Are micro-organisms and micro-biological processes patentable in India

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November 4, 2021

micro-organisms — Image Source: https://rb.gy/mcoiv4

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

Introduction

The patent is a kind of intellectual property right, a legal document awarded by the Government of a State, which provides an exclusive right to the patent holder, vis-à-vis his patented product, for a fixed number of years. Inventor is also provided with Monopoly rights over the product. The patentability criteria are provided in Indian Patent Act 1970, in Section 3 (k) of the Act.

Moreover, Section 2 of the Act, says that anything that is novel(new) with commercial value and industrial utility can be patented. Novelty means an invention that is not present in the public domain or as common public knowledge. Anything, which is already in use, or known to the public, simply becomes a non-patentable subject matter. Inventive step means that there has been some sort of technological advancement to the existing technology. Industrial utility means that the subject matter can be commercially used and be developed for mass utilization.

A microorganism refers to a living organism that is microscopic. The study related to microorganisms is called microbiology. Microorganisms can be categorized as bacteria, fungi and protists, though it does not cover viruses and prions. Many virologists consider viruses to be non-living as they hardly fulfil all the necessary conditions of life. Viruses can only replicate themselves by infecting the cells of the host. Micro-organisms are mostly unicellular or cell-cluster microscopic organisms.

The subject covering the patentability of the microorganisms is very tricky and irregular. The World Trade Organisation Agreement i.e Trade-Related Aspects of Intellectual property Rights (TRIPS), is a multilateral agreement covering IP. The important thing is that Section 27 of TRIPS allows microorganisms to be patented, and thus in precedence many nations are now allowing microorganisms to be Patented.

Significance of patenting microorganisms

The question arises that, why on earth is there a need to patent micro-organisms, the answer simply lies that is to further conduct research. Moreover, the genetic material of these microorganisms is used as raw material by bio- technologists. The first-ever patent that was granted for microorganisms was awarded to Louis Pasteur in 1873. The claim made by Louis Pasteur was that the concerned invention furnished better quality of beer from the same quantity and quality of work through the process of fermentation.

Condition in the U.S

The most important case that came up in the United States of America, regarding the patentability of Microorganisms is Diamond vs. Chakraborty. The brief facts of the historic case were as follows, Ananda Mohan Chakrabarty, a General Electric genetic engineer, developed a bacterium now known as Pseudomonas Putida (derived from the genus Pseudomonas), which is capable of metabolizing the hydrocarbons that make up Crude oil. No naturally occurring bacteria exhibit this property and are used in the field of bioremediation or biodegradation of oil.
In 1972, Chakrabarty filed a patent application that was assigned to General Electric Co. Chakrabarty’s 36 claims consisted of three types: (1) method claims for the method for producing the bacteria; (2) Claims about an inoculum consisting of a carrier material floating in the water and the new bacteria; and (3) claims about the bacteria itself. The patent examiner admitted claims belonging to the first two categories, but rejected the third for two reasons: first, microorganisms are a “natural product” and second, as living beings, they are not patentable subject matter under Section 101 of Title 35 USC. The Supreme Court agreed and ruled on June 16, 1980, that a living human-made microorganism is patentable under Section 101 and that the defendant’s microorganism is a “manufacture” or “composition of matter” within the meaning of this Law. The patent was granted on March 31, 1981.

Condition in India

Article 27 (3) (b) of the TRIPS Agreement allows the Member States to reject patents on “plants and animals, other than microorganisms, and essentially biological processes for the production of plants or animals other than non-biological processes and microbiological”. Therefore, the TRIPS Agreement obliges all signatories to renew patents on microorganisms, non-biological and microbiological processes. Furthermore, parts of animals and plants, as well as modified plants and animals, are not expressly included in the exception, so TRIPS may also require the patenting of biological organisms. In accordance with TRIPS, the Patents Act of 1970, as amended in June 2002, grants patent rights to new microorganisms. Section 3 (j) of the Law excludes from patentability “plants and animals, totally or partially, that are not microorganisms, but that include seeds, varieties and species and essentially biological processes for the production or propagation of plants and animals”. The 2002 amendment to the Indian Patent Law added a statement to the chemical process stating; Chemical processes include biochemical, biotechnological, and microbiological processes. Other areas with microorganisms are also patentable in India. For example, both a synergistic composition containing the new or known microorganism and a method that uses microorganisms to produce a substance can be patented. The biosynthesis process of a new microorganism is also patentable. Microorganisms that are lyophilized as final products are patentable.

The law does not specify the scope of the patentable invention but specifically restricts non-patentable subject matter. But even before the amendment, Calcutta High Court was concerned about the question of whether a process that uses live microorganisms as an end product can be patented. At this point, it should be noted that the definition of the invention at issue in the proceeding has been modified since the decision in this case. The applicant had previously applied for a patent for the production process of a vaccine to protect poultry from infectious bursal disease. The patent examiner stated that the process was not an invention, as the final product produced by the process contained a living organism and was therefore not patentable. The applicant appealed the controller’s decision to the Calcutta High Court. The person in charge alleged that a patent is only granted for a process that leads to an article, substance or manufacture, and a vaccine with a living organism is not an article, substance or manufacture. The court used the normal meaning of the manufacturing dictionary, as it was not defined in the Patent Law, stating that “after going through the manufacturing process through the inventive process, the material in question has undergone a change and becomes a material “that differs from the starting material ”. The court determined that this meaning does not exclude the manufacturing process of a product containing a living substance from being patentable.

The court ruled that no law excluded a living end product from the definition of production. Furthermore, the court ruled that “since the patent application process leads to a salable product, it is certainly a substance after going through the manufacturing process.” Ultimately, the court concluded that “a new and useful art or process is an invention” and, because the process is new and useful, “is apparently patentable under Section 5 along with Section 2 (j) ( i) “of the Patent Law. The court ruled that “when the final product is a new article, the process leading to its manufacture is an invention.” Although the definition of the invention has been changed, this change could actually improve the court’s inventive argument, because now the elements of manufacture, article or substance are no longer needed. Rather, the new definition simply requires a new, non-obvious and useful product or process. As noted above, the court ruled that the vaccine was new and useful and did not discuss the final product containing live material to reach this conclusion. However, other changes in the law can change the outcome of the case. For example, Section 3 (j) was added to the patent law after this case and now excludes essentially biological processes for the production or propagation of plants and animals from the definition of the invention. In this case, the court warned that applications for patentability must “be examined by the controller according to the principle of Article 3” of the Patent Law.

Conclusion

Microorganisms with human interference, accompanied by novelty, utility and industrial applicability, are patentable. Technological advances in microbiology, genetics, etc. have complicated the problems associated with patenting microorganisms. Therefore, the scientific aspects and the legal design of the invention must be carried out with due care and consideration. Although the Monsanto case was very technical, the Supreme Court lost the opportunity to rule on the facts of the matter. The fact that the subject of many biotech products is incredibly complex, especially when it comes to a living organism. In fact, they are not man-made, these themes are really a “black box” and are therefore practically impossible to describe. Full disclosure of an invention is a prerequisite for patent protection. In all other technologies, all aspects of the elements of the invention are known. In jurisdictions that allow biotechnology to be patented, a concession is made to this basic requirement, namely the deposit of samples of the patented matter. These deposits are part of the “complete description” of the invention and the deposit is intended to “supplement” the complete description.

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Laws regulating mergers and acquisitions in India

By

Diganth Raj Sehgal

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November 4, 2021

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M&A — Image source: https://rb.gy/b9ztjd

This article is written by Kashika Mahajan from Bharati Vidyapeeth University’s New Law College, Pune and the article has been edited by Khushi Sharma (Trainee Associate, Blog iPleaders).

Table of Contents

Introduction

Merger and Acquisition are most talked about subjects these days. Often these are interchangeably used although they have different legal meanings. Merger means integration of two entities into one. In short in India mergers are called Amalgamation.In Amalgamation, at least two entities are needed to form a new entity. The acquisition means absorbing or buying the entity. Basically, taking over the assets and liabilities of one entity and influencing the voting rights. Both the entities separately exist whereas in mergers there is the dissolution of one entity.

Examples of mergers:

In 2020, Indus Tower merged with Bharti Infratel.
In 2019, Bank of Baroda merged with Vijaya Bank and Dena Bank.

Examples of Acquisition:

Zomato acquired Uber Eats in 2020.

Walmart acquired Flipkart in 2018.

It is done for the purpose of expansion, diversification, optimum utilization of resources etc. to increase the GDP of the economy and also to help sick companies. Through this one can achieve cost reduction, tax benefit, increase in market capitalization, employment, and access to foreign markets etc.

Laws Governing M&A in India

The Companies Act, 2013

Section 230-240 of the act covers the provisions relating to M&A including arrangements that cover companies, their members, and creditors. All sections except 234 became effective on 15th December 2016 and S-234 was notified on 13th April 2017.

These sections are completely different from The Companies Act, 1956. Moreover, we had only four sections relating to M&A i.e., 391-394.

Apart from these sections, we have Compromise, Arrangements and Amalgamation Rules, 2016 (‘CAA RULES’)

S-230 is R.W. S-232.Talks about corporate re-structuring through compromise and arrangement.

Under S-231 Power is with NCLT to enforce compromise and arrangement by

Accepting the proposal
Modifying the proposal and
Lastly by rejecting the proposal i.e., winding up of a company if they are unable to pay a debt.

Section 232 talks about the procedure for the same. Moving ahead towards Section 233 is read with Rule 25 of CAA. It talks about fast-track mergers. This section was inserted to prevent companies from going through a lengthy procedure given under S-232. Provided they need to have approval from shareholders, directors, creditors of the company. In short, each person is directly related to a company.

Merger schemes can be vested between the following companies:

Holding Company and its wholly-owned subsidiary company;
The merger between two or more small companies;
Such Other class or classes of companies as may be prescribed.

Prominent features of this section are:

No mandatory approval of NCLT is required.
No need of issuing public advertisements.
Less administrative burden.
Economic in nature.
Series of hearing may be avoided.

Section 235 & 236 deal with the purchase of minority shareholding in a company. In the case of Foss V Hardbottle[1], it was held by the court that the will of majority shareholders will prevail and the court will not interfere in the internal management of the company. However, minority shareholders can’t be neglected or oppressed. But Court will ensure that majority shareholders are exercising their powers within their limits.

The concept of squeezing out of minority was given legal recognition by the ministry of corporate affairs under section 236 from 15^th Dec 2016. In this minority shareholders leave the company and sell their shares to majority shareholders.

Definition of minority shareholding has not been defined under the section it’s just written their shareholdings should not exceed more than 25%.

The procedure for the same has been mentioned in the section.

Section 237 says that the central government has the power for amalgamation in the public interest and also lays down the procedure for the same. It is corresponding with Section 396 of the Companies Act, 1956.

National Company Law Appellate Tribunal (NCLAT) deals with all grievances under company law.

Competition Act, 2002

This act was replaced by MRTP Act 1969 to prohibit unfair trade practices, but it was not self-sufficient and had lots of loopholes. To prevent monopolistic trade practices and win people’s trust competition act came into being. It dealt with all the challenges and holds a good command over globalization. This will help in increasing the GDP in the economy. This will be achieved when we will practice fair trade policies.

Objectives of this Act

To protect the interest of consumers;
To prevent unhealthy trade practices;
To prevent abuse of power;
To prevent monopolistic markets and promote healthy competition in the market;
To provide the framework for the Competition Commission of India;
To investigate the matter therewith or incidental thereto;
To check anti-competitive practices.

This act is designed to regulate the activities and operation of combinations. This includes Mergers, Amalgamation and Acquisition. If the combinations exceed the threshold limit are prevented they will or are likely to cause adverse effects on the economy. But If CCI wants then they tell them to modify the same and then go ahead with the scheme. The threshold limit is decided by the turnover and assets of the company.

Section 3 of the act talks about anti-competitive practices. It restricts any kind of compromise, arrangement, acquisition which will cause or likely cause an adverse effect on the economy.

Section 4 talks about the abuse of dominant power. when two or more powerful companies come together and start creating a dominant position in the market and customers have no choice other than going them. The reason may be the product value or geographical location. But this exploits the customers a lot.

Section 5 deals with the regulation of combinations. It has exempted certain companies from this section if they fulfil certain criteria. However, these exempted companies don’t have any competitive impact on assessment under section 6 of the act

Section 6 talks about void combinations, this combination will cause or is likely to cause an adverse effect on the economy. If any company wishes to go ahead and follow the combination need to give prior notice to CCI. After that procedure for investigation takes place which is given under Section 29 of the act. And company need to go ahead as per the orders of the commission which is given under Section 31.

Chapter VI talks about appeals and penalties. The act has various sections that talk about the same. They are as under:

SECTION 27	Orders by Commission after inquiry onto agreements or abuse of dominant position
SECTION 28	Division of enterprise enjoying dominant position
SECTION 31	Orders of Commission on certain combinations
SECTION 32	Acts taking place outside India but having an effect on competition in India
SECTION 33	Power to issue interim orders
SECTION 39	Execution of orders of Commission imposing monetary penalty- IMPRISONMENT: Up to 3 years or Fine: Up to Rs 25 cr.
SECTION 42	Contravention of orders of Commission
SECTION 42A	Compensation in case of contravention of orders of Commission
SECTION 43A	Penalty for failure to comply with directions of Commission and Director

Act also has provision for Appellate tribunal and appeal appellate tribunal which is discussed under Section 53 and 53A. for hearing the matters under competition act we have Competition Appellate Tribunal, matte need to be filed within 60 days. After 2017 all the cases will go under the National Company Law Appellate Tribunal which is constituted under Section 410 of the companies Act, 2013 shall, on and from the commencement of Part XIV of Chapter VI of the Finance Act, 2017.

The Indian Income Tax Act, 1961

Meaning of term Amalgamation has been defined in this act under Section 2(1B),it means merger of one or more companies into another company or two or more companies merged to form a new company. The company which is merged is known as amalgamating company and coin which that company is being merged or formation of the company is known as the amalgamated company. Also, all the assets and liabilities of the amalgamating company become the assets and liabilities of amalgamating company.

Act also has the concept of capital gain, which means gains or profits that one receives after the sale of capital assets. Any gain from the sale of assets is our income and hence we need to pay tax for that income in the year in which we have purchased it. It can be both short term and long term.

Transactions that are exempted from capital gain tax in an amalgamation are as under:

Section 47 of the act exempts the following:

If the amalgamated company is an Indian company. Any assets transferred by amalgamating company towards amalgamating company shall be exempted.
Where the transfer of shares is made by shareholder has been made by an amalgamated company which is Indian Company along with that allotment of shares is also made by the amalgamated company.
If two foreign companies are amalgamated no tax is levied. When an Indian company and foreign company are amalgamated, and the resultant company is in India. This will result in a capital gain for shareholders.

Along with these income tax exempts inherited property as there is no sale or transfer of ownership. It also includes sales by way of gift or will. Tax will only be levied if further this property is sold to someone else. Then it will result in a capital gain.

The Indian Stamp Act, 1899

The act is in enforcing in the whole of India with respect to the rate of different instruments which are commercial in nature. This is enacted by the central government, but it gives power to the state government to either use the act as it is or can modify the same. Even they can enact a different act for stamp duty for their state. Some examples are as under:

States which have adopted the stamp duty act are Arunachal Pradesh, Jharkhand, Uttarakhand, etc.
States which have adopted Schedule 1A with amendments are Andhra Pradesh, Punjab, Assam, Bihar, Delhi, etc.
States that have their own stamp act are Gujarat, Maharashtra, Karnataka and Rajasthan, Kerala etc.

Stamp duty is charged under Section 3 of the act. It is to be paid to the state government in full and due time. If there is any delay in the payment penalty is enforced.

Constitutional provisions related to stamp duty are:

Schedule 7 has divided the powers among central and state governments. There are three lists which cover the items that will be covered by them like maters of union list are handled by the central government, items mentioned in sate list are handled by the state government and what is not by these two listed are governed by a concurrent list which is managed by both central and state government but in case of conflict, centre prevails overstate.

Union List: Entry 91 of List I have given power to Union Legislative to prescribe the stamp duty. Subjects like Bills of Exchange, Cheques, Promissory Notes, Transfer Of Shares, Letter Of Credit, etc.
State List: Entry 63 of List II talks about this. It covers subjects other than mentioned in Entry 91 List I. Like: Issuance of Shares.
Concurrent List: Entry 44 List III. It covers all other matters which are not covered in the above two Lists. It means stamp duty other than duties collected by means of judicial stamp but not including rates of stamp duty.

The liability to pay stamp duty arises when the instrument is executed and secondly if the instrument is executed outside the state, laws of stamp duty of that state will be executed

Foreign Exchange Management Act, 1999

The concept of Cross border mergers is dealt with by FEMA. It means any merger, amalgamation, or arrangement between Indian and Foreign companies. FEMA regulations provide that any transaction taken with respect to cross-border will take place through RBI, as per the 25^th rule of CAA Rules, 2016. Amendment of 2017 in companies act added Section 234 to the act which talks about cross border merger. In 2018 RBI notified in the official gazette about inviting stakeholders for regulations. They will have a major role as they will keep an eye on the market situation. Before 1999 we had FERA 1973 i.e., Foreign Exchange Regulating Act. As the name suggests it was a regulatory body. They had no power of enforcing rules and make changes in the act. It couldn’t cope with the policy of LPG. There was an urgent need to repeal the act and form such an act that actually has an impact on the economy and people start taking it seriously.

Cross border mergers can be divided into two types:

Inbound Merger- means where a foreign company merges with an Indian company. Accordingly, all the assets and liabilities are transferred to the Indian Company.

Example: Daiichi Acquired Ranbaxy

Outbound Merger- means where an Indian company is merging with a foreign company and all the assets and liabilities are transferred to a foreign company. These mergers comply with both FEMA and Foreign rules.

Example: Tata steel Acquired Corus

The SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011

This regulation is important for the merger, acquisition, amalgamation, compromise, arrangement for the listed companies. It prescribes that an acquirer acquiring substantial offers or casting a ballot right i.e., 25% or more, should make an open proposal to every one of the public shareholders of the objective organization. Independent of the offers or casting a ballot right gained, the acquirer likewise should make an open proposal after obtaining control of the objective organization. It, in this way, becomes vital to considerably comprehend the significance of the word ‘control’ and its suggestions. Be that as it may, because of the clashing meanings of ‘control’ by Indian enactment and courts just as the uncertain understandings of the word, there is a shortfall of a thorough meaning of the word. Perceiving this vagueness and its likely effect on financial backers in the public space in India, the Protections Trade Leading body of India (Hereinafter “SEBI”) looked to characterize ‘control’ and start a public discussion process. This paper endeavours to clarify the idea of ‘control’.

Insolvency And Bankruptcy Code, 2016

Before IBC we had Sick Industrial Companies Act, 1985 i.e., SICA legislation. This act was enacted to detect the sick units and revive them through mergers and acquisitions, if possible, if not then pass the order for winding up of sick companies. The main reason why this act came into being was to release the investment which has been locked up so that resources can be used in a different and efficient manner. Act also had two quasi-judicial bodies which have now been repelled. After that in 2003 SICA legislation was repelled, and newly amended legislation was enacted. It had more stringent provisions and covered all loopholes which were there in the 1885 act. In 2016 SICA was fully repealed as it overlapped with provisions of the companies act. With the enactment of IBC, companies act sections from 253-269 were omitted and now Section 255 and Schedule XI deals with it. It is administered by NCLT and helps in auctioning the assets whose value has been depreciated. To start the process under the corporate insolvency resolution process one need to file an application to NCLT. Many amendments have been made timely. Recently in 2020 and 2021, it was made.

References

[1843] 67 ER 189, (1843) 2 Hare 461
Laws regulating Mergers and Acquisition, see here
Mergers And Acquisitions, see here
Mergers and Acquisition under Companies Act, 2013, see here
Why is Competition Law relevant to mergers and acquisitions and private equity, see here
Stamp Duty Implications Of Mergers And Acquisitions, see here
Tax Issues In M&A Transactions, see here
Cross Border Mergers- A Summary of Recent Developments, see here
SEBI Takeover Code, see here

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Spider-Man’s IP journey to the Marvel Cinematic Universe : a case study

By

Abanti Bose

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November 4, 2021

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spiderman — Image Source: https://rb.gy/gypxlb

This article is written by Suvigya Buch, pursuing Diploma in Intellectual Property, Media and Entertainment Laws from LawSikho. The article has been edited by Aatima Bhatia(Associate, LawSikho) and Smriti Katiyar (Associate, LawSikho).

Table of Contents

Introduction

The year of 2018 was an extremely tough year for comic book lovers all around the globe as in the month of May, 2018, Steve Ditko, an American comic book artist who was best known for his co-creation of Spiderman and Doctor Strange, passed away. Not long after in November of 2018, Stan Lee, the primary creative leader of Marvel and the co-creator of Spiderman also passed away. While these two iconic businessmen, but more importantly comic book authors may not exist on this planet in their physical form, but they left the world a far better place than they found it, as a result of their everlasting art. Despite this, there’s always the possibility of them making a comeback through the Multiverse!

While 2018 had several low moments for comic book fans, there was also reason to celebrate. 2018 saw the release of several Marvel movies, two of which made an unprecedented impact on not only the box office but also the standard of comic book filmmaking. The penultimate Avengers movie in the Infinity Saga, Avengers: Infinity War, released and snapped away all of its box office competition. Marvel also saw unlikely success in the form of Spider-Man: Into the Spider-Verse, an animated movie revolving around the friendly neighborhood web shooter, or as J. Jonah Jameson would refer to him, the crawling arachnid. Spider-Man appeared in both films, albeit in different capacities, and this officially made him Marvel’s highest grossing character ever.

However, the road to becoming the highest grossing on-screen character for a company as large as Marvel was filled with obstacles. While Spider-Man may be one of the most well-known characters in all of the popular culture, he has also been the most controversial and sought-after character when it comes to his Intellectual Property Rights (“IPR”). Marvel’s methodology for film adaptations of its comic-books was for a number of years, focused on licensing its characters to major studios. Marvel licensed many of its famous characters to production houses such as Hulk to Universal Pictures, and the X-Men and the Fantastic Four to 20^th Century Fox. The conditions of such licenses often provided film studios with the permission to utilise Marvel’s IPR in their films in exchange for a fee or royalties, without Marvel having to spend money on the actual creation or production of the films. The webslinger was one of the characters that was licensed by Marvel several years ago and this paper aims at understanding and analysing the journey of Spider-Man through the years, under the lens of IPR.

“Spider-Man has taken to Court, Friend or Foe?”- J. Jonah Jameson, The Daily Bugle

The Spider-Man film franchise can be a little befuddling. Not only must fans grapple with an ever-growing number of films, some of which even date back to the 1970s, but they are constantly faced with the question of who owns Spider-Man. Since at least 1985, the rights to Spider-Man have been a source of contention. For several decades, there was a legal battle principally between Marvel and Metro-Goldwyn-Mayer, Inc., (“MGM”) with the letter asserting to have purchased film rights from companies that had since shut down. In the 1980s, Marvel sold the rights for Spider-Man movies to independent production houses three times, each of which went bankrupt subsequently. Marvel too filed for bankruptcy protection soon after. The television and home video rights to the film were licensed to Viacom Inc. and Sony, respectively, by one of those independent companies in turn for bankruptcy protection. However, MGM claimed it had purchased or inherited the sole movie rights from the deceased independent studios, putting Marvel, Sony, and Viacom in court. Due to the lack of funds for the legal battle against Marvel that could possibly cost them tens of millions of dollars, MGM decided to settle. The courts ultimately concluded that Marvel possessed the cinematic rights to Spider-Man in that case. Following that, in 1999, Marvel opted to license Spider-Man to Columbia Pictures Industries, Inc. (a subsidiary of Sony Picture Entertainment) on the condition that Sony was to produce a new Spider-Man movie every five years in order to be able to retain the rights to the character. Sony was given the right to make as many Spider-Man films as it wanted and to utilise Marvel’s IPR in exchange for royalties, all without having to spend any money on production or filming.

Since then, Sony released its first trilogy of Spider-Man movies directed by Sam Raimi in the years 2002, 2004, and 2007. However, during this period, Marvel decided to change its strategy. Marvel in 2007 was not in the best position, financially and content-wise. They were on the verge of bankruptcy and had little to no self-esteem, as said by Avi Arad. Their ideology was that they would rather create bad films because their idea didn’t work instead of them not being able to do anything about it. Marvel got a small amount of revenue through merchandising, and other such revenue sources. However, it was not enough, especially because they could have owned the rights to sell the DVDs. This is when they decided on starting Marvel Studios, a venture where they would create movies for the niche market and additionally earn money, retain all the intellectual property rights. This would also enable them to protect all their characters and movies under Copyright law. Marvel, however, did not have the right to produce films based on some of its own characters because those rights had already been sold to other companies. Marvel, for instance, would require Sony’s authorisation to develop a film based on Spider-Man.

Starting Marvel Studios and making Iron Man would be Marvel’s biggest gamble, because if the movie flopped, as a result of a financing deal for the movie, they would lose their rights to several characters such as Black Panther and Doctor Strange. However, the risk paid off, the movie grossed over $500 million and the world received its first-ever major superhero timeline. The Marvel Cinematic Universe (“MCU”) has since been pushing the limits of story-telling and engaging an audience. While they managed to win back the rights of Iron Man from New Line Cinema and Hulk from Universal Pictures, Spider-Man kept escaping their web of rights.

Disney’s spidey senses are tingling

Marvel Entertainment, the wing of Marvel that made movies, was acquired by Disney in 2009 and this gave Marvel movies the second wave of life. Marvel now had access to a lot more characters, however, Spidey was still tough to get a hold of. After the Raimi trilogy, Sony rebooted the Spidey universe and made two more films, The Amazing Spider-Man (2012) and The Amazing Spider-Man (2014) both of which were directed by Marc Webb. Both these movies proved to be the lowest-earning Spider-Man movies. Sony was trying to figure out how to halt a bleeding movie franchise whereas Marvel/Disney was trying to figure out how to develop films around characters to which it did not have rights. It was possible that the studios would renegotiate their contracts. A flurry of talks ensued. After the failure of the reboot, “The Amazing Spider-Man” series, Marvel and Sony first discussed a collaboration. It is safe to say that the discussion did not end well as Amy Pascal, Head of Sony Pictures, at one point, threw a sandwich at Kevin Feige.

However, Pascal and Feige struck a deal in 2015 the terms of which stated that Spider-Man may appear in Marvel films, and characters whose rights were retained by Marvel (such as Iron Man) might appear in Sony’s Spider-Man films. Sony would retain all fundamental rights to the Spider-Man films, including financing for, owning, and distributing them, as well as creative control over the final product.

Resultantly, Spider-Man could be a long stay in the MCU. In exchange for access to Spider-Man for inclusion in Marvel Studios’ extraordinarily profitable series of Avenger films, Marvel Studios would co-produce Sony’s Spider-Man flicks. What a lot of people don’t know is that the Spider-Man reboot which goes by the name of “Spider-Man: Homecoming” is still financed and distributed by Sony Pictures. Sony also accrued all the box office earnings; however, Marvel Studios was the creative lead and produced the film. Hence, Marvel Studios helped create the movie in the sense that the team chose the cast, director, script and by doing so not only supervised but also got to control the process of the movie, thereby setting its tone and showcasing it to the audience as a part of the extensive MCU.

Marvel still owns the merchandising rights to Spider-Man and with the release and success of “Spider-Man: Far From Home” and the recent success of the teaser trailer for the third movie in this series, “Spider-Man: No Way Home” it is evident that these movies have relentlessly continued to dominate the market.

While this partnership is going strong as of today, it faced a few roadblocks that had started forming in 2017 and came to the surface in 2019. Amy Pascal in 2017 voiced her concerns over the longevity of the relationship between Sony and Marvel with respect to Spider-Man. She said, “One of the things that I think is so amazing about this experience is that you don’t have studios deciding to work together to make a film very often. In fact, it may never happen again… after we do the sequel.”

Discussions between these entities came to a halt when it got down to a few important points such as the degree to which future Spider-Man films would be co-financed, whether this contract would apply to Spider-Man spin-offs not part of the MCU, and producer credits. Despite this, both companies came to an agreement and the audience is now being treated to a few more web slinger appearances on the big screen. This new contract enabled Spider-Man to stay in the MCU for at least one more feature in exchange for Marvel Studios co-producing another Tom Holland Spider-Man film which will be released on December 17, 2021.

Recently, beginning with its 2022 films, Disney and Sony Pictures have announced a multi-year “content licencing agreement” that will deliver new Sony theatrical productions to Disney-owned networks. The agreement also grants Disney the rights to several of Sony’s earlier movies, notably Spider-Man films, implying that films starring the web-slinger, which are conspicuously missing from Disney Plus’ Marvel film library, may someday find their way to the streaming platform.

Will the real owner please stand up?

It is therefore evident that Marvel Comics and/or Disney, its parent company own the rights to Spider-Man comics and have control over all his appearances in said comics. When Sony bought the movie rights to Spider-Man in 1998, they also got the Spider-Man merchandising rights, which turned out to be a very profitable source of revenue. While the movies generate a lot of money at the box office, the merchandising rights can (and frequently do) produce much more revenue.

When Sony needed funds in 2011, it decided to sell the merchandising rights back to Marvel. As a result, Sony presently just has the rights to make films; it no longer has a stake in the merchandising market. Sony’s Chief Financial Officer, Kenichiro Yoshida in a 2017 interview, said: “We had sold some assets of the studio, such as merchandising rights of Spider-Man, to raise short-term cash in exchange for long-term cash flow when the electronics units were struggling.” Hence, Marvel Comics and/or Disney also own all the rights to the Spider-Man merchandise and as a result, they derive revenue from every official Spider-Man t-shirt, bag, water bottle and so on. However, when it comes to Spidey in the film format, whether that be on the big screen or on an Over The Top (“OTT”) Streaming Service, it is done under the control and supervision of Sony Pictures as they own the rights to the Spider-Man movies.

Conclusion

Marvel’s strategy of copyrighting and licensing has worked largely in their favour even though there were problems in their initial days. Marvel has been able to create a universe that has trumped all its previous success and managed to overshadow its competition. This would not be possible without the help of legal instruments like copyright and trademarks that are largely known as Intellectual Property Rights. Marvel has undoubtedly reaped huge rewards from its licencing endeavours thanks to its strong IP assets. Because of its low-risk movie-licensing strategy, production companies bear all of the financial risks in generating the picture, while Marvel benefits from different marketing prospects. Spider-Man is and has been a prime example of how successful a single character can be not only when it comes to its profitability but also its significance in pop culture. Spider-Man has stood the test of time, which believe it or not, is tougher than defeating the Sinister Six all in one go. Spider-Man has over the years provided vital income to three different production houses and has become a mainstay at each of them. As various other companies and artists try to emulate the success of Marvel, through similar business structures, the importance given to Copyright law and character protection will see a constant rise. However, despite all the success, the biggest takeaway from this is the importance of managing one’s IP. Had Marvel never sold off the rights to their poster hero, they never would have had to go through so many legal procedures just to acquire rights over what was already theirs and lose millions of dollars in the process. Marvel’s move to sell off the rights to Spider-Man movies in exchange for a quick cash grab is a classic example of the lack of foresight that existed two decades ago and is prominent even today. The legal journey of Spider-Man and his film rights serves as a great learning experience and precedent for several creators and owners of IP. It is a classic example of how the loss of IP for one entity can prove to be one of the biggest assets for another, in this case, the former being Marvel and the latter, Sony.

Spreading awareness about IP management and enforcing the same to the highest possible extent is of utmost importance, especially when it comes to comic book characters. With basic awareness about the law of copyright and its correct application, the world may witness the success story of another visionary like Stan Lee or Kevin Fiege. However, in the foreseeable future, Marvel will continue to be the finest case study for why copyright and specifically character protection are crucial to any artist. Little did Uncle Ben know that he’s saying, “With great power comes great responsibility” would be applicable to both Peter and IP management.

References

Micheal Hiltzik, Studio Rights to Spiderman Are Untangled, Los Angeles Times https://www.latimes.com/archives/la-xpm-1999-mar-02-fi-13115-story.html.
Joanna Robinson, The Beginning of Marvel Studios, Marvel Looks Back at Iron Man- the Movie That Started It All, Vanity Fair https://www.vanityfair.com/hollywood/2017/11/marvel-looks-back-at-iron-man-the-movie-that-started-it-all
Ben Fritz, The ‘Black Panther’ Movie Deal That Didn’t Get Made, The Wall Street Journal https://www.wsj.com/articles/the-black-panther-movie-deal-that-didnt-get-made-1518703200
Gregory Wakeman, Will Marvel And Sony’s Partnership Last? Here’s What One Producer Says, CinemaBlend https://www.cinemablend.com/news/1641019/will-marvel-and-sonys-partnership-last-heres-what-one-producer-says
Jay Peters, Disney inks a huge Sony deal to bring Spider-Man and other films to Disney Plus and Hulu, The Verge https://www.theverge.com/2021/4/21/22396430/disney-plus-sony-pictures-marvel-deal-spider-man
Takashi Mochizuki, Sony Says It Won’t Sell Movie Unit Despite Nearly $1 Billion Write-Down, The Wall Street Journal https://www.wsj.com/articles/sony-slashes-profit-forecast-after-writing-down-nearly-1-billion-on-movie-unit-1486017798?tesla=y

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Analysing the importance of gender equity, equality and freedom of women through a sociological perspective

By

Abanti Bose

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November 3, 2021

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This article is written by Indrasish Majumdar, LawSikho Intern. The article has been edited by Ruchika Mohapatra (Associate, LawSikho).

Table of Contents

Introduction

Life as we know it comes into play the very moment we open our eyes in this world. The preceding moment before this holds a very unique and special place for us. The moment being mentioned here is the birth-giving process through which various species survive and continue their very existence in this world. Reproduction is the harbinger of life on earth and the sine qua non in this process is the female in whose womb life form is created, nourished and protected until successful delivery of the progeny. The same life that has been mentioned above comes to a stop when we die or more symbolically we close our eyes and become one with mother earth. Darkness and shadow of death follow the life and vice-versa. Thus, it becomes quintessential that females be treated with the highest honour and respect that they rightfully deserve.

Status and perspective surrounding women in ancient India

In India, women have been viewed as a goddess, the creator of all living beings and the origin of life positioning itself as the ‘numero uno’ in the cycle of reproduction. Ancient India has always been a witness and flag bearer of the ‘mother goddess tradition’. It would be natural and logical to extrapolate this to today’s situation as well. This train of thought would be derailed catastrophically if it were to only gain knowledge of the plethora of crimes, violence and inhuman activities that women face as of now. We have set exemplary records and unimaginable rates of plummeting to the bottom which remains fairly unprecedented in human history in the treatment of women. The female that was once the subject of divine origin is now reduced to a mere object on which violence is down poured, thereby severely abusing her. Now, she does not have the basic freedoms on which the very foundation of the human race stands. Thus, it becomes a necessity of utmost importance that we prioritize the issues regarding the status of women in India with regard to their freedom and equality in society.

The tale of freedom, equality and equity

The above three words are intertwined with each other in such close proximity that a systematic breakdown is required to understand them comprehensively. At the very inception of this analysis, it is to be noted that the very existence of women’s struggle and fight for liberation from the shackles of patriarchy is shameful for the entire society which apparently tries to portray itself as progressive, civilised and fair.

The main issue today revolves around gender equality which is supposed to make our society gender-neutral. It is partially correct as far as the methodology goes. This article tries to show that gender equity is the way to achieve gender equality and why the former should be adopted in the initial phase to attain the latter, which would be the obvious by-product of the former. The United Nations Educational, Scientific and Cultural Organisation (UNESDOC) provides a fair distinction between the two in the following paragraph:

“Gender equality, equality between men and women does not mean that women and men have to become the same, but that their rights, responsibilities and opportunities will not depend on whether they were born male or female. Gender equity means fairness of treatment for men and women according to their respective needs. This may include equal treatment or treatment that is different but which is considered equivalent in terms of rights, benefits, obligations, and opportunities.”

The word “equality” can be now safely considered as replicating men in every sphere through an essential process of copycat. Technically, this does establish certain standards of equality but there is no uniqueness in that, the entire beauty of the other sex fades away, giving rise to a replica of males.

It has been very rightly said that equality is the end goal and equity is the means to get there.

Gender equality does not mean that women and men will be the same; it attempts to give us a world where they both get equal opportunities, treatment, rights and resources irrespective of whether they are born male or female.

We have to understand that the end goal here is to make both sexes reach a point of zenith and maximise their strong points. Equity is giving everyone what they need to become successful while equality means treating everyone the same. Equality though it sounds just and fair, is guilty of destructive generalisation. Men and women are different, a forceful way to make them mirror copies of each other is not only absurd but also destroys the very fibre of uniqueness and diversity. As they are different they should be provided differently to reach the same goal. There is no level playing ground and this very fact would collapse the theory to provide them with the same opportunities for achieving the same result. Equity leads to equality. Through equity, a level playing ground can be reached after which equity shall prevail to eliminate any biases. Fairness is yet another term that keeps oscillating between equality and equity. It holds great directional value for the establishment of an ideal society but the opposite also has to be considered i.e. its misguided interpretation. Usually, fairness raises the very apparently pertinent question of why he/she and not I? The following example would create a link between fairness, equity and equality;

In a situation where several kids are being provided food, picture this; assume everyone gets one apple at a time. A kid who has received one apple observes another kid go up to the distributor, whisper something in his ears and get two apples. The first kid raises the very elementary question in his mind that this is not fair, that why he got only one apple while the other kid got two? He comes to the conclusion that it is not fair. Now, this definition of fair means equals treatment of all. The kid who got two apples had previously whispered something to the distributor, he mentioned that he was extremely hungry and a single apple will not satisfy his hunger, due to which he received two according to his hunger’s demand. Now, it has to be noted here that the first kid tagged our case situation as unfair not due to his hunger but due to the fact that another kid got more than him.

This prevailing situation portrays the demand for equality, treatment of unequal in an equal way, which is highly unjust. The other kid getting more was due to the severity of his hunger which was more than the first kid and thus, is fair, contrary to the belief of the first kid. Thus, treating everyone exactly the same actually is not fair, what equal treatment does erase our differences and promote privilege, equality always does not promote true fairness. If the gender gap is treated with the concepts of equality before equity, it may lead to a potentially never-ending cycle.

Conclusion

The blueprint for women empowerment has been laid down, however, the nation is yet to create a structure of strength and permanence promulgating notions of equity and empowerment on the basis of the layout. It can only be hoped that in the upcoming years’ women empowerment shall prove its worth. We must realize how integral are women as a part of society and how indispensable a role they play in determining the destiny of the nation. As rightly commented by Swami Vivekananda “ The Best thermometer to measure the progress of a nation is its treatment of women”. Every person should come forward to ensure equal status for women in all spheres of life, by providing them with due recognition which becomes all the more important. The best possible way to achieve empowerment is to generate public awareness with regard to the same, a crucial element in making judicial activism successful. Committees dedicated to the cause of emancipation of women such as the National Human Rights Commission or The National Commission for Women should be allies in acclaiming incidents of Human rights Violation. The Judiciary should play a proactive role in protecting the rights of women and should adopt stringent policies to punish the offenders. Along with increased vigilantism, the court should also try and deliver more judgments in approbation of female victims, to make them feel safe and confident.

Currently, feminism faces criticism from certain factions of society as some of its forms prefer the upliftment of women against men, which is not balanced in nature. Following this path may lead to a society where males will be suppressed and then there will be men’s fight for equality against gender oppression, and thus the status of gender gap will never close and will function in a to and fro motion, which does not promise us of a stable society. Thus, the equity should be practised till a level playing ground is reached and then equality should be implemented to provide fair and equal conditions irrespective of unrelated and superficial attributes which promote inequality.

References

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The legality of comparative advertisement and product disparagement in India

By

Rachit Garg

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November 3, 2021

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This article has been written by Suvigya Buch, pursuing a Diploma in Intellectual Property, Media and Entertainment Laws from LawSikho. It has been edited by Prashant Baviskar (Associate, LawSikho) and Ruchika Mohapatra (Associate, LawSikho).

Table of Contents

Introduction

Advertisements are defined by The Advertising Standards Council of India (“ASCI”) as a form of communication that has to be paid for and is directed at the general public or a specific subset thereof, with the intent of influencing the views or behavior of those to whom it is directed under The Code for Self-Regulation of Advertising Content in India. Further, the ASCI also states that this description includes any message that the general public would consider as advertising under normal circumstances, even though it is distributed free of any cost for any purpose. Furthermore, they also define a product as anything that forms the subject of an advertisement and includes goods, services, and facilities.

If such puffery goes too far and depicts a recognizable rival product in a negative light, it leads to the denigration of the other product. Both active, as well as implied denigration, have been prohibited by the courts and therefore it is critical to develop a “broadly uniform standard to govern comparative advertising practices while keeping the interests of the parties involved in mind.

Comparative Advertisement and Product Disparagement in India

Because of the growing importance of consumer protection jurisprudence in recent times, the customer is just as much a stakeholder in any regulatory scheme as the seller or competitor.” Advertising is guaranteed protection under the law as it is recognised as commercial speech. Resultantly, a manufacturer or seller has the right to declare his products to be the best on the planet, even though the declaration may be seen as false because everyone is well within their rights to believe that the product created by them is the best in the world. In trying to advertise their products there is often a temptation for the seller to compare the product with its competitors’ products to prove the advantages of using the seller’s product. One may be tempted to equate the advantages of his products to those of others to declare them to be the best in the world.

Is it, however, permissible to argue that his products are superior to those of his rivals when claiming that the competitors’ goods are inferior? Is this considered slandering or disparaging his rivals’ products? What happens in cases where the seller’s products that are being advertised are better than that of the competitor? The aim of this paper, therefore, is to examine the legal complexities surrounding the principle of comparative advertising as it relates to product disparagement and trademark infringement.

Pushing The Boundaries Of Advertising In India

Provisions for comparative advertising have been included in Section 29(8) and Section 30(1) of the Trade Marks Act, 1999 where Section 29(8) defines cases wherein advertisements in which trademarks have been used may amount to trademark infringement. It states that an act of infringement takes place when the advertisements are not in compliance with the ethical standards or are harmful to another brand’s distinguishing characteristics and reputation. Additionally, under Section 30(1) of the Trade Marks Act, the practice of comparative advertising is exempted from the definition of infringement as under Section 29(8) of the Trade Marks Act as it states that if an advertisement follows honest practices and consequently does not damage or harm the unique character and its reputation, it is acceptable and therefore does not qualify as an infringement.As a result, the only grounds for infringement are deceiving practices or the use of a trademark in a way that harms the mark’s integrity or distinguishing property. However, the word “honest practice” has not been established anywhere.

Often, the interpretation of the phrases ‘is not such as to be harmful to the trademark’s repute’ and ‘in compliance with honest standards’ tend to be confused for each other due to their entwined nature. If an analogy harms the image of the trademark owner it is to be avoided at all costs. Moreover, determining a specific commercial’s honesty is a question with an extremely wide scope and must be answered from the viewpoint of a reasonable consumer. Hence, if a reasonable consumer is likely to have overlooked hyperbolic and exaggerated claims, the advertisement may be touted as honest.

Honesty in the conduct of trade is largely to be measured with what is fair for the target audience of the advertised products or services and therefore it is the owner of the trademark and not the user of the trademark upon whom lies the burden of proving that the use of his/her trademark was not only unauthorized but also dishonest. It is widely agreed upon that it is trademark infringement as per Section 29(8)(a) and (c) of the Trade Marks Act if anyone gains an undue benefit by using a registered trademark in their commercial, thereby harming the mark’s integrity.

In the case of Hamdard Dawakhana v. Union of India, the court held that even though commercials were viewed as a practice of free speech, they were not considered to qualify as free speech as their intention has always been that of commercial gain. The Supreme Court in Tata Press v. Mahanagar Telephone Nigam Ltd., reversed the above mentioned position and ruled that commercials benefit both manufacturers as well as the free flow of knowledge in a free market economy, which helps to achieve the larger objective of public awareness. As a result of this decision, commercials were deemed to be “commercial speech” under Article 19(1)(a) of the Constitution of India (“the Constitution”).

Despite having been given protection under the free speech clause of the Constitution, commercials cannot be granted blanket protection solely based on their ability to generate public awareness. It is extremely important to double-check that the commercials do not mislead the viewers or vilify a competitor’s product. Originally, Section 36A of The Monopolies and Restrictive Trade Practices Act, 1969 (MRTP) regulated false or deceptive advertisements as it dealt with “unfair trade practices”. Section 66 of the Competition Act 2002, however, revoked the MRTP Act. However, since the concept of “unfair trading practices” was adopted pari materia under Section 2(1)(r) of the Consumer Protection Act of 1986, traders were not left without recourse. The Consumer Protection Act of 1986’s scope was confined to offering redress only to the consumers and not the service providers, distributors, and retailers.

Due to the lack of a proper legislative instrument for advertisers to redress their grievances, the ASCI was created. The ASCI principles guaranteed that comparative advertising is handled fairly, taking into account the needs of all parties concerned. Furthermore, these principles guaranteed the disparity was not set up in such a way that gave the producers an unfair advantage over the competition’s product. Additionally, it guaranteed that the comparisons are correct and based on evidence so that future customers are not misled.

Despite the fact that ASCI established appropriate and equitable rules, it lacked successful enforcement and ran into issues when non-members’ acts resulted in the violation. Sections 29(8) and 30(1) of the Trade Marks Act further address the issues surrounding such infringements. Although Section 29(8) of the Trade Marks Act deals with trademark infringement by commercials, Section 30(1) makes an exception for the use of marks in industrial and commercial matters where they are done per “honest practices”. The Trade Marks Act protects the rights of other producers whose brands are at risk of being tarnished as a result of unfair competition in cases where a producer uses comparative advertising to promote his or her products or services.

While the Trade Marks Act does not explicitly define disparagement, dilutions, and honest practices, all of which are essentials, they can be traced back through various court decisions over time. For the very first time, the court addressed puffery as an element of comparative advertising in Reckitt & Colman India Ltd. v. M.P. Ramchandram & Anr. In this case, the plaintiff was ‘Robin Blue’ and the defendant was ‘Ujala’, both of them being detergent brands. The plaintiff claimed that the defendant had purposefully used a bottle that looked similar to the plaintiff’s product in his commercial. Furthermore, in the commercial, the defendant also claimed that the plaintiff’s product was inefficient and uneconomical. In this case, the court cited the De Beers case to hold that a producer can declare his products to be the best, or even better than those of his rivals, even if the claim is false. And yet, even though this is valid, he cannot say that his competitor’s products are poor when making such a distinction. He/She is not allowed to make any statements that could be construed as demeaning his competitor’s products.

In the case of Pepsico. v. Hindustan Coca Cola Ltd.the definition and meaning of the word disparagement were dealt with. Patent infringement was claimed by Pepsico. because, in its commercial, Coca-Cola had demeaned Pepsi’s products by naming Pepsi “Bachon Wala Drink.” Coca-Cola also used a bottle with the same color scheme as Pepsi and the word “Pappi” written on it. When considering the definition of disparagement, the court determined that advertising is defamatory if it dishonours, undervalues, or discredits a competitor’s product. The court held that “In the electronic media the disparaging message is conveyed to the viewer by repeatedly, showing the commercial every day thereby ensuring that the viewers get clear message as the said commercial leaves an indelible impression in their mind and so to decide the question of disparagement, the following factors have to be kept in mind:

(i) intent of the commercial;

(ii) manner of the commercial;

(iii) storyline of the commercial and the message sought to be conveyed by the commercial.

Out of the above, ‘manner of the commercial’, is very important. If the manner is ridiculing or condemning the product of the competitor then it amounts to disparaging but if the manner is only to show one’s product better or best without derogating other’s product then that is not actionable.”

In Havells vs. Amritanshu Khaitan the disputed commercial concerned Havells and Eveready LED bulbs. The problem was whether, for an advertisement, to be honest, the contrast between the producer’s and competitor’s products had to include all of the features. It was held by the Delhi High Court that an advertiser may highlight only a distinctive property of their product that distinguishes it from that of a competitor as long as the distinction is accurate. Disparagement would not occur if all characteristics of a product are not compared at the same time.

Additionally, Advertisements are a form of commercial speech protected by Article 19(1)(a) of the Constitution of India, according to Indian courts. Moreover, they can only be limited to by-laws passed under Article 19(2) of the Indian Constitution. In the landmark case of Horlicks Ltd. v. Heinz India Private Limited it was held that “In a democratic country, free flow of commercial knowledge is indispensable, and the public has a right to receive commercial expression.”

Infringement can occur when a trademark is used in advertising, according to Section 29(8) of the Trade Marks Act. Any advertisement that is not in line with honest practices; or is harmful to the unique identity; or the integrity of the mark is an act constituting infringement, according to Section 29(8) of the Trade Marks Act. Any commercial that follows honest practices and is not harmful to the unique identity or notoriety of the mark is considered good in law and does not constitute infringement under Section 30(1) of the Trade Marks Act. As a result, Section 30(1) of the Trade Marks Act exempts comparative advertisements from the definition of infringement under Section 29 of the Trade Marks Act.

Conclusion

When advertising is done right, it has the power to shift people’s perceptions of a product or service. Even so, given the fierce competition in the industry, having an advantage over the competition becomes critical. As a result of globalization, businesses today have a presence in many jurisdictions. Hence, “If done honestly and objectively, there is no better way to achieve this than comparative advertising.” It is therefore all the more important to use a competitor’s trademark in compliance with industry standards and honestly. Advertisers must be careful not to exaggerate the value of their products or services without providing facts to back up their arguments.

On analysing the legal framework, the judicial journey of several important cases, and legislations regulating comparative advertising in India, it is evident that as a result of the lack of a dedicated legislative framework to regulate the practice, a largely haphazard framework has been adopted, with various facets of the practice based on contradictory standards. The twin components of simplistic puffery and denigration must be discussed when bearing in mind the essence of such portrayals to arrive at a uniform norm or degree of acceptance. It’s worth noting that, while the degree of permissibility for puffery has varied, the stance on denigration has remained fairly constant. Additionally, considering the needs of all interested parties, including suppliers, advertisers, competitors, and customers is also important. The prevailing view, which had been followed by our judiciary for nearly ten years, failed to satisfy the expectations of consumer justice. “The self-regulatory process as has been established by the advertising industry has been relegated to a purely recommendatory function, with it having no enforcement mechanism to ensure compliance with its directives.”

Recommendations

Enabling the advertising industry to propose a broad framework for regulation, while guaranteeing that the interests of both competitors and consumers are protected, may be one way to develop a more robust system of regulatory oversight. This can be accomplished by following the model that has arisen in the UK, with the advertising body’s standards being legally enforceable. Universal standards for both simplistic puffery and denigration, while keeping consumer justice and fair competition in mind can be established through the enforcement of such norms.

Competitive advertising not only increases awareness about products by increasing interest but also ensures high productivity levels in the industry. It also aids customers in making well-informed decisions. However, it is not always the case that what customers are told is accurate. It can be inaccurate, dishonest, and fraudulent. Advertising is, without a doubt, commercial speech covered by 19(1)(a) of the Constitution of India, however, it cannot be left unregulated.

A legislative advertisement regime that is backed by the government would prove to be highly beneficial in the interest of the customers. For a long time, ASCI has served as a self-regulatory body, but it has yet to establish a compliance mechanism with the requisite teeth for practical repercussions. A producer who has had their product disparaged has no legal standing to seek redress under the current law. Hence, notifying a consumer organization or representing the case before the state or the central government is the only recourse.

Comparative advertising is advantageous in the interest of consumerism, but it must be objective and avoid disparaging competitors’ products. The competition that is reasonable and healthy is a sign of a thriving economy, and practices that foster competition should be encouraged. Establishing and enforcing specific and strict guidelines by a central authority with a strong compliance mechanism is essential as it is only after doing so that a balance between consumer interests and trademark owners’ interests is preserved.

Therefore, it can be established that even though comparative advertising is protected under Article 19(1)(a) of the Constitution as an expression of free speech, it should not be left unregulated to prevent misuse and disparage trademarks and products of competitors.

References

The Code for Self-Regulation of Advertising Content in India, ascionline, (2018) https://www.ascionline.org/images/pdf/code_book.pdf
The Trade Marks Act, 1999, No. 47, Acts of Parliament, 1999 (India).
Uphar Shukla, Comparative Advertising and Product Disparagement vis-à-vis Trademark Law, 11 JIPR 409 (2006).
The Constitution of India.
Akhileshwar Pathak, Liberalisation and Law on Comparative Advertising in India, IIM AHMEDABAD (2004), https://ideas.repec.org/p/iim/iimawp/wp01792.html
Péter Iskolczi-Bodnár, Definition of Comparative Advertising, European Integration Studies, 25, Miskolc Vol. 3 (2004).
Jeerome G. Lee, Comparative Advertising, Commercial Disparagement and False Advertising, 71 Trademark Rep. 620 (1981).
Merriam-Webster‘s Collegiate Dictionary 542 (Merriam Webster, 11^th ed. 2009).

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Understanding constitutional provisions with respect to trade and commerce within India through case laws

By

Rachit Garg

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November 3, 2021

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This article has been written by Oishika Banerji of Amity Law School, Kolkata. This article deals with an understanding of Articles 301-307 of the Indian Constitution using case laws.

Table of Contents

Introduction

Articles 301-307 of the Constitution of India, 1950 lay down the provisions for freedom of trade, commerce, and intercourse, which draws its roots from British India. Being influenced by Section 92 of the Australian Constitution, the framers of the Indian Constitution adopted the same to incorporate Articles 301-307, which stand corresponding to Article 19 (1) (g) of the latter. Article 301 of the Indian Constitution walks in line with the fundamental right to carry any occupation, trade, or business, as it provides that, “subject to the other provisions of this Part, trade, commerce and intercourse, throughout the territory, shall be free”. Before delving into the articles in specific, it is important to understand the meaning of the terms “trade”, “commerce” and “intercourse”. Chief Justice Marshall’s view in Gibbons v. Ogden (1824) was that although commerce is traffic, it is majorly intercourse. That is why, with the addition of the term “intercourse” under Article 301, the ambit of the same has widened. With the observation of the Supreme Court of India in the case of State of Bombay v. R.M.D.C (1957), which stated that gambling cannot be considered as a trade, it has been made clear that the terms “trade”, “commerce” and “intercourse” include only lawful trading activities. This article discusses a few case laws that will help in better understanding Articles 301-307 of the Constitution.

Articles 301-307 of the Constitution of India, 1950

Part XIII of the Constitution of India encumbers Articles 301-307 dealing with trade, commerce and intercourse within the territory of India. The articles have been listed hereunder;

Article 301: Freedom of trade, commerce and intercourse.
Article 302: Power of Parliament to impose restrictions on trade, commerce and intercourse.
Article 303: Restrictions on the legislative powers of the Union and of the States concerning trade and commerce.
Article 304: Restrictions on trade, commerce and intercourse among States.
Article 305: Saving of existing laws and laws providing for State monopolies.
Article 307: Appointment of authority for carrying out the purposes of Articles 301 to 304.

Fateh Chand v. State of Maharashtra (1977)

The Supreme Court of India while deciding the case of Fatehchand v. State of Maharashtra (1977) took into account whether the profession of money-lending could be considered as a trade or not. According to the Court, money-lending can be considered an ancillary to commercial activity and benign in its effects, but it can also be ghastly when it facilitates no flow of trade, no movement of commerce, no promotion of intercourse, no servicing of the business and instead merely stagnates rural economies, strangles the borrowing community, and turns malignant in its repercussions. The former is undoubtedly commercial, but the latter, according to the law, is not.

G.K. Krishnan v. State of Tamil Nadu (1975)

The issue before the Supreme Court of India in the well-known case of G.K. Krishnan v. State of Tamil Nadu (1975) was whether the freedom of trade, commerce and intercourse spread over Articles 301 to 307 of the Indian Constitution provides absolute freedom or is subjected to reasonable restrictions. The Apex Court clarified that the word “free” under Article 301 of the Constitution does not signify freedom from regulation. There is a contrast between regulations that restrict people’s freedom to engage in the activities that make up commerce and laws that impose rules of proper behaviour or other limitations on those who engage in them. Regulation is the term used to describe this distinction. The true solution in any given case could be discovered by distinguishing between features of the transaction or activity that classified it as trade, commerce, or intercourse, and those features that, while invariably found in some form or another in the transaction or action, are not necessary to the conception. The difference between the core features of trade and commerce and the episodes of the transaction, which do not always give it the character of trade and commerce, is important. The Apex Court went further to state that a tax that is compensating or regulatory cannot be used to limit the freedom of trade or commerce. A compensating tax is imposed based on the nature and degree of road use, provided the profits are used to repair, maintain, and improve important roadways, and the collecting of the tax causes no significant disruption to traffic. The requirement for ensuring freedom of movement by road is that no financial burden be imposed.

State of Madras v. Nataraja Mudaliar (1969)

The validity of the Central Sales Tax Act, 1956 was challenged for violation of Article 303 (1) of the Indian Constitution, in the present case of State of Madras v. Nataraja Mudaliar (1969), which appeared before the Supreme Court of India. The observations that were made by the Apex Court in the present case have been listed hereunder;

Restrictions or obstructions that directly and immediately hinder or hamper the free flow of trade, commerce, and intercourse, whether interstate or intrastate, are prohibited under Article 301 and may be treated as void, subject to other rules. A tax may, in some situations, directly and instantly hinder or obstruct the flow of trade, but not every tax imposed does so.
The phrase “between one State and another” does not indicate that the power granted by Article 302 can only be used to regulate trade between two states as separate entities. The Article clearly states that limits may be imposed not only between states but also within India’s borders. There is also little dispute that the exercise of taxing power is typically regarded as being in the public interest.
Within the sense of Article 303, the Central Sales Tax Act does not discriminate between states. The Act has been enacted solely to impose a tax that is to be collected and retained by the state. Neither does it amount to law, thereby authorizing giving preference to one state over another, nor does it make or authorise the making of any discrimination between one state and another solely because of different tax rates.
No discrimination is practised by leaving it to the states to levy sales tax in respect of a commodity on intra- state transactions. Further, no discrimination can be deemed to be practised by authorizing the state from which the movement of goods commences to levy Central Sales Tax at rates prevailing in the state, subject to certain limitations.
The flow of trade is influenced by several factors, including the source of supply, the location of consumption, the existence of trade channels, freight rates, trading facilities, and the availability of efficient transportation and other trade-related services.

Atiabari Tea Co. Ltd. v State of Assam (1961)

The landmark case of Atiabari Tea Co. Ltd. v State of Assam (1961) that appeared before the Supreme Court of India is related to the interpretation of Article 301 of the Constitution of India, which enacts a general rule that trade, commerce and intercourse throughout the territory of India shall be free. In this case, the state of Assam’s tax on tea carriage by road or inland waterways was declared unconstitutional because “the transportation or movement of goods is taxed solely on the basis that the goods are thus carried or transported,” and thus “directly affects the freedom of trade as contemplated by Article 301.”

The Supreme Court held that the freedom granted by Article 301 would be illusory if taxation could be used to block, obstruct, or impede the movement, transit, or carrying of commodities without meeting the standards of Articles 302 to 304. The Court did not take into account the amount of tax burden, which was far from exorbitant. The tax was found to violate Article 301 simply because it was imposed on the “movement” of commodities from one location to another. The viewpoint advocated in Atiabari was bound to have a significant negative impact on state financial autonomy. It would have eliminated their taxing power under List II (Articles 56 and 57) of the Indian Constitution.

Mehtab Majid v. State of Madras (1963)

The Supreme Court of India took into notice a petition under Article 32 of the Constitution that was filed by the petitioners, who were dealers in hides and skins in the State of Madras, in the present case of Mehtab Majid v. State of Madras (1963). The petitioners’ main argument was that, under Rule 16 of the Madras General Sales Tax Rules, tanned hides and skins imported from outside the State were subject to a higher rate of tax than hides and skins tanned and sold within the State, and therefore such discriminatory taxation violated Article 304 (a) of the Constitution. The respondents’ in return had contended that the impugned rule was not a law made by the State legislature because it does not impose the tax but fixes the single point at which the tax was to be imposed by Sections 3 and 5 of the Act. Sales tax does not fall within the purview of Article 304 (a) because it was not a tax on the importation of goods at the point of entry. The respondents’ went on to say that the contested rule was not developed with the origins of the items in mind.

After hearing the parties to the case, the Apex Court observed that it has now been well established that taxation laws could be a restriction on trade, commerce, and intercourse if they obstruct the flow of trade. Provided they are neither compensatory taxes nor regulating measures. The Court further stated that sales tax of the type in question could not be described as a measure of regulating any trade or a compensatory tax levied for the use of trading facilities. Sales tax that has the effect of discriminating between goods from one state with that of the other may obstruct the free flow of trade. In such cases, it will violate Article 301 and will be valid only if it complies with Article 304 (a). The Court clarified that Article 304 (a) authorises a state’s legislature to levy taxes on commodities imported from other states, and does not accept the argument that the tax must be imposed at the point of entry.

Jindal Stainless Ltd. v State of Haryana (2006)

The Supreme Court of India determined the nature and character of compensatory tax and its parameters in the context of Article 301, in the present case of Jindal Stainless Ltd. v State of Haryana (2006). It also examined the source from which the concept of compensatory tax was judicially derived. The Supreme Court has observed that payout for regulation differs from revenue payment. If a taxing or non-taxing law chooses an activity as the criterion for its operation, such as trade and commerce movement, and the consequence of the law’s operation was to impede the activity, the law constitutes a limitation under Article 301. The tax is regulatory. However, if the law established has to impose discipline or conduct under which the trade must operate, or the payment is for the regulation of conditions or occurrences of trade or production, it would not be just regulatory by nature. This was how the concept of compensation tax is reconciled with the framework of Articles 301, 302, and 304.

Kalyani Stores v. the State of Orissa (1966)

The Supreme Court of India was hearing a petition under Article 226 of the Indian Constitution that challenged the imposition of excise duty on ‘foreign liquor’ imported into the state in the case of Kalyani Stores v. State of Orissa (1966). The excise duty had been levied at Rs. 40/- per L.P. Gallon until March 31, 1961, under a notification issued in 1937 under Section 27 of the Bihar and Orissa Excise Act, 1915. It was increased w.e.f. April 1, 1961, by a fresh notification. On behalf of the appellant, it was argued that because no foreign liquor was manufactured within the state, and thus no excise duty was levied on any locally manufactured “foreign liquor,” no countervailing duty could be imposed on liquor imported from outside the state, as this would violate Articles 301, 303, and 304 of the Constitution.

The Apex Court observed that a restriction on the freedom of trade, commerce, and intercourse throughout India, as indicated by Article 301, can only be justified if it falls under Article 304. The exercise of power under Article 304(a) can only be effective if there is no discrimination between the tax or duty imposed on goods imported from other countries and the tax or duty levied on identical items manufactured or produced in that country. Article 304 protection was not available in this case since no foreign liquor was produced or made within the state.

Automobile Transport (Rajasthan) Ltd. v. the State of Rajasthan (1962)

The respondents, in the present case of Automobile Transport (Rajasthan) Ltd. v. State of Rajasthan (1962), had claimed that taxation to raise revenue for maintaining roads, was not covered by Article 301. The Supreme Court of India had observed that the Rajasthan Motor Vehicles Taxation Act of 1951 did not breach the terms of Article 301 of the Indian Constitution, and the taxes imposed under it were compensatory or regulatory taxes that did not obstruct the freedom of trade, commerce, and intercourse guaranteed by that Article. As a result, such taxes were legal. The Court observed that Article 301’s concept of freedom of trade, commerce, and intercourse must be understood in the context of ordinary society and as part of a Constitution that envisaged distribution of powers between the States and the Union; if so understood, the concept must acknowledge the need and legitimacy of some degree of regulatory control, whether by the Union or the States. Regulatory or compensatory tariffs imposed on the use of commercial facilities did not impede trade, commerce, or intercourse, but rather facilitated it, and were thus exempt from the freedom guaranteed by Article 301.

Khyerbari Tea Co. v. the State of Assam (1964)

In the present case of Khyerbari Tea Co. v. State of Assam (1964), the petitioner challenged the constitutional validity of the Assam Taxation (on Goods carried by Road or on Inland Waterways) Act, 1961. The Apex Court had observed that a statute adopted under Article 304(b) with the President’s prior approval does not necessarily deprive the Court of its power to evaluate whether the restrictions imposed are reasonable and in the public interest. In the present case, the observation made in the Atiabari Tea Company case was regarded not to be a conclusive one. There was a presumption in favour of a statute’s constitutionality, and if it was proven that it infringes the fundamental rights under Article 19(1), then the burden of proof would have shifted on the State. The State was to then defend its validity under Article 19(1) (6). But in the present case, the onus under Article 304(b) was still more in favour of the citizen as it purports to restrict the freedom of trade.

Conclusion

Trade and commerce play a significant role in the development of a State. While on one hand, the Constitution of India guarantees fundamental freedom of occupation, trade and commerce to only the citizens under Article 19 (1)(g), under Article 301, the Constitution vests the right to freedom of trade, commerce and intercourse to all persons within the Indian territory. This tells us the importance of trade and commerce for India as a democratic nation. The case laws act as an additional guide for the articles of the Constitution dealing specifically with trade, commerce and intercourse.

References

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Instagram influencer agreement : everything you need to know about it

By

Abanti Bose

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November 3, 2021

1

394575-instagram-influencer-marketing-tutorial (1) — Image Source: https://rb.gy/skxzot

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

Table of Contents

Introduction

Social media or digital media is growing enormously nowadays, especially in the last few years. From education to work, everything can be found online today. People have started spending more time on social platforms like WhatsApp, Twitter, Facebook (Now named as “Meta”) etc. Among all these platforms, one of the most influential platforms is Instagram.

At present time, Instagram has 1.386 billion active users and around 180 million in India itself. Acknowledging the diversity and population involved in this social media platform, companies, firms, businesses, agencies etc., consider it an extremely profitable platform for advertisement. Advertisements and endorsements on Instagram are made through influencers. This article deals with the agreement between influencers and various companies and brands etc.

Why are advertisements done through Instagram?

Every company wants to spread awareness about their products, services, works etc. to a large number of people from various walks of life for growth. Before the advent of these social platforms or before the popularity of these platforms, advertisements were mainly done through TV shows, TV advertisements, movies ads, salespersons, campaigning, posters etc., All these methods involve huge investment from companies to promote their brand/service. And after doing all these, the inadequacy of the diverse range of population covered by companies was disproportionate to the marketing and promotion costs and to make a profit. After some time, companies/businesses started to find it unprofitable. Now, the question before companies/businesses was, how to promote their brands/how to spread awareness to their products and services? And with the advent of social media platforms, the popularity of Instagram skyrocketed and brands found it more profitable to reach a larger mass in a shorter span of time with minimal investment of cost and time to tap into a consumer base from their side as influencers already have a certain amount of reach.

Why are influencer agreements important?

Both social media influencers and brands have a lot invested in influencer marketing collaborations, and influencers agreements serve to protect the interests of all parties, define ownership and usage rights of materials, and clarify campaign expectations. As recent legal actions by the U.S. Federal Trade Commission (i.e. FTC, the governing body that protects consumers from deceptive advertising and unfair business practices) illustrates, crafting an airtight influencer agreement complete with the requisite FTC stipulations can be largely helpful to both digital influencers (e.g. YouTubers, Instagrammers, Viners, Snapchatters, bloggers), content creators, audiences, and brands.

Influence through Instagram

The general human nature is that we want to be like people whom we admire and respect. And in the same way, if that person says something, wears something, says something, we accept that without any question because we value that person. There are several celebrities on Instagram with millions of followers. So, now that companies have started their marketing and promotional activities through the accounts of these celebrities, a person who has a large/adequate number of followers/fans, they have been able to reach a large number of people easily.

Influencer agreement : influencer and parties involved

If we start with the meaning of the word Influencer, an influencer is a person who can change the decision of another person, through his words or acts, photos, videos etc. Influencer Agreement broadly means the Agreement between the Influencer and the company or brand or agency, who wants to promote their product/service etc via said influencer.

The Influencer Agreement outlines the terms and conditions that are needed to be followed by each of the parties to the Agreement. The Agreement covers everything related to the marketing activity of that particular brand like,

The consideration a celebrity gets,
What the influencer has to do – posting story, post, video etc.,
Usage of Hashtags,
Timing of posting ads,
Adding the brand name in the account bio, etc.,

Apart from all this, the Agreement also outlines the basic clauses of Agreements, including but not restricted to:

Payment clause,
Dispute clause,
Confidentiality clause,
Content rights,
Termination clause,
Post-termination clause,
Indemnity clause, etc.

The above mentioned, details are the basic information about, Influencer, Influencer Agreement. Now let’s move towards Instagram Influencer Agreement and look at the specific clauses to be made a part of this agreement.

Instagram Influencer Agreement

At the current time, Instagram is the most popular site for advertisement, marketing, promotion and where the Influencer Agreement is used most. The celebrities, through their Instagram posts, stories, likes, bio, etc. promote the product. In consideration of this, they get a sufficient amount as monetary benefits to promote the brand/product.

Before starting to post the advertisement related to a product, celebrities enter an Influencer Agreement with that brand/product. They outline all their work, including but not limited to,

When they are going to post a story about the product as an advertisement, like on every alternative day or daily and for what duration like 12, hrs, 20 hrs, 24 hrs. and in consideration of what they will get,
Will they post photos/videos also and usually for posting a post, the amount is higher than the posting a story.
Will they also use hashtags?
Will they use the brand/product name in their bio also, etc.?

So, through the Influencer Agreement, the celebrities or influence accounts of Instagram enter into an Agreement i.e., Instagram Influence Agreement.

Important clauses to be included in Influencer Agreement

Content-Type: The Agreement must clearly outline what type of content needs to be posted, post, story, videos and all other forms. The Agreement must not be ambiguous or uncertain about this clause.
Creative Control: This is another important clause to be included in the Agreement. It includes that, whether the Influencer will create images/stories or the brand/company will provide the images, video, etc. there also needs to be a clause determining who owns the product of this collaboration.
Duration: The duration of the Agreement must be mentioned. Till what time/months/year, the Influencer is bound by the Agreement and cannot endorse another similar brand.
Payment Clause: The payment clause must be agreed upon by both parties. This covers the modes of payment like cash/cheques and schedule of payment like after every month or after every post, story etc., These all points need to be included in the payment clause to avoid any future disputes.
Termination/post-termination clause: The Agreement must include the termination clause. What happens if the Agreement is terminated in between? The remedies to the sufferer party etc., need to be included in this clause. And what happens after termination, does the company is still bound to pay if the contract terminated in between etc.,

These are some essential clauses that need to be included in the Influencer Agreement. Apart from the above mentioned, there are other clauses like indemnification, dispute resolution, exclusivity, content approval, compliance etc. that also need to be considered while entering into an Instagram Influencer Agreement.

Precautions before entering an Influencer Agreement

Laws: The companies before entering into the Influencer Agreement need to be well aware of the laws that regulate the Influencer Agreements in the country.

Example: The Australian Association of National Advertisers Code of Ethics rules require the Influencer to disclose that a post is paid endorsement of a particular brand or product.

Fake Followers: The first and most important thing that the brands/companies need to look at is whether the Influencer has fake or real followers and whether they are paid or unpaid. Nowadays, many people have started increasing their followers overnight through follower’s apps, hacking etc. So, the companies need to be cautious about these accounts.
Know about the Influencer: While entering into an Agreement with the Influencer, the companies/brands are suggested to know about the Influencer. Sometimes the Influencer is not an independent contractor, so it’s better to know common things like, whether the Influencer is an Independent contractor or employee of any other person.

Apart from this precaution, some other points need to be considered before entering into an Influencer Agreement like the expectation for work and remuneration, involvement of celebrity in any legal issue, background information, involvement in any illegal activity etc.,

Conclusion

Instagram Influencer Agreement plays a vital role in branding and publishing of the products. Instagram has been using various influencers to influence the buyers which give benefits to the marketers and also result in profits for the social media site. So, to have a legal written agreement becomes mandatory to be on a safer side. As the influencer promotes the services or products of a company which he or she is not so well aware of, it can sometimes create a dispute regarding the idea, timing, content objectives, etc. So, to have a written influencer agreement is a safe method to get work done smoothly as all the terms and conditions are laid down in the agreement which both the parties are bound to follow once signed.

References

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

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

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Retrospective taxes : the need to get rid of them

By

Rachit Garg

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November 3, 2021

0

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This article has been written by Shohom Roy, from Symbiosis Law School, Noida. This article is a critical analysis of retrospective taxation laws in India and the urgent need to discard them.

Introduction

In the Wealth of Nations, the renowned Economist Adam Smith had suggested that an ideal taxation system must be based on the principles of equity, certainty, convenience, and efficiency. The time of payment, procedural formalities, the quantity of payment must not suffer from arbitrariness and should be clear to the taxpayer as well as every other individual. While taxes might appear to be an obligatory economic duty to finance the services provided by the government, the notion of tax is based on the social contract theory of governance. Taxes are considerations paid by the individual for the economic benefits provided by the government and society as well as an instrument for the redistribution of wealth between the rich and the poor. Therefore the proper functioning of a democratic system relies on a fair and just taxation system. The introduction of retrospective amendments in taxation laws creates an obligation in the past when the statute might not even exist. The Indian government has utilized the mechanism of retrospective amendments to defeat judicial pronouncements and create unfair tax obligations for many companies. The Taxation Laws (Amendment) Bill, 2021 marks the end of the era of ‘Tax Terrorism’ and creates a positive environment for foreign investments by scrapping the retrospective tax provisions.

Challenges to the constitutionality of retrospective taxation laws

Retrospective comes from the Latin words “retro” meaning “backwards” and “specere” which means to look at. Therefore laws that are retrospective in nature deal with events that have happened in the past. This is a contradiction to the legal maxim of “lex prospicit non respicit” or the prospective principle behind legislation that is binding from the present point in time. Generally, retrospective laws are presumed to be unjust and oppressive since people could be prejudiced by laws that were not present when they were breaking them. It appears to be counterintuitive to the notion of equity, fairness, and natural justice. Therefore, the retrospective laws must be used very carefully and rarely to prevent a gross miscarriage of justice. However, Indian legislators have introduced retrospective statutes time and again in the sphere of taxation. This trend has been influenced by the legislative predisposition to undo certain judgments and rectify certain ambiguities or inconsistencies in the existing laws. The government has exploited the principle of presumption of constitutionality while implementing retrospective legislation. The law mandates a heavy burden of proof to rebut this presumption of constitutionality. However, the judiciary has relied on the reasonability test to strike down any laws that appear to be unreasonable. With respect to retrospective taxation laws, the Supreme Court had held that the imposition of an unreasonable tax burden would deter people from carrying out their profession, which could be interpreted as a violation of the right to practice any legitimate profession and trade guaranteed by Article 19(1)(g) of the Indian Constitution.

Judicial opinion on retrospective taxation laws

One of the most important judicial decisions on retrospective taxation laws came in the case of Chhotabhai Jethabhai Patel & Co v. Union of India (1961). The government declared that duty on manufactured tobacco would be effective not from the day it was passed by the Parliament but from the day the bill was introduced by the Parliament. The petitioners sought relief against this retrospective law from the Supreme Court. The Court relied on foreign judgments to determine whether the retrospective law was constitutional and whether it was in contravention of Part III of the Constitution. While an absence of explicit constitutional restriction on retrospective laws created room for the Parliament to implement such laws, the Apex Court held that Part III of the Constitution was applicable to the taxation laws. However, imposition of tax retrospectively does not always make the statute arbitrary and unconstitutional. This legal precedent led to the misuse of legislative power and prompted the government to proceed from repairing small defects in its enactments to implementing major changes retrospectively. It was only in 1978 that the Supreme Court of India while hearing the case of Maneka Gandhi v. Union of India, clarified that the legislature is bound by fundamental rights restrictions while introducing a retrospective law.

The judiciary has allowed retrospective amendments that cure defects in existing laws and help achieve their intended target. Even if the amendment is not expressly made retrospective, the law mandates that the clarificatory or explanatory nature of the amendment must be examined to determine whether it is retrospective in nature. In the case of Lohia Machines Ltd and Anr. v. Union of India (1985), the Parliament added a rule to the Income Tax Act, 1961 which was applicable retrospectively. While it was challenged that the newly added rule was inconsistent with the rest of the Act and defeats the intended effect of the Act, the Supreme Court held that the retrospective amendment was merely clarificatory in nature and therefore valid. In certain circumstances, even a prospective amendment may be held as retrospective in application. This is usually in the case where a statute suffers from certain omissions which are inserted by later amendments that must be construed to be retrospective in nature for the desired implementation of the statute. In the case of Commr. of Income Tax v. Alom Extrusion Ltd. (2009), an amendment to a statute resulted in several tax-payers losing out on the benefit of obtaining deductions on their taxable income due to the prospective implementation of the statute. The Supreme Court held that people should not be deprived of the intended benefits of a statute due to an error of the legislature. Retrospective amendments in taxation laws that are merely declaratory or curative in nature have been consistently validated by the judiciary.

However, a substantive change in the law that results in an altogether new obligation retrospectively would be in contravention with the spirit of the Constitution. This was clarified in the case of Union of India v. M/S Martin Lottery Agencies Limited (2009), where the Supreme Court held that amendments cannot be made to existing laws under the garb of clarification without a reasonable cause. The imposition of new tax liabilities which are retrospective in nature defeats the fundamental rights under Article 19(1)(g) and Article 14 of the Constitution. Even in the case of declaratory or curative amendments, the law mandates that inconsistencies must be resolved in favor of the public. In the case of Ansal Housing and Construction Ltd. v. ACIT (2017), the High Court of Delhi held that an amendment to a tax statute must be intended to remove any obstacles faced by the taxpayers and not the tax authorities. The lack of clarity regarding the rules and regulations imposed by the retrospective amendment could introduce ambiguities in the statute and render it unconstitutional. In the case of Commr. of Income Tax v. NGC Networks India Pvt. Limited (2019), the High Court of Bombay have relied on the maxim of “lex non-cogit ad impossibilia” to establish that a party could not be expected to perform the impossible task of predicting the future and comply with a law that would be introduced at a later point in time. This puts a check on the abuse of legislative power and prevents taxpayers from bearing the burden of an unreasonable tax.

Recent controversies regarding retrospective taxes

Vodafone International Holdings BV v. Union of India

In the case of Vodafone International Holdings BV v. Union of India (2012) is a company incorporated under the laws of the United Kingdom. In 2007, a show cause was sent to the UK-based company which had recently entered the Indian telecom industry, for the non-payment of tax on the indirect transfer of assets in India.
In the same year, Vodafone had acquired rights to a company named CGP Investments (Holding) Ltd. for USD 11 billion located in the Cayman Islands. CGP was a subsidiary of the Hong Kong tycoon Li ka Shing’s Hutchison Telecommunications International Ltd, which was also situated in the Cayman Islands. CGP owned 67% of Hutchison Essar Limited, an Indian Company. Since Vodafone had acquired CGP it had also purchased its subsidiary Hutchison Essar Limited.
The issue arose regarding the payment of tax on the transfer of shares before the Supreme Court of India. The Court examined the nature and intention of the transaction between the two foreign companies and came to the decision that the major purpose of the transaction was the transfer of GCP’s shares and not that of Hutchison Essar Limited. Furthermore, while interpreting Section 9(1)(i) of the Income Tax Act, 1961, the Apex Court clarified that tax obligations arise where there is a direct or indirect income and not a transfer of capital assets. Since there was a sale of shares and not capital assets, it was a nontaxable transaction under Section 2(14) of the Income Tax Act, 1961. The tax must be levied on the source i.e. the location where the transaction has taken place and not from where the products have derived their value.
The Indian legislature passed the Finance Act, 2012 after the Supreme Court’s verdict in this case, in order to bypass the judicial pronouncement. The retrospective amendment to Section 9(1)(i) of the Income Tax Act created tax liability for non-residents or companies incorporated outside the territorial jurisdiction of India if they are involved in the transfer of shares whose values are derived from assets in India.
The act of deliberately changing legislation to impose tax liability has prompted Vodafone to seek relief from the Permanent Court of Arbitration, Hague. The arbitral tribunal has ruled in favor of the company by deciding that the retrospective amendment of the taxation law is in contravention with the fair and equitable treatment guaranteed by the Indian government under the India-Netherlands Bilateral Investment Treaty and the India-United Kingdom Bilateral Investment Treaty.

Cairn UK Holding Limited case

In light of the events that ensued after the Supreme Court’s verdict in the Vodafone case, the Income Tax Department of India imposed a capital gain tax on Cairn UK Holdings Limited on account of the internal corporate restructuring of the company in 2006. Cairn UK had transferred its entire stake in one of its subsidiaries located in Jersey, the Channel Islands to Cairn India. Later the Indian subsidiary had launched an Initial Public Offering divesting about 30% of its shares to the mining conglomerate Vedanta PLC. Tax demand of Rs 22,100 was made against Cairn.

The Permanent Court of Arbitration, Hague while adjudicating on this issue held that the retrospective amendment to the statute cannot be termed as a clarificatory amendment. The amendment of the domestic law was against the Bilateral Investment Treaty between India and the UK. Therefore demanding tax from the company would be against international law. Furthermore, a tax penalty of USD 1.2 billion was imposed on the Indian government as a way of compensating for the damages suffered by Cairn. Subsequently, the Indian government had entered into negotiations with the promise to waive 50% of the tax liability. However, Cairn filed for an enforcement decree of the arbitral award in the USA and sought to confiscate properties owned by Air India. The company has argued that the government-owned enterprise is representative of the Indian government and therefore liable to pay the dues of the government.

It seeks to pierce the corporate veil and acquire Indian assets which are located all over the world. Several suits have been initiated all over the world to seek enforcement of the arbitral award. Recently a French court has allowed the UK-based company to freeze over 20 Indian assets in Paris worth around 20 million Euros.

Taxation Laws (Amendment) Bill, 2021

The amendments to Section 9(1)(i) of the Income Tax Act by the Finance Act, 2012 established that the shares of a domestic or foreign company shall be deemed to have been always situated in India if the shares derive a substantial part of their value from assets situated in India. Since the tax regime obligates non-residents to pay tax on the income gained from business, property, assets, or any other source of income in India, this subsequent amendment was applied retrospectively creating an unreasonable burden on various businesses. Hence, people who sold shares of foreign companies before the enactment of the Finance Act, 2012 were also subjected to a tax on the income earned from such trade. The Taxation Laws (Amendment) Bill, 2021 seeks to amend the Income Tax Act, 1961 and the Finance Act, 2012 in order to nullify the provision that imposes a retrospective tax liability on the income derived from the sale of shares of a foreign company. The amount paid due to the retrospective tax on indirect transfer of Indian assets would be returned to the taxpayers without any interest from gross tax receipts of the government. Furthermore, it has clarified that this tax liability shall be nullified after the fulfillment of the following conditions:

Withdrawal or an undertaking of withdrawal of any appeal or petition filed against these retrospective tax laws.
Withdrawal or an undertaking to do the same with respect to any arbitration, conciliation, or mediation proceedings initiated or ongoing against these retrospective tax laws.
An individual must submit an undertaking to waive the right to pursue any remedy or claim that might be available due to any law or bilateral agreement

The Government has assured that all assessment or reassessment directives issued by the Income Tax Department would be dissolved and the deducted amount will be refunded without any interest.

Conclusion

The opinion of the international tribunals with respect to India’s retrospective tax regime has prompted the government to initiate a process of making much-awaited changes. Although India seeks to establish that the domestic taxation laws fall under the ambit of its right as a sovereign, the decision of the Permanent Court of Arbitration in favor of the tax-payers and against the Indian Income Tax Department has culminated into the introduction of the Taxations Laws (Amendment) Bill, 2021. The government seeks to put an end to the seventeen arbitrations proceedings initiated against it under the Bilateral Investment Protection Treaty with the United Kingdom and the Netherlands. The consumer protection regulations that compromise the business model of Walmart-owned Indian e-commerce powerhouse Flipkart as well as the dispute over the end-to-end encryption feature provided by Facebook Inc.’s Whatsapp is a glimpse of the inadequacy of Indian law to adapt to the changing needs of the society. The scrapping of the retrospective laws could encourage the flow of foreign investment in India and create a transparent and reliable tax regime for global investors.

References

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Child adoption laws and the role of stakeholders and the government in the adoption process

By

Diva Rai

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November 3, 2021

0

mothers_wait_2759100_835x547-m — Image source - https://bit.ly/3pZ2HFP

This article is written by Aastha Verma, from Kalinga University, Raipur, Chhattisgarh. The article describes the law of adoption and the role of stakeholders in the adoption process, and initiatives taken by the government for the pandemic orphans.

Table of Contents

Introduction

Adoption is a social, emotional, and legal process in which children, who are not able to be raised by their birth parents, become full and permanent members of another family. It is a connection between the child and the caregiver that is legal and binding on both parties. It allows the adoptive parents to make decisions that influence the child’s destiny.

COVID-19 has raised several issues, ranging from the economic slow down to the inter-state migrant issue. One such issue is the issue of pandemic orphans. These are the children who lost their parents and are left without any help in the time when the pandemic was at its peak. The problem of illegal adoption was also brought to attention by the National Commission for Protection of Child Rights (NCPCR). This highlighted the plight of pandemic orphans and directed attention towards the adoption process, principles, and body that govern them in the country.

Adoption in India

In India, Hindu law addresses the rules and regulations of an adopted child under the Hindu Adoption and Maintenance Act, 1956. This Act removes several gender-biased discriminatory factors by reflecting the principle of equality and social justice. Citizens of India who are Hindu, Jain, Buddhist, or Sikhs can adopt children under this Act. Moreover, adoption is not recognized in the personal laws of Muslims, Christian, Paris, and Jews in India, rather it is recognized under the Guardianship and Wards Act, 1890.

Adoption under the Hindu Adoption and Maintenance Act, 1956

Sections 6 to 11 of the Hindu Adoption and Maintenance Act, 1956 defines the essential conditions for a valid adoption.

Section 6 of the Act defines the essentials for a valid adoption. The person adopting the child should be capable of adopting the child. The person giving the adoption must be capable of doing so.

Sections 7 and 8 of the Act state the capacity of male and female Hindus to adopt. The person adopting should be major and of sound mind. A Hindu male, who is major and of sound mind, can adopt a child irrespective of him being a bachelor, widower, divorcee, or married. However, if he is married then the consent of the wife is mandatory and if he has more than one wife, then the consent of all is necessary. An adoption made without the consent of the wife is void.

Hindu unmarried women, divorcees, or widows can adopt a child. A married woman, however, cannot adopt a child, subject to certain exceptions:

If the husband has ceased to be Hindu.
If her husband has finally and completely renounced the world.
If he is declared as unsound by the court.

Section 9 of the Act mentions the person who is capable of giving in adoption. Only the father or mother or the guardian of the child can give the adoption of the child. The father or mother has an equal right to give the son or daughter in adoption. This right is exercised by any one of them with the consent of the other unless one of them ceases to be Hindu or is declared to be of unsound mind by the court.

When both of the parents have renounced the world or have been declared as unsound by a court of law, in that case, the guardian of the child can give the child in adoption, with the prior permission of the court.

Section 10 of the Act states a person who may be adopted. Certain conditions should be fulfilled for a valid adoption to take place.

The child must be a Hindu.
He/She has not already been adopted.
He/She is not married unless there is a custom or usage that permits such adoption.
He/She has not completed the age of 15 years unless there is a custom or usage that permits such adoption.

Section 11 of the Act mentions other essentials for a valid adoption:

If adoption is of a boy, the adopting parents should not have a Hindu son during the time of adoption.
If adoption is of a girl, the adoptive parents should not have a Hindu daughter during the time of adoption.
If a female is adopted by a male parent then there should be an age gap of twenty-one years.
If a male is adopted by a female parent then there should be an age gap of twenty-one years.
The same child cannot be adopted simultaneously by two or more people.
The adoption must be given and taken by the parents’ concern or under their authority with intent to transfer the child from the family of its birth to the family of its adoption.

Adoption under Guardianship and Wards Act, 1890

Personal laws of Muslims, Christians, Parsis, and Jews do not recognize complete adoption. They do not have the laws to adopt the child legally so the desirous parents adopt their child under the Guardianship and Wards Act, 1890. However, this act does not provide the rights to the child the same as a child born biologically. Here, the child cannot become their own child. Also, they cannot inherit their property by right. It only confers the guardian-ward relationship. This relationship exists only till the child attains the age of 21 years.

Foreigners who seek to adopt an Indian child, do so under this Act to assume legal guardianship of the child after giving an assurance to the court that they will legally adopt the child as per the laws of their country within two years after the arrival of the child in the country.

Stakeholders in the adoption process

The adoption of orphans, abandoned, or the children surrendered are regulated by the Central Adoption Resource Authority (CARA) through its associates or by recognized agencies. They are as follows:

Central Adoption Resource Authority (CARA) is a statutory body established by the Women and Child Development Ministry which functions as a nodal agency for adoption. CARA monitors inter and intra country adoption. It ensures the smooth functioning of the adoption process from time to time. It lays down the adoption guidelines, procedures, and process which has to be followed by different stakeholders for the functioning of adoption in India.
State Adoption Resource Authority (SARA) acts as a nodal body within the state which promotes and monitors adoption and non-institutional care with the coordination of CARA.
District Child Protection Unit (DCPU) is a unit set up by the state government in every district. It identifies children who are orphans, abandoned, and are surrendered. They are declared free for adoption by the Child Welfare Committee.
The Authorised Foreign Adoption Agency (AFAA) is recognized as a foreign social or child welfare agency that is authorized by CARA on the recommendation of the central government to coordinate all matters relating to the adoption of Indian children by citizens of that country.
Specialized Adoption Agency (SAA) is recognized by the state government to place children under adoption.
There are instances when adoptive parents and adoptive children are not able to adjust to each other. In that case, the SAA or DCPU arrange a counseling session with them, and non-adjustment of a child with the family despite efforts through counseling can lead to disruption or dissolution of adoption.

The CEO of CARA, Deepak Kumar, stated that several families are registering for adoption. There were about 3374 domestic and 652 intercountry adoptions in the year 2018-19. Some families are adopting children even after having biological children. These days, people are also adopting girls, which is positively impacting society, as people are considering sons and daughters equally. Parents usually show preferences for girl child as compared to boys. About 2398 girl children were adopted in the year 2018-19. Even some families are waiting in comparison to the number of children who are legally free for adoption. It is creating awareness among the parents as well as institutions for an increase in adoption rate by a few years.

Pandemic orphans

As per the National Commission of Protection for Child Rights (NCPCR), there are a total of 9300 children who have lost their parents or were abandoned during the COVID-19 pandemic. Data reveals that there are children who lost their parents and are living with guardians. Also, some families are not designated as legal guardians and some of the children are sent to special adoption agencies. There is a possibility that they will be facing risks to survive, health issues, violence, etc.

Government initiatives for pandemic orphans

Fixed Deposit in the name of the child

PM CARES Fund will contribute through a scheme of providing Rs. 10 lakhs to each child when they reach the age of 18 years. This will help them with monthly financial support for the next three years to care for their requirements during the higher period of education. At the age of 23 years, he/she will get a lump sum amount for personal and professional use.

Support for education

Children below the age of 10 years will be admitted to Kendriya Vidyalaya. Children between the age group of 11- 18 years will get admitted to Sainik School or Navodya where they can get residence. If the children are taking admission in private school then the school fees, expenditure on uniforms, and textbooks will be given by the PM-CARES Fund. The government will provide support for higher education by providing education loans, scholarships equivalent to tuition fees for undergraduate or vocational courses as per government norms.

Health insurance

All children who have faced problems because of the pandemic will be enrolled as a beneficiary under Ayushman Bharat Scheme (PM-JAY) with health insurance coverage of Rs. 5 lakhs. The premium amount for these children will be paid by the PM-CARES fund till the age of 18 years.

Conclusion

Adoption is not a taboo but an alternative way of making a family. Children are believed to be a cluster of joy and the future of the country depends upon them. In India, during the early times, people were not able to accept the concept of adoption. However, with the change in time, people started giving importance to children who are orphans or abandoned or surrendered. It is a beneficial program where the child is treated like a biological child and proper love, care, and attention are given to them. During the COVID-19 pandemic, many children have lost their parents. If not adequately looked after, this can affect the overall development of such children. Therefore, in light of this, the government has taken various initiatives to help these children to get their higher education and can build their future. India needs to formulate more effective policies and the existing ones should address the issues. Stakeholders should have proper coordination with each other to make the laws of adoption more effective.

References

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Colonial laws that are still prevalent in modern India

By

Rachit Garg

-

November 3, 2021

0

This article has been written by Anindita Deb, from Symbiosis Law School, Noida. This article aims to discuss the relevance of the Colonial laws that were implemented in India, of which some are still prevalent.

Introduction

The British Government designed several legislations during their rule in India in order to run the country at their own whims. These legislations were anything but beneficial to the people of the country, they aimed at exploiting the resources of India and suppressing any rebellion by the masses against the British rulers.

Unfortunately, some of these legislations are still retained by the Indian Lawmakers and are very much relevant to date, so much so that these laws are a part of our everyday routine. This article aims to deal with such legislations and how some of them are unethical and need doing away with.

Impact of Colonial rule on independent India’s legal system

The emergence of independent India was quickly followed by the necessity for an adequate governance system that was both indigenous in origin and acceptable and attentive to the requirements and customs of the vast number of castes, classes, religious, and linguistic communities it was attempting to unite. Unsurprisingly, the continuation of the British-created court system was a compromise formula that worked well at the time for the new government. A number of these legal codes, which were based on European culture and traditions, were embraced by Indian society and continued to exist long after the Colonial powers had left.

Ten years post independence, the Law Commission of India in its fifth report on the British Statutes applicable in the country suggested that India could now have a new legal code and in case a British statute proves to be useful, a corresponding India statute, having necessary provisions from the British Law, could be formulated in order to replace it.

Despite the fact that 1200 archaic regulations were repealed in bulk, Indians continue to follow several outdated laws that date back to the British Colonial period. The Indian judiciary relies on a large number of legislations that date back to Colonial times.

Colonial laws that are still in practice in India

The Colonial rule left its legacy in the form of various acts and rules that are still in continuance in India and are being rigorously implemented. Following are some of the laws which have Colonial footprints:

The Dramatic Performance Act, 1876

India used theatre as a weapon to express resistance to Colonial rule in the 18th century. Threatened by social revolution, the British government enacted the Dramatic Performance Act in 1876, prohibiting “scandalous” and “defamatory” dramatic performances. Performances that were likely to elicit anti-government sentiment or that were likely to corrupt audience members were prohibited.

The statute still survives seventy-six years after independence, and many states, with the exception of Delhi and West Bengal, introduced and amended it after 1947.

The Khakee dressing

The Colonial officer Sir Harry Bernet is known to be behind the idea of the Khakee dressing worn by Police officials in the country. The uniform has been prevalent since 1847. The word ‘Khaak’ means ‘dust, soil, and ash,’ implying that the person wearing Khakee puts his life on the line and is brave enough to turn to ashes while fulfilling his duty.

Left-handed traffic arrangement

In 1800, the British introduced this system in India. We still drive and walk on the left side of the road under this system of transportation. Contrary to this, numerous countries around the world follow the right-hand-side-of-the-road regulation. Only a few countries in the world, including India, use the left-handed transportation system.

Salt Cess Act, 1954

The Salt Satyagraha was a notable landmark in the history of India. Though his Satyagraha was against the salt tax, you might be shocked to learn that the ‘Salt Cess Tax Act of 1953‘ is still in effect today. This tax is levied as a sub-tax to cover an exclusive administrative expense. It is levied at a rate of 14 paisa per kilogram of body weight. This tax is levied on salt factories that are either privately held or owned by the government.

In the fiscal year 2013-2014, the government was able to collect around $ 538,000 which was only half of the total cost of collecting this tax, thanks to this statute. Due to the high cost of collection, a committee was formed to look into the practicality of continuing the tax, but they were unable to reach a decision. The salt industry in India is responsible for providing employment to about 1.4 lakh individuals per day. Besides this, 92% of the salt production is carried out by private entities.

The Indian Police Act, 1861

Following the rebellion of 1857, the British drafted this statute. Before implementing this law, the British government’s major goal was to create a police force capable of dealing with any government uprising. All powers were centralised in the hands of the state, which acted as a dictatorial administration under this Act. However, despite the fact that India has declared itself a sovereign republic, this act is surprisingly still in force.

Even though Maharashtra, Gujarat, Kerala and Delhi have passed their own legislation in this regard, these laws very much appear to be derived from the original Act of 1861. According to the Police Act, 1861, police is under state control, i.e. Inspector General/Director General will act according to the order of the Chief Minister, and can be removed from their post by the order of the Chief Minister.

The Indian Evidence Act, 1872

The British Government passed this Act making it applicable to all court proceedings including Court Marshal. However, the provisions of this Act are not applicable to arbitration proceedings. This Act specifies which objects can be used as evidence and which must be reported to the court of law in advance. Hence, even after 149 years, this Act continues to play a significant part in various legislations, even if it is in modified forms.

The Income Tax Act, 1961

The laws related to Income Tax in India are provided for under this Act. This statute specifies how taxes are levied, collected, and the basic structure of the tax. Though the government intended to repeal this Act together with the Wealth Tax Act of 1957 by enacting the Direct Tax Code, it was not repealed when the Wealth Tax Act was abolished.

The most contentious section of the Income Tax Act of 1961 is Section 13-A. The purpose of this Act is to charge income tax on the revenue of political parties. Also, any organisation that receives a donation of $10,000 or more from an individual or a group must disclose the source of its funds. Surprisingly, all political parties claim to have received donations of less than Rs. 10,000 per person.

The Foreigners Act, 1946

This Act was passed prior to the country’s independence. Any person who is not an Indian citizen is classified as a foreigner under this Act. The individual will have to prove whether or not he or she is a foreigner. If someone suspects a foreigner is staying in India illegally for longer than permissible, they must report it to the local police station within 24 hours of receiving the information. Otherwise, that person will be subjected to legal action.

The Transfer of Property Act, 1882

The Transfer of Property Act governs all the legal provisions relating to the transfer of movable and immovable property in India. This Act was also legislated by the British Government. Transfer of Property, according to this Act, entails giving property to one or more individuals or oneself. Property can be transferred at present or in the future.

Indian Penal Code, 1860

The Indian Penal Code is the official criminal code of India intended to cover all the aspects surrounding criminal law. The suggestions of the first Law Commission in 1860 were used to draft the Indian Penal Code. Under the chairmanship of Sir Thomas Mckaley, the first law commission was constituted in India. Under the British administration, the Indian Penal Code was enacted in 1862. The code defines crimes and the penalties stipulated for those crimes under Indian Law.

Laws repealed in the UK but still in practice in India

The Lok Sabha enacted the Repealing and Amending Bill and the Repealing and Amending (Second) Bill in December 2017, repealing 245 obsolete and archaic laws and identifying almost 1,800 more.

For example, the Dramatic Performance Act of 1876, which restricted theatrical representation in India and was originally enacted by the Raj to regulate theatre, was overturned.

However, there are still several outdated and seldom used laws in India. Here is a list of five problematic, archaic laws that are still in effect in Independent India but have been repealed in the United Kingdom.

Sedition

Sedition is defined under Section 124A of the Indian Penal Code as “hatred or contempt excited against the government” by means of words, written or spoken, or through visible representation.

The law of sedition has received mass criticism on the ground that it stifles the freedom of speech and expression of the citizens of a country. For the same reasons, this law was abolished in the UK in 2009. However, it continues to be in force in India.

The law’s objective in the 1870s was to arrest and convict revolutionary nationalists who spoke out against the Colonial government’s legitimacy. Surprisingly, the Colonial authorities amended the legislation in India to charge VD Savarkar with sedition, thereby banning his book and “seditious” pamphlet.

The sedition law is still rigorously put to force in India, with 326 sedition cases being filed in the period of five years from 2014-19. Out of these 326 sedition cases, only six were convicted, hence, it is evident there has been exploitative use of this law.

In a society where freedom of opinion and expression was protected under the Human Rights Act of 1998, the law surrounding seditious libel was considered arcane in the United Kingdom. It was regarded as a vestige of a time when freedom of expression was not regarded as a right, and so sedition was no longer considered a crime.

Blasphemy

Blasphemy is punishable under Section 295A of the IPC which describes the penalty for deliberate and malicious acts which are intended to outrage the religious feelings of any class by means of insulting its religion or religious beliefs. Its roots can be traced back to communal hostilities between Hindus and Muslims in the 1920s, when the Rangeela Rasool magazine (supposedly) insulted Prophet Mohammed, causing chaos and conflict. To preserve other religions and foster harmony, Section 295A was seen as a “need of the hour.”

Until 2008, blasphemy or blasphemy was a potential offence in the United Kingdom if any published piece of text attacked the Bible or Christianity and harmed public order. It could even lead to the death penalty. In the 1980s, a movement to repeal the law began, coinciding with attempts by Muslims in the United Kingdom to use blasphemy laws against Salman Rushdie’s Satanic Verses.

The UK Law Commission proposed that the law be repealed in 1985, citing the right to freedom of expression as well as the law’s insignificance in modern society, which is no longer founded on religion. The law was abolished in 2008, with the UK government claiming that rarely used laws like blasphemy served no beneficial purpose and instead encouraged religious organisations to attempt to restrict artists.

Unlawful Assembly

If there is an assembly of five or more persons who have the common intent to show criminal force or to resist the execution of any law, then that assembly of persons becomes unlawful under Section 141 of the IPC. This provision of the law is often considered vague and has on several occasions led to the prohibition of peaceful gathering, issued under Section 144 of the Criminal Procedure Code.

The Colonial authority utilised Section 144, which was enacted in 1860, to suppress nationalist revolutionaries’ protests and prevent riots. Section 144 allows the local magistrate extensive authority to call for an end to any demonstration, peaceful or otherwise. This Section can be seen too frequently imposed in recent times, some examples include the Delhi Riots of 2020 and post the Ayodhya verdict. Several State Governments have also imposed Section 144 in their states in order to curb the spread of COVID-19.

In the United Kingdom, the Public Order Act of 1986 repealed illegal assembly, rout, and riot in an attempt to make the law more comprehensive and easy to understand. Nonetheless, the ambiguous language of Section 141 has led to widespread use of the prohibitive order in India.

Death Penalty

The death penalty is another law that has made its way into the legal system of India by way of the British-drafted Indian Penal Code (IPC). Provisions of the IPC have made numerous crimes punishable by death.

The death penalty was abolished in the United Kingdom in 1998, except in times of war. It signed the 13th Protocol of the European Convention on Human Rights in 2003, abolishing the death sentence in its entirety.

However, the death penalty jurisprudence in India has grown significantly over time as a result of judicial interpretation. Following Supreme Court precedent, the death sentence is only used for the most heinous of criminal offences in the rarest of rare cases.

The term “rarest of rare” has yet to be defined objectively. Instead, the Supreme Court has established factors that a judge must consider when assessing whether an offender deserves to be executed on a case-by-case basis. As a result, the presiding judge’s decision on whether or not to impose the death penalty is ultimately up to him.

As per a 2019 report, India is one of the 56 countries that have retained the death penalty as against 142 countries that decided to abolish it.

Besides these, the criminalisation of homosexuality under Section 377 of IPC and adultery under Section 497 of the IPC was also adopted from the Colonial era. However, in September 2018, the Supreme Court struck down these sections of the IPC.

A hint of Colonial legacy in Indian judiciary

It is a well-established fact that the British Colonial rule has majorly influenced the present legal environment in India, ranging from dress codes to the provisions of statutes. The Indian judicial system is somehow unable to let go of the Colonial legacy. Over years, there have been numerous debates as to whether it is time to move on from the Colonial conventions pushed on the people of the country decades ago.

Due to its unsuitability in Indian weather, the necessary coat-and-gown dress rule for lawyers has been criticised. In some Courts, the practise of having mace-bearers march ahead of judges has sparked lively debate.

Senior Advocate NL Rajah, a member of the Madras High Court’s Heritage Committee, points out that a Colonial psyche persists throughout the Indian Judicial System.

The Colonial mindset of the British was to protect its subject only on the condition that they surrender their rights to the State. In other words, Justice could not be demanded, rather the State had the authority to allow it as a matter of concession. The way pleadings are written in Court, the way the Court is addressed, and, most crucially, the Court’s accessibility is all evidence of this Colonial mindset left behind by the British rulers. Justice is prayed for in the most humble terms, not demanded. Judges are still referred to as Lordships and Ladyships. The average petitioner, as was the case with the Privy Council during British Colonial authority, is often unable to afford the costs of pursuing suit in remote Higher Courts. Furthermore, judges are rendered helpless by the growing backlog of cases, even if they wish to assist the ordinary litigant.

Because of the large number of cases pending, courts are deciding whether or not to give relief based on the severity of the violation rather than the violation itself. The fact that the law ignores trivial cases is another indication of the Colonial mindset.

Is India ready to move on from Colonial laws

The abolition of Section 377 and Section 497 of the IPC were landmark moves on the part of the Supreme Court in order to push the legal system forward towards a more inclusive society. However, there are still laws and statutes that were given to the country by its Colonial rulers and continue to be used and applied everyday in a law-abiding citizen’s life. While some of these laws do not impose any threat, laws like Sedition and Blasphemy still carry the potential to be misused by the leaders of the country in order to suppress the fundamental right of Freedom of speech and expression. Besides these, the fact that dress codes prescribed by the British rulers are still being devotedly followed by the Guardians of the law is classic evidence of the fact that India might not just yet be ready to move on from the Colonial legacy bestowed upon it.

Conclusion

The Britishers stayed in the country long enough to control and shape the legal system that is followed today. While some of the laws have only assisted the lawmakers of the country to justifiably draft the law of the land, some of the archaic laws which are only aimed at exploiting the accused need doing away with. Overall, these British laws have done more bad than good, and seventy-six years post the independence of the country, there is no point in following the laws that the UK itself has abolished.

References

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

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