Transphobia in Indian prisons : the distressing truth

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October 26, 2021

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This article is written by Nishka Kamath, a student at Nalanda Law College, University of Mumbai. This article aims to elucidate the difficulties faced by Transgenders in prisons due to Transphobia and lack of policies and awareness, especially in India, amongst other nations.

Table of Contents

Introduction

“It is said that no one truly knows a nation until one has been inside its jails. A nation should not be judged by how it treats its highest citizens, but its lowest ones.” – Nelson Mandela

Indeed, the true identity of a nation lies in the manner the citizens belonging to the lowest groups and lower-castes are treated, especially in jails. The violence, the struggle, the assault faced by the trans persons in prisons is abhorrent. Even when progress is made in the field of the rights of transgenders, very little attention is paid to trans persons in detention.

For us to understand what transphobia is and the struggles that trans people go through in prisons, we need to understand the nitty-gritty or fundamentals of trans people. So, let us dive into the details of Transgender first and then that of Transphobia in prisons.

Understanding the transgender community

Everyone- whether transgender or not has a gender identity. Usually, people never ponder upon their gender identity as it reflects or matches the sex they were assigned at birth. As per the National Centre for Transgender Equality, transgender people are those people whose gender identity is dissimilar from the one they were assigned at birth. So, a trans woman lives life like a woman today but was assigned to be male at the time of her birth. Similarly, a trans man lives a man today but was recognized to be female at the time of her birth. Sometimes, people recognize themselves as neither a male nor a female, sometimes as a mixture of both- male, as well as female. There are several terms used for people who are not completely male or female to express their gender identity, like non-binary or genderqueer.

Note of information: Being a trans person means different things to different persons. Just like many other characteristics of people like that of race, religion or caste, there is no specific way to become transgender, nor is there a specified way for trans people to look a particular way or feel the way they feel about themselves. The best way to learn about trans people is to have a conversation with them and listen to their stories.

Prejudice against transgenders and transphobia

Transphobia refers to the fear, hatred, suspicion, or mistrust of transgender people, people who consider themselves transgender, or those whose gender expressions do not conform to the conventional gender roles. Transphobia can stop transgenders and gender-nonconforming people from living lives to their fullest.

Transphobia can take many different forms, including:

Unfriendly attitude and opinions.
Disgust and bias against trans people.
Unreasonable concerns and misinterpretations.
Derogatory languages and the use of offensive names for addressing them.
Harassment, bullying, abuse, and violence.

Note of information: “Outing” is a term used for an act committed when a person reveals another person’s transgender identity or sexual orientation without obtaining their consent or prior permission. Outing is either done deliberately or unintentionally. It may expose them to the risk of feeling awkward, sad, and vulnerable. It can also lead to discrimination and violence, so, one must be very careful before revealing another’s identity.

Transphobia can cause both forms of discrimination- indirect and direct. For instance, trans people or those who are considered to be trans may be rejected from jobs, housing, or health care, simply because they are transgenders. Some individuals may have transphobia due to the teachings they have received from other individuals, including their parents and families, who encourage negative impressions about transgender people and have strict notions about conventional gender roles. Other individuals have transphobia due to wrong information or no information about transgender identities. They may be unaware of trans people or the hardships faced by trans people or they may not know any trans person personally.

Transphobia refers to a form of oppression and bias against transgender people. It can have a severe effect on their physical and mental health. It can be very harmful and can cause depression, dismay, a feeling of hopelessness, etc.

Note of information: 17th May is celebrated as International Day against Homophobia, Transphobia, and Biphobia (IDAHOTB). The Day was recognized in 2004 to bring into the limelight the violence and unjust treatment faced by the lesbian, gay, bisexual, transgender, intersex (LGBTQIA+) community, along with all other people who have a diverse sexual orientation, gender identity or expression and sexual feature. May 17th is now commemorated in more than 130 countries, inclusive of those countries where same-sex activity is unlawful.

Transphobia in prisons

The Supreme Court, in the National Legal Services vs. Union of India (2014), commonly known as the NALSA judgment (discussed below), paved a path for the recognition of a third gender, along with male and female. However, the Indian prisons still follow the regressive process where trans people are misgendered and ill-treated. Even now, most trans people are allocated prisons based on the gender they were assigned at birth, instead of the gender they identify presently. It is crucial to understand several aspects of transphobia in daily life. One of them is the way transgenders are treated in prisons.

No primary education about sex and gender identity has forced society into disbarring people who do not operate in the sphere of the gender binary. As disclosed by the non-government organization, Commonwealth Human Rights Initiative (CHRI), in its report published in 2020, titled ‘Lost Identity: Transgender persons in Indian prisons’, most of the Indian states do not even keep a different register for recording the information on transgender prisoners. Without proper data about trans people and their particular wants, the prisons cannot take any steps to mitigate this situation even if they desire to.

This report gathered information via the Right to Information Act from the State Government and prisons. According to this report, schemes and knowledge about the basic needs of trans inmates were absent, thus causing their rights to be repudiated. Additionally, this report found out that more than 214 transgenders are behind the bars across the Nation. But note has to be taken that this data was not preserved by following a particular uniform procedure across states and thus is incomplete, so there are chances of this number being higher.

It was found that Andra Pradesh, Goa, Himachal Pradesh, Karnataka, Meghalaya, Sikkim, Uttarakhand, Dadra, and Nagar Haveli and Puducherry have been maintaining a separate register apart from male and female amongst the states and union territories who answered the queries of the organization. Moreover, there was no uniformity in maintaining records in various jails in states like Gujarat, Jharkhand, Maharashtra, Rajasthan, Kerala, Delhi, Tripura, West Bengal, and Uttar Pradesh.

Various sorts of responses were given by the State and prison authorities when enquired about their treatments in the case of trans prisoners. As per the report, the Government was unsuccessful in meeting the standards for determining the needs of trans persons in prisons. Not only the prisons, but the courts, as well, were unsuccessful in identifying the “third gender”. The gender of trans persons persists to be recognized based on their genitalia, and the common specified category of male and female.

In addition, the report stated that no plans or initiatives for transgender inmates were organized, nor there have been any awareness campaigns for the inmates as well as the staff authorities in prisons. There is a dire need for the prison department to be enlightened about the sensitization of prisoners, especially on matters related to gender recognition and sexual orientation. According to the report, the State government and the prison training institutes must take proper steps to educate the prison officers, warders, visitors, etc. to ensure that trans people feel included socially. Also, such programs must not be confined to the prison staff but must also involve prisoners. The government and prison staff must make sure that no trans person is ill-treated, mentally or physically assaulted, or undergoes any sort of violence.

The prisoners completely rely upon the prison authorities for their survival, even if they are at serious risk of being abused by these staff members in the first place. While imprisonment exposes each and every inmate to a new layer of vulnerability considering their disunion from their family, friends, social circle, and comfort zones, groups like transgenders find themselves in more danger than others.

International principles

Legislative drafters and policymakers in India have not paid much attention to international standards like those of several United Nations agencies, for instance, the Nelson Mandela Rules (2015), or the Yogyakarta Principles and the Yogyakarta Principles plus 10 (YP+10). These principles focus mainly on concerns of human rights violations faced by an individual because of their sexual orientation or gender recognition.

The United Nations Standard Minimum Rules for the Treatment of Prisoners, known as “the Nelson Mandela Rules” were adopted by the UN General Assembly in December 2015. It was named so in honour of the late President of South Africa- Nelson Rolihlahla Mandela, who was behind the bars for 27 years for advocating for human rights all around the globe, equal treatment, democracy, and promotion of a culture of tranquillity.

The Yogyakarta Principles were set up in 2006 when a group of esteemed international human rights experts had a meeting for outlining a set of international principles relating to sexual orientation and gender identity. These principles have a binding international standard and every state has to follow them. They assure a different future when every individual is born free and equal in dignity and rights can fulfil that precious birthright. Also, the ‘YP plus 10 document’ emerged from the intersection of the developments in international human rights law with the emerging understanding of violations suffered by persons on grounds of sexual orientation and gender identity and the recognition of the distinct and intersectional grounds of gender expression and sex characteristics.

There is no sufficient guidance for the protection of transgenders in detention, except for Article 7 of the Mandela Rules, which clearly states that certain data has to be collected while the admission of a prisoner including precise information that can determine their unique identity and respecting their self-perceived identity. Whereas Principle 9 of the Yogyakarta Principles ensures that imprisonment prevents further marginalising persons based on their sexual orientation or gender identity or subjects them to the risk of violence, ill-treatment or physical, mental or sexual abuse. However, these principles remain hypothetical, i.e., in theory rather than in reality.

Varying fair play and fractured legal aid

“Jail is the place where you are acutely made aware of your transness” – Tanmay Nivedita.

Indeed, trans people undergo the harshest treatment when behind the bars, as if imprisonment is not punishment enough. They face poor legal aid, impoverished legal representation, assault, harassment, discrimination, ill-treatment, and everything in between while imprisoned. It is widespread that trans persons rot in prison before they receive any legal help. They face a lot more hardships in comparison to a straight person.

The Constitution of India has various articles for the well-being of socially, economically and educationally backward class groups; some of them can be made applicable specially and explicitly for transgenders. Article 39A of the Indian Constitution ensures free legal aid to the poverty-stricken and weaker sections of society. Article 14 provides that no individual should be discriminated against based on religion, race, sex, caste or place of birth. The State shall provide equality before the law and equal protection of laws to all individuals. Article 22(1) provides that any individual who is arrested cannot be kept in official custody for questioning without information on the grounds of arrest. Also, it provides that no individual shall be refused the right to consult and be defended by a legal practitioner of their choice.

The aforementioned articles ensure free legal aid, the right to be represented, and just and fair treatment to all individuals irrespective of their gender. But are the rights and privileges only on paper? Let us find out.

Except for Delhi, all the 28 states and seven union territories have been unsuccessful in recognizing the community’s need for free legal assistance. There is an income ceiling limit for availing free Legal Aid. For instance, according to the information shared on the National Legal Services Authority website, Delhi has three distinct categories for free legal aid, that are, a distinct category for senior citizens, one for transgender and one for the general category. For the senior citizens and trans community, the earnings limit is 2 Lakhs and for the rest of the residents, a limit of 1 Lakh is prescribed.

Trans persons, especially those who belong to marginalized communities, face a lot more danger than other prisoners. The National Crime Records Bureau (NCRB) being the sole government body to maintain amalgamated prison statistics disclosed that the prisons of India have an exclusively large population of Dalits, Adivasis, and Other Backward Class (OBCs). Even amongst the transgender inmates, a huge number of inmates belonged to Dalit, Adivasi, and OBC caste identities.

The concept of purity is not only deduced by an individual’s gender alone but also by their caste. In this context, it should not be startling to find the trans community to get weak behind bars.

The plight of transgenders in the global prison system

The community of Transgenders is not only an outcast in the external world but also when they are separated from the common population. Trans people undergo a lot of violence and abuse, usually sexual abuse, which are often perpetuated by prison guards more than the prisoners behind the four walls. The trans community is marginalized and sometimes excluded from the community, which is why the issues associated with the detaining of transgender people have not seen major progress. Many a time, if they raise their voice, they are shushed. Also, they are unrepresented. It does not make much difference whether the country is developed or not, because they still face challenges regarding how the prison guards, authorities and prisoners are treated. Let us read about the problems they encounter in the global prison system and the related legal framework.

The United Kingdom

In 2019, Policy Framework was published on transgender incarceration by the Ministry of Justice (United Kingdom) providing details and compulsory actions associated with the care and management of trans inmates in prisons, Youth Secure Estate, Approved Premises (AP), Probation and private providers who provide services on behalf of HMPPS. This policy further states that all the information of trans prisoners facing any issues like mental health and personality disorder, risk of suicide, physical health issues, learning disability/disabilities must be apprised to attain a result that balances risks and promotes the safety of all inmates behind the bars.

As per an article published in The Telegraph, half of the prisons in England and Wales are holding at least one trans inmate. According to another website, trans inmates undergo a lot of challenges including lack of support, exclusion and facing biased treatment from inmates and prison staff members. These challenges may have their roots in the staff of the prison who do not feel equipped to support trans inmates, maybe for the reason that there is a lack of training and guidance, less or no support from the staff and minimal to scarce resources. Not every staff member is aware of the problems faced by trans inmates, some of them include- misgendering, complex family situations, high risk of homelessness, and abuse upon release. All these problems can result in trans prisoners feeling isolated and not having complete faith in the criminal justice system.

United States

The court in the United States has recognised that the underlying condition of gender identity disorder is substantial, and the provision of medical service includes the provision of hormones and surgery wherever appropriate. Inside the state prisons, transgenders are oftentimes denied any transition-related medical care. Transgender persons who have not undergone any genital surgery are generally classified according to the gender they were assigned at birth for admission into prisons, despite how long they have been behind the bars as members of other genders, and despite how much other medical aid they may have received.

Canada

In Canada, correctional institutions were used to allocate trans prisoners a prison based upon their sex assigned at birth instead of the one they identify themselves with. The trans prisoners in Canada face discrimination and intimidation, and exposure to various types of abuse. So, Bill C-16, an Act to amend the Canadian Human Rights Act and the Criminal Code, became law in June 2017, which added “gender identity” and “gender expression” in the prohibited grounds of discrimination and further prevented the federal government from exercising prejudice on the grounds of gender identity and expression, inclusive of prisons. Moreover, Prime Minister- Justin Trudeau assured that he would “look at and address” trans prisoners’ rights in prison and recognize that trans rights are human rights and that care must be taken that these prisoners end up in the facilities which match their gender identity and that everyone’s dignity and rights are defended in every way.

Australia

Any unjust treatment or discrimination based upon gender is strictly prohibited by the Australian Human Rights Commission Act. Similarly, there are other laws like the Victoria Equal Opportunity Act, Western Australia Equal Opportunity Act, Sex Discrimination Act, etc which ensures the rights of different sexes. Despite all such laws, there remains a persistent concern with the treatment and handling of transgender people in prisons. Sometimes they do not even get the basic essential treatments. Also, at times, they are victims of prison violence. Moreover, how they are allowed to dress up, the personal items they are permitted to buy, the titles they are referred to by the prison authorities and officials do not create hope for a bright future. Sometimes, they also harm themselves.

India

The Supreme Court paved a path for the third gender in the recent NALSA Judgment. Several articles are enshrined in the Constitution of India for the benefit of the marginalized sections of society. Also, many Directive Principles of State Policy provide for equal opportunities for all, irrespective of gender, to thrive in society. The High Court of Bombay has also pondered about formulating special guidelines for trans prisoners as this problem needs to be tackled effectively. Time and again, complaints have been made that the prison authorities behave in an insouciant manner with trans inmates. A special ward for trans persons should be made and can be considered the need of the hour considering the ill-treatment they undergo daily behind the bars.

Proposed solutions

Prisons have worked hard to implement the necessary reforms, with the growing awareness of the rights of trans people. But these reforms hardly meet the minimum change required for including trans people into the functional society. Various efforts and campaigns are undertaken by the government and other organisations for educating inmates about sexism amongst the prison staff. Nevertheless, these efforts have very little impact.

There is a dire need to bring numerous changes to the existing system. Different prisons must be set up for genderqueer people. Also, trans people should be given the choice to choose the prison they want to be admitted into. To address the issues and troubles of transgenders, medical facilities must all be revised. Their gender identity must be respected, irrespective of whether they have transitioned their gender or not, to not exacerbate the gender dysphoria experienced by this tyrannized class.

The State Government, Central Government and the prison authorities can improve the conditions of trans persons behind the bars by taking into account the separate needs of trans persons while keeping in mind the safety of the majority of the population in prison. Following are the suggestions that can be implemented in prisons to cater to the needs and address the issue of transphobia in prisons:

The Central and State governments can develop policies and schemes which pay attention to the specific requirements of trans persons in prisons, provide better medical facilitation, and include activities for the welfare, recreation and education of trans persons.
The authorities like National Legal Service Authority (NALSA) and State Legal Service Authority (SLSA) may arrange programmes for raising awareness of prisoners on issues related to gender recognition and sexual orientation inside prisons, regularly.
The Central and State Government must provide training for prison officers and wardens paying special attention to enlightening them about gender recognition and sexual orientation.
The prison staff must evolve to understand that not every trans person needs sex reassignment surgery or gender-affirming certificates to live contently. They must also respect self-proclaimed identities and must not ask for any medical or legal proof for justifying their gender.

It is pivotal that the policies which are to be implemented must not divert their focus from the main issue which needs to be solved- how to protect individuals who are vulnerable to abuse in prisons. It is prayed that the State and Central Government along with the prison staff and other organisations handle the problems faced by transgenders in prisons in a considerate and flexible manner so that they can live safely and happily with their gender identity. The battle for homosexuals to have the same privileges as heterosexuals is one that has been combated for decades.

Conclusion

With India being a nation that takes pride in its diversity, it is quite a shame that not all factions of society are accepted. The community, which is referred to as that of demi-gods, which the kings would go to seek advice in the olden times, which we still consider to be auspicious especially during marriages and child-birth, lives a life of destitute in India. All we see is them begging at railway stations, on traffic signals and in functions giving blessings to everyone, for which they barely receive any money in the form of alms.

The condition of trans persons in prisons is not so good either, in fact, it is quite distressing, be it in India or the aforementioned nations. The State and Central Government along with the prison staff must take measures to address the difficulties faced by the transgenders in prisons and develop policies for such issues so they too lead a safe and happy life in the gender they recognise themselves with. Trans prisoners should have the same status, facilities, protection and treatment as other prisoners. It must be noted that, if any nation needs to reach its full potential, it must welcome positive changes with open arms, including prison reforms.

References

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Conspiracy between blockchain and smart contracts

By

Abanti Bose

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October 26, 2021

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

Table of Contents

Introduction

Blockchain is a term that almost every person has become familiar with and it’s mainly because of cryptocurrency. Both of these terms go hand in hand with each other. However, very few people are aware of the fact that Blockchain technology has applications that extend beyond the world of cryptocurrency. One of the most revolutionary applications of this phenomenal technology, other than cryptocurrency, is the ‘Smart Contracts’. This article will endeavour to throw some much-needed light on this aspect of Blockchain technology.

What is blockchain technology?

Blockchain or Distributed Ledger Technology (DLT), is a record-keeping technology that stores the information provided in a block (each of the blocks has a storage capacity), and once that block is filled to its capacity, it is then added to the chain that already has a number of information blocks in the chronological order. The following are the unique features of this technology.

Distributed or decentralized

Blockchain technology stores data very differently from the other databases, as the computers that store the data are not under the control of one individual or group, the information or data is distributed across various computers, all of which are operated by different individuals or groups. So it is a decentralized ledger for the storage of data or information, which makes it very transparent and the information stored is less vulnerable to attacks.

Immutable

Another distinctive feature of Blockchain technology is that the information that is stored in it cannot be reversed or changed. This feature almost guarantees the authenticity of the data stored in it, as no one can manipulate the data even if they want to. If any person would endeavour to tamper with the data stored in one block then all the other blocks will cross-reference, as each block has a cryptographic hash of its previous block to point out the block with the incorrect data.

Transparent

The data stored in a Blockchain can be easily accessed by anyone either having a personal node or via Blockchain explorer. It does not have one central point where all the data is stored like databases. Therefore the level of transparency is pretty high in this technology.

What are ‘Smart Contracts’?

‘Smart Contracts’ are self-executing contracts that use Blockchain technology to store the terms of the contract in the form of codes. The terms stored in the blocks act as triggers or pre-determined conditions, so when any of the terms is fulfilled then the part of the contract that is dependent on its fulfilment for execution, gets automatically executed. This eliminates the role of an intermediary to oversee the execution of the contract and therefore, saves a lot of time as well as money. All the participants of the contract remain ensured that the contract will get executed the moment the conditions precedent are met, as the workflow is automated.

How does a ‘Smart Contract’ work?

In 1994, Nick Szabo (an American computer scientist, who invented virtual currency called ‘Bit Gold’ in 1998) suggested that Blockchain technology could be used for smart contracts because of its decentralized nature. A Smart Contract works on the algorithm or statements of ‘if/when/then’, which are written as codes on the Blockchain. It is simply a program that runs mostly on Ethereum Blockchain and is stored in a specific address on it. Ethereum has developed the Solidity language to write smart contract applications. All the transactions with respect to the contract are deployed on the network, instead of being controlled by a user. The smart contracts can be interacted with by a user account by submitting a transaction which will then execute a term defined on the smart contracts. A smart contract, as Nick Szabo says, is like a vending machine, where if there is the right input, a certain output is assured. The same logic is employed in smart contracts. The whole working of smart contracts can be laid out in the following steps.

Determination of terms

The parties will firstly negotiate and decide the terms of the contract.

Translation of terms

The final terms of the contract are then translated into codes. The codes constitute all the variables or conditions that could be posed by the transactions undertaken by the participants and its designated output for the future transaction.

Test and review of the codes

The logic used in the codes are then tested by the person writing the codes. The codes are then sent for review by the internal experts of the parties.

Storing of codes in Blockchain network

The translated codes are then stored on the Blockchain network and distributed or replicated among all the participants on the said network so that each one then has identical access to the terms of the contract and the further activities with respect to it.

Execution of codes

Once all the participants receive the codes, then their respective systems run the codes. The system is configured in a manner that it can listen to any update in the transaction from a cryptographically secured streaming data source, which in common terms is called ‘Oracle’.

Verification of the terms

Now if any of the terms of the contract is realized, then its verification by all the participants on the network is required. Therefore, when the fulfilment of a term is verified by all the participants on the network then that particular transaction corresponding to the term satisfied, will automatically get executed.

Let’s take an example if two parties enter into a contract for the supply of medical equipment. The terms are written in the form of codes and stored on Blockchain. The smart contract will track the delivery of the medical equipment to the ‘buyer’. Once the delivery is fulfilled, the smart contract will automatically release the payment to the ‘supplier’, without any intermediary interference.

What is the legal validity of a Smart Contract?

A smart contract can be legally valid if it fulfils all the requirements of a valid contract under the contract law of the said country. If we are to take the example of India then, under Section 10 of the Indian Contract Act, 1872, the following requirements are given for an agreement to become legally binding: a) competent parties, b) free consent, c) lawful consideration, d) lawful object, and e) not expressly declared void.

Therefore, if we analyze a smart contract based on the prerequisites mentioned above, it can be legally binding as long as it fulfils all the requirements. Moreover, it must comprise an offer and acceptance between the parties. A smart contract typically stores the obligation and consideration part of the contract because it has been designed for execution. So, the other standard and boilerplate clauses can be mentioned in a paper-based contract. The paper-based contract and the smart contract can together form a valid contract. Although it is not mandatory to have a text-based contract attached to the smart contract, it is an ideal scenario.

Are Smart Contracts conceivable without Blockchain?

The answer is ‘yes the smart contracts are conceivable without Blockchain’, but it requires a little more elaborate explanation. There are smart contracts already in existence that are up and running but the only difference is that they are run on a centralized system. The advantage of this type of smart contract is that it reduces the cost and energy consumption as it does not require all the information to be recorded on all the systems present on a particular Blockchain network. However, it is pertinent to keep in mind that the smart contracts created on Blockchain technology offer security and transparency which the smart contracts deployed on a centralized system can never ensure. Therefore, the question an organization or individual needs to ask before choosing between either of them is; what is their priority? Cost or security? The choice will really depend on the priority and the requirements of the parties.

Conclusion

The application of Blockchain or Distributed Ledger Technology in smart contracts is, without doubt, phenomenal and ingenious. This technology not only automates the entire process, thereby reducing time loss and cost of intermediary, but at the same time provides a double layer of security that ensures transparency in the transactions involved in the contract. It presently remains in the experimental phase in most industries, for the complications involved in deploying and managing a smart contract acts as the deterrent. Also, the smart contracts are created in the form of codes so the non-technical parties will require the assistance of an expert in order to confirm that the translation of terms of the contract into codes is accurate. This may create reluctance among parties to endeavour to move from traditional contracts to smart contracts.

The solution here might be to start using the smart contracts based on Blockchain in bits and pieces, without trying to leverage this technology to completely capture a contract arrangement. The potential use of this technology in real-time auditing and risk management is revolutionary and therefore, will be beneficial for the purposes of compliance. This technology is here to stay and no area is going to stay untouched. Smart contracts are definitely going to transform the role of lawyers and other intermediaries involved in the process of contract formation and execution, beyond the traditional boundaries. The sooner we realize this, the sooner we can start adapting to this change.

References

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Protection and role of intangible assets in M&A transaction

By

Abanti Bose

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October 25, 2021

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bigstock-Intangible-Assets-Concept-Fol-114125294 (1) — Image Source: https://rb.gy/6jmb4m

This article is written by Nimish Dhagarra, pursuing Diploma in M&A, Institutional Finance and Investment Laws (PE and VC transactions) from LawSikho. The article has been edited by Tanmaya Sharma (Associate, LawSikho) and Smriti Katiyar (Associate, LawSikho).

Introduction

In the past decade, we have seen the world economy shifting from the physical realm to the digital realm and for the last few years, we have been in a digital overdrive. A new era is unfolding before us where the digital economy is thriving and growing at a fast pace. Since this digital drive, the business has shifted from providing physical goods and services to providing information and digital goods/services. This aspect of business has greatly changed the way we do mergers & acquisitions and has made the procedure of merger & acquisition so flexible and dynamic that it requires a great deal of attention to detail when entering such transactions, at the same time making the procedure smooth and attractive. Businesses all around the world need to understand the importance of intangible assets in their business operation from its ownership to acquisition to its use.

In the present times, a significant part of the value of deals involving mergers & acquisitions is allotted to intangible assets. According to the EY based on annual reports of top 500 listed companies in India by market capitalization from FY 2017 to FY 2020, 31% of the enterprise value of the acquired companies was allocated to ‘identified intangible assets’. [1] Today the success and failure of a company can be determined by how they capitalize their intangible assets, at the same time minimizing the risk associated with them. As businesses now are mostly driven by such assets, it is important for companies to identify-value-protect-use and merges such intangible assets daily, evaluating the future economic benefits that may arise from them. So when a company has an intangible asset, the 5 questions that they need to ask themselves is-

1. What are the intangible assets used in business?

2. What is their value and hence level of risk?

3. Who owns it? Could I sue or can someone sue me?

4. How may it be better exploited?

5. At what level do I need to ensure my intangible assets risk?

What are intangible assets?

According to Indian Accounting Standard Intangible asset is:

“An identifiable non-monetary asset, without physical substance, held for use in the production or supply of goods or services, for rental to others, or for administrative purposes”.

It can include inventions, intellectual property rights, goodwill (brand reputation/brand value/customer loyalty), brand equity, technical know-how, software, data, trade secrets, proprietary technologies, licence etc to name a few. Either a company acquires such assets separately from a third party, develops such assets internally which can be very valuable or acquires them in a business combination. According to Indian Accounting Standards for measuring and recognizing an intangible asset, it should be identified first and control over such assets must be established.

Identification of intangible assets

To identify such assets, it must be distinguished from goodwill as goodwill is a subset of intangible assets, it only arises as a result of business acquisition and represents the difference which the company pays and the fair value in the market. One of the ways to distinguish between intangible assets from goodwill is ‘separability’, that is whether an asset if separated could be sold, rented or exchanged. But this is not a necessary condition as there can be such a situation that does not fulfil such a separability test. Other than this, intangible assets can be determined through contractual or legal rights.

Control of intangible assets

An entity controls an asset if the entity has the power to obtain future economic benefits flowing from the underlying resource and to restrict the access of others to those benefits. The capacity of an entity to control the future economic benefits from an intangible asset would normally stem from legal rights that are enforceable in a court of law. In the absence of legal rights, it is more difficult to demonstrate control. However, the legal enforceability of a right is not a necessary condition for control because an entity may be able to control the future economic benefits in some other way. [2]

Future economic benefit

The future economic benefits flowing from an intangible asset may include revenue from the sale of products or services, cost savings, or other benefits resulting from the use of the asset by the enterprise.

Role of intangible assets in M&A

Competitive advantage

It is a simple equation to understand that having an asset in the market that your competition in the market does not possess, puts you in an advantageous position, at a higher pedal than that of other players in the market. Having a unique intangible asset as a value driver for your company puts the company in such a position in which they have the opportunity to dominate the market share by attracting various stakeholders to invest in your company and increasing the total value of the company in the market.

Tax purpose

For tax amortization, Section 32 of the Income Tax Act,1961 talks about the amortization of intangible assets which can be grouped into a block of assets and can be amortized at a common fixed rate of 25% for tax purposes. The Government of India vides Finance Act 2021, has excluded ‘goodwill of a business or profession’ from the definition of a block of the asset. By virtue of this amendment, goodwill of any nature shall henceforth not be considered as a depreciable asset for the purpose of tax amortisation under the India Income-tax Act. [3]

For business combination

When it comes to a business combination, whether it is a merger or acquisition or amalgamation or a joint venture, the value of intangible assets can be a driving force in determining the main essence of the deal as in present times, as mentioned above intangible assets are allotted most of the value when it comes to the valuation of such a deal. Every player in the market tries to get its hands on such assets to create customer value, increase its value in the market and have a competitive advantage over others. Now it is up to the company whether they acquire such assets separately from a third party or engage in such business combinations.

Licencing and franchising

When it comes to an intangible asset, like any other assets they can be licensed- allowing the other party to acquire rights to use the product or service where the ownership remains with the company or franchising the assets in which the company let the other party enjoy the ownership of the assets in payment of a fee provided such usage will be under the supervision and control of the company.

Preserving the asset value

This is a secondary benefit of having an intangible asset as it indirectly helps the company in preserving the value of all assets in general, in which the company intends to protect such assets to identify and monitor risk related to such assets and motivate them in creating a safeguard mechanism to preserve the value of intangible assets and creating a balance with that of other tangible assets.

Types of intangible assets

Goodwill

It is one of the important subsets of intangible assets. It is treated differently from intangible assets. There is a thin line between the two but both of them have similar characteristics. It is important to note that goodwill only arises when one company acquires the others by paying a premium for the brand value, customer loyalty and brand reputation. So the premium here, the extra money paid by the acquirer above the net value of the company.

After breaking down the word goodwill, it simply means the trust, credibility and reputation that a company builds and earns over a period of time. It is only recorded in the balance sheet after it is acquired in a merger or acquisition.

Intellectual property

One of the most trending and important domains of intangible assets and areas of practice in the corporate sector and business, intellectual property according to the World Intellectual Property Organization “ Intellectual property (IP) refers to creations of the mind, such as inventions; literary and artistic works; designs; and symbols, names and images used in commerce”. [4]

The company that possesses such intangible assets should be aware of the rights and the value of such property. Why? So as to be rewarded for their creation, for growth and encouragement, to get recognition of the protection of the IP so that no unauthorized use of their asset without their consent is being done for profit earning by its competitors. Some common types of intellectual property-

Patent- A document that protects an invention and creates exclusive rights for the creator of the invention for a limited period.
Copyrights- These are rights that are concerned with protecting the work of human intellect such as literacy and artistic work.
Trademark- It is a tool that helps the companies in the protection of brand name, logos and unique designs of the company.
In India, under the following statutes, IP right protection can be taken-

Brand equity

It refers to the consumer perception of the company. It is the value of the brand that is created by the consumer about the company in the market after interacting with its goods and service. The consumer is willing to pay extra to use the goods and services of the company as it has high brand equity in the market. Depending on the reaction, brand equity can be positive or negative. This concept helps companies in increasing the sales of their goods and services. It is important to note that brand equity is different from goodwill as a company owns the brand and from there it earns goodwill over a period of time.

Licensing and franchising

As mentioned above, these are the agreements between the intangible asset or intellectual property owner and others who are authorised to use such assets for business purposes in exchange for a fee or royalty payment.

Customer list and R&D

Customer list refers to the list of old customers of the company that they have built over a period of time. It carries with it significant future value. It helps in future projects of the company as they have targeted customers which will help them market their products and service.

Research and development is also considered an intangible asset as it is an activity in which the company constantly tries to develop, acquire or use technical knowledge for developing new products and updating the existing ones. They are termed intangible assets due to their economics, which would result in higher sales for the company.

Intangible assets can also be classified based on the below table

Marketing Related	•Trademarks, trade names, service marks, collective marks and certification marks, •Trade dress (unique colour, shape or package design), •Newspaper mastheads, •Internet domain names, •Non-competition agreements.
Customer Related	•Customer lists, •Order or production backlog, •Customer contracts and the related customer relationships, •Non-contractual customer relationships.
Artistic Related	• Plays, operas and ballets, •Books, magazines, newspapers and other literary works, •Musical works such as compositions, song lyrics and advertising jingles, •Pictures and photographs, •Video and audiovisual material, including motion pictures or films, music videos and television programmes.
Contract Based	•Licensing, royalty and standstill agreements, •Advertising, construction, management, service or supply contracts, •License agreements, •Construction permits, •Franchise agreements, •Operating and broadcasting rights, •Servicing contracts such as mortgage servicing contracts, •Below-market employment contracts that are beneficial from the employer’s perspective, •Use rights such as drilling, water, air, mineral, timber-cutting and route authorities.
Technology Based	•Patented technology, •Computer software and mask works, •Unpatented technology, •Databases, including title plants, •Trade secrets such as secret formulas, processes or recipe.

How to protect intangible assets?

Asset protection is a good corporate governance practice that a company can adopt. Just as a company manages the physical risk associated with tangible assets, in the same way, the risk associated with intangible assets such as infringement of intellectual property, issues related to human capital such as codifying/sharing of knowledge, staff training of handling of intangible assets and brand/reputation issues such as poor employment practice, the conduct of management leading to a leak of information, have to be mitigated and to do that a company needs to build a mechanism for their intangible assets so that they can protect their intangible assets.

Non-Compete Agreement/Non Solicitation agreement

During and after such merger and acquisition, the company has the intangible assets should make the other party sign a non-compete agreement preventing the other party from creating such assets for themselves that would be in direct competition against the company after the end of the relationship between them. This agreement puts a restriction on the other party, not to compete with the company for a certain period after the ending of their business relationship.
A non-solicitation agreement should also be signed though it is less restrictive; it prevents the other party from engaging the company’s clients, vendors, suppliers and employees.

Confidentiality agreement

As we know, when such a transaction of merger and acquisition happens, there will be a bundle of brand strategy, technical information and knowledge, trade secrets, customer list/data etc that will be shared, which means there are high chances of leakage of information from both the parties. Hence a confidentiality agreement must be signed between the parties ensuring any proprietary information shared between the parties is protected and should not be used for competitive purposes. Any leak of information will result in the imposition of hefty liability for damages.

Registration of intellectual property

The total value of IP is significantly growing in various countries all over the world. That being said, the cost of IP litigation, dispute and claims are also rising day by day that’s why to recognize, protect and enforce the rights of intellectual property, the companies should register their Intellectual property with the required authorities so that they can protect their IP from such infringement and also at the same time recover the damages incurred due to such infringement.

Internal mechanism for risk evaluation and safeguards

As the companies are dealing with intangible assets daily, many companies have developed proactive guidelines for evaluating the value of such assets, the risk associated with them and the course of action to mitigate such risk. Companies are also forming an internal crisis response team that helps the company protect against cyberattacks, corporate espionage, data privacy/theft etc. HR is also tasked with the responsibility to evaluate the behaviour of the company and use proactive methods to influence adverse behaviours in organizations so that the reputation/ brand value, relationship with all the stakeholders are up to the standard.

Insurance

At the end the companies cannot account for all the events and risks that may be associated with the intangible assets as there are situations that are beyond the control of company management, therefore companies are buying insurance products to address the issue related to the intangible assets and transfer some of the risk or damage out of their balance sheet.

Conclusion

The digital era is unfolding before our eyes and the landscape of merger and acquisition is changing itself, creating opportunities at the same time exposing the companies’ business operations to new risks. With the usage of intangible assets by companies at such a high level, organizations all around the world need to find new ways to protect, and at the same time exploit their intangible assets by implementing such risk management practices and safeguard mechanisms in place so that they are prepared to face the constantly changing landscape of not only merger and acquisition but business in general. This will require companies to constantly engage themselves in finding new ways to deal with the internal and external risk that could impact their intangible assets and in turn compromise their competitive position in the market.

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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Everything to know about consultancy agreements

By

Rachit Garg

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October 25, 2021

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This article has been written by Dhruv Mathur, pursuing a Diploma in Law Firm Practice: Research, Drafting, Briefing and Client Management from LawSikho. It has been edited by Kritika Sharma (Associate, LawSikho) Smriti katiyar (Associate, LawSikho).

Table of Contents

Introduction

Specialisations have always been given higher regard in the field of Education. To be specialised in a particular area and to have proficiency in that field always puts you in an advantageous position over others. Individuals having such expertise are often known as consultants. When a specialised individual provides valuable knowledge to individuals and big companies, it is generally referred to as ‘Consultancy’. People often confuse consultancy with advice, but in reality, giving someone advice and consultancy are two very different things. One significant difference in advice and consultancy is advisors advise the company for an extended period regarding the business. When the firm faces an issue, these advisors help the business. In contrast, consultancy is related only to a specific project where the consultant provides their skills and knowledge to a company. When the project has been completed, the tenure of these Consultants is completed.

There is no legal definition defining a Consultant. The term can be applied to any individual who provides expert assistance to others who do not have the required workforce in the specialised field and may work for them for a short or even a more extended period. But when these Consultants provide their valuable inputs to the others, there must be an agreement between the consultant and the other party that defines their obligation to each other. These Agreements shall not be just mere handshakes or oral agreements but actual written agreements. Such agreements are known as Consultancy Agreements.

Consultancy agreements

Consultancy Agreements are contractual documents that define the fiduciary relationship between the company and the consultant providing their services. These agreements are binding and can have legal consequences. Suggestion: the above sentence can be constructed in the following manner- In case the provisions of the consultancy agreement state that; if a conflict arises (when a consultant is paid accordingly but is unable to meet the business’s expectations), the company can approach the Court to claim compensation.

Before getting into a consultancy agreement, the consultant should ensure that their rights and interests are protected and that they are fairly compensated for the services they will provide to the business. From a Company’s point of view, they should make sure that the consultant does not reveal their confidential information to the public. These agreements help in protecting the company’s information.

Types of consultants

Some of the different types of consultants a company can hire to work on a particular project are:

IT Consultant- Theses Consultants generally help the company implement IT strategies and solutions, which will help the company grow efficiently.
Financial Consultant- Financial Consultant keeps track of the client’s financial transactions and provides financial management information by preparing financial status analysis and reports.
HR Consultant- As few organisations develop, they depend on HR specialists to guarantee that they meet their lawful commitments as a business while fostering a practical and reliable onboarding framework.
Legal Consultant- Legal consultants provide legal advice and guidelines in the matter of law. They draft legal documents and agreements, manage negotiations on behalf of the company and ensure company legal compliance.

Benefits of a consultancy agreement

Consulting Agreements can have many benefits for the business and the consultant.

Benefits to the consultant:

Higher Earnings- When a Consultant signs a Consultancy Agreement, he is generally in charge of asking for a reasonably higher earning depending on the quality and quantity of the specialised skills and knowledge he provides and how long he works in that project.

Tax Benefits- Since a Consultant is not officially employed, state taxes are not deducted from the paycheck, contributing to their high earnings. Lower Income Tax is also a bonus for a Consultant.

Benefits to the company

Unique Expertise- When Consultants are hired, they provide the best of their skills and knowledge on their project, which helps the company grow and eliminate its competition.

Tax Considerations- Tax laws permit the business to treat employees and consultants suddenly. Lessened Tax responsibility is probably the best advantage a company can get from utilising an independent Consultant.

Essential clauses under consultancy agreements

A consultancy Agreement may be drafted according to the needs of both parties as different clients may have other requirements. Few essential clauses can be included in the consultancy agreement, which can be helpful for both parties.

Recital Clause: Firstly, there must be a recital clause that should mention the effective date of the agreement, the details of both the parties and the business these parties will be engaged in. This clause should give a detailed description of the client’s services to avoid any future liabilities.

Term and Termination Clause: This clause is a binding provision that talks about the critical function of defining the period for the agreement. In easy terms, it represents the start and end date of the contract. This clause helps the business to allocate the resources appropriately for the present and plan for the future.

In case of breach of a contract by any party, this clause specifies that the agreement can be terminated. It also states other situations where the party thinks that the agreement should be terminated.

Confidential Clause: This is a crucial clause, and it must be included in the agreement to protect the company’s confidential information. This clause should also state that even after the agreement’s termination, the consultant shall not reveal any of the company’s confidential information for a specific time to the public. If the consultant reveals any of this information to the public, he shall be held liable for breach of the contract.

Indemnification: The Indemnification clause outlines insurance for compensation for any damages and losses. If any harm is done to the other party, the party who has caused such harm to the other party shall compensate for all the damages and losses.

Dispute Resolution: This clause discusses what course of action should be taken in case of a dispute or a conflict. It helps the parties in avoiding court proceedings and resolve the dispute via Arbitration, Mediation or Settlement.

Apart from these clauses, the clause relating to Non-Competition, Non-Solicitation must be added in a consultancy agreement so that the consultant may not start a business which may harm the reputation and goodwill of the company.

Conclusion

A Consultancy Agreement is an essential document when a Company hires an independent consultant for the company’s benefit. It protects the interest of both the consultant and the company employing the consultant. Having a consulting agreement with each independent consultant will keep the company in a peaceful state and help the company run smoothly and according to plan. It is a seamless collaboration for the success of a project and the company.

References

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Controversies related to the Goa Bhumiputra Adhikarini Bill, 2021

By

Rachit Garg

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October 25, 2021

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This article is written by Surbhi Jindal, from Dr. B.R. Ambedkar National Law University, Sonipat, Haryana. Through this article, she attempts to highlight the controversies related to the Goa Bhumiputra Adhikarini Bill, 2021.

Table of Contents

Introduction

On July 29, 2021, the Government of Goa introduced a Bill named the ‘Goa Bhumiputra Adhikarini Bill, 2021‘ in the Goa Legislative Assembly. The Bill was passed on July 30, 2021. The Bill’s main objective was to provide a proper mechanism for granting ownership rights to the people of self-occupied dwelling units.

The passage of the Bill sparked a lot of controversies that startled around the Bill. The opposition, the tribes, and even a few members of the Government started raising questions on the Bill and termed it an insult to Goa’s original inhabitants. After these controversies arose, the Chief Minister of Goa, Pramod Sawant, said that the Bill would be reintroduced in the next assembly session.

Hence, to understand the matter in detail, it becomes essential to understand the nature of the Bill and the revolving controversies around it. What is the opinion of various commentators, and what the Government’s stance is? Through this article, we shall ascertain the critical features of the Goa Bhumiputra Adhikarini Bill, 2021, in detail. Furthermore, we shall look at the contentions raised by the people around this Bill and how the Government responded to it. This article will cover all the details that you need to know about the Bill exhaustively.

Critical features of the Goa Bhumiputra Adhikarini Bill, 2021

The Goa Bhumiputra Adhikarini Bill, 2021, was introduced by the Smt. Jennifer Monserrate, Minister for Revenue for the State of Goa. According to the Bill, the main objective is to provide ownership rights to the people of self-occupied small housing units to live a life of dignity and self-respect.

The key features of the Bill have been summarised as follows:

The Act will be known as the Goa Bhumiputra Adhikarini Act , 2021, and it shall apply to the whole State of Goa.
‘Bhumiputra’ will be the person who has resided for at least 30 years in the State of Goa before April 1, 2019.
‘Bhumiputra Adhikarini’ will be the committee constituted under Section 3 of the Act. The Government may notify the constitution of the Committee in the official Gazette. The Committee will comprise of the following to perform the functions assigned under the Act:

Deputy Collector as its Chairperson
An official from the Town and Country Planning Department
An official from the Forest department
An official from the Environment Department
Mamlatdar of respective taluka

After the Bhumiputra Adhikarini has passed an order to declare the person as the dwelling unit owner, the person has to pay the amount of the dwelling unit that is equivalent to the market value of the land to the Government. But if the land is not of the Government, then the amount shall be returned to the owner of such land.
A person can apply for the ownership rights and the prescribed documents to Bhumiputra Adhikarini within six months of the passing of this Act. The dwelling unit on which the person is claiming ownership rights should be constructed before April 1, 2019, and the area must not be more than 250 sq. m.
A Bhumiputra Adhikarini should invite the objections on receiving the application within 30 days by way of public notice.
An aggrieved party can file an appeal to the decision of Bhumiputra Adhikarini in the Administrative Tribunal within 30 days of the judgment being passed. The order passed by the Administrative Tribunal shall be final and binding. No other Court has the power to decide or entertain the jurisdiction over matters decided by the Bhumiputra Adhikarini or the Administrative Tribunal under this Act.

Controversies relating to the Goa Bhumiputra Adhikarini Bill, 2021

The first significant controversy on the Bill was including the term ‘Bhumiputra’ in the Bill. The opposition parties, including Congress, Goa forward party, Maharashtrawadi Gomantak Party, and the Aam Aadmi Party, have asserted that the term Bhumiputra is an insult to the original inhabitants who had lived in Goa for generations.

The BJP ST morcha handed a Memorandum to the Government stating that the term had hurt the communities’ sentiments and feelings, especially the tribal community. If this Bill had been brought in force without proper rectification, then it could have disastrous effects.

The Memorandum also stated that the three tribal communities, Kunbi, Velip, and Gauda, identify themselves as the original and foremost inhabitants of the land. They identify themselves as the sons of the soil. The literal meaning of the term ‘Bhumiputra’ is the sons of the soil. Hence, the term in the Bill is contentious.

The opposition parties have criticized the Government, saying that the Bill aimed at appeasing the migrant vote bank. The other contention raised by the opposition is that the Bill was passed in haste in the assembly on July 30, 2021. The Bill was passed on the last day of the session by a voice vote in the 40-member house. Also, a proper procedure has not been followed for passing the Bill.

No suggestions have been invited from the public, and there has been no debate on the Bill in the assembly. A few opposition parties have also termed it as a ‘Bill for mockery of Goans’. The Congress party demanded that the Bill be immediately withdrawn and may be reintroduced in the assembly. Furthermore, it said that the Government of Goa should restore the faith and confidence of the Goans.

Former Advocate General Carlos Alvares Ferreira said that the Bill was defeating the doctrine of the rule of law which is an essential element of the law. Ferreira also stated that the Bill was an attempt to assault every honest citizen of Goa. It was an attempt on the part of the Government to fool the innocent citizens letting them remain in false hopes of receiving money. He further termed the Bill as a ‘total mockery of the law’.

Former Election Commissioner Prabhakar Timble termed it as the ‘smart politics manufacturing bad laws.’ On the other hand, former MLA and veteran legal practitioner Uday Bhembre said that the laws made without elaborate discussion are inherently dangerous. If such laws are enacted, then it harms the interests of the people of the State and turns the State into a lawless state.

Government’s stance on the Bill

The Chief Minister of Goa, Pramod Sawant, on introducing his objective of bringing up such Bill said that,

“In the last so many years there have been cases of homes built by a person or his parents but the land is not in his name. There is always a sword dangling over their head that someone will file a case against them (over ownership). The land is of different kinds like ancestral property, communidade property, and panchayat land. Everyone had wished for the house that they lived in, their generations lived in, to be theirs.”

On seeing the angered tribal population, he had assured that the word ‘Bhumiputra’ would be replaced by the term ‘Bhumi’ in the Bill. Now, the Bill will be known as ‘the Goa Bhumi Adhikarani Bill, 2021’. The Bill will be reintroduced in the next season of the Legislative Assembly. Suggestions were also invited from the public from August 4 onwards on the Bill. He asserted that valid suggestions by the public would be taken into consideration while introducing the Bill in the next assembly session.

The Hon’ble Chief Minister has said that the Bill was brought for the benefit of Goans. It was drafted after careful considerations, and its primary purpose was to benefit the Goans whose houses were facing the threat of demolition.

He asked, “There are many who are saying that this Bill has been brought for the benefit of migrants (who may be staying in illegal slums). I wish to ask them, ‘when did these migrants come? When did they build their houses? When did they encroach upon government land and common land? And if they are squatting on government land have they paid for it? Or have those lands been allowed to be taken over for free?”

Furthermore, some people even support the bringing of this legislation. Former Chairperson of State law Commission and former BJP MP Narendra Sawaikar has termed the Bill as significant land reform. The Bill, if enacted, will provide the ownership rights to the number of Goans. In his words, “In the absence of ownership records, they could neither repair their homes nor avail any of the welfare schemes of the Government. Amendments may be brought to the legislation as needed over time, but the very fact that the Bill came into existence on the 60th year of Goa’s liberation underscores its significance.”

While a comment by retired bureaucrat and legal commentator N D Agrawal highlights two very critical points. First, that no bill will be passed without proper scrutiny by the various ministries, and the second that our system is so slow that the present Bill will take time to come into force.

Since the Bill pertains to land-related matters, the various ministries will adequately examine the legislation. The Bill needs the permission of the President, which is not an easy task. Supporting this statement, he highlighted the example of the Goa Requisition and Acquisition of Property Bill that the Goa Legislative Assembly passed in 2017. The Bill was introduced for the requisition and speedy acquisition of the property for specific purposes, and it still awaits the permission of the President to come into force.

Updating on the status of suggestions on the Goa Bhumiputra Adhikarini Bill, 2021, the Chief Minister of Goa on September 10, 2021, has said that the Government has received around 150 suggestions on the Bill. He said that the Government would take account of all the suggestions from the people, hold deliberations, and then take a decision accordingly.

Conclusion

It should be noted that the Government of Goa is ready to amend its mistakes. According to the statement made by the Chief Minister of Goa, it certainly looks like that the Bill was brought with a bona fide intention. It was introduced with the sole purpose of benefiting the people of Goa.

But it also cannot be ignored that the Goa Bhumiputra Adhikarini Bill, 2021, had certain loopholes in it. The Government of Goa shouldn’t have passed the Bill hastily in the assembly. It should have invited suggestions from the public and conducted a proper debate on the Bill. Also, the inclusion of terms like ‘Bhumiputra’ should be taken into consideration beforehand and used diligently.

The mistakes committed by the Government of Goa could have been avoided if it hadn’t been so hasty in its work. As the Chief Minister said that the Bill had been prepared diligently, if it could have been more diligent following the procedure, it would not have to face such criticism. Also, the Government should keep in mind that they should follow a proper procedure to pass the Bill this time so that the opposition doesn’t see any loophole to satisfy their political agenda.

Nevertheless, the Government has said that the Bill will be reintroduced in the next assembly session. We can hope that the Government incorporates all the valid and reasonable suggestions by the public in the Bill.

References

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Joint Venture Agreement vs. Memorandum of Understanding

By

Abanti Bose

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October 25, 2021

0

This article is written by Yamini Jain, pursuing Diploma in Advanced Contract Drafting, Negotiation, and Dispute Resolution from LawSikho. The article has been edited by Prashant Baviskar (Associate, LawSikho) and Smriti Katiyar (Associate, LawSikho).

Introduction

In order to make a comparison between a Joint Venture Agreement and a Memorandum of Understanding (“MOU”), it is essential to understand the fundamental nature of the two of them. Any arrangement among two or more parties to cooperate so as to run a business or achieve a commercial aim is commonly known as a JV. On the other hand, an MOU is a formal written agreement between two or more parties outlining the aligned intentions of the parties. The niceties under the abovementioned concepts have been discussed in detail below.

What are Joint Venture Agreements?

Its nature majorly depends on its own underlying characteristics and facts upon the resources and desires of the involved parties. It is a symbiotic business alliance between multiple companies wherein the complementary resources belonging to the partners are shared mutually for their due perusal. The most significant features of a JV would include its effective business strategy for the enhancement of marketing, positioning, and acquisition of clients that has stood the test of time.

Why create a Joint Venture Agreement?

There are a few reasons why two parties might decide on a joint venture agreement:

It allows them to share the reward and risk, which is ideal for minimizing losses.
It helps them each grow as a separate company without seeking capital from other sources.
It gives them access to wider markets.
It permits them to share resources with each other.
It allows them to develop new products.
It provides them with greater skills and expertise.
It helps them diversify their interests and products.
It offers more flexible control over a relationship as opposed to stricter agreements.

Some of the primary purposes of establishing a JV include leveraging resources such as labour, capital and technology to aid in the achievement of economies of scale. JVs can limit individual exposure by enabling sharing of liabilities and thereby offers an opportunity to the parties to jointly manage the risks associated with setting up new ventures. Further, it provides greater market access and is heavily utilized by companies to expand their businesses in other consumer segments, geographies and product markets. This, thereby, enables flexibility in diversifying business by allowing companies to enter into non-core businesses while maintaining an easy exit option.

What is a Memorandum of Understanding?

An MOU is a document that sets out the intent of a common line of action of the parties. It indicates that the parties to it have reached an understanding with a common notion and are prepared to proceed for the next action. Although it does not legally bind the parties, it serves as a firm declaration of the imminence of a binding contract. Such documents are frequently used to facilitate negotiations in commercial transactions as well as in international relations. Thereby, MOUs are generally pursued by the partners of a JV Agreement in the early stages of a negotiation, essentially serving as the foundation of a JV in the future.

Steps involved in drafting MoU

Step – 1: Planning Phase: each party expresses its requirements, objectives, goals, and negotiable points.

Step – 2: Drafting Phase: parties then draft the initial MoU

Step – 3: Negotiating phase: the MoU typically outlines guidelines that govern the mediation process.

Step – 4: Timeline negotiation: on completion of negotiations, parties establish a timeline for the MoU to take effect, when it shall expire and any rules regarding termination.

Step – 5: Restrictions: finally, each party adds any restrictions, disclaimers, privacy statements, etc., and signs the final MoU.

Important Clauses of Joint Venture Agreements and MOUs

Though a JV is usually beneficial, there exist certain concrete drawbacks to it if not drafted in a clear fashion. Further, since a MOU marks the starting point of the establishment of a JV, it is best to have clarity in jotting down the clauses under it to avoid any conflict at the stage of executing a contract in furtherance of such MOU. Some of the key clauses have been described hereunder for both JVs and MOUs:

Joint Venture Agreement

Recitals and definitions

It is crucial that the parties and their business address are mentioned and the purpose of execution of such agreement is clearly specified at the beginning of the document. Following the recitals, the first and most important cause of any agreement shall be the ‘definitions’ clause that ought to define all key and unique terms in the agreement in clear and specific words to avoid any ambiguity in its meaning at any point during the term of the agreement or post its termination if in dispute.

Structure of the Joint Venture

Since there is no stringent criteria upon which the structure of a JV may be determined, it is generally upon the parties to ascertain the same in this clause. They may enter into either of the two kinds of JVs, contractual or a separate legal entity established under the Companies Act, 2013 for the purposes of the JV. It is pertinent that this clause lists the details of the formation of the JV along with the registered office and business address of such JV.

Contribution of parties

The quantum and nature of the investment to be made by the parties in the joint venture is decided by them at their discretion. It can be in the form of intellectual property, equity, debt, capital, or distribution channels, management skills, machinery, goodwill, or any other non-monetary consideration. It can also be determined on a pro-rata basis or otherwise.

Distribution of shares

The proportion of ownership of any company is dependent on the proportion of shares distributed amongst parties. It may be determined on the basis of capital contribution or mutual agreement, and its ratio further has an impact on the decisions of the JV.

Management and financial arrangements

The representation of the parties in the company is dependent on the criteria set out in this clause. It may depend on the shareholding proportions or a management committee may be appointed for short term projects. Along with the internal functions of the company, the parties also contemplate their financial arrangements in respect of the profit-loss sharing ratio or the expenditure to be borne by each.

Deadlock resolution

A deadlock is a situation where parties holding equal powers cannot arrive at a common ground in respect of a particular decision. The various ways in which such deadlock could be resolved include a casting-vote method, an independent manager, gin and tonic method, the third-party swing vote, Russian roulette, or Texas shootout, etc.

Other standard clauses

A JV Agreement shall stipulate various other conditions highlighting the rights and obligations of the parties, their representations and warranties, a covenant to keep each other indemnified of any losses, non-compete, confidentiality, dispute resolution, force majeure, termination, exit mechanism, etc. so as to avoid conflict on its terms in the future, as far as possible.

Memorandum of Understanding

Purpose of the arrangement

This clause shall provide for the exact intent of the parties behind the execution of an MOU and the nature of the commercial transaction that they wish to enter into. It may be for the purposes of a sale, investment, consultancy, etc. thereby setting out the basic terms for it.

Intent to make the MOU legally binding, wholly or partially

As noted above, it is the intention of the parties which determines the binding nature of a MOU. The language of the document is crucial in identifying such intent, whereas, a clear or specific mention of the same aids in avoiding multiple interpretations of the same.

Obligations of the parties or the commercial understanding

This clause states what the parties are intended to do or refrain from doing as per the conditions stipulated in the MOU. Such obligations could vary from the time of performance, payment preconditions, encumbrances, etc. on account of each party individually and simultaneously.

Confidentiality

Often MOUs are entered into with an intention to get the parties to commit to the transaction before actually consummating it. Commercial transactions often have implications on the market movements, especially when these are entered into between two entities that hold a significant market share. In some cases, there may be an ‘announcements’ clause permitting the sharing of the deal, if that benefits the parties to gather momentum or market traction.

At the stage of entering into an MOU, the process of due diligence has not begun, and therefore, a lot of confidential information isn’t shared. However, it is possible that the deal itself or the possibility of the transaction itself is likely to have implications, and therefore, it is required to be kept confidential.

Term/termination

MOUs may not have a definite term and may last up to the time when a definitive agreement is entered into or up to specific work is done or up to the time when something is delivered. It may also have a specific term indicated in it. Together with the terms, it may also have a termination clause that provides either of the parties a right to terminate the MOU at convenience.

Stamping of a MOU

MOUs may not be stamped, particularly if they are not intended to be binding on the parties. However, where the intention is to create legally binding covenants and obligations through such MOU, it ought to be duly stamped in a manner as is applicable to any other agreement of like nature.

Conclusion

A wide range of investments has positively impacted the participation of corporations, especially in the fields of infrastructure, energy, construction and mining, so as to combine their forces and employ their specialities and financing routes, together. The exchange control liberalizations, in the recent past, on payments to foreign technology providers has further spurred activities pertaining to JVs in the country. JVs and MOUs are two such distinct documents that are mistaken to have a similar purport. However, the major difference in the two lies in the intent and timeline of their execution. As has been highlighted hereinabove, MOUs act as a precursor in the stratification of the execution of a JV while the negotiations for the same are under process.

References

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Everything you should know about a contingency contract

By

Rachit Garg

-

October 25, 2021

0

contract — Image source: https://rb.gy/wg42es

This article is written by Ronika Tater, from the University of Petroleum and Energy Studies, School of Law. In this article, she discusses the essential ingredients of a valid contract and the term contingency contract with the support of relevant provisions of law and cases.

Table of Contents

Introduction

In order to understand the concept of contingency contract, it is pertinent to understand the term ‘contract’ and its role in the formulation of trade, business, transactions and commercial relations. The term ‘contract’ is defined in Section 2(h) of the Indian Contract Act, 1872 ( hereinafter referred to as the ‘Act’) and its essential ingredient is an agreement and the agreement should be enforceable by law. The law of contract envisages the enforcement of a voluntarily created civil obligation. Though, some agreements satisfy the requirements of a contract such as a proposal, acceptance, consideration, etc., they are not enforceable by law.

Essentials of a valid contract

According to Salmond, a contract is an agreement formed to define the obligation between two parties through which rights are acquired by one party or forbearance on the part of others.

Agreement

An agreement is the first and vital essence of a contract. Section 2 (e) of the Act defines ‘agreement’ as every promise and every set of promises, forming the consideration for each other. The two essential ingredients of an agreement are as below-mentioned:

Offer and acceptance

An agreement comes into existence when two or more parties agree upon the same thing in the same sense. The case of Carlill v. Carbolic Smoke Ball Co., (1893), declared that a contract is an agreement enforceable by law by a result of a proposal and acceptance of the proposal when two minds come together.

Consent

The contract should be formed with the consent of two or more parties i.e., consensus ad idem and devoid of coercion, undue influence, fraud, misrepresentation, or mistake.

Competency of parties

Competent parties mean the legal ability of the parties to enter into a valid contract. Section 11 defines the qualification that every person should satisfy. These are as follows:

Age of majority
Sound mind
Not disqualified from contracting under any provisions of law

Lawful consideration and object

The consideration and object of the agreement should be lawful and quid pro quo. Section 23 states that the consideration or object of an agreement is lawful unless it is not contrary to the provisions of any law, or defeats the fundamental principle of ‘Ex turpi causa non oritur action’ which means that no right of action arises out of the immortal cause of consideration.

Not expressly declared to be void

Every enforceable agreement should be lawful even if the law shall not declare it to be either illegal or immoral. Such an agreement is expressly and impliedly prohibited by law.

Other essentials of a valid contract

The essentials of a valid contract are not expressly mentioned under any provision of the Indian Contract Act. For instance, if two parties have an intention to create a legal relationship on fulfilment of legal formalities, then there exists a certainty of meaning and the possibility of performance. However, it is impliedly applied before entering into a valid contract.

What do we understand by the term contingent contract

The formation of a contract is the first stage and the next stage is the fulfilment of the object by the parties. Once the object is fulfilled, the liability of either party comes to an end. After that, the contract is said to be discharged in various ways such as by performance, the impossibility of performance, agreement, or breach. A contingent contract is a part of the performance. Section 31 describes ‘contingent contract’ as a contract to do or not to do something or if some event collateral to such a contract does or does not happen. It is a kind of contract which is subject to an uncertain nature or does not have an absolute type of condition. Even though the contract is a valid one, the parties may agree that the rights are going to be enforceable on the happening of an event. Thus, the performance of the obligations under a contract depends on a contingency.

For instance, a contract to pay a sum of money on the expiry of a certain time period of three years or the death of a person is not a contingent contract; these events are of a certain nature. However, a contract to pay a sum of money on the destruction of a building by fire is a contingent contract as the condition of uncertain nature. It also points out an essential element that all contracts of insurance, guarantee, and indemnity are contingent contracts as it depends on a future event. In N. Peddanna Ogeti Balayya v. Seinivasayya Setti Sons, (1954), declared that a contract of life insurance is also a contingent contract.

Features of contingent contract

Some of the features of the contingent contract are as below-mentioned:

Contingency to be collateral to contract

Collateral to a contract means that the existence of the contract subsists but its performance remains in the event of happening or not happening. For instance, a contract to pay a sum of money can only arise on the loss of the ship. This states that the contract is already there and it is not arising on the loss but the performance can be demanded on the loss of the ship. In the case where the contract is established to buy land, which is a subject matter if an ongoing dispute becomes operative only after the seller wins the case. The contract in the instant case is contingent and its performance wholly depends upon the judgment of the case. Similarly, in Tirthnand Singh v. Sk Zer Mohammad, (2001), the subject matter was a contract to sell agricultural land which was a subject matter of an ongoing consolidation proceeding that was held to be the contingent contract. As nobody could predict to whom the land would subsist and hence it was not enforceable.

Contingency depending upon the will of a person

A contract will not be contingent where the happening or non-happening of the contingency depends upon the will of a party. In the case of, Secy of State for India v. A.J. Arathon, (1869), the facts involved supplying timber to a Government Department. The timber was to be approved by the superintendent of the factory. Consequently, which he didn’t approve of. The supplier brought forward a case against the Government for the breach of contract. The Madras High Court held the contract to be a contingent contract and the fact of approval being collateral and its performance could only be demanded after the approval. As the contingency of the contract was not fulfilled, there was no breach of contract.

Contingency to be condition precedent

It means that the condition which is collateral to the performance of a contract is a contingent precedent and not a subsequent condition that needs to be satisfied after the formation of the contract. In the case of Ramzan v. Smt Hussaini, (1990), the Supreme Court held that a contract stating that on redemption of the mortgaged house by the plaintiff thereby the defendant would execute a sale deed of the house is a contingent contract. Thus, where a valid contract is liable to be defeated on the happening of a subsequent event, it is not a contingent contract.

Enforceability nature of a contingent contract

Section 32 of the Act lays down two basic principles. First, a contract to do an act on the happening of the uncertain future conditions can only be enforced once the event takes place or as contemplated by the contract. Second, if the happening of the event becomes impossible then the contract is void. In the case of, Jethalal C. Thakkar v. R.N. Kapur, (1956), an option to buy shares of a bank if the bank is converted into a financial corporation is a contingent contract. As it is to be performed on the happening of an uncertain future event.
Section 33 of the Act states that the enforcement of the contract depends upon the non-happening of the event. Under such circumstances when the event can no longer happen then only the performance can be demanded.
Section 34 of the Act states that when the event of the contract is contingent and is deemed impossible based on human conduct in the future. In the case of Frost v. Knight, (1872), a contract was formed stating that the defendant must marry the plaintiff after the death of the father. However, the defendant during the lifetime of the father married another woman. Hence, the future conduct of the defendant made the contract to be performed impossible thereby leading to breach of contract.
Section 35 of the Act states that when a contract is contingent, it becomes void or impossible on the happening of an event within the specified time or at the expiration of the time fixed or before the time fixed. Moreover, such a contingent contract may be enforceable on the non-happening of an event within the specified time. For instance, A promises B to pay a sum of money if the dispatched ship does not return within three years. The contract may be enforceable if the ship does not return on the time fixed or is burnt or lost within the time fixed.
Section 36 of the Act states that when a contingent agreement to do or not to do anything on an impossible event is void. While making the contract, the event did not exist. For instance, A agreed to pay a certain sum of money to B, if B married A’s daughter C. However, during the time of the agreement C died. The agreement is void.

What do we understand by the term wagering agreement

Section 30 of the Indian Contract Act, 1872 provides that all wagering agreements are void and no suit can be brought forward before the court. The term ‘wager’ means a promise to give money upon the determination or establishment of an uncertain event. The case of Jethmal Madanlal Jokotia v. Nevatia & Co., (1962), defines a wagering contract as a contract between two parties professing to hold opposite views on an uncertain future event. The main point is that either the party has to win or lose depending on the issue of the event. If either of the parties wins with no chances to lose then it is not a wagering contract. Thus, there is no real consideration for the establishment of a contract by either party. Moreover, certain prizes in horse racing are an exception under the wagering contract.

Difference between a wagering agreement and a contingent contract

A wagering contract is void, however, a contingent contract is a valid contract under the Indian Contract Act.
In a wagering agreement, the sole determining factor of the agreement is the issue of an uncertain event whereas in a contingent contract the future uncertain event is merely collateral.
In a wagering agreement, the parties do not have a real interest in the happening of the event except for the issue of win or lose whereas in a contingent contract the parties have a real interest in the happening or non-happening of the event.
All wager contracts are contingent contracts while all contingent contracts are not by way of the wager.

Conclusion

A contract is a contingent contract if it includes that there is a legitimate contract to do or not to do something, the performance of the contract should be conditional, the event should be collateral, and the event should not be at the parties’ discretion. If it satisfies all the essential elements then it is enforceable as a contingent contract. Moreover, contingent contracts provide various benefits not only to the individual but also to the companies by rewarding outstanding results and performance for instance, in the case of contracts for insurance, sales commission, negotiations, media & entertainment, etc.

References

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Cabinet committees : an overview

By

Diva Rai

-

October 25, 2021

0

26ccs — Image source - https://bit.ly/3BaUyQx

This article is written by Oishika Banerji of Amity Law School, Kolkata. This article throws light on cabinet committees, their functions, and their relevance.

Table of Contents

Introduction

Cabinet committees are those extra-constitutional bodies that help in the management of the complex business of the government. These committees draw their roots from the Indian Council Act, 1861 that came into force during the time of Lord Canning, which introduced the portfolio system and the Executive Council of the Governor-General. A change in the name of this office was brought over by the Interim Government of 1946 which designated the Secretariat of the Executive Council as the Cabinet Secretariat, and the Secretary to the Executive Council came to be known as the Cabinet Secretary.

The functions associated with the Cabinet Secretariat went through a transformation to form an organization and were handed the responsibility of carrying out effective coordination between Ministers. Different committees namely Economic Committee, the Directorate of Public Grievances, National Health Authority, Chemical Weapons Convention (NA, CWC), Direct Benefit Transfer (DBT) Mission, Office of Principal Scientific Adviser (O/o PSA) which is also known as the Prime Minister’s Science, Technology and Innovation Advisory Council (PM-STIAC) have been developed by the Cabinet over the years to bring about policies, strategies, innovations in the overall functioning of the government. Currently headed by Cabinet Secretary Shri Rajiv Gauba, the Cabinet Committees have been playing a significant role in handling and managing different circumstances. This article aims to throw some light on the same in the process of highlighting certain important information associated with these committees.

Traits of the Cabinet Committees

The Cabinet Secretariat works directly under the Prime Minister of the nation. But, the administrative head of such a Secretariat is the Secretary of the Cabinet who plays the role of the ex-officio Chairman of the Civil Services Board. The focus should be given to the business that is allocated to the Secretariat under the Government of India (Allocation of Business) Rules, 1961 which includes:

Secretarial assistance to the Cabinet and Cabinet Committees; and
Rules of Business.

Drawing from the above discussion, the various features of Cabinet Committees have been laid down hereunder:

It is the Rules of Business that makes room for the establishment of the Cabinet Committees and therefore, on this ground, the Cabinet Committees are extra-constitutional by nature as no provisions have been incorporated in concern with these committees in the Constitution of India.
The Cabinet Committees are given shape by the Prime Minister whenever he feels the need for the formation of the same. This also symbolizes that the number of members, composition, and names differ from time to time. Generally, the membership of the Cabinet committees ranges from three to eight.
The Cabinet committees are generally of two kinds namely standing, and ad hoc. While the former acquires a permanent nature, the latter by its name itself suggests the temporary existence of such committees that are formed in special circumstances and dissolved after fulfillment of their purpose.
Though the Cabinet committees sound to be open only to the Cabinet ministers for its membership, it expressly or impliedly does not bar non-Cabinet ministers to be a member of the same.
In place of the Prime Minister, the Home Minister, or the Finance Minister can also be the Chairman of the Committees. A fact to be noted here is that if the Prime Minister is himself a member of one of the committees, he will invariably be heading the same.
To say that the Cabinet Committees are those devices that work on the basis of the principles of labour division, an effective delegation to reduce Cabinet’s workload, examine policy-related issues, ensure effective coordination among ministers, will constitute both features, and function of these Committees.

List of the Cabinet Committees

Before the Narendra Modi Government came into power in 2014, there were ten Cabinet committees that were in existence namely:

Cabinet Committee on Economic Affairs;
Cabinet Committee on Prices;
Cabinet Committee on Political Affairs;
Appointments Committee of the Cabinet;
Cabinet Committee on Security;
Cabinet Committee on World Trade Organisation (WTO) Matters;
Cabinet Committee on Investment;
Cabinet Committee on Unique Identification Authority of India (UIDAI related issues;
Cabinet Committee on Parliamentary Affairs;
Cabinet Committee on Accommodation.

Among these ten committees, four were discontinued by the present government in 2016 and incorporated within other committees namely:

The functions of the Cabinet Committee on Management of Natural Calamities came under Committee under the Cabinet Secretary.
The working of the Cabinet Committee on Prices came under the Cabinet Committee on Economic Affairs.
The ambit of the Cabinet Committee on Unique Identification Authority of India came under the scope of the Cabinet Committee on Economic Affairs.

As of 2021, there are eight Cabinet committees functioning namely:

The four significant Cabinet committees have been listed down below:

The Political Affairs Committee deals with all policy matters pertaining to domestic and foreign affairs.
The Economic Affairs Committee directs and coordinates governmental activities in the economic sphere.
The Appointments Committee decides all higher-level appointments in the Central Secretariat, Public Enterprises, Banks, and Financial Institutions.
Parliamentary Affairs Committee looks after the progress of government business in the Parliament.

The first three committees in this list are chaired by the Prime Minister whereas it is the Home Minister who looks after the last one. The Political Affairs Committee, familiarly known as “Super-Cabinet” is the most powerful Committee of the Cabinet.

Functions of Cabinet committees

It is the Cabinet Secretariat who is responsible for the functioning of the committees and therefore, the functions allotted to these committees can be understood through the functions of the Cabinet Secretariat as have been presented hereunder:

The Cabinet Secretariat has been vested with the responsibility of administration of the Government of India (Transaction of Business) Rules, 1961 and Government of India (Allocation of Business) Rules, 1961 thereby facilitating and ensuring smooth transaction of business carried out by different Ministries or Departments by the following ways:

Circulating papers that are related to the important cases on the agenda.
Preparing a record of discussions as evidence for future use.
Circulating record of discussions after the Prime Minister approves the same.
Monitoring proper implementation of decisions that are taken by the Cabinet and its Committees.
Convening of the meetings of the Cabinet & its Committees on the orders of the Prime Minister.
Preparation and circulation of the agenda for discussion.

Followed by the previous function, the Cabinet Secretariat plays the role of assisting the Government in decision-making thereby ensuring coordination among different Ministries by creasing out differences that arise within various Ministries or Departments.
The Cabinet Secretariat is involved in ensuring the meeting of minds of different Ministries with the help of the Standing and Ad hoc Committees of Secretaries.
Cabinet committees collectively work towards managing grave crises that are faced by the nation by means of coordinating different activities of the Ministries in such circumstances. Inter-Ministerial coordination can be ensured in the following ways;

Removing difficulties.
Removing differences.
Overcoming delays.
Coordination in administrative action.
Coordination of policies.
Cabinet committees ensure logical disposal of the Cabinet’s complex workload so as to ensure productive output from the Cabinet.

Formation and abolition of GOMs and EGOMs

GOMs or Group of Ministers which has been formulated for looking into various subjects comes along with the Cabinet committees. They are vested with the power of taking decisions and, or advice to or on behalf of the Cabinet committees. GOMs have behaved as a catalyst for the functions of the Cabinet committees as having been discussed previously. The Group of Ministers are an Ad hoc organization by nature and are constituted for the purpose of delivering recommendations and assisting the Cabinet and its ministers in critical areas of decision-making. After the purpose is fulfilled, the GOMs formed are dissolved.

Empowered Group of Ministers (EGoM) is a type of Group of Ministers (GoM) belonging to the Central Government who are appointed by the Cabinet, a Cabinet Committee or the Prime Minister for the purpose of conducting investigation and reporting on the same to the Cabinet. These Group of Ministers are also authorized by its appointing authority to take adequate decisions in matters that follow the investigation conducted.

It is to be noted that while the GOMs are not vested with the power of decision-making on the matters investigated thereby being subject to the decisions of the Cabinet, the EGOMs can take decisions following investigation and reporting the same to the Cabinet. Thus lies the difference in their names. Both these Group of Ministers are appointed on the basis of para 6(4) of the Government of India’s (Transaction of Business) Rules 1961 which lays down the establishment of such groups by the Cabinet. It is required to know that the decisions of the Standing or Ad hoc Committee are subjected to review by the Cabinet. This technically becomes extra work for the Cabinet thereby defeating the whole purpose for the formulation of the committees or groups to reduce its workload. Taking this into account, the Narendra Modi Government on 31st May 2014 decided to scrap down all the existing Empowered Group of Ministers (EGoMs) which were nine in number and twenty-one Groups of Ministers (GoMs) with an aim of speeding the process of decision-making by the Cabinet and ensuring accountability in the entire system.

Conclusion

Cabinet committees have played relevant roles in guiding the Cabinet and its ministers in the process of handling the largest democracy of the world. In order to ensure transparency among these committees, it is the government that must take due responsibility for the ineffective working of the executive wing of the government.

References

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Analyzing the Defamation Bill, 1988

By

Rachit Garg

-

October 25, 2021

0

This article is written by Ms. Somya Jain, from the Vivekananda Institute of Professional Studies. The article aims to analyze the Defamation Bill of 1988. It establishes the background and the reasons for introducing the draconian Bill that was later withdrawn due to mass protests.

Table of Contents

Introduction

The draconian law of defamation has been much criticised from time immemorial. With the advent of time and the growth of technological facets, the cases of harming the reputation of others have rapidly increased. On the other hand, a progressive path of democracy and recognition of fundamental rights such as freedom of speech and expression has questioned the legality of defamation, being a criminal offence, now and then. The fact that people have a right to freely express their opinions and to be aware of the contemporary issues surrounding their existence, forces the framers of law to bring about the necessary reforms concerning the defamation law. One such incident was observed in the year 1988 when the then Prime Minister Rajiv Gandhi, to curb the extensive power of the press, formulated laws concerning the offence of defamation, thereby, prohibiting the press from publishing scurrilous articles that had criminal imputation in the minds of the public at large.

Overview of the background of the Bill

The ruling government of the then Prime Minister Rajiv Gandhi presented the Defamation Bill 1988 on 29th August 1988 in the Lok Sabha and was passed the very next day. The Bill was introduced in the public domain without any prior consultation and debate with the concerned people being affected by the Bill especially the press. The haste with which the Bill was introduced was held negatively against the government as it indicated the attempt of the government to impose censorship on the media especially on investigative journalism.

Before delving into the issues pertaining to the Bill, it is essential to understand the background of when the Bill was introduced. The then government in power was criticised on multiple grounds for its failure to uphold its position in the country. According to many journalists, one of the main reasons for Rajiv’s Gandhi government to introduce the new Defamation Bill was to condemn the actions of the press in enumerating the faults of Mr. Rajiv Gandhi in the Bofors case time and again. In this concerned case, India entered into a contract with AB Bofors, a Swedish arms manufacturer, to provide for the armoury needs of the country. However, it was later discovered that AB Bofors had paid huge amounts by way of bribes to several government officials in India including the then Prime Minister Rajiv Gandhi. This news unleashed animosity within the public at large towards the government especially the Prime Minister which resulted in the press publishing about the same. Aggravated by the same along with other failures, Rajiv Gandhi introduced the said Bill.

The press and the public contended that the said Bill curtailed their Right to Free Speech by furthering a criminal action against lucid exposition of the press. In addition to this, it demolished the right to know guaranteed to the public. However, the scathing protests and opposition to the Bill ultimately led to the withdrawal of this draconian legislation.

Reasons for protests against the Bill

The tyrannical law of defamation incorporated in 1988 underlined some objectives of the Bill that were:

To prevent character assassination.
To protect the reputation of an individual.
To prevent freedom of the press from becoming a licence.

However, as far as the true motives behind establishing such law were concerned, the opponent party criticised the Bill on the grounds that it aimed at:

To protect persons in high places involved in corruption.
To discourage investigative journalism.
To muzzle the press in India.

The Bill sought to introduce some new provisions which were detrimental to the press and the public at large. These provisions were the grounds on which the opponents based their contentions thereby, refusing to accept the same. Some of these provisions include:

According to Section 3 of the Bill, any person who by words or by signs publishes any adverse claim intending to harm the reputation of the person concerned will be said to defame that person and will be punished under the said Bill.
Section 12 was considered to be one of the most pernicious provisions. It states that if a person is charged with defaming another person, and if he claims that his act is protected under exemption given under Section 4 or Section 11, the burden of proof will lie on the defendant in contrast with the general practice in regard to which the petitioner is expected to prove their claim and then the onus of proof shifts onto the defendant for rebutting the contentions produced by the petitioner. The basic principle enshrined under the Indian legal system is the presumption of innocence. The new law sought to damage this very fundamental principle by transferring the initial burden of proof onto the defendant and the subsequent rebuttal phase onto the petitioner. Apart from this, the provision will also frustrate the process of the court. In common practice, the court issues summons for the production of original documents at an appropriate time, but with the initiation of the new law, the Indian government served notice to circumvent the process.
Section 13 of the Bill establishes stringent punishment if anyone is found guilty under the concerned law. It states that if a person commits an offence mentioned under the Defamation Bill for the first time then they will be subjected to imprisonment for a term which shall not be less than one month, but which may extend to one year and with a fine which may extend to two thousand rupees, and, in the case of a second or subsequent offence, with imprisonment for a term which shall not be less than three months, but which may extend to two years and with a fine which may extend to five thousand rupees. Such stringent punishment was criticised on a national level as it was detrimental to basic human rights.
Section 14 empowers the Sessions Court to try the offences under the Bill in a summary way and can further, pass a sentence enumerated under Section 13 even in a summary trial. It stipulated that the trial shall be concluded within a period of three months from the date on which the accused was ordered to appear before the court. Such type of provision never found light with regards to other offences like murder.
Section 15 asserts that if the accused establishes that the imputation published is true and it is essential for the public good to publish the same, subject to the question of fact. Additionally, the onus of proof lies on the accused to prove the same and the prosecution is expected to rebut it.
Section 18 stated that if the accused is a publisher, journalist, printer or editor in any newspaper or periodical, then the court should not dispense the case with the personal attendance of the accused. This means that the accused will have to suffer long trials while attending court. The provision also empowered the court to hold the trial in-camera and publication of the proceedings of the court itself would then become an offence.

The Bill posed blatant threats to freedom of speech and expression of the press. Therefore, it faced unprecedented defiance from the media, advocates, students, and literally the entire public. Several meetings were arranged to discuss the same issue. The attempt to redefine the concept of defamation left scathing effects by way of large scale protests in the country. The Bill directly or indirectly targeted the media group by curbing their free speech. Spontaneous demonstrations covered the grounds of India. This step of the fanatic government was bolstered to strengthen their arguments that the Bill was initiated to conceal the corrupt practices of the government and to muzzle the press to prevent publishing about potent scandals.

The proponents of the legislation took shelter under the 42nd Report of the Law Commission (1978) and the Report of the Second Press Commission (1982), which suggested changes under the existing press laws at that time. However, the reports never suggested such draconian provisions be included within the new legislation. Moreover, the Commission recommended that the publication of fair and accurate comments, made in good faith in the public interest should be given complete privilege. Therefore, the government failed to muster credible defence in their favour.

This led to the culmination of the long-fought battle against the new Defamation Bill. The then Prime Minister, Rajiv Gandhi himself released a statement emphasising the efforts of the government to protect the right of the press. He stated that “a free press is an integral part of the inner strength and dynamism of our democracy. Without a free press, there can be no democracy. The imperishable values of our freedom struggle have gone into the making of the press in India. We uphold this legacy.” Thus, on 22nd September, Rajiv Gandhi announced the unconditional withdrawal of the Bill and expressed his support for the freedom of expression.

Conclusion

The draconian law of defamation raises questions related to the criminalisation of free speech and expression and the concerned law on defamation. Since the law of defamation intrinsically protects the reputation of an individual, it remains in constant conflict with the fundamental right of free speech and expression. It becomes all the more necessary for the relevant authorities to balance the two while imparting justice to the victim. On one hand, it is essential to protect the reputation of people which is considered as their property, while on the other hand, it is the duty of the concerned authorities to recognise the freedom of free speech and expression along with protecting the right of the public to know the truth in certain matters.

The Defamation Bill 1988 was interpreted in the guise of protecting an individual’s reputation while demolishing the freedom of the press. The nationwide protests forced the government to scrap off the legislation on the grounds of it being violative of fundamental rights. The unconditional withdrawal of the Bill marked a new beginning of the rights of Indian citizens. Therefore, the growing intolerance of the public should be utilised in a positive manner thereby, bringing the corrupt system to a halt. Lastly, it is substantial for the concerned authorities to give a harmonious construction while dealing with such matters that would be in favour of all and not just the party in power.

References

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Energy : is it a part of human rights

By

Shoronya Banerjee

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October 25, 2021

0

Human rights and ipr — Image Source: https://rb.gy/u0ljh9

This article is written by Prachilekha Sahoo pursuing LLM from National Law University, Odisha. The article has been edited by Ruchika Mohapatra (Associate, LawSikho).

Table of Contents

Introduction

We have all heard the saying, “It was Prometheus that stole the fire from Gods” or that it was humans who discovered fire accidentally playing with the flint-stone or that it was the sight of regular forest fires that gave humans the hint about the fire. There has been no clear-cut theory of the emergence of energy. But it was the technique over the control of creating a fire that gave man the first source of energy beyond his own body. The control over the source of energy signified the beginning of human civilization. The entire edifice of a modern economy is built around the production and consumption of huge amounts of energy.

For both economic development and human development energy is vital. The advent of industrialisation and globalisation over the past few decades has taken a giant leap. Energy resources had been the primary factor for all such development. A UN expert group of the UN Secretary-General in April 2010 called for the realisation of universal access to modern energy services by 2030.

Access to energy services has been considered as a prerequisite to the enjoyment of human rights or at times a human right in itself. However, despite the increased affirmation of the link between human rights and access to energy, the role of human rights in guaranteeing access to energy for each and every individual has been underexplored. This article aims to shorten that gap and seeks to analyse and clarify the concept of energy law, how energy law is perceived in both national and international spheres.

Sources of energy in today’s time

There are multiple sources of primary energy ranging from fossil fuels like coal, petroleum, and natural gas, hydro, nuclear, solar. Some of them are categorized as renewable and non-renewable energy. There are also numerous goals in energy policy i.e.to attain economic efficiency, access to clean energy to all at affordable prices, take steps for environmental sustainability and energy security.

In the case of fossil fuels, excessive fuel extraction and not giving it enough time for replenishment may cause natural resource degradation, conversion of fuel into useful energy causes environmental pollution, some gases (local) such as sulfur dioxide, nitrogen oxide, and particulate matter, and some (global) like carbon dioxide. In the case of hydropower, conversion of forest land requires massive displacement and resettlement of indigenous people and thus causes ecological disturbance. In the case of nuclear power, the major policy issue is safety. Use of renewable resources like biomass may involve loss of agricultural output. Hence the choice of a model energy mix for a nation involves careful appraisal of trade-offs among the alternatives, based on nationwide circumstances, policy priorities, rate, and affordability.

Issues plaguing the energy sector

Today, 1.4 billion people around the world still lack access to electricity, amounting to over 15 % of the world’s population. Worldwide, approximately 3 billion people still rely on traditional biomass for cooking and heating. While in the Western world, access to energy is considered a normal part of everyday life, it has been estimated that by 2030 lack of access to (modern) energy (services) result in 1.5 million premature deaths per year, over 4000 per day. This is greater than the estimates for premature deaths from malaria tuberculosis or HIV/AIDS. Another challenge is presented in the fact that those living in “energy poverty”, live in rural areas.

These impressing and worrying figures in combination with the unjustifiable disparities in energy access worldwide, regionally and locally, has led to the situation that access to energy is increasingly recognised as a basic human need, as a prerequisite for a life of dignity and the full enjoyment of human rights, even as a claim from human rights protection in itself.

However, access to energy as a human rights concern, or as a right of individuals as such is only a recent concept. It is only for a decade that access to energy has been increasingly recognised as a prerequisite for combating poverty, and that access to energy is a matter of universal concern.

In the 2009 European Union Directive on the harmonisation of electricity markets in the EU, there is still relatively little clarity as to the question of whether access to energy is a true human rights value and whether individuals can actually stake a claim of access to energy as a human right. There is only one human rights treaty that explicitly accords a right of access to energy, in the form of access to electricity, which is the 1979 UN Convention on the Elimination of all forms of Discrimination against Women. It has declared that all the state parties shall take all necessary measures to abolish discrimination against women residing in rural areas in order to make sure that, on a basis of equality of men and women, that they participate in and reap the benefits from rural development and in particular, shall ensure that such women enjoy the right of adequate living conditions, chiefly in relation to housing, sanitation, electricity and water supply, transport and communication infrastructure.”

However, while no other human rights treaty seems to explicitly recognise the right, other human rights supervisory bodies have also commented in their monitoring work that accesses to electricity should be improved and quality of life should be improved.

Interrelationship between human rights and energy law

Human rights are positive rights. They place an affirmative duty upon the state to provide a minimum quantity and quality of goods and services to all the citizens. On the other hand, energy laws govern the use and taxation of energy, both renewable and non-renewable. The practice of energy law includes contracts for siting, extraction, licenses for the acquisition and ownership rights in oil and gas both under the soil before discovery and after its capture, and adjudication regarding those rights. Access to energy is emerging as the basic human right in the 21st century after food, water, and air. To further substantiate the claim, it has been found that based on econometric modeling of historical data suggests that energy consumption will grow at a rate of 5 percent in 2045.

A human rights-based approach to program the energy laws sets the tone of achievement of human rights obligation as an objective of such development programs. This approach adds value for numerous reasons. It supports the achievement of the Millennium Development Goals. It legitimates the demands of citizens for energy protection and is likely to produce better end results for sustainable development. It will help to produce real results in protecting biodiversity, improving access to energy for all, and channeling and managing conflict over shared natural resources. Another key advantage is that procedural rights create a framework for addressing grievances that are otherwise submerged in conflicts. Human rights standards and principles will help set the objectives of programs whilst also guiding the entire programming process. It legitimates the demands of citizens while delegitimizing the excuses of the powerful. It may also bring a new dimension to monitoring and evaluation, with the use of common human rights standards and principles to monitor achievements within and across development programs.

Similarly, problems can also arise in the case of energy utilities. Consumers obtaining access to cheap energy via human rights will have little incentive to conserve.⁴ Furthermore, the provider will have trouble recovering costs. Combining cheap energy under a positive right will degrade infrastructure and aggravate the greenhouse gas emissions contributing to climate change. Energy security concerns might also be further developed. Energy security includes multifarious aspects out of which two are of prominent importance i.e. physical availability and economic affordability. The supplies should be available in proximity to where the household is located and that the energy is supplied to households at prices that even the poorest can afford to pay.

Conclusion

Using a human rights lens to analyse and assess energy issues requires an effort to look beyond technical issues and to identify the legal, political, economic, social, and structural challenges that often lie at the root. With tight methodologies and goals, developing a human rights-based approach will not occur overnight- this will take time and needs to evolve from existing practice. So, therefore, we need to rethink and reorient energy consumption as a basic human right in such a way that it reduces the energy footprint to enjoy the abundance of natural resources, which are affordable as well as sustainable and it doesn’t burden our costs or conscience.

References

Energy for a sustainable future. The UN Secretary General’s Advisory Group on Energy and Climate Change (ACECC), Summary Report & Recommendation.28 April 2010, New York, p.7, on the ‘importance of energy’.
Yojana, March 2014 Edition on ‘Energy Security’.
The distinction between negative and positive rights was notably developed in I. BERLIN, FOUR ESSAYS ON LIBERTY 118-34(1969). See Frank B. Cross, The Error of Positive Rights,48 UCLA L. REV. 857(2001), for a critical evaluation of positive rights.
Sarah Krakoff, Planetarian Identity Formation and the Relocalization of Environmental Law, 64 FLA.L.REV. 87,98 (2012).

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