What career opportunities open up if you do LLM from a top university : how does the CLAT PG exam help you get into a top university

October 22, 2021

This article has been written by Anindita Deb, a student from Symbiosis Law School, NOIDA. In this article, she discusses the opportunities available to a person who obtains an LLM degree from a top university and how the CLAT PG entrance can help you get into one.

Table of Contents

Introduction

Law as a career option is up and rising and has claimed a high demand for the profession in the market. From litigation to corporate law or legal advising, there is a plethora of opportunities available to a person who holds a degree in law. Law aspirants can either pursue a 3-year LLB course after they have completed a bachelor’s degree or can opt for an integrated 5-year LLB course. Although the opportunities available to a graduate in LLB are no less, the availability of career opportunities with lavish salary packages increases substantially after one completes a course in LLM, which is a master’s degree in law.

LLM degrees can open up a whole new horizon of opportunities for someone looking to reach heights in the field of law. Students who get an LLM can work as legal counsellors, lawyers/advocates, solicitors, or legal writers, advisors, and so on. This article will help you explore what opportunities are available to an LLM graduate.

Professions that can be pursued after completing LLM

Upon completion of an LLM, a number of high-value professional possibilities become available. These careers provide not just financial security, but also ensure that employees are satisfied with their jobs. The following are some of the jobs that an LLM graduate can pursue:

Judge – Every country’s legal or judiciary system holds this position in extremely high regard. To be a judge, one must be well-versed in the subject matter and have relevant experience. The salary of a Junior Civil Judge ranges from Rs. 27,700-47,700.
Legal advisor – Court partners or law associates assist with contract summarization, contract management, legal study, writing, court cases, and analytical pertinent projects. If you have prior knowledge in the field, you can succeed as a consultant and earn very well. The average salary for the role of Legal Advisor in India is Rs. 32,900.
Law examiner – Different types of legal paperwork may be discussed and evaluated by an assessor or an equivalent. A review of a legal record includes legal documents like comments and documentary evidence. Law examiners are mostly paid on an hourly basis starting from an average of Rs. 600 per hour.
Advocate – A lawyer is a valued specialist in the field of law, whether in India or overseas. To carry out his or her duties, he or she must have a thorough understanding of the country’s laws. The average salary for a Lawyer is Rs. 19,718 per month in India.
Oath Commissioner – “Oath commissioner” is a term used to describe the oath officer. The task is done by a freshly qualified lawyer who is named by the High Court Registrar in accordance with the principles of law. The starting salary of an Oath Commissioner is Rs. 1,80,000 per annum.

Opportunities for LLM graduates in the public sector

For a trained LLM student, there are several prospects in the government sector. They can work as a Magistrate, a Judge, a Legal Advisor, or a Public Prosecutor. After passing the National Eligibility Test (NET) or another equivalent exam, there is also the possibility of pursuing a teaching career at both private and public universities. Following is a table presenting the jobs available for LLM graduates in the public sector along with their corresponding salary packages:

Position	Average Salary
Law Clerk	Rs 3,60,000 p. a.
Law Assistant	Rs 5,50,000 p. a.
Legal Researcher	Rs 8,00,000 p. a.
Civil Judge	Rs 10,00,000 p. a.
Legal Officer	Rs 8,40,000 p. a.
Public Prosecutor	Rs 5,00,000 p. a.
Guest Faculty	Rs 4,80,000 p. a.

Apart from these, several career opportunities are also available in the Indian Railways, Defence and Excise departments.

Opportunities for LLM graduates in the private sector

When it comes to the private sector, LLM graduates have a lot of options. There are a number of private law firms in India which have high-profile clients and pay handsome salaries to their employees. The following table represents the top law firms in India and the average salary paid by them:

Hiring Company	Average Salary
Khaitan & Co	Rs 17,00,000 p. a.
Luthra and Luthra	Rs 16,00,000 p. a.
Cyril Amarchand Mangaldas	Rs 16,60,000 p. a.
S&R Associates	Rs 21,00,000 p. a.
AZB & Partners	Rs 20,00,000 p. a.

Besides law firms, NGOs, consultancies, media and publishing houses, and international organisations like the United Nations (UN) also hire LLM graduates at highly paid positions. The job of Company Secretary (CS) has come up as a very valued position for LLM graduates. Companies prefer to hire CS who have a legal background as being a CS involves dealing with the company law. The starting salary package for a CS in India is around Rs. 2,50,000 per annum.

CLAT and its role in the admission to a top university for pursuing LLM

The Common Law Admission Test (CLAT) is a national level entrance exam conducted by the Consortium of NLUs and administered by the Bar Council of India (BCI). In India, most private law schools also use these scores for enrollment. CLAT Post Graduation (CLAT PG) scores are used by public sector companies in India such as ONGC, Coal India, BHEL, Steel Authority of India, Oil India, and others to recruit for jobs in their legal sectors.

Thousands of people take the CLAT exam every year. Many candidates, however, are undecided about whether or not to take the CLAT PG exam after completing their undergraduate degrees. Many candidates are unsure about the advantages of taking the CLAT PG exam, while others consider how it might help them advance in their careers. There are a number of reasons why one should choose to attempt the CLAT PG entrance exam in order to get into a top National Law University (NLU) for getting their LLM degree. Some of them are stated below:

A chance of getting into top law colleges in the country

CLAT is the only exam in India that provides one with the opportunity of being admitted to the prestigious NLUs. The NLUs, sometimes known as the “IITs of Law,” are India’s top-ranked law schools. The National Law School of India University (NLSIU), Bangalore, was the first NLU in India, founded in 1986. There are currently 23 NLUs in India, with 22 of them offering admission through the CLAT exam.

Top-notch placements

CLAT gives you the chance to work for some of the best firms in the world, national and international. According to NLU placement reports, NLU students receive placements ranging from Rs 4-16 lakh per annum at the end of a law course.

CLAT scores are used not just for LLB and LLM admissions, but also for recruitment in Public Sector Undertakings (PSUs). Those who take the CLAT LLM exam stand a good chance of getting hired in legal positions at leading public sector organisations. Some of the well-known PSUs that hire law graduates are given below:

Oil and Natural Gas Corporation (ONGC)
Bharat Heavy Electricals Limited (BHEL)
Steel Authority of India Limited (SAIL)
Telecom Regulatory Authority of India (TRAI)
Securities and Exchange Board of India (SEBI)
National Thermal Power Corporation (NTPC)

A brand new kick start to your career in law

CLAT PG is an excellent initial step toward a successful legal profession. You can take the exam as soon as you complete your Undergraduate degree to gain admission to an LLM programme that specialises in your preferred field of law. When you get an LLM degree, you have a variety of opportunities.

Conclusion

A career in law demands a significant amount of knowledge, skills, and zeal. It involves social awareness. Professional life after completing an LLM, on the other hand, offers up a wider range of subject-specialized areas. So, if you put in the effort, you can guarantee yourself a successful future after graduation.

References

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Insider trading in India : regulations and controlling authority

Shoronya Banerjee

October 22, 2021

This article is written by Megha Dalakoti of National Law University Orissa. The article has been edited by Smriti Katiyar (Associate, LawSikho).

Table of Contents

Introduction

The effective functioning and governance of a corporate organisation are attributed to ensuring transparency, openness, and disclosure. To achieve these attributes, it is essential to maintain a positive relationship among the managers and the stakeholders, and embrace the faith of the investors. Investors are attracted by good corporate governance and this increases their reliance on the companies. The Directors of the companies constituting the Board of Directors play a major role in deciding the future of the company. The decisions of the board can affect the stock market reaction towards investors. Hence, the meetings and decisions of the board amount to confidential information. Confidential information is only shared when it is required for the benefit of the company. Hence, it is important to maintain the confidentiality of the information, until disclosed in public. It has been observed over the years that to gain an unfair advantage over others, the people working in the organisation manage to get their hands on confidential information and often engage in unfair trade. This is an unfair practice and morally wrong, which can have bad consequences. Hence, it is essential to curb these practices globally. There are steps taken by different governments to prohibit such practices via regulations globally.

The problem of insider trading emerged with the introduction of the concept of trading of securities in the global market. In India, SEBI regulates the functioning of the capital market. It was established in 1992 under the SEBI Act, 1992. It was necessary for the protection of investors to enact legislation and establish an authority that can regulate the securities market effectively. In 1952, it was recommended by the Bhabha committee to make it obligatory for the directors to disclose the information of sale/purchase of shares in a different register managed by the company. Consequently, Section 307 (provides for maintenance of a register by the companies to record the directors’ shareholdings in the company) and Section 308 (prescribed the duty of the directors and persons deemed to be the directors to make disclosure of their shareholdings in the company) were introduced in the Companies Act, 1956. By the Companies Amendment Act, 1960, Managers of the company were added to the scope of section 308. In 1978, it was recommended by the Sachar Committee to make stringent laws to acknowledge transaction details of traders so that it can be identified that no unfair gain has taken place by using price-sensitive Information. In 1986, a committee headed by G. S. Patel described the term ‘Insider Trading’ in their report recommending to amend the Securities Contract (Regulation) Act (“SCRA”), 1956 to allow the exchanges to implement strict policies to prohibit insider trading of information. In 1989, it was recommended by the Abid Hussain Committee to include the act of insider trading under civil and criminal offences and it was also suggested for stricter regulation by SEBI to restrain the unfair practice of Insider Trading. To regulate the unfair trade practices in the securities market, SEBI (Insider Trading) Regulations, 1992 was enacted. The regulations were amended in the year 2002.

Insider trading refers to the trading of unpublished price-sensitive information behind the corporations in order to gain unfairly or avoid loss. The Securities Exchange Board of India (Prohibition of Insider Trading) Regulations, 1992 defines it as a breach of fiduciary duty by the officers of the company towards the shareholders. The regulations on restriction of Insider Trading were formed with the view of ensuring fair transfer and trade of securities in the market. However, it is still difficult to say that countries have successfully overcome the problem of insider trading.

What is insider trading?

Insider Trading is a practice of using confidential information (unpublished price-sensitive information) of a company to trade in the company’s securities. The unpublished price-sensitive information is not known to the general public as it is not published and is related to the decisions taken by the Board of Directors of the company. The use of such information to cause wrongful gain or loss is termed as insider trading. The information is referred to as ‘price-sensitive ‘ as it is capable of influencing a company’s securities’ price in the market.

“Insider trading is an act of buying, selling, subscribing or agreeing to subscribe in the securities of a company, directly or indirectly, by the key management personnel or the director of the company who is anticipated to have access to Unpublished Price Sensitive Information with reference to securities of the company and it is deemed to be insider trading.”

Unpublished price-sensitive information

Information is said to be price sensitive if it is not published anywhere; is related to the decisions of the company; if known, it can affect the price of securities in the market; The following can amount to unpublished price-sensitive information; financial statements; declaration of dividends, public rights issue, merger or amalgamation information, buy-back of securities, information on de-mergers, policy revision or change in operations of the company.

When the trading is done by keeping in mind all the regulations and rules of fair trading, it is termed as fair trading whereas when trading is done by violating such rules and regulations for unfair gain, it is termed as unfair trading. Similarly, unfair trading is termed insider trading when such trading takes place by involving the use of unpublished price-sensitive information. It is ethically and morally wrong to share such information in the market as this provides an unfair advantage to the person possessing the information whereas the traders not having the information are left at a disadvantageous position.

In India, members of a company can trade in their company’s stocks subject to disclosure of transaction records to maintain transparency and restrict the use of confidential information. SEBI has framed several regulations on disclosure by insiders to bring the investors into confidence and ensure transparency in trading. To ensure fair market trade, the practice of insider trading is made a punishable offence in the country.

Who is an insider?

“Insiders” can be referred to as persons who are in a position to access confidential price-sensitive information, connected with the company. They use such information against uninformed investors in making huge profits before it comes to the knowledge of the public. The term “insider” has wide interpretation and includes partners, directors, officers and employees of a company and related companies, persons holding some kind of official relationship with a company, professional or business (e.g., auditors, consultants, bankers, and brokers), stockholders, government officials, and stock exchange employees, etc. It can be noted that the board of directors and employees have direct access to price-sensitive information and therefore are in a position to use such information in the manner they want. There can be instances where the insider can supply the information to an outsider and hence, deal with the outsider without letting the blame fall on him. The insider can engage in many other such malpractices and remain unnoticed. Hence, it becomes important to point out such deficiencies in the system.

The basis of insider trading is the exchange of securities willingly on receipt of some piece of confidential information that is not publicly available and which has the potential to affect the price of these securities drastically. For instance, a director of a company is aware that the company is in a bad financial state and sells his shares in the company knowing that there will be an announcement made to the public about the cut in a dividend. Similarly, the director would be engaged in insider trading if he buys more stocks in a company on receiving information about the discovery of diamond or gold on the company’s land, before public announcement expecting the price of stocks to rise on such announcement. Thus, an insider who knows that the company is in a financial mess may sell his shares in the company knowing that shortly there will be a public announcement of the news.

Any person having any kind of professional or business relationship may become a connected person and thereby an insider, if he may reasonably be expected to have access to unpublished price-sensitive information. The relationship and accessibility to unpublished price-sensitive information facilitated by such a relationship are necessary.

What are the effects of insider trading?

The effect of insider trading is borne by those who are not aware of the confidential information. Due to this, they do not deal in securities. Insider trading is unethical and amounts to a breach of fiduciary position as it involves a breach of trust and confidence. The misuse of insider information is discouraged for numerous reasons:

a) Insider takes unfair advantage over the information deprived person;

b) It results in a conflict of interest as it is beneficial for insider’s self-interest and not in the company’s best interest;

c) It lowers the market reputation and acts as a disincentive to investment.

The conditional buying or selling of securities by the advantageous person only when in possession of confidential information affects the determination of the value of those securities. Also, the possession of confidential information in question implies that the advantageous person has some connection in the corporation who is yielding the essential information to that person. He may be a director, employee, or professional adviser of that company. This is disadvantageous for the corporation as well.

Let us suppose a hypothetical scenario of insider trading activity in which a director of a merchant bank was advising a company regarding the process of mounting a takeover of another company. It was known that the publication of the information of a takeover offer could result in an immediate rise in the prices of shares of the target company or in the acquiring company. The acquisition of some shares by the merchant banker in advance of publication, at the pre-bid price, and disposing of them immediately after the announcement of the bid, would constitute the act of insider trading.

It is essential for a fair trade that insider information must not be utilised by the directors or employees to further their own interests. Doing such an act would amount to a breach of their obligation towards the company. People will lose interest in such companies. There should be a continuous check on such practices to ensure the integrity of the market is not degraded by the loss of confidence of investors. These practices are immoral, unethical and can cause damage to a large number of innocent investors.

Over time, countries have expressed their objections to such practices. The USA was the first country to tackle the problem of insider trading effectively. The United Kingdom has imposed a lot of obligations and duties on the Directors to control the transfer of confidential information. India has also developed various regulations in this regard. The Companies Act and SEBI Regulations 1992, are examples of such regulations. However, the country has not been effective in fighting such practices.

Insider trading in India

Indian law development

The Indian Government started giving importance to the issue of insider trading after independence in light of the recommendations of the Thomas Committee of 1948 which evaluated the US regulations. Subsequent to this, sections 307 and 308 were incorporated under the Companies Act, 1956 seeking certain disclosures from core insiders i.e., directors and employees. In the 1970s, insider trading was recognised as an “undesirable practice” for the first time. However, there was still no adequate enforcement provision under the Companies Act, 1956. The recommendations to formulate separate legislation in this regard were proposed by the Sachar Committee in 1979, the Patel Committee in 1986, and the Abid Hussain Committee in 1989. This led to the establishment of SEBI in 1992. The Committees made the following observations in its report:

Sachar Committee (1979)

The committee was formed in June 1977 for reviewing the Companies Act, 1956 and Monopolies and Restrictive Trade Practices Act (MRTP), 1969. The committee submitted its report recommending: Insider shall notify his intention of trading; prohibition on trade by Insiders, of the securities before and after two months of the closing of the accounting year, it shall be applicable for right’s issue also; the insider’s dealings of shares is required to be maintained in a register by the company; provision for compensation and civil remedy.

Patel Committee (1986)

The committee was formed in May 1984 with the aim of conducting a thorough review of the dealings of stock exchanges and making recommendations in that regard. The committee identified the essential need for the legislation on insider trading in the country, the absence of which was the primary cause of these activities.

Abid Hussain Committee (1989)

It was created in 1989. The committee recommended the declaration of insider trading as a civil as well as a criminal offence. It advised SEBI to form regulations in this regard. In furtherance of the recommendations by the committees, SEBI enacted regulations to curb the practice of insider trading: –

‘SEBI [Insider Trading] Regulation-1992’
SEBI [Substantial Acquisition of Shares & Takeover] Regulations 1994.’
‘SEBI [Prohibition of Fraudulent & Unfair Trade Practice relating to securities market] Regulations-1995.’

SEBI has incorporated some significant changes to improve the then-existing Insider Trading Regulations, 1992. The regulation was amended to overcome certain loopholes that were highlighted in the cases of Hindustan Lever Ltd. v. SEBI and Rakesh Agarwal v. SEBI. The new legislation was named “SEBI [Prohibition of Insider Trading] Regulations 2002.” The definition of ‘deemed to be connected person’ (Insider) was amended to include “a person who is an ‘intermediary’, ‘investment company’, ‘trustee company’, ‘Asset Management Company’ or an ‘employee’ or ‘director’ thereof or an ‘official of stock exchange’ or ‘of clearing house’ or ‘corporation’.” The definition of ‘insider’ was amended again in 2008. In 2015, SEBI (Prohibition of Insider Trading) Regulations, 2015 were notified by SEBI which were further amended in 2018 as SEBI (Prohibition of Insider Trading) (Amendments) Regulations, 2018.

Regulatory authority

In India, SEBI is the regulating authority for insider trading. SEBI derives its power to form the regulations for insider trading under the SEBI Act, 1992. It is the responsibility of SEBI to regulate and safeguard the securities market in India. Also, SEBI keeps a check on the insider trading of securities.

The Indian market has no depth because of which it is considered to be highly volatile. However, there has been significant growth in the capital market due to the increasing number of investors, more participation of different companies, capitalisation, stock exchanges, foreign direct investment, turnover, mutual funds, brokers, etc. The growing economic reforms in the country are a big reason behind the development of the capital market. The market has also improved its volume, transparent operations, and investment holding methods by way of a depository.

The Harshad Mehta scam of 1992 and other fraudulent practices in the Indian capital market have negatively impacted the image of the market that many investors fear the credibility of investment in the security market, nowadays. Some of the common reasons for these apprehensions are:

Activity of insider trading;
Less transparency in transactions;
Unwarranted transactions;
Lack of knowledge to general investors.

Indian authorities have tried hard to regulate and encourage investment in the market through its various agencies namely, the Company Law Board (CLB), Reserve Bank of India, SEBI, and various stock exchanges.

There have been various regulations issued by SEBI to control insider trading and other mal-practices of market manipulations. However, for the first time with respect to insider trading, SEBI issued the SEBI (Insider Trading) Regulation, 1992 which was last amended in 2018.

SEBI Regulations

Insider trading in India is prohibited by the Companies Act, 2013 and the SEBI Act, 1992. SEBI has formed the SEBI (Prohibition of Insider Trading) Regulations, 2015 which prescribe the rules of prohibition and restriction of Insider Trading in India.

The Regulations passed by the Securities Exchange Board of India i.e., SEBI (Prohibition of Insider Trading) (Amendments) Regulations, 2018, are applicable mainly to “dealing in securities” which involves “buying, selling or agreeing to buy, sell or deal in any securities by any person either as principal or agent, by insiders on the basis of any private confidential information.” The Regulations are only applicable to the exchange of listed securities.

The Regulations provide that the communication or dissemination of any confidential information, by an insider, is prohibited. The information communicated or disseminated must be unauthorized. The information can be used by the person himself or any other person on his behalf. If any person contravenes with any provision of the SEBI Regulations, it amounts to an offence under the Act and is punishable with imprisonment up to 10 years or a fine up to 25 crores, whichever is higher. Under the SEBI Regulations, the adjudicating officer may impose a penalty on any person who contravenes with the provisions of the regulations except for the offence committed under section 24 of the Act. SEBI also has the power to investigate the case of Insider Trading and related matters. The powers of Investigation may be exercised by SEBI for two main reasons:

to investigate into the complaints received from investors, intermediaries or any other person on any matter having a bearing on the allegations of insider trading; and,
to investigate upon its own knowledge or information in its possession to protect the interest of investors in securities against breach of these regulations.

Under the Regulations, promoters of the company will be held liable irrespective of their shareholding status if they are found violating insider trading norms using unpublished price-sensitive information of the company in absence of any legitimate purpose.

There are certain exceptions to these prohibitions by SEBI such as,

Disclosure is allowed for legitimate purposes, performance of duties or discharge of legal obligations. In the case of Dirks v. SEC, it was held that “persons like lawyers, accountants, etc. who are actually outsiders will be construed as insiders from the point at which the UPSI was shared with them under ordinary course of business.”
Disclosure is allowed when there is an obligation to make an open offer; and where disclosure is required in the best interest of the company. In the case of Samir Arora v. SEBI, it was held that to attract a provision of Insider Trading, the unpublished private information needs to be true.

Loopholes

The regulation of the practice of Insider Trading has been quite a task for the Indian Authorities. The Annual Report of SEBI for the year 2016-2017 revealed that of all the investigations taken up by SEBI, the Insider Trading cases covered 14% cases (34 in number) in the year 2016-2017 as opposed to 12 cases in the year 2015-2016. With each passing year, the offence of Insider trading is significantly increasing and so is the demand for stricter regulations. The pendency of cases is also a major concern as of 34 cases investigated, only 15 were finished. The allegations of insider trading are raised on the basis of circumstantial evidence and lack of concrete evidence makes it difficult to detect and prove the offence. Though the regulatory system is very robust, the rate of successful cases is quite less. This is because SEBI does not hold the required technological expertise to effectively perform investigations. The acute shortage of resources and manpower is also one reason for the failure of SEBI. Further, the Indian law does not cover the cases where the offence of Insider Trading has been committed by a foreign national. There is no provision of penalty or investigation in such cases. The Acts lack the application on the extra-territorial applicability of the regulations.

Suggestions and conclusion

There has been an evolution of the laws prohibiting the practice of insider trading to a great extent since 1992. The authorities have considered the practice of insider trading as an alarming offence and have amended the statutes with new and stringent provisions from time to time. SEBI has succeeded in punishing the offenders of insider trading to some extent.

The Directors of a company plays a major role in the preservation of the unpublished price sensitive information and hence, to eliminate the offence of insider trading and for the preservation of interest of investors in the market, it is essential to make the people who are considered as ‘Insider’ in the company, accountable for their unlawful dissemination of price-sensitive information. It is not possible to fully control the actions of the Insiders and hence, the people holding the top managerial positions i.e The directors, officers, and other members of the company should set high standards of ethical behaviour in their organisations to ensure that the company’s goodwill is not damaged. This behaviour cannot be imposed compulsorily on anyone. The Indian authorities can also focus on adapting such techniques or technologies that can help in the faster redressal of pending cases.

References

https://groww.in/blog/is-insider-trading-legal-in-india
https://trendlyne.com/equity/group-insider-trading-sast/
https://www.business-standard.com/about/what-is-insider-trading
https://www.sebi.gov.in/
http://www.legalservicesindia.com/article/2567/Insider-Trading-laws-in-India-in-comparison-with-the-laws-in-US-and-UK
SHRADHA RAJGIRI, ‘AN ANALYSIS OF INSIDER TRADING IN INDIA’ (2019) 9 PRAMCI 137.
Iragavarapu Sridhar, ‘Corporate Governance and Shareholder Activism in India’ (2016) 6 TEL accessed 02 Feb 2021.
J Sarkar & Subrata Sarkar, ‘Large Shareholder Activism in Corporate Governance in Developing Countries: Evidence from India, International Review of Finance’ (2000) 161-194.
UmakanthVarottil, ‘A Cautionary Tale of the Transplant Effect on Indian Corporate Governance’ (2009) 21(1) NLSJ REV. 1.
Bernard Black, ‘Shareholder Activism and Corporate Governance in the United States’ (The New Palgrave Dictionary of Economics and The Law, 1998).
Stuart Gillan & Laura T. Starks, ‘The Evolution of Shareholder Activism in the United States’ (2007).
Himanshu Chahar, Sumeer Sodhi, ‘Insider Trading in India’ (Legal Service India).
Hemant Singh, ‘How Securities and Exchange Board of India (SEBI) Controls Capital Market of India?’ (Jagran Josh, 22 Sept 2019) <https://www.jagranjosh.com/general-knowledge/powers-and-functions-of-sebi-to-regulate-security-market-in-india-1455101630-1 > accessed 05 Feb 2021.
Richa Sharma, ‘Is Insider Trading Legal in India’ (Groww, 19 May 2020) <https://groww.in/blog/is-insider-trading-legal-in-india/ > accessed 05 Feb 2021.
http://www.legalservicesindia.com/article/2567/Insider-Trading-laws-in-India-in-comparison-with-the-laws-in-US-and-UK.html#:~:text=In%20India%2C%20SEBI%20Act%20and,or%20with%20fine%20or%20both accessed

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Protection of IPR against unfair trade practices

Oishika Banerji

October 22, 2021

IPR — Image Source: https://rb.gy/bvk98x

This article has been written by Megha Dalakoti of National Law University Orissa. This article has been edited by Smriti Katiyar (Associate, Lawsikho).

Table of Contents

Introduction

The importance of IPR was deliberated on for the first time in the ‘Paris Convention for the Protection of Industrial Property’ (1883) and the ‘Berne Convention’ for the protection of Literary and Artistic work (1886). Both treaties are administered by WIPO. India is a member of WTO (World Trade Organisation) and therefore, a party to its TRIPS (Trade Related aspects of Intellectual Property Rights) Agreement. Also, India is a member of WIPO (World Intellectual Property) Organisation and hence a member to various WIPO-administered International Treaties and Conventions relating to Intellectual Property Rights such as ‘Patent Cooperation Treaty’, ‘Paris Convention’, ‘Berne Convention’, ‘Budapest Treaty’, ‘Madrid protocol’, ‘Nairobi Treaty’, ‘Marrakesh Treaty’, etc…, as well. India has enacted various laws in the past few years for the protection and development of IPRs of its citizens in compliance with various International Treaties and conventions. There have been changes in India’s IPR policy regime from time to time in accordance with International guidelines.

“The present laws protecting IPRs in India are,

Trade Marks Act, 1999;
The Patents Act, 1970 (as amended in 2005);
The Copyright Act, 1957;
The Design Act, 2000;
The Geographical Indication of Goods (Registration and Protection) Act, 1999;
The Semiconductor Integrated Circuits Layout Design Act, 2000;
Protection of Plant Varieties and Farmers’ Right Act, 2001;
Information Technology Act, 2000.”

The Protection of IPRs is important for various reasons. It is essential to recognise the IPRs of the creators and provide them protection from infringement and exploitation to –

encourage innovations in the field of technology and culture;
to boost the economic growth thereby creating new jobs and industries;
for the safeguard of rights of creators; and
to facilitate the transfer of technology in various forms to ensure ease of doing business.

However, the recognition of rights over Intellectual Property is not enough. A market economy allows and encourages competition between industrial and commercial organizations. As competitors are out to win, they may sometimes be tempted to use malicious means to gain an unfair advantage such as directly attacking a competitor or misleading the public to the detriment of a competitor.

Many instances have been reported where businesses have adopted unfair trade practices in order to take advantage of the work of other competitors. On one hand, unfair trade practices are being used for the unauthorized use of one’s Intellectual Property while on the other hand, the owners of the exclusive rights over particular Intellectual Property are abusing their dominant position in the market via pooling, refusal of a license, and other anti-competitive practices. In order to avoid market distortion and to regulate fair competition in the market by preventing unauthorized use of one’s Intellectual Property, there is a need to curb unfair trade practices. It is essential to maintain a healthy balance between Intellectual Property protection and Competition policy in the Indian market in order to have a level playing field for this emerging Industry.

The acts which are contrary to the honest practices are considered as the acts of unfair competition. The protection against these acts is basically to serve the interest of business competitors. Consumers might be the primary victim of the acts of unfair competition but the protection to the consumer is primarily incidental and not the only aim of unfair competition.

Now with development in various aspects the protection against unfair competition is not only limited to business competitors but also serves the interest of the public, which helps in consumer protection.

International perspective

The Paris Convention and, more recently, the World Intellectual Property Organization have given more meaning to the notion of minimum standards of protection for intellectual property rights. Article 10 (2) of the Paris Convention defines an act of unfair competition as any act of competition contrary to honest practices in industrial or commercial matters. Examples include confusing and misleading the public, as well as negatively affecting a business’s reputation and goodwill. Article 4 of the WIPO Model Provisions specifically refers to rules against misleading the public regarding the geographical origin of goods.

The Paris convention enumerated common rules regarding different intellectual properties and also included common rules relating to protection against unfair competition. The rule states that the contracting state under the convention must provide effective protection against unfair competition. Article 1(2) of the convention also includes the repression of unfair competition among the objects of protection of intellectual property. Under Article 10 bis (3)3 of the Paris Convention, the countries of the Paris Union are supposed to discourage indications or allegations likely to mislead consumers as to the nature, manufacturing process, characteristics or quantity of goods. This article argues legal development plays an important role in protecting the interest of consumers from various dishonest practices.

The intention behind the two laws

IPR is typically utilized as a tool to provide exclusive monopoly rights to the holder and subsequently prevent different players from offering the products in a similar market which diminishes competitiveness and prompts conflict between objectives of both the law. IPR is based on the idea of remuneration theory meaning the prize the inventor has disclosed to the general public which further strengthens the bone of contention. Notwithstanding, by observing the objectives there is an undisputed opinion that both the laws promote consumer welfare and innovation.Competition law is enacted to avoid the misuse of the monopoly power granted under the statute, which is broadly followed in various countries prior to establishing such enactment to control abuse of monopoly power. The Competition Act, 2002 has broadly acknowledged the intentions of IPR while framing provisions and it does not eliminate the dominance achieved by an individual due to such IPRs.

Competition law in India

The protection against unfair competition has been perceived as one of the principal goals of Intellectual Property system, which precludes any act of competition that is in opposition to fair practices in Industrial or business matters, referred to as “Unfair Competition”. The restrictions on Unfair Trade Practices protects the consumers against the exclusive right-holders of Intellectual Property by ensuring that they don’t abuse their dominant position in the market. Competition Act, 2002 and Consumer Protection Act, 2019 are the legislations that ensures fair competition in Indian markets by protecting the rights of the consumers against the exclusive right-holders of Intellectual Property.

Competition Act, 2002

In India, the Competition Act was enacted, with the aim of the economic development of the country, for the establishment of a Commission to restrict practices having adverse effect on competition, to promote and sustain competition in markets, t0 protect the interests of consumers and t0 ensure freedom of trade carried on by different players, and for matters connected therewith or incidental thereto. The Competition Act, 2002 endeavors to shift the focus from restricting monopolies to promoting fair competition, so that the Indian market is equipped to compete with the market world-wide.

Consumer Protection Act, 2019 (repealed Consumer Protection Act, 1986)

The Consumer Protection Act, 2019 is an important legislation enforced to protect the consumers from business exploitation. It repealed the Consumer Protection Act, 1986 to expand the scope of the Act by enhancing the rights of consumers and liabilities of sellers. In short, it protects the consumers from influences of the coercive power of sellers’ (marketer / manufacturer) by way of unfair trade practices to restrict competition.

Unfair trade practices

There is no specific or exclusive definition of “Unfair Trade Practice”. However, “Unfair trade practices” can be regarded as activities which use various deceptive, fraudulent, misleading or unethical methods to conduct business. Various activities such as misleading representation of a good or service, deceptive pricing, tied selling, acts causing confusion, fake prize or gift offers, refusal to grant license and other noncompliance with manufacturing standards, are included under the ambit of unfair trade practices. For example, misrepresenting the benefits, advantages, conditions, or terms of any policy is an unfair trade practice.

As a general rule, any act or practice carried out in the course of industrial or commercial activities contrary to honest practices constitutes an act of “Unfair Competition”; the decisive criterion being “contrary to honest practices”.

The WIPO Model Provisions on Protection Against Unfair Competition defines the “failure to correct or supplement information concerning a product test published in a consumer magazine, thereby giving a wrong impression of the quality of the product offered on the market, or failure to give sufficient information concerning the correct operation of a product or concerning possible side-effects of a product,” as an act of unfair competition.

“The World Bank (WB)” and “the Organisation for Economic Cooperation and Development (OECD)” Model Law, for example, lists the following trade practices to be unfair:

distribution of false or misleading information that is capable of harming the business interests of another firm;
distribution of false or misleading information to consumers, including the distribution of information lacking a reasonable basis, related to the price, character, method or place of production, properties, and suitability for use, or quality of goods; false or misleading comparison of goods in the process of advertising;
fraudulent use of another’s trademark, firm name, or product labelling or packaging;
unauthorized receipt, use or dissemination of confidential scientific, technical, production, business or trade information.”

Provisions of the Paris Convention define “unfair competition” as – “Any act of competition contrary to the honest practices in industrial and competition matters.”

Article 40 of the TRIPS agreement says that licensing practices regarding IPR can have a detrimental effect on trade and may hinder the transfer of technology. Article 40(2) allows members t0 shortlist any IP Rights violations and develop mechanisms to counter those vi0lati0ns. However, this list is not exhaustive. The provisions on anti-competitive measures are suggestive instead of mandatory and binding.

Interplay between IPR and Competition Cct, 2002

UNFAIR TRADE PRACTICES AND IPRs–

There is no provision that specifically talks about Unfair Trade Practice in Competition Act, 2002, however, Section 3 of the Competition Act, 2002 prohibits Anti- Competitive Agreements. Section 3 sub clause (1) prohibits such trade agreements which are likely to cause an appreciable adverse effect on Competition within India. Any such Agreement, which is Anti-Competitive in nature, is void under the Competition Act, 2002 and cannot be entered into, by the parties, in India. Further, Section 4 restricts the abuse of dominant position by any enterprise or group and enumerates the acts that result in the abuse of dominant position.

The IPRs provided to the owner of the Intellectual Property are exclusive rights and hence, Monopolistic in nature. Therefore, the Intellectual Property Acts promotes Monopoly in the market. The Competition Act, 2002 does not prohibit Monopoly in the Indian markets but regulates the fair use of the dominant power in the market by restricting its abuse. Competition Act, 2002 ensures that the IPRs are not abused by its holder in order to regulate fair Competition in the market. Both the laws are contrary in nature and hence, opposite to each other. IPRs are an exception under the Competition Act, 2002.

ANTI-COMPETITIVE AGREEMENTS AND IPRs –

Agreements which cause or are likely to cause an appreciable adverse effect on Competition in India are termed as Anti-Competitive in nature. For an agreement to be an Anti- Competitive Agreement, the agreement must have its object in furtherance of or to prevent, restrict or distort competition in India.

Anti-competitive agreements can be entered int0 between ‘Enterprise and Enterprise; Pers0n and an Enterprise; Enterprise and Ass0ciati0n 0f Enterprises; Tw0 Ass0ciati0n 0f Enterprises; Tw0 Individuals; Individual and an Ass0ciati0n 0f Pers0ns; Individual and an ass0ciati0n 0f enterprise; Ass0ciati0n 0f pers0ns and enterprises; Ass0ciati0n 0f pers0ns and ass0ciati0n 0f enterprises. The trade practices like price-fixing, restraining supply 0f g00ds 0r services, dividing the market, etc. are anti-competitive practices and shall be restricted. The ambit 0f Secti0n 3 is wide en0ugh because it n0t 0nly includes th0se agreements that are expressly stated but als0 implied agreements that c0me under its purview.

“The agreement should be of one of the following kinds as defined in the Act to qualify as an Anti-Competitive:

Tie-in arrangement;
Exclusive supply agreement;
Exclusive distribution agreement;
Refusal to deal;
Resale price maintenance.”

It is pertinent to mention here that such agreements do not include the IPR-holders in their ambit. The IPR-holders enjoy the protection provided to them under various other Acts such as Trade Mark Act, 1999; Design Act, 2000; Copyright Act, 1957; Patent Act, 1970; etc. Also, Agreements which impose reasonable restrictions on the use of Intellectual Property to protect IPRs are not covered under such agreements. “A mere restriction on the use of the trademark would not be held as anti – competitive within the meaning of Section 3 or 4 of the Act.” Any agreement which is entered into by the parties, outside India but has an adverse effect on Competition in India comes under the preview of the Competition Commission of India.

“ABUSE OF DOMINANT POSITION” AND IPRs–

Section 4 of the Act clearly specifies that no organisation or group shall abuse its dominant position. The Dominant position of an enterprise in the market is the position where the enterprise has the power to influence the prices of the products or decisions of the consumers in the market. Also, the enterprise has the power to operate independently, thereby affecting its competitors. Exercise of such power in an unfair manner to make unjustified gains, is said to be abuse of the dominant position. “Section 19(4)” enumerates various factors that are to be observed while determining dominance of a firm, such as, market share of enterprise; size and resources of the enterprise; size and importance of competitors; economic power of the enterprise; consumer dependence; entry barriers; commercial advantages, etc.

The widely prevalent anti-competitive activities in Monopolistic market are:

Tie-up Arrangements

The agreement between a buyer and seller, to sell particular goods on the term/condition that the buyer will buy some other goods as well. It falls under Unfair Trade Practice and is Anti-Competitive in nature. The tie-up arrangements involve tie-up of 2 or more goods by the seller. The seller must have sufficient market power; an exclusive supply and distribution agreement and a licensee to acquire the required goods from the owner who owns the patent. It limits the transaction between certain classes of people and hence, is restricted.

Patent Pooling

Patent pooling is commonly done by the competitors in the Electronic sector and Pharmaceutical industries. In order to prevent new entrants from entering the market and make profits, the competitors exercise Patent Pooling, by promoting monopoly. Under Patent Pooling, the invention of two or more inventors are locked under a single license by way of an agreement. It encourages market exploitation.

Refusal to License

The owner of the Intellectual Property is the exclusive right-holder and can restrain others from using its Intellectual Property under Intellectual Property Laws. However, the refusal of a Patented technology prohibits entrance of new products into the market and is considered Anti-Competitive.

In the case of Entertainment Network (India) Limited v Super Cassette Industries Ltd, the Supreme Court of India observed that “when the owner of a copyright exercises monopoly over it, any transaction with unreasonable terms would amount to refusal. It is true that the copyright owner has complete freedom to enjoy the fruits of his labour by charging royalty through the issue of licenses. However, the right is not absolute.”

Cartelisation

The formation of cartels is an anti-competitive activity. It is widely prevalent in the Indian film Industry. There are reported cases of copyright infringement and anti-competitive activities. In FICCI-Multiplex Association Vs United Producers Distributors Forum, It was held by the Competition Commission of India that United Producers Distributors Forum (UPDF) entered into a cartel-like activity that since it had a 100 percent market share, therefore, the ability to control the release of films. The CCI decided that UPDF had restricted the supply of films to multiplexes and it was an anti-competitive act under Section 3(3) of the Competition Act 2002.

Excessive Pricing:

The act of excessive pricing is witnessed in a monopolistic market when there are no substitutes available for any commodity. The Patented products can charge excessive prices as it is not restricted under provisions of competition act. However, there are certain commodities on which the government regulates price control. One of those commodities is a lifesaving drug. In Union of India vs Cyanamide India Ltd and another, it was held that Lifesaving Drugs do not fall outside the purview of Price Control.

Research findings

The unjustifiable use of IPR can cause damage to the consumers and society at large. The imposition of high prices on the use of IP by the owner is not anti-competitive and hence, not covered under Competition Act, 2002. Compulsory Licensing should be imposed by the government on IPR holders in order to refrain them from eliminating competition in the market. Tying arrangements should be strictly dealt with. Cartelisation should be strictly prohibited. It is the responsibility of the Competition Commission of India to regulate fair competition and protect against market distortion. It should be ensured that there is no abuse of rights by the right-holders.

Conclusion

The protection of the IPR of an inventor is to encourage innovation and growth in the market. It does not aim to constrain the market competition. However, there are certain activities that take place in the market and are unfair for the competition, the Competition Act, 2002 aims to curb those activities and regulate competition in the market. It is still difficult to decide whether the present Competition Act, 2002 is viable enough to ensure fair competition in the Indian market without intervening and restraining the exclusive use of IPR. It imposes regulatory measures to avoid abuse of Intellectual Property Rights. The two laws may be contrary in their purpose to promote and restrict monopoly in the market but they serve the common aim of promoting market innovation and development. The IPR law is not an abuse of competition law. However, there may be cases in future where the Intellectual Property Laws may overlap with the Competition Act, 2002. The present Competition Act, 2002 is outdated. It was last amended in 2009. It is not competent as per the growing market requirements and needs to be amended in purview of the arising deficiencies.

References

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

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Critical analysis of loopholes in the POSH Act

Oishika Banerji

October 22, 2021

Engineer-women (1) — Image Source: https://rb.gy/83xjlc

This article has been written by Soumali Roy. This article has been edited by Smriti Katiyar (Associate, Lawsikho).

Table of Contents

Introduction

Gone are the days where only men were considered capable of being the bread earners of a family. Nowadays women work shoulder to shoulder. However, with the larger intrusion of women in the Indian workforce, sexual harassment at workplaces have reached greater dimensions. It violates a woman’s fundamental right to equality and life guaranteed under Articles 14, 15 and 21 of the Constitution. It creates an insecure working environment for women and further declines their confidence to compete in today’s world. It hinders their work performance and pulls them down in their social and economic growth adding up to their physical and emotional suffering.

The Prevention of Sexual Harassment Act also known as the POSH Act came into force in December 2013. It is applicable all over India. This Act was brought into force keeping in view to provide a safe working environment to all the women working across different sectors in India-organised or unorganized. The POSH Act defines sexual harassment as making physical contact and advances, requesting or demanding sexual favours, making sexually coloured remarks, showing pornography, or any other unwelcome physical, verbal, or non-verbal conduct of sexual nature. The traditional method of settlement of criminal cases can go on for decades. Keeping this scenario in mind, this special Act was made for the speedy redressal of crimes of sexual nature against women at their workplaces. However, one can still file a police complaint under the Indian Penal Code against sexual harassment.

It is mandatory as per this Act for every employer to set up an Internal Committee (IC) with 10 or more employees. For establishments where there are less than 10 employees or the complaint is against the employer itself, the State Government’s district officer or collector is required to form a Local Committee (LC) in each district and at the block level if required. The Government also must impart training, organize awareness programmes, maintain data on the number of sexual harassment cases filed and ensure proper implementation of the law at every nook and corner.

After the implementation of this Act, many women have started speaking out against sexual harassment but that’s only been limited to the formal sector. It has not been of much help to the women employed in the informal sector. There the women still find it difficult to report such cases because of the stigma, fear of losing the job and lack of belief in the justice system. There are plenty of legislative, judicial and implementation gaps in the Act which need to be addressed. My article discusses the history of the Act, the loopholes and suggestions for better implementation of this Act.

A brief history of the Act

Bhanwari Devi was a social worker employed with the Rural Development Programme of the Government of Rajasthan. In the year 1992, she was gang-raped in front of her husband by upper-caste men angered by her endeavours to prevent child marriage in their family. She was eluded by the Indian justice system. The accused were acquitted of rape and instead charged with a lesser offence. They had to serve in jail only for 9 months. The state authorities and her employer denied any responsibility as she was attacked in her own field.

There was a huge public outrage after this incident which paved the way for new sexual harassment prevention laws for women at workplaces. The social activists filed a Public Interest Litigation (PIL) in the Supreme Court demanding safer workplaces for women and employers to take responsibility to protect their women employees at every step. The Supreme Court acknowledged the glaring inadequacy and acted on this petition in Vishakha vs State of Rajasthan in the year 1997 and laid down the Vishakha guidelines.

In these guidelines, the Supreme Court made it mandatory for every employer to take necessary steps for the protection of women employed at their organisations against sexual harassment and also provide procedures for mitigation. In 2013, India enacted the POSH Act to protect women employees against sexual harassment both in the formal and the informal sector.

Case laws

Sutapa Roy vs. Seagull Book Stores Private Limited

Sutapa Roy was an employee at Seagull Book Stores Pvt Ltd. The manager started making sexual advances towards her. Initially, she was tolerating the harassment until December 1999, when she verbally informed a Senior management Executive but was petrified to make a written complaint fearing adverse job consequences. Despite her complaints, the harassment continued and involved kissing, verbal overtures and proposals for one night stands in hotel rooms. Soon after her written complaint, she was made to sign a resignation letter or accept termination. She accepted the former. The Seagull book stores formed a complaints committee after two months of this episode to look into the charges but it failed to function properly. Thereafter a network of women’s organizations in the city gathered to create public awareness on the issue. They decided to arrange Dharnas in front of Seagull Bookstall at the Calcutta Book Fair 2001. Finally, after many hues and cries the Seagull management decided to offer redress. They paid monetary compensation and also issued a letter of apology to Sutapa. While reckoning her emotional journey Sutapa said “the apology letter is the first recognition of my dignity as a human and it wouldn’t have been possible without the support of the movement.

Nalini Netto vs Neelalohitadasan

Nalini Netto, an IAS officer was assaulted by the then Transport Minister of Kerala at his office during an official meeting. She informed her husband (also an IAS officer) and her colleagues about this who advised her to remain silent. She didn’t lodge a complaint fearing to tarnish her image. She requested the intervention of the Chief Minister when the situation went out of hand but simply asked for a different working environment instead of prosecution of the perpetrator. Immediately after her case, another incident came into light, of Prakriti Srivastava, alleging harassment by the same Minister. Instead of filing a written complaint, she reported the incident to the city police commissioner. She was asked to depose during the investigations. She started receiving threats of grave nature from the Minister after her deposition. Unable to bear the torture, she filed a written complaint under section 354 of the Indian Penal Code (IPC). The Government appointed some committees to look into the matter which insisted on having a public trial though as per Vishaka guidelines it is to have an in-camera hearing. In Nalini’s case, a Fast-Track court in 2008 acquitted the Minister of charges of harassment and sexual assault and in Prakriti’s case, the culprit was sentenced to one year of imprisonment.

Loopholes in the Act

Crisis in the informal sector

The majority of women working in the informal sector do not come under the shield of labour laws and are not provided social benefits such as maternity leaves, sick leaves or health insurance. They work in a perilous environment and are often victims of rampant sexual harassment. They are not able to report it because they do not have properly functioning LCs for their workplace and have no accessible channels for redress. For instance, Nisha, an ASHA worker reported that sometimes when they are alone at their workplaces, the male colleagues’ comment on their dressing and ask lewd questions making it uncomfortable for them to carry on their work. Some of their work requires them to make calls at night in case of emergencies making them vulnerable to further harassment.

Domestic workers are another significant category of workers who are vulnerable to sexual harassment because of the nature of their work. They suffer sexual harassment and violence in isolation of private spaces and sadly they also are excluded from key labour protections. For protecting domestic workers India needs to ratify the International Labour Organization’s Domestic Workers Convention which hasn’t been done yet. The provisions of the POSH Act says that for domestic workers the Local Committees have to report the case to the police. The fear of humiliation at police stations and threats of losing work makes the domestic workers reluctant to report such cases. Women are even scared to report rape cases let alone filing a complaint about sexual harassment. Martha Farrell Foundation interviewed a part-time domestic worker where she was asked about the awareness of the POSH Act. She said in the interview that though she is aware of this Act, would never think of going and reporting an incident to the police because this law doesn’t do anything to protect them. “Even if we complain, nothing happens. When we protest against an incident the police pressure us to be silent. The employers file false complaints against us when we think of complaining to the police.”

Based on 85 interviews conducted by the Human Rights Watch of women working in both formal and informal sectors, it was revealed that there’s very little that the Government has been doing in enforcing this law and filling the gaps in mechanisms in the informal or unorganised sectors. A study was conducted by Martha Farrell Foundation in 2018 which revealed that many districts in the country have either failed in establishing the committees as declared in the Statute or have failed to maintain harmony with the legal provisions in the Statute. The members of the district where LC has been constituted are not aware of their roles and responsibilities and that indicates their inability to handle sexual harassment cases. There’s a lack of awareness about the LCs because the Central government has not provided the State governments with funds for spreading awareness. There is no budget allotted for the implementation of the POSH law. All of this indicates a failure of implementation of this law in the informal sector.

Sexual harassment at the workplace leading to a lack of women participation in the workforce

India is one of the fastest-growing economies with an accelerating output growth but regrettably, the Indian Labour market portrays a different scenario with several hard-hitting negative features. It marks a sunken rate of women labour force participation across states. Going by this scenario, it is evident that the concept of gender equality in the sphere of employment is in jeopardy. We are well aware that gender equality is quintessential for smooth economic development. The Global Gender Gap Report of the World Economic Forum for the year 2015 finds a positive concatenation between gender equality and per capita GDP.

If we try to reach the crux of gender inequality in India’s workforce, we will find that one of the reasons is sexual harassment at the workplace. Workplaces are supposed to impel confidence but in turn, become a site of violence against some women. It discriminates against every woman’s right to work followed by equal pay for equal work and jeopardises her opportunities for advancement. Research conducted by ILO suggests that young, financially independent and single women are more prone to sexual harassment. Long gone are those days where women stayed home to manage only the household and were considered subordinate to men. The changing times have marked an increase in educated women. The number of women doctors, lawyers and other professionals continue to swell and excel. Despite being capable they are unable to have compatible working environments.

It’s high time we recognize the fact that more participation of women in the workforce is important for the growth of our nation. There is a need to revisit the share of women who are working or are actively looking for work. To remove the impediment in economic growth the gender gap that exists in education, workforce participation or entrepreneurial activity must not be allowed to exist.

Conclusion

The swiftly changing work environment fortifies the soaring importance of zero-tolerance policy towards sexual harassment against women at the workplace. The POSH Act is a milestone in the history of gender equality legislation in India where the Government has made remarkable advances in the Vishakha guidelines. It puts a mandatory obligation on every employer to spread awareness and protect and provide redressal to the women working in their organisations against sexual harassment of any nature. However, as against the above-broached scenarios, it is evident that the Act has not taken into cognizance the fact that a bulk of women are employed in the informal sector. The majority of them have been kept outside the protective cover of this law. This includes the women employed in rural areas, small enterprises, unorganised sectors, flexible workplaces, self-employed and those working in home-based industries.

The Indian Government needs to take urgent steps to raise awareness and ensure the implementation of the laws at the grassroot levels.

The steps must include:

Creating and monitoring effective operation of the ICs and LCs.
Carry out inspections and sanction employees who fail to comply with the orders.
Ensure proper hearing and redress for victims.
Ensure a transparent complaint mechanism and adequate compensation for the victims.
Publishing data on an annual basis on the number of sexual harassment cases filed and resolved by the committees.
Ratify and implement the ILO convention on violence and harassment.

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

LawSikho has created a telegram group for exchanging legal knowledge, referrals, and various opportunities. You can click on this link and join:https://t.me/joinchat/J_0YrBa4IBSHdpuTfQO_sA

https://shodhganga.inflibnet.ac.in/handle/10603/243866

Essential Defence Services Ordinance, 2021 – right to strike of the essential defence service employees

Sneha Mahawar

October 22, 2021

This article is written by Daisy Jain, from Nirma University. This is an exhaustive article which deals with the Essential Defence Services Ordinance, 2021 – right to strike of essential defence service employees.

Table of Contents

Introduction

The Essential Defence Services Ordinance, 2021, was promulgated by the President on 30th June 2021, in the exercise of the powers authorized under Article 123(1) of the Indian Constitution. Because Parliament is not in session and the President has determined that conditions present that necessarily require urgent action, the President has propounded an Ordinance under the provisions of Article 123, clause (1), of the Indian Constitution. According to the Ordinance, the government has the authority to help stop layoffs, strikes, and lockouts in defence-related organizations. As per the ordinance, the employees involved in the manufacturing of defence infrastructure and supplies, the operation or upkeep of armed forces industrial facilities, and employees involved in the repair and upkeep of defence products are all encompassed by the Ordinance.

Earlier in June, the government proposed a long-term plan to reinforce the Ordnance Factory Board, which currently runs 41 ammunition and military supplies, defence-related manufacturing facilities and has been in operation for nearly 200 years, into seven state-owned corporations to enhance transparency, effectiveness, and sustainability in the industry. Traditionally, workers have used their right to strike as a means of resolving disagreements with supervisors and compelling management to comply with their requests and demands. Every day, we encounter labor unions going on strike to seek that their demands for decent working conditions, such as a better wage, better benefits, and more vacation time, are accepted by their employers, and this is something we can all relate to. The right to strike has been recognized by many national and international legislations. This Ordinance is provided for the refurbishment of essential defence services to safeguard national security and to ensure the safety and assets of the wider populace. It also addresses issues relating to or inadvertent to these services.

Provisions related to strike

It wasn’t until 1926 that a law was passed to regulate industrial disputes. Bypassing the Trade Unions Act of 1926, the right to strike was formally recognized in a de facto manner. Members and employees of recognized labor unions were provided immunity. Sections 18 and 19 of the Trade Unions Act of 1926 recognize the right to strike. These sections protect from civil liability for trade unions that are on strike. When Chapter V of the Industrial Disputes Act of 1947 was passed, it recognized both the right of employees to go on strike and the right of employers to go on lockout. This right is not absolute and is subject to the restrictions imposed by the same Act. The definition of the phrase “strike” can be found in Section 2(q) of the Industrial Disputes Act, 1947. If an industrial dispute is referred to the Labour Court, the Labour Tribunal, or the National Tribunal, Section 10 (3) forbids a strike unless authorized by the relevant government. Section 10A (4A) deals with an order from the relevant authority forbidding a strike if an industrial dispute is submitted to arbitration. When a strike is extended in denial of such orders, it is deemed illegal.

The deduction or refusal of wages seems to be another direct result of an illegal strike. In Crompton Greaves v. the Workmen (1978), the Supreme Court held that “it is well established that a strike has to be both valid and defensible for the workers to be entitled to wages for the period during which they are absent from the workplace.” If a strike does not violate any existing legislation, it is considered legal. A strike cannot be deemed indefensible unless and until the reasons for it are entirely unreasonable or bizarre. A verifiable issue, whether a strike was justified or not, must be resolved based on the factual data and conditions of each case. Employees who used “force, aggression, or acts of sabotage” during the strike would be barred their wages for the period of the strike, it was also resolved.

In the case of Bank of India v. TS Kelawala (1990), the Supreme Court took a distinct standpoint on wages during the strike (1990). Workers are authorized compensation for lost wages during a strike, irrespective of whether the strike is legal or illegal. The possibility of losing wages does not render a strike as a weapon illegal, nor does it denude workers of their right to strike. When employees use it, they do so with full knowledge of the ramifications. Besides that, in the case of Syndicate Bank v. K. Umesh Nayak (1994), the Court held that employees who go on strike, whether legal or illegal, are authorized to pay wages for the duration of the strike. A cumulative reading of these judgments leads to the final result that if a strike does not violate existing laws, i.e., if it is justifiable and rational, the workers cannot be denied wages while on strike. Workers, on the other hand, are not authorized to receive any compensation while participating in an illegal and unjustified strike. As for the newly propagated Ordinance, which is known as the Essential Defence Services Ordinance 2021, it is an amendment to the International Labor Organization (ILO) Industrial Disputes Act, 1947, that includes crucial defence services under the interpretation of “public utility services” to resolve labor disputes.

Right to strike and its constitutional validity

Disputes over the interpretation of Article 19 of the Indian Constitution have existed since its inception. Many times, the Supreme Court of India has construed the Article in a widespread manner and expanded the scope of its implementation. Several rights, such as the right to non-violent protest, freedom of the press, the right to information, and the right to access the internet have been added to Article 19 throughout its existence. Article 19 (1)(c) of the Constitution, which bestows the right to freedom of association, has, on the other hand, often been a cause of concern. Article 19 (1) of the Indian Constitution grants all citizens the right to “form associations and unions.” However, this right does not have an absolute scope, and it is subject to certain rational limitations outlined in Article 19 (4) of the Indian Constitution.

The few exceptions are India’s sovereignty and territorial integrity, as well as public order and moral code. These limitations could be of a procedural or substantive nature, respectively. In many cases, the Supreme Court has been requested to rule on whether the right to strike is a fundamental right under Article 19(1)(c) of the Constitution. According to the Supreme Court, even a very broad interpretation of Article 19(1)(c) cannot direct to the final result that trade unions have an assured right to effective collective bargaining or the right to strike. It was contended that “collective bargaining must be binding to be successful, with labor withholding its integration from the employer, and thus there is a fundamental right to strike, which is thus a primal exemption from the right to form unions guaranteed by Article 19(1)(c).”

According to the ruling in Bharat Kumar v. State of Kerala (1997), no political group or organization has the authority to call for a bandh. A Full Bench of the Kerala High Court stated that they are not allowed to prevent people who do not express their perspective from exerting their fundamental rights or carrying out their responsibilities for their own or the state’s profit. They are also not allowed to discriminate against people who do not express their viewpoints. As a result, while Indian citizens have the freedom to form organizations and unions, the right to strike is not recognized as a fundamental right under Article 19(1)(c) of the Constitution. The right to form associations or unions is granted to citizens under Article 19(1)(c), but they do not have the right to strike under this provision.

Both special and common law courts in India have ruled that a person’s right to strike does not constitute a fundamental and absolute right. While workers have historically used strikes to accomplish their goals and objectives, halts or stops in production, whether caused by employees or employers, are detrimental to the economy and society as a whole. However, while there have been instances in which the right to strike has been mistreated, it has also been demonstrated to be efficacious in safeguarding workers’ socioeconomic rights in the workplace. As part of the right to collective bargaining, employees, workers, and laborers will continue to use the right to strike as a way to convey or react to their concerns, among other things.

The Essential Defence Service Ordinance, 2021

To ensure the continuation of essential defence services, the President promulgated the Essential Defence Services Ordinance, 2021 on June 30th. It enables the central government to restrict strikes, lay-offs, and lock-outs in units that provide essential defence services, as provided by the ordinance.

Essential defence services

Any service in the following categories is considered essential defence services:

Any institution or undertaking engaged in the manufacture of goods or equipment needed for defence-related uses, or
Any military or defence establishment, or any establishment associated with the armed forces or defence. These also entail services that, if discontinued, would have a negative impact on the security of the establishment providing the services or the employees who work there.

The government may also proclaim any service as an essential defence service if the discontinuance of that service would have a detrimental effect on any of the factors listed below.

The production of defence-related equipment or products.
In addition, the functionality and upkeep of industrial establishments or units that are involved in such manufacturing.
Products connected with the defence industry are repaired or maintained as part of their regular routine maintenance.

Strikes

According to the Ordinance, a strike is described as the discontinuation of work by a group of people acting as a whole. It involves the following actions:

large scale casual leave;
synchronized refusal of any number of people to proceed working or approve employment;
refusal to work extra hours when such work is required for the upkeep of essential defence services; and
any other act that results in, or is likely to result in, disturbance of work in essential defence services.

Prohibition on strikes, lock-outs, and lay-offs

The central government may restrict strikes, layoffs, and lockouts in units providing essential defence services under the Ordinance. The restriction order will be in effect for six months, with the possibility of a six-month extension. The government may execute such an order if it is required for India’s integrity and sovereignty, any state’s safety, law and order, social etiquette, or morality. Strikes and lockouts that are proclaimed after the restriction order has been issued, or that have already started before the restriction order has been issued, shall be illegal. Layoffs caused by a power shortage or natural disaster, as well as layoffs of interim or occasional workers, will be exempt from the restriction.

Punishment for illegal strikes, lay-offs, and lock-outs

Employers who violate the restriction order by engaging in illegal lockouts or layoffs will be subject to a maximum one-year jail term or a fine of Rs 10,000, or both. The punishment for those who initiate or participate in illegal strikes may range from one-year confinement to a Rs 10,000 fine, or both, depending on the circumstances. People who incite, instigate, or take actions to resume illegal strikes, as well as those who intentionally provide money for such uses, will be penalized with up to two years jail term or a fine of Rs 15,000 or both. An employee who violates the terms and conditions of his or her employment will also be subject to disciplinary action, which may include rejection. In such cases, if it is not sensibly feasible to conduct an investigation, the responsible authority may reject or expel the employee without holding a hearing. All offenses punishable by the Ordinance will be cognizable and non-bailable.

Public utility service

The Industrial Disputes Act, 1947 is amended by the Ordinance to involve essential defence services under the definition of public utility services. A six-week declaration must be given in the scenario of public utility services before employees of such services go on strike in violation of contract or employers who provide such services engage in lock-outs.

Objectives of the Ordinance

The proposed law is primarily intended to help stop employees of government-owned ordnance factories from going on strike. There are 41 ordnance factories located throughout the country, employing approximately 70,000 people. Specifically, according to the Ordinance’s “Statement of Objects and Reasons,” “the ordnance factories form an interconnected base for native Indian manufacturing of defence hardware and machinery, with the main goal of soul dependence in assisting the military services with state of the art battle-field machinery.” Considering that it is “absolutely requisite” that an undisturbed production of ordnance products to the armed forces be sustained, particularly in light of what is currently taking place on the country’s northern front, it was deemed important that the government is given the authority to guarantee the continuation of essential defensive services at all institutions attached with defence, whether in the public’s life and welfare or the interest of national security.

Powers in the Ordinance

The Ordinance gives the government the authority to proclaim services listed in it as essential defence services if they “would have a detrimental effect on the manufacturing of defence equipment or commodities; or the function or upkeep of any industrial establishment or unit involved in the manufacturing of commodities or equipment required for any reason associated with defence; or the restoration or upkeep of products.” Strikes and lockouts are also prohibited in any industrial establishment or unit engaged in essential defence services.

Whom will it impact

The envisaged legislation has a significant effect on the approximately 70,000 employees of ordnance factories, who are concerned that the corporatization of OFB will have an effect on their working and retirement situations. Defence Minister Rajnath Singh has guaranteed the public that this will not be the case, noting that the Cabinet note, through which the proposal was approved by the government, specifically stated that there should be no alteration in the service circumstances of the employees. Last year, when the government declared that it would begin the procedure of corporatization of the OFB, the employee unions and organizations were confronted to go on strike as a result of the announcement. As stated in the legislation, “the mediation hearings introduced by the Government at the level of Chief Labour Commissioner were unsuccessful at the general meeting held on June 15, 2021. “

Conclusion

The statute provides for the maintenance of essential defence services in order to protect national safety, the lives and property of the wider populace, as well as the administration of matters correlated with or extrinsic to those services. Because parliament was not in session and the President was pleased that situations appeared that entailed a prompt response, the president is satisfied to affirm the ordinance in the exercise of the powers bestowed by Article 123(1) of the Constitution. Pertinent governing bodies of the Ordnance Factory Board (OFB) have announced that they will go on an unspecified strike on July 26, 2021, in protest of the government’s proposal to divide the Board into seven different corporations. Additionally, employees working in the defence manufacturing industry must be given an equal opportunity to express their dissatisfaction with the Centre’s policy decisions.

References

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

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Will long-term targets ensure reduced climate changes

Sneha Mahawar

October 22, 2021

climate-change — Image source - https://bit.ly/3xkIGdJ

This article is written by Ridhi Mittal, a student of Symbiosis Law School, Noida. It talks about what are the different long-term targets framed in order to reduce the changes occurring in our climate.

Table of Contents

Introduction

Climate change basically refers to the change in temperature and weather patterns of a particular place. It is a long-term shift in the patterns. Often the weather is confused with climate but the basic difference that lies between the two is that weather changes are short-term changes but climate changes take a long time to evolve; they witness pattern changes for decades and centuries. These climate changes have gone worse due to problems like global warming, ozone layer depletion, and an increase in pollution. To curb the climate change, many measures are taken by different countries, separately as well as collectively with other nations. Countries soon realised that coming together and ensuring measures is better since it is not the problem of one but all. Some of the conventions formed by every country joining hands against climate change are the United Nations Framework Convention on Climate Change and the Rio Earth Summit.

Cause of climate change

The average global temperature has touched heights. From the period of 1906 to 2005, it rose for about 0.74 degreecelsius. Then from pre-industrial time to 2015, the temperature got 1 degree warmer. These changes in climate occur due to a number of reasons, some of which are listed below :

Human activities have been one of the prime reasons for climate change. Humans have been digging up fossil fuels like coal and oil for the purposes of generating electricity and running vehicles. Even doing agriculture beyond limits that release gases like methane and carbon dioxide, thereby causing harm to the environment. These gases are usually absorbed by plants and trees but due to the increased rate of deforestation, it has also become a contributing reason for climatic changes due to human activity. Unfortunately, 15 billion trees are cut down every year for industrial development.
Pollution has been yet another factor for such negative changes in the climate. Pollution basically refers to the substances that are dangerous and poisonous for the environment. Pollution can be noise, water and air pollution. Polluting water can be dangerous and harmful for the climate as marine life gets destroyed with water pollution. Air pollution has a direct connection to the climatic changes. The air that we breathe gets polluted by smoke from industries or by vehicles on the road which in turn affects the environment.
When there is a gradual increase in the Earth’s overall temperature and is generally attributed to the causing of greenhouse effect by the increased levels of carbon dioxide and other pollutants, it is referred to as global warming. Due to this increase in temperature the natural balance of Earth goes wrong as it becomes hotter and also this high temperature leads to melting of glaciers and mountains.
The ozone layer is the outer layer of the Earth that protects it and its people from direct sun radiations. But because of the melting of ozone layers, the sun’s extreme heat is now coming in contact with the Earth which leads to high temperatures in the states.

Measures to curb climate change

Climatic changes have a negative effect on the environment. It is absolutely mandatory for everyone to take measures in order to cope with the changes and not let them get any worse than how it already is. Both individual and state-level measures are required to do so. Some of the measures that can help in maintaining the climatic changes are as follows:

At an individual level, one can start by installing solar panels to their house. It is beneficial for both the environment as well as individuals themselves as solar panels generate electricity through the solar radiations or the sun’s rays. Companies like Tesla have contributed immensely in installing solar panels.
Replacing light bulbs with LEDs is again a great measure as LED bulbs last 25 times longer than light bulbs and use 75 percent less energy than the others.
Avoiding the use of plastic would create a lot less pressure on the environment which, in turn, would reduce the negative effect on climatic changes. Instead reusable things like jute bags or tupperware bottles should be used as they are not use-and-throw items and can be reused.
Using cold water or fresh water instead of warm water for washing clothes is highly advised and also beneficial. It is because the warm water tends to loosen the fabric of the cloth and destroys it if washed a lot. Also, using warm water has negative effects on the environment because the heat produced contributes to increasing greenhouse gases and the use of electricity for warming water puts a pressure on the environment.
Unplug the electronic devices when they are not in use; just because a device or any gizmos appears to be off doesnt mean its not drawing power, things like your cable box, laptop and even your speakers maybe using almost as much power when they are off but plugged in as when they are on.

Role of International Law in improving the climate

Due to the exhaustive human activity on earth, climate changes took a negative turn therefore, most of the countries came together and started working upon climate changes and took measures to curb them. One such conference was the Rio Summit or we can say the Earth Summit. The Rio Summit can be referred to by other titles as well, namely, ‘The United Nations Conference on Sustainable Development’ or ‘Rio 2012’ or ‘Rio+20’ or ‘Earth Summit 2012’. This summit was the third international conference discussing sustainable development by aiming at reconciling the economic and environmental goals of the global community.

The Rio Summit was held in June 2012 in Rio de Janeiro, Brazil with the objective of sustainable development. This conference marked the 20th anniversary of the UN Convention on Environment and Development (UNCED) in Rio in 1992. States participating in the 1992 meeting politically endorsed the objective of “sustainable development” as achieving economic, environmental, and social development that meets the needs of the present without compromising the ability of future generations to meet their own needs. In Rio, member states decided to launch a process to develop a set of Sustainable Development Goals (SDGs), which will build upon the Millennium Development Goals and converge with the post-2015 development agenda.

Green economy policies were adopted at the conference. An intergovernmental process was also established by the state parties under the General Assembly in order to prepare strategies for sustainable development financing. Governments also agreed to strengthen the United Nations Environment Programme (UNEP) on several fronts with action to be taken during the 67th session of the General Assembly. A High-Level Political Forum for the purpose of sustainable development was also decided to be established. A request by the government for the United Nations Statistical Commission was made in consultation with relevant United Nations system entities and other relevant organizations. This was done to launch a programme of work in the area of measures of progress to complement gross domestic product in order to better inform policy decisions. A 10-year framework of programmes on sustainable consumption was adopted by the state parties.

The Rio+20 organizers indicate that state parties were expected to adopt clear and focused practical measures for implementing sustainable development, based on many examples of success they had seen over the last 20 years. However, they were mixed views among participants and certain issues were as follows:

The aspects of the green economy with adequate emphasis on social aspects like fairness of sustainable development.
Whether the Sustainable Development Goals (SDGs) should replace or supplement the Millennium Development Goals (MDGs); it was agreed by the U.N, General Assembly in 2000 and expected to end in 2015, as well as how SDGs might be negotiated, and what priorities might be set among them?
How to reform international environmental institutions, especially if strengthening of the United Nations Environmental Program should be done?
What actions, if any, might lead to improved implementation of existing sustainable development goals, given slow progress so far?
Whether governments may commit to greater financial and technological assistance to low-income countries to assist their sustainable development?

Effectiveness of the measures taken

Two highlights of the Rio summit were an agreement to develop a set of global sustainable development goals (SDGs) and to establish a high-level political forum on sustainable development. Using the green economy for the purpose of achieving sustainable development was discussed as an outcome. Promotion of corporate sustainability, strengthening the United Nations Environment Programme, and taking steps to go beyond the gross domestic product to assess the well-being of the country were also talked about. The desired future has its focus on improving gender equality and recognising the important role that indigenous knowledge plays in sustainable development. The measures taken are pretty effective, for instance, the decrease in the use of plastic. It was one of the measures to reduce the use of plastics as plastic is hazardous to both health and the environment. We can see how almost every country has started to become a plastic-freeze Nation. This is also a clear example of the positive effects of long-term goals. Setting long-term goals is a great measure as to when we talk at the state level. Bringing a change is a process that takes time, therefore, setting long-term goals should be the prime objective and to achieve these long-term goals, short-term goals should be framed.

Conclusion

To conclude, we can say the climate is what we expect and the weather is what we get. Nowadays, the climatic changes are getting worse due to the inconvenient behaviour of mankind which lead us to global warming and depletion of the ozone layer. Also, doing agriculture beyond limits releases gases that can be very harmful to the masses and to the climate. A solution to this was that a few steps were taken to protect the climate like installing solar panels and using LED lights instead of bulbs. Moreover, to improve the conditions, conferences like the Rio Summit took place which were very effective for the climate and brought a change in human life. The conference held was the third international conference that was set up to discuss sustainable development in respect of environmental goals of the global community which also adopted the green economy policies; besides many more policies were acquired to shape the environment. In the end, it had a consistently positive impact on oceans which was helpful to restore the health and reliance of ocean and marine ecosystems and also maintain biodiversity.

References

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

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

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Tata Sons v. Cyrus Misty : a case study in corporate governance

Oishika Banerji

October 22, 2021

This article has been written by Kumar Rajiv Ranjan pursuing the Diploma in General Corporate Practice: Transaction, Governance and Practice from LawSikho. This article has been edited by Adarsh (Associate, Lawsikho) and Smriti Katiyar (Associate, Lawsikho).

Table of Contents

Introduction

The much publicized controversy and corporate war between Ratan Tata of Tata Sons and once his touted protégé Mr Cyrus Mistry was back in news recently when a News item was published on 5^th October’21 in the Economic Times that the promoters of SP[ Shapoorji Pallon Ji ] group were planning to raise Rs 6600 Crores by selling debentures to the investors that will be secured against shares of Tata Sons, the holding Company of Tata Group , according to the documents filed by Mistry family in this regard with Registrar of the Company on 25^th September 2021.

This move by the Mistry family has been considered a purposeful attempt to cause a dent to the image of Tata Sons by many legal experts, and likely to be controversial considering the fact that Tata Sons in the past have also raised objections to Mistrys’ pledging their stake in the conglomerate holding Company. During the extended legal battle between two of the oldest conglomerates in India, it has come on record that the Mistry family does have a holding of 18.4% stakes in Tata Groups. Ever since the removal of Mr Cyrus Mistry from the position of Executive Chairman of Tata Sons in 2016 and subsequently from the Board of Tata Group of Companies as Director, the once sweet relationship between two of the oldest business conglomerates has turned sour and acrimonious and a long extended legal battle between the two corporate houses is going on.

Shapoorji Pallonji Group Scion Cyrus Mistry had succeeded Ratan Tata as the Chief and Chairperson of Tata Sons in 2012 amidst a lot of hoopla and fanfare. He was touted as the Future of Tata Sons. Four Years later he was unceremoniously shown the door by his mentor, none other than Mr Ratan Tata himself. The war which began on that day has been continuing.

Brief fact of the case

Mr Ratan Tata is one of the most respectable names in the corporate world. He is former chairman of Tata Sons and also of Tata group. Tata Sons have also ventured into the world of software and consultancy where it is one of the biggest and most established brands as Tata Consultancy services[TCS]. TCS is a multinational information technology services company and a sister unit of Tata Sons. But in the feud between Tata Sons and Mistrys, TCS also played a small but significant role. In fact, they were impleaded as Respondents by Mistry family/their investment firms when they filed the case before NCLT and they were also one of the appellants when NCLAT order was challenged before Supreme Court. In fact, the final verdict by the Supreme Court was delivered in civil appeal No. 440-441 of 2020 filed by TCS by clubbing other appeals of Tata Group.
Mr Cyrus Pallonji Mistry is the scion of Shapoorji Pallonji Group and he is an Irish businessman of Indian origin. He was the Sixth Chairman of Tata Group and remained seated on that Chair from 2012 to 2016, after which he was voted out by the Board of Tata Group and Mr Ratan Tata returned as its Interim Chairman, and a few months later Mr Natrajan Chandrasekaran from TCS was chosen as the new Chairman.
As far as Shaporji Palonji Group is concerned, it is a construction, infrastructure, power, shipping and real estate company having its HQs at Mumbai. One of its listed Companies Forbes & Company Limited, is the oldest registered company in India engaged in shipping, logistics, engineering etc. and is also a well established brand in the field of water purification and its product Eureka Forbes is one of the highest selling and trusted water purifiers pan India. Mr Cyrus Mistry is also the director of Cyrus Investment Private Limited which is a non- Government Company and an investment advisor.
When Mr Ratan Tata stepped down from the position of Chairperson of Tata group, the selection panel of Tata Group selected Mr Cyrus Mistry as his successor. The candidature of Mr Mistry was also strongly supported by Mr Ratan Tata at that point of time. But soon differences arose between him and other Directors over his style of functioning and gradually an atmosphere of lack of confidence and trust was built up. Differences arose also between Mr Mistry and Mr Ratan Tata also over his style of functioning which was considered as too autocratic and not in consonance with democratic management style being practiced by Tata Group and Bombay House.What sealed his fate however was a decision of him taken in June 2016 when he finalized Tata Power’s acquisition of Welspun’s Solar farms for Rs 1.4 Billion without even consulting and taking approval of Mr Ratan Tata and other key shareholders. It was not the way the business had been run at the Bombay House. It turned out to be the final icing on the cake.
Finally, on October 24 2016, he was removed from the Chairmanship of Tata Sons after a majority of the Board of Directors voted for his removal due to loss of confidence. Further, after his removal, concerted efforts were also made to remove him from all the group companies including Shapoorji Pallonji Group. Mr Ratan Tata returned as Interim Chairman of Tata Group. Finally on 12^th January 2017, Sri N Chandrashekaran, then Chief Executive Officer and Managing Director of TCS was appointed as the Chairman of Tata Sons.Sri Mistry was also removed from the Board of Tata Sons as Director on 6^th February 2017.

The legal battle

In the wake of above developments, Mr Cyrus Mistry filed an application under Section 241 and 242 of the Companies Act[ hereinafter referred to as the Act] before the National Companies Law Tribunal [hereinafter called as NCLT] on following grounds:

There was oppression of minority shareholders.
There was operational mismanagement by Tata Sons. They cited the failure of the Nano Car Project and heavy losses suffered therein.
Abuse of a few Articles by Tata Sons and control of Tata Trust over the board of Tata Sons which they alleged to be an unethical corporate government practice.
Article 75 of articles of Association of Tata Sons came under Specific challenge.
Questioned transaction of Rs 22 Crores in Air Asia by Tata Trust.
Transactions made with Siva and Sterling Group of Companies by Tata Groups were questioned.

Acquisition of Corus at overpayment by Tata Trust was also questioned.

This case was filed on December’20 2016 by two Mistry family backed investment firms namely Cyrus Investment Private Limited and Sterling Investment Corporation Private Limited before NCLT,Mumbai. The removal of Mr Cyrus Mistry was also challenged.

The legal issues

Who are Minority Shareholders and what is Minority Interest ?

Oppression of Minority shareholders is one of the big issues raised by the Mistry family through their investment firms and subsequently through the petition of Mr Mistry himself. As the legal battle subsequently reflected, Mistry family initially got relief but the issue could not be sustained finally when questions of interpretation of the terminology came into operation. It was found that under the Companies Act’2013, the term “minority shareholding” and their rights has not been specifically defined in the same manner as it has talked about “ small shareholders” and “protecting the interest of small shareholders”. This absence of statutory provision for protecting the interest of minority shareholders in the Act turned out to be the weak link of the case as raised by Mistry family as the different pages of the legal battle between the two corporate houses later unfolded.

Generally speaking, a Shareholder is said to have minority interest in the Company if he is possessing less than 50% ownership or interest in the Company. The word can apply to either stock ownership or a shareholding interest in the Company. Minority interests are the part of Company or Shares that the parent Company does not own even though they have the majority interest. Most minority interests in the Companies and Corporate world have been seen to have ranged between 10 % to 30%.

In the present case, Mistry family through their two investment firms has a holding of around 18.4% of shareholding pattern of Tata Group under the backdrop of which they claimed before Court of Law that their interest was jeopardized by the Board of Tata Sons by removing Mr Cyrus Mistry from the position of Chairperson and later Director of Tata Group of Companies and their interest also suffered due to some poor administrative decisions by the Board of Tata Group of Companies and their general mismanagement.

Section-241 of the Act:

It deals with the provisions relating to applications to be made before National Company Law Tribunal[NCLT] in case of any oppression or mismanagement and it enables a member of the Company to approach the NCLT if the member feels that the affairs of the company are being conducted in a manner that is prejudicial to the public interest or the interest of the Company or the company is going through a material change and such change will be prejudicial to the interest of the members of the Company. It also empowers the Central Government to refer such matters to a tribunal if it feels that the affairs of the Company are being conducted in a manner which is prejudicial to public interest.

Section-242 of the Act:

It deals with the powers of the Tribunal to adjudicate upon and decide an issue whenever any application is moved before it under Section 241 of the Act.

Contention of various parties before NCLT and subsequently before superior courts

I.TCS and Tata Group:

i. There was no oppression on the part of the Tata group.

ii. It was the decision of the Board to remove Mr Cyrus Mistry from Chairmanship of Tata Sons.

iii. It was a reasoned and justified action and the Board was well within its right to take such decisions.

iv. There was no mismanagement.

II. CYRUS INVESTMENT PVT LIMITED, STERLING INVESTMENT COMPANY PVT LIMITED AND MISTRY FAMILY:

Removal of Mr Cyrus Mistry from the position of Executive Chairman [and subsequently as Director of Tata Group of Companies] was unlawful and an authoritarian act as well as an act of oppression by Tata Trust owned by Mr Ratan Tata holding 68% plus ownership in Tata Sons.
The Legality of Tata Son’s conversion from a public company to a private company.
Should Nominee Directors of a majority shareholder have substantial affirmative powers ?
Mismanagement and poor administration.

The chronology of events relating to precipitation of the legal battle before NCLT

6^th March’2017: NCLT Mumbai set aside the plea of the above named two investment firms over maintainability issues ruling that they did not meet the criteria of 10% ownership in the Company for filing any case of alleged oppression of minority shareholders under the Companies Act. The Court observed that the Mistry family owns 18.4% stake in the closely held Tata Sons but it is inclusive of preferential shares. If those shares are excluded, their holding gets reduced to less than 3%.
17^th April 2017: NCLT, Mumbai also rejected their plea seeking waiver in the criteria of having at least 10% ownership in a Company for filing a case of alleged oppression of minority shareholders.
27^th April 2017: The two orders of NCLT, Mumbai were challenged by the two Investment Firms before NCLAT.
21^st September 2017: The petitions of the two investment firms seeking waiver in filing the case of oppression and mismanagement etc. against Tata Sons were allowed by NCLAT. The other petition on maintainability was however rejected on the ground that Mistry family did not have more than 10% shares in Tata Sons.

The case was referred back to NCLT, Mumbai with directions to issue notices and proceed in the matter.

5^th October 2017: The two investment firms moved before the Principal Bench of NCLT at Delhi by filing a petition seeking transfer of the matter from Mumbai to Delhi citing likelihood of bias[ Perhaps a cardinal mistake and tactical blunder by the Legal Team of Mistry Group as by such petition, integrity of judicial system was questioned which are never appreciated by Superior Courts]
06^th October 2017: Expectedly the petitions were dismissed. A cost of Rs 10 Lakh was also imposed on the two firms which was to be shared equally.

The NCLT verdict

The case was heard by NCLT Mumbai and order was passed on July 09 2018 whereby the pleas of Mr Mistry/ two investment firms were dismissed. The pleas of Mistry challenging his removal as Tata Sons’ Chairman were dismissed. His other plea relating to rampant misconduct on the part of Ratan Tata and the Company’s Board was also dismissed as NCLT observed that it did not find any merit in the allegations of mismanagement in Tata Group firms.

THE BATTLE CONTINUES: APPEAL BEFORE NCLAT [NATIONAL COMPANY LAW APPELLATE TRIBUNAL]:

August 3 2018: The two investment firms filed their Appeals against the order of NCLT. Mr Cyrus Mistry also moved before NCLAT in his personal capacity against the order of NCLT.
August 29 2018: NCLAT admitted the petition filed by Mr Cyrus Mistry and decided to hear the same along with the two main petitions filed by the two investment firms
May23 2019: Hearing was concluded and NCLAT reserved its order.

The order passed by NCLAT

The much awaited order was pronounced by NCLAT on December 18 2019. The hon’ble Tribunal overruled the judgment passed by NCLT, Mumbai. Sri Cyrus Mistry was restored as Executive Chairman of Tata Sons but the Tribunal suspended implementation of the order by four weeks and thereby a reasonable time was allowed to Tata Sons to file its appeal.

In the order passed, the Tribunal held that Mr Mistry was removed from the post of Chairmanship illegally and the Board of Directors did not have a right to remove him. The Tribunal observed that such powers can be only exercised in exceptional circumstances and in the interest of the Company. Further, before exercising such powers, reasons for removal should be recorded in writing and intimated to the respective shareholders whose rights shall be affected. In light of the above, the Tribunal ordered Tata Sons Ltd to reinstate Mr Mistry and held that the appointment of Sri N Chandrasekaran as Chairman of Tata Sons was illegal.

However, as stated above, the NCLAT suspended the implementation of the order by four weeks and allowed Tata group reasonable time to prefer its Appeal.

The contentious issues and analysis of the orders passed by NCLAT vis-a-vis NCLT

Oppression of Mr Cyrus Mistry: On the contentious issue relating to the allegations that the affairs of the Company are conducted prejudicial and oppressive to the general public interest, interest of the Company and interest of its members, Section 241 is a legal tool available to a member of the Company under which an application can be filed before the Tribunal. This Legal tool was utilized by the two investment firms holding a minor shareholding of 18.45% and Sri Cyrus Mistry against his removal from chairmanship of Tata Sons. As already stated at preceding paragraphs, Section-242 allows the Tribunal to adjudicate upon such applications and pass its orders.
NCLT observed that removal of an employee falls within the ambit of Section 241 of the Act. The Tribunal, however, also observed that a Company is incorporated for the benefits of its members and it is for the members to appoint their Executive Chairman. In light of the above observations, the claim of the two investment firms/Sri Cyrus Mistry that the Company’s Board did not have any right to decide the Chairman was declared as devoid of merit and was accordingly rejected by NCLT, Mumbai. It acknowledged that the Board of Directors have lost confidence in Sri Cyrus Mistry and, therefore, they were within their rights in removing Sri Mistry.
On the other hand, NCLAT observed that Mr Mistry was removed from his post without any discussion and records of the Company did not show any lack of performance on his part. Therefore, NCLAT ordered for his reinstatement after four weeks from the date of its order.
Oppression of minority Shareholders: The bone of contention between the two business conglomerates was Articles of Association of Tata sons. Mistry Group contended that some of the Articles (and in particular Article 75) are extremely loaded in favor of Tata Sons and are oppressive in nature as far as minority shareholders are concerned which was hotly contested by Tata Group.
Article 75 of the Articles of Association of Tata Sons enables Tata Sons to ask any shareholder to sell its shares either to the existing shareholders or to any outsider selected by the Board through Special resolution. It was argued by Mr Mistry/ his Investment Firms that the above provision in the Articles of Association of Tata Sons is oppressive as it compels the minority shareholders to sell their shares as per the choice of Board of Tata Sons..
NCLT observed that Article75, even though it restricts transferability of shares, was in existence even before filing of the applications by the Applicants and about existence of this clause, the Applicants were very well aware much before filing of their applications before the Tribunal. In order to prove oppression, alteration in articles of association in a manner prejudicial to the interest of minority shareholders was required to be done but there was no such move by Tata Sons. Hence, NCLT, Mumbai observed that any allegation of oppression was not established.
On the other hand, NCLAT commented adversely upon existence of Article 75 in the Articles of Association of Tata Sons and observed that as it restricts transferability of the shares and as a result, on occasions it may work against the interest of minority shareholders in light of which it directed Tata Sons not to invoke Article 75 against the minority shareholders.
Conversion of Tata Sons into a private company from a public company: This was another contentious issue which came for deliberation before the judicial institutions. The NCLT observed that such a conversion of a public company into a private company does not fall within the ambit of Section 241 or Section 242 but NCLAT observed that in the instant case, the conversion from public to a private company was done suddenly and in between the proceedings. The NCLAT further observed that the correct procedure for conversion was also not followed.
QUASI PARTNERSHIP: The question as to whether or not Tata Sons can be recognized as a quasi partnership was raised before both the Tribunals. NCLT invalidated the claim of the applicants that the Company can be recognized as a quasi partnership between Tata Group and Shapoorji Pallonji Group but NCLAT acknowledged the claim. However, NCLAT did not accept and acknowledge that legitimate consequences from such partnership can lead to oppression. Moreover, the NCLAT also ignored the principles established by the Hon’ble Supreme Court in various judgments on how to determine whether it is a quasi partnership. This flaw in their order was later utilized by the Legal Team of Tata Sons before Apex Court.
MISMANAGEMENT: The allegations of mismanagement and prejudice were not accepted by NCLT on the grounds that they [Tata Sons] are majority shareholders and, therefore, they cannot go against their own interest. On the other hand, NCLAT observed that mismanagement was quite evident as Tata sons incurred heavy losses because of some prejudicial decisions and resolutions passed by its Board and observed that there were certain glaring examples of mismanagement and failure. The legal team of Mistry family repeatedly highlighted the failure of Nano Project, misadventure of Air Asia etc. which were given cognizance to by NCLAT.
However, the claim questioning the conduct of Mr Ratan Tata as the Director was held as unreasonable and frivolous by both the Tribunals as they observed that the applicants could not establish or prove that he (Mr Ratan Tata) acted prejudicially to the interest of the Company or the applicants.

Legal battle before the Apex Court

Aggrieved by the orders of NCLAT, Tata Sons Limited appealed before Supreme Court of India by preferring an Appeal having Civil Appeal number 440-441 of 2020 clubbed with some other Civil Appeals wherein their Legal Team coined the phrase of CORPORATE DEMOCRACY and successfully contested their case. It was contended that the NCLAT did not give cognizance to and rather undermined the existence of corporate democracy in Tata Group of Companies. The case was finally heard by a division bench consisting of Mr Justice S A Bobde, V Rama Subraminiam and A S Bopanna which was finally decided on March 21 2021.

The Apex Court set aside the order of the NCLAT, dismissed the charges of oppression and mismanagement against Tata Sons Ltd and ruled against Mr Cyrus Mistry. The Hon’ble Supreme Court acknowledged the questionable conduct of Mr Mistry and made a sweeping remark that Sri Cyrus Mistry himself invited trouble as he was involved in leaking extremely confidential and classified information about the company in the Media just to create sensation in light of which the Apex Court considered his removal from the position of chairmanship and Directorship of Tata Group of Companies as justified.

The Apex Court further observed that:

Mere removal of a person from the post of Chairmanship shall not fall within the scope and subject matter of Section 241 if it is not prejudicial to the interests of minority shareholders.
If the actions are not prejudicial or oppressive to the interest of the company, its members or the public at large, Tribunal does not enjoy any authority to interfere with the removal of a person as Chairman of a Company by exercising its authority under Section 242 of the Act on an application moved under Section 241 of the Act.
Section 241 and 242 of the act do not expressly confer the powers of reinstatement to the Tribunal.
The issue of minority shareholders and their rights was deliberated at length in the Supreme Court order. The Legal team of Shapoorji Pallonji Group/its two investment firms/Mistry family argued before the Court that removal of Cyrus Mistry meant oppression of minority shareholders. However, SC upheld Tata Group’s decision to remove Cyrus Mistry as executive Chairman of Tata Sons. The Supreme Court also observed that the Minority shareholders do not automatically get a right to a seat on the Board. Private Companies, which have minority shareholders, are free to make an enabling provision to do so if they wish to but right now they are under no statutory obligations to do so.
It is important to remember that in the petitions following removal of Mr Mistry as the Executive Chairman and subsequently as Director from the Board of Tata Group of Companies, the Mistry family/ the two investment firms had alleged that Tata sons was being run and operated in a manner which was “Oppressive” and “Prejudicial” to the rights of the minority shareholders. But the argument was lost at the interpretation and construction stage before the Apex Court.
It was observed that while interpreting and discussing the rights of minority and small shareholders and their importance in the Board of the Company, the Supreme Court has held that minority shareholders or their representatives are not automatically entitled to a seat on the private Company’s board like a small shareholder representative.
The Apex Court observed that the provisions contained in the 2013 Companies Act only protects the rights of small shareholders of listed companies by asking such companies to have on their Boards at least one Director elected by such small shareholders.
As per provisions of the Companies Act 2013, a small shareholder is a shareholder or a group of shareholders who hold shares of nominal value of not more than Rs 20000[Twenty thousand Rs]. The Supreme Court observed that as the Mistry family and the SP Group were not small shareholders but Minority Shareholders, there was no statutory provision which gave them the right “to claim proportionate representation” on the Board of Tata Sons.
The Apex Court further observed that the right to claim proportionate representation is not available for the SP Group even contractually, in terms of the Articles of Association. Neither SP Group nor CPM [Cyrus Pallonji Mistry] can request the Tribunal to rewrite the contract, by seeking an Amendment to the Articles of Association. “The Articles of Association, as they exist today, are binding upon the SP Group and CPM.” The Top Court had said.
Another bone of contention in the spat between Tatas and Mistry was the existence of Article 75 in the Articles of Association of Tata Group which gives the Company the right to purchase shares from a minority or a small shareholder at a fair market value. Fearing that the Tata Group may use it to try and buy out the SP Group, the latter urged the Company law tribunals and the Supreme Court to not allow the same to be used.
Further the Mistry camp had also alleged that the Tata Group had taken several commercial decisions which did not yield the desired results and had resulted into more loss to the minority shareholders than the majority shareholders .But the questions on the rights of minority shareholders and its protection had remained unanswered though the Apex Court did not consider Article 75 as oppressive and also they did not accept the allegations of mismanagement against Tata Group of Companies.
The Court also observed that Article 75 is nothing but an exit option to shareholders which was attacked by Mistry Group before NCLT/NCLAT. So the Apex Court had opined:

“We cannot adjudicate on fair compensation. We will leave it to the parties to take the Article 75 route or any other legally available route in this regard.”

The SC also rejected Mistry’ Group plea against conversion of Tata Sons from a Public Limited Company into a Private Limited one and also did not enter into the issue of valuing the Company’s stake. However, during hearing, the Mistry family, one of the oldest business families in India, valued its stake at Rs 1.76 Trillion while Tatas pegged it far below at up to 80000 Crores.
The Court at times also appeared to have treaded a middle path and has suggested that a divorce without acrimony should be encouraged but to what extent this theory shall be bought by Mistry Group is lying only in future, The latest development has only indicated that Mistry Group are in no mood to budge.

The Supreme Court judgment and its impact on corporate governance

The Order of the Supreme Court was viewed by a majority of Legal experts as a resounding victory for Tata Group of Company and in particular Sri Ratan Tata who was amongst the first to welcome the order. It has, however, given rise also to many unanswered questions in the field of corporate governance. Many experts also felt that the minority shareholders were not given a fair deal by the Apex Court. Further, some strong observations by the Apex Court have also created more confusion and doubts regarding the validity of the long standing principles of Corporate Governance. Some questions that emerged are as following:

In what manner duties of Directors shall be determined?
Does it depend on the Company they work for?
What are the roles and fiduciary duties of Nominee Directors?
Do the Directors nominated by charitable Trusts have wider responsibilities to the public than other Directors?

It was comprehensive and elaborated 282 pages judgment by the Apex Court and even though Section-166 of the Act explains in details the duties of Directors, but the Order has elaborately discussed this question since Mistry Group had challenged the affirmative voting rights granted to Tata Sons Directors nominated by Tata Trust which was pleaded by the Legal Team of Mistry as oppressive and prejudicial to the interest of minority shareholders. On this question, the Apex Court made three very important observations:

The Court distinguished Tata Sons from other Companies by virtue of it being an investment holding Company[ But there is no such distinction in the Act].In the order, the Apex Court repeatedly noted that Tata Sons is a principal investment holding company not engaged in any direct business activity.

It observed and suggested that Tata Sons nominated Directors need not make independent decisions [But do they require taking independent decisions? Being Nominated Directors, why should they not cater to the interest of their Nominators? Is there any restriction if Nominated Directors act in a particular fashion catering to the needs of their Nominators only?].

The Court has also observed that because the affirmative voting rights are enjoyed by nominated Directors of philanthropic charitable trusts, they are unlike other Directors appointed in shareholders meetings. But this distinction which the Apex Court has created is utterly confusing because the Companies Act 2013 and rules made there under creates no such distinction and the legal provisions bear no correlation to the business or activities in which the Company is involved and the duties of the Director.

It observed and suggested that Directors nominated by charitable trust [Tata Trust was considered as a charitable Trust] have a much wider duty towards public interest.[But there is no such defined role under the Act].one observation of the Supreme Court is worth quoting here:

“If all Directors are required under Section 166(3) to exercise independent judgment, we do not know why there is a separate provision in Section 149(4) for every listed public company to have at least one-third(1/3^rd of the total number of Directors as Independent Directors.”

However, these notings by the Apex court are more in the form of observations and suggestive in nature and the ratio of the judgment does not appear to alter any position as felt by experts.

The Court also observed that “a Director nominated by a charitable trust also holds a fiduciary duty with the Trust and a fiduciary duty towards the nameless, faceless beneficiaries of those trust” and in that situations, you cannot take a purely commercial approach that these Directors should only be focused on making money but that they are also right to trying to protect the interest of the Trusts but yet a Director nominated by a charitable trust must act in “ pure, unadulterated public interest “The apex Court advised.

This interpretation and advice by the Apex Court raises a question as to in what manner a nominated Director should act particularly those in Public Sectors and Government entities. Should they always promote their nominator’s interest? The other question is what liabilities shall they incur if they promote the interest of the Company by acting on conventional jurisprudence and wisdom? These questions have remained unanswered. Thankfully, the order of the Apex Court on these questions has been given in the form of advice and observations and not as RATIO DECIDENDI.

Conclusion

From day one, it was a very high profile case. As presented at the preceding paragraphs while analyzing the Supreme Court order, this case exposed the weaknesses in the corporate governance system. However, it also gave a precise interpretation of Section 241. The conflicting orders of NCLT and NCLAT created a lot of ambiguity and confusion and the Apex Court by its verdict attempted to put to rest all such confusions and speculation.

From the Law points alone, Mr Cyrus Mistry has a weak case even though he had a more sympathetic and emotional ground because the way he was ousted had left a very bad taste in the mouth. The rights and its redressal upon impeachment as is available to minority shareholders was not very carefully handled by the Legal team of Mistry family and ultimately it fell flat before the Apex Court at the stage of “interpretation” and “construction”.

Cyrus Mistry himself or his father, who was also Director of Tata Group of Companies before him, had never objected to Tata Sons’ Article of Association, its many overseas acquisitions (some turned out into misadventure), deals with Siva, Nano Project failures or alleged proximity of Mr Ratan Tata with Mr Mehul Choksi. It finally went against them.

The order has also opened a fresh debate on the rights of minority shareholders as by distancing them from Small Shareholders, the Supreme Court has opened a new vista and now while going ahead, such shareholders will have to ensure that they have a contract with the majority shareholders or the promoters of the Company to ensure that they have adequate representation on the Board. The Supreme Court has not negated the concept of quasi partnership or a contractual agreement. Going forward, it will be important for all minority shareholders to have an agreement to that effect as well as an article of association amended to capture the allocation/ division of Board seats to protect their interest.

In the end, it can be only stated that both sides have however suffered a big dent to their image as a good corporate governance house and few new questions on the principles of Corporate Governance have emerged, the answers to which lie only in the future.

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The issue of language in Central and State legal and political systems in India

Diganth Raj Sehgal

October 22, 2021

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This article is written by Surbhi Jindal, a law student at Dr B.R. Ambedkar National Law University, Haryana. The article discusses the issue of language in the legal and political system exhaustively.

Table of Contents

Introduction

India is a vast country where people of diverse backgrounds speak different languages. People of different cultures, creeds, religions, and caste interact with each other. That is why India is also known for its ‘Unity in diversity’ or as a ‘Land of diversity’. Interacting with different sects of people in different languages brings unity and a feeling of oneness.

While language is a path to oneness, it has also been subjected to many controversies—putting one’s language at an official status. When India was under the colonial rule, Urdu, English, and Hindi were considered official languages. Later on, when India gained Independence, the Indian Constitution provided Hindi in the Devanagari script as its official language. English was to be considered only till the 15 years from the commencement of the Indian Constitution. But later on, it continued due to the opposition faced by the non-Hindi areas especially South Indian states as they did not want the government to impose Hindi language on the people of their area. Since Independence, a debate has been going on to declare scheduled languages as official languages. Hindi is considered to be a national language, but it is not.

This article discusses the main issue of language in the central and state, legal and political systems in India. Various aspects that revolve around the issue of languages in India will be discussed in this article comprehensively. The debate around the national language and the conflict between the various officials on languages are critical to understanding. Communication between two people takes place through the use of language. Hence, it becomes crucial to use such a language that the other party understands.

Suppose you spoke a few words in English with your friend asking him to do some work for you. But your friend hardly understands English. Do you think he will be able to complete the task that you gave him? Obviously, no. If he didn’t understand what you said, how would he be able to do the task? So, the importance of language cannot be denied.

We shall ascertain the role of language in promoting justice and taking away justice from the nation through this article. We shall also learn about the historical background of languages and the problems created in Indian politics. Under this heading, various commission reports and their observations shall also be discussed.

Historical background of language

Language has remained the most debatable issue in the pre as well as post-independent era. If we discuss before the Indians gained Independence then the issue of language has been going on since the British era. Lord Macaualay recommended that English should be made the main language to study. The recommendation was made in 1835. Therefore, whosoever at that time applied for government service was required to learn english.

At the time of the making of the Indian Constitution, Mahatma Gandhi was of the view to create Hindi as a medium of language. He was in support of adopting one language only as the medium of instruction. However, leaders like Ram Manohar Lohiya opposed this idea and were in favor of adopting a diverse set of languages among the people of India. This is because of the diversity of language that exists in India. The majority of languages spoken in India are Hindi and English. This creates an issue in three arenas i.e. historical, political, and administrative and they often overlap over each other.

The same problem was faced by our Indian Constitution makers. During the struggle for an independent India, the nation’s leaders assured the general public that Indian languages would reach heights under a free country. The states will be reorganized based on languages so that they can be allowed to develop and grow.

But when the Constituent Assembly was given the task to ponder assigning India a national language, they understood that it was not an easy task. This was because of various reasons listed below:

Most of the people of India wanted to continue with English as the National language of India.
The provinces believed that their language was so rich that it could be adopted as the national language of India.
At the time of making of the Indian Constitution, the matter arose in the minds of Constitution makers as to what will be the official language in India. There were two problems in adopting Hindi as the official language of India because of two reasons: Dialect of Hindi and other existing languages in India. Hindi is spoken in 13 different dialects. So, the issue now was which dialect should be given preference. Finally, the Delhi-Agra region with Sanskrit vocabulary was adopted as the Hindi-dialect.
Mahatma Gandhi had a dream that India should have a national language so as to give it a unique identity. Several members of the Constituent Assembly wanted to fulfill this dream of Mahatma Gandhi. However, as the proposal was laid down for choosing the most popular language as the official language, many members from the Constituent Assembly opposed this idea and termed it as being unfair for non-hindi speaking population.
Lot of arguments took place on the inclusion and non-inclusion of Hindi as the national language. Some of the members were of the view that regional languages should also be given recognition at a state level and the language chosen shall not be made exclusive. While the others were in favor, they demanded that Hindi should be the exclusive language across the country without any exceptions. According to them, it would help in promoting national integrity.
The Constituent Assembly was divided into groups: one that supported the making of Hindi language as an official language and the second one who did not support the making of Hindi as an official language. But making various languages as official languages did not seem to be feasible. Dr. B.R. Ambedkar said,

“One language can unite people. Two languages are sure to divide people. This is an inexorable law. Culture is conserved by language. Since Indians wish to unite and develop a common culture, it is the bounden duty of all Indians to own up Hindi as their official language.”

Various commissions and committees have been formed till date on the issue of language. Let us understand them in detail.

Dhar Commission

Dr Rajendra Prasad, the President of the Constituent Assembly, formed the Linguistic Provinces Commission, also known as the Dhar Commission, on June 17, 1948, to ascertain whether reorganizing states based on languages was feasible or not. There was considerable demand, mainly from the south Indian side, to form the shapes on a linguistic basis. This Commission was set up under the chairmanship of S.K. Dhar.

The Commission recommended that the formation of states on the linguistic basis was not feasible, and hence the below-mentioned factors should be considered for reorganizing the states:

Financial self-reliance;
Administrative viability;
Geographical continuity;
Potential for development.

JVP Committee

The report by the Dhar Commission caused a lot of resentment amongst people. As a result, later on, to study the recommendations of the Dhar Commission, the JVP Committee was formed at the Jaipur session in 1948. The Committee appointed by the Congress comprised three members Jawahar Lal Nehru, Vallahabhai Patel, and Pattabhi Sitaramayya. The findings of this Committee also recommended that the reorganization of states based on language was not feasible. However, it stated that the below-mentioned factors should be considered for the reorganization of states:

Unity;
Security;
Economic prosperity.

But the death of Potti Sreeramulu sparked public riots and resentment in the general public. Potti Sriramulu was on a hunger strike in 1952, demanding an Indian state for the Telugu speaking population of the Madras presidency. In this process, he lost his life. After that, the Indian Prime Minister, Jawahar Lal Nehru was forced to announce the creation of a state on a linguistic basis, which came to be known as Andhra Pradesh.

Fazl Ali Commission

The creation of Andhra Pradesh caused an uproar against the people of other states. They started demanding the result of conditions on a linguistic basis. Now, this intense pressure by the general public forced the Indian government to form the new commission known as the Fazl Ali Commission in December 1953. The members of the Committee were Hridaynath Kunzru and K.M. Panikkar. The primary purpose of this Commission was to ascertain whether the separation of states on a language basis can be considered or not.

The report by this Commission was submitted in September 1955. It acknowledged the four significant factors while considering the reorganization of states:

Linguistic and cultural homogeneity.
Financial, economic, and administrative considerations.
Planning and promotion of the welfare of the people in each state as well as in the nation.
Preservation and strengthening of the unity and security of the country.

The Commission also suggested the reorganization of 27 states on a linguistic basis into 16 states and 3 Union territories. The Indian government accepted all the recommendations, and the State Reorganisation Act, 1956 was passed. The Act led to the formation of 14 states and 6 Union territories on November 1, 1956.

Official languages under the Constitution

The Eighth Schedule of the Indian Constitution mentions the scheduled languages of India. The constitutional provisions related to the Eighth Schedule are Article 344 and Article 351. Initially, the Indian Constitution accorded the official status to only 14 languages. Later on, eight more were given official status through amendments making the total languages 22.

At present, India recognizes 22 languages as its scheduled languages. These are Manipuri, Assamese, Bengali, Gujarati, Sindhi, Hindi, Kannada, Kashmiri, Konkani, Malayalam, Marathi, Nepali, Oriya, Punjabi, Sanskrit, Tamil, Telugu, Urdu, Bodo, Santhali, Maithili and Dogri. The language Sindhi was added by the 21st Amendment Act, 1967. Konkani, Manipuri and Nepali were added by the 71st Amendment Act, 1992 and Bodo, Dogri, Santhali, and Maithili were added by the 92nd Amendment Act, 2003.

It is pertinent to note that India does not recognize any language as its national language as per the Indian Constitution. Hindi and English are considered to be the official languages of India. Article 343 of the Indian Constitution says that Hindi in the Devanagari script will be the official language of the Union of India. At the time of the making of the Constitution, it was decided that English would be discontinued after 15 years from the commencement of the Constitution. Until 1950, English, Urdu, and Hindi were considered the official languages of colonial India.

Article 343 also mentioned that after 15 years, if the Parliament of India wishes to continue with English the language or any other Devanagari numerals, it should provide a law for the same. When India decided to discontinue English, it received a massive backlash in 1965 by the non-Hindi speaking belt of the country. They were against the idea of making Hindi the sole official language of India.

Therefore, the Parliament of India, by the Indian Constitution, had to bring a law that provided both English and Hindi as the official languages of India. The law brought was the Official Languages Act, 1963. The primary purpose of this Act was to provide for the languages which may be used for official purposes in the Union of India. The State government is free to declare its official languages.

Many had a myth that exists even today that Hindi is the national language of India. But this is not true. The Gujarat High Court in 2010 dismissed a PIL that sought the direction for mandatory printing of details of goods like price, quantity, ingredients etc., in Hindi because Hindi is the national language of India. The Hon’ble Gujarat High Court observed that though most people accept Hindi as their national language and speak and write in the Devanagari script, it is not officially the national language of India. There are no records to suggest the federal status of the language Hindi.

The Ministry of Home Affairs (MHA), on the inclusion of languages in the Eighth Schedule to the Constitution observed the following, “As the evolution of dialects and languages is dynamic, influenced by socio eco-political developments, it is difficult to fix any criterion for languages, whether to distinguish them from dialects, or for inclusion in the Eighth Schedule to the Constitution of India. Thus, both attempts, through the Pahwa (1996) and Sitakant Mohapatra (2003) Committees to evolve such fixed criteria have not borne fruit. The Government is conscious of the sentiments and requirements for inclusion of other languages in the Eighth Schedule and will examine the requests keeping in mind these sentiments, and other considerations such as the evolution of dialects into language, widespread use of a language etc.”

Part XVII of the Indian Constitution deals with matters of official languages. The constitutional principles related to the Eighth Schedule are described here as below:

Article 344: Article 341 (1) provides for continuing the commission by the president on the termination of five years from the commencement of the Indian Constitution.
Article 351: Article 351 provides for the spreading of the Hindi language to develop and serve as a medium of expression for the composite culture of India.

The Constitution (Amendment) Bill, 2019

In 2019, Shri Vaiko, MP of Rajya Sabha, introduced a private member bill named the Constitution (Amendment) Bill 2019. The main objective and reason to introduce the Bill was to provide all the 22 languages of India the status of the official language of India. Presently, only the English and Hindi languages have the status of official language. The reason given was that India is a nation of diversity, and unity was of its unique feature despite the diversity India represents.

Furthermore, it sought to amend the two Articles and subclauses and insert a few clauses that promoted the development of regional languages.

It also sought to amend Article 343 of the Indian Constitution. Article 343 says that the official language of the Union would be Hindi in the Devanagari script. The Bill proposes to add that all the languages mentioned will also be the official language of the Union in addition to Hindi in Devanagari script.
It also seeks to amend sub-clause 3 of Article 343 of the Indian Constitution. Article 343(3) provides that Parliament has the power to give any law for English as an official language of the Union of India. The Bill proposes that apart from the English, the Parliament may also provide a direction to promote the languages mentioned in the Eighth Schedule of the Indian Constitution.

Therefore, to promote national integrity, it was proposed that all the languages described in the Eighth Schedule of the Indian Constitution should be accorded the status of the official language of the Union of India.

Is there any law prescribing a particular language for official work

The Indian Constitution and the Official Languages Act, 1963 prescribe the language used for official work. In this section of the article, we shall ascertain the constitutional provisions on languages to be used in different arenas for official purposes.

Language to be used in the Parliament and the Legislature

Article 120 and Article 210 prescribe the languages used in the Parliament of India and Legislature, respectively. Both the Articles say that by Article 348 of the Indian Constitution, the Parliament shall use both English and Hindi for transaction purposes. It also provides that if any member of the Parliament cannot express themselves in either Hindi or English, then the chairman of the council of states or speaker of the Lok Sabha may permit them to speak in their mother tongue.

Official languages of India

Article 343 prescribes Hindi in Devanagari script and English as their second languages to be used by the Union of India. However, it was provided in this Article that English will be continued only till 15 years, and after that, only Hindi will be used for official purposes.

But it also provided that through a law, the Parliament can wish to continue with the English language after bringing the ordinance. A provision in the Indian Constitution gave rise to the Official Languages Act, 1963 that prescribes the use of both Hindi and English as the official languages of India.

Official languages of State

Article 345 states that subject to Article 346 and Article 347, the State shall adopt one or more languages that may be used for official purposes by the State. It also provides that the English language shall be continued for the official purposes of the State as it was used before the commencement of the Constitution.

The official language for communication between the Union and States and among States

Article 346 provides for the communication between the Union and states and among states. It also states that if the two states agree that Hindi will be the language between them, it may be used for official purposes.

The debate around national language

In Indian society, a myth exists that Hindi is the national language of India. However, this isn’t true. We already understood that India only has official languages. It cannot be denied that Hindi serves as the link across the country. But this doesn’t imply that Hindi is a national language. From the Constituent Assembly till today, there already has been a lot of debates on this matter. Language has become merely a political issue where each political party makes language its plan to influence the minds of the general public.

In 2019, on Hindi day, the Home Minister of India Amit Shah, in his address, demanded the call for one language in the nation. He said that having different opinions on language is natural, but he argued that Hindi should be the ‘raj bhasha,’ i.e. national language. Even the founding fathers of the Indian Constitution had unanimously agreed to have Hindi as our national language. This statement of making Hindi as raj bhasha had sparked protests all over the nation.

According to the 2011 census on languages, 43.63% of the Indian population speak Hindi as their mother tongue. Hindi is one of the most spoken Indian languages. Between 2001 and 2011, the rate of Hindi speaking people grew by 25%, increasing 100 million new Hindi speakers.

From ancient times, these debates have been going on with no concrete solution at all. Every section of people want to promote their language. The South Indians hardly promote the culture of speaking and teaching Hindi in their curriculum. They have mainly focussed either on their tongues or English for their education.

We all know that India still follows the colonial system. Though we gained Independence in 1947, India, being an Independent nation, hasn’t recovered from colonial rule. We are following the old laws, the administrative and political system that have been followed since British times. We have been in touch with old and obsolete laws such as sedition, unlawful assembly, same-sex marriages, a social taboo, and many more regulations. These laws have been repealed long ago in the U.K., but still, we follow them.

The same is the case with the language. English was the language of Britishers. However, the Constituent Assembly decided to scrap English after 15 years. But the inclusion of one more provision stating it may be continued after bringing a law has led to not Hindi being the official language. Also, the use of Hindi has become very minimal. This is because now every work you see revolves around English. You need to know English for your studies, job etc.

Need for reforms to ensure vernacular inclusive policies

The glamour for speaking English is why India isn’t progressing ahead with its languages. We are living in an elite society where most of the importance is given to speaking English. English has become the norm of today’s society that won’t be going very quickly.

There is a need for policy reforms related to the inclusion of vernacular languages in daily use. The Hon’ble President of India Ram nath Kovind urged the high courts to make its judgments and verdicts available in regional languages. But the progress has remained very meagre. If we talk about our Indian legal education system, then a continuous stress has been laid on use of English language for the purpose of imparting education. English and Hindi should not be the only languages to be considered for administration purposes.

The Former Chief Justice of India (CJI) Sharad Arvind Bobde was of the view that governments should consider amending the Official Language Act, 1963 and include the vernacular languages in the governance of the administration.

The present Chief Justice of India (CJI) N.V. Ramana had laid special emphasis on bringing radical changes in the atmosphere of the courts and making the litigation more friendly for the citizens. The Hon’ble justice himself had taken a step forward. He played the role of a good samaritan for a woman when she was faced with an issue of not being able to speak comfortably in the English language. He allowed her to speak in Telugu which is also the mother tongue of Hon’ble Chief Justice. After listening to her arguments, he then explained her arguments to the bench.

The Britishmen imposed English on the Indians but only for the time period they ruled. After India gained Independence it was in our hands to incorporate Indian vernacular languages within the administrative policies and actions. It could be either the Hindi language or other regional languages. So, it would be wrong to say that the British have imposed on us the language in the present times. We Indians adopted this language because of its utility.

The South Indian states were not keen to adopt Hindi as their language. Some of the people wanted only English as their language while some wanted it to get abolished.

Conclusion

Language cannot be imposed on people. The people of the country have the right to decide which language they want to speak. Indeed, other languages should be given a fair opportunity to represent themselves like Hindi and English.

But it should also be remembered that our Constitution has provided that the speaker of the Lok Sabha may allow the member of Parliament to use their mother tongue to speak if they cannot express themselves. Therefore, we cannot say that mother tongues of respective states are not given any representation because if that would be the case then Lok Sabha would not have been allowed the use of mother tongues. The issue of language has been a long eternal debate going on since times immemorial.

The makers of the Indian Constitution found a way and included both English and Hindi in the Constitution. Though inclusion of English as a language was only for 15 years, later on it continued and is still in use.

Our whole Indian system has remained obsessive with the English language. Until the change in mindset and the different policy reforms are brought to place, this debate is never going to end. Our Indian legal and political system is going to suffer on the pendulum of language.

References

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Case analysis : Sassoon Fab International Pvt Ltd v. Sanjay Garg and Another

Abanti Bose

October 22, 2021

This article is written by Mohd Aman Khan Afghani, pursuing Diploma in Intellectual Property, Media and Entertainment Laws from LawSikho. The article has been edited by Zigishu Singh (Associate, LawSikho) and Smriti Katiyar (Associate, LawSikho).

Table of Contents

Introduction

As we all know that the whole world is going through the wave of Covid-19 and this pandemic has impacted each and everyone’s life in one or the other way. People commonly in many countries like China and other Asian countries used to wear pollution filtering masks regularly but now they are more in use. Face masks can be seen being worn by people from around 10 years approximately, but now they are more common and in full use because of the Covid-19 pandemic. These masks have become an integral part of everyone’s life, especially in India, where the Government has even imposed fines for not wearing the Masks and even the police are vigilant regarding wearing masks and take quick action if they find people not wearing one. Among the different masks which people use these days the N95 Masks hold some special value and goodwill and hold a credible position in the minds of the people. It can be said that these N95 were in the news since pollution started to increase at the onset of the winter season and people were preferring these masks among all the other masks which are available in the market. The most common use of masks by people is for preventing dust particles and viruses from entering the body through the nose or mouth.

The reason for the high demand for N95 masks is because of their capability to cover the face in a proper way and to limit the particles from entering the human body.

In N95 Mask the ‘N’ stands for “Not-resistant to Oil” and in N95 Mask the respirator is said to block around 95 % of very small particles. It is also said that the longer any person wears an N95 mask the more efficient it becomes in filtering and limiting out the particles. It is also recommended that the N95 mask should not be worn for more than 8 hours. N95 Mask was developed in the USA in 1972 by a Company named ‘3M’.

The story of the N95 mask

The N95 Mask was launched by 3M in 1961, and there is a very interesting story behind the invention of this mask. T. Sara Little Turnbell who is a former décor editor for House Beautiful Magazine started consulting with the 3M’s gift wrap division. She saw that the Doctors are using the Flat tie-on Masks when she used to visit the Hospital to see her family members who were in the hospital due to their medical conditions. She came up with the idea of a Mask that would cover the nose and mouth properly and originated the design of a “Bubble” surgical mask. The above mask was also rebranded by 3M because of the reason that this Mask could not block the pathogens. In the 1970s 3M developed a single-use N95 dust respirator, which is in the market even today and is used by people.

Understanding the term trademark

Trademark can be said to be a mark or symbol or logo or wordmark or a device with which normal consumers can find out as to which manufacturer it belongs. It helps to identify the origin of the product or service and it also helps in distinguishing the goods or services offered by an entity from the goods and services being offered by the other entity. A Trademark helps in the creation of goodwill of an entity in the Market. A person or an entity which is selling goods or services in the market with a Trademark acquires the exclusive right to use that Trademark for selling his goods and services and that rights which are acquired is being recognized as the property of that person or entity and is being protected by Trademarks Act, 1999 and also under the Common Law. The basic requirement for protection is registered under the Trademarks Act and the Trademark can be registered under the Trademarks Act when it has a distinctiveness and is not generic and is capable of differentiating the goods or services of one person or entity from that of the other person.

Case analysis on N95 as the trademark

In Sassoon Fab International Pvt Ltd Vs. Sanjay Garg and Anr, the Intellectual Property Appellate Board, Delhi (“IPAB”) had given a stay order on the registration and protection of the N95 Trademark. The IPAB has given the reason that N95 is a generic term that is very much in use in the market for masks and therefore it cannot be registered as Trademark and no single person or entity can have an exclusive right over it.

In the above case, Mr Sanjey Garg has applied for the registration of the Trademark and in fact, he got the Trademark N95 registered under Class 10. After the above event, Sassoon Fab International Pvt Ltd filed an application for rectification before IPAB under Section 52 of the Trademarks Act, 1999 and asked for the cancellation and interim stay on the operation of the above trademark registered in favour of Mr Sanjay Garg.

The IPAB had allowed the Application of Sassoon Fab International Pvt Ltd and held that the term “N 95” describes the attributes and qualities of a mask and its filtering capacity and therefore the term “N95” is considered to be a generic term and could not be registered.

It is a settled position in Trademark law that the Trademark which tells about the attributes of any product cannot be registered as Trademark and in the above case, it is very much evident that the term “N95” tells the attributes of a Mask and therefore it’s a generic term. Such generic terms could not be registered as they fall under Section 9(1) of the Trademarks Act, i.e. under the Absolute Grounds of Refusal.

It was even held by the Board that the action of Mr Sanjay Garg clearly shows his malafide intention to get benefit out of the aforesaid Trademark as he was nowhere connected to the Trademark Industry and he was not even using the same for marketing or for any kind of business activities or for earning profit etc. Even the act of Mr Sanjay Garg shows that he was willing to monopolize the term “N95” so that he can misuse it according to his will and that could even have an adverse impact in the times of this Covid Crisis.

Precedents referred by the IPAB

Cadila Healthcare Ltd vs. Gujarat Cooperative Milk Marketing Federation Ltd and Ors., 2009

In the above case, it was held that the generic term can only be registered in the case where it can be shown that the distinctive character has been acquired by it and it has a distinct identity in the minds of the general public and that would depend on case to case basis and therefore generally the generic term or maker is not at all entitled for protection.

Jain Riceland Pvt. Ltd. vs. Sagar Overseas, 2016

In the above case also the Delhi High Court has held that the generic term cannot be registered as a trademark.

Nestle’s Products Ltd. Vs. P. Thankaraja and Anr.

In the above case, the Madras High Court has held that the term “INSTEA” cannot be registered as a trademark as the same express the attributes of a product that is telling about the instant tea.

ITC Ltd. Vs. Nestle India Limited, 2013

In the above case, the High Court of Madras has held that the term “Magic Masala” cannot be registered as a trademark as it is a generic term and therefore cannot be monopolized by a single entity. It was also held by Madras High Court that Magic Masala is used by many players who are operating in the Food Industry and therefore registering it as a trademark will give a monopoly to a specific entity which would be unfair to the other entities which are operating in the Food Sector.

Conclusion

So conclusively it can be said that the term “N95” is a generic term that is very much in use in the market for masks and if in case it is registered as a trademark in favour of a particular entity then it would be unfair to the other entities or players which are operating in the market for masks and in this way there are huge chances that the entity in whose favour it is registered would have a monopoly over the term “N95” and this monopoly will adversely affect the competition in the market for masks. As we know that “N95” is a descriptive term and is being used extensively by many Hospitals and Industries and by the common public in the times of this Covid-19 and if in case a single entity would get a monopoly on such term then that would definitely have an adverse impact and it should also be noted that in the times of this Covid Wave, N-95 mask is an essential commodity and monopoly over such term which is used to denote an essential commodity cannot be allowed in any manner as it would have grave and hazardous repercussions.

References

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Syllabus and topics to cover to crack the CLAT PG exam

Diganth Raj Sehgal

October 22, 2021

This article is written by Yash Kapadia. Through this article, we shall understand the subjects included in the portion of the CLAT PG exam along with the weightage and importance of each one of them. We shall further enlist certain tips and tricks on how to prepare for these subjects.

Table of Contents

Introduction

CLAT PG exam is the short form for Common Law Admission Test- Post Graduation which is a route for successful law graduates to bolster their career who intend to further study Masters of Law (LLM) or work at a public sector undertaking (PSU) company which are generally owned in majority by the Union Government.

CLAT PG exam is held once a year and the number of exam takers has been rising year on year making it very evident that more students are interested in further studies, either specialising in a particular area of law or working at a PSU. The CLAT PG exam has become a highly competitive exam. In 2020, there were 632 PG (LLM) seats available for 5475 students who appeared and in 2021 the number of test-takers rose to above 8,000 with available seats to 1635.¹

In this article, we shall discuss the following:

Eligibility criteria of students who can give this exam;
Syllabus as per previous years;
Weightage of the subjects;
Topics to prepare for the most important subjects.

CLAT PG eligibility criteria

It is imperative for every exam aspirant to first and foremost meet the eligibility criteria without which there is no way one can appear for the exam.

For the CLAT PG exam, the following are the minimum requirements for eligibility:

“An LL.B Degree or an equivalent examination with a minimum of Fifty percent (50%) of marks or its equivalent grade in case of candidates belonging to General/OBC/PWD/NRI/PIO/OCI categories and Forty-Five percent (45%) of marks or its equivalent grade in case of candidates belonging to SC/ST categories.
Candidates appearing in the qualifying examination in April/May 2021 are also eligible to apply.
No upper age limit is prescribed for appearing in CLAT 2021”.

Additional information to keep in mind:

In case of equal marks, the break of tie shall be by the following procedure and order as under:

Higher age;
Computerised draw of lots.

This is commonly referred to as the tie-breaker rule.

If one fulfills the above eligibility criteria, then they can move on to the next step of ascertaining the syllabus and subjects involved in this exam.

Syllabus of CLAT PG

Disclaimer: Considering the changing pattern of the CLAT PG exam, we have, for the benefit of future aspirants included information and tips on how to approach the objective as well as subjective sections.

At this post-graduation level, the syllabus mainly includes subjects taught in the undergraduate 3 or 5-year programs. As per CLAT PG 2021, the exam will have two sections:

The objective section comprises 100 multiple-choice questions, with each carrying one mark.
The descriptive section requires the test-takers to write two essays of 800 words each, on given topics. Each essay will be of 25 marks.

Therefore, this is a 150 mark exam with -0.25 being deducted for every wrong answer.

For an easy understanding, this is how the paper pattern looks like:

100 objective questions	1 mark each
2 subjective questions	25 marks each
Total marks	150

Objective section

The objective section will have extracts from primary legal materials such as important court orders in various fields of law concerning different statutes or newly formulated regulations. Each passage will be followed by a series of questions that will require you to demonstrate the:

“Ability to read and comprehend the issues discussed in the passage, as well as any arguments and viewpoints discussed or set out in the passage;
Awareness of the issues discussed in the passage, as well as of legal issues and facts related to and arising out of the passage and the judgment or statute from which it is extracted;
Summarise the passage; and
Ability to apply your knowledge of the fields of law discussed in the passage.”

The objective section will include the subjects of constitutional law, jurisprudence, tort law, contract law, criminal law, public international law, labour law, tax law, family and property law.

Subject-wise important topics

Constitutional Law

This subject carries a weightage of 40-50 marks i.e. the most weightage from the objective and subjective section wherein a 40-mark MCQ section is devoted to constitutional law. Questions can be asked from bare acts, doctrines, landmark cases, recent case laws and new developments.

The following are the most important topics that one cannot afford to miss in order to score the maximum marks in constitutional law²:

History	Features	Doctrines of Constitutionalism
The Preamble	Citizenship (Article 5-11)	Articles 12-35, inter-relation between Article 14, 19, 21, Article 352-360
Fundamental Rights and Duties	Writs	Directive principle of state policy
Parliament and its functions	Constitutional and Non-Constitutional bodies

One must also be well conversant with important case laws that have been delivered in the last 2-3 years because there will definitely be questions relating to such judicial precedents in the objective as well as the subjective section of the CLAT PG exam.

Rahul Mathur, AIR 5, CLAT PG stated in an interview³ that Constitution is one of the most important subjects for the CLAT PG test and he focused on reading current and previous historic cases, and if any article of the Constitution was mentioned in the judgment, he read it from the Constitution Bare text. Besides, he recommended that every test-taker must study the key concepts of the Constitution.

Jurisprudence

The subject of jurisprudence requires having excellent knowledge of the concepts which requires a detailed study of specific topics. The weightage of this subject in the CLAT PG exam is around 40-50 marks again, including objective and subjective sections. After referring to past years papers of CLAT PG exam, the following are some of the most important topics on which questions are asked in the objective section⁴

Definition, significance, nature and scope of jurisprudence under which:
1. Relation between law and justice (thoughts of HLA Hart, Amartya Sen, Aristotle;
2. Relation between law and morals (Study HLA Hart and Devlin debate).
School of jurisprudence;
Realist movement which shall include:
1. American Realism;
2. Bad Man Theory by;
3. Works of Jerome Frank;
4. Scandinavian Realism;
Economics and State;
Thoughts of legal pluralism;
Feminist jurisprudence;
Sources of law under which one has to learn legislation, judicial reasoning and custom;
Legal concepts that would include theories of punishment and concept of injustice.

Certain important points to remember when preparing for this subject is to:

Not memorize or mug the syllabus;
Understand the concepts by relating them to real life;
Make structured notes. A tutorial on the same can be referred to here.

Contract Law

The law of contracts can be one of the most competitive sections in the CLAT PG exam. One must understand the very foundations of knowledge and concept in order to correctly answer any objective questions based on contract law.

Some of the most important topics to focus on are as follows:

Agency contracts;
Insurance guarantee;
Contract formation;
Discharging of contracts;
Quasi-contracts;
Void, voidable, illegal contracts, etc.

All in all, one must know the basics of contract law at the back of your hand. A bare act or even a commentary of Avtar Singh or R.K. Bangia. The objective questions i.e. the MCQ may have close options and one must have precise knowledge about every concept in order to differentiate the correct option from the others.

As per the CLAT PG exam of 2021, 12 questions with 2 passages were asked based on Contract law.⁵

Criminal Law

Surprisingly, the CLAT PG exam of 2021 contained criminal law questions unexpectedly in a higher proportion from the Code of Criminal Procedure, 1973 (CrPC) and not the Indian Penal Code (IPC).

Around 30 questions were asked on the topic of criminal law and also included 4 comprehension-type passages.

Some areas where a test-taker needs to focus on and be well prepared to answer MCQ questions on and write essay type answers on are:

General principles and definitions of criminal law;
Punishments and exceptions;
Liabilities;
Criminal conspiracy;
Offences and defamation;
Most important sections of the CrPC and IPC.

Subjective section

The subjective section of the CLAT PG exam, as mentioned earlier, weighs 50 marks i.e. one-third of the total marks of the entire paper. This makes it evident that the subjective section can very well make or break your result and ultimately your rank. The two most important skills need to be practiced are legal writing and structuring. A test-taker must be extremely precise whilst answering essay-type questions keeping in mind the different structures needed to write different types of answers to questions.

It is important to know that no answer can cross the 800-word limit in any answer of the subjective section. The subjective may have questions based on the following:

Constitutional law like basic structure, emergency provisions, executive powers;
Jurisprudence;
Contract law;
Tort law;
Contemporary issues mean the recent amendments or new provisions that have come into force in the last 1-2 years
Recent judgements wherein one must be well conversant with the legal issue, facts and philosophical issue (its relation with other laws and systems, especially ethics and political philosophy).

One must keep in mind that there must be a steady flow of writing in the essay-type answers. For example, if the question is based on emergency provisions of the Constitution of India, then the following must be the structure of the answer:

Introduction

Start with what is the history of emergency provision and where can we find it. Then write down from where has the emergency provision been borrowed in the Constitution. Define the provision in an as it is manner. For example, as per Article 14 of the Constitution of India, “The State shall not deny to any person equality before the law or the equal protection of the laws within the territory of India”

Body

Write down what are the constitutional provisions for each emergency provision. One must make a list of it describing them in point form. List down the recent judgements for each one of them describing the most important parts.

Conclusion

This part may include the current situation of the emergency provisions and one can also reframe this paragraph as suggestions to be put down for the examiner to read.

The evaluator easily speedreads such structured answers when a test-taker highlights, underlines the main keywords in order to make the checking easier and seamless. Lastly, one must prefer using a black or a blue ball pen whilst writing the subjective answers.

Apoorva Gupta, AIR 5, CLAT PG stated in an interview⁶ that the major law subjects she focussed on were Constitutional law after solving previous year papers to ascertain majority of questions are asked from this subject. However, she also focussed on other subjects like labour law, environment law and contract law case laws. She stated that she devoted 4-5 months to her preparations. She first practiced a sample paper and prepared her strategy. She practiced one essay question daily. She advised that one must not limit their preparations to Constitutional law but also other areas as questions can be asked from any subject in any manner either objective or subjective.

Tips to prepare for the objective and subjective sections

Start with reading the bare acts and once one is through with the bare act of a particular subject, then one must move on to reading commentaries for the purpose of the literal interpretation of the statute and judicial interpretation of that statute through various landmark case laws.
Manage your time as per your subjects. Every subject must be given in accordance with how well you are able to grasp the knowledge and remember it. Someone may be good at criminal law and someone may be good at contract law. Therefore, it is important to acknowledge the strong points and weak points and manage your time accordingly in working on all subjects.
For the objective questions i.e. MCQ questions, one must keep practicing as many mock tests and previous year papers as one can possibly do. Going a step further, one can enroll for a crash course too which includes doubt solving sessions and mock tests to boost one’s confidence.
For the comprehension-based approach, one must be in the habit of reading these questions and timing oneself to understand how much time it generally takes for comprehension to be read and then answered. A short trick is to start it with the approach of speed reading. Doing this will train the mind to look out for the keywords making the process of answering the connecting questions much easier.
For the subjective questions i.e. essay-type questions, it is important that one at least practices this section once every two weeks until two to three weeks before the exam. Though this may be tiring and time-consuming, the test-taker will be in a much better position than others if he/she is in the habit of writing down these long answers.
Another point to remember in subjective questions is to make a rough draft of the structure of the answer before one actually starts to write it. Having a layout on a rough sheet of what needs to be written in detail provides a better picture to the writer, thereby improving the quality and flow of the answer.
Last but not the least, it is recommended to not sacrifice your sleep in the last few days before the exam. The reason is, one needs to be at their best possible self, mentally and physically, in order to excel at this highly competitive exam. Try to work out regularly and keep yourself physically fit to optimize your mind’s potential to the fullest.

Conclusion

What we understand from the information provided in this article is that the syllabus for the CLAT PG exam is definitive. However, the questions to these limited topics can be framed in whatsoever manner in case of objective questions i.e. MCQs. With respect to the subjective part, writing a 25 mark answer is no cakewalk either. It requires a lot of time, thinking, stamina and consistency to build a flow as in a short piece of detailed information is given.

CLAT PG exam, though competitive, does provide a gateway to the best of law schools for LLM and PSU jobs. If you are planning to or even vaguely intending to pursue this course and appear for CLAT PG in the near future, attending this Free Bootcamp on how to crack the CLAT-PG exam for LLM and PSU Jobs would answer a lot of doubts and further increase the knowledge and scope of this exam for any aspirant.

References

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

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