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Rights one should know before getting employed

By
Diva Rai
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Image source - https://bit.ly/3nMqLsC

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

History repeats itself, first as tragedy, second as farce – Karl Marx

There have been 1,007 reports related to local trafficking in 2016, and 994 in 2017. Since then, we observe the trend is constantly increasing at an exponential rate. Similarly, the areas related to the regulated working hours, human dignity and good working conditions with requisite safety equipment are often ignored.

Those who cannot remember the past are condemned to repeat it. With these lines of Hegel today we see today’s Farm Laws again turning into a thunderbolt. Here are some of the rights and landmark judgements for the protection of labourer classes.

What are the landmark judgements of Labour Law

To protect the rights of workers from their exploitation here are some of the landmark judgements related to labour laws. In the case of TK Rangarajan vs Govt. of Tamil Nadu, it was held that there is no fundamental right for the government officials to go on a strike. Similarly, in the case of BR Singh vs Union of India, it has held that the constitution does not guarantee the ‘right to strike’ as a fundamental right. Similarly, in the case of Mangalore Ganesh Beedi Workers vs Union of India, it was held that even the beedi workers can have the right to freedom of trade and business. They have the right to form an association as explained under article 19(1)(g) of the Indian Constitution.

In the case of Rangaswami vs the Registrar of Trade Unions, it was held that the withholding of registration of a Trade Union even when the documents were complete was discriminatory. However, in the case of Tamil Nadu Non-Gazetted Government officers Union vs The Registrar of Trade Union, it was held that the government servants engaged in sovereign activities cannot be permitted to form trade unions. The government servants who form the force controlling the disciplinary actions or the governance and law would be disqualified to go to strike. This means that not all officials forming as part of the government officials would be disqualified. This was clarified in the case of Registrar of Trade Union vs Government Press Employees Union. Here, it was held that the officials working in the printing of official gazettes were permitted to form trade unions. Hence, they could avail themselves of the benefit of forming a trade union. Similar it does not matter how menial the work would be, but the people have the right to form the trade union. This was held in the case of Trimala Tirupati Devasthanam vs Commissioner of Labour. Here, it was held that even the people working in the power and water wings of the organisation would be allowed to form trade unions.

What are the landmark judgments regarding trade unions?

In re Inland Steam Navigation Workers’ Union, it was held that the registrar must register the trade union in case all the requirements are fulfilled. No one can deny the right to get registered unless reasonable grounds are presented for the same. However, the fact cannot be denied that merely not getting registered would make a union an unrecognised entity. This was held in the case of Chairman, State Bank of India vs All Orrisa State Bank Officers Association.

Can a trade union be liable for criminal conspiracy?

In the case of RS Ruilkar vs Emperor, it was held that a trade union cannot be held liable for the conspiracy to do certain acts in furtherance of the trade union. Similarly, in the case of Rohtas Industries Limited and another vs Rohtas Industries Staff Union and Others, it was held that the workers cannot be asked to make good of the loss suffered by the employer because of the illegal strike. 

Can the workers protest within the premises of their employers?

In the case of Standard Chartered Bank vs Chartered Bank Employees Union, it was held that the workers cannot have demonstrations in the premises of the employers. One cannot tie banners in the place of the employer. In other words, it can be said that the lobbying or picketing shall be done outside the premises of the employer.

Is there any restriction on the strike of the people working in the services of public utility?

Yes, in the case of Common Cause vs Union of India & Others, it was held that under the Consumer Protection Act, 1986 it was found that the strike was launched by the Indian Flight Engineer’s Association which was illegal. It was held that since flight officials form a part of the public utility services. Therefore, their strike without prior notice was held to be illegal in nature.

What is the scope of industry under the ‘Factories Act’?

In the case of Banglore Water Supply and Sewage Board vs Rajappa, 1978 it was held that the scope of ‘industry’ is not limited to the industry’s premises. It includes gymkhanas, dhanrajgiri hospitals, cricket clubs as well. This case also discusses the ‘dominant nature tests’, which is defining the terms such as workers and industry. Similarly, the running of a tube-well owned by the government was defined as an ‘industry’ in the case of Gurmail Singh vs the State of Punjab. Similarly, in the case of All India Radio vs Santosh Kumar, it was held that the ‘All India Radio’ was defined as an industry under Section 2(j) of the Act.

Likewise, in General Manager, Telecom vs A. Srinivasa Rao and In Sub Divisional Inspector of Postvaikan vs Theyyam Joseph, the telecom department of the union of India was held to be an industry.

Can a research laboratory be held as ‘Industry’?

In Physical Research Laboratory vs KG Sharma, it was held that research laboratory is not an ‘industry’. It was held that a research organisation is discharging purely the governmental functions. It can be defined as a domestic enterprise than a commercial enterprise. However, it also requires the corporation of the employees to achieve its purpose. 

Can an enterprise for the promotion of art and culture be held as an industry?

In the case of Bharat Bhawan Trust vs Bharat Bhawan Artist’s Association, it was held that a trust promoting art and culture is not defined as ‘industry’. The basic definition includes some inclusion of production of a commercially viable entity, manufacturing or processing of goods. However, this is not true in the case of an enterprise just promoting art and culture. However, on the contrary, in the case of State of UP vs Jai Bir Singh it was held that for welfare schemes, the water and sanitation departments would constitute as industries.

Whether a dispute with a person who is not a workman falls within the scope of an industrial dispute?

In the case of Workmen of Dimakuchi Tea Estate vs Management of Dimakuchi Tea Estate, it was held that in the definition clause of Section 2(k) of the Act, the term ‘any person would include a person who is either an employee or a non-employee. Hence, even a non-employee would fall in this category.

What are the provisions for the women employee regarding employment?

In the case of Municipal Corporation of Delhi vs Female Workers (Muster Roll), it was held that those who were employed on the muster roll for carrying on the activities were termed as employees. Even the workers included in the repairing of roads and digging of trenches would be included in the definition of employees. Regarding the women employees, it was held that the women workers should be given the maternity benefit. The period is also defined here. It is said to be a period of mature pregnancy or soon after the delivery of the child.

Can an employee fight his case regarding undue stoppage of promotion?

Yes, in the case of J H Jadhav vs Forbes Golak Ltd, it was held that in case of undue stoppage from the promotion claim of a clerk. This can be sought under Section 2(k) of the Industrial Dispute Act, 1947. 

Can teachers be regarded as workers as per the Labour Laws?

In the landmark judgement of Miss A. Sundarambai vs Government of Goa, Daman & Diu, it was held that an educational institute is an industry. But the teachers cannot be treated as workers. It was added by the Hon’ble Court that the term workmen include semi-skilled or unskilled people not having expertise as teachers. It was held that teaching is a noble profession. It is not attributed to manual work, supervisory work or some clerical work for that purpose. 

How can a workman be defined in the Industrial Dispute Act?

In the case of HR Adhyanthaya vs Sandoz India Ltd., the parameters were set to qualify whether a person is termed as a worker or not. In this case, it was held that a worker is defined as someone doing unskilled, manual work, clerical work for hire or reward, manual, supervisory, technical or operational work for reward or hire. If these parameters are fulfilled then a person is defined as a worker. 

In a similar way, in the case of May & Baker (India) Ltd. vs Workmen, AIR 1967 it was held that medical practitioners are not termed as workers since it is a noble profession. Likewise in the case of Western India Match Co. Ltd. vs Workmen Popularly known as the Vimco case, it was held that a person in the sales department would not qualify as a ‘worker’ under this Act. Clarifying the previous judgement, in the case of Buniah Shell Oil Storage & Distribution Co. of India Ltd. vs Burntah Shell Management Staff Association, 1971 it was held that the person promoting sales would not qualify as a worker. This is because, there is no technical, clerical or supervisory work in promoting sales. Thus, it would not amount to qualify as a workman under the Industrial Dispute Act, 1947.

Can the status of managerial or supervisory work help to establish jurisprudence?

In the case of S K Sharma vs Manesh Chandra, 1983 it was held in this case that in case a worker is not engaged in any administrative or managerial work, he would be qualified as a worker under this Act. Similarly, in the case of Ved Prakash Gupta vs Delton Cable India Ltd. it was held that since a security inspector at the security gate is not doing a managerial or supervisory action, he would not be qualified as a worker, in this case. In the same way, in the case of GB Pant University of Agriculture & Technology vs the State of UP, it was held that the worker of a cafeteria was held to be an employee of the university.

Can we readily revert to strike, in case the demands are not met?

The Hon’ble Court replied negative stating that one should first try to mediate the matter peacefully. The idea of doing a ‘strike’ should be the last resort in such a case. In the case of the Management of Chandramalai Estate Ernakulam vs its workmen, it was held that it is not the right of the workers to commence a strike without trying to mediate the dispute peacefully beforehand. It is only after exhausting the peaceful methods of achieving the reasonable avenues that one should go for a strike. 

What are the areas that an employer can take to resort things to normal?

In Kairbetta Estate Katagiri vs Rajamanikam, it was held that just as labourers and workers resort to strike for the fulfilment of their demands; similarly, the employers can use lockout as one of the means to fulfil their demands. 

Besides this, it has been pointed out that strikes cannot be illegal and justifiable at the same time. In re India General Navigation case, it was held that it would be justified if the employer deducts some salary for the period of the strike as a disciplinary action. 

What is retrenchment? What are the established case laws regarding the same?

During an economic slowdown or due to an increased number of employees, the employer tries to scrap some of the employees. This is known as retrenchment. In the case of Punjab Land Development & Reclamation Corporation Ltd. vs Presiding Officer, Labour Court the learned counsel for the employers contended the definition of the term ‘retrenchment’. Section 2(oo) of the Act says that ‘retrenchment’ is the means for the termination of service of workman only by the way of surplus-labour, or by any other reason whatsoever.

In the case of Uptron India Ltd vs Shammi Bhan, it was held that a mere punishment as a consequence of disciplinary action would not amount to retrenchment. 

What is Undertaking? What is its relation with Labour Law?

An undertaking is a concept narrower than an industry. It is more of something related to the government projects of building roads, bridges, railways etc. However, in the case of SM Nilajkar vs Telecom District Manager, Karnataka, there was a landmark judgement in the same area. The closure of government projects or schemes would attract the provisions of S. 25 fff(i). 

The question which was contended was whether the termination of an undertaking contract attract compensation?

It was answered by the court that the expression of the term ‘retrenchment’ here means that the termination by the employer of the service of a workman or any other reason whatsoever, is used in the term ‘retrenchment’. However, the Hon’ble Court contended that the termination would not amount to retrenchment within the meaning of the sub-clause (bb) if the following conditions are fulfilled:

1] The scheme was employed in the project or a scheme which is of a temporary duration.

2] It was a daily wages solicitor, inter alia that the employment would end at the time of the expiry of the scheme.

3] The employment came to an end at the time of termination of scheme or project and consistently within the terms of the contract.

What is its relationship with Criminal Law?

Human Trafficking 

Research has shown that the maximum amount of modern slavery is prevalent in India. Similarly, it has been found that instances of slavery have tripled in the past few years. Merely, making the laws under the Indian Penal Code or Labour Law is not sufficient. There should be active steps taken for curbing the menace of slavery. This is not only a violation of the right to life with human dignity, but also it curtails various rights pertaining to the Universal Declaration of Human Rights.

Force and Criminal Force

There are various instances where the workers are not treated fairly. According to statistics by International Labour Organization 24.9 million people were in forced labour. Similarly, according to a survey conducted by ILO, it has been found that an estimated 15.4 million people were living in a forced marriage.

Sexual Harassment of women at workplace

The landmark judgement of Vishakha vs the State of Rajasthan presents this evidence that today, the instances of sexual harassment of women at the workplace are increasing exponentially. A recent survey has found that 63% of women did not file a complaint. Similarly, 79% kept the issue to themselves. This shows that there is a need to have gender-neutral laws all over the world. This includes, the jokes having sexually coloured remarks, inappropriate innuendo, sexual assault and even inappropriate touching. Similarly, asking for leave during periods is a devastating task keeping an eye on the circumstances. Also, it has been found that 7 out of 10 companies do not take sexual harassment cases seriously. 

Kidnapping 

According to a study, it has been found that more than 460,000 children go missing every year. Out of this, 43% of global kidnappings that occur for ransom occurred in Asia only. Mostly, the severely affected people are those coming from downtrodden societies. They are at the mercy of help from the PIL filers and the activists due to a lack of resources and unawareness about the areas related to law and justice.

Additionally, it has been found that due to corruption the underprivileged people are not able to get the benefit they actually should have. 

In the light of the above discussion, it has been found that the provisions regarding labour law are not known to most people. Similarly, there are areas related to the upliftment of the downtrodden classes that are implemented at the mercy of various officials. One idea can be of including Universal Basic Income. However, it could be accompanied by the notion of indolence, laziness and lack of motivation. Therefore, it is the need of the hour to critically think about the issue at hand. Otherwise, it won’t be late for the next Marxist movement to start mushrooming in the light of the latest Farming Laws!

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Oklahoma Computer Data Privacy Act 2022

By
Shoronya Banerjee
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0
Privacy

This article has been written by Gannat Juneja, pursuing a Diploma in International Data Protection and Privacy Laws from LawSikho. It has been edited by Prashant Baviskar (Associate, LawSikho) and Ruchika Mohapatra (Associate, LawSikho). 

Introduction 

On the dawn of 9th September 2021, a new bill was introduced by Collin Walke and Josh West (a majority leader) in Oklahoma. No one expected that the legislative session of 2022 would witness the filing of the new proposed consumer privacy legislation when Collin Walke introduced the new bill known as Oklahoma Computer Data Privacy Act, 2022. 

Interestingly, it is important to mention here that the Oklahoma legislature is scheduled to convene after 07th February in 2022. Thus, the policymakers, legal scholars, eminent personalities, retired juries, researchers, and lobbyists have sufficient time to study and dissect the bill. The proposed effective date of the bill is 01st January 2023 i.e. exact same date as Virginia’s law.

According to Collin Walke, the quantum of development in the area of artificial intelligence technology development and the lack of privacy protection by the dormant government is alarming. The need of the hour is to come up with the solutions for data privacy and protection and listen to the advice of data security experts like the National Security Commission. The main objective of Walke is to get the privacy law in action in 2022. The introduced Bill has acknowledged the right to privacy as a constitutional right of the Oklahoma citizens and specifically conveys that any collection of information without their knowledge and consent is a violation of their right to privacy. 

Here apart from consent, “knowledge” has been used so as to provide leverage to the citizen (data subject). Further, in case of conflict between the Federal and state-level laws, the stringent act providing more appropriate protection shall prevail; thereby protecting privacy in a more effective manner.

Application of the Bill/Proposed Act

The proposed bill applies to all types of businesses. The term business is defined under Section 3(3) and it includes all types of business propositions whether incorporated or not, like that of a sole proprietorship, partnership, limited liability company, corporation, an association of persons, or any other legal entity. 

But the deciding factor for the application of the act is that the business that collects consumers’ personal information (also defined under the proposed bill), singly or jointly, and is either the processor or controller, or acting in a joint position for determining the purposes and the means of the processing of consumers’ personal information, that carries on the business in the State of Oklahoma, and further that satisfies any one or more of the following threshold limits: 

(A) has annual gross revenues in excess of ten million dollars ($10,000,000) in the preceding calendar year; 

(B) alone or in combination, annually buys, receives, shares, or discloses for commercial purposes, alone or in combination, the personal information of 25,000 or more consumers, households, or devices; or 

(C) derives 50 percent or more of its annual revenues from sharing consumers’ personal information.”

It is interesting to note that clause (B) also mentions the “household” and the word “Device.” The word “Household” is not defined under the act but as per the basic definition, the term means the house and its occupants. Now this calls for clarification whether 25,000 households shall be included or 25000 consumers residing or 25000 devices in use. A single consumer living alone may be using 10 or 20+ devices at a single location. 

The device is also defined under the act as any physical object capable of connecting to the internet or to other devices. It means any electronic device like mobile, printer, pager, computer, laptop, CCTV falls into its purview. But the purview of the introduced bill is it covers a large number of entities as compared to laws in California, Colorado, and Virginia.

According to the Bill, the word “consumer” is the resident of Oklahoma, but it does not include an employee or contractor of the business. As per Section-3(13), personal information is defined as “information that identifies or could reasonably be linked, directly or indirectly, with a particular consumer, household, or consumer device.” 

It is important to note that the bill specifically excludes publicly available information. Further, the term ‘publicly available information’ is also defined as the information that is lawfully made available from federal, state, or local government records. However, the personal information also does not include de-identified or aggregate consumer information.

Information : how to collect and use it

As per the act, there are certain restrictions as to how the information is to be collected and utilised. The proposed bill warrants that the businesses must only collect the information or share the information with the 3rd parties which are only required to facilitate the products or services to the consumer and that too only for those consumers who have explicitly requested the same or is required for security purposes or fraud detection. It is important to note that the monetisation of personal information for any purpose shall never be considered necessary.

Further, as per the other data privacy and protection laws across the globe, the data limitation and minimization concept are also made applicable for the use and retention of a consumer’s personal information.

Privacy policy

According to the proposed Bill, it is necessary for the business to provide the privacy policy to its consumers in a clear and unambiguous manner in a plain crystal clear language and shall be made available before any data is collected from the data subject. Further, the data subject shall be informed in advance if any term(s) of the privacy policy is updated, altered, and changed in the conditions of the policy. Further, the privacy policy must mention the 

(a) the type of personal information collected; 

(b) the basis of collection or the reason, disclosures, and the retention period of the personal information hereby collected; 

(c) the rights granted to the consumers and the procedure by which a consumer may exercise their rights provided by the Act;

(d) how the business uses the personal information and whether the information is disclosed to the third party or not; 

(e) whether the business is acting as a controller or processor and if the personal information is being shared with the service providers, and if so, the categories of service providers; and 

(f) retention period of the personal information.

Rights granted under the Bill

The Oklahoma residents have been bestowed with various rights under the bill like the right to opt-out, the right to deletion, the right to know/access, the right to data portability, the right to correct inaccurate information, and the right not to be discriminated against for exercising their rights likewise the rights provided as by the California Consumer Privacy Act.

Further, any sale or disclosure made by the business for a business purpose would be required to be disclosed to the consumer. There cannot be any discrimination against the consumers for exercising their rights granted under the Act. Furthermore, the right to opt-out must be granted and every business must apprise its consumer of this very right in a clear and conspicuous manner so as to opt-out of personal advertising on the homepage of the business website itself.

If any consumer wants any information or disclosure and places a valid request with the business, the request must be adhered to within 45 days of the receipt of the verifiable consumer request. If not complied within 45 days, the business must provide the basis for such delay and must comply with the request within the next 45 days. Notice to a consumer must be given for the delay in complying with the request along with the reasons mentioned therein.

However, the maximum total number of two requests can be made by the same consumer within a period of 12 months. The business is not under an obligation to comply with any further requests.

The data processing agreements by the service providers also fall under the purview of the proposed bill and are liable to provide protection. Further, the bill prohibits dark patterns and the companies are barred from designing, modifying, altering, or manipulating the user interfaces. 

Exceptions and exemptions

The amended Bill contains certain exclusions and thus would not apply to certain types of entities and certain data sets as protected health information collected by business associates and covered entities, Health Insurance Portability and Accountability Act (HIPAA) covered entities, HIPAA business associates. The Bill also does not apply to the sale, collection, processing, selling, or disclosure of personal information by a consumer reporting agency or financial institutions pursuant to the Gramm-Leach-Bliley Act (GLBA). Further, the Bill does not contain any employee and business-to-business exemptions as seen in the CCPA.

Enforcement and penalties

The state Attorney General’s office shall be the appropriate authority to enforce the bill. For each intentional violation penalty amount of $7,500 is fixed and $2,500 for each unintentional violation. However, the bill does not purport to create a private right of action.

The punitive damages may be further imposed by the court on the request of the Attorney General in addition to the injunctive relief so as to prevent repetitive violations. The Attorney General is also entitled to recover costs and damages from the violating party.

Conclusion

In many ways, the story remains the same for states. Until the federal government passes comprehensive data privacy legislation, states will continue to attempt to enact their own. In lieu of a uniform law, it can be argued that a patchwork of different laws enacted at different times is continuing to confuse and confound businesses and consumers alike. 

References

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Jurisdiction clause in investment contract

By
Oishika Banerji
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0

This article has been written by Hemnaag I pursuing the Diploma in Advanced Contract Drafting, Negotiation and Dispute Resolution from LawSikho. This article has been edited by Ruchika Mohapatra (Associate, Lawsikho) and Zigishu Singh (Associate, Lawsikho). 

Introduction

Startups struggle hard in their budding stages in streamlining processes, finding funds etc. Often such startups enter into investment agreements to secure funds. In cases where there have been no predefined clauses, misunderstandings between parties have led to litigation. Hence, it is often advised that clauses in agreements should be thoroughly written to ensure that there is no scope for disputes. In case there are certain disputes, it is better to have a pre-decided jurisdiction clause in the agreement between parties. There are generally no problems when businesses do not have ongoing litigations, however when a dispute arises between parties, then a pre-decided jurisdiction clause helps in resolving matters easily at the initial stages.This article will help us understand the importance of the jurisdiction clause in an investment contract.      

Jurisdiction

Jurisdiction in law is the geographic area or a particular authority which is held by  judicial and quasi-judicial forums such as to hear and determine the cause or an authority to resolve. So, jurisdiction refers to the inherent authority of a court to hear a case and to declare a judgment.  It is derived from the Latin word ‘juris’ meaning ‘law’, ‘Dicere’ meaning ‘to speak’. Jurisdiction is the practical authority of a legal body to administer justice within a defined field of authority and responsibility. Example: Supreme Court of India has jurisdiction over the whole country. The High Court of any state has jurisdiction over the entire respective state.

Jurisdiction clause

When an agreement is executed between the parties, the jurisdiction clause of that agreement determines the forums in which any dispute arising between the parties under the agreement will be resolved. The parties to the agreement shall mutually decide on the specific court to resolve any  disputes arising relating to the agreement,  such jurisdiction is considered as exclusive jurisdiction.    

Exclusive jurisdiction 

Exclusive jurisdiction means the sole power of a court to adjudicate a case to the exclusion of all other courts. It means the court has sole power to adjudicate a case without linking jurisdictions of other courts. At the federal level, exclusive jurisdiction allows the Supreme Court to review the judgments in lower courts. Exclusive jurisdiction in a contract may arise when the disputes are to be resolved  through litigation in the civil courts, and then the parties to the contract can limit their legal proceedings to a special court. Exclusive jurisdiction can be done only by mentioning the clause in contract.  A typical “exclusive jurisdiction clause” in contract is worded in this manner ‘the agreement shall be subject to jurisdiction of the courts at Tamil Nadu’. 

According to Section 9 of the Code of Civil Procedure, 1908 (CPC) all courts have the jurisdiction to decide any suit of any civil nature unless the jurisdiction is expressly or impliedly barred. The Indian Contract Act and the Code of Civil Procedure provide to an extent the liberty to the parties to limit the place of legal proceedings for convenience and minimize legal costs incurred by the parties.  This is done by expressly including a valid ‘Exclusive Jurisdiction’ clause in the contract. It must be ensured that the place of jurisdiction mentioned in the clause has actual jurisdiction in the eyes of the law. Parties cannot grant jurisdiction, via clauses, to courts or forums which do not have the jurisdiction to try it under law.

What if there is no jurisdiction clause?

In the event where there is no jurisdiction clause mentioned in the contract, the aggrieved party shall sue the other party according to the laws laid down in Sections 15 – 20 of CPC, 1908:

  • cause of action; or 
  • residing place of petitioner; or 
  • residing place of defendant; or 
  • Place where defendant carries on business   

The better option is  to mutually decide upon a jurisdiction and type of dispute resolution mechanism viz. litigation, arbitration  and can execute a jurisdiction agreement or can add a jurisdiction clause to the existing agreement by drafting an addendum. 

Investment contracts 

During the fundraising round of the company, one of the most important contracts executed is an Investment Agreement.  It is a contract between the parties ie; an Investor and the Company. In simple words, an investment agreement is an agreement between an investor and the company for which an investor gets interest for investment or shares in the company or ownership in the company as consideration. It consists of the main contractual terms and conditions surrounding the investment between the parties. An investment agreement governs a particular transaction where an investor invests money in exchange for equity in the company and it is specific to that transaction only. It does not regulate  the way in which shareholders are to exercise this right with respect to the company on a continuous basis.

Key points to remember while drafting a jurisdiction clause in an investment contract

1.              Convenience

In the event of a dispute in the agreement, you have to decide where you want to sue or be sued either in your country or the country of another party or if both parties are in the same country then a mutually convenient location.

2.              Favourable judicial system

Preferring the judicial system depends on whether you are a claimant or defendant. For example, if you are claimant and depending on your business and transaction you would prefer an efficient judicial system that offers a good range of interim and final remedies and refer to a judicial system where the mode of business in such agreement is common. 

3.              Consideration

The parties should select a court which is most cost-efficient and at the same time appropriate to resolve the dispute.

4.              Consistency

It is necessary to ensure that the governing law and jurisdiction clause refer to the same place and meaning, for (example) the law of India governs this agreement and courts of New Delhi have jurisdiction over the dispute.

5.              Where are the parties based 

According to the place of residence of the parties in the agreement, one can select the jurisdiction of the courts according to the same country.  

Jurisdiction clause in investment contract

The most commonly used to a jurisdiction clause in investment contracts are:

1. Exclusive jurisdiction;

2. Non-exclusive jurisdiction;

3. Asymmetric Clause.

1. Exclusive jurisdiction

The use of exclusive jurisdiction clauses is common if the commercial contract is within the same country. The parties mutually decide to approach a specific court of a  country as mentioned in the agreement instead of other courts in a different country.

Sample 

The Parties mutually agreed that any dispute, settle, contrary or claim arising between the Parties connecting with this Agreement which cannot be amicably resolved by the parties within 15 days shall be exclusively and finally settled by court of Tamil Nadu by the law of India.

2.               Non-exclusive jurisdiction

The non-exclusive jurisdiction clause is commonly used in cross-border  commercial contracts. Any dispute within the agreement the parties can approach the particular jurisdiction as mentioned in the agreement and at the same time either party has an option to commence legal proceedings in the court of any other jurisdiction.

Sample 

The Parties irrevocably agree that the court of New Delhi has non-exclusive jurisdiction to hear, settle and or determine any dispute, contrary or claim arising between the parties with this Agreement.

3.              Hybrid /Asymmetric Clause

In the event one party submits to the exclusive jurisdiction of a specific court and the other party submits to the non exclusive jurisdiction of a particular court the parties in the agreement can execute a hybrid clause. 

Example:

·    Party X can only bring legal proceedings against Party y only in the court/country as mentioned in the agreement. 

·     Party Y is permitted to commence legal proceeding against party x in the courts of any court/ country which has jurisdiction over the dispute. 

Sample 

1.1 The Parties mutually agree that any legal proceeding against party Y regarding any claim, hear, settle and or determine any dispute shall be commenced in the court of New Delhi and laws of India shall be governed. 

1.2 Notwithstanding clause 1.1 the Parties irrevocably agree that any dispute connected to this Agreement regarding party X the court of New Delhi has non-exclusive jurisdiction to hear, settle and or determine any dispute, contrary or claim arising between the parties with this Agreement.

Case laws 

  1. ABC Laminart Pvt. Ltd. & Anr V/S Andhra Pradesh Agencies, Salem (1989 SCR (2)1),

The issue in this case was ” where can a suit arising out of a contract be filed?”The appellant, a manufacturer, entered into a contract with the respondent for supply of yarn to the respondent. The said contract mentioned clause 11 stating that “any dispute arising out of this sale shall be subject to Kaira jurisdiction”. The dispute occurred under the terms of the contract and the party filed a suit at Salem. The trial court held that because of clause 11 it had no jurisdiction to entertain. 

The appellant’s contentions that clause 11 of the contract only grant the parties to the contracts to file a suit within Kaira jurisdiction and not Salem, where the respondent’s contentions are only general terms and conditions of the sale and that clause cannot take away the jurisdictions of the other courts. Under section 20 (c) of CPC, it is subject to the limitation that  every suit shall be initiated in a court within the local limits of whose jurisdiction the cause of action, wholly or in part arises. The supreme court dismissed the appeal and held that the jurisdiction of other courts has not been excluded in the contract and it provided significant leeway to the party seeking to deviate from an exclusive jurisdiction clause. 

  1. Aniket SA Investment LLC V/S Janapriya Engineers Syndicate Private Limited and Ors (Commercial Appeal No. 504/2019)

The Bombay HC held that a choice of seat is itself an expression of party’s freedom to determine (Party Autonomy) and it has a legal effect of conferring Exclusive Jurisdiction on the courts of the seat. And it states that the seat of arbitration  as it was mentioned in the Arbitration Agreement must prevail over an Exclusive Jurisdiction Clause, if there is one. The court held that the choice of seat is in itself an assertion of party autonomy ( In Arbitration, the parties’ freedom to determine the seat) and then with the effect of conferment of exclusive jurisdiction on the courts of the seat and to elucidate that two concurrent courts of the seat and even if it was to have jurisdiction, additional to this, the choice of courts in the exclusive jurisdiction clause is made ” subject to” the court of the seat. The HC concluded by analysing the decision of the Hon’ble supreme court in Bgs Sgs Soma JV v/s Nhpc limited (2020) 4 SCC234 (‘bgs sgs’). 

The judgment of Bombay HC provides that by conceding the significance of the “seat” of arbitration and how it is to be effective over an exclusive jurisdiction clause by recognizing the ratio imposed in bgs sgs. This judgement states that the Indian arbitration mechanism has been made in line with the  international practices by reducing the confusion as to what takes the place of priority between the seat of an arbitration and the exclusive jurisdiction clause, in order to facilitate for India to become an arbitration-friendly jurisdiction.

Conclusion

Jurisdiction clause in an investment contract is mutually decided by the parties in the contract and the type of jurisdiction clause to be drafted in the contract dependence on the parties so while drafting an investment contract one must keep the discussed points into consideration and draft a jurisdiction clause in an investment contract, so that in case of dispute the clause can be favorable for both the parties.  

References

1. https://www.contractscounsel.com/t/us/investment-contract.

2.https://www.mondaq.com/india/contracts-and-commercial-law/1047384/exclusive-jurisdiction-clause-in-contracts.

3.https://www.barandbench.com/columns/exclusive-jurisdiction-clauses-contract-key-issues

4. https://www.investopedia.com/terms/i/investment-in-the-contract.asp.

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All you need to know about the doctrine of Kompetenz-Kompetenz

By
Oishika Banerji
-
0
ADR

This article has been written by Johana George pursuing the Certificate Course in Arbitration: Strategy, Procedure and Drafting from LawSikho. This article has been edited by Ruchika Mohapatra (Associate, Lawsikho) and Zigishu Singh (Associate, Lawsikho). 

Introduction

Before the Arbitration and Conciliation Act, 1996 the arbitral tribunals had no power to decide the validity of the arbitration agreement or the jurisdiction of the arbitral tribunal and the adjudication was as per the court’s decisions. This was because, the above-said issues, being the core of the arbitration proceedings, could not be risked and the ultimate hand was for the courts. This was against the very aim for establishment of ADR, i.e. minimal judicial intervention. But then, in the English law, they had already recognized and settled the power of the tribunal to rule on its own jurisdiction by the landmark decision by Devlin, J., in Genossenschaft Osterrchischer Walldibesitzer Holzwirtschaftsbertriebe registrierte Genossenschaft Mit Beschrankter Haftung. Therein, it was laid that the arbitral tribunal was empowered to inquire into the merits of the issue whether they have jurisdiction or not, majorly for satisfying themselves as a preliminary matter on  whether they need to continue the proceedings or not. It was also ruled then that the same wasn’t for reaching any conclusion which may be binding upon the parties, as they couldn’t do so. But it was then that the UNCITRAL Model Law of 1985 changed the face of the story. The adoption of national arbitration laws were then majorly based on the Model Law.

What is the principle of kompetenz-kompetenz?

Kompetenz-kompetenz is the jurisdictional principle to empower an adjudicating body to exercise on the issues on its own jurisdiction submitted before it, i.e., it can decide on the pleas challenging its own jurisdiction submitted before it. In Olympus Supertructures Pvt. Ltd. v. Meena Vijay Khetan & Ors, it was ruled that the arbitral tribunal has the power to decide upon matters of its own jurisdiction as per Section 16(1) of the Arbitration and Conciliation Act, 1996. The major aim behind the establishment of the arbitration mechanism was to reduce the burden on courts and settle disputes without court intervention. Section 16 of the Arbitration and Conciliation Act, 1996, i.e., jurisdiction of an arbitral tribunal, acts as the backbone for the Act. This article is intended to discuss an important aspect of jurisdiction of the tribunal- the Principle of Kompetenz-Kompetenz.

Competence of arbitral tribunal to rule on its own jurisdiction

Section 16 of the Arbitration and Conciliation Act, 1996 has been framed in accordance with Article 16 of the UNCITRAL Model law, which embodies elemental jurisprudential doctrine i.e., “Kompetenz – Kompetenz”. This doctrine empowers the court or an arbitral tribunal to rule on its ‘own’ jurisdiction. Section 16 of the Arbitration and Conciliation Act, 1996 says:

 “Competence of arbitral tribunal to rule on its jurisdiction.—

a) The arbitral tribunal may rule on its own jurisdiction, including ruling on any objections with respect to the existence or validity of the arbitration agreement, and for that purpose,—

  1. an arbitration clause which forms part of a contract shall be treated as an agreement independent of the other terms of the contract; and

b)   a decision by the arbitral tribunal that the contract is null and void shall not entail ipso jure the invalidity of the arbitration clause.”

 As under Section 16 of the Arbitration and Conciliation Act, 1996 the arbitral tribunal has been granted the power to rule on the objections raised by either of the parties on the existence/validity of the arbitration clause/agreement. This competence of the tribunal to rule on its own competence gave rise to the Principle of Kompetenz- Kompetenz or the Principle of Competence.

Major aspects of principle of kompetenz-kompetenz

The 3 major aspects of the principle of competence are as follows:

  • The arbitral tribunal is empowered to decide upon the jurisdiction of court interference.
  • The first say to the objections raised on the jurisdiction of the tribunal will be for the tribunal than the court.
  • The interference of the courts, if required, must be confined to deciding on the existence of the arbitration agreement and reference of the parties to arbitration.

 The Supreme Court in the recent N.N. Global Mercantile Pvt. Ltd. V. M/S Indo Unique Flame Ltd. ruled that the doctrine of kompetenz-kompetenz implies that the arbitral tribunal has the competence to determine and rule on its own jurisdiction, including objections with respect to the existence, validity, and scope of the arbitration agreement, in the first instance. The same can be subjected to judicial scrutiny by the courts at a later stage of the proceedings, if required. The doctrine is based on the premise that the arbitration agreement is separate and independent from the substantive underlying contract in which it is embedded. Equally, an arbitration agreement exists and can be acted upon irrespective of whether the main substantive contract is valid or not.

If the party is aggrieved with the decisions of tribunal

The Arbitration and Conciliation Act, 1996 does not provide for rendering a preliminary award on jurisdiction. However, Section 16 of the Act states that if the tribunal rejects the plea of either of the parties in its jurisdiction, they can continue with the arbitral proceedings and make an arbitral award.

The High Court of Delhi, in Union of India v. M/s. East Coast Boat Builders & Engineers Ltd., stated that no appeal is provided against the decisions by the tribunal to reject the plea that the arbitral tribunal has no jurisdiction (Section 16(5)). The tribunal would then continue with the proceedings and issue the award without any delay and without interference by supervisory courts. The only remedy left to the aggrieved party is to file an application for setting aside such an arbitral award which too can be filed only after the issuance of final award under Section 34 (Nav Sansad Vihar Coop. Group Housing Society Ltd. (Regd.) v. Ram Sharma and Associates). 

But, on the other hand, the decision of the tribunal to accept the pleas against its jurisdiction under Section 16(2) and Section 16(3) by either of the parties is appealable as under Section 37(2) (Pharmaceutical Products of India Ltd. v. Tata Finance Ltd).

 To sum up, when the arbitral tribunal decides to reject a plea challenging its jurisdiction then the decision made by the tribunal regarding its jurisdiction cannot be appealed whereas if the tribunal’s decision is to accept the plea that it has no jurisdiction to rule on that particular dispute, then such an order as under Section 37(2) is appealable.

 These provisions clearly indicate the intention of the creators i.e., if parties were allowed to challenge the decisions/jurisdiction of the tribunal before the courts in a very early stage, it would turn against the reason for the existence of the process of ADR. The legislative intent of these sections seems to be to prevent undue delay and provide for as little interference by the courts as possible.

Limitations

Section 5 of the Arbitration and Conciliation Act intends to limit the judicial intervention. As per the same, no judicial authority can intervene in the process of arbitration unless specified in the Act, thus upholding the principle of Kompetenz- Kompetenz. But, as always this principle too, is not absolute. Several interpretations of the Court time and again have resulted in the watering down of the powers of Section 16. SBP & Co. v. Patel Engineering Ltd. is one amongst them.

Section 11(4), 11(5) and 11(6) of the Arbitration and Conciliation Act provides for court intervention during appointment of arbitrators. As per the provisions, the appointment of the arbitrators can be done by the courts (Supreme Court/respective High Court/any person or institution assigned by the court, as per the respective cases) in the following situations (upon request of the party):

  • Either of the parties fails to appoint an arbitrator/arbitral tribunal within 30 days from the receipt of a request to appoint from the other party;
  • Either of the parties fails to appoint an arbitrator/arbitral tribunal in accordance with the appointment procedure agreed upon among themselves.
  • The 2 appointed arbitrators fail to agree on the third arbitrator (presiding arbitrator/chairman) within 30 days from the date of their appointment
  • The 2 appointed arbitrators fail to agree on the third arbitrator (presiding arbitrator/chairman) in accordance with the appointment procedure agreed upon among themselves.
  • The person/institution designated by the court fails to perform the entrusted functions.

Note: The courts while considering applications under Sections 11(4), 11(5) or 11(6) are confined to the examination of the existence of the arbitration agreement.

Doctrine of kompetenz- special reference to Uncitral rules

After the adoption of UNCITRAL Model Law in 1985, many countries, including India, sought to prepare new laws taking into consideration the Model Law, but after inserting the changes as needed by the respective countries. The Indian Arbitration too has been majorly influenced by the UNCITRAL Rules.

Article 16 of the Model Law says that the tribunal can rule on its own jurisdiction regarding the objection raised by either of the parties on the existence or validity of the arbitration agreement. For this purpose, the main contract would be considered as separate from the arbitration agreement/clause (Doctrine of Separability). Such a plea will be considered as a preliminary question or in an award in merits.

arbitration

Section 11 :  special reference to 2015 and 2019 amendments

2015 amendment

The 2015 amendment helped in the gearing disposal of Section 11 applications. 2015 amendment allowed:

  • Enabling a person of any designation or institution as an appointing authority for arbitrators in addition to the High Court or Supreme Court under Section 11;
  • Limiting challenges to the decision made by the appointing authority;
  • Requiring the expeditious disposal of Section 11 applications, preferably within the prescribed sixty (60) days’ time period.

Based on the recommendations of the Law Commission in the 246th Report,[7] Section 11 was substantially amended by the 2015 Amendment Act, to reduce the judicial intervention while appointing an arbitrator by non-obstante sub-section, and to reinforce the “Kompetenz- kompetenz”,principle enshrined under Section 16 of the Act.

 Sub-section (6-A) as inserted under the 2015 Amendment reads as under:

“(6-A) The Supreme Court or, as the case may be, the High Court, while considering any application under sub-section (4) or sub-section (5) or sub-section (6), shall, notwithstanding any judgment, decree or order of any court, confine to the examination of the existence of arbitration agreement.” (emphasis supplied)

As per sub-section (6-A), the power of the Court had been restricted only to the examination of the existence of an arbitration agreement. Earlier, the Courts had been given the power to examine other aspects as well i.e. limitation, whether the claims were referable for arbitration etc. However, the 2015 Amendment achieved in giving power to the arbitral tribunal to decide other preliminary issues if at all raised.

The amendment envisaged that the Courts shall not refer the parties to arbitration, only if it finds that there does not exist an arbitration agreement or that the arbitration agreement is null and void. If the Judicial authority is of the opinion that prima facie the arbitration agreement exists, then it shall refer the dispute to arbitration and leave the existence of the arbitration agreement to be finally determined by the arbitral tribunal. However, if the Judicial authority concludes that the agreement does not exist, then the conclusion will be final and not prima facie.

By virtue of the non-obstante clause incorporated in Section 11(6-A) previous judgments passed by the Supreme Court in SBP & Co. vs. Patel Engineering Ltd. (supra) and in National Insurance Co. Ltd. vs. Boghara Polyfab (P.) Ltd. (supra) were essentially overruled and/or no longer relevant.

 Case laws

1. SBP & Co. v. Patel Engineering– The Supreme Court extended its power over the appointment of arbitrators by ruling that if an application under Section 11 is submitted, the court would have to look into the following questions

  • Whether the arbitration agreement exists?
  • Whether the arbitration agreement is valid?
  • Whether the party requesting under Section 11 is a party to the arbitration agreement?
  • Whether the subject matter is arbitrable?

2. Booz Allen and Hamilton Inc. v. SBI Home Finance Ltd– The Supreme Court ruled that the courts cannot decide on the arbitrability of disputes in a Section 11 application. [Reversal of Patel Engineering]

3.     M/s Duro Felguera v. M/s Gangavaram Port Ltd– Applied Section 11 (6A) strictly- only looked into the existence of the agreement.

4.     United India Insurance v. Antique Art Exports– Appointment of arbitrators under Section 11 is a judicial power, and the court can decide on issues not limited to existence of the arbitration agreement.

5.     M/s Uttarakhand Purv Sainik Kalyan Nigam Ltd. v. Northern Coal Field- The Supreme Court held that only the arbitral tribunal can decide as to whether a matter can be heard or not. Court can intervene if the arbitration agreement is not in writing or if it is obtained by fraud or misrepresentation.

6.     Mayavti Trading Pvt. Ltd. v. Pradyut Deb Burman– Principle in Section 11 (6A) can be applied.

Negative effect of the principle

Just like a coin has two sides, the principle of competence has two faces as well. In Chloro Controls(I) P. Ltd v. Severn Trent Water Purification, the Supreme Court remarked on the negative effects of the principle. As of them, the tribunal rules out the courts from their jurisdiction. The actual negative effect lies where the national courts aren’t allowed to review the decisions of the tribunal on the pleas challenging its jurisdiction. In other words, the situation is against the very basic notion in law- nemo judex in causa sua (No one can be a judge in his own cause). It deprives the higher authorities to issue a final pronouncement on the question of jurisdiction in the pre-award stages.

Conclusion

In my opinion, the Principle of Kompetenz-Kompetenz is one of the best ways to ace the system of Alternate Dispute Resolution, ensuring that the parties involved do not immerse themselves into frivolous submissions and delay the process.

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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The judgment by the Intellectual Property Appellate Board (IPAB) in Music Broadcast Ltd. v. Tips Industries Ltd. & Ors.

By
Sneha Mahawar
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0

This article is written by Oishiki Bansal, a student of Symbiosis Law School, Noida. The article explains the judgment given by the intellectual property appellate board in the case of Music Broadcast Ltd. v. Tips Industries  Ltd. & Ors.

Introduction 

The growth and protection of intellectual property have always been a topic of great debate and discussion. Copyrights are one of the intellectual property rights which aims to protect the creativity of an artist. In the recent cases under the Intellectual Property Appellate Board, the issue of royalty given to the owner of the Copyright holder was discussed. This article aims to explain the judgment of the appellate board in one of these cases and also provides insights about the Intellectual Property Appellate Board, Section 31D of the Indian Copyright Act, 1957, and Rule 31 of Copyrights Rules, 2013.

Intellectual Property Appellate Board 

The Intellectual Property Appellate Board (hereinafter IPAB) was established on 15th September 2003 as an appellate body by the government of India. IPAB was established to oversee the cases relating to the Indian Trademarks Act, 1999, and the Geographical Indications of Goods Act, 1999. The power to resolve the appeals under the Patents Act, 1970, and the Copyright Act, 1957 was given later in the year 2007. Thus, all the cases relating to the disputes over intellectual property rights were transferred to the IPAB. In December 2019, the Ministry of Commerce and Industry also released a notice stating that the judgment given by the IPAB can be directly challenged in the Supreme Court forgoing the old tradition of challenging the judgment of IPAB in the High Court and then the Supreme Court. However, on 4th April 2021, the President gave approval to the “Tribunal Reforms Ordinance, 2021” abolishing the IPAB due to its shortcomings in its working. 

The Copyright Act, 1957

The Copyright Act, 1957 aims to protect the Copyrights as registered by the literary and music artists. Copyrights are any original idea turned into an expression that can be protected by the law of land. The Copyright Act protects the registered Copyright of an artist for the lifetime of the creator and in addition for 60 years after the death of the creator.  

Section 31D of the Indian Copyright Act, 1957

The 2012 Copyright Amendment Act introduced an amendment in Section 31D of the Copyright Act, 1957.  This Section deals with the broadcasting or performance rights of an already published Copyrighted literary work or music or sound recording. This Section states that any broadcasting company essentially radios and television, desirous of reproducing or using or transmitting any literary work, musical work, or any sound recording which has already been published would have to comply with this Section of the Act.  The Section further states that any broadcasting company who wants to communicate any artistic work has to give notice to the creator and also has to pay a royalty to the right holder that is fixed by the Copyright board.  However, The Finance Act, 2017  has replaced the term ‘Copyright board’ with the appellate board. Furthermore, the Department of Industrial Policy and Promotion (DIPP) issued an office memorandum in September 2016  which broadened the scope of intermediaries involved in Broadcasting. The memorandum stated that as the word ‘broadcast’ means communicating to the public, therefore any means used to communicate the literary work will come under the Ambit of Section 31(D) Copyright Act,  1957. In the case of Saregama Ltd vs. The New Digital Media & Ors(2016), the High Court of Calcutta held that violation of Section 31(D) results in the violation of Copyright. The Court said that if a  Broadcasting Company is communicating the literary work of an artist it needs to pay the royalty and if not it will lead to infringement of copyright held by the artist.

Copyright Rules, 2013 

The Ministry of Human Resource and Development now known as the Ministry of Education released the Copyright Rules of 2013 which provided New provisions and amendments in the Copyright Act of 1957.  Some of these provisions include increasing the maximum fees that could be asked at the time of registration of Copyright,  provisions relating to registration of Copyright societies, new Rules for statutory license and broadcasting of Copyrighted work, etc. 

Rule 31 of Copyrights Rules, 2013

Rule 31 of the Copyrights Rules, 2013 states the manner of determining royalties that are needed to be paid by the broadcasting companies. The steps that are to be followed by the Copyright Board to decide the amount of royalty are as follows – 

  1. A notice showing an intention to fix the royalty rates is to be issued by the committee as soon as it is established. 
  2. The notice issued will be published in the Official Gazette of India and two other newspapers having nationwide circulation. In addition, the notice should also be published on the website of the Copyright board. 
  3. Any broadcasting company or artist can give suggestions for fixing of royalties rates within thirty days of the release of such notice. The broadcasting companies and artists can provide different rates for different forms of work. 
  4. The board shall consider the recommendations given by such broadcasting companies and artists. 
  5. The board shall fix the royalties rates within a period of two months after receiving the suggestions. The rates are to be determined differently for different forms of works. 
  6. The Copyright Board has to determine the royalties to be paid separately by the television and radio broadcasting company to the owners of the Copyright under Section 31(D) of the Copyright Act, 1957. 
  7. Following elements are to be considered while determining the royalty – 
  • The time slot of the broadcast: different rates for different time slots inclusive of repeat broadcast are to be considered. 
  • Rates depending on the different classes of work. 
  • Varying rates for different nature of the use of work.
  • The existing standards of royalties in different fields of work.
  • The terms and conditions of the Grant of Permission Agreement (GOPA), an agreement between the Ministry of Information and Broadcasting and the broadcaster for Operating Frequency Modulation (FM) Radio Broadcasting Service. 
  • Other matters considered relevant by the board.
  1. While determining the royalties of payment the Copyright board shall consider the following –
  • Works that are included in the scheduled programs. 
  • Works that are newly published hence not included in the scheduled program. 
  • Works made available to the public in cases of an emergency.
  • Using work in excess of what is mentioned in the contract, for example, using for more time period than mentioned, using at a geographical location not allowed, etc. 
  1. The rate of royalties is to be revised once a year by the board.

Music Broadcast Ltd. v Tips Industries Ltd. & Ors. (2020)

Facts of the case  

In the case of Music Broadcast Ltd. v Tips Industries Ltd. & Ors. (2020), ten applications were filed by Music Broadcast Limited under Section 31(D) of the Copyright Act,1957 and Rule 31 of the Copyright Rules 2013 asking for statutory license and also asking the Tribunal to fix the rate of royalties that are to be provided to the owners of the Copyright for communication of sound recordings to the public using a  radio broadcast. With respect to the applications, the IPAB issued a notice on 22nd September 2020 to the public seeking recommendations. 

The Indian Performers Rights Society (hereinafter referred to as IPRS) issued an application on 17th September which included a notice. The IPRS’s notice was based on the premise that when the songs are communicated through a radio broadcast two types of implications arise relating to the payment of royalties. The first one being the exploitation of the rights of IPRS and the second one being the right to receive the royalties that lie in the hands of the music companies or their successors. The IPRS claims that the music companies are its assignee because the owner of the Copyright of sound works namely, the music companies like Sony Music India, TIPs Industries Ltd., etc, have assigned their work to IPRS through the deeds of assignment. 

The IPRS also contended that while fixing the royalties for the sound recording that are broadcasted by the radio the royalties for underlying work in music such as lyrics and composition of music should also be fixed. Hence, filing a fresh application on  23rd September.

The applications regarding the expiration of the license provided by the Copyright board were also filed. The applicant was concerned with the implications as to what would happen if an order of maintenance of status quo was not issued before September 30, 2020, i.e. the date of expiration of licenses. 

Issue

The issue, in this case, was

  • Whether the royalties should be fixed differently for sound recordings and underlying works of the sound recording?
  • Will the applicants be forced to enter into an involuntary agreement with the music companies on the expiration of the statutory license?

Judgment 

The case was headed by a bench comprising the chairman of IPAB, Justice Mr. Manmohan Singh, Mr. N Surya Senthki, and Mr. S P Chockalingam. The Bench upheld the rights of IPRS and held that its assignee that is the lyricist, music composers, and publishers have a right to claim royalties separately. The judgment came in light of the 2012 amendment to the Copyrights Act, 1957. The bench stated that the radio broadcasting companies are required to pay a separate royalty rate from 2021 onwards to Copyright owners of literary works and musical works under the ambit of sound recordings.

The Court also held that the contract between the radio broadcasting companies and the music companies will remain in the status quo situation i.e. as the contracts were before the expiration of the license. The IPAB also held that the rate of royalties for the broadcast of sound records through the radio will be the same as fixed by the IPAB in the order dated 8th August 2010. 

The contrast between the Delhi High Court’s judgment and the IPAB’s judgment

Just a week after the judgment was given by the IPAB, the Delhi High Court pronounced a judgment that was totally opposite to the judgment given by the appellate board. During the hearing of the case of Indian Performing Rights Society Limited (IPRS) v.  Entertainment Network (India) Limited (Radio Mirchi)(2021) and the case of Phonographic Performance  Limited (PPL) &  Indian Performing Rights Society v. Cri  Events (P)  Limited and others(2011), the Court held that although the Copyright Act recognizes sound recording and its underline works separately but when the sound recording is communicated through radio, the components of sound recording and the sound work should not be considered separate. Hence a separate license and a separate provision for providing royalty are not required.

The contrast in the orders of both the authorities has created confusion among the music companies and the broadcasting companies. The differences in the judgment will create more disputes between the owners of the Copyrights and the broadcasters. This issue is needed to be addressed by the high courts as soon as possible to clear the ambiguity relating to the payment of royalties under Section 31(D) of the Copyright Act, 1957.

Conclusion

The judgment given by IPAB cleared the right to claim royalties to a certain instance but the order given by the Delhi High court within a week of the judgment of the appellate board has resulted in the same ambiguity as it was before.

Reference 

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

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

https://t.me/joinchat/J_0YrBa4IBSHdpuTfQO_sA

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A complete analysis of the Batla House murder case

By
Sneha Mahawar
-
0

This article is written by Shashwat Kaushik, a student of CCS University, this article gives a complete analysis of the Batla House murder case.

Introduction

A Delhi court held Indian Mujahideen terrorist Ariz Khan liable for killing Inspector Mohan Chand Sharma in the 2008 Batla House shootout. Khan, whose sentencing has been planned for March 15, was captured at the Banbasa line point between India and Nepal in 2018 in the wake of being on the run for a very long time. The Batla House encounter, which occurred in the Okhla space of the public capital, prompted the demise of Delhi Police examiner Mohan Chand Sharma while two officials suffered wounds. 

Ariz Khan, who is a local of Azamgarh in Uttar Pradesh, is additionally supposed to be the brains of the 2008 sequential impacts across Delhi, Rajasthan, Gujarat, and Uttar Pradesh where 165 individuals lost their lives and 500 individuals were wounded. 

An encounter happens at L-18 Batla House in Delhi’s Jamia Nagar, six days after sequential shots tore through the capital killing 30 individuals, between an assaulting group of Delhi Police unique cell and suspected Indian Mujahideen (IM) agents. In the experience, Delhi Police overseer Mohan Chand Sharma loses his life. Ariz Khan, Shahzad, and Junaid escape. Two presumed fear mongers, Atif Amin and Mohammed Sajid, are executed in the shootout and one speculated IM usable, Mohd Saif gives up. 

Contention to the parties

On 19.09.2008, explicit data was received by Inspector Mohan Chand Sharma that one Atif also known as Bashir associated with sequential impacts is living at Flat No. 108, L­18, Batla House, Jamia Nagar, New Delhi along with his partners. This data was held up in a day-by-day journal and was talked about with senior officials. Data was imparted to Inspector Rahul Kumar (PW13). A group including SI Rahul Kumar, Inspector Sanjay Dutt, Inspector Mohan Chand Sharma, SI Dharmender, SI Ravinder Tyagi, SI Devender, SI Dalip Kumar, and other police authorities were composed. SI Rahul Kumar (PW13) along with accessible staff in the workplace. SI Ravinder Tyagi, HC Balwant, HC Satinder, Ct. Sandeep, SI Rakesh Malik, HC Manish, HC Vinod Gautam, and Ct. Birender Tyagi left the workplace of Special Cell at 9:30 AM in one private vehicle sharing a place with SI Ravinder Tyagi and 2 bikes. The group, driven by Inspector Mohan Chand Sharma, and likewise left for the spot of the event. 

When the force entered the apartment, detainees started shooting at the police party. Police party individuals likewise fought back in their self-defence. During cross-firing Inspector Mohan Chand Sharma and HC Balwant supported Junaid also (known by other names as Salim and Anna) suffered wounds. Two militants additionally got bullet wounds in cross-firing while two different assailants figured out how to escape from the apartment while shooting at the police party. Meanwhile, ACP Sanjeev Kumar Yadav of Special Cell, Investigating Officer of bomb impact cases along with his colleagues arrived at the spot. The injured police authorities and aggressors were quickly moved to the hospital. One of the assailants to be specific Md. Saif gave up before the police party and told the name of the assailants who ran away as Junaid and Pappu. During careless inquiry of the apartment one AK arrangement rifle along with two magazines containing 30 round cartridges, each was recuperated from the right side room of the apartment. Two guns of .30 bore were discovered lying close to two wounded militants.

Both wounded assailants in particular Md. Atif Ameen and Md. Sajid was announced dead at Trauma Center, AIIMS Hospital. Severely Wounded Inspector Mohan Chand Sharma was rushed to a hospital however he couldn’t succumb to bullet wounds and Section 302 IPC was included in the FIR. An examination led by ACP Sanjeev Kumar Yadav in FIR No. 166/08 dated 13.09.2008 PS Karol Bagh uncovered that Shahzad Ahmad also known as Pappu, Md. Atif Ameen, Md. Sajid, also known as Pankaj, Ariz Khan (denounced in the current case), and Md. Saif was an individual from Indian mujahideen and dwelling at Flat No. 108, L­18, Batla House, Jamia FIR No. 208/08 4/131. When a group of Special Cell driven by Inspector Mohan Chand Sharma directed an assault at that apartment.

When Ariz was captured

The police, after completion of the examination, filed a charge sheet against Mohd Atif Ameen and Mohd Sajid – both of them died in the case of Ariz Khan. No offence was made out against Mohd Saif, who was one of the tenants of the room. 

Shahzad was captured in 2010 by ATS Lucknow and purportedly made an exposure proclamation. He was captured from the place of his granddad in Azamgarh. He was sentenced in 2013 by the Saket Court. 

Khan had been on the run for 10 years before he was captured by the Delhi Police Special Cell in 2018. Khan, as per the police, was captured on the data of one Abdul Subhan Qureshi, the supposed brains of the 2008 Ahmedabad sequential impacts, from Uttarakhand. The court a week ago held that he was a “prepared lawbreaker” and not “a common person”. The police had before declared an award of Rs 5 Lakh for information about him. He was on the radar of the National Investigation Agency (NIA) which had declared an award of Rs 10 Lakh. 

Khan is likewise confronting six different cases in Delhi where the preliminary is as yet forthcoming. During the preliminary, Khan a month ago told the court that he has nothing to say except for what he has contended. He additionally affirmed that he has been dishonestly embroiled in the situation. 

Findings of the court

Mr. M.S. Khan learned defence counsel couldn’t bring up any inconsistency in the testimonies of police authorities as regards the hour of the event, the spot of event, number of police authorities included and harmed in the episode, number of people required from the side of charged and other material specifics. Every one of these observers was interviewed finally by scholarly safeguard counsel. In this way, affidavits of PW 13 SI Rahul Kumar, PW 20 SI Dharmender, PW 36 HC Balwant, PW 81 Inspector J.S. Joon, and PW 95 ACP Sanjeev Kumar Yadav have become an essential piece of proof to demonstrate charges against the accused. 

It rose out of the statements of aforementioned witnesses that denounced Ariz Khan along with his partners terminated on police party when a police group entered the level and in the process lethally harmed Inspector Mohan Chand Sharma and HC Balwant. Overseer Mohan Chand Sharma capitulated to wounds in the medical clinic. According to a posthumous report, Inspector Mohan Chand Sharma got two wounds, one in the midsection and one in the shoulder. Charged Ariz Khan also known as Junaid along with his partners is answerable for lethally harming HC Balwant and for murdering Inspector Mohan Chand Sharma. The supplication raised for denounced that it isn’t clear with respect to which specific slug. 

The supplication raised in the interest of blame that it isn’t clear concerning which specific slug hit Inspector Mohan Chand Sharma and henceforth, a charge of homicide has not been demonstrated. Profoundly ravaged projectile referenced in ballistic report Ex. PW­36/B couldn’t be coordinated with any of the weapons and accordingly, it is conceivable that the projectile was shot by charged Ariz Khan. Regardless, it has been demonstrated on record that Ariz Khan along with his partners depending on the police party in assistance of their basic goal and in the process, Ariz Khan also (known by other names as Junaid, Salim, and Anna) Mohan Chand Sharma, and head constable Balwant were harmed. Subsequently, the blame can be said to have engaged with the basic aim of harming police authorities with the said Section 34 of the IPC. 

Postmortem on the assemblage of the expired Inspector Mohan Chand Sharma was directed on discharge stun because of gun injury in mid-region as referenced in postmortem report which is adequate to cause passing in the standard course of nature. Subsequently, the passing of Inspector Mohan Chand Sharma by bullet injury is demonstrated by logical proof for example postmortem report Ex. PW­19/C. 

It has likewise been demonstrated on record that on the previously mentioned date, time and spot charged Ariz Khan also known as Junaid along with his partners Md. Atif Ameen and Md. Sajid and Md. Shahzad also known as Pappu (as of now exposed to preliminary and indicted) in the facilitation of regular aim of every one of them deliberately caused intolerable hurt to HC Balwant, a local official while releasing his obligation as such community worker by a .30 bore gun, an instrument of firing. 

It has likewise been demonstrated on record that on the previously mentioned date, time and spot blamed Ariz Khan also known as Junaid along with his partners Md. Atif Ameen and Md. Sajid (both passed on in the shoot-out with individuals from the assaulting group) and Md. Shahzad also known as Pappu (as of now exposed to preliminary and indicted) in assistance of regular expectation of every one of them deliberately and purposely dedicated homicide by causing the demise of inspector Mohan Chand Sharma by gun, and they are all liable for his murder.

It has likewise been demonstrated on record that on the previously mentioned date, time and spot denounced Ariz Khan also known as Junaid along with his partners Md. Atif Ameen and Md. Sajid (both passed on in the shoot-out with individuals from the assaulting group) and Md. Shahzad also known as Pappu (as of now exposed to preliminary and sentenced) in assistance of regular aim of every one of them discharged weapon shot on expired Mohan Chand Sharma and his group, they all being community workers and as such, you utilized guns in the negation of Section 5 of Arms Act. 

It has additionally been demonstrated on record that on the previously mentioned date, time and spot charged Ariz Khan also known as Junaid along with his partner Md. Shahzad also known as Pappu (as of now exposed to preliminary and sentenced) figured out how to escape from the spot of the event during a shoot out and neglected to FIR No. 208/08 108/131 St. Versus Ariz Khan, also (known by other names as Junaid, Salim, and  Anna) show up under the watchful eye of the Court regardless of the decree on 20.04.2009 given against him under Section 82 of the Cr.PC for his appearance under the steady gaze of the said court on 20.04.2009 and he was at last pronounced guilty on 03.07.2009.

Conclusion

On March 15, Additional Sessions Judge Sandeep Yadav forced capital punishment on Ariz Khan, one of the convicts in the Batla House encounter case. The condemning request, which runs into 22 pages, shows legal thinking which neglects the set up capital punishment statute in India. 

On 8 March 2021, Ariz Khan was sentenced for the homicide of Delhi Police Inspector Mohan Chand Sharma, and seven different offences. After seven days, a preliminary court in Saket condemned him to death by hanging. Moreover, he has levied with a fine of Rs. 11 lacs out of which a sum of Rs.10 lacs be delivered as pay to the spouse of perished Inspector Mohan Chand Sharma.

References

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Impact of COVID-19 on patent laws in India

By
Sneha Mahawar
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0

This article is authored by Akash Krishnan, a law student from ICFAI Law School, Hyderabad. It discusses in detail the patent laws in India, the different kinds of patents, the impact of Covid-19 on the patent laws, and the issue of a global IPR waiver for essential medicines in times of pandemics like Covid-19.

Introduction

A patent is one of the forms of intellectual property in industrial property. It refers to the grant or award of privilege, propriety or authority given by the Sovereign or the Government of the country to one or more individuals. A patent is not granted for an idea or principle as such, but for some article or the process of making a product or article by applying the idea. The concept of patent and the criteria of patentability has remained the same for centuries.

A patent is an exclusive right granted to a person who has invented a new and useful product or has made an improvement/addition to an existing product or article or a new process of making a product. It consists of an exclusive right to manufacture the new product invented or manufacture a product according to the invented process for a period of 20 years from the date of filing the application. After the expiry of this term, it falls into the public domain and anybody can make use of the invention. Grant of a patent is territorial in nature. A patent granted in one country cannot be enforced in another country unless the concerned invention is also patented in that country.

Patent laws in the medical industry

India has been a frontrunner when it comes to battling Covid-19 by vaccinating the citizens of the country. Indian vaccine manufacturers had a huge role to play in the production and distribution of vaccines on a large scale to meet domestic and international demand. In light of the same several provisions of the Patents Act are attracted to the use of inventions related to Covid-19. Let us now discuss these provisions in detail.

Compulsory licenses

Under Section 84 of the Patents Act, 1970, the controller is empowered to grant compulsory licenses by fixing the terms and conditions of the license after the expiry of three years from the grant of the patent to any person other than the patentee, to work the patent on the following grounds –

  1. If the patentee fails to satisfy the reasonable requirements of the public with respect to the patented invention.
  2. If the patented invention is not available to the public at a reasonably affordable price.
  3. If the patented invention is not worked in the territory of India.

The significance of this provision is that public interest is being given utmost importance. If any manufacturer is aiming to exploit the market by charging high prices or does not make it available for production in India, then any interested party can make an application for the grant of compulsory license and manufacture the product in accordance with the terms and conditions applied by the Controller while granting the license.

Special provision for compulsory licenses on notifications by the Central Government

Under Section 92 of the Patents Act, if the Central Government is of the opinion that there exists a national emergency or in circumstances of extreme urgency or in case of public non-commercial use, a compulsory license should be granted, it may issue a notification to that effect. Such a notification can be issued at any time after the grant of the patent.

Once such a notification has been issued, any interested person can make an application for the grant of compulsory license to the controller. The controller while granting the license has to ensure that the product that is being manufactured under the compulsory license is being sold to the public at the lowest possible price.

Further, in case of public health crises or epidemics like Covid-19, Section 92(3) explicitly states that the procedure that is followed for application and grant of compulsory license can be avoided and application can be processed expeditiously.  

The significance of this provision is that there is no waiting period as provided under Section 84 for the grant of compulsory license. Thus, in situations like Covid-19, a compulsory license can be granted with immediate effect for the benefit of the citizens of the country.

Power of the Central Government to use/acquire inventions for the purposes of the Government

Under Section 100 of the Patents Act, the Central Government is empowered to utilise any invention for the purposes of the Government at any time from the grant of patent. It is pertinent to note that this provision also allows the Government to use any invention for which a patent has not been granted but only an application for grant of a patent has been filed.

Under Section 102, similar powers have been granted to the Central Government for the use of the patented inventions. What is peculiar about this provision is that it not only allows the Government to use the patent but also acquire it from the patent holder by making appropriate payments.

By applying the powers under this provision, the Central Government can use or acquire any invention for the purpose of vaccinating people and protecting them from Covid-19. Any medicinal or pharmaceutical product can be acquired and used by the Government to facilitate the immunisation of the general public.

It is pertinent to note that as of now, the Government has not used any of the powers granted under these provisions for increasing the production or distribution of vaccines in India. Instead, the Government has entered into advance purchase agreements with domestic vaccine manufacturers to ensure timely procurement and distribution of vaccines.  

India’s quest for a global IPR waiver amidst Covid-19

The Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), 1994 protects patents for any invention in any field of technology that satisfies the primary test of novelty, inventiveness and usefulness. However, there is also room for flexibility. Power has been given to the World Trade Organisation (WTO) members to exclude certain inventions from this protective net on the grounds of maintaining public order, protection of human/plant/animal life and protection of the environment. In the case of pharmaceutical inventions, nations have time and again resorted to compulsory licensing. The TRIPS Agreement allows the issue of compulsory licenses, subject to certain pre-conditions including that of voluntary negotiations with the patent owner. But these pre-conditions are not applicable in cases of national emergency or circumstances of extreme emergency or in cases of public non-commercial use.

India’s proposal for IP waiver

It was in October 2020 that the Government of India and South Africa approached the World Trade Organisation (WTO) with a proposal seeking a waiver from the provisions of the TRIPS. This waiver was sought with the sole intent of ensuring equitable distribution of the vaccine across the world. It is an open fact that neither a manufacturer individually nor in the form of limited groups can satisfy the global demand for vaccines, especially at a time when the demand for vaccines has already surpassed the supply capacity. Moreover, the high-income countries have wasted no time to secure their considerable share of vaccines thereby leaving the low-income countries at high risk.

The waiver is sought from the application and enforcement of Intellectual Property Rights for all technologies necessary for the prevention, containment and treatment of Covid-19. This proposition was supported by 62 WTO member states and over 100 low-income countries. It also met opposition from certain high-income countries like the UK, Australia etc. However, it was only in May 2021, that the proposition found its biggest supporter in the form of the USA, which announced its support to the waiver and willingness to participate in the text-based negotiations at the WTO. Post this announcement from the USA, the initial proposition was amended by India and South Africa on May 25th 2021 and a revised draft was submitted wherein a waiver was sought for a period of 3 years, subject to annual review, intellectual property rights on all relevant health products and technologies, including diagnostics, therapeutics, vaccines, medical devices, personal protective equipment, their materials or components, and their methods and means of manufacture for the prevention, treatment or containment of COVID-19.

Counter declaration filed by the European Union

With the revised draft set in motion and the world debating on its prospects, the European Union (EU) released a Draft Declaration on June 4th 2021. This, however, did not favour the TRIPS waiver but focused on the use of voluntary licenses for expanding the manufacture and supply of vaccines. It also emphasised on minimising export restrictions for smoother cross-border supplies of vaccines and sharing of expertise between member nations. However, it has been a restatement of the provisions under the TRIPS. It states that in case of national emergency, circumstances of extreme emergency etc, compulsory licenses can be issued by a member nation without conducting negotiations with the patent right holder. This provision has already been laid down under Article 31(b) of the TRIPS Agreement. 

The idea of proportionate compensation to the patent right holder by the holder of compulsory license advocated under the Draft Declaration finds its roots in the provision of adequate remuneration laid down under Article 31(h) of the TRIPS Agreement. Also, the provision for import & export of pharmaceutical products by a member nation to other member nations which lack manufacturing capacity and issue of compulsory license in pursuance to it by issuing a notification to the TRIPS Council specifying the name and quantity of products, import eligibility, etc. as laid down under the Draft Declaration is only the reiteration of Article 31bis of the Trips Agreement which provides for issue of a similar notification for import & export of patented pharmaceutical products.

Issues in the EU Draft Declaration

The academic debate is centred around whether knowledge and technology sharing, including sharing of potential trade secrets, will help successfully combat the virus on a larger scale or not. While the initial proponents have focused on boosting the manufacturing capacity of low-income countries, increasing affordability and protection of human lives, the EU Draft Declaration has maintained the stance of IP protection and has failed to provide measures for maximising supply at affordable costs. It is also pertinent to note that, almost all the vaccines have been developed by pharmaceutical companies in the European Union individually or in collaboration with other pharmaceutical companies. Thus, the view taken by the EU Draft Declaration could be cast as a protective net over the Intellectual Property of European Pharmaceutical companies. Since the WTO could have to consider both the proposals now, which would take significantly longer, it can be mooted that the EU Draft Declaration might be an attempt to delay the text-based negotiations on the proposition submitted by the Indian and South African Governments.

The present situation of the global IP waiver

The recent meeting of the WTO General Council held from 27th-28th July 2021 ended on the note that the member nations are in disagreement over the fact that the pro-waiver stance is the best possible option for tackling the issue of shortage and affordability of vaccines and other pharmaceutical products required to combat the virus. The General Council was to continue informal discussions with the member nations over the matter and prepare a Ministerial Declaration which was to be put forward for consideration in the WTO 12th Ministerial Conference later this year in December 2021.  

Conclusion

The Indian patent laws have empowered the Central Government to acquire and use any invention. This wide range of power ensures that the general public can receive proper medical facilities on time and at appropriate prices. The concept of compulsory licensing has a drawback when it comes to the waiting period of three years but the same has been overcome by the enactment of Section 92 of the Patents Act. Thus, when it comes to the impact of Covid-19 on the essential medicine laws under the Patents Act, the Indian Patent laws are self-sufficient and protect the interests of the general public.

When it comes to India’s role on a global platform, the argument for a global IP waiver in times of pandemics is an important argument that has been raised by India. Even though Indian laws may be self-sufficient, it may not be the case for all countries and thus it is necessary that companies and nations place the interests of the general public before their individual interests of obtaining patents and royalties arising from the use of such patents.

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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Importance of proper drafting of force majeure clause

By
Oishika Banerji
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0

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

Introduction

This positive attitude of Indians in the face of multitude of stiff day-to-day challenges has its fallout in contract drafting with the structuring of the Force Majeure Clause, often being treated in sheer disdain. Many times the Force Majeure Clause is simply copy-pasted from other drafts and templates, with the primary focus being on incorporating the phrase ‘Acts of God ‘. Sometimes, the contract simply says ‘ This Agreement shall be subject to Force Majeure Clause‘ without the term ‘ Force Majeure ‘ being defined anywhere in the Agreement.

What is the ‘Force Majeure Clause’? 

‘Force Majeure ‘ is a French term meaning ‘ superior force ‘. The usual perception and understanding of ‘Force Majeure ‘ is any Act of God, a natural calamity, floods, tempest, earthquakes, landslides, bushfires, cyclones, hurricanes, tsunami, Orders of Courts of Law, or pursuant to Orders or new enactments/ changes in law or policy made by the Government of the State or the Union Government, civil disorder, riots, labour strikes, restrictions on supply of input materials, epidemics, etc. 

It is generally perceived that the impact of these factors causing disruption is very well recorded in the public domain and, hence, would either not be disputed or is easy to prove in case of a dispute. 

The Force Majeure Clause is applied to enable the affected party(ies) invoking its provisions to get additional time, equal to the period of time impacted by the occurrence of the Force Majeure event till reasonable normalcy is restored, so as to enable the invoking party(ies) to fulfil their respective obligations under the contract, with delay and without penalty.

Further, the general perception is that the invocation of the Force Majeure Clause by one party implies that the other party automatically gets the benefit of the same in the form of corresponding additional time to fulfil their obligations under the contract. 

There are four necessary components of a force majeure clause:

  1. It must define the breach for which a promisor seeks to be excused.
  2. It must define the “force majeure event” itself.
  3. It must require (and define) the causal connection between these two.
  4. It must explain what will happen if performance is excused.

Each component raises considerations that contracting parties need to consider with some care.

Importance of proper drafting of the Force Majeure Clause

Force Majeure events include the occurrence of widespread devastation and disruption of normal life with breakdown in infrastructure, power lines, communication lines, etc. The Covid-19 pandemic has been an event of Force Majeure but without any occurrences like breakdown in infrastructure, power lines, and /or communication lines, etc. and, hence, has brought a new perspective to the concept of Force Majeure events. The pandemic has thus drawn unprecedented attention to the Force Majeure Clause and highlighted the importance of its proper drafting. 

Firstly, it is necessary to specifically exclude the Payment obligations from the purview of Force Majeure Clause, by stating that, notwithstanding the invocation of the Force Majeure Clause by either or both of the parties, the commitment of either party to effect payments due and/or payable in respect of contractual obligations already fulfilled by the other party shall continue to sustain and survive in the event of such invocation. 

While the lockdown and Janata Curfews declared by the Government of India/ State Governments did bring about a shutdown to most businesses, and brought severe restrictions on the movement of people, the advances in technology, particularly with spread of internet banking, mobile banking, and digital banking, implied that there were no substantial restraints to enabling payments.  

Hence, in contracts where the Payment clause specifically stood excluded from the provisions of the Force Majeure Clause, the paying party was obligated to release payment at the risk of being in breach of the contract.  

Secondly, the pandemic has highlighted the necessity of proper drafting of the Force Majeure Clause, which has been brought out by Orders of the Hon’ble High Courts.

Case Laws

In Standard Retail Pvt. Ltd. vs GS Global Corp and others, in Commercial Arbitration Petition (L) No. 404 of 2020, the Bombay High Court was seized of a Petition filed under Section 9 of the Arbitration and Conciliation Act, 1996, seeking directions restraining the Respondent-Bank from negotiating/ encashing the Letters of Credit issued at the instance of the Petitioner. The case of the Petitioner was that in view of the pandemic and the lockdown declared by the Government, its contracts with the Respondent No. 1 had been terminated as unenforceable on account of frustration, impossibility and impracticability. The Petitioners relied upon Section 56 of the Indian Contract Act, 1872. 

In terms of the contract, the Respondent No. 1, based in South Korea, was contracted to supply certain steel products, to be dispatched from South Korea to the Petitioner at Mumbai. The contract was subject to General Terms and Conditions, which inter alia read as follows : 

“Article 11. Force Majeure: 

In the event of an Act of God (including but not limited to floods, earthquake, typhoons, epidemics and other natural calamities), war or armed conflict or serious threat of the same, government order or regulation, labor dispute or any other similar cause beyond the control of “Seller” or any of its suppliers or subcontractors which seriously affects the ability of “Seller” or any of its suppliers or subcontractors to manufacture and deliver the “Goods”, “Seller” may, at its sole discretion and upon written notice to “Buyer” either terminate the Contract or any portion affected thereof by such event(s), or delay performance of the Contract, in whole or in part, for a reasonable period of time. Any such delay of performance by “Seller” shall not preclude “Seller’s” later right to terminate the Contract or any portion affected thereof by such event(s). In no event shall “Seller” be liable to “Buyer” or to any third party for any costs or damages arising indirectly or consequentially from such non-fulfilment of or delay in the performance of all or part of the Contract” 

It was argued by the Respondent Bank that the Letters of Credit, being an independent transaction with the Bank, had no concern with any disputes between the Petitioner-buyers and the Respondent–seller. Further, there is no beneficial proviso for the Petitioner in the Force Majeure Clause.  The Respondent Seller had fulfilled its contractual obligations, and the cargo had already been dispatched from South Korea, and if the Petitioner would not be able to perform its obligations, it is not a factor which can be considered and held against the Respondent Seller. Also, distribution of steel was declared as an essential service, with no restrictions on its movement, all ports and port related activities including the movement of vehicles and manpower, operations of Container Freight Station and warehouses and offices of Custom Houses Agents were also declared as essential services. Also the lockdown would be for a limited period and, hence, it cannot come to the rescue of the Petitioner so as to enable the Petitioner to rescind from making payments to the Respondent –Seller in terms of its contractual obligations.

The Bombay High Court, vide its Order dated 8th April 2020, upheld the contentions of the Respondents, and rejected the Petition.

In Halliburton v Vedanta, O.M.P. (I) (COMM) 88/2020 before the High Court of Delhi, the petition under Section 9 sought interim protection, by way of a restraint, against Respondent No. 1, injuncting the said respondent from invoking or encashing bank guarantees, issued by the Respondent No 2 bank in favour of Respondent No. 1, under instructions of the Petitioner. 

The Petitioner was executing a contract for the Respondent No.1, for which Performance Bank Guarantees had been furnished. The Petitioner claimed to be in a position to complete the work within the extended due date, 31.03.2020, but due to the sudden spread of Covid-19, the Petitioner had addressed communications, dated 18.03.2020 and 25.03.2020, to the Respondent No. 1, invoking the Force Majeure Clause and seeking benefits thereof. However, the respondent refused to accommodate the Petitioner, and vide communication dated 31.03.2020, had reserved its right to take appropriate recourse under the contract, including, but not limited to termination of the contract and getting the balance work executed through alternative resources at the risk and cost of the Petitioner. 

Aggrieved, the Petitioner approached the High Court apprehending termination of the contract by Respondent No. 1, which would, consequent thereupon, also proceed to invoke and encash the bank guarantees provided by the Petitioner, thereby causing irreparable prejudice to the Petitioner. 

The Petitioner argued that though work was substantially completed prior to the said date, owing to the complete lockdown, on industrial activities as well as on movement of persons consequent to the pandemic, the Petitioner was unavoidably restrained in further execution of work. It was emphasised that the execution of work required travel of persons from overseas, and from various parts of the country. Respondent No.1 strongly opposed the Petitioner’s contentions including on grounds that there was no bar on continuation of industrial activities including production of oil. However, the Petitioner successfully argued that they were not engaged in production of oil per se but only in drilling work unrelated to the current production of oil.  

The Hon’ble Court took a view that the countrywide lockdown, which came into place on 24.03.2020 was prima facie in the nature of a force majeure event, was unprecedented, and was incapable of having been predicted either by the Respondent or by the Petitioner. The Petitioner having represented that they were in the process of completion of the project, and that, but for the lockdown, the project might have been completed by 31.03.2020, therefore, prima facie, special equities did exist, to justify grant of the Petitioner’s prayer, to injunct the Respondents from invoking the Bank Guarantees furnished by the Petitioner, till the expiry of a period of one week from date till which the lockdown had been imposed. Therefore, the interests of justice justified grant of an ad interim injunction, restraining invocation or encashment of the said Bank Guarantees, till the expiry of exactly one week from the date till which the lockdown stood extended. 

Based on the peculiar facts of the case, the Hon’ble High Court of Delhi, by its Order dated 15.04.2020, granted the ad interim stay. 

Conclusion 

The aforesaid orders of the Hon’ble High Courts clearly illustrate how the proper drafting of the Force Majeure Clause is important for obtaining reliefs thereunder, and also how the timely noticing of Force Majeure events to the opposite party, and a proper representation based on the specific facts of the case can help get reliefs on exceptional grounds of existence of special equities.

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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All you need to know about consumer protection in railway services

By
Diganth Raj Sehgal
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0
Image Source- https://bit.ly/2Se49Cy

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

Introduction

Every human being is a consumer in one form or the other. Consumer’s expectations of service and goods quality, performance, safety, and reliability have increased since the past times. But this is shattered on door of debacle when the consumer is left in lurch with unsatisfactory services. Thus, the Government of India has brought in various statutes in order to protect customers from such harassment and fraud. Consumer Protection Act is one of them. Since the service sector of India is so vast that it becomes necessary to have an efficient operation of same, and which become only possible when there is efficient Service Provider and Receiver Relationship.

The service sector of transportation is keystone that cannot be overlooked and, in that Railway, as a medium of transport is most prominent and largest public sector service. Thus, deficiency in this sector can be highly detrimental to the economy. Therefore, it is an urgent need to have proper vision regarding rights, redresses mechanism etc. as consumer so that Railway can also expand its Service efficiency along with redressing our grievances. This article presents a deep analysis regarding the protection of Consumer’s Rights in railway services. In this article, Rights one has as railway consumers and deficient services of railways are also discussed.

The idea of Service has expected more prominent significance in present society as a notion of the service have turned into a concept of necessity right now.  Railway Service is one of them. Since Indian Railways is acting as milestone for the Indian economy, so it becomes crucial for individual to have knowledge as Railway consumer in terms of their Services. As a major service provider, railways need to ensure that it provide quality of service to its consumers but in various instances, the railway failed to provide such and the concept of consumerism arise. In response to the same, The Railways Act of 1989 was passed but no specific rights to the railway consumer, as such, were provided in the act. There were only a few provisions regarding the carriage of passengers were there but these provisions were not enough to cater to needs of the rights of railway consumers. For the protection of rights as a railway consumer, one has to take recourse of the Consumer Protection Act, 1986. The Railways Act, 1989 with allied rules defines the responsibility of the railway towards its passengers. For deficiency in service passenger has right under Consumer Protection Act, 1986 because under the railway law, no mechanism is available to mitigate the problems faced by the railway consumers. That is why a consumer has to seek recourse of consumer forum in cases of deficient services.

Consumer forum’s jurisdiction towards railway services

Since it is clear fact that even statutory corporations providing a deficient service, can be made liable under the Consumer Protection Act. Furthermore, if one talks about the definition of Service then, As per Section 2(42) of C.P. Act, 2019, “Service” means service of any description which is made available to potential users and includes the provision of facilities in connection with banking, financing, insurance, transport, processing, supply of electrical or other energy, board or lodging or both housing construction, entertainment, amusement or the purveying of news or other information, but does not include the rendering of any service free of charge or under a contract of personal service. So, it is clear that since the term “transport” includes railway transport. So, the person who is availing of the railway services is considered as a “consumer”. 

Section 3 of this act provides that the provisions of the Act shall be in addition to and not in derogation of the provisions of any other law for the time being in force. On the above said provisions were giving the powers to the consumer forum to hear the railway consumer disputes which is relating to “deficiency in service”. Furthermore, there are various statutes that have been passed by the Indian Parliament specifically for the Railway department which deals with the liability of Railway authorities like the Railway Act of 1989, Railway Claims Tribunal Act, Workmen compensation (Indian Railways) Act etc. 

It is here important to note that in order to decide the jurisdiction of the Consumer Commission or the Railway Tribunal the facts of the case have to be correctly interpreted, else minor changes will roll out jurisdiction from one to another. If one considers the jurisdiction of Consumer Commissions then it is lined up with a path that when a customer buys a train ticket he becomes a consumer so, an incident relating to negligence or deficiency in services brings the case under the Consumer Forum. Whereas on other hand, the cases which are related to accidents due to collusion of trains or specifically untoward incidents fall under the jurisdiction of Railway Tribunal as the reason being that the question is not with respect to services of the railways but the accidents involved. There cannot be any ground that accident occurs due to negligence or deficiency in railway services. Overall, it can be summarized that consumer fora have jurisdiction over railway services. 

Possible deficiency in railway services

Deficiency means any fault, imperfection, shortcoming or inadequacy in the quality, nature and manner of performance that is required to be maintained by or under any law or has been undertaken as part of a contract or otherwise. This definition helps us to analyse the problems such as trains being unfathomably late, passengers holding a reserved ticket does not get the assigned seat; long-distance trains not having the basic services like water in the washroom, poor electricity due to lack of maintenance etc. are not any other but the examples of Deficiency on part of Railway authorities. Even there have been incidents where the passengers have lost lives due to the dilapidated & deficient railway Services. So, it becomes crucial to have in and out of these deficiencies and their redressing mechanisms.

Here is a shortlist of possible deficiency in Indian Railway Services:

Loss of Personal luggage of the Passenger:

There is as such no express provision for the loss of luggage under the Railway Act or RCT Act but one can approach under Consumer Act.

CASE: G.M.Eastern Railway vs Smt. Malti Gupta 

The state commission held the loss of three suitcases of the Passenger in the train as almost to deficiency in service and the railway was held liable to pay compensation. 

2. Cleanness and water facilities:

Again, there is no express provision in the RCT Act so, the consumer can invoke the jurisdiction of the consumer forum to decide his claim. 

CASE: South Eastern Railway Vs. Yeshwant Tiwari

Not providing water for cleaning purposes to the reserved compartment passengers is amongst to deficiency in service and, the consumer forum is having the jurisdiction to hear this dispute. 

3. Negligence in taking due care:

Railway authorities are liable if they perform an act with negligence such as over-speeding unnecessarily, compartments with squalor, lack of proper maintaining etc.

CASE: Union of India v. Rajiv Kumar Tandon

The complainant was perched by the window and he attempted to lower the window yet because of some deformity, it couldn’t be moved down. As the train was pacing at a quicker speed a piece of concrete flew noticeably all around and struck against the head of the complainant. Thus, he was admitted to the clinic roughly for 15 days and it was held that the Railway Claim tribunal has no jurisdiction. As, for this situation, it is definitely not an “untoward incident”. The complainant was viewed as the consumer via buying the railroad ticket and hence employing the services of the respondent and was granted compensation.

4. Extreme delay in Arrival and departure:

CASE: Union of India v. Kedar Nath Jena and Others

The complainant, an advocate, purchased tickets from Cuttack to Bangalore in order to take his son for treatment there. The Guwahati Express train which was to leave Bangalore at 10.30 p.m. on 09/06/1990 started at 9 a.m. on 10/06/1990. The complainant suffered inconvenience and also incurred huge expenses because he had to hire lodging. The Railways failed to give reasons for the delay. It was held as a ‘deficiency in service’ under the Consumer Protection Act. Each of the complainants was thus awarded ₹ 500/- as compensation. 

5. Malpractices by railway in allotting berths:

CASE: Meenakshi Sundaram v. G.M. Southern Railway

In this case, It was found that the Railways superseded the complainant and allotted the reservation to some VIPs. The State Commission held the Railway Department liable for deficient service and awarded Rs. 1000/- and Rs. 300/- to the complainant. 

There is as such no end to all the possible deficiencies but all the general deficiencies are covered which are quite common in practice.

Overlapping jurisdictional issues  

There is still maybe sometimes the cases of overlapping jurisdictional issues. Consumer forums generally have the jurisdiction to hear the disputes between railway consumers and the railway authorities in respect of “deficiency in service”. Whereas, the railway claims tribunal have jurisdiction regarding accidental claims and untoward incidents. On a broader view, Since Railway Claims Tribunal Act has been enacted after the enactment of the consumer protection Act, thus it is a clear-cut indication that the legislature clearly intended to give special jurisdiction to RCT in order to hear the specific railway disputes. Even, Section 15 of the RCT expressly bar the jurisdiction of civil courts and other courts or authorities. Following are the cases where such overlapping jurisdictional issues are being considered.

  1. Union of India V. Nathmal Hansaria

In this landmark case, the National Consumer Disputes Redressal Commission in 1995 upheld a state commission order and directed the railways to pay ₹ 2.25 lakh to the parents of a 21-year-old, Kabita Hansaria, who died in 1990 while passing through interconnecting compartments on a long-distance train. The legal heir of Kabita told the commission that the vestibule connecting the compartments were not having safety grills which resulted in this unfortunate incident. 

The railways took a different stance and contended that according to the provisions of the Railway Claims Tribunal, the complaint was not tenable before the commission. But the commission made a clear distinction between a train accident and accidental death and observed that Kabita’s death falls under the latter case and the state commission is totally right in pointing out kabita as a consumer. 

  1. Deputy Chief Commercial Manager, Eastern Railways & Anr. V. Dr. K. K. Sharma & Ors.

In this case, the consumer forum held that Consumer Protection Act provides an alternative remedy to a consumer and furthermore Existence of remedies, provided by Sections 13 and 15, of the Railway Claims Tribunal Act, 1987 didn’t evoke the jurisdiction of the consumer courts to decide the question with respect to deficiency of service. It is well-appreciated fact that the consumer courts cannot sub-plant the jurisdiction of the Railway Tribunal or any other judicial or quasi-judicial body, but can supplement the jurisdiction of these bodies in appropriate cases.

  1. There are some facts of a case that also illustrate the same. In 2011, the national commission ruled in favour of a woman whose husband was run over by a goods train in 2003 while he was crossing tracks at a spot where there was no railway bridge. The commission rejected the railways’ defence that such cases fell under the provisions of the Railway Claims Tribunal Act and that consumer fora did not have jurisdiction.

Conclusion

At last, it can be concluded that the Indian railway should strive to bring a pragmatic shift in its perception of consumers. To curb these problems, consumer protection laws should be framed in such a manner as to augment the rights of consumers. For the effectiveness of such laws, recognition of rights alone is not satisfactory. This has to be done by promoting awareness among the general public about consumer rights. To achieve this end periodic surveys should be conducted to ascertain the level of satisfaction among its consumers. Not only periodic surveys but also improvements for those areas are specifically required which are witnessing heavy lurch. This will not only just act as basic attempts and viable solutions eradicating consumer woes and sufferings, but will also enhance the working efficiency of Railway and aid in the restoration of faith in Railway Services.

References

  1. Ab Hamid, N. R. (2008). Consumers’ behaviour towards internet technology and   Internet marketing tools. International Journal of Communications, 2(3), 195–204. 
  2. Sharma, S. K., & Kumar, A. (2014). A comparative study of Indian and worldwide railways. Int J Mech Eng Robot Res, 1(1), 114–120.
  3. Rangaraj, N., & Vishnu, B. N. (2002). Node capacity and terminal management on Indian Railways. Invited paper At Vision, 2025. 
  4. Budhkar, A., & Das, S. (2017). Finding trend of advanced ticket booking in Indian railways. Transportation research procedia, 25, 4822–4831
  5. https://indianrailways.gov.in/railwayboard/uploads/directorate/security/rpf/ Files/law/BareActs/Consumer.doc
  6. https://blog.ipleaders.in/railways-sector-deficiency-services/amp/
  7. https://www.lawcolumn.in/consumer-protection-with-respect-to-indianrailways/

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