When a consumer buys a commodity from a manufacturer, there is a transfer of ownership. Now, the consumer owns that commodity and the manufacturer can no longer exercise his rights over it.
However, when it comes to selling software products by companies or manufacturers, a prominent question is whether the software is sold or licensed.’ The answer is that it is often done through the granting of a license rather than a sale. Since a license provides permission to use a product rather than ownership of the product, it allows software publishers to impose restrictions on how purchasers use their software.
When a customer or business purchases a piece of software, they’re not actually gaining ownership of the software at all. Instead, they are paying for the right to use the software. Ownership of these software applications remains with the software vendor.
What is an end-user license agreement
An End User License Agreement, abbreviated as EULA, is essentially an enterprise license agreement. It is a legal contract between the software company and the user or the purchaser of the software. It acts as an agreement of terms and conditions by granting the users the right to use the software application purchased from the company. End-User License Agreements (EULAs) are the legal contracts between the software developer or vendor and the user, outlining the terms and conditions under which the software can be used. These agreements often impose various legal restrictions and obligations on the user to protect the intellectual property rights of the developer. In simple terms, EULA’s provide a simple and efficient means of protecting a software publisher’s intellectual property.
Need for EULA’s in today’s time
An EULA is not mandated by the law, but it acts as a framework against legal hurdles that might arise in the future between the parties of the contract.
Unlike many physical products, where ownership changes hands once the transaction is finalised, purchasing software constitutes an ongoing relationship between the vendor and the user. This relationship requires setting boundaries. EULAs establish what the user can and cannot do with the software, set the terms of the agreement, clarify liability, and provide infringement information, specify disclaimers, and address how and when the right to use the application may be terminated.
A common misconception is that this legal contract only safeguards the interests of the vendor of the software. Taking cognizance of the fact that most EULA contracts are designed in a way that particularly safeguards the interests of the software manufacturers, they also do provide several advantages and benefits to the end users too.
Components in an EULA
The terms-and-conditions contract serves as a legally binding agreement between the software developer or provider and the end user. It comprises various clauses and provisions that outline the rights, responsibilities, and limitations associated with the use of the software. Some of the most common components found in such contracts include:
Type and grant of license: This section specifies the type of license granted to the end-user. Common license types include perpetual licenses (unlimited use) and subscription-based licenses (limited-time use). It also outlines the conditions under which the software can be used, such as for personal or commercial purposes.
Terms, terminologies, and definitions: This section provides clear definitions of key terms and phrases used throughout the contract. This helps ensure that both parties have a shared understanding of the language used.
Copyright infringement clause: This clause protects the intellectual property rights of the software developer. It prohibits unauthorised copying, distribution, or modification of the software without the express permission of the copyright holder.
Usage restrictions: This section outlines the limitations and restrictions on how the software can be used. It may include prohibitions against reverse engineering, decompiling, or creating derivative works based on the software.
Warranty disclaimer: This clause disclaims any express or implied warranties regarding the performance, functionality, or compatibility of the software. It clarifies that the software is provided “as-is” and that the user assumes the risk associated with its use.
Software updates: This section addresses the provision of software updates, patches, or new versions. It may specify the frequency of updates, the process for obtaining them, and any additional fees or charges associated with updates.
Dispute resolutions: This clause outlines the steps to be taken in the event of a dispute or disagreement between the parties. It may include mediation, arbitration, or litigation as potential dispute resolution mechanisms.
These clauses and provisions work together to create a legally binding agreement that governs the relationship between the software developer and the end-user. They protect the rights of both parties and provide a framework for resolving any issues that may arise during the use of the software.
Legal framework involved in EULA contracts
Most of the EULA contracts, as discussed earlier, are via the provision of licenses. These licenses may prohibit the user from using the software on his device in a way that is not mentioned in the clauses. Although these agreements may contain negative terms or clauses, the restrictions imposed by EULA’s, however, are not insignificant or deterrent in nature. These restrictions are framed in a way to cater to the intellectual property rights of the developers and manufacturers of the software.
The legality of EULA is often recognised by most internet users. The legal framework involved in such contracts is broad and encompassing.
EULA’s are nothing but contracts enforceable by law, according to Section 2(h) of the Indian Contract Act of 1872. Therefore, its legality depends on a valid offer, acceptance, consideration, etc.
However, the current use of contract law to evaluate software license agreements is problematic, not because the doctrine is inadequate but because those who use the rhetoric of contracts have tended to impose an artificially static view of what contract law demands.
Antitrust laws and intellectual property rights never go hand in hand. While the former focusses on sustained and fair competition, preventing anti-competitive practices, the latter provides the creator of any work with an exclusive right over that work and bars any other person or entity from using that creator’s work. EULA is governed by Intellectual Property Rights law, which provides the licensor with certain exclusive rights, giving them privilege as to determine how and when the licensee can use the software.
The Hon’ble Supreme Court, in a recent judgement, has recognised the validity of End User License Agreements (EULAs) through its verdict in the case of Engineering Analysis Centre of Excellence Pvt Ltd vs. The Commissioner of Income Tax. This landmark judgement revolves around the payment of consideration by Indian companies or end-users to utilise computer software obtained from foreign sources and whether such payments constitute taxable royalty.
In this case, the assessee, Engineering Analysis Centre of Excellence Pvt Ltd, had entered into EULAs with foreign software companies for the use of their software. The EULAs specified that the consideration paid by the assessee was for the right to use the software and did not include any payment for the underlying intellectual property.
The Commissioner of Income Tax, however, contended that the payments made by the assessee were in the nature of royalty and, therefore, subject to tax under the Income Tax Act, 1961. The Commissioner argued that the EULAs granted the assessee exclusive rights to use the software, which amounted to the transfer of intellectual property rights and, as such, attracted royalty tax.
The Supreme Court, however, disagreed with the Commissioner’s interpretation. The Court held that the payments made by the assessee were not in the nature of royalty but were merely for the right to use the software. The Court observed that the EULAs did not transfer any intellectual property rights to the assessee and that the assessee could not sub-license or distribute the software to third parties.
The Supreme Court’s judgement in this case is significant as it provides clarity on the taxability of payments made under EULAs. The Court’s decision confirms that payments made for the right to use software, without the transfer of intellectual property rights, do not constitute taxable royalty. This judgement provides much-needed guidance to Indian companies and end-users entering into EULAs with foreign software companies, ensuring certainty and predictability in their tax obligations.
Shrinkwrap and clickwrap licenses
Shrink Wrap: Shrink Wrap Contracts or licenses are contracts where the acceptance is deemed to be given with the usage of the product or software. In simple terms, when a user or a consumer of a product or a software purchased online opens the wrapped bundle of the product, utilises the product, or does any other similar act, he is said to have accepted the terms and conditions of the contract.
Click Wrap: Click Wrap Contracts are contracts between the product or software manufacturer and the user or the consumer, where the user agrees to the terms and conditions of the vendor or the provider before using the product or the software.
Courts have distinguished between different types of agreements. Shrinkwrap agreements, which are enclosed with a product and deemed accepted when the package is opened, have been upheld in cases like ProCD, Inc. vs. Zeidenberg. Clickwrap agreements, where users click a button to indicate acceptance, are also generally enforceable if users had to take an affirmative action to agree, as seen in Feldman vs. Google, Inc.
Before the advent of such a spike in technological inventions, EULA’s were printed on the back of a software application, package, or product. According to the shrink wrap contract, the user is deemed to have consented to the terms, conditions, and restrictions imposed by the vendor on him during the period of contract between them.
Both the mentioned contracts, shrink wrap and click wrap licences, require the user or the purchaser to waive off certain rights of his under the Copyright Act and to adhere to the terms and conditions on the package of the software. This, along with the inability of the users to read the terms of the agreement before consenting to it, has made many legal scholars question the validity of such licences, which undermines the legal enforceability of these contracts.
Although there remain several shortcomings of these licenses in several jurisdictions, they are legally binding in a majority of them.
Contrastingly, a free software license grants the users and purchasers of any software the rights to use, modify, distribute, and redistribute it without any restrictions imposed on them. This goes in hand with the anti-trust laws around the world but severely undermines the intellectual property rights of the manufacturer of the software. These kinds of licenses are, however, accompanied by a disclaimer of warranty.
In the landmark case of Shree Vardhman Rice & Gen Mills vs. Amarsingh Chawalwala, the Hon’ble Apex Court of India delivered a significant judgement that underscored the fundamental principle of contract law: parties must adhere to the terms of their agreements unless they are found to be illegal or against public policy. This ruling has far-reaching implications, particularly in the context of End-User License Agreements (EULAs).
EULAs are legal agreements between software developers and users that govern the use of software applications. They typically outline the terms and conditions of use, including restrictions, warranties, and limitations of liability. The Apex Court’s emphasis on the enforceability of EULAs, provided their terms are lawful and agreed upon by both parties, reinforces the sanctity of contractual obligations in the digital age.
The judgement in Shree Vardhman Rice & Gen Mills vs. Amarsingh Chawalwala serves as a reminder that parties cannot simply disregard the terms of their agreements once they have been entered into. If a party enters into an EULA and subsequently breaches its terms, they may be held legally liable for any resulting damages or losses. This principle helps to maintain fairness and predictability in commercial transactions.
Furthermore, the court’s recognition of the enforceability of EULAs highlights the importance of informed consent in the digital age. Software developers must ensure that users have a clear understanding of the terms and conditions of the EULA before they agree to them. This can be achieved through transparent and easily accessible language, as well as opportunities for users to seek clarification or advice if necessary.
The judgement also serves as a caution to software developers against including unfair or overly restrictive terms in their EULAs. Courts are increasingly scrutinising EULAs for provisions that may be considered unconscionable or against public policy. For example, terms that purport to limit a user’s right to seek legal remedies or that impose unreasonable restrictions on the use of the software may be struck down by courts.
In conclusion, the ruling in Shree Vardhman Rice & Gen Mills vs. Amarsingh Chawalwala underscores the importance of adhering to the terms of agreements, including EULAs. It highlights the need for informed consent and discourages the inclusion of unfair or overly restrictive provisions in such agreements. This judgement contributes to the broader legal framework governing commercial transactions in the digital age and helps to protect the rights of both software developers and users.
In Shreya Singhal vs. Union of India (2015) 5 SCC 1: The Hon’ble Supreme Court dealt with the constitutionality of certain provisions of the Information Technology Act, 2000, particularly Section 66A, which was struck down for being vague and overbroad. While the case did not directly address EULAs, it highlighted the need for clarity and precision in digital laws and agreements, which is pertinent to the drafting and enforcement of EULAs.
In the landmark case of Eastern Book Company & Others vs. D.B. Modak & Another (2008), the Hon’ble Apex Court in India addressed significant legal issues related to copyright protection in the digital age. While the primary focus of the case was on copyright issues in compilations and databases, the court’s decision also had broader implications for the protection of intellectual property in digital formats.
The Supreme Court’s judgement in this case reinforced the importance of safeguarding software and digital works under copyright law. This decision recognised that digital works, including software, are entitled to the same level of copyright protection as traditional literary and artistic works. By doing so, the court acknowledged the unique challenges and vulnerabilities associated with digital content in the face of rapid technological advancements and the ease of unauthorised copying and distribution.
Furthermore, the court’s decision indirectly supported the enforceability of End-User License Agreements (EULAs) that aim to protect intellectual property in digital formats. EULAs are legal contracts between software developers and users that govern the terms and conditions of software use. These agreements often include provisions that restrict unauthorised copying, reverse engineering, and other activities that could infringe on the copyright holder’s exclusive rights.
By recognising the importance of EULAs in safeguarding digital intellectual property, the Supreme Court’s decision provided a legal framework for software developers to protect their creations and investments. This decision helped establish a balance between the rights of copyright holders and the legitimate interests of users, ensuring that both parties are protected within the digital landscape.
The Eastern Book Company & Others vs. D.B. Modak & Another case set a precedent for future legal disputes involving copyright issues in digital formats. It emphasised the need for courts to consider the unique characteristics and challenges of digital content when interpreting and applying copyright law. The court’s decision also highlighted the importance of intellectual property protection in fostering innovation and creativity in the digital age.
Conclusion
End-user licensing agreements play a crucial and pivotal role in today’s e-contracts as well as the software industries. They are designed in a way to define the boundaries within which the user or the purchaser of the software can use or operate the software. It strives to delicately balance out the rights of the consumers and the users while at the same time protecting the interests of the developers and manufacturers of the software.
This article is written by Kanika Goel. The present article is a comprehensive piece of literature which deals with Order 10 of the Code of Civil Procedure, 1908 in a detailed manner. The article covers a detailed explanation of all the rules related to the examination of parties by the court underlying Order 10 along with its purpose and relevance in a civil proceeding. This article also covers the important relevant case laws incidental to Order 10.
Table of Contents
Introduction
The procedural law dealing with civil suits is codified under the Code of Civil Procedure, 1908 (hereinafter referred to as CPC) which came into force on 1st January 1909. CPC is divided into 2 parts, namely; the Sections and the First Schedule wherein all the Orders are dealt. As the process of a civil suit goes through various stages, one such stage is the examination of parties by the court which is dealt with under Order 10 of CPC. Examination of parties is the stage where the court has the liberty and the authority to question the respective parties to the suit in order to ascertain the accepted and the denied pleadings. It not only ensures transparency and fairness in a civil proceeding but also ensures the administration of justice. The parties are under an obligation to disclose the relevant and important facts incidental to the subject matter of the suit which allows the court to decide for further examination. The rules underlying Order 10 are indispensable while proceeding with a civil suit.
However, before moving towards the detailed explanation of the rules underlying Order 10 of CPC, it is very important to understand various stages of a civil suit and the objective behind examination of parties as stated under Order 10. Let us delve into the brief explanation of these aspects in this article.
Stages of a civil suit
A civil suit is initiated between two parties who want their legal dispute over a civil wrong to be addressed in a suitable court of law. A suit of civil nature in India is governed by the Code of Civil Procedure, 1908. As a process, a civil suit goes through various stages in order to ensure that an appropriate judgement is passed. These stages include:
Cause of action: A civil suit is filed in the court of law only after a party suffers any breach of its right or there is any civil wrong committed by the other party. According to the law laid down in the CPC, the cause of action is nothing but the circumstances which lead to the dispute between the parties.
Filing of suit (Section 26 read with Orders 6, 7 and 8 of CPC): Once, the cause of action is determined by the parties (namely the plaintiff and the defendant in accordance with the provisions of Order 1) which has led to the arising of the dispute, a suit is instituted by the way of a plaint in accordance with the provisions of Order 4 of CPC. A plaint is a document wherein the plaintiff to the dispute states the facts and the summary of the complaint. It lays the foundation of the entire process of civil litigation.
Issue of summons (Sections 27-32 read with Order 5 of CPC): When a plaint is filed and accepted by the court, the summons is issued upon the defendant to appear before the court within 30 days of the issuance of summons in accordance with the provisions of Order 5 read with Sections 27–32 of CPC.
Written statement (Order 8): Upon issuance of summons, the defendant is required to comply with them and appear before the court to file a written statement under Order 8 in reply to the allegations of the plaintiff. However, the defendant is required to specifically deny each allegation.
Appearance of parties (Order 9): As per Order 9, once both the documents are filed and accepted, the parties are required to appear before the court on a fixed date failing to which results in the passing of an ex parte orderagainst the defendant.
Examination of parties (Order 10): Under the purview of Order 10 of CPC, the court has the authority to examine the parties in order to list down the issues of law and facts. The statements of the parties during the process of examination form a part of the record of the suit.
Framing of issues: Once the parties submit their issues, the court frames the final issues based on the facts of the case. However, the issues framed may be either facts in issue or issues of law.
Examination of witnesses and arguments by the parties: Being an important stage of a civil suit, the plaintiff’s witnesses are examined by their own advocate and then cross-examined by the defendant’s pleader. Once the examination is over, the parties put their arguments before the court. If upon the perusal of the arguments, the court is of the opinion that no substantial issue exists against the defendant, it may dispose of the case at the first hearing in accordance with Orders 12 and 15. However, otherwise, the matter proceeds with the trial under Order 18.
Judgement: Order 20 of CPC read with Section 33 talks about the judgement. After considering all the arguments of the parties, the court pronounces the judgement followed by the decree.
Rules underlying Order 10 of Code of Civil Procedure (CPC)
Order 10 of CPC deals with the examination of parties by the court and the following rules are encompassed under this Order:
Order 10 Rule 1
Rule 1 of Order 10 deals with the ascertainment of the admitted and denied allegations in pleadings. The court on the first date of hearing, after the plaint and the written statement are submitted, shall ask the parties to either accept or deny the facts stated by them in their respective pleadings. The reason behind this exercise is to reduce the scope of litigation and to dig out the issues of facts and laws regarding the subject matter of the civil suit.
The term “first date of hearing” has been indicated by the Supreme Court in the case of Ved Prakash Wadhwa vs. Vishwa Mohan, (1981)wherein the bench stated that “the first hearing of the suit” can never be earlier than the date fixed for the preliminary examination of the parties (Order 10 Rule 1) and the settlement of issues.”
The above principle was reiterated by the court in Kanwar Singh Saini vs. High Court of Delhi (2012)stating that Order 10 Rule 1 provides for recording of the statement of the parties to a suit at the “first hearing of the suit” which comes after the framing of the issues and it can never be earlier that the date fixed for the preliminary examination of the parties and the settlement of issues. The words “first date of the hearing” does not mean the day for the return of the summons but the day on which the court applies its mind to determine the issues and evidence.
Order 10 Rule 1A
Rule 1A of Order 10 deals with the court’s direction to the parties to opt for any of the modes of alternate dispute resolution. As per this rule, the court exercising the jurisdiction over a civil suit is duty-bound to encourage the parties to adopt any mode of alternate dispute resolution (hereinafter referred to as ADR) which are mentioned under Section 89 of CPC. Once, the parties choose the mode of ADR as specified under Section 89, the court for this purpose shall fix the date for the appearance of the parties before the forum or the authority chosen by them.
In pursuance of this Rule, the Supreme Court in Afcons Infrastructure Ltd. vs. Cherian Varkey Construction Co. (P) Ltd. (2010) held that “neither Section 89 nor Order 10 Rule 1A is intended to supersede or modify the provisions of the Arbitration and Conciliation Act, 1996 or the Legal Services Authorities Act, 1987. Section 89 makes it clear that two of the ADR processes (i.e. arbitration and conciliation) will be governed by the Arbitration and Conciliation Act, two others (i.e. Lok Adalat settlement and mediation) by the Legal Services Authorities Act, 1987 and the last of the ADR process by judicial settlement.”
Order 10 Rule 1B
According to Rule 1B of this Order, the parties are bound to appear before the forum for conciliation after the suit is referred to any authority under Rule 1A.
Order 10 Rule 1C
Rule 1C of Order X deals with the appearance of the parties before the court when the efforts of conciliation fail in lieu of Rule 1A. Once the matter is referred to an ADR forum and the presiding officer of that forum is of the opinion that the suit must be decided by a civil court, it can refer the matter back to the civil court which has the jurisdiction over that matter. However, such power of referring the matter to the civil court lies with the presiding officer of the forum only.
Order 10 Rule 2
Rule 2 of Order 10 talks about the oral examination of the parties and their companions. In order to comprehend the matter in controversy, the court exercising jurisdiction over the subject matter of the suit has the power to orally examine the parties and their companions. This enables the court to frame the issues underlying the matter in controversy. The questions can also be put forth to people acting as the companions of the parties in order to get some material answers. The court can orally examine the parties at any later stage of the suit as well.
In the important precedent, Kapil Corepacks Pvt. Ltd. vs. Harband Lal (2010), the Apex Court while determining the scope and ambit of Rule 2 of Order 10 stated that where on one hand Rule 1 enables to ascertain the admissions and denials by the parties, Rule 2 is not restrictive to allegations made by other parties, rather, it leads to elucidating any matters of controversy. Through the words of judgement, the Supreme Court stated that “Rule 2 enables the court to examine not only any party, but also any person accompanying either party or his pleader, to obtain answer to any material question relating to the suit, either at the first hearing or subsequent hearings. The object of oral examination under Rule 2 of Order 10 is to ascertain the matters in controversy in suit, and not to record evidence or to secure admissions.”
In another case of A. Shanmugam vs. Ariya Kshatriya Rajakula Vamsathu Madalaya Nandhavana Paripalanai (2012), it was held by the court that “framing of issues is a very crucial stage of a civil trial and it is important for a judge to critically examine the pleadings of the parties before framing the issues under Rule 2 of Order 10. In search of truth, the court must go to the core of the matter and eliminate the controversies”.
Order 10 Rule 3
According to Rule 3 of Order 10, the judge presiding the court must reduce to writing the information provided by the parties during their oral examination which would also form part of the record of the suit.
Order 10 Rule 4
Rule 4 of this Order refers to the consequence of refusal or inability of the pleader to answer. As this rule suggests, if during the oral examination of parties under Rule 2, the party or its pleader to whom the question is posed either refuses to answer or is unable to answer, the court may adjourn the proceedings and postpone the matter for not more than 7 days in order to ask the parties to appear before the court “in person” to answer the questions. However, if the party or the pleader fails to appear before the court on the date fixed, the court may pronounce the judgement against that party.
Process of examination of parties
There is no particular process that is to be followed to examine the parties. However, it is a common practice that after the issuance of summons and filing of written statements, the parties appear before the court to put forth their arguments. Before the parties put their arguments before the court, they are examined in order to discover the facts and evidence to facilitate the process of trial and enable the court to frame the issues. These discoveries out of the statements of the parties form a part of the record.
Objective behind examining the parties
The objective behind examining the parties is majorly to ascertain the denied and the accepted allegations of the parties. By the process of examination of parties, the court tries to extract the issues underlying the dispute from the parties. This results in the clarification of issues and gathering of evidence. It also enables the court to form an opinion regarding the reference of the dispute to an appropriate forum of ADR in order to escalate the settlement of the dispute. The stage of examination of parties by court paves the path for further steps to be followed in a suit. Post examination of parties, the court stands in a position to frame the final issues.
Interplay between Section 89 and Order 10 CPC
Section 89 of CPC aims for the settlement of disputes outside the court by resorting to any of the modes of ADR namely arbitration, conciliation, mediation or by judicial settlement through Lok Adalat. According to this provision, if the court is of the opinion that essential elements of conciliation or judicial settlement exists between the parties, it may either suo moto or on the application of the parties refer the matter to be settled through any of the modes of ADR mentioned above. The court can refer the dispute to any ADR forum at any stage of the proceeding but before the settlement of the issues.
The Civil Procedure (Amendment) Act, 1999 which came into force on 1st July, 2002 inserted Rule 1A to Order 10. This Rule was inserted to supplement the purpose of the provision under Section 89 of CPC. As mentioned earlier as well, the essence of Rule 1A of Order 10 resonates with the essentials of Section 89. The purpose of both provisions is to ensure that the dispute may be settled amicably through any of the modes of ADR and to reduce the pendency of litigation. While Section 89 results in early settlement of disputes, Rule 1A supplements to the purpose of that provision by referring the matter to a suitable ADR forum. Courts through these provisions try to encourage the parties to opt for a method of settlement of their disputes outside the court which would not just result in their cost management but also will efficiently resolve the dispute.
If the reference is to arbitration or conciliation, the court has to record that the reference is by mutual consent. Nothing further needs to be stated in the order sheet.
If the reference is to any other ADR process, the court should briefly record that having regard to the nature of dispute, the case deserves to be referred to Lok Adalat, or mediation or judicial settlement, as the case may be. There is no need for an elaborate order for making the reference.
The requirement in Section 89(1) that the court should formulate or reformulate the terms of settlement would only mean that the court has to briefly refer to the nature of dispute and decide upon the appropriate ADR process.
If the judge in charge of the case assists the parties and if settlement negotiations fail, he should not deal with the adjudication of the matter, to avoid apprehensions of bias and prejudice. It is therefore advisable to refer cases proposed for judicial settlement to another judge.
The purpose of the court behind issuing these guidelines was to ensure that the provisions are utilised efficiently to gain the best results out of ADR mechanisms.
Important case law
M/s Kapil Corepacks Pvt. Ltd. vs. Harbans Lal (2010)
In this case, the Supreme Court ascertained the objective and the aim of Rule 2 of Order 10 of CPC. The questions of consideration before the court included the ambit and scope of Rule 2 of Order 10, the court’s confrontation with the defendant of a substantial portion of a document to be examined and to ascertain if an answer given against the question put to a defendant under Rule 2 can prosecute him under Section 340 (procedure in cases mentioned under Section 195) of the Code of Criminal Procedure, 1973 (now as Section 379 of the Bhatariya Nyaya Suraksha Sanhita, 2023).
The court while determining the scope and ambit of Rule 2 of Order 10 stated that where on one hand Rule 1 enables to ascertain the admissions and denials by the parties, Rule 2 is not restrictive to allegations made by other parties, rather, it leads to elucidating any matters of controversy. Through the words of judgement, the Supreme Court stated that “Rule 2 enables the court to examine not only any party, but also any person accompanying either party or his pleader, to obtain answer to any material question relating to the suit, either at the first hearing or subsequent hearings. The object of oral examination under Rule 2 of Order 10 is to ascertain the matters in controversy in suit, and not to record evidence or to secure admissions.”
While deciding the other issues, the court held that Rule 2 is not resorted to decide the rights and obligations of the parties. Also, it was stated by the court that confrontation of a document which is not exhibited lies outside the purview and scope of Rule 2 of Order 10. While deciding the final issue, the bench held that no party can be prosecuted under Section 340 of the Code of Criminal Procedure, 1973 for the answers given by them against the questions put to them under Order 10 Rule 2.
Dr. Vimla Menon and another vs. Gopinath Menon (2022)
In this case, a civil suit was involved wherein an application was filed by the plaintiff under Order 10 of CPC to challenge the information and the responses provided by the defendant and claimed that those responses were evasive and insufficient. The plaintiff also sought an order to examine the defendant on oath under Order 10 Rule 1 in order to clarify all the issues.
The main issue underlying this case was whether the examination of parties on oath under Order 10 was justified and the discretion of the Sessions Judge to order the same.
The Delhi High Court in this case upheld the decision of the Sessions Judge and held that the latter had the discretion to order an oral examination of parties on oath under Order 10 CPC. It was also held that Order 10 grants an authority to the court to examine the parties if deemed necessary. The court also stressed upon the fact that predicting the exact questions arising from the oral examination of parties was not within its scope.
Conclusion
Through the process of examination of parties under Order 10, the court ensures that all the relevant information is disclosed and extracted through the parties and is documented effectively to form a part of the record of the suit. It is a very crucial stage of a civil suit because it not only helps in the clarification of issues but also aids in the gathering of evidence. In order to ensure a fair and transparent settlement of the issues, it is very important for the parties to comply with the provisions of Order 10. With the interplay of Section 89, Order 10 aids in the speedy and efficient resolution of disputes by referring the matter to any suitable ADR forum. Therefore, there stands no doubt that Order 10 for the examination of parties by the court forms a crucial step in the process of civil litigation.
Frequently Asked Questions (FAQs)
What is the relevance of Order 10 in a civil suit?
Order 10 plays a crucial role in deciding a civil suit. It refers to the examination of parties by the court which enables the court to ascertain the underlying issues between the parties. It leads to the discovery of facts, clarification of issues and helps in gathering the evidence. The court having jurisdiction over a dispute by the way of examination of parties tries to discover the hidden issues of law and facts over the subject matter of the dispute.
Can a party refuse to answer the questions put forth by the court under Order 10?
In general, a party cannot refuse to answer a question posed by the court. However, as per Rule 4 of Order 10, if a party or its pleader refuses to answer any question or they are unable to answer, the court may grant them 7 days to appear “in person” before the court to answer the questions.
What is the objective behind the insertion of Rule 1A in Order 10?
The objective behind the insertion of Rule 1A to Order 10 was to ensure speedy and amicable settlement of disputes. It supplements the purpose of the provision under Section 89 of CPC and the court has the authority to refer the matter to any ADR forum if it is of the opinion that the dispute can be resolved by any of the modes of ADR.
Which forums of ADR can be referred to at the direction of the court?
The court can refer the parties to any of the ADR forums mentioned in Section 89 namely, arbitral tribunal in case of arbitration, Lok Adalat in case of judicial settlement outside the court, conciliator in case of conciliations and mediators in case of mediation.
Is the power to identify the matters in controversy under Order 10 Rule 2 differ from the power exercised by the court under Section 165 of the Indian Evidence Act?
As held in Kapil Corepacks Pvt. Ltd. vs. Harbans Lal (2010), the power to identify the matters in controversy by examination of parties at the pre trial stage under Order 10 Rule 2 is completely different from the power exercised by the court under Section 165 of the Evidence Act, 1872 to put any question in any form to a witness or a party in order to discover or to obtain proper proof of relevant facts.
Reference
Civil Procedure by C.K. Takwani.
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This article has been written by Jaanvi Jolly. The article delves into the intricacies of Section 9 of the Trademarks Act, 1999 which deals with the absolute grounds for refusal of registration of a particular trademark. Broadly, Section 9 talks about two aspects, distinctiveness and descriptiveness. The process, needs and benefits of registration of a trademark are also discussed in the article, along with the consequences of non-registration. A wide array of case laws have been discussed to provide a better understanding of the aforesaid concepts.
Table of Contents
Introduction
A trademark is a mark or a sign that aids the purchase decisions of individuals by indicating the origin or the source of a particular product. The trademark helps the consumer to identify certain aspects of the quality of a product, derived from their own or others’ past experiences.
As far as the interest of the producer or the manufacturer is concerned, trademarks provide an incentive to the manufacturers to invest in improving and maintaining the quality of their products to reap the benefits of the reputation of their brand. The trademark law can be understood as an economic or commercial tool, which, if strategically designed, is capable of producing incentives for maximising commercial efficiency.
There are some marks which are barred from registration due to internal aspects of such a mark. The marks must be distinctive in order to secure registration and when this aspect is absent or the marks are predominantly descriptive, or it is prohibited under some law or are obscene, scandalous or confusing, then the registration would be refused.
The process of registration of the trademark begins by filing an application before the trademarks’ registry. Then the registrar examines the application and provides a report to the applicant within 30 days. The registrar would either refuse or conditionally accept the application after examination of Section 9 and Section 11.
Meaning of trademark
Section 2(1)(m) of the Trade Marks Act, 1999, defines a ‘mark’ in an inclusive manner. A mark under the Trademark Act, 1999 would include a device, brand, heading, label, ticket, name, signature, word, letter, numeral, shape of goods, packaging or combination of colours or any combination of either of these would fall under the definition given in this Section.
Section 2(1)(zb) of the Trade Marks Act 1999 defines a ‘trademark’ as a mark which is capable of being represented graphically and essentially of a distinguishing character, which means that it distinguishes the goods or services of the applicant from those of others. It is further stated that a trademark can consist of the shape of goods, the packaging and the combination of colours.
The word trademark can be broken down into two components, trade and mark. It reflects a mark which is used in connection to a trade to establish a connection between the goods and the manufacturer or producer. The mark, therefore, is an identifier of the source of goods and thus becomes a trademark. For a trademark to be considered a trademark under the Trade Marks Act, 1999, firstly it would have to satisfy the requirements of being a mark under Section 2(1)(m) and subsequently, the mark must fall under the definition of a trademark under Section 2(1)(zb).
The Global Innovation Index, analyses and ranks nations based on their innovation in reference to the economic and geopolitical environment. It ranked around 132 economies on the basis of their innovation, along with highlighting their innovations, strengths and weaknesses. The overall rank of India in this index in the year 2023 was 40, and in the category of trademark by origin, India ranked 54th. In the ranking of the top three innovation economies by region in central and southern Asia, India ranked first; followed by Iran and Kazakhstan.
Further, in the top three innovation economies grouped by income, India fell within the lower middle-income group and ranked first, followed by Vietnam and Ukraine. This clearly reflects that while India has great innovation potential when compared with its neighbours both geographically and economically on the international scale, we still have a lot of room for improvement.
Benefits of registration
Section 28 of the Trade Marks Act provides the rights which an applicant enjoys after the successful registration of his trademark. These are as follows:
The proprietor has an exclusive right to use their registered trademark in respect of the goods for which it has been registered.
It grants the proprietor of such mark the right to file a suit and seek remedies in case of infringement of the trademark.
Grounds for refusal of registration of trademark
The trademarks are a mark which can be used by a particular manufacturer or producer to distinguish his goods from those of others. However, not every mark that they decide to use for the purpose, can be granted registration. The statute expressly provides both absolute and relative grounds for the bar on registration. While the absolute bar is due to causes inherent in the mark itself, the relative bar is in reference to other similar or identical marks which have been granted registration prior in time.
Absolute grounds for refusal
The absolute grounds for refusal of registration are linked to the public policy. It seeks to protect the legitimate interests of the producers/manufacturers in protecting the reputation and goodwill of their goods from other people replicating them or attempting to pass off their goods as that of the trademark holder. Further, they also protect the interest of the consumers in getting the authentic goods originating from a particular source as indicated by the trademark. The absolute grounds of refusal are given under Section 9 of the Trade Mark Act, 1999, which are discussed as follows:
Marks lack a distinctive or distinguishing character.
Indicative and descriptive marks in reference to quantity, quality, intended purpose etc.
Marks that have become customary in language or trade usage.
Marks that are deceptive or likely to cause confusion.
Relative grounds for refusal
The relative grounds are provided under Section 11 of the Trade Marks Act 1999. The registration is refused here when the trademark sought to be registered is likely to cause confusion to the public on the account of it being similar to an already registered trademark.
Section 9(1) of Trademarks Act, 1999
Section 9(1)(a): lack of distinctiveness
Clause (a) of Section 9 (1) deals with the grounds for refusal of registration based on a lack of distinctive characteristics. The phrase “devoid of any distinctive character” means that the trademark is incapable or insufficient to distinguish the goods or services of the person seeking registration from the goods or services of another person. The unique or the differentiating character is missing in the trademark sought to be registered.
This sub-section can bar registration of a trademark on the ground of lack of distinctiveness, however, the meaning of the term distinctiveness is not directly defined in the Act. In a catena of judgements, the court has interpreted the term to mean that the trademark in respect of the goods of a particular person, must play the function of making the public unmistakably and immediately connect the mark with the particular manufacturer.
Relevant case laws
Muneer Ahmad vs. Registrar of Trade Marks (2023)
In this case, the word ‘Bharat’ written in style, along with the figure of a slanted paintbrush was sought to be registered in reference to paintbrushes, artistic brushes, and roller brushes. The Registrar of Trademarks refused the registration on the ground that the specific trademark is highly descriptive in nature and would design the quality and the purpose of the goods.
The trademarks which lack the distinctive character as required under Section 9 could be divided into two categories. Firstly, there are marks which inherently lack distinctiveness. In other words, they are incapable of distinguishing between the goods and services in respect of the trademark and the goods and services of another person. These words are incapable of being used to distinguish the said goods in the particular category.
In the second category, the trademarks lacking distinctiveness would be due to their common usage in connection with the specific goods or services, and are thereby incapable of acting as the identifier of the source of such goods and services in the latter case, the registrar must make a specific reference identified. The marks which are common in the trade and thereby are refused registration.
The court held that the said trademark or device mark must be seen as a whole to examine the conditions of Section 9. In conclusion, the court held that the device mark of which the registration was sought. If seen as a whole was distinctive. The word ‘Bharat’ said to lakh distinctiveness and is therefore registrable.
Geep Flashlight Industries Ltd. vs. the Registrar of Trade Marks (1972)
In this case, the question of registration of the trademark ‘Janta’ for electric torches. The registration of the mark was refused on the grounds of it not being distinctive. The applicant proved the fact of his impressive sale, along with orders placed based on newspaper clippings. This successfully proved that the trade name has been used for a long time and it has also been extensively advertised, leading to the term acquiring distinctiveness by the use.
The registrar further refused registration on another ground, that the term ‘janta’ has a direct indication towards the quality of the goods that is, the name indicates that they are cheap and made to cater to the general public (for the ‘Janta’). The court held that merely because the torches bearing the name ‘janta’ are the cheapest, it would not be sufficient to conclude that janta is descriptive of their quality. Price is an important factor in the mind of the consumer, but it is not the sole one, attributes like utility would be of prime consideration. If the quality has been compromised, a mere low price would not make the product very popular.
In this case even though the appellant had led evidence to prove that its torches bearing the name ‘Janta’ have acquired considerable reputation in the market, still the word ‘Janta’ is in fact not adapted to distinguish or is in fact not capable of distinguishing the appellant’s goods. Further, even if the appellant’s proposed trade mark satisfies the conditions prescribed in Section 9 of the Act, the appellant is not entitled as a matter of right to the registration of his trade mark.
The reason provided by the registrar for refusal to register the word “janta” was upheld by the court. In India the word is used very widely in various situations to denote the common man and therefore the word ‘Janta’ is one of those words which should be kept open for the use of any person for a bona fide descriptive or trading purposes and that the appellant should not get monopoly right over this word. Thus, the court held that the mark could not be registered.
Section 9(1)(b): Descriptive marks
This subsection provides a bar for the registration of marks which are merely descriptive in nature. As a general rule, a descriptive mark cannot be allowed to be monopolised. However, if it is proved by the appellant that due to a long period of use the descriptive mark has lost its primary meaning and has acquired a secondary distinctive meaning in reference to the goods of the applicant, it may be granted registration.
The subsection provides a list of characteristics which, if are a part of the trademark, would be treated as a ground for refusal of registration of that trademark. The aforesaid indications in the trademark designate the following:
Kind– The type or category of a product, for example: an SUV car cannot be granted registration as a trademark.
Quality– The words indicative of the standard of a product cannot be registered as a trademark, for example: best or No.1.
Quantity– The terms indicative of the quantity like weight and number cannot be granted trademark registration.
Intended purpose– A mark which is descriptive of the use of the product that is not registerable, for example: floor cleaner, shampoo, room freshener, etc.
Values– The terms like degree or Celsius are not registrable as a trademark (the trademark for the brand 62 degrees east, owned by Deepika Padukone is a good example of using value which is generally a descriptive term in a fanciful or arbitrary way.
Geographical origin– These include terms of countries, cities and towns which are indicative of the source place of the product. For example: Shimla Apple cannot be granted trademark registration.
Time of production of goods or providing of service– These terms are indicative of when the goods or service are provided. For example: using the term 24×7 regarding a service cannot be granted trademark regulation.
Other characteristics of the goods or services– For instance name of football players or football teams on goods related to sports gear, use of terms like teeth or gums for a dental clinic.
Relevant case laws for trademark which includes a geographical mark
Foreign cases
Liverpool Electric Cable Co Ltd case (1929)
In this case, registration was sought for the trademark Liverpool, but the Chancery Division Court refused registration since it was the name of an important commercial centre. Herein, the court observed that even if the name has acquired distinctiveness in reference to the goods for which it is sought to be registered, the registration of a geographical name can be refused.
Sir Titus Salt, Bart., Sons and Co.s Application XI. (1894)
In this case, the registration of the term ‘Eboline’ was sought for silk goods. The Chancery Division Court held that ‘Eboli’ is the name of a town and the addition of the suffix ‘ne’ is not sufficient to consider the word as an invented term. In order to successfully register such a word, the term must be an invented word in fact and not merely in the belief of the person claiming its registration. The objective of such prohibition is to prevent the acquisition of monopoly in the name of a place by a particular person and resultantly suggest that the specific goods have an origin or connection with that place where in fact, no such connection exist.
Indian cases
Muneer Ahmad vs. Registrar of Trade Marks (2023)
In this case, the term Bharat along with a slanted paint brush was sought to be registered in reference to goods like paint, brushes, artistic brushes, etcetera. The trademark examiner held that the brush is indicative of the intended purpose of the product and would thereby be non-registrable under Section 9(1)(b). The Delhi High Court held that the examiner wrongly examined the mark partially with the reference only to the paintbrush, which only forms a part of the whole device mark consisting of the word Bharat in a particularly distinctive style along with the paintbrush. The court held that the mark when seen as a whole cannot be said to be descriptive of the product in reference to which it is sought to be registered. Bharat is the more prominent feature of the mark, and that has no descriptive relation to the kind of goods in respect of which the mark is used. The court concluded that in invoking either Section 9 or Section 11, the mark has to be viewed as a whole. Therefore, the court concluded that the mark is distinctive, and the registration can be granted.
Hi-Tech Pipes Ltd. vs. Asian Mills Pvt. Ltd. (2006)
in this case, the plaintiff company was involved in the business of manufacturing and sale of steel pipes, and the mark Gujrat was used in reference to such goods. The Delhi High Court observed that the question to be decided is whether the term has acquired any secondary meaning and does it have distinctiveness with respect to the goods produced by the company. The defendant also plotted to use the similar term ‘GUJARAT’ in respect of similar goods. The court held that merely because the name is of geographical description, It does not mean that an action of passing cannot be maintained by the company. The burden on the trademark holder is to establish the probability of deceit or confusion by the use of a similar name.
Imperial Tobacco Co. of India Ltd. vs. The Registrar of Trademarks (1986)
In this case, the registration of the trademark ‘SIMLA’ was in question in reference to cigarettes. Initially, the mark was refused registration as the word Simla was held to be indicative of the geographical origin and thereby was an absolute prohibition to registration under Section 9(1)(b). The Calcutta High Court held that the term is a geographical indication and is accompanied by hills as a part of the mark which points towards its usage in the ordinary or geographical sense. Thereby the exception granted in the cases of arbitrary or fancy use of a descriptive mark which leads to acquisition of a secondary meaning is not be applicable here.
In this case, some observations regarding geographical names as trademarks, were discussed. As a general rule, a geographical term in reference to its general significance is inherently incapable of being registered. However, some minor exceptions have been accepted to this rule in various judicial decisions.
When a geographical location is used to indicate a specific locality, country or state, it cannot be allowed to be registered and thereby monopolised by a particular individual as a trademark. However, in cases where the geographical word is not used in the geographical indicative sense in order to establish the place of origin or the source of the goods, but rather is used in a fancy, creative or arbitrary way, only intending to indicate the ownership, irrespective of the location can in some cases be allowed registration as a trademark. There are instances where geographical terms are used to identify and distinguish the goods belonging to a specific producer or manufacturer. In this case, such marks can only be allowed registration if the terms are such as would never occur to other producers or manufacturers to use in case of similar goods. It means that the particular mass or word is used in a fanciful full way and not as a descriptive or indicative term.
On the other hand, the terms referring to or indicating a major industrial city would be unregistrable for any class of goods. In between these two extremes, there are marks which have evidence of distinctiveness if the applicant is able to prove that she has a natural or legal monopoly in reference to the particular goods along with the place concerned, he may be able to seek registration of that trademark. However, that alone would not enable him to get a geographical name registered, he would also have to establish substantial evidence of acquired distinctiveness.
In conclusion, it can be stated that the reference to geographical terms in the ordinary sense would not have distinctiveness. This rule has been relaxed where the trademarks, or marks to be registered, refer to a small and insignificant place or where the term lacks any geographical significance. To conclude, where the geographical term to be registered is the name of an important country or a town of commercial significance, the mark will not be registered unless the evidence of long and extensive use is proved, which leads to it acquiring distinctiveness.
Bar on registration of trademarks which are descriptive of quality or character of goods
M/s Hindustan Development Corporation Ltd. vs. The Deputy Registrar of Trade Marks (1955)
In this case, the registration of the term ‘Rasoi’ as a trademark was up for discussion. The question arose whether the use of the term ‘Rasoi’ as a trademark in respect of hydrogenated oils would be a reference to the character or quality of the product. In dealing with the question the Calcutta High Court stated that the mark must be looked at not in the grammatical or literary significance but rather the view of the public at large. Therefore, the term ‘rasoi’ would be generally linked to cooking and the normal use of the oil is also for cooking. Therefore, the people in the trade and the ultimate consumers would indubitably link the word ‘rasoi’ to the character of the goods. Thus, the mark was refused registration.
Marico Limited vs. Agro Tech Foods Limited (2010)
In this case, the appellant had registered the Trademarks “LOSORB” and “LO-SORB” for different products in class 29 like viz oil, ghee, etc.
The respondent was selling its edible oil/sunflower seeds oil under the trademark “Sundrop”. They claimed that the presence of anti-foaming agents in the sunflower oil resulted in less oil being absorbed when used for frying. On the packaging, the term ‘Sundrop’ was used along with the phrase ‘with low absorb technology’.
The Delhi High Court held that the appellant cannot be held to be entitled to the exclusive ownership of the term ‘low absorb’ as it is a general, descriptive word, indicating the low absorbing quality of a product. It is not an invented word, rather is a simple amalgamation of two English words. The court held that such descriptive terms are barred from being registered as a general rule under Section 9(1). The phrase “low absorb” surely and indubitably presents the meaning that something which absorbs less, and when used with respect to edible oil, it is descriptive in that it refers to low oil being absorbed
Nevertheless, the proof of application of the proviso to the case may enable registration where acquired distinctiveness is established. The court concluded to state that when the registration of such a term is sought, the applicant must be wary of the use of such term in a descriptive sense by others. Low absorb is not an unusual syntax and the same can almost be said to be a meaningful part of a sentence or phrase in itself. Adoption of such terms naturally entails the risk that others in the field who would also be entitled to use such phrases.
In this case, the dispute was related to the trademark ‘sugar free’. It was contended that it is merely a combination of two words, it is not inherently distinctive and is rather descriptive of its characteristics. The mark had not acquired any distinctiveness by usage beyond the artificial sweetener category, and therefore the appellant cannot have an exclusive claim over usage of the mark in respect of any or all products. The respondent could not be absolutely restrained from using the term ‘sugar free’ in a descriptive usage. However, in case a third person enters the category of artificial sweeteners with the trademark of the appellants, he can be restrained.
Further, this position is clarified by Section 30(2), which deals with the limits placed on the effect of a registered trademark. Subsection (2) provides that where a registered trademark is used by another to indicate the descriptive nature, which includes the kind, quality, purpose, value, geographical origin etc of his goods or services, this would not be considered as an act of infringing the trademark.
In the present case the adoption of the term sugar-free as the trademark, the plaintive must be aware that it is a descriptive word which is used by a lot of manufacturers and is in widespread use some degree of confusion is inevitable. In trademarks of a descriptive nature, a blanket ban on the usage of such terms cannot be issued, especially when the registered trademark is only used as a descriptive phrase for the product and not as the trademark.
In conclusion, the Delhi High Court held that the mark ‘sugar free’ which is clearly a descriptive mark indicating the quality of the product, would be an absolute ground for refusal of registration unless it has acquired a distinctive character as per Section 9(1). The mark can at best be said to be distinctive in reference to the artificial sweetener category, and mere marketing of another product with the trademark would not give him the right to claim distinctiveness in reference to all food products.
Info Edge (India) Pvt. Ltd. and Anr. vs. Shailesh Gupta and Anr. (2002)
In this case, the appellant had the domain name ‘naukri.com’ registered. Subsequently, the respondents also registered a similar term ‘naukari.com’. The Delhi High Court observed that when the business is carried on by the respondent under a trade name which bears close resemblance to the name of the appellant who has over time built goodwill around it, it is likely that such usage by the defendant would cause confusion. It would mislead the public into believing that it bears a connection to the trade of the plaintiff. Further, the distinction between a generic word and a descriptive word is very thin, thereby such a term could acquire a secondary meaning by long use, establishing its reputation.
The court also noted that even if the word in question is generic, yet, if it is found by the court that such mark has attained distinctiveness and is associated with the business of the plaintiff for a considerable time and thereafter the defendant adopts a similar word as one of his marks to induce innocent internet users to come to his website, the same establishes dishonest intention and bad faith. Thus, the court would grant an injunction to protect the business of the plaintiff.
Online India Capital Co. Pvt. Ltd. And vs. Dimensions Corporate (2000)
In this case, trademark protection was sought for ‘www.mutualfundsindia.com’. The Delhi High Court refused to grant any protection to domain names consisting of generic words, which were merely descriptive of the services being provided by the concerned parties. It may, however, be noticed that in this case, it has been observed that there was an absence of material or the material placed on record was insufficient to show that the marks had acquired any secondary meaning, which is a ‘precondition’ for granting protection to descriptive names.
Bharathiya coffee workers catering vs. Indian coffee workers Co-Operative (1998)
In this case, the question raised before the Kerala High Court was related to the usage of the name ‘Indian Coffee House’.
The respondent before the Apex court were originally the plaintiffs which was a society formed by the employees of the Indian coffee board and they were running coffee houses in the name of ‘Indian coffee house’ as distinct from the India coffee house run by the present appellant. The managing director of the appellant company was earlier a member of the respondent society, but due to difference of opinions, he formed a separate entity and started doing the identical business. The appellant used a similar name for his establishment. The respondent filed the suit for permanent injunction against the appellant from using the term ‘India coffee house’.
The court held that here in the plaintive society does not have any exclusive right to run coffee houses with the name, Indian coffee house. it is a generic name which is used by the ex employees of the coffee board. Even if we accept the contention that the Indian coffee house run by this particular society has earned a goodwill, it would not per se enable them to restrict other ex employees from running coffee houses in the same name or to claim a passing of action.
Christian Louboutin Sas vs. Abubaker & Ors (2018)
In this case, the plaintiff-appellants, the company Christian Louboutin SAS filed the suit for injunction against infringement of its trademark: the ‘red sole’ of its shoes. The Delhi High Court analysed the definition of ‘mark’ given under the Trademark Act and stated that the term used by the legislature is ‘combination of colours’, which impliedly would mean that a single colour would not come within the term ‘mark’ and thereby the first basic sine qua non of a thing becoming a trademark i.e., of whatever is sought to be claimed as a trademark must first also be a mark is not fulfilled here. Thus making ‘combination of colours’ a ‘sine que non’ as distinguished from one single colour, the latter cannot be claimed as a trademark.
In the present case, the issue was in reference to a single colour used in the soles of shoes for ladies. In conclusion, it was said that the definition of a mark is not capable of being registered as a trademark. Thus, once it has been conclusively stated that a single colour, cannot be a mark and therefore cannot be a trademark, the question of the plaintiff claiming use of a single colour as a trademark by getting benefit under the proviso to Section 9(1) of the Trade Marks Act will not arise, as this proviso will come into play if there is first of all a trademark because of a mark being used in the course of a trade as a trademark.
The court further cautioned that in case a particular trademark of a person is claimed to have adopted a secondary distinctive meaning in reference to the applicant’s products, such registration cannot entitle the person to stop other people from using this expression only to describe the descriptive characteristic features of the products.
The court further stated that even when a single colour is supplied to a particular product, it would pertain to or indicate its characteristics. It is used to make the product more attractive. The function of making the product more appealing is not a trademark function as a feature of the good. Trademark has a specific purpose of indicating the origin of the product from a particular manufacturer or producer. Even if the red soul of the shoe is registered, nevertheless, it cannot be granted exclusivity in its usage, thereby depriving others from using the same feature.
Section 9(1)(c): Customary terms
This subsection provides the ground for refusal of registration where the trademark sought to be registered consists of marks which have become:
Customary in usage or commonly used in the current language; or,
Used in the established practice of trade in bona fide.
When a trademark is evaluated in reference to the goods or services for which the registration is sought, it is necessary to examine the perception that the general public has towards such a trademark. If it is a mark which is associated with a particular idea in the mind of the people, then as a general rule, such symbols cannot be allowed for registration.
For example, the cross sign in red colour is related to the perception of people to hospitals, various traffic signs have their own established meanings. These cannot be allowed to be monopolised by a particular individual. This is because these are not distinctive and have already fixed meaning or relevance in the minds of the people. A trademark is a mark which is used to distinguish the goods or services of one person from the other, and the registration of such customary or pre-established marks would not serve the purpose.
Section 9(1) proviso: Overcoming objection under absolute grounds for refusal by proof of acquired distinctiveness
This proviso to the subsection states that even though a ground for refusal has been made in the case of a particular trademark, nevertheless, it can be registered if prior to the date of application for registration it has either:
Acquired distinctive character due to its usage or,
Has become a well-known trademark.
The primary objective of a trademark is to identify or indicate the source of origin of a particular good or service. A prolonged usage of the term in a few cases creates a situation where a certain trademark gets mentally fed into the minds of people as belonging to a particular manufacturer. The trademark acts as a surety for the people who seek to buy products from their trusted brands. This long-term association creates an acquired distinctiveness or a secondary meaning to innately indistinct or descriptive words.
When the court comes across a case, wherein it has to examine whether a mark has acquired a distinctive character or not, the following factors are usually considered:
What is the market share of the goods which have been using the said mark?
How intensive geographically, widespread and long user has been in reference to the mark?
The cost incurred by the applicant in the promotion and popularisation of the mark.
The proportion of the segment of people who identify the source of the goods as indicated by the trademark.
The standing of such goods in the various trade and commerce circles.
After analysing all of these factors, if the registrar or the court is satisfied that the mark has acquired sufficient distinctiveness in the eyes of the people, to which the public identifies the goods as originating from a particular source due to the trademark, then the condition for the application of the proviso, which is the establishment of acquired distinctiveness must be held to be satisfied.
Where a mark Is refused registration on the ground of lack of distinctive character or consisting of indicative terms or consisting of signs which have become customary or commonly used in the practice of trade, an exception is still available. In case the person is able to show that the mark has acquired distinctiveness due to the use made of it before the date of application for registration, then the registration of such a trademark may be allowed.
If he is able to show that prior to the application being presented, the mark has become distinctive and is capable of distinguishing the goods of the person from another, the registration may be allowed. The distinctiveness, which may be acquired between the date of application and the date of examination by the authority, is immaterial. In order to prove acquired distinctiveness, the applicant is duty-bound to establish that the public perceives and views the mark as indicative of the applicant’s goods.
In the case of Kaviraj Pandit Durga Dutt Sharma vs. Navaratna Pharmaceutical Laboratories (1965), the Supreme Court stated that where a trademark has been continuously used by a business, with alterations or additions which do not impact its identity the registration would not be refused on the grounds of it not being distinctive. The evidence establishing acquired distinctiveness can be perused to examine the application of the proviso to section 9(1). Further in the case of Marico Limited vs. Agro Tech Foods Limited (2010), the position in relation to acquired distinctiveness was clarified, “when the descriptive trademark is used only by one person undisturbed for a very long period of time, without anyone else attempting to use the trademark during this long period time, a case can be established of a descriptive word having achieved distinctiveness and a secondary meaning.“
In India, no established statutory guidelines are provided which are to be satisfied as a proof of acquired distinctiveness. Due to this, the courts play a proactive role in determining the question of acquired distinctiveness in every case as per the facts and circumstances before it.
The process of acquiring distinctiveness in respect of a trademark is a difficult task. No particular time has been fixed for which the mark must be used in order to be said to have a quiet distinctiveness. There can be cases where, for various reasons, a trademark acquires distinctiveness in a very short period. In other cases, there can be trademarks which never acquired distinctiveness. Therefore, the period of use is a relevant factor, but not a sole one.
This view was reflected in the case of Mrs. Ishi Khosla vs. Anil Aggarwal (2007) where the Delhi High Court stated that to acquire a secondary distinctive meaning, the product need not be in the market for any particular number of years. Where the idea of the product along with a particular trademark is new, fascinating and appealing to the public, it can have the capability to become popular in a short period. The burden of proof lies upon the applicant to prove that his descriptive trademark has attained distinctiveness on account of its usage.
The court also held that the proof of distinctiveness must be established in respect of every article to which the trademark is applied and not just for a single product.
Trademark registered in breach of Section 9(1)
Section 32 of the Trade Marks Act deals with the situation wherein a trademark is registered in violation of the provisions of Section 9(1). It stipulates that due to such violation, the trademark would be declared invalid unless it has acquired a distinctive character in relation to the goods or services in respect of which it is registered, after it. The opportunity to prove the acquired distinctiveness will be given before any legal proceedings are initiated to challenge the validity of such registration.
Therefore, it protects a mark which might not have been a distinctive character when it was registered. However, prior to the proceedings challenging its validity, it acquires the distinctiveness then registration will not be invalid because ultimately the purpose of a trademark is to distinguish the goods of one person from another.
Relevant time to check if the trademark has acquired distinctiveness
Wherein an inherently descriptive trademark is sought to be registered by the application of the proviso to Section 9(1), the question arises at what point is the acquired distinctiveness to be proved?
When we read the proviso to Section 9(1) of the Trade Marks Act 1999, it states that in case there is an absolute bar on the registration of a particular trademark nevertheless, such a trademark can be registered if, prior to the date of application, it has acquired a distinctive character or is a well-known trademark.
Further, in Section 31(2) and Section 32 of the Trade Marks Act, 1999, the position is established that as a general rule, the evidence claiming distinctiveness acquired by the usage has to be presented on the date when the application is filed for registration. However, by virtue of Section 31, this period can be extended up to the actual date of registration.
As per Section 32 a person can produce evidence in order to establish distinctiveness, which is acquired even after the registration process wherein the proceedings are initiated by a third party, claiming the invalidity of such trademark. In these proceedings under Section 57 of the Trade Marks Act 1999, the evidence can be produced establishing distinctiveness. However, no such evidence can be produced in a civil suit in a civil Court where an infringement action is initiated in regard to a registered mark.
Impact of a descriptive trademark being registered on account of acquiring distinctiveness and the right of other people to use it in a descriptive sense
It has been clarified by the Supreme Court of India in several judicial decisions that when a descriptive trademark is registered on the basis of acquired distinctiveness, the proprietor of the mark would not be able to monopolise it. In other words, if a person is a registered owner of a trademark which is indicative of the characteristics of the goods, then despite such registration, he will not be entitled to the exclusive usage of the mark. He would not get the right to prohibit another person from using it, since the mark is descriptive in nature and is indicative of the characteristic of his own manufactured goods. Herein, it would not result in the infringement of the registered trademark. For instance, the usage of ‘24/7’ as a registered mark.
A characteristic of the goods would include the functional aspects which give an appeal to the products and whenever a trademark is offered, a kind which can also be a characteristic or a description of the goods then merely because such a descriptive trademark has been registered. It cannot prevent other manufacturers or sellers from using such characteristics. It must be however remembered that this characteristic must not be used as a trademark, but rather only as a feature of the goods.
This is based on the understanding that when a person gets a descriptive trademark registered, he does so knowingly and understands that by Section 30 of the Trademark Act, 1999, he would not be able to prohibit or prevent another person from using such descriptive characteristic simply because he has registered it as a trademark. The objective behind such provision is to discourage the adoption and the use of a trademark by a person which pertains to the element stated in Section 32(1) of the Trademark Act, 1999, which includes the aspect of the trademark being only descriptive of the good’s characteristics.
Section 9(2) of Trademarks Act, 1999
This subsection primarily bars the registration of trademarks on the ground of it being confusing or deceptive, hurtful to religious sentiments or scandalous. These are an absolute bar upon registration of marks which consist of such terms.
Section 9(2)(a): Deceptive or confusing
This subsection bars the registration of a trademark if it is of a nature which will deceive the public in any way or would cause confusion to the general public. These marks might present an indication that is ambiguous and does not provide the benefits which trademarks intend to offer, i.e., identifying the source of the goods or services. For example, a mark containing the words ANIMAL FREE, but the ingredients of goods include meat or a mark being similar to that of a well-known brand but only slightly different will not be fit for registration.
Relevant case laws
Sunder Parmanand Lalwani vs. Caltex (India) Ltd (1969)
This case is concerned with the dispute over the mark ‘Caltex’. The appellants sought to register it in the year 1958 in reference to watches and their components. The applicant claimed that he had imported the watches to India from M/s Degoumois and Co., who are the original owners of the trademark for watches in Switzerland. It has been contended by him that the watches were imported under contractual terms with the original proprietors but thereafter in India, he used the trademark ‘Caltex’ in his own right and by using it acquired the ownership.
This application was opposed by the respondents who claimed to be the owner of the mark in reference to industrial oils, lubricants, fuels, etc. and have been using it in India since 1937. They stated that the applicant’s mark is identical to theirs, it is thereby likely to cause confusion to the public.
The Bombay High Court held that since the original proprietors, M/s Degoumois and Co., have not claimed the ownership of the mark in India, thereby making the use of such mark in India as a new mark for watches and its components since it was not used earlier by anyone in the Indian territory. The court analysed that although there is no trigger connection or any common channels of trade, there are other factors that need to be checked in order to decide whether the trademark is likely to create deception or confusion among the public.
The court further stated that the goods of the respondents are widespread as is their publicity, the goods are used all over India by people, rich or poor literate or illiterate. The goods of the applicant are very different but, their goods would be purchased by the common public who may be confused between the two. Furthermore, the respondents are a big company and are capable of starting any new industrial or trade. Due to that, people might believe that they have started a new business in a different field. Therefore, the applicant’s registration was rejected by the court.
Section 9(2)(b): Marks likely to hurt religious sentiments
This subsection bars the registration of a trademark when it contains words or symbols, which tend to hurt the religious sentiments of any section of people of India.
Relevant case laws
Controller General of Patents vs. * Additional (2013)
In this case, the registration of a trademark with the picture of the Attukul deity and on the appellation ‘Sabarimala of women’ was contended to be against the provision of the Trademark Act along with it being in violation of Articles 25 and 26 of the Constitution of India. The usage of such marks, which have religious symbolism, was claimed to be hurtful to the faith of the devotees when such religious idol is reduced to a ‘business outfit’.
It was claimed that the picture of the data is common and cannot be allowed to be monopolised by the trust. Additionally, the grant of such registration would bring about a commercial advantage and reduce the temple to a source of commerce, which would hurt the faith and belief of the devotees.
The Kerala High Court held that in India, it is a very common practice to use the names as well as the pictures of various gods as trademarks. These are not per se regarded as offending religious sentiments. However, the use of such symbols in relation to particular goods have the tendency to hurt religious sentiments. For example, the use of such duties, on footwear or on tobacco, etc. would be considered in bad taste.
The trust claimed that it stands in the status of the manager of the estate of the deity, who is considered a perpetual minor, and they only see the registration of the trademark in respect of various services provided, for example, ‘anndana’ etc. The court held that there was no ground to refuse registration of the trademark as the mere usage of the image of the deity is not likely to hurt religious sentiments.
Section 9(2)(c): Marks which are scandalous or obscene
This subsection bars the registration of a trademark which consists of any scandalous or obscene matter. The question of what constitutes scandalous and obscene must be analysed in light of the development of society. In the case of Ranjit D. Udheshi vs. the State of Maharashtra (1964), the Apex Court discussed the Hicklin test, which was laid down in the case of R vs. Hicklin (1868) and held that obscene would mean any matter which corrupts the mind of those who are open to such immoral influences, regardless of its artistic merit.
In another case of Aveer Sarkar vs. the State of West Bengal (2014), the Supreme Court applied the ‘community standard test’ according to which the impact of such matter as a whole has to be examined on the society as per the prevalent notions of what is considered obscene. This new test required that a conviction be based on a finding that the average person applying contemporary community standards would feel that the dominant theme of the material taken as a whole appealed to a prurient interest in sex.
While in the case of S. Rangarajan vs. Jagjivan Ram (1989), the Apex Court held that the standard to evaluate the obscenity is that of a reasonable man, an ordinary person of common sense and prudence.
Myntra, which is the leading e-commerce website was forced to change its logo after an activist, Naaz Patel, filed a complaint with the cyber police alleging that the logo was insulting and offensive towards the woman as it resembled a bare woman. After this, the Mumbai police cybercrime department discussed the issue with the Myntra official and asked them to change the logo. This can be taken as an example of a trademark being scandalous or offensive. To know more click here.
Section 9(2)(d): Mark prohibited by law
This subsection bars the registration of a trademark which contains a mark, the usage of which is prohibited as per the Emblems and Names (Prevention of Improper Use) Act, 1950. Under Section 4(1)(b) of the said Act, it has been stated that no competent authority will register a trademark which bears any emblem or name as provided in the Schedule of the Act. Under this Act, the following are a few of the emblems that have been prohibited to be registered as a trademark:
The name, emblem or the official seal of the United Nations Organisation (UNO).
The name, emblem or official seal of the World Health Organisation (WHO)
The national flag of India.
The name, emblem or official seal of the President or Governor of India.
The name or factorial representation of Shri Lal Bahadur Shastri.
The name and emblem of the Federation Internationale de Football Association (FIFA) etc.
Section 9(3) of Trademarks Act, 1999
In this subsection, the mark consisting of a shape is dealt with. Under the Trademarks Act 1999, Section 2 (zb) expressly allows for the registration of the shape of the goods as being constituent elements of the trademark. A trademark is a mark which is capable of being represented graphically and distinguishes the goods of one person from another. This distinctive factor can also be a shape in the case of goods. A shape mark is a trademark consisting of a 3-dimensional shape, which is capable of distinguishing the goods of one individual from another.
The legislature has given statutory recognition to the shape in which the goods are marketed along with their packaging, and the combination of colours used. These components are a part of the trade dress. The distinctive nature of a particular good can also be seen in terms of the unique shape in which the goods are presented. These shapes must be indicative of the origin of such goals and must not merely be a result of technical considerations or functional aspects.
Section 9(3)(a): Shape resulting from the nature of goods
This subsection bars the registration of a trademark which consists of the shape of a particular good, resulting from the nature of the good itself. For example, the shape of a chocolate bar or ice cream sandwich cannot be registered as a trademark, since it results from the nature of the goods itself. Another example can be taken of the default shape of mugs, glasses, vases, etc.
Section 9(3)(b): Shape required to achieve technical result
This subsection bars the registration of a trademark in respect of the shape of goods which is essential in order to achieve a technical result. For instance: the shape of a straw or the shape of a car tyre.
In the case of Delta Sport Handelskontor vs. EUIPO – Lego (2024), the Danish toymaker Lego was the owner of a trademark for the three-dimensional shape of a Lego brick or the design of the plastic building block. A competing German manufacturer Delta sport applied to have the Lego trademark declared invalid.
It was claimed by the german manufacturer that the design mark of the Lego brick which are alleged to be unique are in reality only related to the technical function of the product, thereby cannot be trademarked. The interlocking brick developed by Lego was registered in 1958. Finally the European Court of Justice in Luxembourg upheld the claim of Lego by stating that “It must be stated that the smooth surface of the upper face of the product concerned by the contested design is not included among the features identified by the Board of Appeal. It is a feature of appearance of that product.”. Thereby holding that the interlocking design is eligible for trademark protection.
Section 9(3)(c): Shape which provides substantial value to goods
This subsection bars the registration of a trademark consisting of a shape which provides substantial value to the goods. The test to decipher what adds a substantial value to the goods is what compels a particular customer to select a particular shape over other shapes and materials or any other attributes of the product. Shapes adding substantial value to the goods can be understood as the shapes which make the products comparatively more effective in carrying out the required tasks. For instance, the shape of straws, cups, tyres, etc., are functional aspects and are, therefore, unregistrable.
Relevant case laws
Apollo Tyres Ltd. vs. Pioneer Trading Corporation (2017)
In this case, the appellant had filed a suit to restrain the defendant from using the registered trademark of the appellant in respect of the tread pattern upon a tyre. Mark defined under Section 2(1)(m) includes the ‘shape of goods’. Further, a trademark under Section 2(1)(zb) is defined as a mark which plays the role of distinguishing the goods of the applicant from others and can be graphically represented and includes the shape of goods etc. therefore the tread pattern on the tyre must fall within the term shape. This tread pattern must be applicable to be protected, as this is something invented by the applicant and is unique to his goods. This pattern plays a very important role in the differentiation of types from different manufacturers.
No party can claim proprietary over the shape of a tyre, since all tyres are round in the shape of a wheel, which is a functional requirement. Furthermore, no party can claim proprietary over the technique/practice of providing treads in a tyre, since even treads are functional, i.e. they afford the necessary grip between the tyre and the ground during movement of the vehicle to keep it substantially stable. No party can claim proprietary over the technique/practice of having a plurality of ribs, separated by grooves, which create the tread on the tyre.
However, the tread pattern can be registered as a trademark, i.e., used as a source identifier. The registration of a tread pattern as a trademark does not mean that the unique pattern of the tread adopted by a particular manufacturer, which constitutes its unique design and shape, would not be entitled to protection as a design, under the Designs Act, 2000. This essentially means that in case a tread pattern is also applicable to be protected under the Trademark Act as a shape mark, the dual protections can co-exist.
What is functional in a tyre are the “treads” and not the “tread pattern”. Therefore, the tread pattern can be registered.
Whirlpool of India Ltd vs. Videocon Industries Ltd (2014)
In the case, the plaintiff claimed protection for the shape and configuration of its washing machine. It was contended that the functional parts which include the drums etc are inside the machine and what is sought to be protected is only the shape and configuration of the machine. The outer receptacle is designed to look appealing to the eye and serves no functional purpose. The Bombay High Court protected the design of the plaintiff’s semi-automatic washing machine since the same was unique and had no attribute of functionality.
Koninklijke Philips Electronics Ltd. vs. Remington Consumers Products Ltd (2000)
In this case, the European Court of Justice was dealing with the registration of the trademark of the appellant in reference to a 3 headed rotary electric trimmer. The appellant contended that the shape depicted in the trademark was not the only way to achieve optimum results, and subsequently produced equally efficient designs. To obtain the functionality, neither the particular number of rotating razors nor the assembled triangular shape was required.
The court held that as per the ground provided under Section 9(1)(b) of the Trademarks Act, the words “which is necessary to obtain a technical result” are not defeated by merely producing other shapes which are capable of producing equivalent results. The only requirement of the Section is that the essential features of the shape are linked only to the technical result. To accept the interpretation of the appellant, it would open the gates for registration of all alternative shape formations which achieve the functional result. Therefore the court refused to uphold the validity of the trademark of the appellant.
Zippo Manufacturing Company vs. Anil Moolchandani (2011)
In this case, the Delhi High Court granted protection to the shape of a lighter manufactured by the plaintiff, having regard to the unique shape. The unique shape had no functional aspect, therefore replication of the shape would lead to misleading the public to believe that the lighter of the defendant is manufactured by the plaintiff company. Thereby, the court injuncted the respondent from using a shape identical to the one registered by the appellant.
Gorbatschow Wodka KG vs. John Distilleries Limited (2011)
In this case, the plaintiff claimed trademark protection in reference to the shape of the bottles of vodka as being distinctive and thereby a part of the goodwill and reputation of the product of the plaintiff. The defendant had adopted a bottle which was similar to that of the plaintiff. On this ground, the plaintiff claimed that his remark had been diluted.
It was contended by the plaintiff that the shape of the bottle of the plaintiff has no functional aspect with the nature of the product or the quality, which is a prerequisite of a container in which the vodka can be sold. The shape is only provided to give the product some appeal.
It was held that the shape is novel and is a result of the imagination of the plaintiff. On comparison, the Bombay High Court felt that both the bottles had a striking similarity. The Trademark Act protects the shape of the goods by statutorily recognising them as an element of trademark. It is possible that the particular shape of the goods could become a source identifier for the goods, and the imitation of such shape by other people may cause confusion among the consumers regarding the source of the goods.
Conclusion
Since time immemorial, people have been extremely cautious when it comes to the protection of their property. In the contemporary era, we have seen the emergence of a new kind of property, which is the intellectual property. These seek to protect the innovations and imagination of an individual from imitation and exploitation by others. However, this right to register a particular trademark and enjoy the exclusive usage of it is restricted by some absolute grounds of refusal, which are guided by public policy.
The objective of a trademark is to ensure that the consumer is able to identify the source of a particular product. When a trademark does not fulfil this objective, it may be refused registration. Under Section 9 of the Trade Marks Act, 1999, various grounds for refusal are given, such as lack of distinctiveness or descriptive terms or likely to cause deception or confusion, or the terms which may be obscene or scandalous that are barred from being registered as trademarks. However, even where the term lacks inherent distinctiveness, it can nevertheless be registered if acquired distinctiveness is proved. Therefore, a balance is maintained by the provisions of the Trademarks Act between the rights of the applicant and the public.
Frequently Asked Questions (FAQs)
What are the different types of trademarks?
With the widening use of trademarks to protect particular aspects like the reputation and the goodwill of one’s business, the arena marks which can be registered as trademarks have also widened. The various types of trademarks which are registrable are:
Word marks– Marks consisting of words, letters or numerals. For example, OnePlus, Samsung, Disney, Pixar, etc.
Device marks– Marks which are an exclusive or unique representation of words etc, for example- Amazon or eBay.
Figurative marks or logos– Marks which are visual representations of a symbol, for example: the swoosh of Nike or the Lady on the Starbucks logo.
Service marks– These marks differentiate the services of different companies, for example- The name ‘United Airlines’, the ‘Fly the friendly skies’ tagline, and the logo of a world map are service marks. This is because United provides a service: airline flights around the world.
Collective marks– It is used by a group of companies or associations, for example- CA for Institute of Chartered Accountants or CPA used for members of the Society of Certified Public Accountants.
Certification marks– It is used to define standards and assure that the particular product meets those standards. For example, Hallmark, ISI, FSSAI, etc.
Well-known marks– These are marks which have gained recognition on a large scale by the public, for example- Audi logo, Ferrari, etc.
Colour mark– A specific combination of colours, for example- red and yellow in McDonald packaging.
Sound mark– These consist of specific sounds used to identify the source, for example- 20th Century Fox Studios music.
Smell mark– An example of a smell mark is the Brazilian footwear company Grendene successfully trademarked their line of bubble gum-scented jelly sandals in June 2015.
Shape mark– This aspect is also called the trade dress, it includes a particular unique non-functional shape, for example, Coca Coca-Cola bottle shape, the shape of a Toblerone chocolate bar.
How to register a trademark online?
Any person who seeks to use and register a trademark to use in reference to a class of goods in his business. The following entities are allowed to get a trademark registered: limited liability partnerships, partnership firms, individuals etc.
In India, the e-filing process has the following steps:
Create a trademark application with details of the applicant’s name, address, trademark representation etc
Payment of fees for the application on the Intellectual Property India portal.
Submit the application on the portal.
The application is then scrutinised by the trademark office and any objective and deficiencies if found would be intimidated.
After examination, it is published in the trademark journal for public notice and inviting objections.
Finally, the trademark is registered for a period of 10 years and the certificate is given.
What is the difference between a suit for infringement and a suit for passing off under trademark law?
Infringement of a trademark is a statutory remedy dealt with under the Trademarks Act, 1999. It refers to a breach of a trademark owner’s exclusive right of usage over his registered trademark. By registration, the proprietor of the trademark acquires exclusive rights to use the trademark for the goods and services in respect of which it was registered. When another person uses an identical or deceptively similar mark for their similar goods as that of the registered owner, the cause of action for a suit of infringement is made out.
Passing off is based on the principle that nobody has the right to represent his goods as the goods of another. Passing off action has not been dealt with under the Trademarks Act, 1999. The action of passing off lies in the case of unregistered trademarks, wherein there is a misrepresentation of the trademark of the owner by a person in furtherance of his trade in order to attract customers by causing confusion in their minds as to the goods, this misrepresentation has to be with an ill intention and should result in the injury to the business and the goodwill of the original owner.
What is the Madrid system?
The Madrid system is a system designed for a convenient and simplified registration of trademarks worldwide. It allows the applicant to file one application and only one time fees for registration of his trademark in up to 131 nations. Further, the modification, renewal or expansion of the global trademark portfolio can also be managed from one centralised system.
What is a well-known trademark?
Section 2(zg) of the Trademark Act defines a “well-known trademark” which, in relation to specific goods or services, means a mark which has become so to the substantial segment of the public which uses such goods or receives such services that the use of such mark in relation to other goods or services would be likely to be taken as indicating a connection in the course of trade or rendering of services between those goods or services.
In the case of Tata Sons Ltd. vs. Manoj Dodia & Ors. (2011), the Delhi High Court laid down a few factors which must be considered to examine whether a particular trademark is a well-known trademark. It is a mark which has a popular reputation among the relevant masses. The court needs to consider several factors, including:
The extent of knowledge of the mark and its recognition by the relevant public,
The duration of the use of the mark,
The area in which it is publicised or advertised.
What is the Hicklins test?
The hicklins test originated in the case of Regina vs. Hicklin (1868). Lord Chief Justice Alexander Cockburn supplied a broad definition of obscenity, based on ascertaining “whether the tendency of the matter is to deprave and corrupt those whose minds are open to such immoral influences and into whose hands a publication of this sort may fall.”
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This article is written by R Sai Gayatri, and further updated by Shweta Singh. This article deals with Section 24 of the Hindu Marriage Act, 1955, and elaborates on its meaning, objectives, and interpretation. In addition to this, the article also discusses the scope and applicability of this section with the help of various decided case laws.
Table of Contents
Introduction
Maintenance is not just a legal right but a human right as well. The purpose of granting maintenance to the affected spouse is to enable them to live a dignified life and represent themselves in legal proceedings, thereby giving them equal protection of the law as outlined under Article 14 of the Indian Constitution. The provision for maintenance also fulfils the requirement envisaged under Article 39 of the Indian Constitution, which outlines that both men and women have the right to an adequate means of livelihood. Section 24 of the Hindu Marriage Act, 1955(hereinafter referred to as the ‘HMA, 1955’) talks about the maintenance pendente lite and expenses of proceedings. Here, the term maintenance refers to the provision of basic needs to a dependent spouse and ‘pendente lite’ is a Latin term that means “while a suit is pending” or “while litigation continues”. Thus, it can be understood that ‘maintenance pendente lite’ refers to the provision of providing expenses and financial support to the spouse (either wife or husband) while a suit is pending. Let us know more about Section 24 of the HMA, 1955.
Section 24 of Hindu Marriage Act, 1955
Section 24 of the HMA, 1955, states that in any proceeding under the HMA, 1955, if a court believes that either the husband or the wife has no source of independent income to provide for his or her support and the required expenses of the proceedings then the court may, on the application of such dependent spouse, order the other spouse to pay:
The expenses of the proceedings,
The monthly sum during such proceedings as the court finds reasonable with regard to the income of both the spouses.
In the case of the Special Marriage Act, 1954, a similar provision has been made under Section 36 with the key differentiation that under this Act, the alimony pendente lite (alimony during the pendency of the suit) can only be claimed by the wife; it does not apply to the husband. Further, Section 125 of the Criminal Procedure Code, 1973, also talks about the provision of interim maintenance to the wife by the husband.
The provision of interim maintenance under Section 24 applies to the cases of restitution of conjugal rights (Section 9), judicial separation (Section 10), void marriages (Section 11), voidable marriages (Section 12), divorce (Section 13), and mutual divorce (Section 13B). Either the husband or the wife may claim interim maintenance for himself or herself or their child, irrespective of the fact as to which party started the proceedings. The primary condition for the grant of interim maintenance is that one party to the proceeding does not have sufficient independent income for their support and the required expenses of the proceedings. Interim maintenance is paid from the date the petition is filed until the suit is dismissed or a decree is passed. This type of maintenance is meant to cover the immediate needs of the petitioner. Maintenance pendente lite is specifically for litigation expenses. By virtue of Section 24, the court can exercise the power conferred upon it even if the respondent denies the factum of marriage.
In the case of Smt. Sushila Viresh Chhadva vs. Viresh Nagshi Chhadva (1995), the Family Court rejected the application made by the wife regarding the grant of interim maintenance and legal expenses on the ground that the husband has filled for the nullity of marriage. The Supreme Court held that the order made by the family court was legally unsustainable. The Family Court had erroneously taken the view that interim aliment was not available to the wife as the husband had sought an annulment of the marriage. The wife’s right to maintenance was dependent on the status of her marriage. Section 24 of the HMA, 1955, which deals with maintenance pendente lite and litigation expenses, was applicable to all the proceedings under the HMA, 1955. This encompasses suits for restoration of conjugal rights, judicial separation, divorce, and annulment of void and voidable marriages.
Hence, the Family Court was not correct in denying interim alimony to the wife on the ground that the husband had filed a suit seeking annulment of the marriage. The very essence of an order under Section 24 would be negated if the decision to provide interim maintenance and the expenses of the proceeding were delayed until the last stage of the case. The direction for interim alimony and litigation expenses under Section 24 is imperative and must be addressed as soon as the matter is brought to the attention of the court, allowing the other issues in dispute to be considered afterwards.
In the case of Amarjeet Kaur vs. Harbhajan Singh and Anr. (2001), the Supreme Court, while dealing with the order of the single judge bench of the Haryana and Punjab High Court, discussed the basic requirement that is required to be met while passing an order under Section 24 of the HMA, 1955. Under the order passed by the High Court, a condition was imposed for the purpose of granting maintenance and litigation expenses.
The Supreme Court clarified that in the event that one spouse has no independent income, the Court, under Section 24 of the Hindu Marriage Act, 1955, can order one of the spouses to pay the other’s legal expenses/fees and monthly maintenance pending the proceeding. The Court needs to take into consideration the income of both spouses while fixing a reasonable amount. The court further asserted that in assessing the need for interim maintenance, the court should not look at any probable outcome of the main proceeding. While the marriage in question continues, the court is to determine whether the spouse applying under Section 24 has insufficient income. The only discretion that is left with the court is, therefore, to decide on the quantum of the interim maintenance without placing other conditions that will defeat the very purpose of the interim maintenance.
Objectives of Section 24 of the HMA, 1955
The maintenance pendente lite provides for the personal support of the claimant’s spouse and the required expenses of the proceeding. The objective of maintenance pendente lite and expenses under Section 24 of HMA, 1955 is primarily to provide financial assistance to the claimant’s spouse in order for them to carry on with the proceedings and maintain themselves.
It must be understood that pendente lite maintenance is provided to either of the spouses under HMA, 1955 i.e., either of the spouses can claim maintenance. However, under other statutes such as the Special Marriage Act, 1954, Criminal Procedure Code, 1973, etc., the claim for maintenance can only be made by the wife and not the husband.
In the case ofChitra Lekha vs. Ranjit Rai (1977), it has been held that the objective of Section 24 is to provide financial assistance to the indigent spouse to maintain herself or himself during the pendency of the proceedings and also to have sufficient funds to carry on with the litigation or defend themselves so that they shall not suffer unduly in the conduct of the case for the want of funds.
In the case of Bhuvaneshwar Prasad Shanna vs. Dropta Bai (1963), the Madhya Pradesh High Court clarified that Section 24 is intended to help a spouse who does not have enough independent income to support themselves and cover the necessary legal costs. The goal is to ensure that this spouse can properly defend themselves in the legal proceedings. The decision highlighted that the key requirement for an order under Section 24 is that the applying spouse must be without sufficient means, underscoring the provision’s role in providing support.
The objective of Section 24 of the HMA, 1955, can be well understood in light of the legislative intent of the legislature while enacting the HMA, 1955. In the case of Dharmendra Kumar vs. Smt. Pushpa Devi (1994), the Madhya Pradesh High Court stated that an examination of the structure and provisions of the HMA, 1955 shows that the primary intention of the HMA, 1955 is to bring some vital reforms to Hindu marriage law.
The HMA, 1955, seeks to protect and strengthen the institution of marriage while at the same time also expanding the grounds on which individuals can claim matrimonial relief. While providing for these reliefs, the legislature has been cautious in ensuring that the marriage bond is not dissolved hastily or without proper cause. For this purpose, the matrimonial court has been vested with several powers, responsibilities, and duties under the HMA, 1955, leading towards the fulfilment of legislative objectives.
Also, the legislature has provided that there should be fairness in the legal battles by recognising the fact that the effect of a fight between persons of unequal standing would lead to an unjust outcome. This fairness has been sought to be achieved by the legislature through the enactment of Section 24, which provides for maintenance during litigation and legal costs. An order made under the provision of Section 24 of the HMA, 1955 is not a determination of the matrimonial case but an incidental order. In other words, orders passed by the court under Section 24 of the HMA, 1955 are incidental to the main matrimonial case, not substantive resolutions of it.
Further elaborating on the objective behind the construction of Section 24, the Madhya Pradesh High Court stated that the right given to a party under this Section should not be constrained without proper and sufficient cause. The proceedings that arise under Section 24 are summary in nature and the scope of the inquiry is correspondingly limited. The objective is to reduce the financial burden on the party who does not have adequate monetary resources.
The objective of Section 24 gets defeated when there is an unnecessary delay in deciding the matter and prolonging reconciliation efforts. Unfavourable economic relations are barriers to reconciliation, which should be mutually respected and dignified. The party that is not financially stable like the other party may feel pressured to reconcile, which lacks mutual respect.
The intention of the legislature is not to force the spouse to reconcile because they are financially dependent. Therefore, the legislature has provided provisions regarding maintenance and legal costs while the case is yet to be decided. This economic balance between the parties ensures that reconciliation takes place genuinely and mutually.
The Madhya Pradesh High Court in the case ofSmt. Mamta Jaiswal vs. Rajesh Jaiswal (2000) decided whether a spouse who can earn but chooses not to should be allowed to claim maintenance during legal proceedings. The court’s decision involved interpreting Section 24 of the HMA, 1955. The court asserted that Section 24 is intended to provide some form of financial support to a spouse who is unable to maintain herself/ himself despite making sincere efforts. Therefore, a spouse who is well-qualified and capable of getting a job should not sit idle just for the purpose of causing the other spouse to provide him/her with alimony.
From the aforementioned pronouncements, it becomes evident that the provision of Section 24 is not intended to equalise the income of the spouses but rather to prevent one from suffering due to a lack of financial support during divorce or other proceedings. Where one spouse has no source of income or support to maintain themselves, the court has to make an order on the basis of the income of the other spouse. However, if both the husband and wife are earning and have good incomes, the court does not need to make an order under Section 24 just because one earns more than the other. Therefore, the true objective of Section 24 is to give financial assistance to the spouse who requires it and not to equalise the incomes of the spouses.
Power of the court under Section 24 of HMA,1955
The courts have the discretion in passing an order regarding the interim maintenance amount that a spouse may be required to pay to the other based on reasonable grounds. In order to exercise this discretion, the court considers the income of the spouse who has made the application for interim maintenance and the income of the other spouse who is required to pay such interim maintenance and expenses.
In the case of L. R. Rajendran vs. Gajalakshmi (1985), the Madras High Court held that the interim maintenance under Section 24 of HMA, 1955, should be a ‘reasonable’ amount. It was further held that stating the fact that the brother of the wife is an income earner is irrelevant and is an invalid ground to refuse interim maintenance to the wife under Section 24. Thus, the grant of interim maintenance of Rs 150 per month as ordered by the lower court was held to be reasonable by the Madras High Court.
The conduct of the parties is an important factor that will influence the discretion of the court. Under Section 24, the court will not ignore the conduct of the parties. For example, if a spouse brings cohabitation to an end by their own misconduct, the court may refuse to grant them any relief under Section 24.
It is pertinent to note that the court’s discretion is judicial and not arbitrary in nature. Such judicial discretion must be exercised within the ambit of Section 24, considering the objective of the Act and adhering to the ideal principles of the matrimonial law. In Mukan Kuwar vs. Ajit Chand (1958), it was held that the discretionary power of the court must be based on sound legal principles and not on caprice and humour.
Procedure under Section 24 of Hindu Marriage Act, 1955
Under Section 24 of the HMA, 1955, a matter is contemplated as a summary enquiry and not a full-fledged trial at length. If the court believes that the applicant is not likely to succeed in the dispute, then in such a case, the court cannot, solely on the basis of such grounds, refuse to grant interim maintenance and expense of proceedings under Section 24.
In the case of Sushila Viresh Chhadva vs. Viresh Nagshi Chhadva (1996), the Bombay High Court held that the fact that there is a strong possibility of a marriage being declared null shall not be a ground for denying interim maintenance and expenses of the proceeding to the spouse claiming such interim maintenance under Section 24 of HMA, 1955.
The proviso appended to Section 24 states that the application for the payment of interim maintenance and expenses of proceedings shall be disposed of within sixty days from the date of service of notice on the spouse.
Quantum of maintenance under Section 24
The Hindu Marriage Act, 1955, under Section 24, does not lay down any rigid rule for deciding the quantum of interim maintenance. However, the quantum of such interim maintenance depends on the following factors:
The duration of the marriage.
The means and conduct of the spouses.
The ability of the spouse to earn.
Education and maintenance of children.
Other such reasonable needs of the claimant.
The educational qualifications of the claimant.
It is to be noted that in matters of granting maintenance pendente lite, the Court exercises a wide discretion. However, this discretion is not to be exercised in an arbitrary manner. It should be within the ambit of Section 24 and guided by the ideal principles of matrimonial laws.
In a recent case of Chetram Mali vs. Karishma Saini (2023), the appellant had sought a reduction of maintenance, stating that while he was initially ordered to pay Rs. 21,000 per month for the respondent and the child under the Protection of Women from Domestic Violence Act, 2005 (‘the PWVD Act’), such an amount was later enhanced to Rs. 30,000 without a change in circumstances. It was contented by the appellant that the trial court failed to take into account that he was the only breadwinner in his family, looking after his two sisters, brother, and elderly parents. Moreover, for his younger brother’s marriage, he borrowed Rs. 4 lakhs from his employer, to which he paid regular instalments. The Delhi High Court, while recognising the contentions raised by the appellant, held that “while considering the quantum of maintenance, the liabilities of the appellant along with his duties towards other family members could not be ignored”.
On the issue of the educational qualification of the claimant (respondent in this case), the Delhi High Court observed that although the respondent claimed to have no independent source of income, she had a reasonable educational background, being a graduate of Delhi University, and appeared to have chosen to engage in social work voluntarily despite having no barriers to obtaining meaningful employment.
The High Court further observed that where a spouse had the ability to work and earn income but decided to stay home without a reasonable cause or made genuine attempts to seek employment then the other party should not be burdened by making him solely liable for meeting the expenses. The objective of granting maintenance pendente lite and litigation expenses is not to achieve exact financial equality but to cater to the needs of a spouse unable to maintain himself during the pendency of the proceedings or to prevent such spouse from suffering solely on account of lack of income. The High Court held that the provision of Section 24 was gender neutral and Sections 24 and 25 of the Act outline the rights, liabilities, and obligations resulting from the marriage between the parties as stipulated by the HMA, 1955.
In the case of Dinesh Mehta vs. Usha Mehta (1978), the High Court of Bombay held that Section 24 of HMA, 1955 deals with the deciding of a reasonable amount for interim maintenance. Thus, the fixing of a reasonable amount is more about finding a balance among several competing claims. The Court further stated that reasonableness necessarily means that the wife must be ensured of similar comforts and amenities as she was getting when residing with her husband excluding the reduction resulting from separation and creation of two different establishments.
When can an application under Section 24 be made
The application for interim maintenance and expenses of proceeding under Section 24 of the HMA, 1955 can be filed any time during the pendency of the suit. In the case where the wife is the respondent, she can seek the grant before her written statement is filed.
In the case ofChagan Lal vs. Sakkha Devi and Anr. (1974), the High Court of Rajasthan held that an application for interim maintenance under Section 24 HMA, 1955, and also an application for maintenance under any other matrimonial statute must be decided as quickly as possible but in any case before the main application is decided.
Maintenance to children under Section 24
The primary object of Section 24 of the HMA, 1955 is to enable the provision of interim maintenance to the claimant’s spouse along with the expenses of the proceedings. However, in certain exceptional cases, the court can order the maintenance even for the children who are living with and dependent on the spouse who has claimed the interim maintenance, where such a claim has been justified by the court.
In the case ofDharawant Singh vs. Narinder Kaur (2017), the Punjab and Haryana High Court held that although Section 24 of the HMA, 1955 does not explicitly state that maintenance for a child can be awarded, the court can still grant it in certain situations. Specifically, if the children are living with the spouse who is requesting maintenance, the court has the authority to include an amount for the children’s maintenance as well. This interpretation ensures that the financial support covers not just the spouse but also the children in their care.
In the case of Smt. Jasbir Kaur Sehgal vs. The District Judge Dehradun & Ors (1997), the Hon’ble Supreme Court held that provisions under Section 24 cannot be given a restricted meaning. It was further held that the wife’s right to claim maintenance pendente lite would include her own maintenance and that of her unmarried daughter living with her.
Expenses of the proceedings
A spouse can claim interim maintenance along with the necessary expenses of the proceedings under Section 24 of the HMA, 1955. This provision ensures that the spouse is provided with sufficient funds to meet the expenses of the proceedings. The scope of ‘expenses of the proceedings’ is wide; it includes court fees, lawyer’s fees, expenditure incurred in getting services of the witnesses, xerox and typing charges, process fees, etc.
In the case ofSmt. Priti Parihar vs. Kailash Singh Parihar (1977), the Court held that if the need arose subsequently, the court has the jurisdiction to grant additional expenses in excess of what was originally sanctioned by it.
Enforcement of orders
The courts have recourse to methods apart from the Civil Procedure Code, 1908 for the enforcement of orders regarding interim maintenance and expenses of proceedings. In the case of Narinder Kaur vs. Pritam Singh (1982), an employed husband who denied obeying the order to pay maintenance pendente lite was punished for contempt and given a sentence of four months.
In the case of Shmt. Malkan Rani vs. Krishan Kumar (1959), the issue regarding the execution of the order passed under Section 24 of the HMA, 1955 was brought before the Punjab and Haryana High Court. The issue involved was whether a proceeding of the case regarding the restitution of conjugal rights could have stayed till the order passed by the court under Section 24 of the HMA, 1955 has been enforced and the amount has been paid by the spouse as directed under the order.
On behalf of the wife, it was contended that there was no specific method provided under the HMA, 1955 for enforcing an order passed under Section 24 of the HMA,1955. Therefore, for the execution of such an order, the matrimonial court can stay the further proceedings if found necessary by the exercise of its inherent jurisdiction.
On the other hand, the husband countered by arguing that the method of enforcing an order had been provided under Section 28 of the HMA, 1955 (now Section 28A after an amendment made in 1976). Section 28 provides that “all decrees and orders made by the court in any proceeding under the HMA, 1955 shall be enforced in the same manner as the decrees and orders of the court made in the exercise of its original civil jurisdiction for the time being in force.” He therefore contended that resorting to any other procedure for enforcement would be inconsistent and prohibited by the HMA, 1955.
The Punjab and Haryana High Court decided upon this issue by interpreting the intention of Section 24 and the circumstances that would result if an order is not enforced within time. The High Court observed that Section 24 of the HMA, 1955 gives the Matrimonial Court the right to order pendente lite maintenance and other expenses for a needy party. The rationale behind this provision is to make sure that the indigent spouse is in a position to produce all the essential evidence and material in the case. The legislature’s intention was to address the issue whereby a party is put at a severe disadvantage and is unable to present relevant facts before the court due to poverty.
The court noted that lawyers demand their fees before rendering their services and the other litigation expenses had to be paid during the proceedings. Thus, the maintenance allowance should be provided during the litigation, not afterwards. In order to achieve the goal of Section 24, such amounts cannot be delayed when applied by the applicant. Due to the probable animosity between the two partners in such circumstances, the partner who is supposed to pay may be reluctant to do so and may also delay the payment.
If the indigent spouse had to initiate execution proceedings under the Code of Civil Procedure to recover such amounts, then it would result in additional and unnecessary legal proceedings. This would pose great challenges for the Matrimonial Court to handle the case expeditiously, thereby denying justice to the spouse who requires the support.
In light of these observations, the High Court held that in order to meet the legislative intention of Section 24 it can exercise its inherent jurisdiction. The HMA, 1955 does not restrain the courts from exercising this inherent jurisdiction for the purpose of delivering justice. Also, there is no procedure in the Code of Civil Procedure, for the recovery of pendente lite maintenance and litigation expenses without delay and therefore the court has to exercise the powers inherent in it to enforce these orders.
In the case of Anita Karmotrar And Anr. vs. Birendra Chandra Kannokat (1962), the Calcutta High Court held that it was a strictly permissible step to stay the proceedings of the petitioner in the event of the husband’s non-compliance with the order to pay maintenance pendente lite and expenses. It was further held that Section 151 of the Civil Procedure Code vests the court with the said power.
In the case of Amarjit Kaur vs. Harbhajan Singh (2003), the Hon’ble Supreme Court held that the main condition for the grant of maintenance pendente lite is to ascertain whether the spouse claiming such interim maintenance has independent income that is sufficient for their support. If it is shown that such a spouse does not have sufficient income then the court is bound to grant interim maintenance and the only discretion left with the court shall be the quantum of such interim maintenance.
The effect of non-compliance of order on pending appeal has been discussed in the case of Banso vs. Shri Sarwan, 1978 Hindu LR 2S1, where the Punjab and Haryana High Court ordered the husband to pay maintenance pendente lite on the preference of an appeal by the wife after her petition for judicial separation was dismissed by the court below. The husband disobeyed the order of the Court. On this ground, the High Court allowed the appeal.
Under Section 24, if a spouse is entitled to receive maintenance pendente lite and litigation expenses, the order so passed can be executed as per Section 28A of the HMA, 1955. The question that arises here is whether the spouse who receives the maintenance award but is unable to support themselves has any other remedies that they can take against the other spouse to compel their compliance.
The answer to such a question lies in various judicial pronouncements, as mentioned above, that agree that given the purpose of the law to provide support to a needy spouse, such an order can be executed through more rigorous methods. Some of the measures include staying the trial, dismissing the petition, adjourning the case indefinitely, dismissing an appeal due to the failure of the defaulting party to respond, striking off the defence, and even taking contempt action against any party that wilfully disregards the order.
Can an appeal lie against the order passed under Section 24 of HMA, 1955
Every order or decree passed by the family court under the HMA, 1955, is appealable under Section 28 of the HMA, 1955, or Section 19(1) of the Family Courts Act, 1984.
Section 28 of the Hindu Marriage Act outlines the provisions for appealing decrees and orders made under the Act. Under Section 28(1), it has been provided that every decree passed by the court in any matter under the HMA, 1955, can be appealed as if they were decrees passed by the court in the exercise of its original civil jurisdiction. These appeals should be made to the court, which normally hears appeals from such decisions. Section 28(2) further provides that any order that is made and given by the court under Section 25 or 26 shall be appealable, provided that it is not an interim order. Section 28(3) provides an exception to this provision, wherein an appeal shall not lie if the order is concerning costs only. Section 19(1) of the Family Courts Act, 1984, on the other hand, provides that “an appeal shall lie from every judgment or order, not being an interlocutory order, of a Family Court to the High Court both on facts and on law.”
In view of the above provision, the question lies as to whether an appeal against the order passed under Section 24 is made under Section 28 of the HMA, 1955, and Section 19(1) of the Family Courts Act, 1984. In the recent case of S.Menaka vs. K.S.K. Nepolian Socrates (2023), the Madras High Court held that an order for interim or pendente lite maintenance under Section 24 of the Hindu Marriage Act cannot be appealed under Section 28 of the Hindu Marriage Act or Section 19 of the Family Courts Act. However, it was clarified by the High Court that such orders can be challenged under Article 227 of the Indian Constitution by way of revision.
It is pertinent to note here that, with regard to the appealability of an order under Section 19(1) of the Family Courts Act, there are conflicting judgements of various High Courts in India. A Full Bench of the Allahabad High Court and Division Benches of the Uttarakhand, Delhi, and Madhya Pradesh High Courts have held that such an order is appealable under Section 19 of the Family Courts Act. In contrast, the full benches of the Orissa and Patna High Courts and division benches of the Karnataka, Rajasthan, and Bombay High Courts have ruled that such an order is not appealable to the High Court under Section 19(1) of the Act. However, as far as the appealability of an order under Section 28 of the HMA, 1955 is concerned, various high courts have unanimously held that such an order of the family court is non-appealable.
In the case of Narendra Kumar Mehta vs. Suraj Mehta (1981), the Andhra Pradesh High Court deliberated on the issue of whether an order passed under Section 24 of the HMA, 1955 is appealable under Section 28 of the HMA, 1955. The High Court observed that, originally, any decree or order passed by the court in any proceeding under the Act was appealable under any other law. Any application for maintenance or legal expenses was deemed proceedings under the Act and an appeal could be filed against any order made thereunder, just like any other decree or order made in the original civil jurisdiction of the court.
However, the amendment of Section 28 in 1976 altered this position. Now, under Section 28(1), only decrees and not orders made in any proceeding under the HMA, 1955 are appealable as a decree from the original civil jurisdiction of the court. This is subject to Section 28(3) which provides that no appeal can be made exclusively on the matter of costs. Section 28(2) outlines the kinds of orders that are appealable.
Under Section 28(2), it is provided that any order made under Section 25 or 26 of the HMA, 1955, shall be appealable where such order is not an interim order or an order as to costs. This means that interim orders and orders regarding costs are non-appealable. Thus, the order can only be challenged if it was given under Section 25 or Section 26 and no appeal will lie against the order made under any other Section of the HMA, 1955 unless the right to appeal is expressly granted by the HMA, 1955. In view of such an observation, the court held that the order passed under Section 24 being interim in nature and specifically excluded by the legislature can not be appealed against as per the provisions of Section 28 of the HMA, 1955.
In the case of P.T. Lakshman Kumar vs. Mrs. Bhavani (2013), the Madras High Court, after analysing Section 28 of the HMA, 1955, held that from the reading of the provisions of Section 28, it is clear that Section 28(1) means that appeals can be made against decrees, whereas Section 28(2) means that appeals can be made against the orders made under the Act.
Under Sections 9, 10, 11, 12, 13, 13A, and 13B, the court passes a decree that is clearly appealable under Sub-section (1) of Section 28. On the other hand, under Sections 24, 25, and 26, the court issues orders. Any order made under Section 25 or 26 is an appealable order under Subsection (2) of Section 28, provided that it is not an interim order. The High Court noted and emphasised through its interpretation of Section 28 that the legislature has deliberately omitted Section 24 from this provision, thereby making the order passed under Section 24 of the HMA, 1955 non-appealable.
Conclusion
Section 24 of the Hindu Marriage Act, 1955 states that in any proceeding under the HMA, 1955, if a court believes that either the husband or the wife has no source of independent income to provide for his or her support and the required expenses of the proceedings then the Court may, on the application of such dependent spouse, order the other spouse to pay the expenses of the proceedings and the monthly sum during such proceeding as the Court finds reasonable with regard to the income of both the spouses.
Frequently Asked Questions (FAQs)
What is the meaning of maintenance?
According to Section 3(b)(i), maintenance includes maintenance with respect to food, clothing, residence, education, and medical care. For an unmarried daughter, it also includes the expenses for her marriage. Permanent maintenance provisions exist in all personal laws and these provisions are relatively similar with slight differences among them. Maintenance is not merely a legal right but a human right, especially for the vulnerable groups whose lives depend on it.
The primary aims of providing maintenance are to avoid homelessness and poverty resulting from marital problems and to guarantee that a financially helpless spouse can effectively engage in the legal process. During a marital breakdown, the husband tends to neglect the financial obligations of the wife, and the children, thereby compelling them to be dependent on their grandparents and other close relatives.
It is both reasonable and justifiable to provide financial assistance to a spouse who is in need because, had the marriage not been dissolved, the husband would have been under an obligation to support the wife. However, under Section 24 of the HMA, 1955, not only a wife but the husband as well is eligible to get maintenance from his wife if he is not able to maintain himself.
What is the difference between Section 24 of the HMA, 1955, and Section 125 of the Code of Criminal Procedure?
Section 24 of the Hindu Marriage Act is applicable only to Hindus and acts as an interim relief during the trial process. After the case has come to an end, benefits under Section 24 automatically cease. On the other hand, Section 125 of the Criminal Procedure Code 1973 is available for all individuals, including parents, minor sons, and minor daughters. It is known for its fast procedure and provides permanent maintenance as a relief. Although this Section is part of the Code of Criminal Procedure, it is of a civil nature, with the exception of following criminal procedure, which makes the procedure faster. The right under Section 125 is available till the wife remarries and it applies to all religions.
What is the difference between Section 24 and Section 25 of the HMA, 1955?
Section 24 of the HMA, 1955 provides for interim maintenance to the spouse which means that the maintenance shall be provided till the pendency of the case. Whereas Section 25 of the HMA, 1955 provides for the permanent maintenance to the spouse implying that the court after assessing the facts and circumstances of the case may order to pay maintenance to the applicant till he or she remarries.
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Think of the word ‘conflict’ and immediately the mind comes up with violent images of war—of exploding bombs, ruined towns, and columns of refugees trudging across smoke-filled landscapes. If you are (and we sincerely hope that you are) of a less violent bent of mind, maybe you think of violence as it happens at a more mundane level—fights among friends, workplace conflict, or disputes among neighbours. In no context, however, does conflict present a pretty picture. Hence the natural desire to not want to be in a situation that would lead to conflict. This, thus, brings us to the important concept of conflict management and the strategies we can use towards that end.
Definition and scope
Let us begin by quickly defining what we mean by conflict management. We will follow this up by looking at what falls within the purview of conflict management.
In simple terms, ‘conflict management’ is how we can address, resolve, and hopefully prevent the recurrence of conflict. Additionally, for some practitioners, identifying potential sources of conflict even before they occur is also a crucial part of the conflict management process. Put this way, conflict management is both a science and an art.
The scope of conflict management is extensive, including (but not limited to) conflicts between nations, organisations, groups, or individuals—conflicts that can be either personal or professional. While discussing scope, it is important to remember that conflict management does not imply conflict avoidance. Nor does it mean sweeping conflicting issues under the carpet to avoid unpleasantness. The objective is to proactively deal with and resolve conflicts in a fair, objective, and collaborative manner, leading to mutually acceptable outcomes.
Keeping this basic point in mind, let us now move on to discussing the basic strategies for conflict management.
Strategies for conflict management
There are basically two broad kinds of strategies for managing conflict:
Reactive strategies: This group includes strategies for managing conflict once it has occurred. For instance, identifying causes of a conflict, calling together all parties to a conflict, and brainstorming to find common ground among the conflicting interests, to name but a few.
Proactive strategies: These are strategies that are in place to try to prevent conflict from flaring up in the first place. Often, these involve what may be termed ‘institutional measures’ such as having a dedicated forum or channel where aggrieved parties meet to discuss grievances.
We will now discuss each of these groupings in detail.
Reactive strategies for managing conflict
As mentioned above, reactive strategies are what may be termed ‘after the fact’ methods to manage conflict. These include:
Identifying the causes of conflict: This is often the place to begin if you want to effectively deal with discord and conflict. Since conflicts invariably happen among people—whether individuals or groups—it is important to understand the reasons that led to conflict in the first place.
Let us take a brief look at common causes of conflict. These include:
Differences of opinion on the matter under discussion.
Differences in understanding about the issue(s) at hand.
Different expectations with respect to results or outcomes form a certain scenario.
Differences of personality or temperament among different parties involved.
Feelings of being cheated or shortchanged in a deal or agreement.
Understanding the different causes of conflicts is important, as this makes it easier to design appropriate and effective strategies aimed at managing any resultant dissent.
For instance, it should be easy for us to see that not all of the causes listed above would require the same strategy for resolution. Managing a conflict arising from differing expectations would require a different strategy than managing one due to a personality clash between key stakeholders. Accordingly, the resulting strategies would also have to be tailored differently.
Bringing the conflicting parties together for a discussion: This step is extremely crucial in a situation where conflict has already occurred. As we have seen in the common causes of conflict listed above, a lot of conflicts can be traced to misunderstandings and miscommunication. Thus, bringing together people in a setting that allows for open and respectful communication is a necessary step in conflict management. Moreover, giving people a chance to have their say and air their views often helps to lower the tension and feelings of antipathy that often accompany conflict.
Encouraging a spirit of cooperation and compromise: A necessary follow-up to getting people together for a discussion is to then encourage a spirit of cooperation rather than confrontation. Effective communication plays an important role here as well.
Invoking the bigger picture: It often happens that during a disagreement or conflict, people get hemmed in by their individual concerns and challenges. Reminding them to see the bigger picture makes it easier for people to come to a compromise.
Keeping the focus on finding solutions: This is another important step in conflict resolution as it gives a common goal for conflicting parties to work towards. It helps keep the discussions on point and encourages people to try to step beyond their own narrow concerns in the interest of finding a solution.
Proactive strategies for managing conflict
As mentioned earlier, proactive strategies for managing conflict are geared towards trying to minimise the chances of conflicts arising in the first place. Often, this requires a very structured approach. There need to be clear rules and guidelines set down regarding open channels of communication. Similarly, details of the points of contact, a well-defined chain of command, available methods of escalation, and joint forums where all difficult issues can be brought up and discussed are all crucial parts of a package for dealing proactively with conflicts. We will now look at these in detail.
A well-defined channel of communication: One of the most effective ways of preventing conflict is to have clear and open communication among people. A well-defined chain of communication with clear rules and guidelines can go a long way in promoting this. If expectations and goals can be communicated clearly, the chances of confusion and misunderstandings can be drastically reduced.
A well-structured mechanism of escalation: In case there does arise an issue that could lead to conflict, having a well-defined method of escalation also helps to prevent differences of opinion from going out of hand. If an individual knows ‘who to take up’ a certain issue with, then they can do so—whether it is to ask for more clarity or to more emphatically raise their own concerns.
A common forum for open discussions: Transparency and openness are important factors that can be used to nip conflict in the bud. Such values promote an environment of trust, which in turn promotes a culture wherein people are more open to listening to others.
A culture focused on collaboration and problem solving: Building a culture that emphasises collaboration rather than conflict and one-upmanship also helps to minimise people. This is, by default, a longer-term initiative. Yet, it is one that can be among the most effective ways to manage conflict if it does break out.
Building an esprit de corps: Consistent and constant emphasis on reminding people that the group is actually a team can foster an esprit de corps. This is defined as the “enthusiastic devotion of members to a group and strong regard for the honour of the group” .
Conflict resolution
Having discussed the finer details of conflict management, we will now look at two broad strategies that involve some degree of combining the more specific strategies discussed above. These can be thought of as comprising a broader, more formal framework that can be used for conflict resolution. The use of the term resolution’ here ought to make it clear that these frameworks, discussed below, invariably operate in a post-conflict scenario.
Mediation
Mediation is a process or framework wherein the parties involved in conflict bring in a third party to help resolve the situation. It is imperative that the third party being brought in to act as a mediator be neutral in its stance. The mediator cannot in any way have a vested interest in helping resolve the conflict one way or another.
It is important to remember that the mediator does not function as a decision-making authority. The role of the mediator is basically that of a facilitator. In this capacity, the mediator should be the one to ensure that the basic strategies for conflict management discussed above are followed properly. Thus, it falls to the mediator to see that the parties communicate openly and freely, that the participants focus on the bigger picture, etc.
If done skilfully, mediation can help different parties to a conflict better understand each other’s concerns and viewpoints. This in itself would be half the battle won since then everyone involved can work towards finding mutually acceptable solutions.
Arbitration
The second framework we are going to look at is arbitration. While the process of arbitration shares some features in common with mediation, there are also fundamental differences between the two processes.
The common factor is that, just as in mediation, arbitration also involves the participation of a third party in the conflict resolution process.
The big difference here, however, is that in mediation, the party brought in as the mediator does not make any decision regarding how the conflict is to be resolved. In cases of arbitration, the third-party arbitrator is authorised to make a decision. Not only that, the decision is also binding upon the parties to the conflict. Moreover, decisions taken in this manner are legally enforceable.
Conclusion
Thus, we can see that there are several methods that one can use to manage conflict. Whether the approach that one goes for is reactive or proactive—listening, keeping an open mind, being willing to collaborate, and compromising in the interests of the bigger picture are some of the common traits that are essential in conflict management and resolution. This applies at all levels and across a whole spectrum of human activity. The parties involved can be individuals, families, organisations, or even entire countries and groups of nations. Whichever strategy one opts for to resolve conflict, the objective remains the same: the maintenance of cordial relations and harmony.
This article was written by Ishan Arun Mudbidri and further updated by Debapriya Biswas. This article deals with permanent alimony and maintenance under Section 25 of the Hindu Marriage Act, 1955, focusing on its essentials, constitutionality and need. The article also details the objective of maintenance and why it is given while exploring the application of Section 25 through several case laws. In the end, it deals with the recent guidelines established by the judiciary regarding maintenance and some FAQs to clarify any further questions.
Table of Contents
Introduction
Marriage is considered a ceremony that brings two people together for life. Many even believe marriage to be a pre-destined event mandated by the heavens. However, in reality, such is not the case and people can fall out of love or become dissatisfied with their marriage with time. This can make the lives of the two people involved and their family members difficult. In such cases, if the spouses decide to separate, they can legally dissolve their marriage by divorce in front of any competent court of law.
However, just like marriage, divorce has certain rights and obligations that bind the parties involved despite the separation. One such right is the right to claim maintenance, which was initially only claimed by the wife since, historically, women were the ones financially dependent on their husbands. Nevertheless, the law has changed with the times and now maintenance can be claimed by both spouses under certain provisions. In this article, we will study in detail the need and essentials of maintenance, specifically under Section 25 of the Hindu Marriage Act, 1955 (hereafter referred to as the HMA).
Meaning of maintenance
Sometimes, a marriage can go sideways. The last resort in such a case is either judicial separation or divorce. In both situations, the spouses start living in separate quarters, and the custody of the children is given to either of them, most often the mother if the children are especially young. It may become difficult for a single parent to provide for all the basic requirements of life, like food, shelter, clothes, education, etc., for themselves as well as the kids, especially in cases of women who were previously housewives. Hence, as the principles of social justice talk about resources and equity, it becomes the duty of the husband to provide for these basic needs. This concept, in legal terms, is called maintenance.
In India, maintenance laws are stringent and applicable to all citizens. The maintenance laws in India provide support to parents, wives, and children who are unable to maintain themselves or are financially dependent on someone else. As per Section 3(b) of the Hindu Adoption and Maintenance Act, 1956, the term ‘maintenance’ includes all the basic needs of an individual, such as food, clothing, shelter, education and necessary medical expenses. In the case of an unmarried daughter as a dependent, the expenses of her marriage may also be considered maintenance as long as it is within reasonable bounds.
Thus, in simpler terms, maintenance can be defined as an allowance required by law to be made by an individual to the people who are financially dependent on them. These dependents can be their spouse (current or divorced), children and parents.
Objective of maintenance
The question that now arises is what is the objective of giving maintenance. The Indian Judiciary has answered this question in various judicial precedents. In the case of Badshah vs. Sou. Urmila Badshah Godse and Anr (2013), the Supreme Court held that the laws regarding maintenance are established to protect and empower the destitute, achieve social justice, and maintain the dignity of the individual.
In simple words, maintenance is established to protect those completely dependent on another for their finances and basic needs, such as children or housewives. Separation or negligence from the one providing for their finances could lead to dire consequences and injustice. Thus, to avoid this, the right to claim maintenance was established in law, especially for those who are unable to support themselves.
The legal provisions for maintenance align with the ideology behind Article 15(3) of the Indian Constitution. This constitutional article empowers the state to make laws protecting the rights and interests of women and children. Hence in India, there are several legislations as well as personal laws (for people belonging to their respective religions) that protect the rights of women, children, and parents for claiming maintenance.
Maintenance provisions are often regarded as laws made for women, which is because in most cases, the duty of maintenance falls upon men as the father/husband/son. However, with changing times, this is also changing since women have started to become independent as well and have started earning on their own rather than merely staying as housewives dependent on their husband’s income.
Thus, maintenance laws are slowly becoming gender-neutral in their application, where both spouses can claim maintenance if they are unable to support themselves financially. Even under the Indian Constitution, Article 39(a) states that both men and women equally have the right to an adequate means of livelihood, and the state must direct its policies to secure the same.
On the other hand, Article 39(f) empowers the state to direct policies to ensure that children are given opportunities and facilities that help them grow in a healthy manner with dignity and care. This includes protection from financial abuse and negligence, which maintenance laws can help.
Types of maintenance
There are two types of maintenance under the Indian laws:
Interim maintenance
As already established before, maintenance is usually claimed by dependents who are unable to support themselves without financial assistance. In such circumstances, it is unfair to expect that the claimant would be able to support the expenses of the lawsuit, or even support themselves during the litigation process. Thus, during these times, the court may grant the claimant temporary or interim maintenance for the duration of the lawsuit.
In simpler terms, interim maintenance is a type of maintenance that is given for the duration of legal proceedings to the claimant who may not have sufficient income to support his or her daily necessary expenses. It is temporary and is usually calculated based on the income of both parties. The amount granted in such maintenance is not fixed and entirely depends on the court’s decision.
Interim maintenance is paid by the financially independent party or spouse to the other one who is dependent and unable to support themselves. It will also cover the legal expenses and other expenses that might occur during the court proceedings, including the basic needs of the dependent party. Once the court proceedings end, the interim maintenance will also end. This is why this type of maintenance is also known as the ‘pendente lite’ maintenance, which directly translates into ‘during litigation’ maintenance.
Permanent maintenance
Once the court proceedings end, the claimant can file an application for permanent maintenance instead. As the term suggests, permanent maintenance is the type of maintenance that is paid for the financial support of dependents for their whole lives. In other terms, this maintenance is paid throughout the lives of the dependents unless they either remarry (for the divorced wife or widowed daughter-in-law), reach the age of majority (for children), get married to someone financially stable (disabled children) or after their death.
This type of maintenance is also known as ‘alimony’ when given to the ex-wife at the end of the divorce proceedings. It can be paid either as a lump sum or in instalments, and the amount of the payment is calculated based on the income and property of both parties.
Maintenance provisions in India
The Preamble of the Indian Constitution declares India to be a secular country where equal status and dignity of every citizen is promoted and protected by the state. Based on this ideology, India has enacted different legislations for each personal law, including the divorce and maintenance provisions.
Due to different legislations based on different personal laws, maintenance in India is dealt with through several legal provisions. Some of these legislations and provisions are given below:
Sections 24 and 25 of HMA, with alimony and maintenance (interim as well as permanent) under the Hindu law.
The Hindu Adoption and Maintenance Act, 1956, in which Section 18 deals with the maintenance of the wife, Section 19 deals with the maintenance of a widowed daughter-in-law and Section 20 deals with the maintenance of children and aged parents, all under the Hindu law.
The Maintenance and Welfare of Parents and Senior Citizens Act, 2007 was enacted to provide for effective provisions regarding the welfare of the parents and senior citizens (such as relatives) who might be financially dependent on someone else and unable to support themselves. Section 4 of this Act specifically deals with the maintenance of senior citizens as well as aged parents.
As discussed earlier, maintenance in India can be claimed by one’s wife, children, parents, as well as their widowed daughter-in-law. The abovementioned provisions cover the maintenance laws for all the dependants an individual may find themselves financially responsible for.
However, the thing that is most noticeable in the aforementioned provisions is that they are more women-centric, and the mention of the husband being eligible for maintenance is almost nonexistent. Only the Hindu Marriage Act, 1955 and the Parsi Marriage and Divorce Act, 1936 have maintenance provisions that can be interpreted in a gender-neutral manner for both spouses.
Section 25 of Hindu Marriage Act, 1955
The most important provision for the right of maintenance, specifically for the husband and wife under Hindu law, is Section 25 of the Hindu Marriage Act, 1955. Before analysing this provision, let us first look at what it states.
This Section talks about permanent alimony and maintenance, stating that:
After either spouse files an application under Section 25, any court that has jurisdiction under this Act has the power to order the respondent to pay for the maintenance in support of the applicant or claimant. This maintenance or alimony can be paid either in a yearly or monthly sum for a term not exceeding the life of the applicant. The amount of maintenance to be paid shall be fixed based on the respondent’s income and property.
If the court is satisfied that there is a change in the current situation after passing the order, then the court may modify or rescind the order at the instance of either party.
If the court is satisfied that the claimant, in whose name the order of maintenance was made, has re-married, or if the wife has not remained chaste, or if the husband has had sexual intercourse with any other woman, then the court, at the instance of the party may modify or rescind the order.
Based on the aforesaid clauses, it can be concluded that either of the spouses can file an application for alimony or maintenance under Section 25 to the same court where the original jurisdiction of their previous matrimonial case lies. This matrimonial case can be a divorce, judicial separation, restitution of conjugal rights or even the declaration of the marriage as void.
Section 25 mostly focuses on the alimony and maintenance that is to be given after the matrimonial case is decreed and not on the maintenance that was given during the litigation or even before the case was filed.
Alimony, in this context, refers to the one-time payment made to either the husband or wife after the divorce or judicial separation. It is given in lump sum and is not taxable at the hands of the recipient. On the other hand, maintenance is a recurring alimony that is given to the dependent spouse monthly, annually, or in instalments fixed by the court or the parties’ mutual decision.
Furthermore, alimony is mostly awarded when the divorce between the parties is with mutual consent, while maintenance is given in cases where one party has filed for divorce and the other party has contested it in court. Section 25 deals with both maintenance and alimony after the divorce (or any other matrimonial case) has already been decided and the spouses are living separately after such an order.
Essentials of Section 25
While Section 25 of HMA has only three subsections, it has several elements to it that need to be fulfilled before one can be eligible for alimony or permanent maintenance under this provision. Some of these essential elements are given as follows:
Matrimonial case needs to be decreed
In simpler terms, the matrimonial case (divorce, judicial separation, etc) needs to be decided and decreed before alimony or maintenance under Section 25 can be sought. This is because subsection (1) of this Section explicitly states that permanent maintenance or alimony can only be claimed at the time of passing of the decree or any time subsequent to. Any maintenance given before the matrimonial case is decided will be dealt with under Section 24 of the HMA instead.
As seen in the case ofPatel Dharamshi Premji vs, Bai Sakar Kanji (1967), in which both parties were married to each other and had a son. Soon, they separated, and the respondent (Bhai Sakar Kanji) went away to stay with her father. The issue was whether either of the parties could apply for maintenance after passing the order for divorce. The court allowed the appeal and held that either the husband or wife could file for permanent alimony after passing the order for divorce under Section 25 of the Act. The court also changed the order of the lower appellate court and increased the amount of maintenance to be given to the son by the appellant.
Filing separate application
To claim alimony or maintenance under Section 25, a separate application, specifically under this Section, has to be filed after the matrimonial case is decided. Such an application is to be filed under the same court where the original jurisdiction of the matrimonial case lies.
Furthermore, as per the case of Umarani vs. D. Vivekannandan, (2000), the application under Section 25 can be filed both in written and oral form to avoid excessive litigation expenses, especially for the dependents who are unable to support themselves.
In this case, the parties filed for divorce under Section 13 of the Hindu Marriage Act. The petitioner applied for interim maintenance and other expenses under Section 24 of the Act. She argued that her husband, the respondent, deserted her and her child despite being capable enough to pay for the maintenance. The question that arose in front of the Madras High Court was whether a written application is needed under Section 25 to claim alimony and maintenance. The court held that a written application is not necessary under Section 25 and granted monthly maintenance to the petitioner and her child.
Fixation of maintenance
Unlike what one may think, neither Section 24 nor Section 25 of HMA gives a formula or calculation for the amount of maintenance one can receive in the respective provisions. In fact, no legal provisions provide any such calculations for alimony or maintenance, mostly because it can depend on case to case.
Since the income, property, living expenses and even circumstances of each couple and the case may vary, the quantum of maintenance and its fixation is often left at the discretion of the court. However, even though it is at the discretion of the court, there are some factors that can greatly affect the amount of maintenance awarded under Section 25, some of which are given below:
Income and property of the parties
Unlike Section 24, which mostly only focuses on the income of the spouses, Section 25 accounts for both the income and property (both movable and immovable) of both parties. This is done so as to calculate which spouse may need the maintenance and to what degree while also observing if the other spouse has the means to provide for the maintenance or not.
For instance, A and B are getting divorced and A demands maintenance from B, citing that A’s income is more than B’s. However, if B has several properties or land in their name that has much more value than A’s income, the court may adjust the maintenance accordingly. This is because properties are also assets that can generate income.
Capacity of income
The court focuses on the capacity of income of the spouses and the potential income that they can earn in their field. For instance, while the wife may have a medical degree, if she has not worked in the field for several years and has only worked as a housewife for the past few years, then her income capacity would be counted as none.
Similarly, if the spouse is working in a high-paying field with the potential of earning crores but their salary is not that high, that does not mean the maintenance would be calculated based on how high the earning capacity of the field is. The court cannot impose an order of maintenance that exceeds the spouses’ current capacity. The potential of the spouses’ income is different from their current capacity. Calculating maintenance based on how much they could earn potentially would be both unfair and unreasonable to the husband.
Thus, only based on the current income and its capacity would the quantum of maintenance or alimony be fixed. If there is any change in income, another application can be filed for such change.
Custody of children
One of the biggest deciding factors in the amount of alimony or maintenance one may get is the custody of children. The one who has custody of the children would most likely receive maintenance. Furthermore, the number of children would also play a significant role in the amount along with the fact of how the custody arrangement looks.
If the child stays full-time with the father, then the father would get maintenance. However, if the custody is shared half and half, then the calculation would be completely different.
Dependents on the spouse
Other than the children, the court also accounts for the number of other dependent members on the parties who they may have to financially support. For example, during the divorce, it is found that B earns much less than A. However, A has two aged parents and one disabled sibling. In such a case, the court would also consider the dependents on A and the financial strain that takes on A to provide for a fair and reasonable fixation of maintenance.
Another example would be if the spouse providing the maintenance has remarried and has another family to support. In the case of Dr. Kulbhushan Kumar vs. Raj Kumari & Anr (1970), it was held by the court that a minimum of 25% of the current salary of the husband should be kept for maintenance for the estranged wife. The court believed that a quarter of the net income would be just and reasonable for maintenance in case the husband got remarried and had to tend to a new family. The same would be applicable to the counterpart spouse, where if the wife remarried, then her priority would be to take care of her family, and the maintenance paid to her divorced husband would decrease accordingly.
Status of parties
Another factor that the court accounts for during the fixation of maintenance is the status of both the spouses after and before divorce. If the spouses were upper class during marriage and one of the spouses’ status fell to the middle class after the divorce, the court would favour the spouse with the lower status to receive maintenance. This is to provide an equal standard of living for the dependent spouse while not compromising the income of the earning spouse completely.
Conduct of the parties
Under subsection (1) of this Section, it is mentioned that the conduct of the parties would also affect the fixation of maintenance. This conduct may include the behaviour of the spouse during the marriage or even during the litigation process.
For instance, if A earns more than B but B is found guilty of abusing A during the course of the marriage, then the court would be more obliged to reduce the maintenance given to B. The same is the case if the dependent spouse was found committing adultery during their marriage.
Subsection (3) of Section 25 deals with other conducts of the party that may result in a decrease or even cancellation of maintenance and alimony. These conducts include:
If the dependent spouse or the spouse in whose favour maintenance was made has remarried,
If the wife did not remain chaste,
If the husband had an affair or sexual encounter outside the wedlock.
In any of the aforesaid cases, the parties can approach the court to modify or rescind the previous maintenance order. However, the parties themselves need to raise such objections or else it would not be applicable.
Residuary considerations
Section 25 also mentions ‘other circumstances’ that the court may consider when calculating the amount of maintenance to be awarded. These residuary considerations, which are not included or covered in the other categories, usually differ from case-to-case circumstances that can help the court to arrive at a fair, just and reasonable fixation of maintenance.
Period of fixation
As mentioned earlier, while alimony is a one-time payment, maintenance is recurring. The fixation of maintenance under Section 25 is periodical, which can either be monthly, quarterly (once in three months) or annually (once in twelve months). It can also be paid in a gross sum/lump sum, but that would be legally referred to as alimony rather than maintenance.
The period of fixation is usually decided upon the fact that the spouse would be able to pay maintenance altogether. If payment of the gross sum is not possible, the period is decided at the convenience of both parties.
The court, if deemed necessary, can make the periodical amount of maintenance a secured order to ensure that there is no lapse in payment. A secure order is a type of order which has the property of the respondent attached to it for the better enforcement of the decree.
By passing a secure order, the court can make sure that the respondent doesn’t neglect their legal obligation (especially if they have a history of it) and that, in case of default, the maintenance would be paid out of the property attached.
Duration of maintenance
The biggest question that often arises in the context of maintenance is how long one is supposed to pay for such an allowance. Unlike Section 24 of HMA, where the maintenance is supposed to last only until the duration of the litigation, Section 25 deals with permanent maintenance that is supposed to last for the whole life of the dependent spouse.
In simpler terms, if the claimant does not commit adultery or remarry after the divorce, then they would receive maintenance for till the end of their life. Obviously, the maintenance would not go beyond the life of the claimant and their legal heir cannot claim the same.
Even alimony is calculated for the approximate average age of the claimant and the subsequent amount they may need to secure their living status for the rest of their life.
Variations and alterations of maintenance
Subsection (2) of Section 25 talks about the modifications that can be made to the order of maintenance if there are any significant changes in circumstances.
As discussed earlier, circumstances for people may change with changing times, and that can make the maintenance order outdated and often unfair. For instance, A was ordered to pay heavy maintenance to his wife upon the divorce since he had a very well-paying job. However, his company downsized due to the pandemic and that led to him being let go. In such a scenario, if his unemployment continues for a longer while, he can file an application to get his maintenance order altered.
Such alterations can also be made if the income of the respondent had increased, in which case the court would adjust the new maintenance order proportionate to the new income. In a nutshell, the change can be negative or positive in nature.
If the claimant has remarried, then the respondent can also get the maintenance order rescinded.
Need for reforms
The sole motive of Section 25 of the Hindu Marriage Act is to ensure that even after divorce, both the husband and the wife are looked after financially. Hence, subsection (1) of the said Section serves this purpose, and grants maintenance to the one needing financial assistance, be it the husband or the wife. However, subsections (2) and (3) might seem fair at first glance but may not be so upon a closer look.
In the case of subsection (2), it covers the option of moderation and alteration of the maintenance amount depending on the change of circumstances. This can both be a boon and a curse since it can be used to modify the maintenance order for a genuine reason, such as the loss of employment or a pay cut in the salary. On the other hand, it can also be used to harass the other party and somehow adjust the maintenance in their favour. It is a double-edged sword that stands as a necessary evil and can only be resolved at the court proceedings.
Meanwhile, subsection (3) has its problems since it deals with the modification or even cancellation of maintenance in case the spouse remarries or has other sexual relations. Let us take a closer to understand the same in detail.
Constitutionality of Section 25(3) of Hindu Marriage Act
Section 25(3) of HMA needs a revisit. This subsection states that the court may change or cancel the order for granting maintenance on three conditions:
if the wife has not remained chaste,
if the husband has had sexual intercourse with another woman,
if either party has re-married.
This subsection erases the line between sexual intimacy and financial survival, which are two very different concepts with their own circumstances. Should a woman remain without sexual autonomy without her own will, especially after the divorce is finalised? If so, then this will make the other party (husband) gain unjust control and advantage over the woman and the maintenance proceedings.
Furthermore, since this Section is gender-neutral, neither the husband nor the wife can get into sexual relationships after divorce or judicial separation for fear that they might lose their maintenance. This subsection is not clear on exactly when such relations are not permitted and can affect the maintenance. In addition, since the language used in the subsection indicates modifications or cancellations after the maintenance order is made, it can be interpreted that it is applicable even after the divorce is settled.
Most women in India still like financial independence and autonomy, which makes it difficult for them to maintain themselves. In the case of Sachindra Nath Biswas vs. Smt. Banamala Biswas & Anr (1960), the court observed that having sexual intercourse by a woman or a man with people apart from their husband or wife is a sin of ethics and morality. Now, it may seem that this subsection does not violate Article 14 and Article 15 of the Indian Constitution, which talk about equality without any discrimination since they are gender-neutral. But if we consider the unjust restriction of sexual intimacy or potential relations with other partners after divorce, that would not be the case.
Moreover, Article 21 of the Constitution talks about the right to life and personal liberty. Hence, shouldn’t personal liberty include the right to choose one’s own partner, sexual or romantic? Shouldn’t sexual intimacy be part of the same right? A divorced woman who already faces many challenges can’t be burdened with the issue of not granting maintenance just because she had sex with a person apart from her husband after the divorce or even during the lengthy divorce proceedings that may stretch up to years. Just as the Constitution decriminalised the practice of adultery on the grounds that it violated the Constitutional provisions in the case of Joseph Shine vs. Union of India (2018), doesn’t this Section need a relook as well?
Maintenance for the second wife
Another issue that needs to be looked into is how the second wife is not usually entitled to maintenance under this Section or even the Hindu Marriage Act at all. It is both unfair and unreasonable, especially if the second wife was not made aware of the man’s previous marriage. There are many discrepancies and contradictions in the precedents regarding this, with the most popular being the holding of the Bombay High Court in the case of Mangala Bhivaji Lad vs. Dhondiba Rambhau Aher (2010). In this case, the court observed that only the legally recognised wife under Hindu law would be entitled to maintenance under Section 25 of the Hindu Marriage Act or Section 18(1) of the Hindu Adoption and Maintenance Act. Thus, the second wife would not be qualified for the same.
On the other hand, cases like Smt. Narinder Pal Kaur Chawla vs. Shri Manjeet Singh Chawla (2007) and Badshah vs. Sou. Urmila Badshah Godse & Anr (2013) held the maintenance in favour of the second wife on the basis that the husband was at fault for not disclosing the knowledge of his first marriage and actively defrauding the second wife. In cases like Rameshchandra Rampratapji Daga vs. Rameshwari Rameshchandra Daga (2004), the Supreme Court had also established that while second marriage under Hindu law is illegal, they are not ‘immoral’ and hence, the second wife who is unable to support herself financially should not be denied maintenance solely on this ground.
It wasn’t until in the case of Loyola Selva Kumar vs. M. Sharon Nisha (2023) that the Madras High Court established that the second wife and family can seek maintenance under Section 125 of the CrPC even if not recognised legally as a wife. The Bombay High Court later reiterated this view in the case of X vs. the State of Maharashtra (2024), where it was held that the husband, who knowingly married the second wife without legally dissolving the first marriage, was not to be allowed to deny maintenance to the second wife and the child from her. The court emphasised that the husband should not be allowed to take advantage of his wrongs like this.
Keeping the same ideology in mind, Section 25 of the HMA should also be reformed to accommodate void marriages such as the second marriage to prevent such defrauding from occurring.
Recent guidelines by the Supreme Court
The Supreme Court of India laid down certain guidelines to regulate maintenance payments in matrimonial cases while delivering the judgement in the case of Rajnesh vs. Neha (2020). In this case, a Family Court had ordered Rajnesh, the appellant, to pay interim maintenance to the respondent, Neha. Aggrieved, the appellant then approached the Supreme Court and contended that he was not in a position to pay for maintenance. Summarised below are the observations and holding of the Supreme Court In the present case:
In India, there are various legal provisions governing the right of maintenance. Hence, the Supreme Court observed that every maintenance proceeding shall be separately read, resulting in the multiplicity of proceedings. To avoid this, the person filing the claim for maintenance shall mention whether he/she has been granted maintenance before in another proceeding.
Furthermore, the maintenance shall be granted from the date the application has been filed and not earlier than that.
As for the quantum payment for the maintenance, the Supreme Court stated that the details of the parties like status, income, needs and wants, liabilities, job, age, etc., should be considered. Section 25(1) of the HMA mentions the list of the factors essential for the fixation of maintenance or alimony.
As per the court, the duration of the marriage should also be considered. This is to avoid defrauding the husband in case the wife marries for money and aims to get high alimony or maintenance in divorce. The longer the duration of the marriage, the lesser the chance of such fraud will be.
Difference between Section 24 and Section 25 of Hindu Marriage Act
While both Sections 24 and 25 cover the concept of maintenance, there are some vital differences between the two that one should know before filing an application under either of them.
These differences between the sections are summarised below:
S.No
Basis of Differentiation
Section 24 of HMA
Section 25 of HMA
1
Nature of maintenance
Section 24 covers maintenance pendente lite and any expenses incurred during the litigation process by the financially dependent spouse. It is an interim order.
Section 25 covers alimony and permanent maintenance, which refers to the type of maintenance that is to be provided till the end of the dependent spouse’s life.
2
Period of maintenance
The period of maintenance under this Section is only till the pendency of the court proceedings.
Under this Section, the maintenance is to be provided for the rest of the life of the dependent spouse unless it is rescinded or paid in a gross sum.
3
When the application is to be filed
Any time during the litigation proceedings of the matrimonial case.
At the end of the matrimonial case or any time subsequent to it.
4
Calculation of maintenance
Only the income of both spouses is considered when calculating the maintenance to be paid under this Section.
The income, as well as any existing property under the name of the spouses, are to be accounted for while calculating the quantum of maintenance under this Section.
5
Factors affecting fixation of maintenance
As per Section 24, only two factors affect the fixation of maintenance: the income of both parties and whether the claimant is able to support themselves or the proceedings financially.
Under Section 25, many factors affect the fixation of maintenance, such as the income and property of the parties, who has custody of the children, the capacity of income of the parties, the status of the parties, their conduct, etc.
6
Period of fixation
Maintenance under this Section is to be paid monthly during the court proceedings.
Alimony is to be paid in a gross sum. Meanwhile, maintenance can be paid periodically through monthly, quarterly or annual payments.
7
Alteration or cancellation
Section 24 does not cover any scope of alteration or cancellation of the maintenance order given under this provision.
Subsections (2) and (3) cover the scope of modifications and even cancellations of the maintenance order in case either of the spouses remarries, have sexual relations with another person or have significantly different circumstances affecting their financial capacity.
There are even significant similarities in both provisions, both being gender-neutral in their application and are applicable to Hindu spouses only. Both Sections also allow for periodical payment of maintenance, such as payment in monthly, quarterly or annual instalments. The period and frequency of the payment would be decided upon the convenience of the parties or the order of the court. Another similarity that is often overlooked is how the income of the spouses is accounted for in the calculation of maintenance under both sections. However, for Section 25, there are some additional factors to be considered as well, which differ heavily from Section 24.
Relevant case laws
Shailja vs. Khobbanna (2017)
In this case, a special leave petition was filed in the Supreme Court by the wife for the enhancement of the amount of maintenance. Initially, the Family Court had ordered Rs 15,000 to be paid monthly to the wife as maintenance in addition to the Rs 10,000 that is paid for the son. However, the High Court of Karnataka had reduced the amount to Rs 6000 each upon appeal since it was observed that the wife was working as a teacher.
The Supreme Court, upon reviewing all the facts and the incomes of both spouses, held that decreasing the quantum of maintenance solely on the fact that the wife is working is both unjust and unreasonable. Her employment should not be punished with less maintenance, especially given how women already face great injustice during their employment due to gender disparity as well as discrimination. Thus, with the aforesaid rationale, the Court restored the previous maintenance amount, citing that working women also have the right to maintenance.
Kalyan Dey Chowdhury vs. Rita Dey Chowdhury Nee Nandy (2017)
In the aforesaid case, the parties have been entangled in several litigations, which initially started with an application under Section 9 of the Hindu Marriage Act, 1955 by the husband (appellant), which was followed by the wife (respondent) filing a case under Sections 498A and 406 of the Indian Penal Code, 1860 against the husband and his parents. The wife stayed at her matrimonial house for a while, claiming maintenance under Section 125 of CrPC for her son and herself. In 2003, the wife filed for judicial separation under Section 10 of HMA as well as permanent maintenance under Section 25 of the Act at the same time. At the time, she was awarded maintenance amounting to Rs 2,500 per month and Rs 2,000 per month to her (then) minor son.
In 2007, the husband filed for divorce under Section 13(1)(ia) of the HMA, along with which the wife filed for enhancement of maintenance under Section 25(2). This resulted in the quantum of maintenance being increased to Rs 8,000 per month for herself. In 2010, an application was made for further amendment under Section 25(2), based on which the court adjusted the amount of maintenance to Rs 6,000 for both wife and her son.
Aggrieved, the wife appealed against the amendment in 2015, where the High Court decreed the maintenance amount to be Rs 16,000 monthly to both the wife as well as her minor son. The husband filed for a revision against this decree, resulting in the court enhancing the amount further to 23,000. Aggrieved by the revised decree, the husband filed an appeal in the Supreme Court, contending that the enhanced maintenance was unreasonable.
The Supreme Court observed that the husband had received an increase in his salary and now earned a respectable amount of about Rs 95,000 per month, while the wife only earned 30,000 per month and had custody of their son. The son, however, had attained the age of majority and was (at the time) pursuing college. Furthermore, the husband had also remarried and was asking the same to be considered.
Thus, in view of the above facts and observations, the Supreme Court held that the wife is entitled to the enhancement of maintenance if there is an increase in the salary of the husband. However, since their child is no longer a minor and the husband has married again, the court adjusted the amount to Rs 20,000 instead of restoring it back completely to the previously decreed amount.
Jaspreet Kaur and Others Revisionists vs. State Of Uttarakhand and Anr (2019)
In this case, the wife (the appellant) had initially filed for maintenance for her two children under Section 125 of CrPC after being kicked out of her matrimonial home along with her children in 2014. The application of maintenance under Section 125 was partially allowed in 2019. However, the Family Court of Dehradun rejected the aforesaid application later on upon revision filed by the appellant on the ground that the wife was already awarded maintenance under Section 25 of the HMA.
The Supreme Court held the judgement in favour of the appellant, stating that the maintenance awarded under Section 25 of HMA to the wife is a completely separate matter from the maintenance awarded under Section 125 of the CrPC for the children. In view of the aforesaid rationale, the court overturned the previous decree and allowed the revision filed by the appellant in front of the family court.
Conclusion
India is a diverse nation with a variety of religions spread across its planes. As a secular state, each individual is governed by the personal civil law of their religion, each of which has their own divorce and maintenance laws. Section 25 of the Hindu Marriage Act, 1955, is one such provision under the Hindu law that governs the law for alimony and permanent maintenance. The benefit of this provision is that it applies to both husband and wife.
This gender-neutrality of the Section has led to many progressive precedents along with the people of India evolving and trying to come out of their 50s and 60s mindset. In today’s world, both men and women have equal legal status. Provisions like Section 25 helped a lot in bridging the gap for both genders. However, there is still scope for reformation under the provision, which includes subsections (2) and (3) of Section 25 of the Hindu Marriage Act 1955.
Frequently Asked Questions (FAQs)
What are the legal provisions under which maintenance can be claimed?
In India, there are separate legal legislations for each personal law. Since each personal law has its provisions for divorce and maintenance, many varied legal provisions for maintenance are followed and applicable in India. The legal provisions that specifically deal with maintenance are given below:
Sections 125 to 128 of the Code of Criminal Procedure, 1973, which is now directly replaced by Sections 144 to 148 of the Bharatiya Nagarik Suraksha Sanhita, 2023.
Sections 24 and 25 of HMA.
Sections 18 to 20 of the Hindu Adoption and Maintenance Act, 1956.
The Muslim Women (Protection of Rights on Divorce) Act, 1986.
Sections 39 and 40 of the Parsi Marriage and Divorce Act.
Sections 36 and 37 of the Special Marriage Act.
Sections 36 and 37 of the Divorce Act, 1869.
Section 4 of the Maintenance and Welfare of Parents and Senior Citizens Act, 2007.
Section 20 (1) of the Protection of Women from Domestic Violence Act, 2005.
Why is maintenance given?
Maintenance is a type of legal allowance that is paid to the claimant who is unable to financially support themselves and is dependent on the respondent for their basic needs such as food, shelter, clothing, education as well as medical expenses. It is provided to prevent financial injustice and abuse from happening to dependents or family members in the event of separation.
What is the difference between maintenance and alimony?
Alimony is a one-time payment made to the claimant after a divorce or judicial separation. Maintenance, on the other hand, is a recurring type of alimony that is paid in instalments. Furthermore, alimony is only paid to the spouse, while maintenance can be paid to any dependent of an individual, whether it be their child, spouse or parents.
In addition to this, alimony is usually awarded in cases where divorce between the parties has happened with mutual consent, while maintenance is given when one of the parties files for the application in the court.
Can the husband claim maintenance?
Under Sections 24 and 25 of HMA, the husband can also claim maintenance. It was also backed by judicial precedents like Nivya V.M vs. Shivaprasad N.K (2014) and Rani Sethi vs. Sunil Sethi (2011), where it was held that if the husband does not have an independent income, it is unfair to deprive him of the right to maintenance that the wife would have received if she was in the same financial position.
Which court has the jurisdiction to hear the application filed under Section 25?
The court with original jurisdiction of the matrimonial case that entertained and decreed the said case would also have the jurisdiction to hear the application filed under Section 25 of HMA. In simple words, the court where the case of divorce, judicial separation, etc., was heard and decreed, the same court would have the jurisdiction for the subsequent application of maintenance.
Can a wife claim maintenance without getting divorced?
Yes, a wife can claim maintenance without getting divorced from the husband. Even before the divorce, if the wife has separated from her husband, she can claim maintenance. However, the only criteria for which the wife is not entitled to claim maintenance are as follows:
If the wife is living with another man, she cannot claim maintenance under Section 25 of the Hindu Marriage Act,
If the reason for separation is unclear or found to be disingenuous, then maintenance might not be awarded as such by the court.
When the husband and wife are living separately by mutual consent, they cannot claim for maintenance.
References
Dr. Paras Diwan, Family Law, Allahabad Law Agency, 2022.
K. Desai, Indian Law of Marriage & Divorce, LexisNexis, Edition 12th, Vol 1.
M. Seervai, Constitutional Law of India, Universal Law Publishing Co., Reprint 2013.
M. Bakshi, The Constitution of India, Universal Law Publishing Co., 2014.
M.P. Jain, Indian Constitutional Law, Wadhwa and Company, Nagpur, Fifth Edition 2008.
Private equity (PE) firms have emerged as key players in the M&A space to the extent we can say that the two share a symbiotic relationship.
A Harvard study implies that PE has driven one-third of all M&A transactions.
It basically translates to PE firms acquiring a stake in private companies to generate additional profits in these companies and then re-selling their business to gain returns on their investment and profit.
What is private equity and what does it consist of
Private equity investments are investments that acquire an equity interest in a privately held company. It is the Stock capital held by a private company that is not offered to the general public.
Private equity funds are a type of investment funds, as they are used to invest in companies which are not listed on the stock exchange, i.e. the public cannot buy and sell shares in these companies. The PE investors acquire shares and invest in these private companies.
Private equity is “an investment fund, which invests in and restructures private companies.” These funds entail an element of ownership of shares or assets, i.e. equity.It is also categorised as a class of assets (equity securities) that govern the financial management and operation of private companies.
The PE industry is made up of institutional investors and PE firms. They have the capacity to deploy large amounts of capital for a long duration. They pool resources together from multiple investors and these resources are then invested in organisations that are in need of restructuring and improvement.
Why do private companies allow PE
Once the PE funds are invested in the company, the PE firm runs the company as it has acquired ownership through this investment.
They then use their expertise to boost the value and profitability of the acquired private company. Thus, private equity investment is a way to revive a sick company’s business post-investment through a new management and business strategy.
The firm enhances the efficiency of operations, cuts down costs and adopts structural changes that are necessary for growing business.
What is in it for the PE firm
After driving the success of the target company, the PE investors get back returns on their investment by re-selling the company or business and they distribute their profits in a predetermined ratio.
Thus, it is a win-win as the company’s financial prospects improve and become more valuable, and the investors gain good returns on their investment.
Role of private equity firms in M&A transactions
1) Injecting capital-
Private equity firms provide necessary funds and capital reserves necessary to drive M&A transactions. They know where to make specific investments and deploy capital and resources to reap maximum profits.
2) Expertise-
PE professionals possess peculiar knowledge about industries, so they can add value to these companies. The firms specialise in particular industries and sectors and can thus help revive them.
In addition to industry knowledge, they also have an understanding of market research dynamics and thus know which strategies to apply to make the most of the market and consumers.
3) Restructuring the operational aspect-
The firms identify areas that need restructuring, and carry out internal changes that help to boost the efficiency and productivity of the company. They enhance the production, distribution, sale, and other aspects of business in a way that transforms the company’s business and reaches greater heights.
4) Guidance and leadership-
The experienced professionals are capable of providing the necessary guidance and insights to the company’s management, and this can help breathe new life into the company.
5) Financial expertise-
PE professionals know the way through finance and they manage the capital and resources in a way that reaps the maximum benefits. They know the right strategies to allocate and utilise resources efficiently to grow the financial graph.
6) Exit Strategy-
PE firms plan timely and successful exit strategies such as IPOs to realise significant returns.
7) Cultural Compatibility-
PE firms make sure the acquiring company and the acquired company share a fairly compatible corporate culture so that there is smooth integration and transition with a spirit of cooperation. Even otherwise, they have the expertise to manage the cultures of the companies effectively.
Kinds of private equity
1) Venture capital- Venture capitalists are the ones who invest in startups at the early stages. They assess the future potential of the start up, and invest amounts accordingly. Thus, it is done for entities who are new and just getting started in the market.
2) Mezzanine financing- This is an investment that is made into the debts of an organisation. If the invested debt is not disposed of on time, then the investors acquire an equity interest. The debt is converted into equity, and the rate of interest on such a debt investment is high.
3) Growth capital- This investment is made in entities and organisations that are well established and looking to expand their operations into newer places and markets. Thus, it is done in mature organisations that are looking to diversify their markets and their products or looking for greater funds for further acquisitions.
4) Real estate PE- As the name suggests, this investment focuses on investing in real estate properties. There are three types-
a) Core– This investment is made in properties that can provide an assured amount of cash flow.
b) Core plus– This investment is done in properties that require some improvements, and therefore, there is some element of risk.
c) Value added– The invested properties require a good number of improvements, and so the risk associated is high.
How do PE firms raise money
They raise money from a number of sources such as-
Limited Partners (LPs) such as insurance firms
endowments
wealthy persons
retirement funds
pension funds
Forbes 2024 trends in private equity and M&A
Despite political issues and conflicts, there has been considerable growth in M&A activity.
There is a slight decrease in ‘mega’ deals.
The lower middle market experienced the most action, with M&A transactions, joint ventures and the purchase of minority shareholdings increasing there.
Private equity firms are driving the M&A game.
The lower middle market is seeing an increase in the number of ‘serial’ acquisitions, as they provide for simpler valuation and a smoother management and post-integration transition. This is because companies in the lower middle market are smaller in size and less complex. So, there are fewer hassles in valuation and post-deal integration.
Such recurring acquisitions bring greater expertise, as they refine the skills and procedures of each acquisition, which acts as a building block. The process gets more and more efficient with each deal, generating a high long-term value.
According to PwC, there has already started a bounce back of M&A in the energy, technology and pharma sector. Real estate has recovered. But sectors like Banking and healthcare remain slow because of the impact of market conditions.
M&A activity is expected to remain sustained in the next few months in the middle market, largely supported by private equity firms.
Bain and Company conducted a study in 2020 which revealed that the technology sector received the most investment from private equity, which led to expanding its share in the market. Thus, PE are the key dealmakers in the technology sector.
The major reason PE firms engage in M&A is to expand their investment options and to diversify their holdings.
When these firms invest in different sectors and different geographies, they reduce their risk and increase their returns, as such deals give them access to new markets, technologies and consumer bases, broadening the scope of growth.
How does strategic M&A work
Acquisition strategy–
Strategic players make strategic acquisitions by identifying companies that complement their industry or business. Thus, they create a company portfolio that has collaborative and harmonious businesses.
They make targeted and cohesive acquisitions that can produce synergistic benefits.
Hilton was a leading luxury and full-service hostel and hospitality company. Blackstone Group was an investment firm that focused on real estate, private equity and asset management.
Blackstone had significant experience in the hotel and real estate sector, and so it was able to manage the multitude of Hilton’s hotels and real estate.
Blackstone effectively managed Hilton’s hotel operations, improved customer service, cut costs and expanded its business because of its experience in hotels and asset management. It launched new hotels in Asia and Middle East, complementing the growth aspirations of Hilton and boosting profitability with its asset and financial management.
When Blackstone went public, it was one of the largest hotel IPOs, and Blackstone continued to have a significant stake as a major benefactor after the IPO.
Comparing strategic M&A with PE-backed M&A
Strategic M&A and its PE counterpart have very different approaches and strategies. From identifying targets to valuation methods, PE has evolved and developed a strong financial discipline and expertise, which may give it an edge over strategic M&A.
Let us compare various aspects of Strategic and PE-backed M&A one by one-
1) Source of funding–
Strategic M&A-
a) Profits of the company– Strategic M&As rely upon the profits generated from current operational activities, so they do not have to rely on additional borrowing.This incurs no liabilities on the company and indicates sound financial health.
In addition, this does not dilute ownership in any manner.
b) Cash reserves– The company can also leverage its cash liquidity to raise funds. Having sufficient internal cash flow means the company would not be vulnerable to the need of external debt assistance. Again, this does not affect the pattern of ownership in the company.
However, it can deplete cash reserves, thereby affecting the volume of capital available for future operations and investments.
c)Banks loans– Companies can raise long-term loans from banks which are tailored specially for M&A. Loans can have lower interest rates compared to high-yield debt and the interest is usually tax-deductible.
However, they need to be secured by way of collaterals, such as the assets of the company against whom the loans are secured.
d) Making partnerships such as joint ventures– In partnerships and JVs, both parties are jointly responsible to provide capital. Such an arrangement creates a dual obligation and sharing, and such sharing can better facilitate raising of funds.
Burden of financing gets allocated to various partners or strategic allies, but on the downside, may lead to conflicts among partners over the sharing of revenues and control.
e) Issuing corporate bonds– Companies can issue Corporate bonds i.e. securities issued to raise capital.
They can be issued in the form of a senior or subordinated debt, depending on the requirement and terms.
Corporate bonds help to raise capital without immediately affecting the current operations and affairs of the company.
They can be issued according to the size of the acquisition and the term of repayment is usually long.
However, their issuance incurs additional costs and may also impact credit ratings.
f) High yield bonds – Aka Junk Bonds, they are usually issued by companies with lower credit ratings, but have the potential to generate high rewards and capital.
g) Royalty financing– This method involves issuing a percentage of the revenues that will be earned in the future. Companies can utilise royalties begotten from existing products or issue a certain proportion of the future revenues.
h) Asset-based financing – This involves pledging assets such as company property, inventory, and receivables. They act as a collateral and provide capital depending on the value of the assets.
Thus, they serve as a quick source of raising funds, but may have an impact on the operations of the company, along with posing a risk of high interest rates.
i) Divestitures– This involves selling off the non-core assets of the company, i.e., assets that are not essential, as a means to raise immediate capital.
Sometimes, such sales can also lead to loss of valuable assets. They can sometimes disrupt the operations and affairs of the company.
j) Development financing– Government and development banks can issue loans for acquisitions that can play a role in economic development. Such mergers and acquisitions which complement the economic and growth aspirations of the government, can receive finances.
Since the aim is the greater good of the economy, such funds come with lower rates of interest and the terms are also usually favourable.
But the process for applying and obtaining such funds can be cumbersome, entailing a number of terms and conditions.
Private equity-backed M&A-
a) Private equity investment– This involves issuing shares which are not traded on the stock exchange for the purpose of raising capital. Investors purchase or subscribe to shares and thus acquire ownership.
This kind of investment brings with it ownership and expertise, but on the other hand this change usually means dilution in the earlier pattern of ownership and influence.
b) Leveraged buyouts – These are acquisitions that are made through debt financing. A public company may be bought out and delisted.
Such buyouts can lead to magnified returns after improving the financial prospects of the acquired company.
However, It creates a debt liability on the company which incurs high rates of interest on the debts borrowed.
c) Equity co-investments– Co-investors are other investors who join hands with the lead private equity firm. The main lead is the PE firm, but it will have co-partners such as institutional investors, other private equity firms, offices or limited partners who participate in the investment.
Since there are multiple sources of funds available from the co-investors, it reduces the burden of extracting equity solely from the lead PE firm.
However, the co-investors in return can demand a share in the profits and a control in the management.
d) Convertible securities– Upon certain conditions, these securities can be converted into equity. Thus, investors invest and help raise capital with the option to convert their securities into equity in future.
Therefore, it implies a possible dilution in ownership in the future.
The structuring of such deals can be complex.
e) Seller financing– It involves leveraging the Seller’s capital or finances to fulfil investment goals. Thus, it is like a loan mechanism, given by the seller to the PE firm to fulfil its capital needs. Thus, it is useful where the acquirer may not have sufficient funds.
However, the seller’s interests may override the interests of the company.
The rates of interest may be high and the seller may exert some influence.
Strategic acquirers have more means to raise funds compared to PE acquirers. This might make it seem like the former has an advantage, but this instils a sense of financial discipline on the PE firms, who may not win the highest bid, but can catch up to valuable deals faster.
2) Identifying targets-
Strategic M&A-
Strategic players have a greater understanding of their industry and therefore identify potential targets that align well with their objectives.
Thus, Strategic players look for companies and firms within their industry that bring in synergies.
But this knowledge is meaningful only when they brace themself to the risk of diversification, otherwise the number of targets can go down.
For Eg- When Apple acquired Beats Electronics in 2014 after studying the latter’s technological Audio system, which integrated well into Apple’s ecosystem.
Another example is Microsoft’s acquisition of LinkedIn in 2016-
Microsoft analysed how Linkedin, a professional networking software based platform could be used to integrate with its own professional tools like Microsoft 365 and Dynamics 365. Thus, it leveraged the technology of another platform that not only boosted its own productivity, but also fetched high returns post-acquisition.
Lack of Diversification– Strategic investors hesitate to invest in industries or services that do not complement their core competencies. Thus, their pool of potential targets gets restricted, and they miss out on opportunities in unrelated industries.
For instance, a food delivery company like Zomato might acquire another similar e-service food delivery company like Swiggy, and may miss out on investing in other tech sectors which might help it to develop and innovate its supply chain logistics.
However, diversification also brings with it an element of risk.
For example, when General Electronics (GE), whose core industries were power generation and industry equipment, diversified its domain by entering into the financial services, it faced significant challenges as these services did not align with its core competencies. The complexities grew and GE was forced to divest many of its financial services assets and focus again on its core operations.
Private equity-backed M&A–
PE firms have the expertise to conduct in-depth financial analysis. They are aided by a professional network of bankers, lawyers and finance professionals who guide them in identifying potential targets as smoothly as the strategic players. The network not only assists in sourcing the deals but also in structuring and executing them.
For example- Kohlberg Kravis Roberts and Co. used its wide network of investment bankers, consultants and advisors to get hold of valuable deal targets. After a rigorous analysis, they acquired First Data, a technology payments solution provider.
Diversification across Sectors–
PE firms are not restricted to one or a few sectors. Their network of multiple professionals helps them to pursue opportunities in multiple industries and sectors.
For Example- Carlyle Group, a reputed PE firm, has invested in a number of unrelated sectors such as healthcare, energy, technology, consumer products and financial services.
Thus, Strategic players have an understanding of their domain and often do not venture into other sectors, as they may encounter integration and other challenges.
But PE firms, through their vast network and expertise, can identify and work well even in unrelated sectors, thus diversifying their investment portfolio.
3) Antitrust regulations–
Strategic M&A–
Strategic players, since they look for similar targets within their domain, tend to attract antitrust regulations under the regulatory authorities because they can pose a significant threat to the other competitors as they become a direct player in the market post the acquisition.
For Example, when a large Technology company seeks to acquire another technology company, the authorities will scrutinise the impact it has on competition and market share. They will impose significant restrictions like divestitures if its dominance is found to hurt competition in any way.
PE-backed M&A–
PE firms are usually not viewed as direct competitors or threats, but merely as investors. Therefore, they are not subject to as many tight regulations under antitrust laws as strategic players.
For Example, when Carlyle Group extended into the technology sector, it was not looked at as a key competitor to other technology companies, as PE firms do not have a similar market share and do not focus on competing and dominating the market, but on diversifying and earning returns.
4) Due diligence–
Strategic M&A–
The process of Due Diligence might be similar and streamlined for strategic players, as they look to acquire similar targets in their quest to achieve synergy.
They have specific knowledge of their industry and therefore they may be well accustomed to the process of due diligence for targets within their industry. The process can be smooth and less time consuming for them.
If they do wish to venture into other domains, the strategic players might lack experience and network to execute the diligence and may have a hard time conducting due diligence of an unrelated industry.
Private equity-backed M&A–
Since these firms venture into a number of different industries, each process of due diligence will require unique knowledge pertaining to the target company’s industry.
Therefore, they require a comprehensive network of diligence professionals who possess specific knowledge of the industries the firms wish to enter.
Therefore, it may take longer for the firm to familiarise itself with the working of different industries.
The Target Company can assist in preparing documents tailored to its industry, as it has a better understanding of the same.
For Example, when a PE firm seeks to invest in a niche industry like a chemical industry, it will need a team of professionals who will study the inner technicalities of the chemical industry such as chemical safety standards, its regulatory landscape, licences and permits pertaining to chemicals, etc.
The target company can help bridge this information gap by providing the necessary inputs to the diligence process to speed it up, else it can be time-consuming for a firm that is new to the industry.
5) Valuation-
Strategic M&A–
While undertaking valuation, the strategic players will conduct a Discounted Cash Flow (DCF) analysis, to identify synergies that extract the maximum value.
The DCF analysis determines the value of a company by predicting the cash flows of the company in the future, and then adjusting them in the present. In this way, it analyses the present worth of the company by assessing its expected financial value in the future.
The strategic player can use the estimates of the DCF model to help identify and validate certain synergies.
For example, HealthPro, a healthcare company, is seeking to acquire MedTech, a company that manufactures innovative medical technology devices.
While preparing the DCF model, HealthPro forecasts MedTech’s future cash flows, such as the cost of production and operation, capital expenditure incurred, and profits earned. These estimates are then discounted back to the present to determine MedTech’s worth today.
Synergies–
By integrating MedTech’s operations and products into HealthPro’s ecosystem, they can bring down the operation and manufacturing costs.
HealthPro can use its established marketing channels to boost the sales of MedTech’s products, thus expanding its market share.
The DCF Model considers these expected synergies while determining the valuation of the acquisition.
Large strategic players may display inflated estimates in the DCF analysis to win approval for the transaction.
In a bidding context, they may use aggressive tactics to outbid other bidders in an attempt to win the contest. Such a victory will not reward a high Internal Rate of Return (IRR), rather it will lead to losses.
Private equity-backed M&A–
These firms usually base their valuation on Leveraged Buyouts aka LBOs.
In LBOs, the financing is obtained through external loans from banks and creditors.
So, the PE firm needs to estimate the amount that it needs to borrow for acquisition, which will depend on the value of the target company.
The firm will use multiples, such as the price-to-earnings ratio, to determine the company’s value.
It will make forecasts of the target’s future cash flows, estimate how much money will be earned by the target in the future and determine the value of the company.
Based on this, the Company will decide the amount of debt to be borrowed, and they must also consider the Acquirer’s ability to pay back such debt.
Validating the company’s cash flows is important, as the PE will borrow debts based on these cash flow projections.
Estimates of future profits after the acquisition are also considered, as it is hoped that the integration will improve the operations and financial prospects. They need to make sure the future profits are enough to enable the firm to pay back the debt.
As a lot of borrowing is involved, the Acquirer cannot afford to go wrong with the future cash flow estimates or the future profit estimates. Moreover, these values have a direct bearing on the valuation of the acquisition.
In situations of bidding, the PE firms may be at a disadvantage as the bidding is conditional upon the bank approving the loan for acquisition, and other bidders may not face this issue.
Although arranging the loan may be tricky, it is worthwhile as the firm makes the investment not through its own capital but from borrowings, and if the acquisition reaps the benefits as forecasted in the future cash flows, then the PE will have high internal rates of return (IRR) without depleting its own cash reserves or capital.
Macroeconomic conditions such as economic recession, higher cost of borrowing, tightened credit markets, regulatory changes, stock market volatility may, however, affect debt financing and PE’s ability to leverage funds.
6) Negotiation and execution-
Strategic players tend to have experience as they negotiate and execute similar deals repeatedly within the industry.
As the process is newer and more demanding for PE firms, especially with the involvement of debt, they need more financial discipline and diligence.
7) Value creation post-execution-
Most strategic acquisitions seek to integrate the acquired company fully after the transaction to make use of the synergies they expect.
However, according to data, between 70-90% of all M&A deals fail to achieve these synergies, as accommodating the eco-systems of both companies becomes difficult.
A Harvard Business Review Article published in 2014 titled “The Big Lie of Strategic Mergers” highlighted the integration challenges post-mergers-
a) Cultural Clash- The different Corporate cultures of the companies lead to employees remaining dissatisfied and productivity of the merged company going down.
b) Operational disruptions- Merging different systems, people, and processes can disrupt the flow of operations, and it may take time to get them back on track, sometimes failing to do so altogether.
c) Too much emphasis on synergies- Companies prioritise realising the benefits of the expected synergies, such as reducing costs and improving revenue, and transition activities take a back seat.
d) Poor Management and Leadership issues- A good leadership is required to manage and execute the transition process, otherwise it could lead to unclear roles and consequent conflicts.
Fresenius, a German Healthcare Company, agreed to acquire Akorn, a U.S. pharma company. They signed an agreement, but soon Akorn faced severe financial and operational issues, including regulatory hassles.
Fresenius sought to terminate the merger agreement, quoting a Material Adverse Effect (MAE) due to significant downfall in Akorn’s business.
Akorn challenged the termination of the merger agreement, arguing that the MAE was not valid.
The Delaware Chancery Court found that the issues at Akorn post-signing of the Agreement did constitute a valid MAE, and Fresenius was allowed to walk away from the deal.
Private equity-backed M&A–
The Target acquired by a PE firm, in most cases, will operate as an independent business, without requiring a blend of two cultures or systems.
Moreover, they are burdened with debt and therefore are under pressure to manage their cash flows carefully.
Therefore, they undergo regular financial and performance assessments.
They might have to carry structural changes, undergo cost cuttings, even sell off non-core assets to gain greater returns.
In addition, the company can issue performance-based incentives to enhance performance, such as bonuses, Restricted Stock Units (RSUs), other forms of equity ownership, milestone-based- rewards, a share in the profits etc. to boost productivity and meet targets.
The pressure of repayment weighs high and they have to adhere to greater regulation and discipline in business.
This discipline, along with incentive measures, puts private equity on a higher peg in terms of value creation post-acquisition.
For example-
Acquisition of Dunkin’ Donuts by Roark Capital Group (2020)–
Post Acquisition, Dunkin’ Donuts continued to operate as a standalone business in its own brand, and retained its operational autonomy, without merging into other brands of Roark Capital.
As it was a debt transaction, Dunkin; Donuts focused on optimising its supply chains and introduced new products to attract more customers to improve profitability.
The employees were awarded bonuses upon achieving specific targets such as reduced costs.
8) Long term goal–
Strategic M&S–
A strategic buyer’s goal after the transaction is to hold onto the business for a long time because they merge or acquire businesses to integrate them into their system of operations. As a result, they focus on the company’s long-term aspirations, such as upgrading technology or spreading out into different markets and places, etc.
PE-backed M&A-
On the other hand, PE firms work on the principle of “Purchase, optimise and exit.”
They will exit the investment after 3-6 years, usually through IPOs.
Since they have a limited time to improve the business, they follow the required practices and orderliness that are required for a business to excel.
On the downside, as investors are not much concerned about the long-term performance of the company, they tend to have a myopic vision, i.e. they remain short-sighted on the long-term aspirations of the company.
Thus, they mostly focus on getting immediate or short-term gains.
The company’s long-term aspirations tend to be overlooked.
SDL acquired Trados, a software company in 2013. Trados was financially vulnerable and had received several stages of funding from venture firms (similar to private equity.) They had preferred stock, which meant that during the liquidation process at the event of a sale, they would be entitled to receive a fixed pay out first.
Consequently, at the time of liquidation, the preferred shareholders, including the private equity shareholders, received their liquidation preferences, and the common shareholders got nothing.
Common shareholders alleged that many Directors were connected to the firms and had breached their fiduciary duty by approving a provision that upheld the interest of preferred shareholders over common shareholders.
The Delaware Chancery Court ruled that while Directors were obliged to honour their fiduciary duties towards all shareholders, they are not strictly required to maximise the value of the common shareholders if circumstances of the company so require.
However, in this situation, the directors had not fairly and sufficiently considered the circumstances and interests of common shareholders, and thus the court applied the principle of “entire fairness”.
It held that the sale was not entirely fair to the shareholders.
The case emphasised the duty of directors to be considerate of the interests of all shareholders, and not just the preferred ones.
Conclusion
Both kinds of mergers and acquisitions bring their own share of pros and cons, for instance, strategic players possess industry-specific expertise and benefit from the synergies they gain from related businesses. They focus on the long-term aspirations of the acquired business, but merging it within itself can be challenging. For instance, the Vodafone and Idea merger VI witnessed many post-integration and operational challenges and could not reap the desired benefits. Then, there are mergers like Cisco and Mittal Steel, which are great examples of strategic mergers.
On the other hand, a PE firm with its team of multiple professionals possesses varied expertise and adheres to greater focus and regulation to optimise value from the deal, as the acquisition is only for a few years. The targets can operate through their own brand and thus can retain their identity. But the due diligence process can be challenging upon venturing into different industries. The risk of debt is high in cases of Leveraged Buyouts and if the company does not produce the desired results, repayment of that debt would be the biggest challenge. The company’s long-term aspirations don’t hold much regard.
Strategic players have intimate knowledge of their industry, and can thus maximise value by consolidating the products and services of a compatible target with its own, upgrading technology and mastering their operations. Whereas for PE firms, investment and M&A are the only arenas in which they operate, a diverse ecosystem of other professionals is crucial to keep them at the top.
This article is written by Mehak. This article aims to illustrate the notion of talaq-e-tafweez and focus on the concept, its nature and scope, and the types of talaq-e-tafweez. This article further emphasises the agreements with respect to talaq-e-tafweez. This article also covers the relevant case laws and their judicial interpretations of talaq-e-tafweez along with some related FAQs.
Table of Contents
Introduction
Talaq or divorce is the dissolution of marriage between the parties, where all the rights and obligations that exist between the parties come to an end. Divorce is regulated as per the specific provisions mentioned under the personal law applicable to the individual. Under Muslim law, the dissolution of marriage can take place either by the death of the either party or by the divorce between the parties.
Divorce under Muslim law, can be judicial or extra-judicial in nature and are valid and recognised. Judicial Divorce is given by the judicial decree of the Court as per the provisions of the Dissolution of Muslim Marriage Act, 1939. Whereas, extra- judicial divorce can be given either by mutual consent, by husband or by wife. Divorce by mutual consent is further divided into two types: Khula and Mubarat, where the husband can divorce his husband via three modes: Talaq, Ila, and Zihar. It also recognises the divorce pronounced by the wife. A wife can dissolve the marital ties with the right and power of talaq-e-tafweez.
Talaq-e-tafweez is one of the ways by which she gets the power to divorce her husband. It is a sort of agreement that can be entered before or after the marriage, where the husband delegates his power of divorce to his wife in order to exercise it in specified reasonable conditions. This delegation of power can be given permanently, temporarily, conditionally, or unconditionally. Such divorce shall not make it any less divorce. It shall have the same effect as if it was made by the husband.
Let us delve into this delegated power of divorce right, that is, talaq-e-tafweez and understand it in detail.
Women’s power to divorce
By Dissolution of Muslim Marriage Act, 1939
A Muslim wife is entitled to seek a decree of divorce from the Court as per the grounds mentioned under Section 2 of the Dissolution of Muslim Marriage Act, 1939, i.e., in cases where the whereabouts of the husband are not known from the past four years, failed to provide maintenance, has been sentenced to an imprisonment for seven years or more, if the husband is impotent, insane or have any venereal disease, etc. The woman can grant the divorce if it falls under any of the grounds specifically provided.
By Mutual Consent
Divorce by mutual consent can be made in two ways:
Khula
Khula in a literal sense means “to lay down” or “to take off clothes”. In legal terms, it means laying down one’s authority over his wife. A Divorce by Khula is on a consensual basis only but is initiated on the instance of the wife, against which she gives or agrees to give consideration to her husband. The consideration is given by the wife in exchange for dissolving marital ties with her.
Mubarat
Mubarat means “release”, i.e., to release each other from marital ties. Under Mubarat, the divorce takes place with the mutual consent of both the parties. The parties must be of sound mind and should have attained the puberty age in order to get their marriage dissolved by mubarat.
Recently, in the case Shabnam Parveen Ahmad vs. Nil (2024), the Karnataka High Court allowed the appeal whereby the parties approached the Court against the orders of the Family Court. The Family Court thereby dismissed the suit stating that the parties mutually seeking the decree of divorce as per the Muslim rites and covenants of Mubarat deed is not contemplated under the provisions of the Dissolution of Marriage Act, 1937. The appellant in the appeal contended that Mubarat agreement is to be accepted by the Family Court when the Dissolution of Marriages Act, 1937, and the Muslim Personal Law (Shariat) Application Act, 1939 are read withSection 7 of the Family Courts, 1984. The High Court pursuing the appellant’s contentions held that the Family Court’s interpretation of to Mubarat agreement was the incorrect proposition of law and further declared that the marriage between the parties was to be dissolved as per the Mubarat deed.
By Delegated Divorce
Delegated Divorce or Talaq-e-tafweez is a mode of divorce under which the husband gives her power to divorce to his wife under certain contingencies. Wife by exercising her power can divorce herself and it shall have the same effect as it is pronounced by the husband. However, authorising power to divorce does not deprive the husband’s right to divorce. It is recognised under both the Shias and Sunnis laws.
Concept of Talaq-e-tafweez
Meaning of Talaq-e-tafweez
Talaq-e-tafweez, where tawfeez means “delegate”, is also referred to as Talaq-i-tawhid or delegated divorce. It is a type of talaq, where the husband delegates the powers to his wife or other person to pronounce divorce under specified conditions. However, delegating powers does not deprive the rights and power of the husband to divorce. This delegation of power can only be done by her husband and is recognised under both the Shias and the Sunnis laws. He may delegate this power absolutely, temporarily, permanently, or conditionally. However, a permanent delegation of power is revocable but a temporary delegation given for a specified period is not revocable.
Nature and scope of Talaq-e-tafweez
Talaq-e-tafweez is basically an agreement made before or after the marriage stating that the wife has the power to divorce the husband under the specified conditions mentioned under the agreement. Provided that, the conditions under the agreement must be reasonable to account for separation via divorce. The reasonable conditions to get separated could be –
Husband marrying a second wife.
Husband not maintaining her wife or providing her with basic facilities.
Any other conditions that are not opposed to public policy.
And if the husband does any act which comes under the conditions mentioned in the agreement, then the wife has full authority to pronounce talaq. In such a way, she can get separated from her husband and dissolve her marital ties. However, if the husband does any act fulfilling the conditions under the agreement it does not automatically result in the divorce. The exercising of power depends upon the wife, whether she wants to divorce her husband or not.
Discretion of wife to exercise power
Under the agreement, there are stipulations mentioned by the parties stating that if the husband acts upon any such stipulation, a woman may enforce her right to divorce. It is to be noted that the happening of such contingency, does not by itself lead to divorce. This does not act as an automated divorce. Happening of any contingency gives power to the wife to divorce, not result in a divorce. It’s upon the discretion of the wife to pronounce talaq on the occurrence of such contingency. Therefore, to dissolve the marital relations, the wife has to exercise her powers.
Types of Talaq-e-tafweez
Talaq-e-tafweez is further classified into three types which are as follows –
Ikhtiyar (Choice) – Ikhtiyar is one of the types of talaq-e-tafweez. Under this, the husband vests power and authority onto the wife to pronounce and initiate the talaq whenever it seems reasonable. It means that the husband gave his wife a choice to cut off marital obligations. The wife can only use this choice to divorce under certain conditions that seem reasonable. However, such delegation can be for a day or a certain period of time, it’s at the discretion of the husband.
Amr-bi-ya (Liberty) – Under this, the decision as to talaq is solely determined by the wife. The wife shall be responsible for the dissolution of the marriage. The wife has the liberty or freedom to entertain or initiate the divorce, i.e., whether to divorce the husband or not.
Mashiyat (Pleasure) – Mashiyat is a type of talaq under which the husband gives his wife an option to exercise talaq. Under this, the wife has the freedom to initiate talaq upon his will. This type of talaq can be unconditional or may be subject to certain contingencies/ conditions. Non-fulfillment of conditions shall be sufficient reason for a wife to divorce herself and get herself free from the marital tie. The divorce takes place as it is pronounced by the husband and has the same effect.
Like, in the case ofSainuddin vs. Latifannessa Bibi (1918), the husband and wife made an agreement under which the husband gave power to his wife to pronounce triple talaq under certain conditions. The husband married to the second wife without the permission of his wife which falls under the condition to exercise the power of talaq. However, the first wife untied herself from marital obligations by pronouncing three talaqs. The Court held that the divorce is completely valid and effective as per Muslim laws.
Pre-nuptial and post-marriage agreements
Prenuptial agreements
Prenuptial agreements are the agreements that are entered into by the parties before or at the time of the marriage. In relation to Talaq-e-tafweez, the parties before or at the time of marriage specifically mention conditions as to which a wife can use his power to pronounce the divorce. Such contracts also outline the husband’s responsibilities and duties towards his wife and mere non-fulfillment could be a valid reason for the wife to exercise his right of talaq.
For instance, in the case of Mohd. Khan vs. Mst. Shahmai, (1972), a husband who was Khana Damad, under a prenuptial agreement undertook to pay a certain amount of marriage expenses incurred by father-in-law if leaving the father-in-law’s house and thereby conferred power on the wife to pronounce talaq on non-fulfillment. The husband left his house without paying a specified amount stipulated in the agreement. The wife, therefore, exercised her power and divorced herself. In the case, it was held that a woman divorced herself by exercising the power delegated to her and hence, is a valid divorce.
Post-nuptial agreements
Post-nuptial agreements or post-marriage agreements, on the other hand, are agreements where spouses set out the rights and responsibilities each spouse has during the marriage. It also outlines the financial assets one spouse will acquire after the event of divorce. In relation to Talaq-e-tafweez, the spouses enter into a contract where they set out the conditions that if the husband fulfils any of these conditions stipulated, the wife has the authority to divorce herself and get separated. Such contracts can be temporary or permanent in nature. However, permanent contracts are revocable whereas temporary contracts made for a specified time, once made cannot be revoked.
Delegation of power
Delegation of power is the main aspect of talaq-e-tafweez, where the husband delegates his authority to divorce. Under this, the husband gives the right to women to divorce and get separated from marital relations under specified conditions. This power is given through an agreement, stipulating conditions, and the nature of the agreement.
Time and effect of delegation
Time of delegation
The delegation of power to pronounce talaq can be given –
at any time prior to the marriage
During the marriage or
subsequent to the marriage
Delegation of power shall be considered perfectly valid at any time, either before the marriage, at the time of the marriage, or after entering into marriage. Every delegation shall have the same effect. However, the agreement as to the delegation of power entered prior to the marriage shall take into effect only after the marriage and shall not be binding upon the husband before the marriage of the parties.
Effect of delegation
The effect of delegation shall be that the wife shall act as a representative of her husband to pronounce talaq on his behalf. By delegation of power, her husband authorised her to dissolve the marriage but under specified conditions that are reasonable and are not opposed to public policy. The Talaq shall be deemed as it is made or pronounced by the husband only and shall have the same effect. The power of divorce to women is irrevocable if given for temporary or specified conditions but can be revocable if given permanently or unconditionally.
Eligibility to delegate the right of divorce
The husband can only delegate his right of divorce when he falls under the following conditions –
The husband should be of sound mind.
He should have attained the age of majority.
He has the absolute and unrestricted right to divorce.
Case laws and judicial interpretations surrounding Talaq-e-tafweez
Hamidoolla vs. Faizunnissa (1882)
Facts
In Hamidoolla vs. Faizunnissa (1882), the plaintiff, i.e., husband, and defendant, i.e., the wife had entered into an agreement (kabinnama) before their marriage, according to which she has the right to divorce her husband on the happening of certain contingencies such as, to allow to visit her father’s home four times a year, not to ill-treat her. The defendant therefore as per agreement conditions divorced herself on being ill-treated by her husband and on refusing to pay dowar money. Thereafter, the plaintiff filed restitution of conjugal rights against his wife.
Issues
Whether the divorce made by the defendant is contrary to Mohammedan law or not?
Contentions by Plaintiff
The Counsel for Plaintiff, Munshi Serajul Islam in the appeal contended that the delegation of power to divorce her husband is violative and contrary to Mohammedan law and therefore the divorce pronounced by the wife to her husband is invalid and does not dissolve the marital tie between them.
Judgement
The Calcutta High Court in this case held that the divorce made by the wife is not opposed to the policy of Mohammedan law and the divorce pronounced by her on behalf of her husband is completely valid. The Court stated that there are no findings based on the authority that prove the contentions of the plaintiff and further laid down that the Mohammedan law gives the husband to delegate its power to divorce to his wife on certain occasions. And, in the present case, the divorce made by the wife falls under certain conditions and so the power exercised by the wife as per kabinnama was not opposed to the policy of Mohammedan laws.
Asbi vs. Hashim M.U. (2021)
Facts
In Asbi vs. Hashim M.U. (2021), the petitioner and respondent were lawfully married in accordance with the Muslim laws. The petitioner was the wife of the respondent. Their marriage was solemnised on 04/05/2015 and a girl child was born on 10/02/2018 during their marriage.
The respondent divorced by pronouncing talaq and the third pronouncement was made on 28/12/2019 to the petitioner via registered post. The petitioner disputed the legal validity of the talaq pronounced by the respondent via post and filed a petition for restitution of conjugal rights. Thereafter, the respondent filed an Original Petition U/S 7(d) of the Family Courts Act, 1984 in the Family Court to declare the marital status between the petitioner and respondent.
Issues
Whether the Family Court has jurisdiction to declare the marital status of the parties filed u/s 7(d) of the Family Courts Act, 1984 or not?
Guidelines
Following are the guidelines/procedure stated in the case to be followed by the Family Courts while endorsing the application U/S 7 (d) of the Family Courts Act, 1984-
The notice shall be served to the respondent on the receipt of the petitioner.
On appearance of the both the parties, the Family Court shall formally record their statements and shall direct them to produce a talaq nama/ mubaarat agreement, if divorce is made in writing.
The Family Court on the basis of recitals (if talaq pronounced in writing) and statements, shall ascertain the validity of talaq/khula/talaq-e-tafweez.
On prima facie satisfaction by the Court that the talaq/khula/talaq-e-tafweez is valid, then the Court shall declare the status of the parties without any further delay.
Judgement
The Court in the present case, held that the pronouncement of talaq by respondent via registered post is completely valid as the other party had proper knowledge and intimation about the pronouncement of talaq and was made in accordance with the Muslim Personal laws. Therefore, the Court without any further delay disposed of the petition by declaring the status of the parties as divorce.
Mangila Bibi vs. Noor Hossain, (1991)
Facts
In Mangila Bibi vs. Noor Hossain and another, (1991), the petitioner, i.e., Magila Bibi was married to Noor Husain, dated 6/03/1986 who is the defendant in the present case. A Kabinnama was executed between the parties, where the husband delegated the power of divorce to Mangila Bibi.
The petitioner made contentions that she was misrepresented by her husband that he was a medical graduate which he was not and further stated that she was badly treated over there. Therefore, she exercised her delegated power to divorce herself and made herself free from marital obligations. She presented the divorce deed before the Muslim Marriage Registrar and Kazi dated 27/02/1988. The divorce was communicated to the opposite party but as per Kabinnama maintenance and dower were not paid by the husband so she made an application under Section 3 of the Muslim Women (Protection of Rights on Divorce) Act, 1986.
Contentions by defendant
The defendant in response to the application, contended that the petitioner is not a divorced woman and so cannot demand any maintenance, dower, and properties as a consequence of divorce. He stated that there never existed a delegation of power to talaq, if there was any there is no such contingency that happened. No existence of contingency events means there is no power to pronounce talaq. He further denied all the allegations made by the petitioner stating he ill-treated her when they were living together. He also pleaded that certain entries in Kabinnama were made against and without his knowledge.
Judgement
The Calcutta High Court held that the delegation of power to divorce is in the hands of the husband. He may either delegate it absolutely or conditionally and the same is not prohibited by the personal laws. This type of divorce is recognised and considered valid by Muslim laws. Therefore, the Court opined that it was quite open to her to divorce herself. The Court further on the basis of the finding held that the petitioner shall be provided with a relief to which she is entitled and the application made under Section 3 of the Muslim Women (Protection of Rights on Divorce) Act, 1986 shall be disposed of accordingly. The Court held the same on the observation that the petitioner after pronouncing talaq to her husband, executed the divorce deed before the Muslim Marriage Registrar and Kazi, who stated that the divorce was communicated to the other party. The same was stated by them during the examination in chief and was not challenged during the cross-examination. Therefore, the Court set aside his order of dismissing the application made under Section 3 of the Muslim Women (Protection of Rights on Divorce) Act, 1986, and ordered to determine the relief to which the petitioner is entitled and dispose of the matter expeditiously.
Conclusion
In conclusion to the above-mentioned points, it is however observed that Talaq-e-tafweez embodies an important role in the life of Muslim wives. Talaq-e-tafweez acts as a step to gender inequality by allowing women to exercise divorce under reasonable conditions. Not only that, it also upbrings women’s self-respect as she can put an end to the marriage if the husband marries a second woman or does not maintain her in marital relation or any such other reason. Also, by such practice of talaq, she will not be forced to live in marital relations due to the above reasons. She can pronounce divorce herself and let herself free from the marital responsibilities.
Frequently Asked Questions (FAQs)
What are the other modes for Muslim women to divorce?
The other way a Muslim woman can take divorce is by mutual consent, which is further sub-categorised as Khula or Mubarat, or by the death of the husband after fulfilling the iddat period which is of 4 months and 10 days, and in case of pregnancy, she has to wait till the delivery of the child or by the judicial decree under Dissolution of Muslim Marriage Act, 1939.
Is Muslim women eligible for maintenance after exercising their delegated power of divorce?
The Talaq pronounced by women under talaq-e-tafweez is considered as it has been given by the husband. Under, talaq-e-tafweez husband delegates the authority to pronounce talaq to herself on his behalf under the specified conditions. Therefore, she will be eligible for the maintenance and allowances as per The Muslim Women (Protection of Rights on Marriage) Act, 2019, and any other laws in effect.
What are the rights of a Muslim woman to divorce under the Dissolution of Marriage Act, 1939?
Section 2 of the Dissolution of Marriage Act, 1939 specifically mentions the grounds where a Muslim woman is entitled to obtain a decree of divorce. She can file for dissolution of her marriage if the husband does any act that falls under one or more of such grounds namely if the whereabouts of the husband are not known from the period of four years or the husband has been imprisoned for more than seven years or more or if husband is impotent, insane for the period of two years or unable to fulfil marital obligations or other such grounds that seems valid for the dissolution of marriage. Thus, Section 2 of the Act, empowers the Muslim woman with the right to obtain a decree of divorce from the court.
By the term itself, we can tell that using artificial means like computer systems or machines to think like humans to perform day-to-day tasks, analyse problems, make decisions, etc. To make it easier to understand, some of the examples of AI that we use every day are taxi booking apps, chatbots, streaming apps, image recognition through Google Lens, navigation and travel, and voice assistants like Apple’s Siri and Alexa, which act as personal assistants, allowing us to make calls, send texts, etc. with one instruction given by you. These examples show that AI has become a part of our lives, similar to smartphones and the internet. This trend is repeating in the case of business as well.
According to the survey conducted by TCS, 86% of senior business leaders have deployed AI to enhance revenue globally, while in India, 74% of enterprises are working with AI (IBM Global AI Adoption Index 2023). Some reasons for adopting AI are advanced decision-making, reduced response time (2.5 hours/day), cut cost (28%), improved operational efficiency and productivity, enhanced customer-related services, increased productivity, and many more.
Customer relationships
64%
Increase productivity
64%
Increase sales
60%
Save cost
59%
Reduce respond time
53%
Reduce the risk of errors
48%
Enhance decision making
44%
Streamline
42%
Overview of how businesses are using AI for efficiency in different sectors
Customer services
Marketing
Sales
IT operations
Fraud detection
Legal department
Accounting
AI in customer-related services
AI tools such as chatbots are revolutionising customer service by offering a wide range of capabilities and benefits. They go beyond simple tasks like password generation to handle complex queries and provide personalised assistance.
One key area where chatbots excel is customer feedback. They can collect feedback in real-time, analyse customer sentiment, and identify pain points. This information can then be used to improve products, services, and customer experiences.
Chatbots are also adept at recommending products based on customer preferences and demographics. By analysing past purchases, browsing history, and other data, chatbots can make personalised recommendations that increase the chances of a sale. Additionally, they can provide customised offers and discounts, further enhancing the customer experience.
Another significant advantage of chatbots is their ability to analyse customer behaviour. They can track customer interactions, identify patterns, and predict future needs. This information can be used to develop targeted marketing campaigns, provide proactive support, and optimise the overall customer journey.
Chatbots are also known for their quick response times. They can handle multiple queries simultaneously, ensuring that customers receive immediate assistance. This can significantly reduce wait times and improve customer satisfaction.
Moreover, chatbots are available 24/7, providing round-the-clock support. Customers can interact with chatbots at any time, regardless of the time zone or day of the week. This level of accessibility fosters a sense of trust and convenience, enhancing customer loyalty.
The success of chatbots in customer service is evident in the impressive statistics. According to a report, Tidio’s AI-powered chatbot, LYRO, resolves 70% of customer requests. Furthermore, 80% of customers have a positive experience interacting with AI.
Several notable companies have incorporated chatbots into their customer service strategies. For example, HubSpot, Impulse Creative, and Apple have all successfully implemented chatbots to enhance customer engagement and satisfaction.
How AI is used for customer services
Improve productivity: AI-powered chatbots enable customers to answer basic queries, eliminating time-consuming repetitive tasks that save lots of time and help invest in more complex tasks.
Proactive recommendations: AI helps in giving customised recommendations based on the data available, customer preferences, and search patterns.
Give a quick response around the clock.
Keeps the customer updated through emails or posts.
Customer insights: The customer service team can use the data analysed by the system based on the customer preferences, purchases, search history, and every piece of data to gain insights on the market for improving the product or services and plan relevant marketing strategies.
AI in marketing
According to a report by HubSpot, the use of artificial intelligence (AI) and automation has revolutionised the way sales and marketing teams operate. These technologies have brought about significant time savings, allowing teams to focus on more strategic and creative tasks.
The report highlights that the sales team can save up to 2 hours per day by deploying AI and automation solutions. These solutions streamline repetitive tasks such as data entry, lead qualification, and scheduling appointments. By automating these processes, sales representatives can dedicate more time to building relationships with potential customers and closing deals. These tools assist marketers with tasks such as content creation, email marketing, and social media management. This allows marketing professionals to focus on developing innovative campaigns, analyzing customer data, and refining their strategies.
The report also indicates that 63% of marketanalysinging teams use AI for administrative tasks. AI-powered solutions can handle tasks such as scheduling meetings, managing calendars, and responding to routine inquiries. This frees up marketers to engage in more value-added activities, such as market research, brand building, and customer engagement.
The integration of AI and automation in sales and marketing functions has not only enhanced efficiency but also improved overall productivity. By automating repetitive tasks, teams can allocate more time and resources to strategic initiatives, leading to increased innovation, better decision-making, and ultimately, improved business outcomes.
How the marketing team uses AI
Market research: While traditional market research involves conducting surveys, one-on-one interviews, and manual feedback, which is time-consuming, AI simplifies this task by providing data-driven insights into strategic decision-making. Some market research tools are SEMrush Market Explorer, Poll the People, AI Persona Builder, etc.
Data analysis: Predictive analytics foresees market trends, customer demands, and preferences. With the help of this data, the marketing team can optimise the resource efficiently and prevent potential risks.
Content creation: AI-powered content creation helps get unique digital marketing ideas for product descriptions, social media posts, audio, video, and images. Some AI tools available for content generation are AI Writer, Gemini, Claude, Chat GPT, Chatsonic, etc. Craiyon, DALL-E, and Midjourney for image generation.
Media buying: The first step in marketing a product involves creating awareness among the target audience. Media buying involves purchasing a platform like television, radio, or social media to showcase the product. AI tools simplify this by real-time bidding for space on websites by analysing customer patterns and preferences and optimising media buying strategies for maximum ROI.
AI marketing tools: AI-powered Pattern89 is the marketing tool for Instagram, Facebook, and Google Ads that predicts the best ways to market the product for each penny spent. It has special features like ad placements, an ad assembler, an ad extender, etc. Jasper uploads business knowledge, creates campaign assets, optimises content to rank on page 1 in SEO mode, matches your brand voice and style guide, and has additional features like Chrome extension and privacy. Semrush helps grow organic traffic with SEO tools, competitor research, PPC and social media marketing, content marketing, and tracking of SERP positions.
AI in sales
According to HubSpot, out of the 648 sales professionals and 300 business leaders surveyed, 74% are using AI and automation, and 31% are using generative AI for one or the other work in sales. They are used for different tasks like automating manual work (35%), data-driven insights (34%), writing sales content (31%), analysing sales calls (28%), lead generation (26%), and qualifying leads (25%).
Customised sales messages and responses based on purchase patterns.
Prioritise leads in the sales pipeline.
Customer insights from the CRM system, email interaction, and support tickets.
Forecast market trends based on seasons and predict future sales for better resource allocation.
Optimise pricing based on demand and competition.
Competitive analysis to stay updated in the market.
Continuous improvement from every interaction history.
AI tools like Crystal and Humantic AI provide prospect insights for better sales messaging. Zoominfo SalesOS- intelligent software that provides a vast and updated database and data enrichment services. LinkedIn sales navigator offers lead discovery tools. Apollo.io for accurate real-time data, CRM systems, and automation tools for marketing. Cognism– prospects and lead generation. Instantly.ai– reach prospects’ inboxes with their deliverability network, optimise with campaign analytics, instantly sales accelerator.
AI in the IT sector
According to the IBM Global AI Adoption Index report, IT process automation, security, and threat detection are the popular applications of AI; 42% of IT professionals have already deployed AI. These tools are used for various services like software development, infrastructure management, AIops, and quality assurance.
Software development: AI helps automate software programming, increasing efficiency by 24-hour software testing, keeping updates on software systems, and improving security.
Quality assurance: when software is developed, it is to be tested for quality and generate test data. Manual testing takes almost one-third of the testing cycle. With the help of AI-powered tools, we can automate testing operations without human errors, supervise API testing, and determine the type of method for the test script. This eliminates repetitive tasks, enhancing efficiency and cost savings.
AIops: The term AIops- Artificial Intelligence for IT operations was coined by Gartner in 2016. It uses machine language, natural language processing, and other methodologies to improve operational efficiency by managing IT based on a multilevel platform, gaining insights into past and present states of IT systems, and providing solutions. IT operations are challenged by the rapid growth in data volumes generated by IT infrastructure and applications that must be captured, analysed, and acted on, says Padraig Byrne, senior director analyst at Gartner.
According to a Forbes Advisor survey, 51% of the respondents have a positive idea of using AI in fraud detection. It can detect fraud related to cards, fake account creation, account takeovers, and credential stuffing with LLM-based assistants running RAG on the backend. In the banking sector, AI algorithms detect unusual transactions based on previous transaction history and alert the customer. It monitors transactions 24/7 and can handle complex databases, reducing costs and gaining customer trust.
Artificial intelligence (AI) is rapidly transforming the legal industry, and the legal department is no exception. AI-powered technologies are being used to automate tasks, improve efficiency, and even provide insights that can help lawyers make better decisions.
One of the most significant ways that AI is being used in the legal department is to automate tasks. This includes tasks such as document review, contract analysis, and legal research. AI-powered tools can quickly and accurately review large volumes of documents, identify key issues, and extract relevant information. This can free up lawyers to focus on more strategic tasks, such as providing advice to clients and developing legal strategies.
AI is also being used to improve efficiency in the legal department. For example, AI-powered tools can be used to manage calendars, track deadlines, and file documents. This can help lawyers stay organised and avoid missing important deadlines. AI can also be used to create automated workflows that can streamline processes and reduce the amount of time it takes to complete tasks.
In addition to automating tasks and improving efficiency, AI is also being used to provide insights that can help lawyers make better decisions. For example, AI-powered tools can be used to analyse data and identify trends. This information can be used to help lawyers develop more effective strategies for their clients. AI can also be used to identify potential legal issues and risks. This information can help lawyers advise their clients on how to avoid these issues and risks.
The use of AI in the legal department is still in its early stages, but it is clear that AI has the potential to revolutionise the way that legal services are delivered. AI-powered technologies can help lawyers to be more efficient, effective, and insightful. As AI continues to develop, we can expect to see even more innovative and sophisticated uses of AI in the legal department.
Here are some specific examples of how AI is being used in the legal department today:
Document review: AI-powered tools can quickly and accurately review large volumes of documents, identify key issues, and extract relevant information. This can save lawyers a significant amount of time and effort.
Contract analysis: AI-powered tools can be used to analyse contracts and identify potential risks and issues. This can help lawyers negotiate better contracts and avoid disputes.
Legal research: AI-powered tools can be used to search through legal databases and identify relevant case law, statutes, and regulations. This can help lawyers to research legal issues more quickly and efficiently.
Calendar management: AI-powered tools can be used to manage calendars, track deadlines, and file documents. This can help lawyers stay organised and avoid missing important deadlines.
Workflow automation: AI-powered tools can be used to create automated workflows that can streamline processes and reduce the amount of time it takes to complete tasks. This can help lawyers to be more efficient and productive.
AI is a powerful tool that can be used to improve the efficiency, effectiveness, and insightfulness of the legal department. As AI continues to develop, we can expect to see even more innovative and sophisticated uses of AI in the legal department in the years to come.
AI in accounting
According to a Thomson Reuters survey, 59% opted for increased productivity, 75% for internal efficiency, and 67% for intelligent advisory by utilising AI-powered tools in tax and accounting services. Some tasks, like invoice processing and reconciliation, are time-consuming and prone to human errors. This can be eliminated by using AI, which can scan the documents and collect relevant data for data entry with high accuracy and speed. By choosing the right AI tool, we can use it for budgeting, tax compliance and preparation, bookkeeping, and audit support.
Artificial intelligence (AI) is revolutionising various industries, and the accounting profession is no exception. AI-powered technologies are transforming how accountants work, enabling them to perform tasks more efficiently, enhance accuracy, and gain valuable insights from financial data.
Automating repetitive tasks
One of the most significant applications of AI in accounting is the automation of repetitive tasks such as data entry, invoice processing, and bank reconciliation. AI-powered tools can extract data from various sources, including invoices, receipts, and bank statements, and automatically populate accounting software. This eliminates manual data entry errors, saving accountants time and reducing the risk of discrepancies.
Enhnced accuracy and compliance
AI algorithms can analyse large volumes of financial data to identify anomalies, inconsistencies, and potential fraud risks. By leveraging predictive analytics, AI can assist accountants in detecting suspicious transactions, ensuring compliance with regulations, and minimising the risk of financial misconduct. This enhances the accuracy and transparency of financial reporting.
Streamlined audit processes
AI is transforming audit processes by enabling auditors to analyse vast amounts of data more quickly and efficiently. AI-powered tools can identify patterns and trends in financial transactions, helping auditors focus on areas of higher risk. This streamlines the audit process, reduces the time required for manual review, and improves the overall effectiveness of audits.
Data-driven insights and decision-making
AI can analyse financial data to identify insights and trends that might not be immediately apparent to human accountants. By leveraging machine learning algorithms, AI can uncover hidden patterns and correlations in financial data, enabling accountants to make more informed decisions. This can lead to improved financial planning, budgeting, and forecasting.
Enhanced customer service
AI-powered chatbots and virtual assistants can provide real-time customer service to clients, answering queries, resolving issues, and providing support. This enhances the client experience, reduces the workload of accounting professionals, and frees up their time for more strategic tasks.
Upskilling and reskilling
As AI transforms the accounting profession, accountants need to upskill and reskill to stay relevant. This includes developing skills in data analytics, machine learning, and artificial intelligence. By embracing AI and continuously learning, accountants can position themselves for future success.
Conclusion
Many such AI tools are available in the market, either rule-based or machine-learning-based, helping businesses improve efficiency and productivity. As the saying goes, “Everything has advantages and disadvantages.” AI also has potential risks and dangers like job losses, misinformation, data privacy, and automated weapons. By analysing the risks, we can overcome them and build a future with AI.
What all of us have to do is make sure we are using AI in a way that is for the benefit of humanity, not to the detriment of humanity. – Tim Cook
This article is written by Moiz Akhtar. This article explains the relevance and necessity of trade marks in today’s modern era where the world is running on complex business machinery. This article explains Section 11(1) of the Trade Marks Act, 1999 exhaustively. It also provides the legal remedies available against the refusal of trade mark registration. It also provides an understanding to the readers about the applicability of Section 11(1) and the Registrar of the trade marks functions according to the Act.
Table of Contents
Introduction
Any person or proprietor who owns a business of goods or services in India and those products or services, whether sold in the Indian market or abroad, can apply for registration of his trade mark. People having business, whether it is a proprietorship or a company, usually register for a trade mark under the Trade Marks Act, 1999(hereinafter referred as Act). A trade mark is a sign or logo that a company or any other entity owns which has distinctive marks, designs, paintings, and signs that create an identity for that entity in the market. Trade marks are used by companies, proprietors and businesses to create a distinguishing and distinctive identity for their products or services in the market. For example, MRF tyres are popular in the Indian market, and people recognise the company by its logo in which a young muscular man is holding a tyre in his two hands above his head. People usually look for MRF trade mark on the tyre while purchasing to check its originality whether the tyre is manufactured by MRF or not. Trade marks play a crucial role not only in sales and marketing of the products but also establishes uniqueness for the brand.
This article talks about Section 11(1) of the Act and how this section prevents registration of new trade marks if they look alike or look similar to any of the pre-registered trade marks. However, before moving onto Section 11 let us understand the concept of registration of trade marks.
Registration of a trade mark
Chapter III of the Act deals with provisions and conditions for the registration of a trade mark in India. Under Section 18 of the Act, a person can apply for the registration of a trade mark. Under Section 18(1), a person can give in writing to the Registrar of the trade mark for registration of a trade mark wherein a person wants to claim a trade mark used or make a proposal for using a trade mark by registering it.
The proprietor should mention in the application to the Registrar the nature and kinds of goods and services to the market. The application for the registration of trade marks is to be filed in the office of the Registry of trade marks. The Indian government has established a trade mark registry under the Trade and Merchandise Marks Act, 1958. Currently, India has five trade mark offices at Mumbai, Ahmedabad, Kolkata, New Delhi and Chennai. The proprietor should file the application in that registry office under whose jurisdiction his location of business falls. For example, if a person has his business located in Gurgaon, then he should file the registration application in the trade mark registry office of New Delhi only.
Along with the application of registration, the proprietor has to specify what category of goods and services his business renders and have to pay the respective fees along with the application. Each category of goods and services has different fees and the fees are to be paid by the proprietor while filing his application for trade mark registration.
After the application has been filed by the proprietor, the trade mark Registrar will advertise the acceptance of the application made for the trade mark. The acceptance could be absolute or along with conditions and amendments. In case of conditions and amendments, the application will be accepted by the Registrar only after the changes in the application and the trade mark have been made by the proprietor. The Registrar may also refuse to accept the application under Section 9 and Section 11 of the Act which deals with grounds for refusal of the trade mark.
The Registrar will evaluate the application and the trade mark on all the grounds mentioned in both Section 9 and Section 11. An application for trade mark should pass the test of both Section 9 and Section 11 in order to be declared accepted by the Registrar.
Grounds for refusal of a trade mark under Section 11
Section 11 of the Act provides for relative grounds for refusal of registration of trade mark. The grounds for refusal mentioned in this Section are relative in nature i.e., if the new applied trade mark resembles, whether completely or partly, with any pre-registered trade mark, then the registration of the new trade mark will be denied. This section protects the goodwill established by earlier trade marks and prevents other new trade marks from benefiting from the goodwill established by other trade marks in the market.
The Section begins with “save as provided in Section 12”. Hence, it would be pertinent to first discuss in brief about section 12 (Section 12 is, however, later discussed in detail). This Section provides that the Registrar may permit a trademark to be registered by more than one proprietor, such trademarks being identical or similar in nature, provided the case is of honest and concurrent use.
Grounds provided under Section 11(1)
Section 11(1) provides that a trade mark shall not be registered if it is similar or identical to the already registered trade mark.
Clause (a)
Clause (a) of Section 11(1) of the Act says that if any proprietor has applied for the registration of a trade mark, then the Registrar of the trade mark has the authority to deny the proprietor for registration on the basis of the fact that the applied trade mark is found to be identical to any other pre registered trade mark of any other business. Further it is also verified by the Registrar that the applied trade mark does not sell similar or same kinds of goods or services that a pre-registered trade mark sells. For example, the Nike logo consists of a check mark which is its trade mark. Consumers all over the world identify Nike shoes from its logo or trade mark. Along with the Nike swoosh symbol, Nike also has a tagline “Just Do It”. Nike has a huge reputation in India and abroad and has created goodwill among its consumers. More or less the goodwill that has been established by the brand in the consumer market leads to its popularity and authenticity. Consumers would find its trade mark on the shoes to ensure that the shoes have been manufactured by Nike.
Suppose a proprietor applied for registration of a trade mark for his shoe manufacturing company. The trade mark that he applied for is the same as Nike’s trade mark i.e a check or swoosh. If the Registrar passed the trade mark then the new brand would take advantage of the goodwill that has been established by Nike among the consumer market. There is a significant chance that consumers may confuse the newly registered trade mark with Nike’s trade mark and end up buying the shoes. The proprietor’s trade mark is the same as Nike and his products are also the same as Nike’s product i.e shoes.
In this case, the proprietor has an unfair advantage over its other competitors as he is selling his shoes under the misused goodwill of Nike. Hence, due to this reason the Registrar would first check the applied trade mark for registration with other pre registered trade marks so that the new business should not be taking unfair advantage of already established well known brands in the consumer market. Here the Registrar shall ensure that the applied trade mark is not identical or similar to the existing trade marks in the market. Also the proprietor cannot apply for the same categories of the goods that have been sold by other established brands with similar kinds of trade marks.
Clause (b)
Clause (b) of Section 11(1) of the Act says that the Registrar of the trade mark shall not register the applied trade mark, if the new applied trade mark might create confusion among the consumers about its similarity or association with any pre registered trade mark. The Section further mentioned that the Registrar shall also compare the class and categories of goods and services sold by the new applied trade mark with that of pre-registered trade mark. If the Registrar finds, there is a significant chance that the applied trade mark will create confusion among consumers due to the fact that it looks similar to any pre-registered trade mark and sell similar kinds of goods to that of any pre-registered trade mark then, the Registrar will not register it.
Applicability of clause (a) and clause (b)
Clause (a) of Section 11(1) deals with those trade marks which are identical to some other pre-registered trademarks. If the new identical trade marks sell the same goods and services as the old trade mark, then the new one has the advantage of using the brand value of the old trademark. Clause (a) ensures that no new trademarks look identical to any well-known pre-registered trade mark. This clause protects the old established business from unfair means of passing off by new trademarks. Even if the new registered trademark is identical to any old trademark then the Registrar will make sure that the new trademark sells different kinds and categories of goods so that no similarity would arise among the goods and services of the two trademarks. In case any new registered trademark is found identical to an old trademark and sells the same kinds of goods and services then, the old trademark has the right to initiate legal action against the new registered trademark on the grounds of passing off.
Whereas, Clause(b) of Section 11(1) operates on the context of similarity between two trademarks i.e. one new and one old. In case any new trademark is optically or phonetically similar to any old trademark and the new trademark sells the same kinds of goods and services as of the old trademark then the public might get confused among the two trademarks and think both of them are the same. Confusion will arise among the public if both trademarks look similar and sell the same kinds of goods and services. Here, even if the new trademark is not identical to the old trademark but similar enough to the old one to create confusion among the public then also the Registrar will not register it. In this case also the old trademark has the legal right to sue the new trademark on the grounds of passing off.
Both the Clauses under Section 11(1) protect the goodwill and brand value established in the market by the old trade mark. These Clauses ensure that no new trademark takes unfair advantage of the goodwill of any well-known trade mark in the market. If in case any potential chances of passing off is found then, the old trademark has legal right to protect its trade mark and to bring injunction against the infringing mark.
How to overcome objections under Section 11(1)
Section 12 of Trade Marks Act (honest and concurrent use)
The way to overcome objections under Section 11(1) is through an honest concurrent route provided under Section 12 of the Act. In an honest concurrent route, the proprietor has to prove to the Registrar of the trade mark that he is using the trade mark for years and he used the trade mark in good faith. The Registrar must be satisfied that the proprietor has used the trade mark in good faith and has no ill intention to use the goodwill of any pre-registered trade mark. In this case, subject to the satisfaction of the Registrar, the proprietor could be allowed to register the trade mark if it resembles any other pre registered trade mark or identical to any other trade mark. However the proprietor has to show the Registrar the followings-:
The proprietor has to prove to the Registrar that he has been using the trade mark for a long time and has no knowledge of its identical or similar looking nature with any other pre registered trade mark.
If the proprietor has printed pamphlets for the promotion of his goods and services in the past and has used the same trade mark then, he can provide the same pamphlet to the Registrar in order to prove that he has been using the mark for a long time or from the commencement of his business.
And if the goods and services are also similar then, the proprietor has to submit copies of his books and accounts to the Registrar in order to prove that he is selling those categories of goods and services from the time of commencement of his business. The Registrar must satisfy himself with all the apt information before allowing exception under Section 12 of the Act.
The Registrar could demand any other supporting documents from the proprietor before allowing the exception of concurrent use.
Appeal under Section 91 of Trade Marks Act
If the Registrar of trade mark denies the registration of any trade mark to any proprietor, then the proprietor has the right to appeal against the denial order of the Registrar in the High Court of relevant jurisdiction under Section 91(1). The condition for making an appeal against the denial order is that the proprietor has to make the appeal within three months from the date of the denial order by the Registrar. Further no appeal shall be allowed under Section 91(1) of the Act after the expiry of the time period of three months.
However there is an exception to this rule, that is, if the plaintiff has sufficient reasons not to apply for appeal within three months of the denial order of the Registrar and he is able to satisfy the High Court with his reasoning, then the High Court can entertain the appeal even if it is done after three months. Under Section 91, if the High Court allows the proprietor to register the trade mark, then the denial order by the Registrar becomes invalid, and the Registrar will register the trade mark.
Judicial precedents surrounding Section 11(1) of Trade Marks Act, 1999
Modicare limited vs. Registrar of trade marks (2022)
Facts of the case
In this case, the Registrar of the trade mark denied the plaintiff from registering its trade mark “Saloon Professional” stating that the trade mark would create a connection between the words used for the trade mark and the categories of goods and services it offers. People will easily be able to recognise the products and services offered under this trade mark by merely looking at the trade mark. Also, the Registrar denied the registration of the trade mark because the trade mark is similar to an early registered trade mark and registering this trade mark would lead to the violation of Section 11(1)(b) of the Act.
Disappointed with the order of the Registrar, the plaintiff i.e Modicare, appealed to the High Court under Section 91(1) of the Act and cried for relief. The appellant argued that it has been using the trade mark “saloon professional” since 2003 along with its flagship housemark modicare. The appellant applied for the registration of two trade marks namely modicare saloon professional and “saloon professional”. The mark “modicare saloon professional” was registered but objections were raised against the mark “saloon professional” by the Registrar. Both the trade marks are applied for class 3 products which include hair care, hair cream, shampoo, hair colour, hair conditioner, hair oil, hair lotions and other hair products. The council for the appellant argued that “saloon” and “professional” are both different words and together they create a distinctive wordmark that is unique to the appellant only.
Issue raised
Whether or not the denial of registration of the trade mark “Saloon professional” by the Deputy Registrar of trade mark was justified
Judgement of the case
The Delhi High Court held that the word saloon professional is being used by the appellant as a logo but the appellant had applied for the registration of the word under the word mark. Registering the word “saloon professional” under word mark would restrict other businesses from using those words. The appellant agreed to change the trade mark category from the word mark to the device mark. Further, the court directed that association of the trade mark “modicare saloon professional” with “saloon professional” should also be advertised. On these terms the court allowed the appellant to register the trade mark.
Corn Products Refining Co. vs. Shangrila Food Products Ltd.(1959)
Facts of the case
In this case, the appellant has registered a trade mark named GLUCOVITA which is a dextrose (glucose-d powder mixed with vitamins). The respondent in this case was a biscuit manufacturer who made biscuits named GLUVITA containing glucose. The respondent made an application for registration of its trade mark “gluvita”. The appellant opposed the respondent’s application for registration of the trade mark “gluvita” on the ground that there is a similarity between the words glucovita and gluvita. The appellant stated that the public might get confused between the two trade marks.
Deputy Registrar of the trade mark analysing the case concluded that the words “glucovita” and “gluvita” were not phonetically as well as visually similar and hence the chances of the public being deceived are very unlikely. The Deputy Registrar also stated that the syllable “CO” in glucovita makes the word different from the word “gluvita” and both “glucovita” and “gluvita” belong to different descriptions of goods under class 30.
The appellant appealed in the Bombay High Court regarding the order of Deputy Registrar. Bombay High Court set aside the order of the Deputy Registrar stating that there are ample chances of the public being deceived because, the respondent’s trade mark “gluvita” is sufficiently similar to the appellant’s trade mark “glucovita” and will create confusion among the public.
The respondent appealed against the single judge appellate bench order in the same High Court, which was further heard by a division bench. The division appellate bench held that the trade mark glucovita has gained a reputation specifically among “trade people” and not among the general public and hence the chances of the public being deceived by the respondent’s trade mark gluvita is minimal. The appellant again appealed to the Supreme Court regarding the order of the appellate bench of Bombay High Court.
Issue raised
Whether the trade mark “Glucovita” and “Gluvita” are sufficiently similar at first impression?
Whether there is a chance of arising confusion among the public between the two trade marks?
Judgement
The Supreme Court after taking reference of several cases held that identical similarity between two rival trade marks is not the only test, the test of trade connection between different goods is also to be done in order to check whether there are ample chances of deception and confusion.
The court held that there is an establishing trading connection between powder glucose manufactured by the appellant and glucose biscuits manufactured by the respondent. People might think that the glucose biscuits “gluvita” is made from glucose powder which is sold by the appellant under the trade mark “glucovita”.
The court also upheld the view taken by justice Desai that both the marks are similar in the first impression and might cause confusion among the public of our country. The Supreme Court dismissed the order of the division appellate bench of the Bombay High Court and allowed the appeal.
Cadila Healthcare Ltd. vs. Cadila Pharmaceuticals (2001)
Facts of the case
In this case, the appellant (Cadila Healthcare Ltd) filed an injunction suit against the respondent Cadila Pharmaceuticals for using a similar drug name as used by the appellant. Cadila Healthcare who is the appellant here manufactured and sold drugs for brain malaria treatment under the name FALCIGO. The appellant registered the trade mark Falcigo in 1996. The respondent sold drugs for malaria treatment under the name FALCITAB and registered the trade mark in 1997.
Both ‘falcigo’ and ‘falcitab’ had different chemical compositions but they are used in the medical industry for the treatment of the same disease i.e. brain malaria. When the appellant came to know about the fact that the respondent has registered the trade mark “falcitab” and sells the drug under it, the appellant filed a suit of injunction to restrict the trade of Falcitab against the respondent on the ground that the trade mark “Falcitab” is similar to appellant’s trade mark i.e. ‘Falcigo’.
Further, appellant also claimed that similarity between the names of the two drugs creates confusion among the public regarding which drug to buy, and this leads to passing off. Passing off means unauthorised use of one’s trade mark by another and getting benefits from the goodwill established by the former. However, the Vadodara District Court dismissed the injunction suit by stating that both the drugs are Scheduled L category of drugs and are not directly sold by pharmacies. The court also stated that the chances and likelihood of the public being confused between the two trade marks is minimal.
The appellant again filed an appeal in the High Court but the appeal was dismissed. The appellant filed an appeal in the Supreme Court. The appellant contended that although both the drugs are Scheduled L categories of drugs and were only sold to clinics and hospitals on the prescription of a medical practitioner, medical practitioners are also subjected to human error.
Issue raised
Whether the sale of the drug Falcitab by respondent leads to passing off?
Are the two trade marks i.e Falcigo and Falcitab similar?
Judgement
The Supreme Court stated that in India, a large number of the public is illiterate and doesn’t know the English language hence, the Lower Court should keep this fact in view while deciding a case of similarity of trade marks or identity of a product/drug. Further, the Supreme Court also established several principles that should be considered while deciding a case of passing off. The principles are as follows-
To check the nature of the mark used for the trade mark, whether it is a label mark or word mark or a mix of both.
To check the degree of similarity between the two trade marks, if they are phonetically similar then they both will generate similar ideas.
To check the nature of goods and services sold by both trade marks. If both trade marks sell the same or similar goods and services, then the likelihood of passing them off is higher.
To check the class of consumers who are going to purchase the product. Whether the consumer class belongs to an educated background or not, whether they have the intellect to differentiate between the trade marks or not.
To check whether the trade mark in dispute is selling the same or similar types and categories of goods to that of its rival trade mark.
To check how the goods can be purchased and from where it can be purchased.
To check any other dissimilarity between the two trade marks.
By stating all these above principles, the Supreme Court returned the case to the Trial Court and disposed of the petition.
Conclusion
As the economy is booming in India, trade and business activities are expanding. More and more numbers of trade marks are being applied for registration. Hence, the Act as well as its application is widely used and referred to. As more indigenous as well as foreign corporations are increasing their business activities in India, more stringent application of trade rules along with protection of trading rights of individual businesses is the necessity of today and future. Configuring commerce standards to a simpler ease of doing business environment and legal frameworks that support the growth of modern businesses are intrinsic to the legal industry. The Trade Marks Act 1999, The Copyright Act, 1957, Sales of Goods Act 1930, etc, are not only necessary but are core to the lifelines of the Indian businesses.
Frequently Asked Questions (FAQs)
What is a trade mark?
A trade mark is a combination of words, symbols, pictures or designs used by a business to establish a distinctive identity for its products and services in the market. A trade mark helps the consumers to identify the brand or the business among other businesses and brands present in the market. A trade mark serves as an identity card for a brand or business which sells any specific class of product or a variety of products of different classes. For example, Parle is a well-known brand in India that manufactures biscuits of various types and flavours. Parle has established itself as a well-known manufacturer, and consumers identify the brand by its trade mark, which is a house-shaped pentagon of red colour and inside it, Parle is written in uppercase.
Who is the Registrar of trade marks?
The Registrar of the trade mark is appointed by the Central Government. Central government issues notification through its Official Gazette about the appointment of the Controller General of Patents, Designs and Trade Marks, who also serves as the head of trade mark registry offices in India. Currently, India has five trade mark offices at New Delhi, Mumbai, Chennai, Ahmedabad and Kolkata respectively.
What is the passing off of a trade mark?
Passing off of a trade mark means when a person or business sells its goods to the consumers pretending it to be goods of another business or brand. In case of passing off, one business takes advantage of the goodwill established by another business by mocking its trade mark or logo. Generally, consumers get confused if two trade marks look similar and end up purchasing the product of one of the brands. If a brand is well established and has goodwill in the market then other businesses might take undue advantage of it by just mocking the trade mark or logo of that established brand.
What are the different types of trade marks?
There are many kinds of trade marks there namely product marks, service marks, word marks, device marks, certificate marks, collective marks, series trade marks, unconventional trade marks, colour marks, shape marks and sound marks. All the mentioned marks are used as trade marks and all of them are distinguishable from one another. Generally, a unique and distinctive trade mark is preferred to avail legal protection under the Trade Marks Act 1999.
How to register a trade mark in India?
Under Section 18 of the Indian Trade Mark Act 1999, a person can apply for the registration of a trade mark. Under Section 18(1), a person can give in writing to the Registrar of the trade mark for registration of a trade mark wherein a person wants to claim a trade mark used or make a proposal for using a trade mark by registering it. Further, the proprietor has to apply in writing to the registry office of the trade mark depending upon the location at which his business is registered. For example, if a business is registered in any place in the State of Maharashtra, then the proprietor has to apply for the registration of his trade mark in the office of the Registrar situated in Mumbai.
What is the difference between Section 9 and Section 11?
Section 9 provides for absolute grounds of refusal, meaning thereby that if any of the grounds mentioned under Section 9 fulfilled, the registration will be straightaway refused. However, if a particular case of registration falls under Section 11, then such applicant will be first given a hearing so as to satisfy the Registrar regarding how his proposed trade mark is different from the previously existing trade mark.