequent amendments to the law following the recommendations of the Insolvency Law Committee, formed by the Central Government, and various observations in the Landmark Judgements by the Hon’ble Supreme Court of India.

Before Section 29A came to the light, without any specified criteria about the eligibility or disqualification for that matter, any person having an interest in the corporate debtor(CD), any corporate body could participate in the bidding process irrespective of whether he is a promoter, a director, a key management personnel, or any other person associated with the promoter, either directly or indirectly. This would mean the CD or the control of it falling back to the hands of the very people it was supposed to be saved from the process, which would, in turn, the financial institutions take the burden of deep haircuts when it comes to recovery.

Therefore, after numerous consultations with the lawmakers, the Courts, the professionals, this provision was brought about in the Code vide Amendments dated 23/11/2017 and the other one on 6/6/2018, to disqualify those due to whom the corporate debtor stood on the verge of downfall at the cost of various stakeholders’ time, money, efforts.

A brief on the Insolvency and Bankruptcy Code, 2016

The Insolvency and Bankruptcy Code was the brainchild of the then Union Finance Minister, Senior Advocate of the Supreme Court, Late Mr. Arun Jaitley, which was introduced in the Parliament on 21^st December 2015. It was passed by Lok Sabha (Lower House of the Parliament) on 5^th May 2016 and later by the Rajya Sabha (Upper House of the Parliament) on 11^th May 2016. The Code received the assent of the President of India on the 28^th of May 2016.

This is the Bankruptcy Law of India which consolidated the existing (weak) framework by creating a single law for the purpose. This law/code is the ‘One Stop Solution’ for resolving the insolvency cases in a strict court monitored, time-bound process to bring the defaulting corporate debtor back to its Going Concern Status in a transparent way. This Code gives power to the lenders- the financial institutions who provided loans to the Corporate Debtor, which was declared as the Non-Performing Assets (NPAs) over some time. Therefore, the onus lies with these lenders, depending on the factors such as their exposure to the CD, their expertise and experience with similar cases, the results of the due-diligence conducted on the viability and the pay-back capacity of the entity over the tenure of the loan.

The IBC, 2016 has been instrumental in inculcating the discipline with which the promoters and the boards run the day-to-day affairs of the corporate debtor, emphasizing good corporate governance practices, making them answerable to the authorities for the financial decisions they take in the best interest of the stakeholders. The Code gives the power of the cases under IBC to the National Company Law Tribunal (NCLT) and the National Company Law Appellate Tribunal (NCLAT) thereby reducing the burden of the civil courts across the country. The prime objective of the Code is to ensure resolution of the corporate debtor with liquidation only as a matter of last resort and that under no circumstances the law is to be referred to as a recovery mechanism.

Section 29A- concept and relevance

What does it emphasize?

Section 29A of the IBC, 2016 contains the list of Conditions that would disqualify a potential bidder from being a resolution applicant. Section 29A goes a step further in its capacity to effectively prevent the incumbent management to participate in the future of the distressed company all together. Here, we go through the motivations of enacting Section 29A and how it influenced India’s new era of corporate restructuring.

Criteria of Disqualifications u/s 29A:

There are three layers of Ineligibility and they are as follows:

Persons acting in Concert: Persons having a common objective of acquisition of the shares or voting rights to gain control over a distressed co. following an agreement, formal/informal, directly/indirectly, to co-operate to gain back the control of the company in question.
Connected Persons: A promoter, a member of the Board or in control of the resolution applicant; any person who shall be so in the process during the implementation of the resolution plan; or holding/subsidiary/associate company or a related party of a person mentioned above.
Related Party: Anyone about the defaulting promoter or their spouse; partner in a partnership firm or a trustee in a trust in which the defaulter individual is associated with; a private company in which that individual is a director and holds over the prescribed limit of share capital including family and relatives.
Importance of this Provision in Indian Context:

This section asserts protection to the creditors of the company by safeguarding them against unscrupulous persons who irrespective of the earlier defaults are trying to reward themselves by taking the system for a ride resulting in the very objective of the resolution process going for a toss. The Resolution Professional has the responsibility to conduct due-diligence u/s 29A of the Code. Adequate due diligence on the prospective Resolution Applicants and their connected persons needs to be conducted efficiently and independently subject to the timeline prescribed by the NCLT. The CoC has been empowered to review the Due diligence report submitted by the Resolution Professional and to decide on approval or rejection of the Resolution Plan.

In the Indian context, this process is necessary to maintain the very objective of the code and to do away with the drawbacks of the previous Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI), Lok Adalat & DRT frameworks regimes. There have been cases before IBC where the powerful promoters of defaulting companies used their political connections to derail the process of recovery and notoriously threaten or terrorize the Professional in charge of the Process.

Examples of attacks on the provision of Section 29A of the Code

Following are the case studies in which this provision was challenged over some time since the enactment of the code:

Chithra Sharma and Others Vs. Union of India and Others

The Supreme Court while dealing with the proposal of JAL to submit a resolution plan for CIRP of Jaypee Infratech Limited (JIL), observed the following:

JAL is disqualified under Section 29A of the IBC under sub-clauses (c) and (g), as it has an account that has been classified as a non-performing asset for over one year from the date of commencement of the CIRP of JIL and is also a person who has been a promoter or in the management or control of the corporate debtor, who has engaged in a fraudulent transaction;
JAL (Jaiprakash Associates Limited) also lacks the financial capacity to complete the unfinished projects, as the Reserve Bank of India is seeking to initiate insolvency proceedings against JAL.

Arcelor Mittal Private Ltd Vs. Satish Kumar Gupta (Essar Steel India Ltd)

The “de facto” position of person has to be checked as opposed to “de jure” It is important to discover who are the real individuals or entities who are acting jointly or in concert, and who have set up such a corporate vehicle for submission of a resolution plan.
“Acting jointly” does not mean a Joint Venture (JV) necessarily, it is in the sense acting together
Stage of ineligibility attaches at the time of when the resolution plan is submitted by a resolution applicant.
“Management” ordinarily vests in the board of directors and includes MD, manager, and officer as per Companies Act, 2013.
The expression “control”, in Section 29A(c), denotes only positive control, which means that the mere power to block special resolutions of a company cannot amount to control. “Control” here, as contrasted with “management”, means de facto control of actual management or policy decisions that can be or are taken.
29A (f) – if a person is prohibited by a regulator of the securities market in a foreign country from trading in securities or accessing the securities market, the disability under sub-clause (i) would attach.

Swiss Ribbons Vs. Union of India:

The Key implications of the judgment of the Supreme Court are as follows:

The distinction between promoters/Management and the Corporate Debtor has been judicially recognized. Displacement of the promoter or the management of the Company in default can now be done relatively quickly to protect the company and its assets.
The SC has concluded that the IBC is a beneficial legislation and is for the benefit of the Corporate Debtor and therefore the admission of the Company in the Corporate Insolvency Resolution Process cannot be seen from the lens of Traditional proceedings in the matter.
The SC has acquired a fair and reasonable treatment for Operational Creditors as a requirement for the approval of the Resolution Plans. The SC has provided for the much-needed clarity on what is expected out of the Operational Creditors.
The SC has also upheld Section 29A in its entirety while going through the list of the related parties specified thereunder who are subject to be tested for the Disqualification under Sec. 29A, to those who have a business connection with the Resolution Applicant and sighted that this will help in increasing the number of the participants in the process. It would also help in streamlining the process of Due-Diligence required by the Resolution Applicant, the Committee of Creditors, and the Resolution Professional u/s 29A compliance as regards the ‘Connected Person’ thereby reducing the costs and timelines of the CIRP Process.

The above judgments do not provide any rational basis for the solutions on such extraordinary circumstances and therefore the stop-gate to the promoters by sec. 29A is getting withered away. After going through the above cases and the time taken by them, it is evident that the IBC has failed to comply with the timeline of 330days as envisaged under the Code read with the rules relating to the same, and this has impacted the confidence of the Investors intending to participate in the Bidding process of such defaulting companies.

The approach of the international laws on insolvency proceedings

United Nations Commission on International Trade Laws (UNCITRAL)- Legislative Guide on Insolvency Law:
- The Legislative Guide provides a comprehensive statement of the key objectives and principles that should be reflected in a Member Country’s insolvency laws.
- It is intended to inform and assist insolvency law reform around the world, providing a reference tool for national authorities and legislative bodies when preparing new laws and regulations or reviewing the adequacy of existing laws and regulations.
- The advice provided aims at achieving a balance between the need to address a debtor’s financial difficulty as quickly and efficiently as possible; the interests of the various parties directly concerned with that financial difficulty, principally creditors and other stakeholders in the debtor’s business; and public policy concerns, such as employment and taxation.
- Strong and Effective Insolvency Regimes are important for all the States as a means of preventing or limiting financial crises and facilitating rapid and orderly workouts from excessive indebtedness.
- These Legislations can facilitate the orderly reallocation of economic resources from the businesses that are not viable to more efficient and profitable activities, Provide incentives that not only encourage the investors to take up the investments but also encourage the managers of the failing companies to take early steps to address that failure and preserve employment, reduce the costs of businesses and increase the availability of credit across the globe.
- The Legislative guide is divided into four parts:
  1. Key Objectives of an Insolvency Law, Structural Issues, and the mechanisms available for resolving a debtor’s financial difficulties and the institutional framework required to Support an effective insolvency regime.
  2. Core Features of an Effective Insolvency Law- Right from commencement of Insolvency Proceedings to Discharge of Debtors and closure of the process. This includes the Standardized Process, In-Process Finance, participation of creditors, and Simplified Requirements for Submission and Verification of Claims, a suggested path to Convert to Liquidation if in case Restructuring Fails and finally the Closure of the Procedure.
  3. Treatment of Enterprise Groups under the Insolvency Laws – both Nationally and Internationally. This part supplements the above two parts. This part focuses on Co-operation and Coordination, extending provisions based on the Model Law on Cross-Border Insolvency to Group Context.
  4. Focus on the obligations that might be imposed on those responsible for making decisions w.r.t. the management of the enterprise when I face imminent insolvency or in the case where the Insolvency becomes unavoidable. This is to protect the legitimate Interests of Creditors and other stakeholders and to provide incentives for timely action to minimize the effects of the Financial Distress being experienced by the concerned enterprise.

As far as India’s Position is concerned, India is yet to align its Insolvency and Bankruptcy Code to the provisions of this Model Laws on Insolvency and Cross Border Insolvency. As I write this piece, India is set to adopt the “UNCITRAL Model Law on Cross-Border Insolvency”

International Insolvency Institute Guidelines for Coordination for Multinational Enterprise Groups (2013):

The International Insolvency Institute (III) aims to promote and advance international insolvency laws, and in particular to support better cooperation in cross-border insolvency cases.
The Committee chaired by Hon’ble Ralph Maybe has drafted ‘Guidelines for Coordination of Multinational Enterprise Groups’ concluded in 2013 and with an emphasis on ‘Cooperation’ at the very Heart of the Guidelines.
These guidelines add on to Multinational Enterprise Groups with ‘Operations, Assets and Employees located in more than one country, which has a unified Corporate Governance, either through common or interlocking shareholding or by Contract.’
The Guidelines consider seven topics and twenty-two points which if applied to by Member Jurisdictions are subject to changes to suit their Domestic Aspects.
Refer Page 355-356 of the EU Document by the European Law Institute titled “Rescue of Business in Insolvency Law.”

Insolvency, Restructuring and Dissolution Act, 2018 – Singapore:
- This is a vast and an integrated Act for the City-State of Singapore which inculcates every aspect of the Insolvency Proceedings about the Resolution or Insolvency proceedings against an Individual Debtor, a Partnership Firm, and a Body Corporate and the Prescribed Manner in which these should be carried on with the time constraints.
- This Act read with the relevant provisions of the Companies Act, 2018 of Singapore (Part VII to Part X of the Companies Act, 2018, SG) provides for a wide range of solutions to the instances about the winding-up, Reorganization of a Partnership Firm or Restructuring of a Company registered under the law of the Land.
- Specifically, Part 16 of this Insolvency Law corresponds to the Provisions of the Section 29A of the Insolvency and Bankruptcy Code, 2016 of India as it describes the eligibility of the persons submitting applications for Bankruptcy and the one who is eligible to submit a plan of Resolution to the Court subject to the scrutiny by the Official entitled by the Court to make the decisions to the Best of his/her Knowledge and Public Interest at large.
- This Act of Singapore also takes into consideration the UNCITRAL Model Law for Cross-Border Insolvency right since its Enactment as the law of the land making it a one-stop-shop for all the relevant aspects related to Insolvency and Bankruptcy as a whole.

Rescue of Business in Insolvency Law – European Law Institute, European Union:
- Since the global financial crisis, insolvency law has been at the forefront of law reform

initiatives in Europe and beyond. The specific topic of business rescue appears to rank top on the insolvency law-related agenda of the EU institutions.

The economic recession in Europe has faced a rapid growth of insolvencies, clearly highlighting the importance of effective business rescue. More recently the downfall of oil prices and for instance, the problems retail markets face, are other causes for ongoing harm for businesses.
Procedural Design of a Restructuring and Insolvency Framework:

Distinguishing between three types of Business Rescue Oriented procedures that need to be defined:

Workout: The Debtor concludes a contract with all the relevant creditors and other stakeholders that contains a solution to the Debtor’s Financial Problems. The Workout is purely a contractual solution, that is no Courts are involved. That is why, these are often referred to as informal, private, or out-of-court workouts.
Pre-Insolvency Proceedings: Any one of the jurisdictions offers a judicial procedure with the sole purpose of rescuing a business from its difficulties independent of its Formal Insolvency Proceedings. The degree of the involvement of the courts can be either substantial or minimal.
Formal (Restructuring and Insolvency) Proceedings: Every Jurisdiction provides for the court proceedings that are designated for Insolvent Debtors only. Such proceedings require insolvency tests and involvement of the courts from Day one. These may not be Rescue-oriented but provide for legal instruments to conduct a business restructuring or a going-concern sale of the viable Business parts. Otherwise, interim proceedings are also common, if in case any of the jurisdictions do not open such proceedings.

Chapter 8.3 of the law puts forth the Criteria for proposing and negotiating a Plan to Rescue the Business which is again in line with that of India’s Eligibility Criteria for the same u/s 29A of the insolvency and Bankruptcy Code, 2016 (as amended from time to time).

This part of the text deviates from ours as it commonly provides the right to the Corporate Debtor itself to present a Resolution plan. Where a Restructuring Plan is the sole purpose of either specific Reorganization proceedings or a plan option in consolidated insolvency proceedings, the debtor here usually owns this right exclusively. Whereas, the only distinguishing law, in this case, is that of France’s which allows for a competing plan from a member of the Creditor’s Committee and empowers the court to decide which plan to Accept. While, in Sweden, the Insolvency Professional has the right to decide between the viable Plans it has received to save the failing Corporate Debtor.

Chapter 8.3.2 in the Document presses for Transparent Negotiations of a plan proposed. Here, The Plan Proponent is responsible for organizing sufficient Creditor support for the Proposal. Negotiations with the Key Stakeholder will normally begin before a plan is formally filed, essentially an out-of-court element of plan negotiations that involve only critical stakeholders, usually major lenders, key suppliers, or employee representatives. These are often confidential, but if successful in establishing required support for the plan, it is filed formally before the adjudicating authority in respective jurisdictions.

Chapter 8.5 puts down the Conditions which would lead to the Confirmation of the Plan so discussed. A Restructuring Plan commonly requires the confirmation or the sanctioning of the Court before putting it into action. While Confirming a Plan, the Court in that Jurisdiction verifies the Following:

The plan has been accepted according to the underlying applicable rules,
The Content of the plan meets all the legal requirements, and,
The Plan is Fair and Equitable against the dissenting Creditors.

Point 8.7 provides for the Recommendations regarding the Right to present plans, the Content of the Plan, The Scope of the Plan and the Protection of the Parties involved, the Secured Creditors, Preferential Creditors, Other operational or unsecured creditors, the stakeholders. This part emphasizes the “No Creditor Worse off” Principle. This is followed by the recommendations on Confirmation standards and the legal requirements to be adhered to. And, finally the particulars on the Implementation, Supervision, Termination of the Plans in question and the Tax implications of the same.

Reconsidering addition of Section 29A – clarifying the controversies

The Inclusion of the provision of Section 29A which declared the persons responsible for the Sorry State of Affairs of the Corporate Debtor Ineligible and restrained them from submitting Resolution Plans and gaining back the control of the very Corporate Debtor in question. The particulars of this section assert protection to the Creditors of the company by safeguarding them against unscrupulous persons trying to take undue advantage of the procedure which is meant to be carried out in Good Faith and undermine the process with no intention to contribute to the revival of the business.
It is obvious that the intention behind inserting Section 29A is to restrict those persons from submitting a Resolution Plan who could hurt the entire Corporate Insolvency Resolution Process. This provision would indirectly ensure adhering to timelines for the resolution put forth by the Code which was otherwise being hampered by the loopholes in absence of such a stringent criteria-driven approach.
It provides for a Diligence Framework enabling the Committee of Creditors to make a proper assessment of the solvency, integrity, and credibility of the resolution applicant before approving a Resolution plan keeping in view the scale, complexity, viability, and feasibility of the resolution plan to avoid entry of unsolicited applicants. The prescription of heavy penalties for the violation of the Code in this regard shall ensure keeping fraudsters at Bay.
As per the instructions of the Apex Court, this section also allows for the Applicant to file Resolution Plans once it clears its dues to the lenders and shreds the tag of ‘Non-Performing Asset’.
This provision also helped in filling the gaps in the Law, as the Insolvency Resolution Procedure had become cumbersome adding to the already heavy workload of the Resolution or the Insolvency Professional to verify the background of the Resolution Applicants which may also result in a delay in the process and missing the deadline so fixed by the Adjudicating Authority.
Due to its stringent qualification criteria, the Code ends up disqualifying the majority of the domestic and international players from participating in the process of reviving the Corporate Debtor which would, in turn, result in the Loss of the already depressed financial value of the Company.
The Scope of the terms ‘Related parties’ and the ‘Connected Persons’ haven’t been clarified in this provision of the Code.
One of the plus points of this section is also that the ‘Financial Entity’ have been excluded from the ambit of the ‘Related Party’ in the Code and it also allows limited exemptions to the MSMEs from the application of the same by allowing its promoters to submit a resolution plan provided a proven fact that he is not a Wilful Defaulter in any case.

So, when the Creditors are getting what they want and where the Resolution Plan, made adhering to the Law (the Code), is satisfying the very purpose of revival of the Corporate Debtor, then why to reconsider it and challenge its validity?

Recommendations

Extending a disqualification to a resolution application owing to inconsistencies in the relationships of the persons may prove to be adverse in that shrinking of the pool of Resolution Applicants. Anyone acting with a common objective of the applicant shall be subject to pass the test laid down in 29A.
Under Section 29A, the law should clarify that if an NPA account is held only because of the acquisition of the Corporate Debtor under the CIRP, then the disqualifications should be either relaxed for them or exempt them completely sighting the fact that the law was relatively New and that as per the Supreme Court, there is a need to encourage the Industry experience as regards the progress of the Law.
As far as Clause (h) of 29A is concerned, the intent of the clause could not have been to disqualify every guarantor for the reason of ensuring an enforceable guarantee as it may prove discriminatory.
Given the wide array of disqualification criteria laid down under section 29A and its applicability to the resolution applicant and the connected persons, in the interest of timely and transparent resolution, the resolution applicant may still be required to submit an affidavit stating that it is eligible to submit a Plan under this provision.
Note that Section 30(2)(e), which states that the resolution plan must not contravene any provisions of the law for the time being in force will adequately ensure compliance with section 29A of the Code.

Conclusion

The Section 29A of the Insolvency and Bankruptcy Code, 2016 of India laid down a multi-layered and comprehensive standard of disqualification that will ensure exclusion of Bona-Fide Resolution Applicants. The Application of this section may also bar crucial or potential stakeholders to bid for the Revival of the Company. Therefore, a certain amount of leniency by the courts in deciding the issue of qualification is the need of the hour to maximize the Benefits and Objectives of the Code to the Creditors and the Economy as a whole.

As an alternative to the current restrictions, a middle ground could be adopted which would permit the promoters to be able to submit the Resolution Plans like that of the common European practices, but with relevant safeguards in place to ensure that the Lenders make the most out of the Process. This shall also help in protecting the interest of various other stakeholders making the IBC and the CIRP much more economically viable for the promoters and the lenders holding the Code True to its Letter and Spirit.

There must be certain relaxations as suggested by the Insolvency Law Committee and its Report on the same dated 26^th March 2018, which are yet to be implemented in the day-to-day proceedings about the CIRPs which are live as I conclude this piece on a highly contentious topic of debate for quite some time. The Ultimate aim of the Legislation is to Revive the Company and avoid Liquidation, maintain Transparency and Ethical requirements and not repeat the mistakes of the previous Regimes for the purpose.

References

Critical Analysis of Section 29A of the Code, PDF by IBC Laws.
https://web.iima.ac.in/assets/snippets/workingpaperpdf/12136580552021-07-01.pdf
https://corporate.cyrilamarchandblogs.com/2019/02/swiss-ribbons-v-union-india-foundation-modern-bankruptcy-law/ – Reference to Swiss Ribbons case.
https://taxguru.in/corporate-law/eligibility-resolution-applicant-section-29a-ibc-code-2016.html – Details on the other Material Case studies.
https://uncitral.un.org/en/texts/insolvency/legislativeguides/insolvencylaw.

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Types of Directors under Companies Act, 2013

By

Shoronya Banerjee

-

December 3, 2021

0

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

Introduction

A company is an artificial person. For a company to carry out its day-to-day business it will need a living person who is in possession of a mind and hands and therefore capable of carrying out its actions. The company can act only through such living persons. These living persons are the directors of a company. The Companies Act, 2013 does not precisely define a director. Section 2 (34) of the Act states that “director” means a director appointed to the Board of a company. The board of a company comprises those people who carry out day-to-day business activities and manage the company. In short, the directors are the ones who look after the business of the company. And that is why the role of a director is the most important role that determines the success of a company.

Let’s put it this way – A good Director is like the captain of a cricket team. He organises the players/resources based on the demand. He performs for his team and not for personal gains. For him, his team comes first so his intentions from his team and company’s perspective are WIN-WIN.

Before we go on to discuss the different types of directors in a company, let us understand the different roles a director plays in a company, the composition of directors in different types of companies, and who is eligible to become a director.

Director’s role : servant, agent, trustee or managing partner of the company

Sometimes directors act as trustees, sometimes as agents, and sometimes as managing partners. A director is not a servant of the company. He is someone who controls the affairs of the company. A company hires a director so that he can look after the company’s business. We can call him the controller of a company’s affairs but not a servant. Directors get hired by the company in a professional capacity so that they can direct the affairs of the company. Thus, they are the officers and not servants of a company.

The landmark case of Ferguson v. Wilson held directors to be the agents of a company. A company is not a real person and can function only through its directors. Thus, the relationship a director shares with his company is like that of a principal and agent. When a director signs on behalf of the company, it is the company that is held liable and not the director.

Directors are sometimes also considered as trustees, since a director is somebody who manages the money and properties that come under his control, he discharges the duties of a trustee.

Composition

Section 149 of the Companies Act, 2013 discusses the composition of directors in a company i.e. the composition of a Board of a company should be as follows:

Public company:

Minimum number of directors – 3 (three) and

Maximum number of directors – 15 (fifteen)

Also, at least 1/3^rd (one-third) must be independent.

Private company:

Minimum number of directors – 2 (two) and

Maximum number of directors – 15 (fifteen)

One person company (OPC):

Minimum number of directors – 1 (one)

In every company, a maximum of 15 directors can be appointed. And if a company wants to have more than 15 directors then it can be done by passing a special resolution in the company.

Eligibility

Following persons are not eligible to become a director of a company:

Company auditor,
A Director who has been banned,
An individual under the age of 16 years,
An undischarged bankrupt/insolvent.

Types of Directors
Based on functions –

(a) Executive Director– The two types of Executive Directors –

Managing Director,
Whole time Director.

(b) Non – Executive Director – The two types of Non- Executive Directors –

Nominee Director,
Independent Director.

Based on appointment –

Additional Director,
Alternate Director,
Casual Vacancy Director.

Other types –

Residential Director,
Women Director,
Small Shareholders Director,
Shadow Director.

There are a variety of Directors under the Companies Act, 2013. Let’s discuss each one in detail.

Executive Director

Executive directors are internal professionals i.e. they are internal to the organization and are involved in the daily functions of the company. Any person who is a full-time employee of the company (i.e. whole-time director) or who is responsible for the day-to-day operations of the company (i.e. managing director) will be called an Executive Director. Thus, an Executive Director can be designated as Managing Director and whole-time Director. Generally, an executive director is paid more than a non-executive director because they are believed to have rich expertise and experience in their field. He is usually responsible for the executive functions in the management and administration of the company. Certain skills are required for a person to be an executive director.

As defined in Section 2(94) of Companies Act, 2013 – Rule 2(1) (k) of Companies (Specification of Definitions Details) Rules, 2014 – Executive Director means a whole-time director.

They are generally appointed through an appointment agreement and their qualification and remuneration will be discussed in detail before they are appointed as Executive Directors.

Tenure – Managing director or a whole-time director can be appointed for a maximum period of 5 (five) years. They are eligible for re-appointment. The re-appointment can be done for the next term but not before one year of the expiry of the current term.
Age limit – The minimum age of a director should be 21 years. And the maximum age should be 70 years. For a person above 70 years, shareholder’s approval in the General meeting is required.

A Company (public or private) cannot appoint a manager along with a managing director but can appoint a whole-time director along with a managing director or manager.

Managing Director – He is an executive director. When considerable power of managing the affairs of a company is given to a director either by way of –

Articles of Association of the Company (AOA) or
An agreement with the Company, or
A resolution passed in its general meeting, or
By its Board of Directors.

Then he will be a Managing Director of that Company.

Whole Time Director – Director + Whole Time Employee of the company = Whole Time Director. As per Clause 2(94) of Companies Act, 2013 – “whole-time director includes a Director in the whole-time employment of the company. He is also an executive director of the company.
Non-Executive Director

Non-executive directors are external professionals. The Companies Act, 2013 does not define non-executive directors but we can understand the meaning from the definition of executive directors. Directors who are not involved in the day-to-day functions or activities of the Company are called non-executive directors. Despite not being involved in the day-to-day business they are still on the Board. The reason is that the Board needs their inputs in certain areas, or because there may be a legal requirement to have them on the Board. Non-executive directors come to the company only to make certain decisions at the Board meeting.

Two types of Non-executive directors are –

Independent Director – Directors who have knowledge or network in a particular area or a particular field can be termed as independent directors. Usually, companies hire ex-officials for such roles because they have the industrial expertise and the experience which is required to run a company smoothly. Women directors can also be appointed as independent directors. Independent directors help maintain transparency, which is an especially relevant factor, especially in the corporate regime.

As per Section 149(2) – an independent director is a director other than managing director, whole-time director or nominee director and in the opinion of the Board possesses relevant expertise and experience.

As per Section 149(4) of the Companies Act, 2013 – every listed public company must have at least 1/3^rd of the total number of directors as independent directors. This will include companies listed on the SME segment of the stock exchange.

The Central Government also prescribes the minimum number of independent directors in the case of unlisted public companies.

The Central Government vide Rule 4 of Companies (Appointment and Qualification of Directors) Rules, 2014 – states that unlisted public companies must appoint at least 2 (two) directors as independent directors in the following circumstances –

If the paid-up share capital exceeds Rs. 10 crores.
If the turnover exceeds Rs. 100 crores.
If the aggregate of all the outstanding loans, debentures and deposits, exceeds Rs. 50 crores.

A declaration by an independent director that he meets the criteria of independence is a must-

At the first meeting of the Board in which he participates as a director and
At the first meeting of the Board in every financial year or
Whenever there is any change in the circumstances which may affect his status as an independent director

Qualification – An independent director must have skills, experience and knowledge in one or more fields of law, management, sales, marketing, corporate governance, administration, research, technical operations or other disciplines related to the company’s business.
Tenure – The term of independent director must not exceed 5 (five) years. They can be elected again for a second term. A cooling period of 3 years is compulsory after the expiry of the second term. Companies are allowed to appoint independent directors for less than 5 years, however a person cannot be appointed for more than 2 (two) terms.

All independent directors should meet at least once a year in the absence of non-independent directors and other members of the company so that they can evaluate the performances of the company’s chairperson, other directors, and the Board. An independent director must comply with the functions and duties mentioned in the Code of Conduct provided under Schedule IV of the Companies Act, 2013. Independent directors are not paid remuneration but are eligible for sitting fees for the meetings they attend. Their nature is independent, they cannot receive any stock option. As per Regulation 25 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 – an independent director cannot be a director of more than 7 (seven) listed companies.

Nominee Director – Section 149(7) and Section 161(3) of the Companies Act, 2013 deals with a Nominee director. If it is authorized by the Articles of Association (AOA) of a company then the Board may appoint any person as a director nominated by any institution in pursuance of the provisions of any law for the time being in force or any agreement or by the Central Government or the State Government under its shareholding in a Government company. If the Articles of Association of a Company authorizes it, only then can a nominee director be appointed by the Board.

They represent the stakeholders on the board of directors. To put it in simple terms, a nominee director is a representative of the stakeholder who protects the stakeholder’s interest. Their job is to see that the company does not function in a manner detrimental to the interest of the stakeholders they represent.

Appointment – Nominee directors are appointed by an agreement (either Shareholder’s agreement or financing agreement) between the company and the stakeholder. The stakeholders are responsible for the payment of such nominee directors they may appoint. A nominee director must act in good faith and the interest of the company even if they are nominated by the stakeholders.

In the landmark judgment of Tata Consultancy Services Limited v. Cyrus Investments Private Limited & Ors. – It was made clear by the Court that while a nominee director is entitled to take care of the interests of the nominator, he is duty-bound to act in the best interests of the company and not fetter his discretion.

Bhardwaj Thiruvenkata Venkatavaraghavan v. Ashok Arora – the Delhi High Court held that Nominee Directors must act in the best interest of the Company and its shareholders and not only in the interest of their Nominators.

Additional Director

Provisions of Section 161(1) of the Companies Act, 2013 deal with the Additional Director. Where there is heavy pressure of work on the Board of directors then the Board of directors can appoint an additional director, if authorized by the Articles of Association of that company.

Mode of appointment – Additional directors can be appointed by passing a resolution at the board meeting or through circulation.

Who can appoint? – The power to appoint an additional director rests with the Board of directors and this power is given to the Board by the Company’s Articles of Association (AOA). If the AOA of the company does not confer the powers on the Board then the Board cannot appoint an additional director.

Tenure – Additional director holds office only up to the date of next Annual General Meeting (AGM) or the last date, on which the annual general meeting should have been held, whichever is earlier. If a person does not get appointed as a director in a general meeting then he cannot be appointed as Additional Director.

An additional director can be a managing or a whole-time director. An additional director can also be considered a rotational director. The powers and rights of the additional directors will be the same as other directors of the Company.

T.M. Paul vs. City hospital Pvt. Ltd (2000) – It was held that an additional director cannot be appointed on extraneous considerations such as strengthening the position of the majority in the Board.

Alternate Director

Provisions of Section 161(2) of the Companies Act, 2013 deal with Alternate directors. When a director of a company is not in India for more than (3) three months then an alternate director can be appointed on the original director’s behalf. An alternate or an alternative director acts on behalf of the director who is not in the office due to being away for more than 3 months.

Thus, the alternate director exercises his duties for a limited time only i.e. only till the time the principal director returns to his duties. In other words, alternate directors are appointed by the Board as a replacement for a director who is going to be away from India and is unable to attend board meetings. Even though a director can be present through video conferencing, at times the shareholders might find the need to have a physical presence on the Board, which is when an alternate director gets appointed.

If, in the absence of an independent director, an alternate director is to be appointed on his behalf, then that alternate director also needs to be independent. Further, an alternate director cannot be appointed as an alternate director for some other director in the same company.

Tenure – An alternate director will hold office only till the time the original director comes back to India. While in office as an alternate director, he will be responsible for all practical purposes and will be entitled to all notices of the meetings along with the original director. The decisions taken by him in his capacity as an alternate director will be valid.

Mode of appointment – The AOA of the Company must authorize the Board to appoint an alternate director or he can be appointed by passing a resolution in the general meeting or through circulation.

If the original director resigns or is removed then the alternate director will also vacate his office unless the Board appoints him as an additional director. An alternate director can be considered as a rotational director only if the original director is rotational. An alternate director cannot be considered as a proxy of the original director.

An alternate director can be appointed as a managing director because there is no provision in the Companies Act 2013, which will prohibit alternate directors to be appointed as managing directors provided that he must comply with sections 195,196 and schedule V of company act 2013.

Casual Vacancy Director

Provisions of Section 161(4) of the Companies Act, 2013 deal with a casual vacancy director. Before understanding who is a casual vacancy director, it is important to understand the meaning of casual vacancy. Casual vacancy means a vacancy in the office due to the reasons of death, resignation, disqualification, incapacity, and removal. Thus, a director assuming office due to any of these reasons will be considered as a casual vacancy director. The vacancy arising in the office of the director shall be considered as a casual vacancy if such a director was appointed by a shareholder in a general meeting. Only the shareholder will have to make a valid appointment with such a director. The concept of a casual vacancy director applies only to public companies.

How to fill a casual vacancy?

The AOA need not authorize the Board to fill the casual vacancy.
If AOA has prescribed a procedure as to how to fill such a casual vacancy then that procedure needs to be followed.
If AOA has not mentioned any procedure for such filling of casual vacancy then the Board can pass a resolution in the Board meeting but not by way of circulation.

Thus, even if the AOA is silent on filling in the casual vacancy, the Board has the power to fill such vacancy.

Appointment – The Board of directors can appoint a casual vacancy director. AOA need not expressly state for filling in the casual vacancy. Such a director needs to be appointed in the Board meeting only.
Tenure – Casual vacancy director shall hold office only up to the date up to which director in whose place he is appointed would have held office if he had not vacated. The concept of reappointment applies to the original director not to the casual vacancy director.

A casual vacancy director can be appointed as a Managing director but he cannot be considered as a rotational director.

Residential Director

Provisions of Section 149(3) of the Companies Act, 2013 deals with the residence of a Director. The new Companies Act introduced this concept of Resident Director. The Act makes the residence of a Director in India mandatory.

It states that every Company shall have at least 1 Director who has resided in India for a total period of not less than 182 days in the previous financial/ calendar year. This provision applies to all companies, both private and public.

In the case of Companies that are newly incorporated, the requirement of 182 days shall apply proportionately at the end of the financial year in which it is incorporated – (proviso to section 149(3) inserted w.e.f. 7-5-2018).

Due to the COVID-19 pandemic, the MCA General Circular No. 36/2020 dated 20-10-2020 states that the minimum residency in India for a period of 182 days for the financial year 2020 – 2021 will not apply.

Declaration of a Resident Director is not required. A Resident Director is like any other Director and he is required to attend at least 1 Board Meeting in a year.

Women Director

The Companies Act, 2013 made it mandatory for certain companies to appoint a woman director. As per the provisions of Section 149(1) of the Act and Rule 3 of the Companies (Appointment & Qualification of Directors) Rules, 2014 – The Companies that need to appoint a women director are as follows –

Every listed company.
Every public company having paid-up share capital of Rs. 100 crores or more.
Every public company which has a minimum turnover of Rs. 300 crores or more.

The time limit for an appointment – The existing Companies (i.e. old companies under the previous Companies Act, 1956) shall appoint women directors within 1 (one) year from their commencement. The new Companies (i.e. under the new Companies Act, 2013) have to appoint women directors within 6 (six) months from the date of their incorporation. If this provision is violated then it is punishable under Section 172 of the Companies Act, 2013.

Case Law – Jalpower Corporation v. ROC (2016) – In this case, there was a delay of 6 months in appointing a woman director. Jalpower Corporation stated that the delay was committed due to unavoidable circumstances and it was not deliberate. While admitting to the offence, it stated that the said offence did not cause any harm to the public interest. Due to this delay, the ROC had issued a show-cause notice to Jalpower Corporation for the non-appointment of a woman director. The Court held that not appointing a woman director was a compoundable offence and punishable under Section 172 of the Companies Act, 2013. A fine of Rs. 50,000/- was imposed as a compounding fee which was to be paid within 3 weeks from the date of receipt of the order.

Tenure – The tenure of women director is till the next Annual General Meeting (AGM) from the date of her appointment. She can resign any time she wishes by giving notice to the Company.

The women director can be appointed during the time of registration of the Company or after the incorporation of the Company by the Board of Directors and the shareholders.

Any intermittent vacancy of a women director shall be filled by the Board of Directors within 3 months from the date of such vacancy, or not later than the immediate next board meeting, whichever is later.

Declaration of a woman director is not required.

Small Shareholders Director

Any person who holds shares of the nominal value of not more than Rs. 20,000 in a Public Company is called a small shareholder. These small shareholders are allowed to elect a director in a listed company. Thus, directors elected by these small shareholders are called Small shareholders Directors. According to Section 151 of the Companies Act, 2013 every listed company may have 1 (one) director elected by such small shareholders.

Thus, a small shareholder director can be appointed by a Company if –

The Company is a Public Company;
The Company has at least 1000 or more small shareholders;

Only if these two criteria exist, the listed company can have one director elected by a small shareholder.

Appointment – The appointment of such a director is optional and that is why there are hardly any companies that have a small shareholder director. The Company can appoint a small shareholder director either on its own or on the application made by a small shareholder.

Rule 7 of Companies (Appointment and Qualification of Directors) Rules, 2014 lays down certain provisions relating to Small Share-Holder Director which are as follows –

At least 1000 small shareholders, or 1/10^th of the small shareholders, whichever is less, should provide a written notice to the Company. But the notice should be provided 14 days before the General Meeting.
The said notice must contain details of the proposed director. Details such as name, address, folio number, shares held etc.
The said notice must be signed by the person proposing to be the director.
The said notice should be accompanied by a statement signed by the proposed director stating that he has a Director Identification Number (DIN), he is not disqualified to be a director and he has given his consent to act as a director.

Other provisions related to a small shareholder director are as follows –

A small shareholder director is eligible for an independent director as per the provisions of Section 149 (6) & (7) of the Companies Act, 2013.
A small shareholder director shall not be considered as a retiring director.
A small shareholder cannot be appointed as a Managing Director or a Whole Time Director.
A person shall not hold office as a small shareholder director in more than 2 (two) companies at the same time i.e. he is allowed to hold office in 2 companies at the same time but not more than 2.

Tenure – A small shareholder director can be appointed for a maximum period of 3 (three) years. He is not liable to retire by rotation and he is also not eligible for reappointment after the expiry of his tenure. Further, he cannot be associated with the company for 3 (three) years after he has finished his service.

Shadow Director

A shadow director is nowhere mentioned in the Companies Act, 2013. A shadow director is someone who is not appointed officially as a Director of the company but the Board follows his directions and orders. They are very influential just like any other Director of a company but they manage to avoid the liability that arises thereof. They give orders and their orders are followed but they do not have any managerial position in the company. Such Directors are known as Shadow Directors.

Example – Mr Ram is not a Director in QPR Ltd. Nor is he an employee nor does he have any contractual association to QPR Ltd. Before taking any major decision, the Board of QPR Ltd., consults Mr Ram. And only after Mr Ram’s directions, QPR Ltd. goes ahead with the business. In this case, Mr Ram will be a Shadow Director of QPR Ltd.

Section 2(59) of the Companies Act, 2013 defines “officer” which is similar to a Shadow Director. It means “any person under whose directions or instructions the Board of Directors or any one or more of the Directors are accustomed to act”. Also, under Section 2(60) (v) – a similar kind of person is mentioned known as an “officer in default”. The Shadow Director can also be an officer in default.

Case Law: Re Hydrodan (Corby) Ltd [1994] is a UK company law case, which explains the meaning of a shadow director. This case laid down a few characteristics of a Shadow Director –

A person who is not a director in the Company;
A person who instructs the Board of Directors concerning the management of the Company;
The Board follows the instructions and directions given by such a person and then acts.

It is important to note that if the Board is acting and following the directions given by a person who is not the director in a company and the Board is doing it continuously and the majority is following those directions only then that person can be referred to as a Shadow Director or Deemed Director.

Thus, the following points need to be established for a person to be called a shadow Director-

Not in official capacity – Such a person is not a Director in his official capacity.
Direct involvement – The person is involved directly in the affairs of the company. He is not merely advising but is directly involved in the company’s management.
Continuity – The Board of Directors are following the instructions of such a person continuously and not just once or twice.
Majority following – The majority of the members of the company are following the instructions and directions given by such a person.

Conclusion

The famous American Lawyer, Charles Keating once said – “A director’s role is to create an atmosphere where his company can be created.” And rightly so because every director in a company whether it is a residential director, women director, shadow director, independent director, or any other director discussed above, all have a specific role to play and all these types of directors must work in a way that will benefit the company’s growth.

As it has been said, directors are the brain of a company and a company acts only through them. All these directors represent their company and their position is very important for the company. The Companies Act, 2013 has given certain powers to the Directors so that they can contribute their best to the company. Along with these powers, the Act also imposes certain restrictions to avoid any misuse of such powers.

References

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Salwa Judum movement and government’s failure

By

Rachit Garg

-

December 3, 2021

0

This article is written by Divyanshi Singh of Symbiosis Law School, Noida. This article explains the Salwa Judum movement in detail and how the government failed in carrying it out.

Introduction

The Salwa Judum Movement, known for its failed attempt to counter the Naxalite movement, was a part of an anti-insurgency operation in 2005 in Chhattisgarh. It was a state-sponsored movement to counter the ongoing Naxal violence in the state. However, in 2011, the Supreme Court of India outlawed the movement. To understand what the Salwa Judum Movement was and why it failed, we need to first understand what it was countering because that will help us understand the topic better.

Naxalite movement

Naxalite is a shorthand for the Maoist revolutionaries in India. The Naxal Movement started from the Naxalbari village in West Bengal, where some people gave the general designation to several Maoist-oriented, militant insurgent and separatist groups that have operated intermittently in India since the mid-1960s. On a broader aspect, Naxalism or the Naxal movement is applied to the communist insurgency itself. Let us understand the origin of the movement.

Naxalbari uprising in 1967

An armed peasant revolt occurred in the Naxalbari block of the Siliguri subdivision of Darjeeling in 1967. The revolt was led by the tribals and the communist leaders. The aim for the same was to launch an armed protracted people’s war in India for which Charu Majumdar had written the Historic Eight Document. This document laid a foundation for the Naxalite movement in India.

On 22 April 1969, the All India Coordination Committee of Communist Revolutionaries gave rise to the Communist Party of India (Marxist–Leninist) (CPI (ML)). The party was formed by the radicals of the CPI-M, like Majumdar and Saroj Dutta. Some groups maintained their own identities and remained independent of CPI (ML). One such organization was named Dakshin Desh after the name of its publication. The group has started printing Dakshin Desh in a Maoist style. A group of trade union activists joined the organization.

Practically, all Naxalite groups trace their origin to the CPI (ML). Further, the new party was divided after Satyanarayan Singh revolted against the party leadership. Two new factions came into being, one led by Charu Majumdar and the other by Satyanarayan Singh.

In 1972, the radical leader Charu Majumdar died of multiple diseases. His death caused the splitting of his party into pro and anti-Majumdar factions. However, the split did not stop there and the pro-Majumdar faction split again in 1972. This time it was based on pro and anti-Lin Biao factions.

The pro-Lin Biao faction became known as the Communist Party of India (Marxist–Leninist) and the anti-Lin Biao-group later became known as Communist Party of India (Marxist–Leninist) Liberation. The movement deteriorated into extreme fanaticism as a result of both external repression and a failure to sustain internal unity.

In 1975, the Dakshin Desh group was renamed as Maoist Communist Centre. On April 22, 1980, the Communist Party of India (Marxist-Leninist) People’s War, commonly called People’s War Group (PWG), was founded by Kondapalli Seetharamaiah. He sought a more efficient structure in attacks and followed the principles of Charu Majumdar. The PWG carried out various revolts and violence over decades.

In 2004, the Communist Party of India (Marxist–Leninist) People’s War (People’s War Group), and the Maoist Communist Centre of India (MCCI) merged and formed the Communist Party of India (Maoist).

This multiple splitting and constant violence is the biggest threat to the internal security of our country. In the eastern states of Chattisgarh, Odisha, Jharkhand and West Bengal, groups often refer to themselves as Maoists. They have been declared as a terrorist organization under the Unlawful Activities (Prevention) Act, 1967.

Causes of Naxalite movement

Every movement and every violence has a cause because of which it initiates. A few causes for the violent Naxalite movement are as follows:

Lack of Human Development
Exploitation and harassment suffered by the tribal population
Cultural Humiliation
Poor Health care access
Slow implementation of land reforms
Poverty causing low literacy rate

The Red Corridor

The Red Corridor refers to the territory occupied by the Left Wing Extremists, that are, the Maoists or the Naxalites. The area is spread over eight or more states. Following is the list of Affected areas divided based on their severity:

The Severely Affected States:

Chhattisgarh
Jharkhand
Odisha
Bihar

The Partially Affected areas are:

West Bengal
Maharashtra
Andhra Pradesh

The Slightly Affected areas are:

Uttar Pradesh
Madhya Pradesh

Salwa Judum movement

The word ‘Salwa Judum’ means ‘Peace March’ in Gondi, a tribal Language. In 2005, the Chhattisgarh state government, with the support of the Home Ministry, sponsored an anti-Naxalite movement to counter the ongoing violent Naxalite movement in the state under the leadership of Congress MLA Mahendra Karma. It was a very rare instance in which two political parties collaborated for a movement against the Naxalites.

Very soon, the meetings were held in villages by the Salwa Judum activists along with the security forces. In these meetings, the activists tried to persuade the village youth to join the movement and as per the media, the villagers were even threatened that if they would not join the movement, their houses would be burnt.

Appointment of Special Police Officers by the Chhattisgarh government

The local tribal youth were trained by the state government for the Salwa Judum movement. Special Police Officers (SPO) had been appointed by the Chhattisgarh Police Regulations, with a total of 4048 officers. There is the active participation of the Salwa Judum and the security forces training them in military and weaponry skills as part of an official plan to create a civil vigilante structure parallel to that of the Naxalite.

People were forcibly removed from their communities and confined in ‘relief camps’ by the Salwa Judum activists and experienced extreme shortages of food, water, and other basic utilities.

All villages that refused to relocate to camps were labelled as “Maoist” and denied all health, education, and other services, including market access. As a result, a vast number of people were denied their fundamental rights guaranteed by India’s constitution. It was unmistakably admitted that the most serious offence, according to the law, is to stay neutral.

Legal provisions for the appointment of Special Police Officers

Under the Chhattisgarh Police Regulations, SPOs (appointed under Sections 17, 18, 19 of the Police Act 1861) are recruited during the special situations of unlawful assembly or riot or disturbances of the peace, in the case when the regular police force is insufficient to handle the crowd. They are not meant to counter long-term problems like that of guerilla warfare.

SPOs are expected to be persons of stature in the locality who can keep the peace, not juveniles or lumpen elements with supposedly criminal backgrounds. The SPO has the same powers, privileges, duties, punishments, and protection as a regular police officer.

A large number of SPOs were unemployed tribal youngsters who had joined the program solely to earn the Rs.1500 that SPOs were paid. Even this small amount was paid irregularly. Many of these SPOs had no clue that they were exposing themselves to terrible danger or that they were choosing sides in a battle against their own communities when they signed up. They assumed they were getting a ‘government job’, which is much desired after in an area with significant unemployment.

The illegality of Salwa Judum – analyzing the Supreme Court judgment

Social anthropologist Prof. Nandini Sundar and others filed a writ petition with the Supreme Court, which was decided on July 5, 2011, by Justice B. Sudershan Reddy and Justice S S Najjar. The ruling strongly indicted state officials, who were found to have violated constitutional principles by arming youth who had only completed the fifth grade and empowering them with police powers. The Supreme Court in Nandini Sundar & Ors. v. State of Chhattisgarh (2011) stated that Salwa Judum is illegal. Let us analyze what the case was about.

Issues

The major issue, in this case, was to examine the constitutional validity of the Chhattisgarh Government’s recruitment of tribal people as special police officers (SPOs).
Another important issue raised in this case was to analyze the constitutional validity of the Chhattisgarh Police Act, 2007.

Laws involved

Section 17 of Indian Police Act, 1861– District Magistrate has the authority to appoint the SPOs.
Section 18 of the Indian Police Act, 1861- SPOs draw their power, duties, and accountabilities from this statute.
Chhattisgarh Police Act, 2007– SPOs were appointed under this Act.
Article 21 of the Constitution of India– Violation of human rights as many innocent people lost their lives.

Judgment

The Chhattisgarh government was ordered by the Supreme Court of India to disband Salwa Judum, a militia unit formed to confront Maoist guerrillas that control significant sections of the country on July 5, 2011.
The Supreme Court ordered the Chhattisgarh police to immediately suspend and discontinue employing SPOs in any form in any actions, directly or indirectly intended to oppose Maoist/Naxalite activities.
Salwa Judum became illegal on July 6, 2011. To end this, the Chhattisgarh government was ordered to retrieve all of these weapons as well as their ammunition and equipment.
It was held by the Supreme Court that Chhattisgarh must cease and refrain from deploying SPOs in any fashion or form in any operations aimed at stopping Maoist/Naxalite activities in the state of Chhattisgarh. Moreover, the Union of India was asked not to use its fund, directly or indirectly, in any form of counterinsurgency operation against the Naxalites.
The Chhattisgarh government was required to make arrangements for adequate security and take whatever measures are necessary, within the bounds of constitutional legality, to protect the lives of those who had previously been employed as SPOs, or who had received any initial orders of selection or appointment from any forces.
The State of the Chhattisgarh shall take all appropriate measures to prevent the operation of any group, including but not limited to Salwa Judum and Koya Commandos, that in any manner or from seeking to take the law into private hands, act unconstitutionally or otherwise violate the human rights of any person. The measure to be taken by the State of Chhattisgarh shall include, but not be limited to, investigation of all previously inappropriately or incompletely investigated instances of alleged criminal activities of SalwaJudum or those popularly known as Koya Commandos, filing of appropriate FIR and diligent prosecution.
In addition to the above, the appointment of the SPOs to perform any of the duties of regular police officers, other than those specified in Section 23(1) (h) and Section 23 (1) (i) of the Chhattisgarh Police Act, 2007, to be unconstitutional. Moreover, the court also upheld the violation of human rights in instant cases.

Case Analysis

The deployment of tribal youth as Special Police Officers (SPOs) against Maoist insurgency was deemed unlawful and unconstitutional by the Supreme Court in the current case. One of the extraordinary initiatives taken by the court was to instruct the state of Chhattisgarh to halt and refrain from utilising SPOs in any fashion or form in any activity. However, one should not overlook the number of occasions where SPOs played an important part in resolving the situation, as well as those reports that supported the appointment of SPOs. Overall, the decision is historic in that it upholds constitutional ideals.

Steps taken to remove Naxalite Movement

Intelligence and Networking

Multi-Agency Centre (MAC) at the central level and State Multi-Agency Centre (SMAC) at the state level were created by the state governments. In Maoist hotspots like Jagdalpur and Gaya, these centres have shown to be incredibly effective. Strengthening State Intelligence Bureaus (SIBs) in LWE-affected areas is another important step.

Deployment of Central Paramilitary Forces

An important aspect in improving the situation was the development of the Central Armed Police Forces (CAPF) to carry out counterinsurgency strategies. CAPFs have been deployed in the Naxal-affected states over 70,000. Additional assistance was provided by CoBRA, a group of soldiers skilled in guerrilla warfare and jungle warfare skills and dispatched to the worst-affected areas.

SAMADHAN

SAMADHAN was introduced by the Narendra Modi-led NDA government in May 2017 to hit at important points in the Maoist links. The acronym stands for:

S – Smart Leadership

A – Aggressive Strategy

M – Motivation and Training

A – Actionable Intelligence

D – Dashboard Based KPIs (Key Performance Indicators) and KRAs (Key Result Areas),

H- Harnessing Technology

A – Action plan for each theatre

N- No access to Financing.

Infrastructure Schemes

This programme provides funding for improved mobility, weaponry, vehicles, and other important infrastructure. A total of 250 fortified police stations were opened in the LWE-affected states as part of the plan. In December 2016, the Union government approved road-connectivity projects in 44 of the worst-affected areas, allocating INR 14025 crores.

Ban on the CPI (Maoist) and the UAPA Act, 2009

In 2009, the Central Government banned the CPI across the country (Maoist). The Unlawful Activities Prevention Act, 2009 was also passed by the government to put a check on the Naxalites and provide police and paramilitary forces greater autonomy.

These are just a few of the factors that characterise the government’s stance in Naxal-affected states. “One method fits all” would be a disaster given the wide variety of Maoist and Naxal populations. So the government is moving on with not only the “Law and Order Approach” but also the “Development and Rehabilitation Approach,” which has proven to be equally beneficial.

Conclusion

To conclude, the state must begin fighting the conflict lawfully, reduce collateral damage, improve the leadership of the security forces, and abstain from any human rights abuse. It would be better for the security forces to start defending the civilians living in the conflict zone instead of simply fighting Maoists on a massive scale. A political challenge must be mounted against the Naxalite movement that offers better alternatives to a Maoist approach and new perspectives. When it comes to this, the state should begin addressing the basic needs of the poor and performing its primary responsibility to offer human development to these disadvantaged communities.

References

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Legality or morality : an analysis in light of Shashimani Mishra & Another v. State of Madhya Pradesh & Another

By

Rachit Garg

-

December 3, 2021

0

This article is written by Priyanshi Soni, from Symbiosis Law School, Noida. This article seeks to discuss the concept of legality and morality and weigh them against each other, in the context of a recent Madhya Pradesh High Court judgment.

Introduction

In this case, a serious issue of legality and morality is discussed, specifically dealing herewith the right to die with dignity. It has been argued that something lawful should also be moral. But looking into intricacies, it is not always so. There are instances where a thing that invokes moral sentiments into the people of a community may not lawfully be a compulsion. Morals cannot be enforced and cannot be forced upon any individual; it is the law that is enforceable and has to be followed by all.

Law versus morality

Concept of morality

Morality means a kind of good conduct and behaviour that is acceptable by society in general. It is a matter of code of conduct to decide right and wrong and is guided by philosophy, religion, or individual conscience. It aligns with ‘ethics’ which is a study of ‘philosophy of morality’. Stanford Encyclopedia of Philosophy defines morality as some code of conduct put forward by society, group, or religion, or is accepted by an individual for her behaviour in a descriptive sense. Normatively, it refers to a code of conduct that, given specified conditions, would be put forward by all rational persons. Morality can be further classified as natural morality or positive morality, private or public morality, theological or totalitarian morality, liberal or utilitarian morality, and so on.

Morality is like a standard of behaviour. While it cannot be denied that it influences the concept of justice, it would be wrong to say that justice and law depend totally on morality. Morality can even vary from situation to situation and place to place, but majorly, the core and aim of morality remain the same.

If we see the origin of preaching and following morals and the righteous path, it comes from the very basic unit of society- the family. At times, there is no logic behind morals, for example, touching others’ feet, but still, these morals prevail widely and are naturally taught to the children of the family too. This is fully one’s private practice which must not be determined by law. Morality can have a negative impact on society.

Morality is a very important element of society that defines our behaviour and actions. But, in today’s times, people relate morality with religion, which is not correct. At times, religions can differ to a great extent and can even lead to wars between different sects. But it is not so as morality is more of a universal thing and even a person who is an atheist can be moral.

Nexus between law and morality

The relationship between law and morality is one of the more enduring issues of jurisprudence. It is not wrong to say that law and morality are the two sides of the same coin. Without one, the other is clueless. What morality does is it influences our behaviour and action whereas we have to follow the laws as they are compulsory for everyone.

Positivists believe that there is a difference between ‘law as it is’ and ‘law as it ought to be’. Positivists also believe that law is not influenced by morality. They acknowledge legality/legal rights over morality, but in the end, it feels insufficient to resolve social problems.

There is a mutual interdependence of law and morality. Law that is without morality will of course lead to corruption, immoral power play, and misuse by those in power and also by common people. Morality can be evaluated as the basis of law to test positive law as an ultimate end of the law in the form of justice.

Law is influenced by both religion and morality, and so there is a sought of interaction between the legal system and our society’s moral and religious faculties. In a traditional culture, laws have never played a major role, whereas religion and morals have always played strong roles. However, in modern culture, life moves at a breakneck pace, making morals and religion obsolete and so now, the law is playing a major role in human development.

The conflict between law and morality

Does the law have the power to interfere with the religious and moral feelings of the people? This includes instances such as prostitution and homosexuality, where people have conflicted opinions based on their moral sentiments. Homosexuality is considered to be immoral by many, and it was even criminalized in India under Section 377 of Indian Penal Code (IPC) until 2018 when it was finally scrapped. Such laws might be considered immoral by many, but with the modern pace, it is important to think with practicality and equality and thus, they are made legal.

Another issue we are handling is abortion. Abortion is accepted as one of the most debatable issues in bioethics. It does not only involve doctors but also the morals and ethics of people and also the law. Abortion is immoral since it develops the deliberate destruction of a human being. As per the law in India, abortion is allowed in only a few exceptional cases and in a restricted manner. This shows that at times, man’s conscience may regard an activity as immoral, but practically, its legality has to be taken into consideration.

Natural law, positive law, and morality

Exclusive positivists like Bentham and Austin reject the involvement of morality in law, whereas inclusive positivists like Hart accept morality in law to some extent. They have always kept law away from morality as they believed that law should be studied as it is and not how it should be. Natural law thinkers, on the other hand, have always considered morality as higher law and ridiculed man-made laws. The natural law system depends upon the standards and yardsticks of morality to formulate any law, whereas the positivist system of law depends upon the conscious and deliberate attempt of lawmaking. It has always been contended by Austin and Bentham that law never enforces morality.

Law, at any given period and in any given place, becomes a tool for establishing a certain expected social conduct. Morals may be for enlightenment and to help individuals. Aspirations have an impact on life; therefore, a legal system should be based on principles of ease and fairness. A law cannot and should not promote any such moral which can impact the growth of society negatively.

As per Dworkin, the law is not entirely founded on social facts, but also involves moral justifications for institutional facts and activities that we intuitively accept as legal. He is not in favour of all sorts of morals, since it creates uncertainty in legal matters. Some empirically recognized morality is inextricably linked to the legal sphere and the underlying issues of legal principles. However, he opposes the “a priori” style of thinking.

Hart-Fuller Debate

Hart advocated a positivist stance, saying that morality and law are distinct. Morality, on the other hand, can play an important role in any legal system, but it cannot be dominating and determinant. After all, whether it is ethically just or unjust, the law is the law. Because of human frailty, approximate equality, limited generosity, limited resources, and limited understanding and strength of will, he emphasized the minimum content of natural law in positive law for the benefit of the legal system.

Fuller rightly asserted that the eventual need of law is to comply with inner morality. Law in total divorce or opposition to morality cannot be called a “law”.

Article 21 of the Indian Constitution

Article 21 of the Indian Constitution covers many aspects of personal liberty and the right to life. It ensures protection only against ‘State’ and not against ‘private individuals’. Article 21 corresponds to the Magna Carta of 1215, the Fifth Amendment to the US Constitution, Article 40(4) of the 1937 Irish Constitution, and Article XXXI of the 1946 Japanese Constitution. But what makes the Indian Constitution different from these rules on life and liberty is that the Indian Constitution treats individuals with an aim for overall development and well-being and protection from any sort of aggression by the State, whereas these other provisions treat individuals merely as physical entities.

There is an exception to this, i.e., except according to the procedure established by law, states shall preserve personal liberty and protect the life of an individual. This right extends to all the natural persons, i.e., to citizens as well as to foreigners.

Right to life with dignity

This implies that the right to life involves the right to be treated with dignity and respect. One should have the freedom to make his or her own decisions, as well as human respect in the community and access to necessities. In Occupational Health and Safety Association v. Union of India (2014), it was ruled that basic/proper working conditions and workplace environment fall under the right to live with dignity.

In a recent landmark judgment, the Navtej Singh Johar v. Union of India (2018) case on homosexuality, it was held that the right to live with dignity includes all those rights which enable a person to lead a respectful life in society without any disturbance to his personal safety, privacy, and respect. Thus, the court then decriminalized gay sex and scratched Section 377 of IPC.

Life is not counted by the mere existence of a human being. Like necessities, it has a more extensive significance which incorporates the option to live with human poise. Justice Mishra Ragnath rightly pointed out in Parmanand Katara v. Union of India that ‘preservation of life is of utmost importance because if one’s life is lost, the status quo ante cannot be restored as resurrection is beyond the capacity of man’. After the second world war, the international community considered human dignity as the most important thing to be protected if we want to protect humans.

But does this right to life also include the right to die with dignity?

Right to die with dignity

The presence of such a right as the right to life, including the right to live with human dignity, would imply the existence of such a right till the end of natural life. This may involve a dying man’s right to die with dignity. However, the right to die with dignity should not be confused with the right to die in an unnatural manner that shortens one’s natural life span.

In the recent past, a controversial issue was raised regarding the right to die, involving euthanasia. Euthanasia involves the deliberate termination of life; a patient suffering from a painful and incurable disease or incapacitating physical disorder chooses to end his life rather than suffering from the disease.

In its latest judgment in the case of Common Cause (A Regd. Society) v. Union of India & Anr, on March 9, 2018, the Apex Court included the right to die with dignity as a part of the right to life under Article 21. Before the common cause judgment, the right to die with dignity was not recognised. The Supreme Court of India held that a person in a persistent vegetative state can opt for passive euthanasia; a person can execute a living will to refuse medical treatment in case of a terminal illness. This judgment legalised passive euthanasia, thus conferring a right to die. The court held that the right to die with dignity is a part of the right to life with dignity. A person should have his decision on whether he wants to live or die. Such interpretation aligns with Article 1 of UDHR that defines a dignified life and Articles 6, 7, 17, and 18 of ICCPR that broaden the conceptualization of the right to a dignified life.

In 2020, due to COVID-19, the Supreme Court took suo motu cognizance regarding the undignified treatment and disposal of the bodies of COVID-19 patients. The Court asserted that indignity shown towards the dead patients shows “grave infraction of the citizen’s right to die with dignity”. In the suo motu writ petition, it was observed that the patients and dead bodies were kept in the same ward. In fact, the dead bodies were seen in the lobby and the waiting room without proper care. Even relatives of the body were not informed when the bodies were cremated so that they could have attended the last rites. A senior advocate of the Supreme Court has said the fundamental right to die with dignity embraces the right to decent burial or cremation.

Right to decent burial under Article 21

In a suo motu case of Madras High Court in April 2020, amid the COVID pandemic, the order issued summary guidelines concerning tackling the pandemic. It also asserted that the Dead Body Management mentioned standard precautionary measures and the court asserted the same, concerning Article 21.

The right to safety and dignity granted to a person under Article 21 of the Indian Constitution is primarily for the safety and dignity of that person’s body, as well as to prevent any crime or harm from being committed against it. Similarly, the bodies of the dead must be respected and treated with care and dignity, because a third person has no control over whether a person is alive or dead.

Right to privacy

This right was earlier not recognized as a fundamental right in India but with time, this became a fundamental right under the right to life. This is not an absolute right as it is subject to reasonable restrictions for the greater good.

The first case where the right to privacy was recognized was R. Rajagopal v. State of Tamil Nadu (1994). In this case, a prisoner wrote his autobiography, wherein he mentioned that the prison officials had acted as his partners in crime. The officials stopped the publication of the autobiography and so the editor filed a petition. It was held that it is the prisoner’s private information and it depends upon him about whom he wants to write in his autobiography and so he should not be stopped from getting it published. This set a precedent for future cases regarding recognizing the right to privacy as a fundamental right.

Justice K.S. Puttaswamy (Retd.) v. Union of India (2015) is a landmark judgment that has to be studied when we talk about the right to privacy. This is a very recent landmark case dealing with the right to privacy and Aadhar Card. A retired Karnataka High Court Justice brought the case before the 9-judge bench challenging Adhar Card which used biometric identification, stating that this hampers the right to privacy. At that time, no strict data protection bill existed. It was unanimously held that the right to privacy is a fundamental right under Article 21. It upheld that the Aadhar Card is constitutionally valid but certain provisions of it were struck down as being violative of the right to privacy.

Many other rights such as the right to medical assistance, sleep, etc. are also with time and coming judgments got added as a part of the right to life.

Case analysis of Shashimani Mishra v. State of Madhya Pradesh

Facts of the case

The Petitioner No.1 was Mrs. Shashimani Mishra, W/o. Mr. Kulamani Mishra. Petitioner No.2 was Dr. Rajendra Kumar Mishra and he was the son of Petitioner 1, and an Indian Police Service Officer posted as Additional Director General of Police (Recruitment). They both lived in D-7, 74 – Bungalows, Bhopal. The petitioners were aggrieved by the letter issued by the State Human Rights Commission. Respondent No.2 herein, addressed to the Director-General of Police, Madhya Pradesh, and by another letter issued by the DGP, to Respondent 2.

On 14th February 2019, a report in the newspaper name “Hari Bhoomi” was published which stated that the father of petitioner 2 passed away and still the dead body was kept with the petitioners in their residential premises which caused inconvenience to the two guards, who eventually fell ill allegedly due to the stench emanating from the decomposing body.

Based on this newspaper report, respondent 2 sent a letter to DGP seeking answers to these questions raised by him – “Call for the report from (1) DGP Bhopal – whether it is a natural death or unnatural? – whether the dead body has been cremated or not? – what scientific measures have been adopted to preserve the dead body and to stop the bad smell? Within three days”.

In response, the Police HeadQuarters (PHQ) replied to Respondent 2 that Mr. Kulamani Mishra was admitted at Bansal Hospital on 13/01/19 with a serious respiratory condition and that he passed away at 4:30 p.m. on 14/01/19 and mentioned that it was natural death but last rites were not performed. PHQ said that they cannot provide information on scientific measures practiced by the petitioner to keep the body at home.

Now, in response to this report by PHQ, the respondent issued directions to DGP for forming a committee of medical specialists headed by the Superintendent of Police, who will visit the resident of the Petitioner informing him the reason for the visit, and if the petitioner resists, the tram will be authorised under Section 13(3) of the Protection of Human Rights Act, 1993. Thereafter, the petitioner filed a writ petition on 22nd February.

The contentions of the parties

Contentions of the Petitioners

Mr. Ajay Mishra, Ld. Sr., counsel appearing for the petitioners, contended that the father of petitioner 2 Mr. Kulamani Mishra is still alive and is undergoing ayurvedic treatment. Although he agreed that Mr. Kulamani Mishra was admitted to the Bansal Hospital but he did not agree to the death certificate issued. The counsel of the petitioners also argued that it was wrong on the part of Respondent 2 who tried invading the privacy of the petitioners based on a newspaper report which is itself not correct. The counsel said that no such statement of guards got recorded regarding their illness due to the corpse, and also said that it is undisputed that the identity of the said guards is not known. He rightly asserted that if the father would have died that the decomposition had irritated the neighbours but no such complaint was done. The counsel said that there was a violation of the right to privacy as per Article 12 of the Universal Declaration of Human Rights which provides for the protection of an individual’s right to privacy against arbitrary intervention with the same. It gives the right to protection of the law against such attacks.

Contentions of the Respondents

The counsel for respondent 2 argues that Kulamani is dead and the corpse is kept at his home. This poses a great danger to the health of the neighbours and Mr. Kulamani Mishra should be subjected to last rites as per the rites and rituals of the Petitioners and that would be the way in which a dignified quietus is given to the entire episode. The counsel for respondent referred to a judgment of Madras High Court in S. Sethuraja Vs. The Chief Secretary, Government of Tamil Nadu and Ors (2007), where an Indian National died abroad and his kin wanted the body to be brought to India to perform the last rites as per the Hindu rituals and so they approached the High Court of Madras. Through this case, the counsel tried to show that Kulamani Mishra deserved dignified disposal in accordance with the rites and that the retention of the remains by the Petitioners violates the human rights of Mr. Kulamani Mishra, which continues even after his demise till the dignified disposal of the body.

Issues involved

The questions involved in this case were whether the act of the Petitioners in retaining the body of the deceased and not subjecting it to last rites is illegal? And, was there an invasion of the privacy of the petitioners and so does this right privilege the petitioners to prohibit the officers from entering the premises?

Judgment of the M.P. High Court

The Court proceeded to examine what makes an act lawful or legal and in the converse, what is unlawful or illegal? Where the law permits certain acts, those acts are considered legal and the acts prohibited by law are considered illegal. But, where the law is silent about the legality or illegality of any act, would the performing of such act be termed as unlawful if such act goes against social mores and perception of society? A person has the liberty to perform such an act if the law is silent on it. Thus, it is not sufficient that an act must be right or wrong applying the standards of contemporary social morality. The act must be wrong in the eyes of law.

The Court rightly pointed out that a legally wrong act is against legal justice and law. It may or may not be a moral wrong, and conversely, a moral wrong may or may not be wrong in law. Thus, one cannot mix these two terminologies. Morality and law are to be treated differently especially if the act finds a violation of one and not the other. What the counsel of respondent 2 argued is that dealing with human remains in a manner contrary to social norms is violative of the human rights of the deceased. But social norms cannot compel someone to behave in that manner.

Since it was not clear as to whether the father of the petitioner died or not, still assuming that even if he is no more, the court observed that performing last rites may be considered socially important, however, it cannot be said that failure to consign human remains to last rites would not result in violation of Article 21 or human rights of the deceased.

Next, the Court looked into the question of the violation of privacy alleged by the petitioners, and whether they had the right to prevent authorities from entering into their premises to check the condition of the father. The right to privacy is a fundamental right of a person and a person’s home is his castle, as observed by the Court. The court said although, if the father is no more, then keeping the dead body at home might be considered abhorrent by many, it does not give any right to authorities to intervene in the right to privacy of petitioners if the act was not unlawful or illegal.

Thus, merely because the petitioner has kept the remains of his father at home does not permit the authorities to invade their privacy and proceed with an investigation.

Conclusion

To conclude, the Court held that the petitioners succeed in this case and the directions given by respondent 2 to the State are held to be violative of the right to privacy of the petitioner, under Article 21 of the Constitution of India. Law and morality do have a similar base, but they are different and should not be confused with each other. What is moral may not be lawful and what is immoral may be lawful.

Reference

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

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Cybersquatting in India

By

Shoronya Banerjee

-

December 3, 2021

0

This article has been written by Shivani Singh pursuing the Diploma in Cyber Law, FinTech Regulations, and Technology Contracts from LawSikho. The article has been edited by Prashant Baviskar (Associate, LawSikho) and Ruchika Mohapatra (Associate, LawSikho).

Table of Contents

Introduction

In the modern world, every business or organization, whether big or small, prefers to have its presence on the Internet. With the growth of technology, it has become easier for a business or an organization to market its products and services over the internet as it has a rampant reach to the masses. This is usually done by launching websites in the name of the company or business after registering the name of the website, which is known as the domain name. A domain name generally consists of the trademark of an organization or business and can serve as a classing trademark function of symbolizing a company’s recognition and goodwill in the marketplace.

What is a domain name?

A domain name in a technical sense is an alpha-numeric mnemonic device that can be mapped onto an Internet Protocol (IP) address which enables the users to browse the web more easily than if they had to remember the details of each IP address they wanted to visit. Since the Internet Protocol numbers are all-numeric, they are difficult to remember and are not eye-catching, which led to the emergence of a domain name system (DNS), which is a popular substitute for all the IP addresses of a particular server, for example, “apple.com”, “amazon.com” etc. These domain names can be registered in any name of the choice of the owner. The domain name in today’s world serves as an online trademark, source identifier, indicates quality, and repository of goodwill. Since customers cannot sample a product physically on the Internet, considerable reliance is placed on the prior reputation and goodwill of the person advertising the product on the Internet. Thus, it can be said that domain names reflect the trademark of an organization and are pivotal corporate assets.

What is cybersquatting?

With the rapid increase in the usage of the Internet, the importance of domain names has escalated by almost 46.4% since 1995 throughout the world. Big corporations and businesses prefer to register domain names in the name in which they carry out the business outside their country. However, there is a proclivity in the domain names field to register the names of these big corporations and well-known businesses as domain names by persons other than the owners of such commercial undertakings. Registering domain name in the name of a well-known and/or registered trademark or confusingly similar trademark, and then trying to sell that domain name to the owner of the well-known and or/registered trademark or to a third party with an intention of selling it at a higher profitable price to the trademark owner is known as cyber-squatting. The High Court of Delhi in the case of Manish Vij v. Indra Chugh has defined cyber-squatting as “an act of obtaining fraudulent registration with an intent to sell the domain name to the lawful owner of the name at a premium.”

What are domain name disputes?

The value and potency that a domain name possesses have ensured that organizations are willing to shed any amount of time and money so as to acquire these names. Unlike the traditional trademark system, where identical trademarks may be owned by several persons, subject to certain differentiations such as geographical or class of goods or product, the virtual world has a limitation that only one owner can possess a particular domain name. Domain name disputes generally arise in two situations; in the first, an individual or organization with no other rights to a name may register a website with that name. This may be for several objectives- extortion, appropriation of goodwill, diversion of web traffic, defamation, dilution, etc. The second kind of situation is where conflict arises between persons who are equally entitled to a name- a situation that often arises given the global nature of the internet.

Legal analysis

In India, there is no specific legislation that deals with cyber-squatting or other domain name disputes. However, in the protection of trademarks in domain names, the Trade Marks Act, 1999 is used. The limitation of the Trade Marks Act, 1999 is that it is not extra-territorial and therefore it does not provide for adequate protection of domain names. The Indian Courts, in spite of the absence of such legislation, however, have been very active in providing relief in the case of cyber-squatting.

The first case of cybersquatting in India was Yahoo Inc. v. Akash Arora. In this case, the U.S.-based Yahoo Inc. had filed a suit for injunction against the defendant Akash Arora, who had registered a deceptively similar trademark of Yahoo Inc. as “Yahoo.com”. The High Court of Delhi passed an injunction order in favor of the plaintiff restraining the defendant from using “Yahoo!” as it infringed the trademark of Yahoo Inc. As the defendant’s domain name was deceptively similar, it was easy for the consumers to be confused despite the disclaimer put by the defendant or adding the word “India ” in its domain name.

Another landmark case in the development of Indian Jurisprudence on a domain name is the Rediff case. In Rediff Communication Ltd. v. Cyberbooth and Another, the High Court of Bombay stated that “A domain name is more than an internet address and is entitled to equal protection as a trademark.” In this case, the plaintiff filed for an injunction against the defendant who had registered the domain name in the likeness of the domain name of the plaintiff, claiming that such domain name was deceptively similar to theirs. There was a common field of activity. The judge was satisfied that there was a clear intention to deceive and that the only purpose of registration by the defendants was to trade on the goodwill and reputation of the plaintiffs. The judgment given in Satyam Infoway Ltd v. Sifynet Solutions (P) Ltd. is said to have nailed the Indian domain name scenario way back in 2004. The Supreme Court, in this case, stated that: “As far as India is concerned, there is no legislation which explicitly refers to dispute resolution in connection with domain names. But although the operation of the Trade Marks Act, 1999 itself is not extraterritorial and may not allow for adequate protection of domain names, this does not mean that domain names are not protected in India”. The decision, in this case, was again in favor of the plaintiff, wherein the respondent had registered domain names and which were similar to the Plaintiff’s domain name. The Court remarked that domain names had all the characteristics of a trademark and an action of passing off can be found where domain names are involved.

The common law approach to cyber-squatting

In Marks & Spencer v. One-in-a-Million, the defendant had registered domain names of several companies to his name. The Court was of the opinion that the defendant’s activities showed a deliberate practice of registering domain names that resemble the name of well-known trademarks and there was also intended to deceive the public by choosing such domain name. The High Court granted an injunction in all five cases and stated that injunction is granted by the courts when the name is adopted with the intent to cause passing off, with the intent to use under fraudulent circumstances. In the case of Prince Plc v. Prince Sportswear Group Inc., both the parties had legitimate interest in using the domain name in issue. The plaintiff, a computer services firm based in the U.K. had registered the domain name “prince.com”. When the defendant tried to register the same domain name, they found that it was registered by the plaintiff. The defendant sent a letter to the plaintiff, through their attorneys asking the plaintiff to assign the domain name to the plaintiff and that the use and registration of PRINCE as a domain name by the plaintiff constituted infringement and dilution of the defendant’s rights in the trademark. An inquiry as to damages was refused to be granted by the judge in the absence of evidence of damage. Secondly, the lordship refused the declaration that the plaintiff’s registration and use of its domain name does not infringe the defendant’s UK trademark. The burden of proof was on the plaintiff for a declaration of non-infringement. But an injunction was issued against the defendants, preventing them from continuing with the threats of infringement proceedings against the plaintiff.

Conclusion

Cybersquatting has become so prominent in the current world scenario that it has been termed as a modern-day extortion technique, making it viewed as an important issue in the legal setup. The U.S. had enacted the Anti-Cybersquatting Consumer Protection Act way back in 1999 to try and resolve disputes in this regard, however, in India, there is no such legislation in specific which deals with cyber-squatting. All the cases in India with regard to cyber-squatting are resolved on the trademark law which is bound to be counterproductive.

The emphasis should not be on examining every dispute from a trademark angle because not every time the process of litigation would be preferable as it leads to an enormous loss of time and money. Therefore, there is a dire need for new legislation in India that would specifically deal with cyber-squatting. Although the courts have taken recourse to the trademark law in resolving these domain name disputes, there is no specific law in the Information Technology Act or legislation dealing with cyber-squatting. In many cases, the courts have to seek guidance from English and American laws and decisions. It is, therefore, the need of the day to have a law such as ACPA as in the case of the U.S. There has been an increase of about 4.6% in the number of cases (2754) filed in the WIPO Arbitration and Mediation Center in 2015 compared to that of the previous year. In light of this, another suggestion could be the establishment of a national arbitration forum which deals with domain name disputes in India, forming a parallel body to the US National Arbitration Forum and the Czech Arbitration court. Such institutions shall aid in faster and effective disposal of cases unlike in the path of Indian courts.

Further, decisions of the WIPO Arbitration and Mediation Center and ICANN with respect to domain name disputes should be made binding on Indian Courts which would help ease the already overburdened Indian Court system. Lastly, these disputes could be reduced to a great extent if the registrar, before allocating the domain name, does some background check, thereby curbing the possibility of a dispute that could arise in the future. Another way out can be publishing the to-be-allotted domain names in a journal, as it is done in the case of trademarks in the trademark journal. Such approaches to cyber-squatting would go a long way in reducing and preventing the number of domain name disputes.

References

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Role of blue economy in India

By

Sneha Mahawar

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December 3, 2021

0

This article is written by Himanshu Mahamuni, a student of Government Law College, Mumbai. This article analyzes the role of India in the BE by its relevance to the country, the draft framework and developments in the Indian ocean region.

Table of Contents

Introduction

The concept of Blue Economy was introduced by Professor Gunter Pauli at the United Nations University (UNU) in 1994. It is a sustainable development concept based on the “no waste, no emission” engineering process. The United Nations Sustainable Development Goal #14 states, “Conserve and sustainably use the oceans, seas and marine resources for sustainable development”. The goal serves as a guiding principle for global governance and the use of ocean resources. It implies a method to use the available ocean as a resource to address the problem of resource scarcity while employing renewable resources to enable sustainable development. There is no permanent framework to regulate the BE in India. The ministry has suggested a draft which has invited suggestions for improvement. The development of the BE will be a crucial step if India wants to achieve its ambitious goals.

This article discusses the relevance of the BE from the Indian perspective, the proposed draft framework and the possible development of the BE in the Indian ocean region.

Relevance of blue economy for India

New India by 2030, envisioned by the Indian Government, lists the ten core dimensions of growth. The BE occupies the sixth core dimension for growth for India. A need was stressed for a coherent policy to improve the lives of coastal communities and accelerate development and employment.

This relevance of BE for India can be figured by India’s geographical location and strategic importance in Southeast Asia. India has a unique maritime position comprising a long 7517 km coastal line to nine states. The importance of the sea to India can be understood by the 12 major and 187 non-major ports that handle around 1400 million tons of cargo every year, which makes up 95% of India’s trade by volume. The coastal economy supports the lives of over 4 million fishermen. Huge amounts of non-renewable resources, crude oil and natural gas, are spread over India’s 200 nautical miles of Exclusive Economic Zone (EEZ). The coastal states have observed a fast-growing sector of marine tourism. This has contributed to the state economies and improved livelihood.

The huge dependence of the country’s economy on maritime business makes it essential to invest and develop the BE. The increase in the capabilities, capacities and skills of the BE creates employment and gross value addition. The policy framework of India to develop a BE will enhance the GDP in a sustainable way. The inclusive growth of India aligns in harmony with the sustainable development goals mapped out by the United Nations.

India’s blue economy draft framework

The Ministry of Earth Science (MoES) has drafted a policy framework on the BE and invited suggestions and input from various stakeholders. It is aimed to vision and strategy the oceanic resources available in the country. The draft is in line with the vision of New India by 2030. It emphasizes the various key sectors for holistic growth of the economy with the help of the BE. A legislative framework will be formulated later on for the BE based on an assessment of the suggestions and the draft. In the meantime, the framework suggests the proposed objectives, governance capabilities such as Coastal and Marine Spatial Planning (CMSP) and National Blue Economy Council (NBEC) and the enhanced capacities.

Objective of the policy

Framework for a robust mechanism

A robust mechanism for the generation and collection of reliable data is to be set up for periodical study. Setting up an expert group of scientific collaboration for the development of scientific tools and technologies relevant to the BE for its measurement and management.

Framework for sustainable national coastal marine

The BE in India’s EEZ on the wide database based on the CMSP to plan eco-tourism and increase blue flag beaches. Increasing pollution will be addressed in the coordination of various related ministries.

Framework to develop marine fisheries, aquaculture and fish processing

The BE would promote aquaculture, cage culture, seaweed and algae harvesting and sustainable marine capture in fisheries management, communication connectivity, financial inclusion, upgraded post-harvest management and marketing.

Interventions of fishermen will be considered. National level “Institute for Marine Biotechnology” shall be expedited.

Framework to domestic manufacturing, emerging industries, trade, tourism, technology, services and skill development connected with the BE

Emerging sectors of marine biotechnology, deep-sea mining and ocean energy will be promoted. scientific institutions and industry would be created in the coastal states for R&D and innovation purposes.

Framework to develop logistics, infrastructure and shipping

The logistics and connectivity will be improved to improve ease of doing business and efficiency including the harmonization of tax regimes. A Multi-Modal Network and Digital Grid will be launched to reduce logistics costs.

Framework for coastal and deep-sea mining, new and renewable offshore energy and research & development

A National Placer Mission is to be established to explore workable deposits and evolve a roadmap for their extraction. Sea Mount FerroManganese Crust (SFMC) in the Indian Ocean shall be explored for its cobalt-rich composition. A National Marine Resources Database is to be created for an inventory of our marine resources of living and non-living.

Framework for ocean governance

Ocean governance must be established for coordination, communication and clarity between multiple stakeholders and multiple levels of administrative authorities and coastal communities. The National BE Council shall be set up to oversight expertise and scheme for holistic planning and implementation.

Blue economy governance

For the systematic integrated approach for the interconnected issues and optimal use of resources, the National Blue Economy Council (NBEC) shall be formed for all stakeholders. The NBEC shall be dealing with the following tasks:

evaluation and monitoring of the BE schemes, projects and targets;
guidelines/directives to promote objectives;
guidelines/directives to the Ministries/Departments in development of international cooperation, capacity building;
guidance/directives towards tariff setting, fisheries subsidy negotiations, and regulatory issues.

A governance mechanism is not available for the activities of granting of permissions, leasing, evaluation and monitoring of offshore activities such as exploration, transport, storage, etc. the governing body shall overlook coordination across ministries and state governments and take into consideration international experiences. The body should include all the stakeholders from central, state and local authorities and experts from industry, research organizations and policy advocacy groups.

An Executive Committee shall be set up that would be responsible for undertaking planning, coordination and oversight of projects being executed by Ministries and State governments. The committee may have the following terms of references of the BE:

Facilitate and support Ministries/Departments;
Planning, coordination and oversight of projects;
Support Ministries/Departments in development of international cooperation, capacity building;
Facilitate tariff setting, fisheries subsidy negotiations, and regulatory issues.

Growth and employment capacity

The BE shall generate a talent pool to cater for the important sectors of development. The pool can be developed by higher education courses towards the BE. Universities and research and development institutes like the National Institute of Ocean Technology and the National Institute of Oceanography will be the source of the pool. curriculum on BE in accordance with the New Education Policy shall be revised considering the changes in the field. The Ministries of Education, Skill Development and Earth Sciences can undertake the mission for such a curriculum.

Blue economy in Indian ocean region

A country has been highly dependent on its ports for transportation and trades for ages. The oceanic route needs to be developed and regulated for the smooth working of this. The maritime region holds huge economic opportunities such as oil and gas, undersea cables, tourism, biotechnology, aquaculture, etc. India sees this opportunity in the region of the Indian ocean to focus on the naval operations and anti-piracy efforts to that of environmental protection, national security, infrastructure creation, industrial capacity building and marine development. The development of the BE in the Indian Ocean region will be beneficial to achieve the vision of the country. India has been doing its efforts to increase its bounds in trade and defence in the Indian ocean.

Trade and economic developments

Fisheries and minerals are the most dependent communities among the various sectors that provide tremendous economic opportunities. These industries develop maritime tourism and shipping activities. Fish production has increased drastically from 861,000 tons in 1950 to 11.5 million tons in 2010 in the Indian Ocean. The Polymetallic nodules and polymetallic massive sulphides are the metals that are of commercial interest in the Indian Ocean region. India has explored a region of four million square miles and established two mine sites in the EEZ for the exploration of polymetallic nodules.

A strong emphasis on research and Development, and Innovation in the areas of Ocean Energy, Marine Biology and Biotechnology may yield a significant market share to the country. The vision of a USD 10 trillion economy by 2032 can be pushed by the development of the BE and aim at a higher growth trajectory. The rise in dependence on the country’s oil and gas exported through the sea is expected to rise in 2025. Thus the economic growth of the Indian Ocean region is crucial to accelerate the trade potential. The participating country in the Indian Ocean Rim Association (IORA) has increased its trade from US$ 302 billion in 2003 to US$ 1.2 trillion in 2012 and is expected to increase more. India is expected to develop the BE in the Indian Ocean region to exploit trade and economic opportunities.

Sagarmala project

The Ministry of Shipping has launched its strategic initiative of modernisation of ports by extensive use of IT-enabled services, called the Sagarmala project. It aims to modernize the ports to fix the issues of underutilization, efficient evacuation, and coastal economic development. An estimate of Rs. 3 lakh crore is allocated by the government to develop 199 ports in three years under the Sagarmala programme. The Indian government increased the funding for the project from Rs. 406 crore in 2016 to Rs. 600 crore in 2017 in the Union Budget of 2017-18.

The shipbuilding industry has the ability to accelerate industrial growth on investment along with the associated industries. The number of fleets in 2014 was 1200 which is expected to increase up to 1600 by 2025. The push-in India’s commercial shipbuilding and ship repair sectors, complementing the Sagarmala project in addition to sustainable development under the BE, have huge potential to drive the economy in a drastic way.

International strategy

The presence of major world leaders in the Indian Ocean region has been affected by the reemergence of piracy issues and the growing inclination towards securing the oceanic ecosystem. India’s efforts towards it have been proactive in cooperative management, the UN ad-hoc committee to support zones of peace during world war in the Indian Ocean region is an example of it. The trilateral Cooperative in Maritime Security between India, Sri Lanka, and the Maldives is one of such modern attempts.

The Indian Navy’s policy in the Indian Ocean region of ‘Maritime Security Strategy declares the commitment of the country towards the region. It includes the objective of stability, security cooperation, combat terrorism and piracy, cultural linkage and showcasing the region as a role model of sustainable economic development. The objectives adhere to the BE while cooperating in the region. This need for a strong trans-oceanic partnership and developing synchronization is a need for inclusive development of the region.

Conclusion

The global cooperation and acceptance of the SDG 14 are evident of the need to develop the BE. The vision of India can be achieved if a well-drafted framework is implemented immediately. The impact of the BE on the GDP can be visible by improvement in lives of coastal communities, preserving our marine biodiversity and maintaining the security of our marine areas and resources. This will increase the growth and employment in the country. The BE is the way to the overall sustainability and socio-economic welfare of the people of the country. The framework must be brought to unlock the huge potential that lies ahead. The possible area where the BE can be practised by India is in the Indian Ocean. The development of the BE in the Indian ocean will lead to trade and economic development. The international strategy and security can be enhanced by improving the status of the BE in the region.

References

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

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

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Case analysis of Union of India vs. VKC Footsteps India Private Limited

By

Abanti Bose

-

December 3, 2021

0

This article is written by Pramil Kant, pursuing Diploma in Advanced Contract Drafting, Negotiation, and Dispute Resolution from LawSikho. The article has been edited by Ruchika Mohapatra (Associate, LawSikho).

Table of Contents

Introduction

“The Old India was economically fragmented, the new India will create one tax, one market and for one nation”. – Late Sh. Arun Jaitley, Former Finance Minister of India.

“In reality, it’s a ‘Good and Simple Tax”– Sh. Narender Modi, Current and serving Prime Minister of India. The entire scheme of the Goods and the Services Act (GST), 2017 was based on the principle that it shall allow seamless flow of credit. It simply means that any tax(es) paid on the inputs shall be adjusted in the payment of the output tax liability. As a result, there will be a downfall in the net output tax liability for the businesses which will result in a reduction of inflation and will make the Indian Economy and businesses more competitive globally.

Before the introduction of the Goods and Services Tax in 2017, the Central Government used to levy Excise Duty, Service Tax and Customs Duty over the manufacture of goods, provisions of services and export-import of goods. The state government used to levy sales tax, value-added tax over the sale and purchase of goods. The credit of taxes paid to the central government in the form of excise duty and service tax could not be utilized in the payment of taxes that were to be paid to the state government in the form of sales tax, value-added tax. Therefore, it resulted in an undesirable situation for both the businesses and consumer; for businesses, it meant that there was always unutilized credit available with them and for consumers, it meant that the prices of goods and services were high as the output tax liability for manufacturers and service providers was high.

One of the objectives of the Goods and Services Tax, 2017 was to solve this problem and make the flow of credit seamless. Seamless flow of credit was also believed to moderate the inflationary pressures, The former Revenue Secretary, Hasmukh Adhia, as reported in a leading national news daily, said in an interview that the introduction of GST will result in a fall of inflation by 2 per cent.

Refund under the current GST Law

As per the GST law as it stands today, refund is allowed under Section 54(3) in only two situations;

In the transactions involving exports and;
In the transactions involving inverted duty structure.

Inverted duty structure means that the taxes paid on input goods and services are higher than the taxes paid on the final product. In other words, if a manufacturer procures raw material on which GST is levied at the rate of 18% and the output is taxed at the rate of 5%, then the manufacturer is entitled to get a refund on account of inverted duty structure. But according to the law, as it stands today in Section 54(3) of the CGST Act, a taxpayer is liable to get a refund of taxes paid on input goods and not on input services. This restriction was imposed by an amendment and was given a retrospective effect from 1^st July 2017. This restriction of not allowing input tax credit paid on the input services became a bone of contention between the taxpayers and the Revenue Department and resulted in writ petitions before the High Court.

In 2019, the Division Bench of the Gujarat High Court in the matter of VKC Footsteps India Private Limited upheld the challenge to Rule 89(5) which created a classification between the input services and input goods and held that it is ultra vires the Section 54(3) of the CGST Act, 2017 which allows the taxpayer to take credit of tax paid on input goods but does not give the same treatment to input services. On the other hand, a division bench of the Madras High Court in the case of Tvl. Transtonnelstroy Afcons Joint Venture Vs Others upheld the classification contained in Rule 89(5) of the CGST Rules and restricted the refund of input tax credit only on the input goods.

With contradictory judgments coming from the Madras High Court and the Gujarat High Court, the matter reached the Supreme Court for finality. On 13^th September 2021, the Supreme Court accepted the view taken by the Madras High Court and rejected the view taken by the Gujarat High Court.

Reasons due to which controversy was created

Rule 89(5) of the CGST Rules 2017 reads as follows;

“In the case of refund on account of inverted duty structure, refund of the input tax credit shall be granted as per the following formula:-

Maximum Refund Amount = {(Turnover of inverted rated supply of goods and services) x Net ITC÷ Adjusted Total Turnover} – tax payable on such inverted rated supply of goods and services.

Explanation: – For the purposes of this sub-rule, the expressions – (a) ―Net ITC shall mean input tax credit availed on inputs during the relevant period other than the input tax credit availed for which refund is claimed under sub-rules (4A) or (4B) or both”

In the Explanation of Net ITC, it is clearly mentioned that net ITC shall mean the input tax credit availed on inputs. As per Section 2(59) of the CGST Act 2017, input is hereby defined as;

“Input” means any goods other than the capital goods used or intended to be used by a supplier in the course or furtherance of business.

Therefore, by using the word input in the definition of net ITC in the Explanation, the refund under inverted duty structure was restricted only to the input goods and it completely excluded the input services.

Legal issues in front of the Supreme Court

The Revenue Department along with the Union of India contended that;

The distinction between the Goods and Services is reasonable and not arbitrary. Goods and services are distinct at the constitutional level as well, and therefore different treatment can be given to the refund on tax paid on goods and services.
If the legislature intended to allow refund of unutilised ITC on input services and capital goods, then the same must have been conveyed by the legislature which is missing.
“Unutilized input tax credit” includes the input tax credit available on any supply of goods or services or both. The term input tax credit has been used in Section 54(3) because the legislature, in its wisdom, has decided to give a complete refund of taxes paid on input goods and input services on zero-rated supplies. But the legislature has, in its wisdom, decided not to extend the same benefit in the case of an inverted duty structure.

The taxpayer, on the other hand, argued that;

The intention and the objective of the GST was to allow seamless flow of input tax credit. Section 54(3) allows for the refund of unutilized input tax credit and input tax, as defined under the CGST Act, including taxes paid on input services and input goods. Therefore, by introducing an explanation in Rule 89(5) of the CGST Rules 2017, the executive has unnecessarily narrowed down the refund to only the tax(es) paid on input goods.
The assessee further argued that in Section 54(3) of the CGST Act, 2017, the legislature has used the words “any unutilised input tax credit”. “Any” means unutilized input tax paid on both the input goods and input services. Therefore, the explanation (a) to Rule 89(5) narrows down the meaning of “any unutilised input tax credit” to only tax paid on input goods and excludes the tax paid on input services.
The intention behind Rule 89(5) is to provide a procedure for claiming a refund in accordance with Section 54(3) of the CGST Act. By introducing restrictions on the claiming of a refund under Rule 89(5) of the CGST Rules 2017, Rule 89(5) is against the mandate given by Section 54(3) of the act.
The challenge to Rule 89(5) exists only because of the explanation in which net input tax credit has been restricted only to the inputs and therefore, the expression “on inputs” needs to be struck down.
There is no difference in the manner of availing or utilizing input tax credit on goods or services. Therefore, if the legislature has not differentiated between the goods and services at the time of availing or utilizing input tax credit, it could not have been the intention of the legislature to differentiate between the goods and services at the time of giving refund under the inverted duty structure.

Observations made by the Supreme Court

The Supreme Court, after going through the arguments put forth by both the Parties, upheld the reasoning of the Madras High Court. The Supreme Court held that;

Refund is not a constitutional right but a statutory right and therefore, the legislature, in its wisdom, and through statute, can decide how the refund is to be granted.
Under proviso (ii) to Section 54(3) of the CGST Act, 2017, the legislature has used the word “inputs” which, as defined in the act, means only input goods. Therefore, there is no disharmony between Rule 89(5) of the CGST Rules and Section 54(3) of the CGST Act. If the legislature had any intention of giving the credit of tax paid on input goods and input services, the legislature would not have restricted the scope of refund in inverted duty structure to only “inputs”.
Rule 89(5) was framed under Section 164 of the CGST Act and therefore, Rule 89(5) is not without jurisdiction.
An inequitable and discriminatory provision in tax legislation does not make it discriminatory per se. The court observed that input goods and input services constitute two different classes and therefore, the argument that equals are being treated unequally does not hold water.

The Supreme Court did acknowledge that the formula in Rule 89(5) of the CGST Rules 2017 is inequitable and therefore, urged the GST Council to take the necessary corrective action.

Conclusion

After this ruling of the Supreme Court, the confusion which arose because of contradictory rulings from the Madras and Gujarat High Court has been resolved. It is clear that in an inverted duty structure, the taxpayer shall be allowed a refund of only the input goods and not of input services.

This judgment of the Supreme Court will have an adverse sectoral impact on the e-commerce sector, construction, fertilizers, textiles and other industries where the taxes on input is higher than the tax liability on the output.

The Court in this judgment also held that if a provision in the taxation law fails to achieve certain ideals, it does not make it invalid and ultra vires of the act.

The only silver lining in this judgement is that the Supreme Court has acknowledged certain anomalies in the Goods and Services Act, 2017. Further, while the Supreme Court was conscious not to overstep the powers and responsibilities of the legislature, the apex court did ask the GST council to reconsider the formula.

References

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

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

https://t.me/joinchat/L9vr7LmS9pJjYTQ9

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