What is withholding tax : provisions in Indian law

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November 28, 2021

Tax — Image Source: https://bit.ly/2urQfDw

This article is written by Shubham Mahadeo Walunj, a student of Yashwantrao Chavan Law College from Pune, Maharashtra. This article contains information about the Withholding tax provisions in Indian law & the relevant cases.

Table of Contents

Introduction

Before one can embark on a study of withholding tax under Income tax, it is vital to understand some of the expressions found under the Income Tax Act, 1961. The concept of tax is very vast when we look at the fast-growing corporate world. The withholding tax is the amount of deduction that takes place directly from the employees earning by the employer and is paid to the government as tax. This withholding tax has a large scope as day by day the industries are growing and this leads to employment. When there is more employment there would be a large amount of tax deduction and this may help the government. As the government gets more tax it can be used for the development of the country.

In this article, we will talk or know more about the withholding tax provisions in Indian law with the help of important cases and their judgments.

What is withholding tax

Wi thholding tax is an amount of which deduction takes place directly from the earning of an employee by the employer & paid to the government as a part of individual tax liability. It is also called Retention tax. Such income tax will be paid on the total income of the earlier year in the pertinent evaluation year. However, the total income is not settled forever depending on the residential status in India. These taxes are paid to the Central government of India. In India, the Central Government is empowered to levy & collect taxes. The tax is being charged based on the income of the person.

Withholding tax is the commitment of the citizen to keep a charge when making payments under explicit categories at the rates specified in the current tax slabs. The specific categories include rent, commission, payment for professional services, salaries, contracts, etc.

Section 195 of the Income Tax Act

Section 195 of the Income Tax Act, 1961, governs the rules & regulations regarding payments made to a non-resident. It states in Section 195 of Income Tax Act, 1961 that “Any individual answerable for paying to a non-resident, not being an organization or to a foreign organization, any interest or segment 1 9 4LD or some other total chargeable under the arrangements of this demonstration will, at the hour of credit of such income to the account of the payee or at the hour of the payment thereof in cash or by whatever other mode, whichever is prior, deduct income tax subsequently at the rates in power.”

How are tax liabilities counted in India

It is by calculating the net income earned for the previous financial year in the current assessment year. As we know, the income tax payable of any person depends on the residential status of that person. We should know how residential status is categorized in India.

Residential status is of two types

Resident Indian

It is mentioned in the Finance Act, 2020 which has introduced a new Section 6(1A) in the Income Tax Act, 1961. A resident taxpayer is a person who fulfils any one of the following conditions:

Staying in India for a year is 182 days or more in the previous financial year that is between April to March 31 of the following year.
Staying in India for the immediately 4 preceding years is 60 days or more for a total of 365 days or more in the 4 years preceding the previous year.

Non-resident Indian

Royalty and fees for technical services under the Indian Income Tax Act, 1961 is defined under Se c tion 9 of the Information Technology Act, 1961. A person who doesn’t fulfil the essential conditions of residence can be considered a non-resident. Simply those NRIs are obligated to pay tax who are acquiring income in India from sources referred underneath:

Salary paid for the services provided in India.
Income earned from the property in India or income arising out of business carried out in India.
Fees, royalty, interest paid by Resident Indian to NRI for giving any technical services offered by the Non-Resident Indian in India.

Charges related to withholding tax

The withholding tax rates for payments by resident companies are

Nature of Payments	Withholding Tax Rate
Residents interest	10%
Non-Residents interest	5 – 40%
Commissions & brokerage	10%
Lease of plant, machinery, or equipment	2%
Lease of land, building, or furniture	2%
Legally payments (except for individuals/ HUF)	2%
Legally payments to individuals/ HUF	1%
Purchase of immovable property	1%
Royalty	25%
Fees for Technical Services	25%

Consequences of non-payment of withholding tax

Penalties for non-deduction & failure to pay deducted tax to the government may result in a minimum penalty under Income Tax Act, 1961.
Under sub-section (1) of Section 201, Income Tax Act, 1995 no order shall be made considering an individual to be an assessee in default for failure to deduct the whole or any part of the tax from a person resident in India, whenever after the expiry of seven years from the end of the financial year in which payment is made or credit is given.
Under Equalization Levy, in case there is a delay in payment: Interest is charged at 1% of the extraordinary duty for every month or part thereof is delayed.

Penalty under equalization levy of Income Tax Act, 1961 is equivalent to INR 1,000/day subject to the maximum of the amount of levy failed to be deducted.
Penalty for failure of filing a statement of compliance, INR 100/day for every day the non-compliance proceeds.
If a false statement has been filed, the individual might be subjected to imprisonment of a term of up to 3 years and a fine.

Legal advantages and other intricacies involved

Advantage of keeping taxes from paycheck

The biggest advantage to having enough taxes kept from your paycheck is that you don’t have to think of a truckload of cash at year-end to pay the taxes you owe. You can likewise request that your boss keep extra money to cover the tax owed on other income, like independent work profit or betting rewards. This keeps you from expecting to document tax payments quarterly during the year to remain mindful of your tax commitment. If you overpay your taxes, at year-end you can apply for a discount on the overpaid sum. Many individuals find this component helpful as a reserve fund intended to pay for huge buys.

Exchange of withholding tax

The essential advantage is that the public authority at an early income age gets nothing. Withholding tax is claimed on an exchange, the payee deducts the amount of the tax while setting aside payments and deposits a similar amount with the government. The government gets the sum promptly or as when any such exchange is brought about.

Risk on the payer

The subsequent advantage is that every transaction made is under the radar & scrutiny. It is the responsibility of the payee to do the tax deduction & pay that deducted amount to the government. In this way, the risk is on the payer, it is a must for the payer to make sure that the tax charge is accurate and a similar deducted amount is kept with the government. Thus, for this, the transaction is scrutinized at every designated point.

Tax cannot be avoided

The third advantage of charging withholding tax is that there is no other way by which one can avoid the withholding tax. Initially, Non-Resident Indians can’t exit from paying charges as NRI doesn’t have to make direct instalment of duties, however, the payer has the onus of deducting & paying taxes. So, the NRIs must pay tax via payer & secondly, the payer needs to take care of the deducted tax to the government.

Relevant case studies

Prasad Production Case

In Prasad Productions Ltd., Chennai vs Department Of Income Tax (2009), the assessee company got the contract from the Tourism Department Of Government of Andhra Pradesh to establish an IMAX theatre at Hyderabad. So, the assessee entered into an agreement with IMAX Ltd. for the purchase of equipment and installation. As part of the agreement, it was decided that the assessee will pay IMAX US $ 13,65,000 for the purchase of the system and US$ 9,50,000 as a technology transfer fee. As per the agreement the assessee paid the US $ 9,02,500 to IMAX Ltd. without deducting tax at source (TDS). So the Assessing Officer asked for the detailed description but the assessee could not provide it. The Assessing Officer concluded that since the assessee has not obtained an order under Section 195(2), Section 195(3) or under Section 197, the gross sum remitted by the assessee was liable to tax under Section 195 of the Act.

The remittance of US$ 9,02,500 was for the provision of technical services by IMAX which falls under Section 9(1)(vii) of the Income Tax Act, wherein it is stated above to Section 9(1)(vii) that fees for technical services mean any consideration for the rendering of any managerial, technical or consultancy services it would be chargeable to tax under Section 44D read with the Section 115A. Detailed submissions were made by the assessee before the Commissioner of Income Tax. It was pointed out that where the Double Taxation Avoidance Agreement (DTAA) was entered into by India, the provisions of DTAA would prevail over the provisions of the Act. Accordingly, the Court held that there is no uncertainty concerning the portion which is not taxable and the portion which isn’t taxable. However, the payment of US $ 9,02,500 is a part of the equipment price which includes the services of installation and training. Therefore, the sum of US $ 9,02,500 is not chargeable to tax in India and hence the assessee was justified in not deducting any tax at source. So every overseas remittance had to withhold tax unless it had a nil withholding order from the Revenue Department.

Van Oord Case

In Van Oord Acz India (P) Ltd. vs Commissioner Of Income Tax (2010) case, the appellant was a company incorporated in India and was a wholly-owned subsidiary of Van Oord ACZ Marine Contractors, a company incorporated in the Netherlands. The appellant executed inter alia dredging contract at Port Mundra for Gujarat Adani Port Ltd. The appellant debited to its profit and loss account, inter alia, mobilization and demobilization cost of Rs.8,92,37,645/- reimbursed to VOAMC, out of which Rs.8,65,57,909/- pertained to the aforesaid dredging contract at Port Mundra which was completed during the previous year. The appellant had filed an application with DCIT, Circle 2(2), International Taxation, New Delhi (DCIT) for issuing NIL tax withholding certificate in respect of reimbursement of various costs required to be made by the appellant to VOAMC, on the ground that the amount represented pure reimbursement of expenses and thus, there was no income liable to tax in India in the hands of VOAMC.

The amount repaid to VOAMC was not chargeable to tax in India in the possession of VOAMC. The appellant was thus not liable to deduct tax at source under Section 195 and the prohibition under Section 40(a)(i) of the Act. In favour of the appellant it was seen that the assessee was not responsible to deduct tax at source under Section 195(1) of the Act, about mobilization and demobilization cost which was reimbursed by the appellant to VOAMC. The evaluation procedures in VOAMC were reopened and the last view taken was that the VOAMC is assessable to tax, the assessee, in this case, would likewise be treated as assessee in “default”, which would attract the consequences provided under Section 40(a)(i). The submission was that where sums paid to the non-resident represent pure reimbursement of expenses with no element of profit, there is no income liable to tax in India in the hands of the non-resident. Finally, in this case, the Delhi High Court ruled that withholding taxes apply only to payments that are taxable in India.

Conclusion

This article provides a detailed description of withholding tax, cases and their judgments. A person who is liable for the withholding tax should compulsorily pay the tax. A non-resident can still take shelter under the tax treaty, particularly India’s tax treaties with nations like Singapore, USA, UK & so on that have a confined/ narrow definition of fees for technical services. Although the AAR is restricted to show up before the authority, the gatherings & the transaction for which the decision was given because the decision was delivered on the set of facts & it can’t be a general application. However, it may have convincing value.

References

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Vacancies in subordinate courts : analyzing administrative failure

By

Oishika Banerji

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November 28, 2021

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This article has been written by Ria Verma, a student at Symbiosis Law School, NOIDA. This article aims to critically analyze the procedure for being appointed as a judge and why there are a high number of vacancies in the subordinate courts.

Table of Contents

Introduction

There have been 2.72 crore pending cases and many individuals desperately awaiting a verdict. Some cases have been ongoing for the past two or three decades. These cases indicate that a major reason for the delay and backlog is the astonishing increase in the number of vacancies in the judiciary every year.

The recruitment process in the High Courts has seen a significant decrease from 108 judges getting appointed in 2018 to only 66 appointments made in 2020. Similarly, vacant positions are seen in subordinate countries all across the country. The sanctioned strength for judges amounts to a total of 1,098 out of which 454 are empty.

The total vacancies in the subordinate courts add up to 5,132 indicating the failure of the HC Collegiums to appoint and elevate judges in the stipulated period. The issue has been further elevated with the onset of the pandemic, forcing the Courts to adapt to the electronic format of delivering verdicts.

In the past 12 months, only 7 out of 66 vacancies in Allahabad High Court have been filled. The figures are astonishing and action must be taken at the earliest to fill the gaps. The Courts take a very long period of time along with heavy litigation costs that have to be borne by the petitioners. Constantly delaying justice is synonymous with denying justice.

Qualifications required to be appointed in subordinate courts

Certain qualifications are required for an individual to be appointed in the subordinate courts of the country.

For a civil judge at the junior division, previously candidates were directly recruited through the judiciary exam that consists of 3 phases – preliminary examination and the main examination followed by an interview. It is commonly observed that candidates who become a part of judicial services as civil judges retire after getting elevated to the status of a district judge. However, Justice M. Faathima Beevi, the first Muslim woman to be elevated in the higher judiciaries serves as a figure of inspiration for civil judges to reach even taller heights. Based on seniority as well as merit, the junior division judges are promoted to the senior division. It is generally observed that a minimum experience of 5 years is required to be elevated.

A recent notification by the Bar Council of India deliberated upon altering its previous order that removed practical experience as part of the eligibility criteria for judicial officers. They filed an application seeking to modify the order given by the Supreme Court in All India Judges Association v Union of India, 2001 wherein mandatory practical knowledge was removed for the eligibility criteria. Now, a minimum of three years of experience at the Bar is mandatory to appear for the judicial examinations.

The Council stated that one of the key reasons for the delay in disposing of cases in the subordinate courts was inexperience. The report stated that 7,492 experienced judicial officers could resolve cases in a shorter period of time leading to the efficient administration of justice.

This move was refuted by the legal fraternity and it was widely argued that the most effective long-term solution to deal with the pendency of cases would be appointing more judges. It was also argued that the financial support provided by the bar council is inadequate especially for first-generation lawyers with no connections. An enrolled advocate has challenged this move and it is currently pending in court.

The senior division judges are elevated to the status of the district judge on the same grounds. However, they can also be promoted based on their scores in the examination held for civil judges in the senior division.

According to Article 233 of the Constitution of India, an individual requires:

To be a practicing advocate for a minimum tenure of seven years
To not be employed in Union or State services
To receive a recommendation from the High Court for the purpose of employment

The appointment procedure for judges in the High Courts was under scrutiny very recently. The Union Minister of Law and Justice explained that the process is a collaboration between the judiciary and the executive. Prior approval and consultation of the constitutional authorities are essential at both the State and the Central level.

Recruitment procedures

The procedure of recruitment of additional Judges

Article 224A provides the provisions for appointing retired judges. After obtaining the consent of the President, the Chief Justice of a High Court of any State requests a previous Judge of that particular state’s High Court or any other High Court, to act as a Judge.

The Supreme Court had given an outline of certain guidelines to appoint an ad-hoc judge. This was done to tackle the problem of a high number of unresolved cases in the High Courts. The ad-hoc judge would be considered as the junior-most and would be appointed when the status of the case remains pending even after 8 to 10 years. The retired judges would be appointed based on their competency and proficiency in that particular domain of law. The tenure of the judge is extendable.

Procedural issues that lead to delay in appointments

Complex procedure

The complex framework and provisions for appointing a judge result in delays in appointing judges. Even after following such cumbersome procedures, incompetent judges are reappointed which further hinders the justice delivery mechanism.

Lack of transparency

There is a lack of transparency coupled with an absence of formal criteria in the procedure involved for appointing judges. It has been alleged that there are conflicts between the individuals appointed and the members of the collegium. There is no information disclosed on what criteria the collegium appoints candidates.

Inadequate representation

There is a ‘known but hidden’ criteria for the appointment of judges and includes parameters such as caste, religion, class, family background, political connection, representation from a legal/judicial dynasty etc. Due to these parameters, certain sections of the society are favored more and the structure of the collegium inadequately represents the diversity of the population whom it seeks to deliver justice. Recently, Saurabh Kirpal could become India’s first openly gay judge after being recommended for elevation by the collegium, after being denied elevation for four years.

Slow process

A number of factors from the performance of the candidate to their previous record and their integrity are taken into consideration. All these factors need to be accounted for before making a recommendation. The Chief Justice has to keep a hawk-eye on the potential candidates and a few months are spent to know the competent lawyers.

Malik Mazhar Sultan case

In this case, Malik Mazhar Sultan, 2008 had filed a petition against the Union of Public Service Commission (UPSC). The prominent issue brought to the Court’s attention the validity of the procedure for recruiting Civil Judges (Junior Division). According to the U.P Judicial Services Rules 2001, for a candidate to be eligible, they must have attained a minimum age on the day of giving the exam. Even though the case related to Uttar Pradesh, the ingrained problem of an avalanche of vacancies in the judiciary was common to every state.

A bench headed by CJI Y K Sabharwal pointed out that the vacant seats in the judiciary were the primary reason for the avoidable litigation of the case and also caused anxiety to the candidates appearing for the judicial exams. The public at large is deprived of their right to access justice.

The Court emphasized formulating a mechanism to facilitate the swift appointment of judges at all levels. It is crucial to take prompt steps after determining the number of vacancies by putting up advertisements, declaring the results of examinations conducted and issuing an order of appointment.
A time period must be stipulated to avoid delays in filling up the vacancies. A similar pattern to that of medical colleges filling up seats for admission can be adapted. There must be strict adherence to every step involved in the procedure of appointment. The only exception would be when there is a shorter number of vacancies in a particular year.
All the State and Union Territories Governments and the High Courts (as applicable in a given case) were given directions to ensure that vacancies are promptly filled.

However, we can infer that the guidelines were not efficiently implemented considering the high number of vacancies in the courts even today. The current framework for appointing judges does not allow states to recruit deserving candidates in a short period of time.

A study found that seven states in the country abide by a two-tier recruitment system. In the past decade, it had taken an average of 196 days to complete the first cycle of recruitment and directly appoint district judges enrolled in the bar. On the other hand, the states that abide by a three-tier system take about 336 days to complete the first cycle. Both the systems have breached the stipulated period of 153 days and 273 days that was laid down by the Supreme Court in the Malik Mazhar Sultan case.

Why are there so many vacancies in Indian courts?

Systematic defects

Systemic defects in the appointment process are a major reason for the larger number of vacancies in the lower judiciary. Exams are not conducted regularly and even when they are conducted in a regular manner, the High Court faces difficulties in finding sufficient numbers of eligible candidates to fill the vacancies.

Procedural delays

There have been delays in calling for applications, conducting examinations as well as declaring the results. Funds are not allocated efficiently to accommodate the newly recruited judges and magistrates.

Poor coordination

Unclear recruitment procedures, and difficulties in coordination between the High Court and State Public Service Commission, also frequently give rise to disputes and litigations surrounding recruitment, further stalling the process of recruitment.

Inadequate budget allocation

A very small percentage of the budget is allocated for the judiciary. Approximately 12,000 crores are spent annually which is merely 0.01% of the GDP.

Poor infrastructure

From the courtroom to the residences, the infrastructure is poor and inadequate to accommodate the newly appointed judges and magistrates.

Delay in appointment

The recommendations from the Collegium are not made on time and remain pending with the government for years.

Issues with the procedure adopted by the High Courts

There are 3 major issues in regards to the procedure adopted by the High Court to appoint suitable candidates:

Lack of specific authorities

The High Court has the responsibility to appoint suitable candidates along with the State Public Service Commission. However, there is no mention of the composition or the functions of the specific body in place to conduct the recruitment process. A study revealed that the rules of conducting the examination do not specify roles and responsibilities on an individual basis. This leads to a lack of accountability in the process. The functions of the committee members are not clearly designated. The duties held by individuals are subject to specific rotation.

Ad-hoc procedures

The examinations are uncertain and not conducted yearly. Candidates are anxiously left waiting for the result of the exam. Therefore, the current system is quite ad-hoc.

Lack of grievance redressal mechanism

There is no existing mechanism for resulting in the grievances experienced by candidates. An example of such a problem is the incorrect options to a question. Also, there is no provision in place for re-evaluating the answer sheets of the candidates.

Is the judiciary equally responsible as the government for recruitment?

According to a study, the judiciary along with the government has played a vital role in the increasing vacancies in subordinate courts every year. The Supreme Court recently took suo moto cognizance of the vacancies and inadequate infrastructure of the district judiciary. As for the high courts, the collegiums of various high courts have not recommended names on time.

The Memorandum of Procedure (MoP) had made it binding upon the high courts to recommend appropriate candidates at least one month before a place is left vacant. But there is still a mounting number of vacancies in the country. Many vacancies have been left for over five years.

The delays are mostly observed due to procedural issues or due to a lack of appropriate candidates. However, it is observed that for no proper justification, the government stalls the candidates from being appointed.

Comparisons with other jurisdictions

On applying the demographic standard of 50 judges per million population, 60,530 judges would be required to reach the ratio with the current population of 1,210.6 million. The current ratio is 18 judges per million that shows that the Indian judiciary is quite under-staffed.

On the other hand, other countries have a much higher judge-population ratio. The U.S. Judiciary (solely at the trial courts) has about 102 per million, Australia has 48 per million, England and Wales have 56 per million. A comparative analysis with China is more suitable as they are almost as populated as India- they have 147 judges per million. The highest ratio is as compared to the rest of the countries listed below.

In 2008, Malaysia had similar pendency rates as India has today. They adopted a number of measures such as Court Backlog and Delay Reduction programs that contributed to alleviating the issue. Mediation, an automated case management system, the creation of new courts, and their capacity building were part of these measures.

In Sweden, the population size is very low as compared to India however, less than a third of cases are pending before the courts every year. About half of the cases are dealt with by special courts for litigation with authority or litigation on rent and tenancy. An active role is played by the ‘lay judges’ in ensuring the swift disposal of cases.

In Indian courts, pendency is highest in civil matters in benchmark jurisdictions. There is an immediate need to create more posts at the judiciary and for support staff, and to have adequate infrastructure to reduce the number of cases. Access to justice should be pursued with as vigor as any other service that the State is bound by the Constitution to provide to the people. Justice should be provided in a reasonable time, at an affordable cost, and at a reasonable distance.

Impact of vacancies- rising pendencies of cases

The Indian judiciary has been under constant strain because of startling figures of unresolved cases before them. The figures constantly deter citizens from approaching the courts to resolve their disputes. Anecdotal evidence and popular memes of “tareekh pe tareekh” are constantly seen being circulated on the internet.

The following reasons have been cited as the reasons for the pendency of cases in the Indian courts:

Inherent change in litigation patterns

Traditionally, civil litigation would arise mainly from disputes related to partition, money claims, mortgage suits, adoptions, rent suits, and other such claims. There has been a decline in the number of such claims; however, a sea-change can be said to have occurred in the pattern of litigation. With the change in the concept of the State functions, restrictions on money lending, control over any form of economic activity, agrarian reforms, control on industrial enterprises, taxations to prevent concentration in the wealth of a few, improvement in the conditions of laborers and workers and, the various amendments and changes in matrimonial and personal laws have changed the scope of litigation.

A number of reforms both social and economic have taken place accompanied by a delegation of legislature’s powers in the form of rules, orders, regulations, and bye-laws. There has been a sharp increase in the number of laws affecting the rights of individuals and corporations. Whether a law can be executed is openly challenged in the courts giving rise to issues on the validity of the enactment and the extent of the legislation, along with the powers of the executive.

Increase in legislative activity

With an exceptional increase in the state, parliamentary, subordinate, and delegated legislation there has been a tremendous increase in the number of cases. There has been a continued proportionate rise from the increase seen in the period between 1950 to 1970 wherein almost 1,000 acts and 6,358 statutes were passed by the State Legislatures. The interpretation of the various provisions, as well as questions to their validity, occupies a great time of the courts. Another issue that arises is whether the provisions are in lieu of the provisions of the Constitution. Even the competence of the legislation whether enacted by the State or the Parliament is put in issue owing to the federal nature of the Constitution.

High number of election petitions

Recent amendments made to the Representation of the Peoples Act in 1966 have added the number of files in the High Courts. It involves another form of litigation involving tedious and widely contested trials. A huge number of election petitions are filed in the wake of every parliamentary election and the State legislatures. The provisions of the Act make it mandatory for the petitions to be heard by High Courts as the Court of Original Jurisdiction and the cases have to be swiftly disposed of in tenure of six months, At present, the High Courts are quite ill-equipped to carry this burden and it is rarely seen that the parties were amicably able to resolve the dispute and come to a settlement. There have been cases where the parties wished to have 1,000 witnesses examined along with a high volume of evidence that was submitted on the record. There has been a major contribution of these petitions in accumulating arrears in the High Courts.

Clogging of First Appeals

In every High Court, there is a huge backlog of First Appeals; some have been awaiting a verdict for more than two decades. It is observed that a root cause of this backlog is the continuous decline in the value of the rupee. The purchasing power has reduced to a fraction of what it used to be a few decades back. There has been a sharp increase in the prices of commodities and immovable properties. A high number of disputes have reached the courts through first apparels on transactions of commodities and immovable properties. This was not the scene a few decades back due to a low monetary value attached to the commodity. The courts are far behind in keeping up with the rapid changes of the economy and the inflationary spiral.

Burden of ordinary original civil jurisdiction in some High Courts

With the present pressure of cases faced by the Courts, the ordinary original civil jurisdiction is quite anachronistic. Six High Courts exercise this particular jurisdiction in specified areas and are burdened with a huge load of original trials which they cannot possibly carry today. India’s population and dimension cannot possibly afford the luxury of having trials in the superior courts

Insufficient strength of Judiciary

The judge strength of the High Courts has been fixed at 650 main cases per judge. The high number of election petitions filed after every general election, the delegation of Judges for Commissions and, the time lost on inspection of the subordinate courts, holidays, and medical leaves; are not accounted for.

Impact of pendency

There are negative implications caused by the pendency of cases to the administration of the justice system. According to South African Chief Justice Mogoeng, there are 6 consequences:

Exorbitant legal costs have to be borne by the litigants due to constant delays.
Quality of justice is affected due to the witnesses being unable to recall the exact events over time.
Witnesses and defendants absconding before the next hearing date arrives.
Offenders get opportunities to repeat the offences committed
The effectiveness of the justice system is undermined in the eyes of the public.
Economic losses are suffered by the parties.

A number of studies conducted all across the world suggest that the efficiency of the judicial system has a direct relation with the optimal functioning of the economy. Interest rates are affected positively with improvement in the efficiency of the judicial system and inflation. A judiciary that upholds the rule of law and gives access to justice to every citizen reduces borrowing and lending costs.

Conclusion

The Judges are the most significant part of the judiciary. They must be competent to handle issues that arise every day. The subordinate courts and the government must work together to address the pressing issue of vacancies. A large number of citizens are deprived of access to justice. With the onset of the pandemic, it was seen how the health system failed miserably and the economy declined. The judiciary is not far behind if vacancies are not filled in time.

In my opinion, a permanent, autonomous body must be instituted to look after the appointment of judges and deal with the grievances that are faced by the candidates. The Collegium can provide a list of possible candidates along with their experience, suitability, etc. instead of selecting some judges to meet the vacancies. A higher number of cases are being filed as the citizens get to know about their rights. The establishment of All India Judicial Services (AIJS) would ensure an efficient subordinate judiciary and fill vacancies in a shorter period of time.

The courts constitute the backbone of our judiciary and the collegium must strive to ensure its smooth functioning with zero empty spots.

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

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All you need to know about Dwarka Flyover Construction Rao CGHS v. National Highway Authorities of India & Ors

By

Abanti Bose

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November 28, 2021

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anti trust laws — Image Source: https://bit.ly/2MB01IT

This article is written by Dharmender Pandey, pursuing Certificate Course in Advanced Civil Litigation: Practice, Procedure and Drafting from Lawsikho. The article has been edited by Prashant Baviskar (Associate, LawSikho) and Zigishu Singh (Associate, LawSikho).

Table of Contents

Introduction

This article pinpoints the most crucial and debatable issue of the world at present, that is, the impact of developmental work at the cost of its impact on the environment. In this present Special Leave Petition, the Petitioner ‘Rao CGHS Ltd (New Millennium CGHS) & Ors is made of two group housing societies comprising 280 families and 6 individual residents of Dwarka. They approached the Delhi High Court for seeking the direction to restrain the National Highway Authority of India (NHAI) from carrying out construction activities at DDA Road 226, which is a residential road, unless it places evidence of all the necessary approvals of the appropriate authorities in this regard before the Hon’ble Court.

The Petitioner approached the Hon’ble Supreme Court against an order of the High Court in which the Hon’ble Delhi High Court refused to grant relief to the petitioner. The present case was listed before the Divisional Bench of the Supreme Court comprising Dr. Justice DY Chandrachud and Justice MR Shah. The Bench initially was not ready to take this case for hearing, since the matter was already pending before Delhi High Court. But Advocate Prashant Bhushan, appearing for the petitioner, apprised the court that the construction is still going on day and night despite the High Court order that respondent no. 1 shall not cut or remove any tree in the area in question without obtaining the appropriate permission from the competent authority. He also submitted that the construction work is continuing without obtaining the requisite permission from the competent authorities in the middle of a crowded residential area in which there are 12 (Twelve) schools. After listening to the argument of Advocate Prashant Bhushan the Divisional Bench issued the notice to the concerned parties.

Issue involved

The issue involved in the present case is that the NHAI and its allies are continuously involved in the construction work of DDA Road No. 226 in Sectors 22 and 23, Dwarka, not complying with the Delhi High Court’s order that said the respondent no.1 will not cut or remove any tree from the disputed area without taking the requisite permission from the appropriate authorities of Delhi Government in this regard. It is also alleged that the NHAI and its allies are constructing the flyover without seeking the requisite permission from the various departments which are mandatory before starting the construction work. The said construction work is going on throughout day and night which has been causing the residents in the vicinity great discomfort and inconvenience due to air and noise pollution. In addition to this, they are cutting trees in the said area, an action which would have a drastic impact on the environment. The said area is always congested with long traffic jams since the time when the construction work was initiated. The school children of the 12 schools in this area are affected due to the heavy traffic. The trees in the said area had been chopped off without obtaining the requisite permission from the competent authority under the Delhi Preservation of trees Act, 1994.

Facts of the case

In this present case, the NHAI and its allies are constructing a Highway DDA Road No.226 in Sectors 22 and 23, Dwarka which is a very densely populated residential area along with six schools in the vicinity of this construction work, without obtaining the proper permission from the appropriate authorities. This work is going on throughout day and night which affects the residents and schools in the vicinity. The trees are being cut down by respondents without taking any permission from the appropriate authorities, which impacts the environment. The long traffic jams increase the air and noise pollution to a great extent, which impacts the life of the residents and makes their life miserable. The traffic jams have also affected the school children’s lives in this area.

Plaintiff’s contentions

Plaintiff argued that there are already two (declared) Highways NH 248BB and NH 344M, which are available. In which case, what is the need for this present Highway that is also between a densely populated residential area. The environmental clearance has been only taken at the time of NH334M and not in the case of NH248BB. Even if this flyover is required then also the respondents must obtain all the prerequisites permission from the relevant authorities and strictly adhere to them. In the present case, the respondents have started the construction work without obtaining appropriate approvals from the appropriate authorities. The quality of air in this area became pathetic due to the unregulated construction work and traffic jams, which impacts the health of the residents in this area. The petitioner wants the court to intervene in the matter and restrain the respondents till the time they have not gotten the appropriate permission from the respective authorities. The Petitioner approached the Delhi High Court for a stay of the construction work till the respondents had not placed the requisite permission before the court. The petitioner argued that the Delhi High Court made an error while accepting that this Highway is not new and exempted the respondent from obtaining compulsory environmental clearance under the Environmental Impact Assessment notification, 2016. The plaintiff argued that the impugned order of the Delhi High Court is contrary to this court Judgment in the case “Project Director, Project implementation unit vs. P.V. Krishnamoorthy” where the court held that the environmental clearance is mandatorily required before commencing actual work and not before the Central Government expresses the intention to acquire it.

Defendant’s contentions

Defendants argued that the present Highway’s work is not the new project, but is being done on the existing road, therefore the requisite permissions are not required in this case. Hence the Defendants can continue the construction work and the stay of the construction work will go against the interest of the general public. The Delhi High Court permitted the respondents to continue with construction work but specifically mentioned in its order that they should not cut/remove any tree in the said area without obtaining the appropriate permission from the respective authority or place the already obtained permission before the court.

Delhi High Court observation

The Delhi High Court after hearing both the parties’ arguments has observed that the present Highway work is not the new one so that the respondents can continue the construction work but restrain respondent no. 1 from cutting or removing the trees without obtaining the appropriate permission from the appropriate authority.

Supreme Court observation

The Division Bench composed of Dr. Justice DY Chandrachud and Justice MR Shah initially was not interested to entertain this SLP because the case is pending in the Delhi High Court but after hearing the arguments of the Advocate Prashant Bhushan the trees are being cut down without obtaining the requisite permission from the respective department of Delhi Government. After hearing the argument from the Petitioner side the Division Bench had issued notice to the respondents in this matter. But at the next hearing, the Supreme Court Divisional Bench had reversed the plea back to the Delhi High Court as the Petitioner did not approach the Divisional Bench of Delhi High court against the order of a single Judge Bench.

Present status of the case

The case is sub-judice in the Delhi High Court. The petitioners filed this SLP because they are not satisfied with the impugned order of the Delhi High Court in which Delhi High Court gave free hand to respondent No.1 (NHAI) to continue its construction work of the flyover despite knowing that respondent No.1 (NHAI) never had any mandatory permission from the appropriate authorities, including permission for cutting trees and consent orders under the Water Act, 1974 and Air Act, 1981. The SLP has been declined by the divisional bench of the Supreme Court consisting of Dr. Justice DY Chandrachud, Mr. Justice Vikram Nath, and Ms. Justice Hima Kohli because the petitioner had not approached the Divisional Bench of the High Court against the order of the single bench judge. However, the Bench gave direction to the petitioner to pursue their remedies in accordance with the law.

Conclusion

The present case has become more important in the present time as the subject matter of the case is about development at the cost of a negative impact on the environment. It also raises the question of why the Town planners/Governments are not able to develop the area. Developmental work is necessary for ease of living but pure air and environment are more important for healthy living. The different policies under which a list of permission is required are made for the welfare of the society at large and at no cost should these policies be overlooked by any of the agencies involved in the project. It is also necessary for the different departments of the respective government to clarify that if anyone is not in the possession of the required permission then carrying out construction work without obtaining the required permission must be disallowed. The development work should be done, but not at the cost of the health of the people who are residents of that area. The final call that the court will take is still uncertain, and only time will reveal it.

References

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

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Difference between authorship and ownership of copyright in India

By

Abanti Bose

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November 28, 2021

0

copyright-video (1) — Image Source: https://rb.gy/h0inzf

This article is written by Aishwarya Parameshwaran, 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

As a layman who has very little knowledge about the aspects of copyright, we tend to believe that a music composer or a director is always the owner of the copyright arising from a song or a film. However, such is not always the case. The concept of ownership under copyright has a very different implication in comparison to other domains. The concept of authorship and ownership are very distinct from each other.

In this article, we shall begin with a basic understanding of Copyright and then understand in detail who is an author, and who is an owner of the copyright as per the Copyright Act, 1957. We shall also study the statutory exception to the concept of authorship and ownership of copyright.

Basics of copyright

Copyright is a type of intellectual property that is generally owned by the creator. It is given in the name itself that one possesses rights against the person copying it. The Copyright Act, 1957 is the law that deals with copyright in India. The intent of the legislature with respect to the Copyright Act, 1957 is, to assure authors, artists, composers, designers; basically, those who belong to the creative field who invest time, energy and money in creating the work and secondly, to encourage creative individuals to create more such work without fearing violation of their rights.

The Copyright Act, 1957 intends to safeguard the rights of the owner as well as the author, whether the copyrightable work is published or unpublished. It is requisite that in cases of unpublished works the author must be a citizen or have a domicile of India at the time of the creation of such work. One must always keep in mind that copyright subsists only in those works which are original. However, reproduction or adaptation of a work is only possible after acquiring the necessary permissions for the same. Now that we have learnt the basics of copyright, let us study in detail who is an author under copyright.

Who is an author?

Generally, an author is that person who writes or composes the work, either all by himself or according to the direction given by another person. Whenever a copyrightable work is created, the author puts in his intellectual ability in order to create the work. Hence, the Copyright Act, 1957, recognizing the efforts put by the authors, grants authorship rights to the author of the creation. Since copyright is a universal right, it doesn’t matter what the nationality of the author is in order to acquire authorship rights. However, the Copyright Act, 1957 specifies certain requisites under Section 13 of the said Act which needs to be met in order to own copyright.

The Copyright Act, 1957 has set a general rule under the definition of the author of various works laid down under Section 2(d), which states that the author is the first owner of the Copyright. Section 2(d) of the Copyright Act, 1957. The section reads as follows:

In literary or dramatic works, the author of such work shall be the author.
In musical works, the music composer shall be the author.
In artistic works, the artist shall be the author.
For a photograph, the person clicking such photograph shall be the author.
In cinematographic films, the producer of such a film shall be the author.
For a sound recording, the producer of such sound recording shall be the author.
When a literary, dramatic, artistic or musical work is a computer generated then the person who causes such work to be created is the author.

Who is an owner?

The concept of ownership is very different under the Copyright Act. As we discussed above, the general rule is that the author is the first owner of the copyright. However, the Copyright Act, 1957 specifies certain exceptions to this general rule. Therefore, it becomes very important to understand the difference between authorship and ownership of copyright. Let us understand with the help of illustrations.

Illustration:

If ‘A’ asks ‘B’, a painter to paint his portrait for an agreed sum of money, then although B has created the painting, he shall be the author and A who paid consideration for the portrait shall become the first owner of the copyright arising and accruing out of the portrait.

In many scenarios, the work may be commissioned or made through the course of employment. In such a situation, the person who commissions the work or who is the employer becomes the owner of the rights in that work. The statutory provision that recognizes such a person as the owner is laid down under Section 17. Let’s understand the same in the next subheading of this article.

Thomas vs Manorama:

In this case, it was held that once the employment agreement is terminated, the work created by a person subsequent to such termination shall be the first and true owner of copyright arising out of such subsequent works and the former employer shall possess no copyright on such subsequent copyrightable work.

Statutory exception under Section 17 of the Copyright Act, 1957

Section 17 of the Copyright Act, 1957 is an exception to the general rule of the author being the first owner of the copyright. This section simply lays down that a person who pays a consideration for the work to be done shall become the first owner of the copyright. Let’s dive deeper into this section.

Section 17 (a) of Copyright Act, 1957 : literary, dramatic and artistic works

This clause of Section 17 talks about literary, dramatic and artistic works. It says that whenever such a work is made by an author during the course of his employment or service to the owner of a newspaper, magazine, book etc under a contract for publishing such work, then subject to an agreement in contrary, the owner of such newspaper or magazine shall become the first owner of the copyright.

Illustration:

If ‘A’ is a journalist employed at Mirror Now, a newspaper agency, then he shall only enjoy authorship rights over that article. The first owner of the article shall be the owner of Mirror Now.

Section 17 (b) of Copyright Act, 1957 : photograph, painting, engraving, cinematographic film

This clause talks about the cases when an artist is hired for creating a painting, or when a photographer is hired for clicking images, or a cinematographer is hired to shoot a cinematographic film then the person causing such work to be created shall become the first owner of the copyright. However, this rule shall apply only if there’s no agreement to the contrary between the parties.

Illustration:

If ‘X’ who is an artist has been hired by ‘Y’ to create a portrait of his son, then ‘Y’ shall be the first owner of the copyright arising and accruing from the portrait created by ‘X’ in lieu of consideration. However, ‘X’ shall retain authorship rights over the portrait.

Section 17 (c), Copyright Act, 1957 : work made during the course of employment

This section provides that, when a work is made by a person in the course of his employment under a contract of service or traineeship, then the employer shall become the first owner of all the work created during such employment unless there’s an agreement in contrary between the parties.

Illustration:

If ‘M’ is a programmer employed at XYZ company, then all the copyright arising from codes created by ‘M’ shall be owned by XYZ company as the first owner.

Section 17 (cc), Copyright Act, 1957 : lectures delivered in public on behalf of another

As per this clause, if a person is delivering a speech on behalf of another then, the person on behalf of whom the lecture is given in the public is the first owner of such copyright. However, if a person gives a lecture in public by himself and not representing anyone else then, he becomes the author and first owner of such copyright.

Illustration:

If ‘A’ the spokesperson of ‘B’ a political leader delivers a speech in public, then although ‘A’ is delivering the speech in public, ‘B’ shall be the first owner of the copyright of such speech.

Section 17 (d) of Copyright Act, 1957 : work assigned by Government

Suppose if a copyrightable work is created on being tendered by the government, then such government shall be the first owner of the copyright arising and accruing from such works unless there’s an agreement to the contrary between the parties.

Illustration:

If ‘A’ a sculptor, has been tendered to create a sculpture of national heroes to be affixed on the road by the State Government then, the State government shall own first ownership of copyright arising from such sculpture.

Section 17 (dd) of Copyright Act, 1957 : copyrightable work made on behalf of a public undertaking

When a copyrightable work is created as per the direction of the public undertaking, then such public undertaking shall be the first owner of the copyright.

Section 17 (dd) and Section 41 of Copyright Act, 1957 : copyrightable works created for certain international organization

Suppose if an international organisation assigns a person to create a copyrightable work for them then, that international organization shall become the first owner of such copyrightable work.

Conclusion

This article makes it clear that the Copyright Act, 1957 has precisely demarcated authors, owners and their rights. In the event that there is an ambiguity amongst the parties as to the authorship or ownership of rights, one can simply check the contract they have entered in and the terms and conditions therein. If the parties share a relationship where section 17 applies and there’s no agreement between the parties which is in contrast, then the authorship and ownership rights shall be granted to parties only as per Section 17 of the Copyright Act, 1957. Therefore, there is no hard and fast rule on who owns authorship and who has the ownership of copyright. It is completely dependent on a case-to-case basis and the agreement existing between the parties.

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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Protection of Pride

By

Oishika Banerji

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November 27, 2021

0

LGBT Rights in India — Image source - https://bit.ly/3dmynuy

This article has been written by Darshni Gala pursuing the Diploma in Intellectual Property, Media and Entertainment Laws from LawSikho. This article has been edited by Smriti Katiyar (Associate, Lawsikho).

Table of Contents

Introduction

Kleenex, Thermos, Aspirin, Zipper, etc. What do all of these have in common? All of these terms were once considered as distinctive trademarks. Now these terms come under the purview of generic trademarks, meaning that the products of the companies were so successful that they became so common and started representing an entire category. A very famous term for this is the ‘Trademark Genericide’. Trademark Genericide can be defined as the loss of trademark rights when a term enters common usage and consumers begin to denote a particular product rather than its source. When a trademark becomes the “common descriptive name” of a certain product, the trademark owner will no longer have an exclusive right to its use. This paper throws light on trademark regulations in different countries and how the term LGBTQ and its symbol is recognised in trademark laws. To understand the root of everything, let’s begin from the basis.

Basic understanding of trademark

A trademark is a word, term or a phrase used by a business or an organisation to protect their product or service. Trademark is an element of the Intellectual Property Right that is granted for distinguishing a product or a service from another entity, thus attaining the legal presumption of ownership.

According to the Indian Trade Mark Act, 1999, “trade mark means a mark capable of being represented graphically and which is capable of distinguishing the goods or services of one person from those of others and may include shape of goods, their packaging and combination of colours.”

Hence, a trademark can be a word, name, logo, phrase, symbol, image, design, or a combination of these elements.

In India, to classify goods and services for registration of their trademarks, rules of the International Classification of Goods and Services India that have been published by World Intellectual Property Organization (WIPO) are followed. The Vienna Agreement is followed by India to classify figurative elements of trademarks. With the increasing competition in the market, a trademark offers a simple protection of securing one’s brand and eliminating competitors from stealing one’s ideas.

It is amazing how anything and everything can be considered to be a registered trademark. However, as we all know, nature provides exceptions to every rule. Along with many grounds of restriction like names and surnames, colours, sound, smell, words that are not distinctive in nature or are generic cannot be protected under trademark.

Can the term LGBTQ be protected under trademark law?

The LGBTQ is a community of individuals that defines as Lesbian, Gay, bisexual, transgender and Queer/ Questioning. This term represents identities, individuality, sexuality and so much more. This term has come into being with many years of changes. It is now an umbrella term to define sexuality and gender identity. Although the term LGBTQ has become very popular and is a well-known initialism to what it represents, what is the Intellectual Property Rights of the term?

Case studies

Trademark cases in India

In the case of Superon Schweisstechnik India v. Modi Hitech India Ltd, it was said, “in trademarks matters, every case necessarily turns upon and is decided on its own facts including but not limited to the trademark, goods in question, customers, use and all other factors and their intense correlation in each case” It says that the scope of protection for descriptive words—and in particular, abbreviations as trademarks—was extremely limited.

Allowing a solitary organization to command over use of generic terms for a trademark would be against the principles of natural justice and would be unreasonable to the rest.

In Pre-Paid Legal Services, Inc., “the examiner held that the acronym defines only the feature, function, or intent of the services of the applicant is not entitled to be protected under trademark law. A mark consisting of an acronym will be considered substantially synonymous with descriptive wording if:

The mark proposed is an abbreviation or acronym for specific wording
The specific wording is merely descriptive of the services of the applicant; and
A relevant consumer recognizes it as being an equivalent of merely descriptive wording when viewing the acronym with respect to the services of the applicant.”

Trademark case in USA

In an old case in the US history, it was said that “It does not follow, however, that all initials of combinations of descriptive words are ipso facto unregistrable. While each case must be decided on the basis of the particular facts involved, it would seem that, as a general rule, initials cannot be considered descriptive unless they have become so generally understood as representing descriptive words as to be accepted as substantially synonymous therewith.”

Analysis of regulations of different countries

Throughout the years, courts have used the term “acronym” in a wider sense, thus including its synonym like the term initialisms. The entire principle of a trademark is to show the foundation of goods or services. A generic name is incapable of showing any source. Additionally, the term LGBTQ stands for a community of people, hence it is very ambiguous with what goods and services this term and the community in itself is associated with. In concise, across the period of time, there are three important questions that are to be considered when dealing with the trademark for a term or any other expression-

First, whether the initials represent a specified word?
Second, whether the specific word is generic or merely descriptive of the products or services?
Lastly, whether the people at large will readily recognize the initials as for what its descriptive terms stands for? If the response to these inevitable questions is positive, the registration for trademarks are customarily not granted.

Intellectual Property Rights of the LGBTQ symbol

After discussing the term LGBTQ, it is important to recognise the Intellectual Property Rights of its symbol. The LGBTQ community has a symbol that represents self-identification, acceptance, pride and everything they stand for. This world recognised symbol is that of a Rainbow Flag or commonly known as the Pride Flag.

Article 6ter of the Paris Convention provides that ” the countries of the Union agree to refuse or invalidate the registration and to prohibit, by appropriate measures, the use, without authorization from the competent authorities, either as trademarks or as elements of such trademarks, of armorial bearings, flags and other State emblems of the countries of the Union, official signs and hallmarks indicating control and warranty adopted by them, as well as any imitation from the heraldic point of view.” The Constitution of a State generally defines a state flag.

So State, National and International Flags are generally protected under various agreements and the Constitution but what about the cultural flags like the Pride flag?

Cultural Flags are usually designed by an individual or a private entity. Hence the ownership shall lie with those individuals or a private entity and so shall the right to copyright protection. The bright and beautiful colours of the flag that was designed by Gilbert Baker, a gay right activist in 1978 reflects the diversity of the LGBTQ community. “I thought that we needed that kind of symbol, that we needed as a people something that everyone instantly understands. The Rainbow Flag doesn’t say the word ‘Gay’, and it doesn’t say ‘the United States’ on the American flag, but everyone knows visually what they mean. And that influence really came to me when I decided that we should have a flag, that a flag fit us as a symbol, that we are a people, a tribe if you will.” said Mr. Gilbert Baker.

Mr. Baker could have protected the flag and his interests and licence the limited use of the pride flag as he desired. But that would hamper the entire purpose of “strength in solidarity” such as flags and symbols. Although Baker has moral rights to the flag, his desire to keep the flag as free is evidenced as him waiving off the rights to the flag. The rainbow colours in general have been incorporated in many businesses and companies in forms of their logos, designs and other graphical forms, thus making the spectrum non-distinctive and generic, disabling it to be trademark protected.

Legal aspect

What happens when such flags are used in an immoral, inappropriate manner and for commercial gain?

In a huge controversy in USA, BiNet’s IP claimed that they had a copyright over the bisexual pride flag and its colours. There was a huge backlash on this and people all over the world shared their disappointment. After the backlash, BiNet USA deleted their tweets, comments, and even their own website. In the recent statements of Faith Cheltenham who was the organisation’s president, she said on social media there has been a misconstruction of her words and that “the bisexual pride flag is intended for bisexual community use” and said “BiNet USA ceases and desists of all use of the bisexual pride flag”.

The Objective of Article 7(1)(i) of the EU Trade Mark Regulation applies to all other badges, emblems or escutcheons that are not covered under Article 6ter regardless of whether they are the emblems of a state or international intergovernmental organisation or of public bodies or administrations such as provinces or municipalities. This Article is in particular the interest of the public. Hence, any sort of association or organisation that works in the public interest like those for the LGBTQ rights can go against the registration of the LGBTQ symbol when the symbol has a particular connection with the activities of the body or the organization.

Conclusion

“Although pride flags are not listed among the explicitly unprotectable designs, the genre almost as a rule simply includes recognized LGBTQ+ symbols in simple, easily reproduced patterns.” says an intellectual property attorney, Brian J. Winterfeldt. Although obtaining a trademark on the Pride Flag amounts to the exact contrary to what the Pride Flag stands for, it is still unclear as to what shall happen when such flag is used in an inappropriate manner. It has been observed that “naming and shaming” has become much more famous in such matters rather than taking legal actions. Today, the LGBTQ term and its symbol, the Pride Flag is more than just a collection of terms or a logo. It resembles an entire community worldwide. It is a powerful symbol that represents its history of struggles and the future of acceptance. Thus, it is utmost important that such a term and symbol be protected and receive the true pride it deserves.

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

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Minimum age criteria for NCLT appointments in Companies Act, 2013

By

Rachit Garg

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November 27, 2021

0

1600x960_375595-nclt-e1621162282921 — Image source - https://bit.ly/3o7WDJU

This article is written by Mahimna Dave and the article has been edited by Khushi Sharma (Trainee Associate, Blog iPleaders).

Table of Contents

Abstract

“Age is an issue of mind over matter. If you do not mind, it does not matter.”

-Mr Mark Twain

The present research article argues the constitutional validity of section 413 (2) of the Companies Act, 2013, which prescribes a specific age limitation for the appointment of judicial members in NCLT. It challenges the validity of the provision under articles 13, 14, 21 & 50 of the Constitution of India. The paper further lays down the instances through various celebrated case laws that how tribunalisation and bureaucratization of Justice advance to lack of judicial independence and breach of the separation of powers. In light of this, the paper presents the following three questions: First, we will try to locate the historical position of the provision under the Companies Act, 2013, Administrative Tribunals Act, 1985 and other legislations. Second, we trace the impact of how the imposition of such limitations causes tribunalisation and bureaucratization of Justice, which further raises questions concerning judicial independence and separation of powers, and; Finally: we analyse the status quo and where do we stand after the judgment of Madras Bar Association v. Union of India (2021). Essentially this paper looks at the administration of Justice in our country and analyses how limitations on appointments threaten specialization, which is of paramount concern for any modern democracy governed by the rule of law. Simultaneously, it also tries to dissect the nascent jurisprudence of indirect discrimination absent from Indian discrimination law jurisprudence.

Introduction

There are no codified laws, national or local, in India that directly deal with the issue of age discrimination. The Constitution protects discrimination only on the grounds of religion, race, caste, sex or place of birth. It does not include age. These fundamental rights are available only against the State. Nonetheless, under common law (India being a common law country), it would be possible for an individual to seek protection against age discrimination under certain circumstances.

Types of Discrimination:

There is no law under the purview of Indian jurisprudence which addresses the subject area of Age discrimination. Nonetheless, under common law (India being a common law country), draws inferences from the United Kingdom’s The Equality Act, 2010. The act lays down different kinds of discrimination, they are:

Direct Discrimination: This form of discrimination refers to all protected characteristics. It covers all types of behaviours that discriminate on the grounds of age—for example, denying promotion to an older candidate only on the age grounds without considering their experience example, denying promotion to a more senior candidate regardless of their experience, or making an employee redundant on the grounds of their age.

Indirect Discrimination: An act accounts for discrimination when an employer introduces a workplace provision, practice, or criterion. The measure puts a group of employees with a protected characteristic at a clear disadvantage against their peers.

Ideally speaking, where there are reasonable grounds for discrimination based on age, such as the job’s nature, job’s location, etc., under articles 15 & 16 of the Constitution of India, discrimination may be justified. For example, there exists an age limit for recruitment in the armed forces. The retirement age prescribed for cabin crew of India’s national airlines under the governing statutes is very less than the retirement age of other central government employees or public undertakings.

But the rationale behind establishing a minimum age limit criteria in matters relating to the appointment of judges in tribunals, courts & commissions is understandably arbitrary as there is no nexus between the object and the result sought to achieve. This provision is direct discrimination on age, leading to an indirect entry to the system.

In light of this article, limitations imposed based on age for appointment of judges in NCLT under section 413 (2) of the Companies Act, 2013. It clearly, establishes the existence of direct discrimination as it discriminates people of specific age categories to apply for the same. Section 413 (2) clearly states that individuals who have not completed fifty years of age shall not be eligible for appointment as Judicial Members of the tribunal. The language of the section is worded very strongly that there is no scope for any other interpretation. It establishes only one understanding of direct discrimination as it imposes an indirect barrier for the entry of those below 50 years of age.

Section 413 (2): A Member of the Tribunal shall hold office as such until he attains, —

(a) in the case of the President, the age of sixty-seven years;

(b) in the case of any other Member, the age of sixty-five years:

Provided that a person who has not completed fifty years of age shall not be eligible for appointment as Member:

Moreover, it also violates the ‘right of equality of the parties concerning the case. Every party approaching the National Company Law Tribunal has a right under article 14 to get their rights adjudicated by a forum that exercises judicial power and technical expertise impartially and independently.

It is not just the fundamental right of the parties approaching the tribunal to seek Justice. Still, a duty cast upon the State under Directive Principles of the State Policy enunciated in chapter IV of the Constitution. Art 39 (A) of the Constitution casts a duty upon the State to provide ‘Equal justice and free legal aid’. Understandably, the minimum age limit criteria imposed under section 413 (2) of the Companies Act, 2013 violates the provisions mentioned above of the Constitution. It describes a minimum age limit of 50 years for the appointment as a judicial member NCLT. It further restricts the parties to the case to have their rights adjudicated by a forum (bench) that exercises competent judicial power and technical expertise on the subject matter, eventually leading to non-fulfilment of equal justice principles.

In the recent judgment of NCLT, the bench observed that:

“Wherever the access to courts to enforce such rights is sought to be altered by directing a litigant to approach an alternative forum, then in such case the legislative act in question can be challenged before a court of law on the ground that it is ultra vires the constitution.”

“The fundamental right to equality as mentioned under article 14 before the law and equal protection of laws guaranteed by Article 14 of the Constitution includes a right to have the person’s rights, adjudicated by a forum which exercises judicial power impartially and independently, consistent with the recognized principles of adjudication.”

Thus, the contentions raised by the paper are well as per the constitution and previous Supreme Court and NCLT judgments. On the grounds mentioned above and the peripheral understanding laid down in the introduction section, we can further elucidate some more implications of the issues raised above and try to make some informed and pragmatic solutions to address the Gordian-not.

The genesis of Tribunalisation & Bureaucratization of NCLT

Administration of Justice has been a paramount concern for every country governed by the rule of law. Judiciary being an integral part of the three-tier system forming the basis of functioning of a state holds several responsibilities. In light of this paper, we would like to address the problem concerning the delay, backlogs and incompetency in the administration of justice in the present judicial setup. In our present judicial ordain, disputes usually take several decades to reach finality, travelling across the series of courts. In addition, putting a bar on the entry creates a different spectrum of problems. First, equally competent people do not get equal opportunities which is a type of direct discrimination which we will argue upon under article 14 of the Constitution in the latter part of this paper. Second, tribunals like NCLT delay with such specialized matters. It has become quit-essential to employ those potential judicial members who are well-versed with their subject areas like mergers & acquisitions, insolvency, dissolution, etc. The technical jargon to deliver legally and socio-economically sound legal judgements. But age restrictions imposed under section 413 (2) This provision puts a bar on such opportunities. Last, it violates the right of equality before the law and equal protection of the law under article 14 of the parties approaching the court as they cannot get their rights adjudicated by an independent and technically sound forum in the subject areas pertaining to the matters involved. Age restrictions degrade the quality of judgements and lower the pace of the justice delivery system.

Impact of Tribunalisation and Bureaucratization on Justice

The doctrine of separation of power ensures and maintains the system of check and balance between the legislature, executive and Judiciary. Our Constitution aspires for specialization, ensuring separate and fixed roles of these organs. Overstepping the jurisdiction or course of action of each other is strictly prohibited and. It also provides that every organ should function separately and independently. Since the independence of the Judiciary is necessary to ensure Justice and prevent the government from acting arbitrarily. In Indira Nehru Gandhi v. Raj Narain It was established that parliament does not have the authority to adjudicate disputes. Any dispute concerning the election of the Prime Minister has to be judged by special courts or tribunals as separation of powers is part of the basic structure of the Constitution as prescribed under the celebrated case law of Keshvananda Bharati v. Union of India. However, since the enactment of the Administrative Tribunals Act, 1985, the legislature has overstepped the boundaries established by the doctrine of separation of powers and has deprived High Courts and Civil courts of essential judicial functions by transferring them to quasi-judicial bodies which are directly under its control. Therefore, the necessary power provided to the High Court through our Constitution has been curbed to a greater extent. I think that the potential danger regarding this transfer of judicial power would be an infringement of citizens’ natural and legal rights in our country. Since the parliament and state legislatures now can establish tribunals for any field according to their discretion, there are high chances that they will establish tribunals inspired by their political interests and ideologies. Judicial independence ensures that judges are not politically biased and they will give judgements purely based on a rule which is not affected at all by the ruling party in the parliament. However, the tribunals are entirely under the control of the executive; hence it is highly possible that those who will be in charge of adjudicating disputes in the tribunals will be influenced by the inherent political interests of the party in the rule. There is a common concept named the opinion of Bureaucracy which manifests how the executive organ of the democracy is very conservative and cautious in nature, but their appointments are purely based on political discretions, raising concern about their interest in the prevailing political theories.The establishment of tribunals was justified on the basis that they would reduce the overburdening on courts, ensure speedy disposal of cases and solve the problem concerning overlapping of jurisdiction. However, it has been observed so far that these tribunals have worked as a source of post-retirement occupation for the bureaucrats and judges who support and resist the prevalent political ideologies. Moreover, there have been instances where tribunals have failed to achieve the sole purpose for which they were established, i.e. speedy disposal of cases.

Age Criteria appointment is ultra-vires to articles 14, 21 and 50.

In light of this paper, it is submitted that section 413 (2) of the Companies Act, 2013 is ultra-vires to Article 14, 21 & 50 of the Constitution of India in as much as these are violative of the principle of separation of powers and independence of Judiciary, apart from being contrary to the principles laid down in the case of Madras Bar Association v. Union of India and Anr. This s contrary to the directions in the Madras Bar Association judgment (2021), as the Hon’ble Supreme Court has specifically emphasized the need to appoint young members in tribunals to make their functioning strong. Also, when a person is eligible to be made a High Court Judge, it is quite strange to describe a minimum age limit for tribunals.

In the case of Madras Bar Association, the Hon’ble Supreme Court observed that:

“Younger advocates who are around 45 years old bring in fresh perspectives. Many State inducts lawyers just after seven years of practice directly as District Judges. If the justice delivery system by tribunals is to be independent and vibrant, absorbing technological and rapid advances, it is essential that those practitioners with a certain vitality, energy and enthusiasm are inducted.”

In the present case, therefore, the minimum age limit criteria for qualification as essential for the appointment is discriminatory and arbitrary because there is exist no rational nexus between the provision and the object sought to be achieved. There are no empirical studies or data that explicates older candidates are superior or that younger candidates are incapable of having pre-requisites for being appointed as judicial members in tribunals. Therefore, it is direct and simple discrimination based on age. The criterion (of minimum 50 years of age) is virtually “picked out from a hat.” And wholly arbitrary.

Stance after the ruling of Madras Bar Association Judgment (2021)

Since first, if we are talking about the stance after the ruling of Madras Bar Association Judgment (2021) [addressed as CL1] so it is important for us to know the facts of CL1. In this case, it was a judgment which was delivered by the 3- Judge bench of the Supreme Court with 2:1 majority view held that prescribing 50 years as the minimum age for consideration of advocates in the tribunal has the devastating effect of excluding young lawyers who have their core competence in the relevant field and who are successful in their career.

In this case, the minimum age limit which was prescribed as Proviso to section 184(1) of the Finance Act, 2017 and which was again added through amendment under Tribunal Reforms Ordinance, 2021 under Chapter XI heading Amendments to the Finance Act, 2017 and the relevant part is read as follows –

“184. (1) The Central Government may, by notification, make rules and regulations to provide for the qualifications, appointment, salaries and allowances, resignation, removal and the other conditions of service of the Chairperson and Members of the Tribunal as specified in the Eighth Schedule:

Provided that a person who has not completed the age of fifty years shall not be eligible for appointment as a Chairperson or Member:

Since as we can see that in the Proviso that fixing the minimum age as 50 years for recruitment of members for the tribunal is acting as a deterrent for the other competent lawyers to apply for it, and it was held by the Honourable Supreme Court that prescribing the minimum age limit of 50 years is arbitrary and irrational as since if we see the Constitution in which an advocate with experience of 7 years at the Bar can be considered for appointment to the position of a district judge, and it also excludes the possibility or an utmost certainty that the young advocates who can be trained and competent and can have their core competence in the areas for which tribunals are constituted and thus exclusion of such candidates will be arbitrary and it appears that this age is picked out from a hat.

Now, if we compare the above amendment to section 184(1) of the Finance Act, 2017 under Tribunal Reforms Ordinance, which is mentioned above with the Proviso to subsection (2) of Section 413 of The Companies Act, 2013 Of which the relevant part is read as follows:

(1) The President and every other Member of the Tribunal shall hold office as such for a term of five years from the date on which he enters upon his office but shall be eligible for re-appointment for another term of five years.

(2) A Member of the Tribunal shall hold office as such until he attains,—

(a) in the case of the President, the age of sixty-seven years;

(b) in the case of any other Member, the age of sixty-five years:

Provided that a person who has not completed fifty years of age shall not be eligible for appointment as Member:

Provided further that the Member may retain his lien with his parent cadre or Ministry or Department, as the case may be while holding office as such for a period not exceeding one year.

3) The Chairperson or a Member of the Appellate Tribunal shall hold office as such for a term of five years from the date on which he enters upon his office but shall be eligible for re-appointment for another term of five years.

(4) A Member of the Appellate Tribunal shall hold office as such until he attains,—

(a) in the case of the Chairperson, the age of seventy years;

(b) in the case of any other Member, the age of sixty-seven years:

Provided that a person who has not completed fifty years of age shall not be eligible for appointment as Member:

Provided further that the Member may retain his lien with his parent cadre or Ministry or Department, as the case may be while holding office as such for a period not exceeding one year.

In this case, if we see the Proviso of Sec 184(1), which was held unconstitutional in the case of CL1 by the Supreme Court. It covers all types of behaviours that discriminate on the grounds of age. For example, denying promotion to an older candidate only on the age grounds without considering his or her experience and then taking this judgment into mind and then if we read the provisos in bold font above in section 413 of Companies Act, 2013 and then on the basis of which if central government notifies the advertisement for the appointment of members in NCLT AND NCLAT and only for those which are above the age of 50 years then it would be a violation of the Madras Bar Association Judgment (2021) as it would be contrary to it and would violate the rule of separation of power which forms part of the basic structure of the Constitution, and this advertisement will also be struck down as it would be against the independence of Judiciary and would also amount to undermining the supremacy of the Constitution and would be impermissible legislative interference and then this advertisement would be struck down.

If we would see the Proviso of amended Section 184(1) under tribunal Reforms Ordinance which was held unconstitutional by the Supreme Court which is similar expressly as well as in literal meaning to Proviso contained in Section 413 (2) and thus if section 184 (1) was held unconstitutional by the supreme court as being violative of several constitutional provisions and since the age of 50 years does not have any rational nexus as since no empirical study has been conducted which shows that older candidates performs better and have sound knowledge of law as if any person who has practised for 25 years in unrelated fields and then appointing him as Member would not serve the purpose of tribunal in comparison to the young advocate who has an experience of 10 to 15 years and has a core competence in the area designated for tribunal and thus it is discriminatory, arbitrary and irrational so section 413 (2) should be held unconstitutional and the advertisement would be struck down post Madras Bar Association Judgment (2021) .

Conclusion

We all should criticize the bureaucratization of the tribunal in the harshest words because when it comes to the administration of Justice, you cannot trust bureaucrats as Justice is not delivered on the basis of natural reasons but on the basis of the artificial reasons and judgments of the law and thus when the law is the act which requires long study and experience and law is not the subject of the bureaucrats but the law is designed to measure the causes of the subjects. The centre should not have the power for appointment of judicial members in regard to tribunals as it undermines the Judiciary and instead, as was suggested by the Supreme Court, that National Tribunal Commission should be constituted which will be responsible for the appointments, disciplinary actions, and administrative purpose.

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Legality of cryptocurrency in India

By

Rachit Garg

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November 27, 2021

0

This article is written by Darshin Parekh from National Law University, Jodhpur. The article has been edited by Khushi Sharma (Trainee Associate, Blog iPleaders).

Table of Contents

Introduction

A cryptocurrency, crypto-currency, or crypto is a digital asset that is designed to work as a medium of exchange where an individual coin ownership records are stored in a ledger which exists in a form of a computerized database using strong cryptography to secure transaction records, to control the creation of additional coins, and to verify the transfer of coin ownership. In simple words, there is no currency existing in the physical form, and there is no one particular regulator for regulating these exchanges.

Globally there has been a shift towards a digital economy wherein countries are using electronic means of transfer, cryptocurrencies are in line with the global trend which is also aimed at enabling digital mediums of transactions. Cryptocurrency basically relies on exchanging digital information from one person to another.

In the past decade, cryptocurrencies have seen a thousand-fold rise in the prices of coins, making people attracted to these markets. For example, the value of bitcoin in the early part of 2010 was 0.0008 USD, it had risen up to 60,000 dollars merely in the time period of 11 years, i.e. by May of 2021. This stupendous rise in prices has attracted people from across the globe to invest in the crypto currency, with the aim to earn more profits. This creation of unrealistic profits is not just limited to one cryptocurrency, but a similar pattern has been observed across currencies. Some popular crypto coins are Ethereum, Ripple, Cardano etc.

Now the question that arises is, with so many people entering the crypto market and investing crores of rupees on a daily basis, is there anyone who is regulating the affairs of such transactions and are these transactions even legal. The article aims to discuss the rationale behind crypto- its merits and demerits, legislations regulating crypto by various governments and approaches of the Indian Government on the same.

Rationale behind crypto

CryptoCurrency was invented after the 2008 Global Economic Crisis, to have a decentralized form of currency for individuals. This was created with the intent to prevent any actions or inactions where the governments or the banks could completely tremble the economy of the World. In 2009, the first decentralized cryptocurrency, bitcoin, was created by presumably pseudonymous developer Satoshi Nakamoto. Bitcoin was created as a way for people to engage in financial transactions without relying on banks or governments. It’s a peer-to-peer currency. No one controls your money, but yourself and these transactions are generated, secured and verified because of the use of cryptography.

As per a very recent estimate, there are more than 1600 crypto currencies today. The first of the lot was Bitcoin, which was followed by Lite Coin in 2011. All the crypto currencies that were released post the Bitcoin release claimed to be better than the original crypto currency, but still Bitcoin is the leader in today’s market. Crypto currency in the future will perform similar functions to fiat cash and is soon to be introduced in day-to-day transactions.

Unlike the traditional Stock Market, the crypto market is very volatile. Recently, the crypto market saw a very big dip in the market because China decided to ban crypto currency. Bitcoin and altcoins (refers to all virtual currencies except for Bitcoin) have all reached their lowest prices in the past 6 months. Further, the effect on the prices by mere tweets of wealthy individuals makes one wonder whether the market has any parameters or is it just a bubble that is yet to burst. People are still suspicious and hesitant before entering the market because of its volatile nature. Further, because Crypto coin mining can be done by any individual or group of individuals, how can their credibility be determined. This Article ponders upon the question of whether the virtual currency sphere has any rules or regulations that control the market and approaches of various countries.

Regulation of cryptocurrencies across the world

European Union

The union has provided a definition for virtual or crypto currencies. It defines virtual currencies as a digital representation of value that is neither issued by a central bank or a public authority, nor necessarily attached to a fiat currency, but is accepted by natural or legal persons as a means of payment and can be transferred, stored or traded electronically. In the decision of Hedvist, the European Court of Justice had held that transactions to exchange a traditional currency for virtual currencies and virtual currencies for traditional currencies constitute a supply of service for consideration. This allowed transactions to be exempted from Value Added Tax, therefore no VAT is being imposed on Crypto transactions in EU-member states. The judgement recognized the value and nature of these currencies.

Though these currencies are recognized across Europe, there is still an environment of uncertainty regarding these transactions. In early February, a joint statement was issued by the European Supervisory Authorities for securities (ESMA), banking (EBA) and insurance and pensions (EIOPA), warning the consumers regarding virtual currencies. It stated that virtual currencies are high risk and unregulated products, therefore are unsuitable for investment, savings or retirement planning. The European Commission has also presented a legislative proposal to amend the Fourth Anti-Money Laundering Directive (AMLD). It seeks to include custodian wallet providers and virtual currency exchange platforms within the scope of the AMLD. This would help in fulfilling due diligence requirements and have policies that can prevent money laundering, terrorist financing etc. It is quite clear that virtual currencies have not yet received recognition in European countries as it is considered to be a market that is not stable.

United Kingdom

United Kingdom today does not have any specific set of laws that regulates the crypto sphere, but it deems the regulation of these currencies as necessary. It states that regulation is necessary because it would help in combating illicit activities, promote market integrity and protect the safety and soundness of the financial system. The Bank of England Act 1988 under Section 2A states that it is the responsibility of the Bank of England to protect and enhance the stability of financial systems in the United Kingdom.

In respect to the provision, the Bank considered the risk that is posed by the use of cryptocurrencies in the United Kingdom. After a thorough understanding, it came to the conclusion that the crypto market is currently not large enough to pose any material risk to monetary or financial stability within the country. It is also necessary to ensure consumers are protected while using forms of payment from money laundering, taxation and use of these systems to finance terrorism or any other crime

China

This country does not recognize crypto as a legal tender and the banking system also does not accept virtual currencies. In a 2013 circular, the government defined Bitcoin as a virtual commodity, but while warning citizens about the risks of virtual commodities allowed them to freely participate in the online trading of such commodities, but the attitude and perception of the government have been changing in recent years.

Since 2017, the government has taken steps to prevent activities related to crypto currencies, due to concerns regarding financial risks. China hosts around 75% of the total crypto mining due to its established technology supply chains and extremely cheap electricity. Cryptocurrency mining requires huge amounts of computing power, making energy consumption a major overhead for the industry. China very recently imposed a ban on mining due to its very heavy electricity consumption. This has majorly impacted the miners, as they flock to different countries to seek refuge, and many miners even end their operation to comply with government directions. At the time, when China is banning crypto currency, it is also necessary to point out that the central bank of China is planning to come out with its own form of crypto currency. Therefore, the attitude of China regarding the regulation of Crypto currency is still unclear as it is stating contradicting objectives to the world at the same time.

United States of America

This country is among the very few that have actually started taking steps for creating legislation regulating virtual currencies. The Financial Crimes Enforcement Network (FinCEN) does not essentially consider cryptocurrency as a legal tender but at the same time, it considers the crypto currency exchanges to be money transmitters. It recognizes these currencies as a substitute for the natural currency. On similar lines, the Internal Revenue Service or the IRS, also does not recognize crypto currency as legal tender but considers it to be a digital representation of value that functions as a medium of exchange, a unit of account and/or a store of value. Further, it has also issued tax guidance regarding the same. The same also has been approved by a 2018 circular by the IRS.

Cryptocurrency also falls under the regulatory scope Bank Secrecy Act (BSA), this would indicate that any crypto exchange service provider must obtain a license from the FinCEN, implement an AML/CFT and Sanctions program, maintain appropriate records, and submit reports to the authorities. The US Securities and Exchange Commission has also indicated that the cryptocurrencies are to be considered as securities and security law will be applicable to it. The Commodities Futures Trading Commission(CFTC) has recognized currencies like Bitcoin, Ethereum, and allowed trading of virtual currency publicly on all the exchanges that it regulates.

Regulation of cryptocurrency in India

India is a developing economy and has generally followed in the footsteps of developed countries from around the world. India has legalized the use of crypto currency, and has allowed various service providers to deal in virtual currencies.

On 6^th of April, 2018 Reserve Bank of India (RBI) had issued a circular which stated that the citizens will not be allowed to deal in crypto currencies as there are serious concerns of consumer protection, market integrity and money laundering, among others. But the supreme court seemed to have favoured the virtual currencies by allowing its dealings. In the case of Internet and Mobile Association of India v. Reserve Bank of India, Supreme Court struck down the circular.

The supreme court decided that crypto currency can be accepted as payment for the purchase of goods and services and it should be regulated by the RBI. The Supreme Court also held that RBI is a financial institution aimed at protecting the money of the general public, hence it was within its right to ban the use of crypto. But at the same time it also said that instead of banning these virtual currencies altogether, the RBI could have looked for different approaches that may have been beneficial to the virtual currency users by implementing appropriate regulations. Therefore, crypto currencies are allowed in India but any legislation for regulation has not yet been implemented.

The RBI is also planning to introduce the Cryptocurrency and Regulation of Official Digital Currency Bill, 2021, which will prohibit all private cryptocurrencies and lay down the regulatory framework for the launch of an “official digital currency”. The government is also planning to start a central bank-backed digital currency, which will be less volatile as compared to the other virtual currencies. The Government has stated that virtual currencies cannot be considered as fiat currency as it is not stable and hence it will include its own virtual currency. However it is not quite clear what is to be considered as private currencies and which of them will be banned, but RBI has cautioned the general public regarding the misuse of crypto currencies and what can be its possible implication.

Further the latest amendment to Schedule III of the Companies Act, 2013 states that from the new financial year all the companies will be required to disclose their investments in crypto currencies, and also state any profit or loss involved in the transaction. The holder of virtual currencies will also have to state the number of holdings, details of deposit and advances from any person for the purpose of trading. Hence, it is clear that India is trying to regulate the sphere of crypto currencies and is trying to make it less volatile and risky for the citizens but it is still in its nascent stages.

Conclusion

Virtual currencies, unlike traditional investments, do not have any cap on fluctuations. They can be influenced by the smallest of things and are very volatile. Yet, it has not failed to attract investors from across the globe and give a hefty return on their investments. Countries across the globe are worried that this might just be another hoax, that would make citizens lose a lot of their finances. Countries are constantly trying to regulate the sphere so that the market can be stabilized and there are proper indicators of the market movement.

Crypto currencies were introduced with the intent to have a decentralized currency system, that is not controlled by the banks, financial institutions or the governments but if countries across the globe decide to regulate this currency system, then that might adversely impact the very purpose behind introducing virtual currencies. It might also lose its decentralized nature with central banks planning to introduce their own virtual currencies. Hence, Governments around the world will have to carefully ponder upon these questions before bringing about any legislation. They have to make the system more stable for the citizens so that they do not lose money but also at the same time not excessively interfere or control the activities of the market.

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Measures used to facilitate multi-party arbitration

By

Shoronya Banerjee

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November 27, 2021

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arbitration skills (1) — Image Source: https://rb.gy/sqonj6

This article has been written by Sanjay M Jawle, pursuing a Certificate Course in International Commercial Arbitration and Mediation from LawSikho. It has been edited by Prashant Baviskar (Associate, LawSikho) and Ruchika Mohapatra (Associate, Lawsikho).

Table of Contents

Introduction

Specialisation in today’s world

In the highly competitive world of business, there is an ever-increasing tendency to specialize and perfect the complex products and services in which one deal. Due to this excessive stress on specialization, there is less tendency to do jobs, even small ones, in which there is no specialization. The economies of scale also point towards such a tendency. It is more economical to subcontract jobs that are infrequently done.

Increased need for contracting, subcontracting and contracting patterns

A consequence of this is that there is a large amount of contracting and subcontracting at various levels in a single project with different types of contracts and sub-contracts. One such type of contracting can be of the type where an individual firm or a corporate enters into a contract with a contractor who in turn enters into a subcontract with another and so on. Another type of contracting can be where the individual firm or a corporate enters into different contracts for different parts of the project and they, in turn, enter into a subcontract. The third type of contracting can be where an individual firm enters into a contract with a consortium and each member of the consortium enters into sub-contracts with different parties as per its needs. We thus see that in any project there are multiple contracts depending upon its business type, expertise, and experience, expertise, and equipment sought, etc.

Criticality of timely completion of projects and disputes

The completion of the main contract is thus dependent upon the completion of each of the various contracts. A failure in the fulfillment of the contractual terms in any of the contracts anywhere in the chain has a cascading effect and leads to the eventual failure of the main contract which leads to the blame game and multiple disputes.

Resolution of disputes

Traditional method of resolving disputes

The traditional way of settling these disputes is to refer each of these disputes or all such disputes to the Courts or tribunals as per the individual contract clauses and the understanding of each of the firms or contractors. However, this type of dispute resolution has some major flaws like the disputes may come up for hearing at different times and the awards in each of these cases may be inconsistent with each other and may or may not have any effect on the final expected outcome.

Multi-Party Resolution of Disputes (arbitration)

Multi-party arbitration means arbitration involving more than two parties. One of the solutions to overcome the shortcomings of individual dispute resolution is to have consolidated proceedings or concurrent proceedings with common arbitrators. The primary objectives of having consolidated multi-party dispute resolution are to limit the time, delay, and costs associated with resolving the dispute.

Advantages of consolidated multi-party arbitration

In consolidated multi-party arbitration, all the submissions are made before a single arbitral tribunal- all the evidence is placed before it, all hearings are also conducted before the same tribunal. Consequently, the danger of inconsistent results is avoided. This is one of the major advantages of consolidation of proceedings. As a direct result of this, the cost of resolving all such related disputes can be considerably lower than the cost of resolving disputes in separate proceedings. Also, all the Arbitral Awards are more likely to be aligned and consistent.

Limitations of multi party arbitration

However, the consolidation of proceedings has its own set of limitations or shortcomings. Multiple parties obviously mean multiple agreements having a wide variety of dispute resolution clauses. If, for example, a dozen parties are involved in multi-party contracts having different arbitration clauses, various problems may arise like

Who should be the parties to the dispute?
The Arbitral Tribunal shall consist of how many arbitrators and on what basis?
What should be the process of appointing the arbitrators?
What is the amount of fee and cost to be borne by each of the parties?
Should there be one Award or several Awards?
The problem of jurisdiction shall be a major issue that may have to be resolved, as each party may be located or headquartered in different locations and may have selected a different jurisdiction.
There will also be various administrative problems which will have to be overcome during the course of the proceedings.

Causes of the limitations in multi-party arbitration

All of the above-mentioned limitations for multi-party arbitration arise primarily from two main reasons viz;

(i) Party autonomy: Due to which the two contracting parties have the power to choose their own set of variables leading to arbitration.

(ii) Confidentiality: Due to confidentiality issues, the two disputing parties may not want a third party to be present at the time of the submissions, pleadings, hearings, evidence, or making of the award or any other time which may be inconvenient to the parties. Due to this, consolidated proceedings can also become a slow, time-consuming, and costly process, but it is still capable of giving more consistent and aligned results.

Therefore, despite all the above limitations, consolidated or concurrent multi-party arbitration is increasingly being preferred in complex multi-party disputes. However, a lot of hurdles need to be overcome to resolve such multi-party, multi-contract disputes.

Efforts taken to facilitate multi-party arbitration

Efforts taken by countries

Though consolidation of proceedings is the way forward in the resolution of multi-party disputes, not many legislations around the world provide for it. Section 35 of the English Arbitration Act, 1996 provides that, arbitral proceedings can be consolidated or concurrent hearings can be held subject to the agreement between the parties. Failing such an agreement, the tribunal has no power to order consolidation of proceedings or holding of concurrent hearings.

The situation is similar in many other countries as well. The Courts or Tribunals do not have the power to order consolidation of hearings or hold concurrent hearings in the absence of an agreement between the parties. However, Courts in the Netherlands, in domestic arbitration cases in Hong Kong, and in some jurisdictions in the United States of America have the power to do so.

Efforts taken by arbitral institutions

Although UNCITRAL or the countries across the world have, so far, not taken the initiative to facilitate the consolidation of arbitrations, it is heartening to note that several Institutions have started taking the lead in this matter.

The London Court of International Arbitration (LCIA) Rules (2014), under article 22.1(x), empowers the Arbitral Tribunal to order the consolidation of the arbitration with one or more other arbitrations commenced under the same arbitration agreement or any compatible arbitration agreement(s) between the same disputing parties, provided that no arbitral other tribunal has yet been set up by the LCIA Court for such other arbitrations.

Article 22.1(viii) of LCIA Rule 2014, empowers the Arbitral Tribunal to decide on an application from one of the parties for allowing a third party to be joined in an arbitration provided such third party and the applicant have consented, in writing, to such joinder.

Rule 9.1 and Rule 9.2 of the Institute of Civil Engineers (ICE) Arbitration Procedure, where the same arbitrator has been appointed for resolution of different disputes involving at least one common party, empowers the arbitrator, on the application of a party and is subject to certain rules, to order concurrent hearings for disputes primarily involving the same subject with different parties.

Article 7 of the Chartered Institute of Arbitrators (CIArb) gives a wide range of powers to the arbitrators to consolidate proceedings and/or hold concurrent proceedings. While, Art 7.3 gives powers to the arbitrator to consolidate proceedings or hold concurrent hearings where the same arbitrator is appointed to arbitrate on common issues, whether or not the parties involved are the same., Art 7.4 gives further powers to the arbitrator to give directions in cases where consolidation or concurrent hearings are being held. Art 7.5 clarifies that where the proceedings have been consolidated, the arbitrator may give a consolidated award on the subject matter of the dispute unless the parties otherwise agree whereas Art 7.6 clarifies that where concurrent hearings are being held, the arbitrator will give separate awards unless the parties otherwise agree.

Observations

It is thus clearly seen from the above that there is very little initiative from the global organisations like the UN or from the various countries in coming up with legislation or Rules to resolve this issue. However, several global arbitral institutions have started framing rules and guidelines to facilitate multi-party arbitration and consolidation of proceedings or holding of concurrent proceedings. However, the pace of such reforms is indeed very slow.

Conclusion

In order to increase the pace of reforms related to multi-party arbitration, UNCITRAL has to take the lead and amend not only the UNCITRAL Arbitration Rules which can serve as guidelines to Arbitral Institutions across the globe but also amend the UNCITRAL Model Law on Arbitration as well so that countries can incorporate them into their legislation. This alone will set the pace for speeding up multi-Party arbitration.

However, until such time that these amendments are made and brought into effect, it is necessary for individual parties, in their own business and financial interests, to incorporate an affirmation in their arbitration clause that in case of disputes involving more than one party, they agree to multi-party arbitration, consolidation of proceedings and/or holding concurrent hearings.

References

MULTI-PARTY ARBITRATION: IDENTIFYING THE ISSUES – Sigvard Jarvin —https://digitalcommons.nyls.edu/cgi/viewcontent.cgi?article=1249andcontext=journal_of_international_and_comparative_law
Practice Guideline 15: Guidelines for Arbitrators on how to approach issues relating to Multi-Party Arbitrations
https://scienceimpact.mit.edu/multi-party-dispute-resolution
https://www.legislation.gov.uk/ukpga/1996/23/section/35
https://www.law.cornell.edu/cfr/text/18/401.78
https://uncitral.un.org/
https://www.lcia.org/Dispute_Resolution_Services/lcia-arbitration-rules-2014.aspx#Article%2022
https://www.ice.org.uk/ICEDevelopmentWebPortal/media/Documents/Disciplines%20and%20Resources/09-1-ICE-Adjudication-procedure-2012-04-30.pdf

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Contempt of court by media : a study

By

Diva Rai

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November 27, 2021

0

This article is authored by Aparna Venkataraman, student of Tamil Nadu National Law University.

Table of Contents

Introduction

There is no doubt that media forms the fourth pillar of democracy, after the three pillars of the legislature, the executive and the judiciary. Media comes in multiple forms, such as print media, television news channels, online newspapers, social media, and so on. While social media does not fall under the conventional understanding of media, media outlets do have a presence in social media as well. Moreover, the media has far reaching influence on people, for it reports news of all forms – from politics to celebrity information, from judicial information to international news; there is no limit to the type of information that media provides.

In understanding the role played by media in the country, the following observation of Mahatma Gandhi (slightly modified) is very relevant: “One of the objects of the media (a newspaper) is to understand the popular feeling and give expression to it, another is to arouse among the people certain desirable sentiments, and the third is the fearlessness to expose popular defects.”

From the afore-mentioned quote, it will be very clear that media has a very important role to play in any democracy. It is that tool that allows for both analysis of and criticism on matters of governance, politics, sports, finance and many other areas affecting the common man and do so with reasonable depth. Such analysis by the media keeps people well-informed and in addition, it enables people to form informed opinions as well as take well-thought out decisions, as and when the situation calls for the same (e.g.) voting in an election. Gandhi’s observation reflects the power available to the media, which in turn comes with enormous responsibility.

Such great power to facilitate the narrative, and even change it as suggested by the quote, comes the responsibility of not providing mis-information, not insulting or defaming people, not provoking people to protest or incite violence, and so on. In order to prevent such malafide actions, there have been restrictions placed on the media. These restrictions are reflected in Art. 19(2) of the Constitution of India, which specifies multiple ways to impose reasonable restrictions on the freedom of the press. The article expressly mentions contempt of court (a doctrine that had translated into an Act way back in 1926) as a reasonable restriction, which is elaborated in the Contempt of Courts Act, 1971 (hereinafter referred to as “the Act”).

Research questions

Whether the current Contempt of Courts Act, 1971 is one of the answers to restricting media freedom?
What is the role of the Contempt of Courts Act, 1971 in media trials?
What is the global understanding with respect to restriction of freedom of media through contempt of courts doctrine?

Objective and scope of the research

The paper intends to analyse the current form of the Contempt of Courts Act, 1971 to check for its relevance for the modern day media. This is particularly important because media has evolved quite dramatically since the early 70s, when the Act had originally come into effect. The Act did undergo amendments in both 1976 and 2006, but not to a considerable extent, which makes this an important question to be addressed.

Media trial is not exactly a new concept, but the recent media trial of Rhea Chakraborty in the Sushant Singh suicide case has been downright vicious and traumatic for everyone (including the public) involved. There has to be some sort of scrutiny and control over such ghastly trials and the Contempt of Courts Act, 1971 does provide some base. But whether or not such restrictions are adequate or are implemented correctly are questions that the project seeks to explore.

The scope of the project is restricted to media in its conventional sense alone and does not include social media.

Media freedom and contempt of courts in India

There have been cases that deal with both Art. 19(2) and the Act. One such case was Smt. Archana Guha v. Sri Ranjit Guha, wherein the dispute was based on an article published in a Calcutta newspaper. It has to be noted that the criticism of a judgement was done by distorting the facts, but the Calcutta HC held that there was no contempt because there ought to be freedom to criticise the judiciary, even if done incorrectly. This case brought forth the important point that there should not be any contempt case filed merely because a particular judgement had been misconstrued in the media. An alternative remedy in the form of clearing the confusion with the Registrar of the Press has been provided for the same.

Media freedom is not curbed by imposing restrictions in the form of the Act. Rather, such restrictions make us realise that no freedom is absolute. The Act in itself refers to contempt arising either as civil contempt or criminal contempt. Civil contempt is understood as not abiding by the judgement, order, decree and other such matters of the Court, which is not relevant in so far as the media is concerned. Criminal contempt refers to publication in any medium that intends to reduce the authority of the Courts, interferes with any trial in the Courts, or affects justice in any form. This criminal contempt is what acts as restriction on the freedom of the media. However, the Act has expounded as to what is not contempt in S. 3, S. 4, S. 5, S. 7 and S. 13 (through the 2006 amendment) of the Act.

These sections while explaining as to what contempt is, are vague in their wordings. Such vagueness gives lot of power to the judges to ultimately decide when and how contempt proceedings can be initiated. Ss. 4 and 5 state “fair” in the marginal note, but there is no elaboration provided as to what is “fair.” Although the language of S. 3(3) seems to state that there is a presumption of guilt, it has to be understood that such a presumption is based on the belief that a publication under S. 3 was done bona fide. The case of NN Choudhuri v. Bela Bala Devi has clarified that the benefit of doubt will be extended to the person charged with contempt. This is because criminal contempt cases are understood to be quasi-criminal in nature and hence the standard of proof has to be beyond reasonable doubt.

However, what proves problematic is the fact that the judges ultimately get to decide as to what matters are contemptuous and what are not. This understanding has been provided in the Constitution itself as the inherent jurisdiction of the Courts with regard to contempt matters. This jurisdiction actually brings its own set of problems. As there is no particular standard established as to what exactly can be referred to as contemptuous but for the vague definition, lot of power is given to the Courts to decide on the same. This power can be used arbitrarily by the Judges, especially in cases or situations when tempers run high in the Court rooms. It can also reflect the problem of bias coming into play, for who stated the contemptuous statement might also be equally important as what exactly was stated so as to invoke the contempt proceedings.

It is true that contempt of court is generally not the first resort of the Court (a restraining order is, and upon a violation of such order contempt proceedings is initiated). But if the situation warrants contempt proceedings, then the concern is the inherent jurisdiction of the Court to rule on such matters. The inherent jurisdiction falls a little too close to violating the principles of natural justice for comfort, which is what makes the media (and others against whom contempt proceedings are initiated) weary about this doctrine, and rightfully so.

Media houses – both print and TV channels – have been subject to contempt cases. The Privy Council in the case of Debi Prasad Sharma and Ors. v. The King Emperor held that there was no contempt committed by the editors and publishers of the Hindustan Times for there was no obstruction to the administration of justice; rather, the article in the newspaper had criticised the administrative capacity of the Allahabad Chief Justice, which cannot be construed as contempt. In the case of Ashwini Kumar Ghose v. Arabinda Bose, the SC stated that the article published in Times of India not only criticised a judgement of the Court, but went on to imply motives to the Judges.

Had the article just been a criticism, it would have been accepted. But because the article targeted the Judges, it lowered the dignity of the Court, which attracted the contempt proceedings against the editor, publisher and printer of Times of India. Contempt of court cannot arise if a particular Judge has alone been criticised or written negatively about. Only if the content so published also affects the public opinion of the judiciary can contempt proceedings be initiated. The landmark judgements of In Re: Mulgaokar and that of In Re: Shri Shyam Lal were pronounced when the editors of the leading national dailies the Indian Express and Times of India respectively were hauled up for their criticism of the ADM Jabalpur case. The Supreme Court reduced the sentence of the editor, publisher and the printer when an article made insulting comments on a particular judgment of the High Court, and that High Court had issued contempt proceedings.

Media trials : a legal perspective

All of us would have witnessed the Sushant Singh Rajput media trial. This is by no means the first media trial nor is it going to be the last. The other glaring examples of the media trial include that of the Jessica Lal case, Noida Double Murder case, the Nirbhaya case – the list is endless. The history of a media trial can actually be traced to 1921, where a prominent actor, Roscoe Arbuckle was accused of raping and murdering Virginia Rappe, an actress. There were three decisions on the same matter where the first two resulted in a deadlock jury and the third resulted in his acquittal. But despite that, the media took the matter into their own hands and completely destroyed his career. Since then, media trials have become popular with the media houses doing everything they can to publicise famous lawsuits.

The media, through these trials tends to sway public opinion to showcase one side of the story and make it seem that one set of people are the perpetrators. Rhea Chakraborty, Aarushi Talwar’s parents, and countless others have had their reputation tarnished by the media houses by conducting such trials. What is interesting is that the media generally provides a biased view of the entire situation and according to the portrayed situation, they also pass their own decision as to the guilt of the accused. It is one thing to provide media coverage to matters dealt with in the courts, that is, to provide a media report on what happened in the Court, but it is another thing to perform the role of the Court in another capacity.

Moreover, the media would bring to light every tiny wrong committed, the character, misleading photographs, and so on of the accused, most of which are irrelevant to the case at hand, but help in damaging the reputation of the accused irreparably. Sometimes such actions are not restricted to the accused alone – everyone involved is subject to this treatment (including the evidence) so that their version of who should be the accused comes out quite obviously.

Such media trials are sought to be regulated in S. 3 of the Act, which states explicitly that publication on any matter sub-judice in the Court amounts to contempt of court. Explanation to S. 3 states that if a charge sheet or challan is filed, such a criminal case is pending before the Courts. The 200^th Law Commission Report has recommended that the explanation be amended to state that arrest can be considered to be the starting point for a case to be pending before the Courts. The intention behind S. 3 is that in the event of the public being swayed by the stance of the media on a particular case, their belief on the judiciary reduces drastically and hence in such cases, a situation of contempt arises.

Moreover, the Judges when exposed to the media trials can themselves be influenced by such information and thus adjudge unjustly. In the decision of In Re: PC Sen, the Supreme Court held that the effect of the publication on justice should be given precedence over the intention of the publication. The Chief Justice of India in 2007 had also stated that the judges ought to follow the law and decide on every matter that comes in front of them regardless of the popularity of that case. Apart from the tarnished reputation of the so called wrong doer, even the witnesses are subject to harassment as they have been questioned repeatedly both by the media in addition to the authorities. If the identity of the witness is published for all to see, the harassment becomes worse and they try their best to retract themselves.

In Reliance Petrochemicals v. Indian Express Newspapers Bombay (Pvt.) Ltd., the Supreme court held that the Courts must not be swayed by public opinion or any media on a particular matter. The Supreme Court has stated that publicity is no reason for denial of a fair trial in the case of Ankul Chandra Pradhan v. UoI. In the case of State of Maharashtra v. Rajendra Jawanmal Gandhi, the Supreme Court stated that a media trial goes against the rule of law and can result in miscarriage of justice and has stated that the Judges are not to succumb to the media pressure. Having said that, the media has played a positive role as well. The Supreme Court disapproved of an article that painted only one side of the issue and warned the editor of that newspaper against such activities as it meddled with the dispersion of justice.

In Santosh Kumar Singh v. State, popularly referred to as the Priyadarshini Mattoo case, owing to the enormous pressure put by the media, the High Court reopened the case and sentenced the accused to death. The Trial Court had acquitted him owing to him being the son of an Inspector General.

The Supreme Court in Sahara India Real Estate Corp. v. SEBI, was asked to frame appropriate guidelines for the media in sub judice matters. The judgement believed that there had to be a delicate balance between the right to a fair trial and the right to freedom of expression, and hence decided that postponement orders would be the appropriate solution in that case. The right to freedom of expression is what prevents the Court from filing the contempt cases in the first place. The case also went on to add that the media provides a link between the people and the Courts, whose decisions ultimately become the law of the land. The Court went on to add that unique solutions are required, for neither the right to freedom of expression nor the right to fair trial must be compromised.

A free media is essential for it to discharge its functions properly. But it has to be understood that there is no particular right granted to the media. It is subject to Art. 19(2), while exercising their freedom as provided in Art. 19(1)(a). To enable the media to do its job, the Courts do not, except in extreme cases, initiate contempt proceedings. Even S. 3, S. 4, S. 5, S. 7, and S. 13 of the Act provide an understanding as to where the line must be drawn with respect to Court proceedings and media interference. The 200^th Law Commission Report also thought on these lines and came up with the following recommendations –

Insertion of definition of publication to expand the scope of the Act.
Arrest to be considered to be the starting point for a case to be pending before the Courts.
Insertion of a separate section that covers S. 2(c)(ii) and S. 2(c)(iii) so that the procedure as already stated in S. 15(1) of the Act applies.
Allow postponement of publication when it affects the active criminal proceedings and not postponing the reporting of cases sub judice.

Conclusion

The power to govern the contempt of court is provided to the Supreme Court in Art. 129 and the High Courts in Art. 215. This means that regardless of the Act, the Courts are vested with such powers through a constitutional mandate. However, this does not mean that the Act should not be amended. The Act has to be amended in so far as the idea of inherent jurisdiction be explained in greater lengths. It has to be made clear that if a particular judge calls for contempt proceedings because his name is tarnished, then he does not sit on the bench for the same. Such a procedure is provided for in the Act, but it not mandatory, and it should be made so.

The circumstances wherein contempt proceedings can be initiated must be redefined so that it can be done so more for the sake of the trial or that of justice. The court being scandalised by a particular action must have stricter provisions as it is almost as if the Judges are easily provoked these days, which should not be the case. The Act must also be amended to explicitly include the distinction between the Courts being scandalised and an individual Judge being scorned. In the latter case, defamation is the solution and not a contempt case.

The vagueness of the definitions stated in the Act must be resolved in the earliest so as to provide clear cut directions as to what constitutes contempt and what does not. Another point to note is that the publications at the pre-trial stage are precluded from contempt proceedings. This is being exploited by the media to a large extent. The solution is to amend the Act to cover this time as well. This vagueness has resulted in contradicting decisions of the Courts themselves. While this does come with the added bonus of increasing the discretionary power granted to the judges, reducing the vagueness of the sections would be the solution. Times are changing very quickly and hence, the Act has to be amended to cover the trials and tribulations of the modern times.

The Act seems to be used appropriately in so far as cases of media publications that analyse the judgements of the Courts. However, there is still lacuna when it comes to dealing with media trials. There has to be a line drawn with regard to this. With the greater attention of the media on TRP and the money making mechanism that journalism has become now, it is no longer a media trial alone now. The media is almost doing the entire work of the judiciary – from doing the investigation on a particular case, interviewing the people involved, analysing the evidence, and even deciding the “true” perpetrator.

It is only not sentencing the perpetrator mostly because it does not have the authority to do so. But who knows, in the future something on those lines might emerge too, if such outrageous actions are not nipped in the bud today. But amending the Act is not a solution in this case. There has to be a separate set of rules and regulations for the media in the nature of a code of conduct that state as to what actions are permissible and what not.

This does already exist in the form of the Press Council of India’s Norms of Journalistic Conduct, but these norms do not prescribe punishments, and if they do, they cannot be enforced. The language of these norms is quite gentle and hence, it is not an ideal solution. These norms must be amended to bring about stricter rules and enforcement mechanisms so as to let the judiciary do its duty properly. Even the powers of the Press Council of India do not allow it the jurisdiction to prevent the pre-trial reporting. This must also be amended.

References

[1] Salien Chatterjee, The Journalist in Gandhi, MKGANDHI.ORG, (Aug. 25, 2021, 8:00 PM), https://www.mkgandhi.org/articles/the-journalist-in-gandhi.html

[2] Smt. Archana Guha v. Sri Ranjit Guha 1989 (1) CHN 252.

[3] Fali S Nariman, Contempt of Court, NJA OCCASIONAL PAPER SERIES NO. 2, (Aug. 25, 2021, 8:00 PM), http://www.nja.nic.in/Jounals_Publications_Newsletters/NJA%20Ocacasional%20Paper%20Series%20No.2.pdf

[4] S. 2(a), Contempt of Courts Act, 1971.

[5] S. 2(b), Contempt of Courts Act, 1971.

[6] S. 2(c)(i), Contempt of Courts Act, 1971.

[7] S. 2(c)(ii), Contempt of Courts Act, 1971.

[8] S. 2(c)(iii), Contempt of Courts Act, 1971.

[9] S. 3 (Innocent publication and distribution of matter not contempt), Contempt of Courts Act, 1971.

[10] S. 4 (Fair and accurate report of judicial proceedings not contempt), Contempt of Courts Act, 1971.

[11] S. 5 (Fair criticism of judicial proceeding not contempt), Contempt of Courts Act, 1971.

[12] S. 7 (Publication of information relating to proceedings in chambers or in camera not contempt except in certain cases), Contempt of Courts Act, 1971.

[13] S. 13 (Contempts not punishable in certain cases), Contempt of Courts Act, 1971.

[14] NN Choudhuri v. Bela Bala Devi AIR 1952 Cal 702.

[15] Ashok Kumar Aggarwal v. Neeraj Kumar & Anr. (2014) 3 SCC 602.

[16] Supra note 3.

[17] Art. 129 & Art. 215, Constitution of India, 1950.

[18] Supra note 3.

[19] Ibid.

[20] Ibid.

[21] Ibid.

[22] Debi Prasad Sharma and Ors. v. The King Emperor AIR 1943 PC 202.

[23] Ashwini Kumar Ghose v. Arabinda Bose 1953 SCJ 38.

[24] Perspective Publications (Pvt.) Ltd. v. State of Maharashtra, AIR 1971 SC 1221.

[25] In Re: Mulgaokar (1978) 3 SCC 339.

[26] In Re: Shri Shyam Lal AIR 1978 SC 489.

[27] Rajendra Sail v. MP High Court Bar Association 2005 (6) SCC 109.

[28] Gilbert King, The Skinny on the Fatty Arbuckle Trial, SMITHSONIAN MAG (Aug. 25, 2021, 8:00 PM), https://www.smithsonianmag.com/history/the-skinny-on-the-fatty-arbuckle-trial-131228859/

[29] J. Dr. BS Chauhan et. al., Trial by Media – Free Speech and Fair Trial under Criminal Procedure Code, 1973, LAW COMMISSION OF INDIA (August 2006), https://lawcommissionofindia.nic.in/reports/rep200.pdf

[30] In Re: PC Sen, AIR 1970 SC 1981.

[31] Shobha Ram Sharma, Judicial Activism in Media, PL S-2, (2010).

[32] Supra note 29.

[33] Reliance Petrochemicals v. Indian Express Newspapers Bombay (Pvt.) Ltd. (1988) 4 SCC 592.

[34] Ankul Chandra Pradhan v. UoI (1996) 6 SCC 354.

[35] State of Maharashtra v. Rajendra Jawanmal Gandhi (1997) 8 SCC 386.

[36] MP Lohia v. State of WB 2005 (2) SCC 686.

[37] Santosh Kumar Singh v. State (2010) 9 SCC 747.

[38] Sahara India Real Estate Corp. v. SEBI (2012) 10 SCC 603.

[39] Ibid.

[40] Ibid.

[41] Harijai Singh v. Vinay Kumar 1996 (6) SCC 466.

[42] Supra note 29.[43] J. GN Ray, Press Council of India: Norms of Journalistic Conduct, PRESS COUNCIL OF INDIA (2010), https://presscouncil.nic.in/OldWebsite/NORMS-2010.pdf

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Impact of globalization on cybercrimes

By

Shoronya Banerjee

-

November 27, 2021

0

piracy — Image source - http://bit.ly/31ft5er

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

Table of Contents

Introduction

Information and communication technology has expedited the growth of globalization. Advancement and innovation of technologies such as telecommunication devices, the internet, and television have led to more interaction among people, businesses, and governments around the globe. The process whereby businesses or other entities and groups gain international influence or begin to operate on a global scale is known as globalization. Globalization facilitates the spread and exchange of ideas, beliefs, values, ethics, culture, knowledge, information, goods, and services between the people of different nations. Globalization builds a connection and promotes partnership among people and businesses of different countries. The impact of globalization is so tenacious that it has created an insuppressible interdependence of the world’s economies, communities, populations, and cultures. Along with the progressive and evolutionary impact of globalization, it has numerous negative consequences as well. No doubt that ICT has pushed the growth of globalization but the combination of globalization and ICT has given birth to ‘Cyber Crimes’. Whereby globalization was facilitating the spread of cultures, beliefs, and values, it has also disseminated the ideas regarding innovation in crimes and unethical conducts.

Globalization has developed as a defining element of the new century, and it has become an inevitable reality in contemporary society. Globalization is a force that cannot be ignored by any group or culture. It is a social development process in which geographical and cultural boundaries are broken down. Transportation and communication have resulted in the reduction of obstacles. Globalization is more than just an economic phenomenon; it is also a cultural phenomenon. The article aims to elaborately discuss the impact of Globalization on cybercrimes and how, with the growth of globalization and Information and Communication Technology, conventional crimes are getting replaced with crimes of the contemporary and digitalized world. It further explains how the perpetrators are coming up with innovative ways and ideas to commit a crime simply by sitting at their homes and having a good internet connection.

What are cybercrimes?

Globalization and advancement of technology have aided the spread of cybercrimes around the globe. Innovations and advancements in communication technology and the invention of the internet and telecommunication devices indeed facilitated the growth of globalization, which in turn aided the spread of innovative methods of committing crimes where the offender may not be present in the same city as the victim.

Cybercrime is defined as a crime done with or through the use of a computer, computer network, internet, or any other online service or electronic device. Committing theft of personal data from the laptop of the victim, sexually assaulting a woman on the social media platform, blackmailing and threatening a person on social media to extort money, defaming a person by posting false derogatory statements against him on social media platforms and many more are some of the examples of frequently committed cybercrimes. With the advancement in every field and every part of society, and with the world becoming more globalized with every passing day, these crimes are increasing and are given specific names and definitions. Cyber bullying, sextortion, cyber hacking, phishing, cybersex trafficking, child grooming, etc. are some of the types of cybercrimes.

ICT and globalization

The information revolution and the rapid distribution of knowledge have opened a new era of knowledge and information that has immediate impacts on economic, social, cultural, and political activity in many parts of the globe. Governments all across the world have recognized the potential importance of information and communication technologies in socio-economic growth.

Information Communication Technology (ICT) is a computer-based system for transmitting, receiving, processing, and retrieving data that has transformed the way we think, live, and interact with our surroundings. It’s important to remember that globalization isn’t only about financial markets; it also includes a wide spectrum of social, political, economic, and cultural aspects. Globalization’s primary and driving force is the information and communication technology revolution, and the dynamic change in all aspects of human existence is a major by-product of the current globalization period of the digital revolution. ICTs are becoming increasingly significant in the ability of companies and society to produce, acquire, adapt, and utilise information. Because of its potential to improve the transfer and acquisition of knowledge, it is being hailed as an instrument for the post-industrial age and the foundations for a knowledge society.

ICT could provide developing countries with extraordinary chances to reform educational systems, better policy formulation and implementation, and expand the range of prospects for business and the poor, in addition to facilitating knowledge acquisition and absorption. Learning, knowledge networking, knowledge codification, teleworking, and science systems could all benefit from it. ICT can be utilised to gain access to global knowledge and to communicate with others.

Without a question, the entire world is becoming digital, and globalization is speeding up every day as a result of this uninterrupted and highly functional information and communication technology. Globalization is predominantly affected by rapid advancements in ICT, which have resulted in a tremendous expansion in globalization over the last millennium.

Impact of globalization and ICT

Globalization has benefited industrialized countries while sometimes having negative consequences. Education and learning, commerce, technology and innovation, competition and entrepreneurship, investments and capital flows, employment, culture, and organizational structure are just a few of the positive consequences. Some elements of globalization that have a negative influence include job instability, price fluctuations, terrorism, cybercrime, cyber threat, currency fluctuations, capital flows, and so on. The impact of globalization on cybercrimes is elaborately discussed in this paper.

Offenders are coming up with new means and ideas to commit crimes as a result of the rapid emergence of globalization and ICT. Conventional crimes did not necessitate the use of computers or the internet, but with the advancement of technology, a person can steal personal data and information from his house. He is not required to visit the victim’s residence. In the online realm, this is known as hacking and data theft. Committing the offense of theft or extortion becomes easy when the victim cannot see the offender but it becomes easier for the offender to hide from the police when the offense is committed in the virtual world.

Crimes in the globalized world

As India progresses toward increased computerization, putting a greater number of operations on the internet, from government administration to surveillance and developmental programs, the threat of cybercrime is rising with each day. The threats of this crime have grown significantly as the process of globalization has expanded the levels and dimensions at which countries of the world interact nowadays. It appears that as the world becomes more globalized, the risk of cybercrime increases. In most situations, cybercrime is an attack on information about individuals, organizations, or governments; the attacks do not take place on a physical body, but rather on a virtual body, which is a collection of information about people and organizations on the internet. New technology opens up new criminal opportunities, yet there are rarely new forms of crimes.

In the globalizing world, conventional crimes are getting replaced with innovative ones. The perpetrators are coming up with new means and ideas to commit crimes in the digitized world. When a conventional crime is committed with the use of computer or internet sources, it becomes a cybercrime. Some of the infamous conventional crimes, when committed in the globalized and digitalized world are given below-

1. Cyber theft

Prior to globalization and innovation of ICT, the crime of theft required visiting the offender to the victim’s place of work or residence to steal the money, goods, confidential documents, and information because money and confidential documents used to be in tangible form locked up in a safe. In the contemporary world, when the personal and financial information of the victim is stored in his laptop or mobile phone, and when money is present in the bank accounts that can be virtually transferred, it has become very easy for the perpetrators to hack into the victim’s system and steal such data. There have been cases where the money is stolen from the account of the victim and transferred to some unknown bank account. Such crime is known as Cyber theft where the offender may not be present in the same city or country as the victim.

2. Cyber terrorism and cyber extortion

When the offender hacks into the computer system of the victim and decrypts all the files and information stored in it and demands a ransom to decrypt them, such crime is known as cyber extortion. It refers to the conventional crime of extortion whereby the offender puts the victim in fear of physical injury to dishonestly induce him to deliver some property or money but is committed to the use of technology.

Cyber terrorism refers to the use of computers and digital technology for political purposes to generate widespread disruption or fear in society. Cyber terrorism takes place in the virtual world unlike conventional crime of terrorism whereby the public or group of people are physically terrorised.

3. Sextortion

The offender threatens and blackmails the victim to reveal her and publish the morphed and private pictures with the aim to extort sexual favors or/and money. This is known as sextortion. Unlike the conventional crime of sexual harassment, this does not require the use of criminal force or physical sexual assaultof the victim. The offender can extort money and sexual favors from the victim with the use of digitally generated images and videos.

4. Cyber bullying and cyber defamation

Cyber defamation involves the publishing of derogatory statements against the victim on social media platforms. Cyber defamation involves the use of the internet, social media platforms, or other intermediaries.

Posting or publishing abusive and defamatory comments against the victim on social media platforms, constantly messaging or calling the victim on her mobile phone, posting morphed images of the victim on social media intermediaries are some of the acts covered under cyberbullying. Under conventional law, such an act of physically approaching the victim with the intention to establish a personal interaction is punishable under IPC. This may or may not require the use of the internet and mobile phones.

5. Sexually abusive or pornographic content

It involves assault and sexual abuse of the victim over the internet, morphing the images of the victim and demanding sexual favors, using the morphed images of the victim for pornographic purposes. Morphing the images of a person has become very easy in the digitized world where one can download the image from the social media account of the victim and can edit it with the use of various photo-editing software.

6. Cyber fraud and forgery

Cyber fraud involves attaching fake electronic signatures to an electronic document, altering the contents of any confidential document, creating fake digital identities, creating false e-documents to produce it as evidence in the court of law, etc. This does not involve paper and pen or making duplicate/false traditional signatures. The precision is so high that it becomes almost impossible to differentiate between the original and the fake document, identity, or signature.

It also involves deceiving people while displaying fake identities and inducing them to make online payments. It involves job scams where the offender acts as the HR of any reputed company and dishonestly induces the candidate to pay a sum of money to complete the onboarding formalities.

The above mentioned are some of the cybercrimes that are being frequently committed in the digitalized and globalized world. These crimes are punishable under Information Technology Act, 2000 and the Indian Penal Code, 1860.

Conclusion

Globalization is the unshakable reality of today’s world. Information and communication technology has resulted in the boom of globalization and the exchange of ideas and beliefs across the globe. A person sitting in India can invest in a business running in America. It is very important to note that globalization is not only an economic phenomenon; it creates a way for people to indulge in social and political activities as well. It creates a medium for people to exchange and spread ideas, values, beliefs, and lifestyles. A British individual can influence people sitting in India simply by writing a post or uploading a video on a social media platform. Globalization facilitates the spread of cultures across nations. The dominance of western culture in India is the result of globalization.

This medium of exchange of ideas and beliefs is indeed what the world needed to expand the horizons of development and awareness but as it has been said that “anything in excess is poison”, globalization also negatively impacted this world. People not only exchanged values and ethics but also came up with innovative ways to commit crimes. The boom in ICT and the invention of the internet, mobile phones, and computer resources also resulted in the commitment of crimes in the virtual world, making people unsafe while using the internet and telecommunication devices. When a conventional crime takes place in the virtual or online world, it is known as cybercrime. Therefore, globalization and ICT together influenced the growth of cybercrimes in the world.

Committing the offense of theft or extortion becomes easy when the victim cannot see the offender but it becomes easier for the offender to hide from the police when the offense is committed in the virtual world. As elaborately mentioned in this paper, how easy it is to commit a crime in the virtual world and also to escape liability, the number of cybercrimes is increasing day by day.

Indian law provides the Information Technology Act, 2000 for the regulation and punishment of cybercrimes in India. The Government of India has also set up a national cybercrime reporting portal for the online complaint registration of cybercrimes and cyber cells for offline complaints. The national cybercrime reporting portal also gives an option of anonymously filing a complaint in case of female/child victim of sexual abuse or pornographic content. The status of complaints can also be tracked after registration. India has been modifying and expanding the scope of ICT law but ICT has been developing as well and perpetrators are coming up with new ideas of committing the crimes every single day. There is a need for stronger management and investigation mechanisms for the cyber police to catch the cybercrime offenders.

References

Statutes

The Information Technology Act, 2000.
Indian Penal Code, 1860.

Journal Articles

Anupam Sharma, Globalization and its Impact on Cybercrime: A case study of Indian Police Administration, Indian Journal of Public Administration, Volume 56, Issue 2 (2017), pp. 217-232.
Advento Jeronimo, The Globalization Effect of Law and Economic on Cybercrime, Jurnal Pembaharuan Hukum, Volume 6, Number 3 (2019), pp. 384-395.
L.A. Ogunsola, Information and Communication Technologies and the Effect of Globalization: Twenty-First Century “Digital Slavery” for Developing Countries- Myth or Reality? Electronic Journal of Academic and Special Librarianship, Volume 6, Number 1-2 (2005), pp. 2-15.

Online articles

https://www.piie.com/microsites/globalization/what-is-globalization (Last visited on: 2^ndNovember 2021).
https://searchcio.techtarget.com/definition/globalization (Last visited on: 2^ndNovember 2021).
https://www.nationalgeographic.org/article/effects-economic-globalization/9th-grade/ (Last visited on: 2^ndNovember 2021).
https://www.ukessays.com/essays/economics/positive-and-negative-effects-of-globalisation-for-business-economics-essay.php (Last visited on: 2^ndNovember 2021).
https://www.marketing91.com/what-is-globalization/ (Last visited on: 2^ndNovember 2021).
https://www.dailyexcelsior.com/globalisation-cyber-crime/ (Last visited on: 2^ndNovember 2021).

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