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This article is written by Anushka Tripathi, pursuing BBA LLB from NMIMS School of Law, Bangalore. This article deals with the concept of res judicata and its scope.

Table of Contents

Introduction

What happens if a plaintiff has various grounds to claim relief that they could have taken in a suit, but did not take them all at the time of the suit, or if a defendant fails to present one of his grounds for defence in a suit? Is it possible for them to file suit after suit for every ground of claim or defence that they come up with or can they challenge a court’s judgement over an issue by filing the same suit again in another court?

The doctrine of res judicata has the answer to all these questions. The main objective of this doctrine is to prevent a party from being harassed multiple times over the same issue and also establish the finality of judicial rulings.

Res judicata is made up of two words- res meaning “subject matter” and judicata, meaning “decided”. So, the literal meaning of the doctrine of res judicata is any matter which has been finally decided by a court.

History

The principle of Res Judicata is believed to have its roots in the ancient legal systems of various countries. According to the ancient Hindu law, res judicata was termed as “Purva Nyaya” by the Hindu lawyers. The Roman perspective divided the concept of Res judicata further into two- issues; preclusion and claim preclusion.

The doctrine of Res Judicata emerged in England and later became an integral part of the English common law system and later was adopted by the Indian legal system. In the U.S. Constitution, the doctrine of res judicata is found in the Seventh Amendment. It recognises the finality of a judgement after a fair trial.

The doctrine aims to prevent the re-litigation of the same case between the same parties over the same issue in two different courts.

Meaning of res judicata

The doctrine of Res judicata is based on three Latin maxims

Interest Republicae est sit finis litium– It is in the interest of the State that litigation should come to an end.
Nemo Debet Bis Vexari Pro Una Et Eadem Causa– No person or party shall be vexed more than once for the same cause of action.
Res judicata pro veritah seliptor– This maxim says that any and judicial decisions must be accepted as correct.

Essentials conditions of res judicata

The matters must be civil in nature.
There must be two suits- a prior suit followed by a subsequent suit.
The parties in both the suits must be the same or litigating under the same title.
The court which has decided the prior suit must have competent jurisdiction over the matter.
The subject matter of both the suits must be similar, either directly or substantially. Here, directly means that any matter that is directly related with an issue while substantially means that the fact that is essential for deciding the issue in the prior suit.
The matter must be heard and conclusively decided in the former suit.

Exceptions to res judicata

The original judgement is found to be a fraud.
The cause of action is different in both the suits.
Lack of Jurisdiction of the court deciding the original suit.
Change or amendments in the law, and these new laws give new rights and defences to the party.

Scope of res judicata

Res judicata consists of two concepts-

1. Claim preclusion- Claim preclusion bars litigation of all issues that were or could have been litigated in the original action under the original claim.

2. Issue preclusion- It is also known as collateral estoppel which means that the same parties cannot sue each other over the issues that have been already litigated after a conclusive judgement has been reached based on merits in civil litigation.

Lucky Brand Dungarees, Inc. v. Marcel Fashions Group, Inc. (2020)

Marcel and Lucky Brand both sell jeans and other apparel. Marcel has a trademark registered for the phrase “get lucky” while Lucky Brand has a registered trademark “Lucky Brand”, under which it sells its apparel. Both these entities use the word “lucky” in their trademarks.

This similarity between their trademarks has led to trademark litigation that has spanned over decades. This series of lawsuits began in 2001, where Marcell, the plaintiff, filed a suit against Lucky Brand, the defendant, over its use of the phrase “get lucky” in their advertisements.

The parties agreed to settle in 2003, with Lucky Brand agreeing to no longer use the phrase “get lucky” and Marcel releasing any claims it may have had with relation to Lucky Brand’s use of its own registered trademarks.

The 2005 lawsuit

Round two of lawsuits commenced in 2005, where Lucky Brand filed a suit against Marcel, alleging that Marcel was copying Lucky Brand’s designs and logos in their new clothing line. Marcel countersued on the grounds of Lucky Brand’s continued use of the “get Lucky” phrase and thus violative of the settlement agreement of 2003. It also alleged that Lucky Brand’s use of the phrase “get lucky” along with “Lucky Brand” was confusingly similar to the “get lucky” phrase used and owned by Marcel. However, Marcel’s countersuit did not allege any infringement of trademark for the marks owned by Lucky Brand that did not include the “get lucky” phrase.

Lucky Brand then moved to get Marcel’s counterclaims dismissed because they were barred by the release provision of the settlement agreement. But after the initial motion for dismissal was denied without prejudice by the District Court, Lucky Brand stopped pursuing this defence.

This round was concluded in two parts.

a. District court permanently enjoined Lucky Brand from using, copying, or imitating the “get lucky” phrase and,

b. The jury decided against Lucky Brand on Marcel’s counterclaims that alleged the use of “get lucky” alongside “Lucky Brand” of trademark infringement.

The 2011 lawsuit-

The third round of litigation began in April 2011, with Marcel filing an action, again, against Lucky Brand, alleging that it was violating the judgement issued in the 2005 suit by the continued infringement of Marcel’s “get lucky” mark by using its own trademarks, many of which had the word “lucky” in it. The United States District Court for the Southern District of New York granted a summary judgement to Lucky Brand, asserting that Marcel’s counterclaims in 2005 and its claims in 2011 were essentially the same and the ruling from the 2003 agreement barred Marcel from bringing any further claims against Lucky Brand.

However, the Second Circuit Court of Appeals disagreed, concluding that Marcel’s claim in the 2011 suit was different from its claims in the 2005 suit. The court noted that winning one suit does not take away the plaintiff’s right to sue for the respondent’s similar subsequent violations.

Further on, Marcel’s request to hold Lucky Brand in contempt for violating the 2005 judgement, was rejected by the Second Circuit. The court noted that the issue at hand in the 2011 suit was Lucky Brand’s use of its own trademarks and not the use of the “get lucky” mark. The 2005 ruling prohibited Lucky Brand from using the phrase “get lucky” and not Lucky Brand’s own registered trademarks that happened to have the word “lucky” in them. The court vacated and remanded for further proceedings.

On remand to the District Court, Lucky Brand moved to dismiss because these claims were released by Marcel in the 2003 settlement. Marcel countered the dismissal by stating that Lucky Brand was barred from using release defence because Lucky Brand could have pursued this defence in the 2005 suit but had neglected to do so. The District Court ruled against Marcel and granted the motion to dismiss Lucky Brand, holding that Lucky Brand could use the release defence and that Marcel’s claims were indeed barred by the 2003 settlement agreement.

The Second Circuit disagreed and thus reversed the ruling by concluding Lucky Brand was prohibited from using the release defence as it neglected this defence during Marcel’s counterclaims in the 2005 suit.

The Second Circuit concluded that this “defence preclusion” doctrine barred defendants from raising a defence that could have been raised, but was not raised in the former suit (a) between the same parties, (b) decided based on merits, (c) the District Court, in its discretion, concludes that preclusion of the defence is appropriate.

Issues raised

Whether, when a plaintiff asserts new claims, can federal preclusion principles bar a defendant from raising defences that were not actually litigated and resolved in any prior case between the parties.

The Supreme Court panel found each factor to be satisfactory and thus, vacated the District Court Judgement. The Supreme Court then granted certiorari (an order by which a case tried in a lower court is reviewed by a higher court), to resolve the differences among the circuits about the existence as well as the scope of the “defence preclusion” theory.

In a unanimous decision, Justice Sotomayor wrote that the court reversed the ruling of the Second Circuit and remanded the case. The Court held that Marcel cannot stop Lucky Brand from presenting new defence arguments in the case because the actions challenged in the prior litigations in 2003 and 2005 were different actions that involved different trademarks taking place at different times.

Scope of res judicata in the case

It was noted by Justice Sotomayor that “defence preclusion” is not some standalone version of res judicata but it exists, if at all, only as an example of either issue or claim preclusion. And hence, defence preclusion can only be raised when the essentials of the issue or claim preclusion are met.

In this case, the parties agreed that they could not apply issue preclusion, as none of the previous courts had ever ruled anything about the scope of Marcel’s release provision from the 2003 agreement. So, the only way to find that Lucky Brand was prevented from raising its release defence was by claim preclusion.

Judge Sotomayor, while referring to some of the academic commentaries, noted that there are valid reasons to challenge whether the principles of claim preclusion should ever prevent someone from raising a defence, stating that there can be multiple reasons why a certain defence couldn’t be raised, despite it being available. One of the essentials for the applicability of claim preclusion is that the suits must share a “common nucleus of operative facts” which was not the case in the current suit.

In the 2005 suit, the “get lucky” phrase being used by Lucky Brand in its advertisements was the core of all the claims, while in the 2011 suit, the core of all claims was the alleged infringement of Marcel’s trademark by Lucky Brand, through its own trademark. Another point of difference between the two cases was the different periods. The 2011 suit was interpreted as being restricted to the operations of Lucky Brand after the ruling for the 2005 suit was given.

These grounds, among others, concluded that claim preclusion could not bar Lucky Brand from using the release defence in the 2011 suit, regardless of whether it did or didn’t raise the release defence in the 2005 suit.

Other related cases

1. A landmark judgement was given by the Hon’ble Supreme Court of India in State of Uttar Pradesh v. Nawab Hussian (1977), where a direct question came up before the Hon’ble Supreme Court whereby in this case a (Sub-Inspector of Police) was dismissed from the service by the DIG (Director General of Police). He challenged his dismissal order in the High Court in a writ petition stating that he was not given a reasonable opportunity of being heard by the authorities and later he took the additional grounds that he was appointed by the IGP (Inspector-General of Police) and he was removed by the DIG (Director General of Police). The latter has no authority to dismiss him.

The State argued that the additional ground taken by him is res judicata. The State High Court allowed the petition of the Sub-Inspector of Police. But the State of U.P. has filed an appeal in the Supreme Court of India, whereby the Hon’ble Bench of Court said that suit Sub-Inspector of Police was barred by constructive res judicata, as the plea was within the knowledge of the plaintiff and could have been taken earlier.

2. In Bhagat Ram v. State of Rajasthan (1972), the court held that once a person is acquitted or convicted by the competent criminal court of law, then he can’t be tried once again for the same offence, as it is prohibited by the doctrine of res judicata.

Conclusion

The doctrine of res judicata prevents multiple judgements over the same issue between the same parties and avoids confusion. In the absence of such a principle, litigations would go on forever in circles and would waste the time and resources of both- the parties involved and the court. Res judicata does not, however, restrict the appeal process. The implication or scope of res judicata is quite wide and includes public interest litigations and writ petitions among other things. With time, the scope has widened even further with the Supreme Court broadening the extent of its judgements.

References

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Understanding the benefits of AI in NDA drafting and negotiation

By

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October 17, 2021

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

Table of Contents

Introduction of AI in the legal sector

Artificial Intelligence (AI) is fast becoming the next big thing in the Indian legal sector. AI implementations in the legal sector have already gained considerable popularity at the global level,A number of legal firms have successfully used artificial intelligence to enhance their operations. Furthermore, the AI tool is able to identify contracts written in different languages as well as their conditions and content. Additionally, the contract recognizes different patterns and features.

AI software stores data to avoid conflict and provide more precise and accurate clauses. The system allows companies to review and analyse contracts more rapidly, organize and identify large amounts of data more conveniently, minimizing the likelihood of contract disputes and adversarial negotiations, and thus impacting the volume of contracts that can be negotiated and executed.

As a result, there is a heavy burden placed on each clause to be identified manually for any further processing, with tens of thousands of contracts being entered. However, based on the content of the clause, machine learning algorithms may be able to identify the term. Using this qualified model and tags, documents will be automatically added to a contract management program.

Artificial intelligence saves time and money for lawyers because it allows them to draft contracts more quickly. However, it also increases opportunities for legal researchers, paralegals, and litigators. AI helps with contract management and review, as well as drafting work. AI contract drafting makes use of past or similar contracts in order to learn from them. Incomplete, incorrect, or conflicting words can cause an agreement to fall apart. Using artificial intelligence, current examples of contracts can be sorted quickly to minimise risk. Humans can be replaced by artificial intelligence by being more efficient and producing higher-quality work. In order for business relationships to be safe and effective, contracts must be well drafted.

Contract Review and Artificial Intelligence (AI)

It is possible that a company does not realize to what extent the process will be manual. Until it has become so accustomed that it doesn’t realize how labour-intensive it is. Whenever contract management or contract reviews are concerned, this is common.

Many corporations implement elaborate manual processes for handling contracts, such as cutting and pasting data into templates, e-mailing, searching for documents, and saving them to multiple drives. A manual contract management approach, however, entails significant risks such as insufficient delivery to a customer, inability to enforce negotiated terms with suppliers, and additional work due to inefficient processes.

In the contract review process, there are a lot of concerns. It may impede the execution of powerful agreements that lead to increased revenue, increased partnerships, and valuable purchases when combined with highly manual or ineffective processes.

Despite the fact that resources and budgets are shrinking, legal teams must do more with fewer resources. And in order for this process to be scalable, technology is required. The legal profession is undergoing significant changes due to artificial intelligence, machine learning, natural language processing, deep learning, and other advancements.

Although legal professionals’ expertise and judges will always be at the core of legal processes, artificial intelligence can serve as a type of pre-work much in the same way that a paralegal might mark up a document or run a checklist before a partner reviews it. Artificial intelligence can be used to decrease contract review time, increase productivity, reduce risks, and save time for corporate legal departments.

Five ways artificial intelligence can be used to streamline the pre-signature review process

Contract review as a self-service option

Artificial intelligence allows legal professionals to save days or even hours per first-pass review. Using the software’s web portal or email, users can request a standard contract or submit a contract from a third party. With the aid of corporate standards and transaction histories, AI learns to review and redline contracts and sends them back via Microsoft Word. This is often accomplished in a matter of seconds.

A contract review with a high volume and low editing level

There are contracts that require rapid turnaround, such as non-disclosure agreements, and they often do not depart from standard terms. Considering their volume and low editing level, they make good AI review candidates. By relying on AI to review contracts like this instead of an attorney, it can determine if it would benefit the company to make changes. Afterwards, the NDA or similar contract is either tendered directly to the other party or undergoes one last internal review if it is deemed necessary. Lawyers can dedicate their time to projects that add more value to the firm.

Wheeling and dealing of complex contracts

In addition to master service agreements and statements of works, agreements involving complex sales or purchases can also benefit from AI. In these cases, AI can guide the attorney and the contract drafter as they negotiate the agreement stand by utilizing the full company playbook and clause library.

Risk assessment of third parties to contracts

In the pre-signing phase, AI assesses contracts’ risk by checking the supplier’s documents against corporate standards and checklists. Following this, the software summarizes the risks, flags some issues based on template contract reviews and unique clauses for each company, and suggests proper edits.

Managing playbooks

AI-driven contract review, when combined with a user-friendly platform, allows teams to collaborate, manage, and automatically apply playbooks and precedents across the company.

Legal professionals can then benefit from the real-time insight and data that the platform provides for improving playbook standards further and better understanding enforcement across the enterprise.

Contracts and forms are negotiated by businesses as often as possible. It can be challenging to adhere to company guidelines when contracts are written on “other party paper.” A slow contract execution ultimately slows down the entire process. By relying on AI systems, corporate legal departments are able to expedite business transactions and increase contract compliance while accelerating the closure and signing of contracts.

Impact of AI on the non-disclosure agreement

Non-disclosure agreements (“NDAs”) are important for corporations since they protect the exchange of information and reduce the cost of litigation if a dispute results from a breach of confidentiality. However, drafting, negotiating, and reviewing NDAs is a time-consuming, repetitive process that mostly deals with the same legal questions. NDAs are likely to be reviewed by paralegals or lawyers in a traditional legal organization, and they are processed through regional offices that use various databases to classify them. Non-Disclosure Agreements (NDAs) can be a powerful tool to protect proprietary information and intellectual property, but only when properly negotiated. Due to the simplicity of NDAs, corporate legal departments rely on forms or templates without providing the necessary provisions to ensure complete protection. Through artificial intelligence (AI), corporations can automatically raise their preferred positions and ensure that all NDA negotiation standards are met.

Companies often draft non-disclosure agreements (NDA) as part of their contracts. Despite their commonality, however, these services are vital to protect business strategies and trade secrets. Almost every company uses the same form of NDA in almost every situation, changing only the parties’ names and the information that is confidential, and leaving the rest out. Because of this, NDAs are incredibly repetitive and routine in terms of drafting, although they’re important. Contracts are a constant burden on corporate legal departments. The preparation of NDAs can take up a lot of lawyers’ time, preventing them from doing other important work that could benefit the organization. Contractual artificial intelligence can take advantage of the routine nature of NDAs. By combining AI and contracts, business users can review and redline NDAs in less than two minutes using a risk-free self-service model. By reducing this burden, your legal staff will be able to concentrate on high-value tasks that help the business succeed.

Achieving NDA compliance through AI

Regardless of whether one starts with an NDA template, a forward-looking legal team will tailor the agreement to the needs of the organization. While reviewing and negotiating NDA agreements, artificial intelligence can help provide concise language while eliminating pitfalls that may arise. Artificial intelligence-powered contract negotiation based on natural language processing, machine learning, and company-specific data can offer:

Standards were enforced for playbook development

In most organizations, there are controls or a playbook for governing negotiations and acceptance of contracts. There is a possibility that attorneys will not adhere to the contract or will lack the time to compare its terms with all of the contract’s provisions. AI can automate the enforcement of playbook directives for each arrangement so that it is consistent.

Resolving ambiguities

A contract should not be ambiguous. Legal experts may understand terms that a layman finds utterly bizarre. These provisions and terms can be reviewed by AI to locate ambiguity and suggest language changes.

Augmented negotiations

The contract lifecycle management process is heavily reliant on negotiations. With artificial intelligence, the attorney can focus on negotiation targets, allowing it to focus on the most important clauses.

Automated revisions

Concise contractual language often requires copious revisions and reviews. AI-enabled technology accelerates the review process by applying terms used in previously successful agreements as a guide to enhance the process.

Rapid contract turnaround

Artificial intelligence in contract lifecycle management can help close deals faster, one of its most significant benefits. After submitting a contract for review, the legal department receives a completed, redlined agreement for continued negotiation.

Enhanced resource assimilation

Having a potential NDA thoroughly analysed by an attorney could take days. Attorneys can focus on other strategic areas by removing the burden of painstaking reviews from AI.

Conclusion

In spite of the many suggestions for understanding NDA negotiations, next-generation implementations of artificial intelligence in legal technology are the most efficient and effective approach. AI uses the information available in a legal department to create robust, secure NDAs based on their completed contracts and playbooks. NDAs and other routines, repetitive contracts should not divert attorneys’ attention away from more critical work. AI and contracts combine to create automated NDAs, allowing the legal professionals to focus on other tasks while empowering the business users to self-serve without having to engage in additional risk.

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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Understanding the silence of constitutional functionaries as a drawback for democracy

By

Diganth Raj Sehgal

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October 17, 2021

The article is written by Nikhil Thakur, from Manav Rachna University. The author has briefly reviewed the phrase “the silence of constitutional functionaries as a drawback for democracy” along with recent judgments in this regard.

Table of Contents

Introduction

The Supreme Court, in a landmark verdict to be viable “over the length and breadth of the nation” explicitly ruled that no government official, representative or so on shall be designated as an Election Commissioner. The verdict aims at ensuring the autonomy of the State Election Commission (SEC) who are responsible for conducting elections like that of the panchayat.

The division bench comprising Justice R. Gavai and Justice Rohinton Fali Nariman deplore the Goa government’s attempt to appoint its law secretary as the State Election Commissioner and even dismisses the appeal. As a result, the Hon’ble Court directed the Goa government to appoint an Election Commissioner and to comply with the High Court’s order and further ordered the government to notify the reservation under 5 municipalities for women as per the law within 10 days. The Supreme Court held that if a government official or a representative is appointed as the Election Commissioner it would cause “mockery of democracy”.

Reservation in India

In India, though reservation sounds like a new concept but is not; it possessed the same system even before her independence. As in 1882, William Hunter and Jyotirao Phule originally conceived the idea of caste-based reservations in India.

The basis of reservation in India was to uplift the section of a society which were socially, economically as well as politically at a disadvantageous stage. Those sections involve Schedule Caste (SC), Scheduled Tribes (ST), Other Backward Classes (OBC), and economically backward classes to whom a kind of an advantage or benefit is ensured or provided in the field of the legislature, government jobs, promotion and so on with the prime objective of putting them at par with others. Reservation at higher educational institutions as well as in the parliament stands at 24.1%, as each state determines its reservation percentage, hence it varies from state to state.

After the independence, the Constituent Assembly decided to allow a reservation to certain sectors for 10 years only which shall be extended if the need persists or the parliament believes that the current reservation system is still required to overcome old age discrimination. Thus, the clauses/ provisions dealing with reservation were immediately inserted under the Constitution.

Prime objectives for insertion of reservation in the Indian Constitution were:

To curb the historical/ traditional injustices or discrimination faced by the weaker section of the society.
To ensure equal opportunities as well as representation.
To uplift and promote the weaker section of the society.

History

The genesis of reservation in India was particularly because of the traditional caste-based system which had divided the entire class into 4 different hierarchies namely; Brahmins, Kshatriya, Vaishya, and Shudra. The Shudras were not even allowed to live in the village; they were forced to live on the outskirts. Thus, they have been facing these kinds of discrimination since the beginning of the later Vedic period.

The current reservation system in India is based on the system expounded by the then British Prime Minister (1933) Ramsay Macdonald who introduced a communal award under which a separate electorate like Muslims, Sikhs, Indian Christians, Dalits, etc were included. During the “Poona Pact,” it was decided that there shall be a single Hindu electorate under which there shall be further reservations.

Post-independence, the Constitution allowed the reservation only to Scheduled Caste (SC) and Scheduled Tribes (STs) but later in 1991 after the Mandal Commission even the “Other Backward Classes” (OBCs) were allowed reservation.

Later, in 1992 a landmark judgment of the Supreme Court came out in Indra Sawhney v. Union of India (1992), where the Hon’ble Court upheld the 27% percent quota for the backward sections of the society but at the same time, it dismissed the notification issued by the government in respect to 10% reservation for economically weaker sections (EWS) who belong to the upper section of the society.

Further, it was observed that the combined reservation percentage shall not exceed 50% of the total population of India, which means out of 100, 50 can be given for reservation not more than that. And in the same case, the concept of “creamy layer” was struck down and it was explicitly held that the reservation is restricted only upto the initial appointment of the person, it does not extend to promotion.

In a landmark judgment of Subhash Chandra v. Delhi Subordinate Service Selection Boards (2009), it was held that the beneficiaries, namely SC, STs and OBCs, are determined based on State and Union Territories. So, if any of the abovementioned beneficiaries moved from one state to another in those circumstances the benefits in another State or Union Territories cannot be enjoyed as it is not recognized there.

In another judgment of T. Devadasan v. Union of India (1964), the Hon’ble Court dismissed the Government’s notification of reserving 17.5% seats for SC and STs in Central service but carried forward the said reservation for the next two years to fill the unfilled quota. Consequently, this reservation shall total around 54% (when the reservation is carried forward) hence, it was found exceeding the upper limit, i.e 50% and declared as invalid.

Furthermore, in Saurabh Chandri v. Union of India 2003 and Pradeep Jain v. Union of India (1984), the 50% reservation at postgraduate and 70% reservation at undergraduate courses in medical institutions was held as valid and not in contravention to anything.

Reservation of 50% seats in the primary school of Uttar Pradesh for women was held as valid as observed in the case of Rajesh Kumar Gupta v. State of Uttar Pradesh (2005)

In 2011, a new category was inserted which was the Muslim sub-quota to which the government announced a 4.5% quota within the 27% quota for Other Backward Classes (OBCs). The government clarified the move by stating that the Muslim OBCs are not able to compete with Hindu OBCs thus this quota was necessary.

Later on, it was found that the government’s move to announce a 4.5% sub-quota to Muslims was just to expand their vote bank. As in the same year, elections were announced in 5 states. Further, Andhra Pradesh based on the “Sanchar Committee” struck down the sub-quota as it was carved out merely on basis of religion.

In 2019, the 103rd Constitutional Amendment, the economically weaker section was allowed 10% reservation in government jobs and educational institutions. The benefit of this scheme can only be enjoyed by such a person who does not belong to SC, STs, and OBCs. and This 10% shall be in addition to that 50% as mentioned in Indra Sawhney v. Union Of India 1992.

The Mandal Commission

It was a difficult task to determine the exact definition of “socially and educationally backward class”. The Constitution of India stipulates no definition of backward classes like SC and STs, which are expressly clarified under Article 366 (24) and (25).

Article 340 of the Indian Constitution deals with the appointment of the Commission for “socially and economically backward classes” and so on. This power has been utilized by the Indian President 2 times to determine the “socially and economically backward classes”:

In 1953, under Kaka Kelkar Chairmanship, and
In 1978, under B. P Mandal Chairmanship.

The Mandal Commission submitted the report in 1981 and stated that OBCs in the Indian population total about 52%; hence, 27% of reservations are made or ensured by the government. Besides determining the backward classes of people among Hindus, the Commission also determined backward classes other than Hindus namely; Muslims, Christians, Sikhs, etc.

In 1990, the then Prime Minister of India, VP Singh declared that the recommendations as submitted by the Mandal commission shall be followed and implemented.

Constitutional provisions

There are a plethora of constitutional provisions in respect to reservation of Scheduled Caste (SC), Scheduled Tribes (STs), and Other Backward Classes (OBCs);

There is an entire chapter that specifically deals with the reservation of scheduled caste and scheduled tribes that is Part 16/ XVI of the Indian Constitution.
The State as well as the central government are empowered to make provisions for the reservation of scheduled caste and scheduled tribes in government services following Article 15(4) and 16(4).
In 1995, through the 73rd Constitutional Amendment, a new clause 4A was inserted within Article 16 which allows the government to provide reservation in promotion. But later in 2001, via the 85th Constitutional Amendment, there were some alterations made in Article 16(4A) which ensured that the Scheduled Caste and Scheduled Tribes promotion on the basis of the reservation shall be given consequential seniority status.
In 2000, the legislature passed the 81st Constitutional Amendment Act which inserted another new Clause 4B within Article 16. This amendment allowed the government to carry forward the reservation vacancies to next year thereby defying the 50% benchmark as held in Indra Sawhney v. Union of India 1992.
Article 330 and 332 allow the reservation of seats for Scheduled Castes and Scheduled Tribes in parliament as well as in-state legislatures.
Article 243D ensures the reservation of seats for SC and STs in panchayats.
Article 243T ensures the reservation of seats of SC and STs in municipalities.

Importance

Predominantly the importance of having reservations in India is specifically to abolish the old-age or traditional practice of injustice or discrimination among the weaker, socially and educationally backward section of the society.

Further, the reservation shall ensure equal participation as well as representation of the Indian population as a whole. This would have another benefit attached to it, which is that it will ensure the advancement or upliftment of these aggrieved sections and promote the cause of equity.

Reservation in Municipal Elections

Part IX-A of the Indian Constitution specifically deals with municipalities. The instant part was inserted in the Constitution of India through the 74th Constitutional Amendment, 1992.

Particularly, Article 243T talks about the reservation of seats for Scheduled Caste, Scheduled Tribes, and women in every municipality. Any member for the reserved category can seek election for the post of chairperson in compliance with Article 243T(4).

According to Article 243T(2), out of the total number of seats which are reserved under Article 243T(1) not less than 1/3rd seats from the same category shall be reserved for women belonging to Schedule Caste and Scheduled Tribes.

In compliance with Article 243T(3), not less than 1/3rd of the total number of seats shall be occupied via direct election which shall be reserved for women not covered under the reserved category. This 1/3rd includes the number of seats reserved for women belonging to SC and STs categories under Article 243T(2).

The reservation of the seats along with the office of the chairperson shall cease to exist after the expiry of 40 years as stipulated under Article 334 of the Indian Constitution.

Role of the Election Commission

Under the Indian Constitution, Article 324 states that the Election Commission of India shall have the power of superintendence, direction, and control of conducting elections of Lok Sabha and the State legislative assemblies.

While in the election of municipalities the superintendence, direction, and control of conducting the same are vested in the hands of the State Election Commission (SEC) in compliance with Article 243ZA. The SEC is empowered to make such necessary changes or additions to the same for the proper execution of the election process.

State of Goa v. Fouziya Imtiaz Shaikh

The instant case of State of Goa v. Fouziya Imtiaz Shaikh (2021), raises few pivotal questions

in respect to Part IX-A of the Indian Constitution which deals with municipalities.

Bench

The bench comprises:

Justice, Rohington Fali Nariman;
Justice, B.R Gavai;
Justice, Hrishikesh Roy.

Background, arguments and the Court’s opinion

In the instant case, the representative on behalf of the State Election Commission (SEC) admitted the fact that the director of SEC had fizzled to ensure 1/3rd reservation of women seats at 2 municipalities namely; Mormugao and Mapusa municipal council. It further accepted the fact that the director had to determine the reservation but due to the COVID 19 breakout and the impugned order, hence, the SEC needed to conduct the election on a timely basis.

The Bombay High Court at Goa observed and made a strong statement “that reservation for women in the Constitution and subsequently in state election” is pivotal for the upliftment and hence the steps taken by the respondent is a violation of the law.

Moreover, the court observed that when SEC notices any form of illegality it is expected from the same that it shall make the alteration, changes, and rectification and further to guide and give directions to the director who shall work accordingly as per the direction and the mandate enshrined under the Constitution instead of rushing and scheduling the election.

The Court further observed that complying with the theory of the Constitution and other laws the steps taken forward by the director in 3 instalments which were spread over 15 years were worthless to justify the gross constitutional violation executed.

Critical analysis of the judgment

A plea was filed by the state of Goa before the Supreme Court challenging the Bombay High Court at Goa’s order which set aside or quashed the notification for election in 5 Municipalities (Margao, Mapusa, Mormugao, Sangeum, and Quepem). On appeal against the High Court order, the three-judge bench of the Supreme Court reserved its decision to allow written submission by the parties.
The apex court further issued notices in favour of the State Election Commission and Fouziya Imtiaz Shaikh. Which stated that after considering all the opinions of the representatives in the case, the Supreme Court stayed the impugned order passed by the High Court of Bombay at Goa and the Election Commission notification which was passed in response to the High Court’s order.
The Supreme Court dismissed the High Court’s order and the SEC was given a green chit to conduct elections in the 5 municipalities that were suspended.

Conclusion

Reservation is a fair concept in India, as it ensures a positive action against the traditional and old-age discrimination issues against the weaker section of the society. Reservation somehow creates a kind of animosity among the sections of society that are not getting benefits like the reserved one. When more and more people aspire to be covered within the purview of backwardness rather than forwardness, the nation would remain in the position of stagnation.

In State of Goa v. Fouziya Imtiaz Shaikh, the Supreme Court has taken a forward step by dismissing the High Court’s order and allowing the election in 5 municipalities.

References

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All you need to know about clinical research service agreement

By

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October 17, 2021

agreement (1) — Image Source: https://rb.gy/noldil

This article is written by Labony Ray, pursuing Diploma in Advanced Contract Drafting, Negotiation, and Dispute Resolution from LawSikho. The article has been edited by Zigishu Singh (Associate, LawSikho) and Smriti Katiyar (Associate, LawSikho).

Introduction

Initiation of any business requires an agreement or a contract. Written documents are more favourable when it comes to any business transaction. Contracts or agreements act as a backbone to both parties. If any unfavourable situation arises in future, a contract gives the power to sue and to be sued. A Contract gives legality to any transaction. As per Section 2(e) of the Contract Act, every promise or a set of promises which form the consideration for each other is an agreement. Section 10 of the Indian Contract Act 1872 enumerates the essentials of a valid contract whereby parties following the section creates a legal relationship between them. There is always a consideration involved in every contract. Without any consideration, a contract does not stand valid.

All business transactions are not similar. The clauses differ in each agreement and contract. To draft any contract for a business one should have an essence of:

1. Free consent of the parties.

2. Legal relationship.

3. Competency of the parties.

4. Consensus ad idem.

5. Consideration.

6. Lawful object.

7. Not declared void.

8. Possibility of performance.

9. Offer and acceptance.

10. Legal formalities.

All the contracts must fulfil the criteria as mentioned in the above points. Getting stuck on a standard format of the contract will always end with loopholes and complications. The clauses must be strict and effective. One such agreement is the clinical research service agreement (CRSA) which needs much attention while drafting as a lot of factors must be kept in mind while drafting them.

What is a clinical research agreement?

A clinical research service agreement (CRSA) is a legally binding agreement between the Sponsor and Academic Institution or an organization that will carry out the clinical research, Clinical Trial or Study. This type of agreement can be initiated by a Sponsor or the Academic Institution. It is important to understand the role of two parties in the agreement in order to understand what CRSA is all about.

What is the role of a sponsor?

The sponsor of the agreement is a party who will be engaged in the development, manufacture, distribution, and sale of pharmaceutical products. For example, a pharmaceutical company that is a sponsor to a CRSA usually funds clinical trial projects to study drugs and devices and take on the important role of assuring the safety of the product and will also be responsible for manufacturing, distribution, and sale of the product.

What is the role of an academic institution?

An academic institution is an organization that will carry out clinical research, clinical trials or studies on a particular product and be engaged in managing clinical research programs.

Let’s take the instance of the Vaccination Covishield. Covishield was produced by the Serum Institute of India (SII) and developed by AstraZeneca and Oxford University. So, here Serum Institute of India (SII) is the Organization that has carried out the research and AstraZeneca and Oxford University is the Sponsor.

Clauses to the agreement

Contract negotiation is highly dependent on the clauses of the agreement. During the contract negotiation sponsors and Research Institution must focus on securing acceptable clauses as high-risk factors are involved in such agreements:

Research subject and services to be provided by the parties

As this is the foremost section of the agreement or contract, the exact description of the research and what role the parties are having should be mentioned with a clear cut explanation. This will help to understand the subject matter of the research project. This will also give clarity to both parties in the agreement.

Compensation and payment

It may be decided between the parties, the total costs for Services performed with respect to a particular Project Addendum that shall not exceed the figure for total project costs. Basically, the sponsor is responsible for all reasonable, necessary out-of-pocket expenses incurred in connection with the performance of the Services with respect to a Project in accordance with this Agreement and the applicable Project Addendum. This section must clearly state that:

On completing the milestone the payment has to be made by the sponsor.
What is the additional cost incurred by the research institution, the sponsor shall reimburse the same against invoices.
In what cases does the research organization need to send invoices.
In what other situation the sponsor will not make payment.

Responsibilities of sponsor and research organization

This clause must clearly state the responsibilities of the parties.

The basic responsibility of Research organization includes:

To conduct research.
To get compensated for the work or research work.
Secure appropriate authorization to carry out the research.
Must comply with the study protocol, government laws and regulatory system of the country.
Must be for the welfare of society.
Research must be conducted by well-qualified physicians and scientists.
As a sponsor is responsible for the development, manufacture, distribution, and sale, the basic responsibility of the sponsor includes:
1. To provide funds to the research organization to conduct the study.
2. To get approval from the regulatory body.
3. To notify the appropriate body and get permission for the trial or sale.
4. To comply with the governing law of the country.

Confidentiality

The clause relating to confidentiality in most of the agreements has its own significance. In this agreement, in what way sponsors and research organizations can maintain their confidentiality?

During the terms of the agreement, the sponsor agrees to hold all confidential or proprietary information confidential commercial, scientific, medical and technical information relating to the research organization and its study in strict trust and confidence.

The research organization must hold all information obtained from the sponsor, whether in oral or written form or generated or created as a result of performing the services under this agreement, including, without limitation, all commercial, scientific, medical and technical information and data relating to Sponsor.

Intellectual property (IP)

IP is a very important clause to be drafted with utmost caution. IP rights of creation are connected with the following:

Patent: Exclude others from making, using, offering for sale or selling one’s invention in the market.
Copyright: Gives the sponsor absolute right to make copies of, distribute, adapt, perform and/or display the creation.
Trade secret: Trade secrets must be handled with care by inventors as the information usually has high economic value, therefore reasonable measures must be taken by the parties.

Indemnification

Both the parties to the agreement shall indemnify for any and all damages, costs, expenses and other liabilities, including reasonable attorney’s fees and court costs, incurred in connection with any third party claim, action or proceeding under the agreement or any project addendum.

Provided, both the parties shall have no obligation if it fails to follow the protocol or sells personal health information (PHI) to a third party.

Conflict and dispute resolution

If any issue escalates between the parties then an attempt will be made to resolve them through mutual resolution through Arbitration and mediation.

Inspection and record-keeping

During drafting the terms of the agreement, the research organization shall maintain all materials and all other data obtained or generated in the course of providing the services hereunder, including all computerized records and files, in a secure area reasonably protected from fire, theft and destruction. Additionally, this section includes other agreements, such as the sponsor’s right to audit, inspect or verify data on a regular basis, and the research organization’s responsibility to cooperate with the sponsor or a regulatory agency.

Governing law

The agreement or contract shall govern by a governing law chosen by the parties. By their choice, the parties can select the law applicable to the whole or to only part of the contract. The parties may at any time agree to subject the contract to a law other than that which previously governed it.

Terms and termination

The term in the agreement or contract refers to the period of time i.e for how many years the agreement or contract is valid. Till the time the agreement is valid, the research organization has to provide service and information about the progress to the sponsor from time to time.

As CRSA is a project-based contract between the parties and creation aides to the welfare of the society, the termination must be reasonable. The parties can terminate is any parties to the agreement does :

Fraud,
Breach of contract,
Does not comply with the regulatory body of the country,
Leaks any confidential information,
Without prior notice or information to change business strategy.

Force majeure

Force majeure means unforeseeable circumstances that prevent someone from fulfilling a contract. The clause in any agreement or contract runs as follows:

“In the event, either Party shall be delayed or hindered in or prevented from the performance of any act required hereunder by reasons of the strike, lockouts, labour troubles, restrictive government regulations, riots, insurrection, war, Acts of God, inclement weather or other regulatory reason or cause beyond such Party’s control, the performance of such act shall be excused for the period of such delay. Any timelines affected by such force majeure shall be extended for a period equal to that of the delay and any affected Study budgets shall be adjusted as appropriate to reflect increases or decreases in costs. Notice of the start and stop of any such force majeure shall be provided to the other Party.”

Assignment

This clause hinders the service provider to assign in any situation whatsoever the duties, services which he needs to perform as per the term of this agreement to another person without the prior approval of the sponsor.

Severance

If any clause or provision be found to be illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby, provided the surviving agreement materially comports with the Parties’ original intent.

Notices

This clause states that any notice which is required to be given as per the service agreement shall be delivered in writing and delivered to the party to whom it is addressed in person or by registered mail.

Amendment of contract

For the reason of force majeure, unexpected and new situations are expected to arise. Every business protocol changes according to the circumstances. Therefore at that point in time, amendment or novation of contract is necessary.

Conclusion

A lot of attention must be paid while drafting the CSRA, This is not a contract like rent agreements or conveyance agreements. One can add more clauses according to the parties demands, but one should keep in mind that these kinds of agreements or contracts are project-based and involve a creation for the welfare of the society. Clauses must be drafted keeping in mind the compliances, regulations, limitations and terms.

References

https://www.sec.gov/Archives/edgar/data/1340652/000119312507269302/dex1013.htm

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Difference between court and adjudicating authority

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October 16, 2021

1.https://www.mondaq.com/india/shareholders/839106/civil-court-vs-nclt-in-adjudicating-the-company-law-matters-the-debate-continues

This article is written by Sunkara Vishnu Ameya, pursuing Certificate Course in National Company Law Tribunal Litigation from LawSikho. The article has been edited by Prashant Bhaviskar (Associate, LawSikho) and Smriti Katiyar (Associate, LawSikho).

Table of Contents

Introduction

Historically, the Courts formed the go-to centre for seeking a remedy. However, with special laws and pending matters burdening courts, a need was felt to establish Adjudicating Authorities which are governed by the respective statutes and owe their existence to the respective statutes. Some of the Adjudicating Authorities in India are the Income Tax Tribunal, Income Tax Appellate Tribunal, The National Company Law Tribunal (NCLT), The National Company Law Appellate Tribunal (NCLAT). The present article would delve into the difference between Courts and Adjudicating Authorities. The Adjudicating Authorities covered under this article is limited to the National Company Law Tribunal (NCLT) and the National Company Law Appellate Tribunal (NCLAT).

The court structure in India

The Court Structure in India, as envisaged by the Constitution of India is a 3-tier system with the Hon’ble Supreme Court of India at the top. Further, the Constitution of India deals with the constitution and powers of the Supreme Court of India, under Chapter V deals with High Courts for States and under Chapter VI deals with Subordinate Courts. It is pertinent to note that the Hon’ble Supreme Court of India and the High Courts derive their existence and powers from the Constitution of India and are not bound by any Statute enacted by Parliament. For instance, Statutory provisions like Section 482 of The Criminal Procedure Code, 1973 or even Section 151 of The Code of Civil Procedure, 1908 (CPC) acknowledge the inherent powers conferred upon them by the Constitution. The Constitution of India further empowers the Supreme Court of India and the High Courts to answer questions of law and even interpret the Constitution.

Unlike the Supreme Court of India and the High Courts, the Subordinate Courts are bound by the procedure laid down in Statutes and are bound by the decisions of the Supreme Court and the respective High Court subject to. The Subordinate Courts are courts that adjudicate upon questions of fact, ascertain the fact and then apply the law propounded in the Statute or law propounded by the Supreme Court and the respective High Court subject to. In order to ascertain facts and adjudicate matters, the Subordinate Courts are empowered to look into both physical evidence and oral evidence. Further even the parties to the dispute may put forth evidence to buttress their claims and the Subordinate Court is duty-bound to scrutinize such evidence. Subordinate Courts primarily deal with matters covered under the Civil Procedure Code, 1908 (CPC) and the Criminal Procedure Code, 1973 (Crpc). This empowers the Subordinate Courts with competent jurisdiction to even impose imprisonment and adjudicate matters which are of criminal nature.

NCLTs and the NCLAT

As previously stated, the present article would only cover two types of Adjudicating Authorities, viz. the NCLT (NCLT) and the NCLAT (NCLAT). Under the erstwhile regime, the Civil Courts and the High Court were empowered to deal with matters relating to Liquidation and Dissolution of Companies and other matters specified. However, in order to expedite adjudication for matters relating to Companies and taking note of the specialized nature of law and facts involved, Company Law Boards (CLB) were notified in the year 1991, which were empowered to deal with matters relating to insolvency and companies.

Further, in the year 1999, a report of a High-Level Committee headed by Justice Eradi observed that there was a number and duplicity of matters and court proceedings as the most significant reason for the massive delay in the dissolution of companies. Committee further recommended the constitution of a national tribunal which should combine the powers of various forums, such as high courts in restructuring and winding-up, the Company Law Board (“CLB”), Board for and Appellate Authority for Industrial & Financial Reconstruction under the Sick Industrial Companies (Special Provisions) Act.

As a sequitur to the said recommendations of the Committee, the Companies (Amendment) Act, 2002 was enacted which provided for the establishment of an NCLT. The said Amendment met various challenges which stalled the process. Eventually, Section 408 was inserted in the new Companies Act, 2013 which provided for the establishments of an NCLT, various benches of the NCLT and The NCLAT. This move was further fructified with the Ministry of Corporate Affairs (MCA) Notification dated. June 1, 2016, which called for the establishment of 11 Benches of the NCLT. This move dissolved the Company Law Boards (CLBs). As of today, there are 15 Benches of the NCLT and 2 Benches of the NCLAT.

Historical background of tribunals

Black’s Law Dictionary in its 4^th edition defines ‘Tribunal’ as: ‘The seat of a judge; the place where he administers justice. The whole body of judges who compose a jurisdiction; a judicial court; the jurisdiction which the judges exercise’.

The Constitution of India under Part XIV-A which consists of two Articles 323A and 323B deals with the constitution of Tribunals. Further, the Constitution of India under Article 323B authorizes Parliament and State Legislatures to set up Tribunals for the following matters:

a. Levy, assessment, collection and enforcement of any tax;

b. Foreign exchange, import and export across customs frontiers;

c. Industrial and labour disputes;

d. Matters connected with land reforms covered under Article 31-A;

e. Ceiling on Urban property;

f. Elections to either House of Parliament or Legislatures of the States and;

g. Production, procurement, supply and distribution of food or other essential goods.

In the case of Durga Shankar Mehta v/s Raghuraj Singh (1955 SCR 287) the Hon’ble Supreme Court defined a ‘Tribunal’ in the following words:

“The expression Tribunal as used in Article 136 does not mean the same thing as ‘Court’ but includes, within its ambit, all adjudicating bodies, provided they are constituted by the state and are vested with judicial functions as distinguished from administrative or executive functions.”

In the case of State of Gujarat v/s Gujarat Revenue Tribunal Bar Association ( (2012) 10 SCC 353), the Hon’ble Supreme Court observed that a particular Act/set of Rules will determine whether the functions of a particular Tribunal are akin to those of the courts, which provide for the basic administration of justice.

Structure of the adjudicating authorities

Akin to the Court system, the Adjudicating Authorities, viz. The NCLT as well as the NCLAT is a 3 tier system, with the NCLT being the first for filing an Application. In other words, it is the NCLT which is established under Section 408 of the Companies Act, 2013; which has ‘Original Jurisdiction’ and Applications are directly filed before the NCLT. The NCLAT on the other hand is established under Section 410 of the Companies Act, 2013 as an Appellate Authority and by default, the NCLAT is not the first forum to seek remedy. Further, if a party is aggrieved with the decision of the NCLT, the party may prefer an Appeal to the NCLAT on a “Question of Law”. If a party is further aggrieved by the decision of the NCLAT, the party may approach the Hon’ble Supreme Court on a substantial question of law.

Jurisdiction of courts

As previously stated, the 3-tier Judicial system in India comprises the Supreme Court, the High Courts and Subordinate Courts. As these courts derive their authority from the Constitution of India, the scope of jurisdiction of these courts is vast. Under Article 136 of the Constitution, the Supreme Court has jurisdiction over all Courts and Tribunals in India. Further, both the Supreme Court as well as the High Courts have jurisdiction over several other matters like Writ Petitions, Public Interest Litigations and even overseeing the functioning of Subordinate Courts.

Further, in matters relating to Securities and Insolvency, the role of Subordinate Courts has been extinguished. The Hon’ble Supreme Court in the case of Shashi Prakash Khemka vs. NEPC Micon & Others (2019 SCC OnLine SC 223) ruled that under Section 430 of the Companies Act, 2013; it is the NCLT which will have jurisdiction and Civil Courts are barred from hearing such matters. Section 9 of the Code of Civil Procedure, 1908 (“CPC”) has the jurisdiction to try all suits of a civil nature accepting suits of which cognizance is either expressly or impliedly barred. Accordingly, though, the proper forum to adjudicate on an issue is the Civil Court, Section 9 of the CPC excludes suits of civil nature which are being empowered by the Special Act on the Tribunal.

Jurisdiction of adjudicating authorities

Both the Adjudicating Authorities, the NCLT as well as the NCLAT are Quasi-Judicial Authorities. The Hon’ble Supreme Court in the case of State of Gujarat v/s Gujarat Revenue Tribunal Bar Association (2012) 10 SCC 353 concerning ‘Quasi-Judicial authority’ observed that: “Where there is a lis between two contesting parties and a statutory authority is required to decide such dispute between them, such an authority may be called as a quasi-judicial authority.”

Further, both the NCLT as well as the NCLAT are not bound by the procedure emanated under the Civil Procedure Code, 1908, but are bound by Principles of Natural Justice and the Companies Act, 2013, the IBC and the NCLT and NCLAT Rules.

Further, as both the NCLT and the NCLAT derive their power from Section 408 and Section 410 respectively of the Companies Act, 2013; they are bound by the Statutes like IBC and The Companies Act, 2013 and cannot traverse beyond the scope of the said statutes. Further Hon’ble Supreme Court in the case of Essar Steel vs. Satish Kumar Gupta (CIVIL APPEAL NO. 8766-67 OF 2019) ruled that the NCLT and the NCLAT are not courts of Equity and are strictly bound and limited to the jurisdiction conferred upon it by the IBC and the Companies Act, 2013. Further, the Hon’ble Supreme Court of India in the case of Gujarat Urja Nigam vs. Amit Gupta ruled both the NCLT and the NCLAT owe their existence to the IBC and the Companies Act and are limited to the powers conferred by these acts and cannot usurp jurisdiction which is not conferred by either of the statutes.

The NCLT plays a key role in the Insolvency and Bankruptcy Code, 2016 (IBC) as it is the NCLT that is authorized to order initiation of the Corporate Insolvency Resolution Process (CIRP). In doing so, the role of the NCLT is only to ascertain default from Information Utility or to look into any other evidence submitted as a record of default. Further, the jurisdiction of the NCLT is a ‘Summary Jurisdiction’. Under Summary Jurisdiction, the role of the NCLT is not to adjudicate pre-existing disputes or even go into the depths of the dispute. The Hon’ble Supreme Court in the case of Mobilox Innovations Private Limited vs. Kirusa Software Private Limited (CIVIL APPEAL NO. 9405 OF 2017), ruled that the role of the NCLT is not to adjudicate pre-existing disputes, but is only to ascertain the default. Further, in the case of Shesh Nath Singh & Ors. vs. Baidyabati Sheoraphuli Co-operative Bank Ltd and Anr. (CIVIL APPEAL NO. 9198 OF 2019), the Hon’ble Supreme Court ruled that The Adjudicating Authority does not resolve disputes, in the manner of suits, arbitrations and similar proceedings and the ultimate object of the Adjudicating Authority is only to ascertain default and Amr initiate CIRP.

The NCLT as well as the NCLAT being a creature of the Companies Act, 2013 as well as the IBC is not bound by the Civil Procedure Code, 1908 or the Indian Evidence Act, 1872. As a consequence, Civil Courts are barred from hearing any matter in which the NCLT has exclusive jurisdiction. However, this does not extinguish the jurisdiction of High Courts. In the case of L. Chandrakumar v. Union of India (A.I.R. 1997 SC 1125), a question was raised as to whether the setting up of the Tribunals and excluding the jurisdiction of the High Court was constitutional? A ruling was made by the seven-judge bench of the Supreme Court that the power of ‘judicial analysis’ of the High Court under Article 226 of the Constitution cannot be eliminated by the Parliament.

Limitation on the role of adjudicating authority

While the Hon’ble National Company Law Tribunals all over India have been time and again directing the Central Government to order an investigation into the affairs of the Corporate Debtor as and when it deems that the same ought to be done, this mechanism however may hit turbulence after the recent ruling of NCLAT [Vijay Pal Garg & Ors. vs. Pooja Bahry (Liquidator in the matter of Gee Ispat Private Limited in Company Appeal (AT) Insolvency No. 949 of 2019], wherein it was held that the Adjudicating Authorities cannot possess the power to direct the Central Government to conduct/order the investigation against any company.

Conclusion

Both the Adjudicating Authorities as well as the Courts in India function with the ultimate objective of the dispensation of Justice in compliance with the law. However, the role of Adjudicating Authorities is limited to that conferred upon it by the Statute and the rules framed by the concerned ministry. On the other hand, Courts derive their authority from the Constitution, thus having a greater scope. Ultimately, both the Courts and the Adjudicating Authorities together act inextricably thereby paving way for dispensation of Justice.

References

2. https://www.icsi.edu/media/portals/22/Team%206.pdf

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Defamation case of Kangana Ranaut and Javed Akhtar : what are the legal provisions

By

Rachit Garg

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October 16, 2021

This Article is written by Harmanjot Kaur and the article has been edited by Khushi Sharma (Trainee Associate, Blog iPleaders) and Vanshika Kapoor (Senior Managing Editor, Blog iPleaders).

Table of Contents

Introduction

For someone who is a Bollywood fan, hurting the sentiments of his famous star can be like throwing a pebble on the glass pane of a newly built home. However, understanding the key intentions and the intricacies of law can prevent anyone from falling into the prey of litigation; just because you said something wrong to them.

Provisions in the constitution

Article 19(1)(a) gives you the right to express your opinion. However, this right is limited by Article 19(2), which allows the State to enforce reasonable restrictions. Some of them are as follows:

*A good sense of decency and morality

* Contempt and disrespect of the court system

* Defamation

* Sovereignty and Integrity of India

* Peaceful relations with foreign nations and States

The freedom of speech and expression means the right to express one’s convictions and opinions freely by word of mouth, writing, printing, pictures or any other mode. It includes the right to publish and propagate one’s views. The fundamental principle involved here is the right to know.

In the National Anthem’s case (1986), it was held that the right to freedom of speech includes the right to remain silent as well.

Freedom of press

Unlike the American Constitution, Article 19(1)(a) does not expressly mentions the liberty
of the press. However, we have implicitly imbibed the freedom to publish what we want, the right to express our opinions.

In the case of Bennen Coleman, 1973 it was held that it is the freedom of the newspaper to publish any number of pages or to circulate it to any number of people. This constitutes one of the important parts of the freedom of speech. In Sakal Paper’s case, 1962 it was held that the freedom of speech in the newspaper is not only limited to the commercial content written in it.

Why do newspapers levy subscription charges if freedom of speech is a fundamental right

In the case of Express Newspaper’s case, it was held that the press industry is not free from taxation, but the tax circulation is within reasonable limitations. However, this does not impede the right to freedom of speech since there is a need for a budget for the machinery, printing press, electricity which the newspaper industry also have to pay bills.

Can anyone publish a documentary based on public records of a criminal

Yes. In the case of Rajagopal vs State of Tamil Nadu, 1994 it was held that a person can have the right to publish the documentary of a criminal without any pre-censorship or his permission. The freedom of the press means the absence of any interference by the State unless the topic touches certain areas. These include subjects such as the security of the state, morals and decency, contempt of court, defamation, India’s sovereignty, public order and friendly relations with foreign countries.

What are the constituents of defamation

Article 19(a) of the Constitution of India guarantees the right to freedom of speech. However, this freedom of speech is curtailed by the provisions of the Indian Penal Code, 1860 by inserting Section 124A for sedition and Section 499 defining the provision of Defamation.

The constituents include three broadheads to fulfil the requirements of defamation. These are having a mala fide intent to defame or harm the reputation; publication i.e., made known to the people at large; understood by a reasonable man.

What are the remedies available

There are two remedies available to someone who is defamed. One is the civil proceedings and the other is going for the criminal proceedings.

Can I get compensation for myself rather than publicly displaying anything

Yes, for that case the plaintiff should opt for the civil proceedings, where the plaintiff will get compensation or damages for the defamation.

What is the option that I should have if I care about my reputation in society more than money

In case the plaintiff cares about his reputation in society at large, it is suggested that one should opt for the criminal proceedings. This is a right in rem i.e., against the world at large, where one can opt-out for the criminal proceeding or can make the person pay a fine and even go to jail for a considerable period.

Which option should I opt-out of Criminal proceedings or a Civil Case

In case the plaintiff would care about monetary profit or gaining in personam the damages for the defamation, then he should go for the Civil proceedings. This is more like the arbitration proceedings where the parties compromise with each other and talk about how they can negotiate the long proceedings and settle the matter quickly.

In case, the plaintiff is more concerned about his reputation in the eyes of people at large, then the person should opt for the criminal proceedings. As it can make the person get imprisoned due to his offence.

What are the provisions under English Law

In English law, there is a division of defamation into two categories. These are termed: Libel and Slander. The defamation which is in the written format i.e., which is about the sense of sight is known as Libel. This was held in the case of Goldsmith v. Bhoyrul. On the flip side, Slander is the defamation or harming the reputation in an oral form i.e., something related to the sense of hearing or something which is heard. This was held in the case of White v Mellin. Additionally, Justice Watson commented the statement: ‘In defamation, damages and injunctions are merely two remedies for the same wrong.’

Additionally, there is a provision of innuendo. In innuendo, a person speaks something which is seemingly very innocent but at a deeper level, it is defamation. It is like mockery on the surface however after deeper analysis it is an ‘oblique remark’ disparaging the reputation. In the case of Tolly vs JS Fry & Sons Ltd., the portrait of a golf player was shown as hitting the ice-cream ball. This would amount to defamation as his reputation and career is mocked here. Similarly, in the case of Cassy vs Daily Mirror Newspaper Ltd., it was said that Mr A married Mrs A, but lives with Miss B. At first glance, it may seem to be a simple statement, however deep inside it is raising questions on the person’s character. This would amount to innuendo under English law. Likewise, in the case of Morrison vs Ritchie Co., it was held that it would be an innuendo to say that a lady has given birth to twins just in two months.

Newstead vs London Express Newspaper, a specific person named ‘Camberwell’ was said to commit adultery. However, the actual name of the person was ‘Camberwell Barman’ who had committed adultery. Hence, one needs to be as specific as possible when it comes to writing on any sensitive information. Here, indirectly, the news writer is implying the crime of bigamy, which is an offence. Hence, it is defamation.

What are the specifications under Indian Law

Under Indian law, we have Article 19(1) providing the provision for the freedom of speech. However, curtailing this right so as not to hurt anybody’s sentiments, we have Section 499 of IPC. In Radhey Shyam Tiwari vs Eknath, it was held that one should verify the information before circulating. A false claim of issuing fake certificates, accepting bribes and calling reputed BDO a ‘Money Monger’ would constitute defamation.

Likewise, in Gurbachan Singh vs Baburam, it was held that the editor should check the veracity of the information before publishing it. Otherwise, it may amount to defamation, if it was later found to be untrue. In Alexander vs North Eastern Ry., there was a newspaper headline of a $1 fine or 14 days imprisonment, as the accused was travelling without a ticket. It was held that such an act would not amount to defamation, as the person was actually to pay a fine and was imprisoned. So, using one of the two pieces of information (fine or imprisonment) as a headline would not amount to defamation, as overall the information was true.

In Cook vs Alexander, it was held that anything said during the parliamentary proceeding would not amount to any defamation.

In the present case where ‘Kangana Ranaut’ compared Javed Akhtar with a terrorist, there is clear evidence of irrational prejudice. Moreover, she has not verified the veracity of the information. On similar lines, the precedents attached to this case can be Horrock vs Lowe, where it was held that whoever published anything with prejudice, irrational and unfavourable against the plaintiff would defame them. In the case of Ram Jethmalani v Subramaium Swamy it was held that the provision of ‘qualified privilege’ is present only in the Houses of Parliament or in the courtroom proceedings. Anything which is spoken outside the ambit of the parliamentary proceeding or the courtroom proceedings would amount to defamation. In Salena Dandasi v/s Gajjala Malla Reddy & Another, it was held that the publisher of a newspaper should run due diligence before publishing anything. Otherwise, if later it would be found that the claims were untrue, it could lead to defamation. In Noor Mohammad vs Mohammad Jiajddin, it was said that revoking the marriage in front of the whole ‘baraat’ would amount to defamation. Similarly, in D.P. Choudhary v. Kumari Manjulata, a student going for night classes was accused of running away with her lover. This would amount to defamation, as the information was untrue and not verified before publishing.

What are the provisions in the Indian legal system

There are various exceptions discussed in Indian Penal Code related to defamation. These are discussed under Section 499 of Indian Penal Code, 1860.

Explanation 1.

Implicate anything to a deceased person may constitute defamation, It has been noted that if the imputation would harm that person’s reputation if he were living. Furthermore, it may also hurt the feelings of his family or other close relatives.

Explanation 2.

False imputations regarding a company or an association or group of people may constitute defamation.

Explanation 3.

If an imputation is presented as an alternative or is stated ironically, it may be defamatory. A mocking, less direct, and mischievous way of saying the same thing creates an ironic situation here. This may amount to defamation.

Explanation 4.

Imputations never cause harm to someone’s reputation, unless they lower their character in relation to their caste or their calling. In addition, they do not cause others to believe that their body is dishevelled, or is in a state generally considered disgraceful.

Illustrations

(a) A states, “Z is an honest man; he never stole B’s watch”, intending to give the impression that Z did steal B’s watch. Unless it falls within one of the exceptions, this is defamation.

(b) A inquired who stole B’s watch. In order to make it appear that Z stole B’s watch, A points to Z. Unless it falls within one of the exceptions, this is defamation.

(c) A shows a drawing of Z running away with B’s watch, intending for people to think that Z did it. There is defamation here, unless it falls within the exception.

Exceptions:

First Exception. —Truth about someone that’s for public benefit

Truth about someone that’s for public benefit can be imputed or published. This would not amount to defamation. Factual impugnation about someone that serves the public interest are not defamatory. However, it should be noted that facts determine whether a policy is in the public interest or not.

Second Exception. —Public conduct of public servants.

Defamation does not include the expression of a good faith opinion. This can be related to what a public servant does in the discharge of public functions. Also, it can be about what character he displays, so long as that character appears in that conduct, and no further. Such an expression in good faith would not amount to any defamation.

Third Exception. —Conduct of any person touching any public question

In the case where a news reporter touches the question in good faith, it would not be defamation. This can be related to how a politician has been doing in the last few days, or the work done by a social worker or NGO in the past few days.

Fourth Exception. —Publication of reports of proceedings of Courts.

In case a person presents a compilation of supreme court or high court judgements or any other related reports, it would not amount to any defamation.

Fifth Exception. —Merits of case decided in Court

In case there is any commentary or a document presented in relation to the case decided by the, it would not amount to any defamation,

Conclusion

In a nutshell, we can see that there is a right to freedom of speech however at the same time we have a subsidiary provision to prevent people from rambling anything they want. Kangana Ranaut would have been on a safer side, if she would have targeted a whole community, say; doctors, lawyers, directors etc. before making any claim. As the precedent set by Kempffur vs London Express Newspaper it was held that targeting the whole community of lawyers, doctors etc. would not amount to any defamation. A generic view expressed in good faith would not amount to defamation. However, mentioning a specific ‘target person’ is known to amount to defamation. For instance, speaking hate speech, promoting Naxalism ideology, terrorism, sedition is prohibited. Additionally, speaking anything which is violative of international diplomacy is not allowed. This is implicitly mentioned in Article 51(a) forming the Fundamental duties. With the changing times, it is evident that people are becoming aware of their rights and duties. Furthermore, the infancy stage of the IT Act, 2000 and other laws are slowly buddying. It is only because of them that new and esoteric terms such as ‘Zombie Laws’ are prevalent in the present times. Slowly, but steadily we are on the lines of considering the old idioms and phrases very seriously such as: ‘think before you speak.’

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Transfer restrictions in shareholders rights in articles

By

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October 16, 2021

This article is written by Sanjana Rao, pursuing Diploma in Cyber Law, FinTech Regulations, and Technology Contracts from LawSikho.

Table of Contents

Introduction

Section 44 of Companies Act, 2013(CA,2013) and 2(7) of Sale of Goods Act, shares are movable property and hence, freely transferable. Atlas, the world of corporate is not black and white. Concerning 2(68) of CA, 2013, shares transferred in a private company are mandated to be restricted by incorporating various clauses in its Articles of Association. This is based on the Partnership principle. However, these restrictions have to be exercised in the best interests of the company and its shareholders and complete prohibition on the transfer of shares is not allowed. Examples of sufficient cause can be due call money that has not been paid by the shareholder or is financially incapable of paying it if the transferee is a minor (unless through a natural guardian), improper documents or any other reason in the general interests of the company. The shareholder must study the articles of the company before registering himself as a member.

How are these restrictions placed?

Right of preemption

Concerning Bishan Singh v. Khazan Singh, preemption is a right to the offer of a thing being sold and not a right to the thing itself.

When a member decides to sell his or her shares, the shares must first be offered to other company members. The price will thereafter be established by the board of directors or the company’s auditor, or by applying the formula set out in the articles. However, if no existing member is prepared to purchase such shares, the transferor can transfer the shares to the proposed transferee.

The preemption rule is intended to limit transfers between members and non-members, but it does not apply to transfers among members. This means that, unless other members agree to buy all of the shares intended to be sold, a member is not obligated to sell his or her shares to other members under the pre-emption clause. Steps for implementation of these preemptive rights need to be stated in the articles.

A member cannot avoid a pre-emption clause in the articles by signing an instrument of transfer to such a person holding the shares as a bare trustee and not a registered member. The mandate and validity of preemption have been established in various case laws over time.

In Nanalal Zaver v. Bombay Life Assurance Co. Ltd, the Supreme court held that the existing shareholders must be given the first option by the company.

In Sahara India Real Estate Corporation v. SEBI, it was held that Section 81 of the Companies Act of 1956 presumes a preemptive right on existing shareholders to a new issue of shares.

Power of directors to reject a transfer

The directors in a private company can refuse registration of transfer of shares as per provisions in its articles of association. After exerting preemption rights, the transfer may be rejected only with sufficient cause or in the interests of the company. Provisions regarding rejection are incorporated in the articles and any contractual agreements between the shareholders regarding transfer are not admissible. In circumstances of refusal of transfer registration, a notice needs to be sent by the company to the transferor and transferee within thirty days of the date on which the instrument of transfer is received. The notice should state the reasons for refusal. Once the notice is received, the transferee may appeal to the tribunal within 30 days from the date of receipt of such notice.

The directors can refuse to register a transfer of shares only if they pass a resolution to that effect; just failing to approve a resolution owing to a deadlock is not a formal, active exercise of the right to decline, and the applicant will be allowed to be registered as a member of the company.

In M.J. Amirthalingam v. Gudiyatham Textiles Pvt. Ltd, the court held that the right to refuse transfer is a fiduciary and must be exercised in good faith. However, the Court will not interfere when the Board has rejected a transfer as per the interpretation of its articles but only step in where there is proof of bad faith.

Remedies available to shareholders in case of refusal of a transfer of shares

Under the Companies Act, 1956 Section 111 of the Act aims to prohibit directors from abusing their power and to protect the interests of real and bona fide transferees and shareholders. Section 111 grants a right of appeal to the Company Law Board in the event of a refusal to register a transfer/transmission of shares, while Section 111A provides a right to petition the CLB for rectification of the members’ register.

Under Section 58 of the Companies Act, 2013- Refusal of registration and appeal against refusal.

Grounds of appeal in rejection of transfer of shares:

When the board has acted with malafide intentions.
Insufficient or irrelevant reasons are not specified in the articles.

In Master Silk Mills Private Limited v. Dharamdas H Mehta– the company rejected a transfer based on “not approving the purchaser”. The court held that such a blanket ban could not be imposed on the transfer of shares and it resulted in an improper exercise of power.

The individual bringing the accusation bears the burden of establishing that the directors have unlawfully accepted or opposed to sharing transactions. The courts will always assume that the

directors are acting in good faith. In Balwant Transport Company v. Deshpande, the Nagpur High Court decided that interfering with the director’s legitimate use of discretion would be unjustified. This is founded on the Court’s judgement that the directors are the ones who know what is best for the company and that it is, therefore, improper for the Court to substitute their opinion for the board’s.

Shareholders agreement and Articles of Association : the dilemma continues

Shareholders provisions are usually updated with changes in the shareholding patterns or additional rights but these changes are not always incorporated in the articles of association. More often than not, this leads to inconsistencies and courts have passed mixed judgements in this regard.

B. Rangaraj vs. V.B. Gopalkrishnan and Ors: This is the Supreme Court’s first judicial pronouncement on the enforceability of clauses in the shareholder’s agreement(SHA) that are not referenced in the articles(AOA). The Supreme Court held that a restriction on the transfer of shares that has not been incorporated in an AOA but has been incorporated in an SHA is unenforceable and that such a condition is only enforceable when it has been incorporated in the company’s AOA. A similar judgement was passed by the Delhi High Court in HTA Employees Union vs. Hindustan Thompson Associates Ltd. and Ors, where it was held that, once the modified AOA takes effect, no rights or claims that violate it can be enforced or considered genuine.

In Vodafone International Holdings vs. Union of India and another, the Supreme Court concluded that shareholders can engage in agreements that are in the best interests of the company and that such terms of the SHA are not in conflict with the provisions contained in the AOA, such clauses of the agreements are legitimate and enforceable.

Conclusion

In conclusion, when the company is a party to the shareholders’ agreement, and the clause wherein does not clash with the articles of the company, shareholders agreement may prevail. However, it must be noted that the articles of association are a charter document that serves as the company’s bible and will always take precedence over any agreement. As a result, it is recommended that the shareholders’ agreement clauses be inserted into the articles of the company.

References

Bishan Singh v. Khazan Singh- https://indiankanoon.org/doc/47635/
Sahara India Real Estate Corporation v. SEBI- https://indiankanoon.org/doc/158887669/
Nanalal Zaver v. Bombay Life Assurance Co. Ltd- https://indiankanoon.org/doc/1679542/
Master Silk Mills Private Limited v. Dharamdas H Mehta- https://indiankanoon.org/doc/65351/
B. Rangaraj vs. V.B. Gopalkrishnan and Ors- AIR 1992 SC 453- https://indiankanoon.org/doc/140212/
Vodafone International Holdings vs. Union of India and another- https://indiankanoon.org/doc/115852355/
M.J. Amirthalingam v. Gudiyatham Textiles Pvt. Ltd- https://www.casemine.com/judgement/in/5608fe9ce4b0149711150acf
https://taxguru.in/company-law/enforcement-contractual-restrictions-transfer-shares-i ncorporated-articles-association-company.html
V.B. Rangaraj vs. V.B. Gopalkrishnan and Ors.- AIR 1992 SC 453
Vodafone International Holdings vs. Union of India and another- 2012 6 SCC 613
https://www.mondaq.com/india/shareholders/1089446/enforcing-shareholders39-agreeme nts-in-india-a-legal-laggard

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How did India decide between the ‘adversarial’ and ‘inquisitorial system’ of criminal justice : in light of plea bargaining and Article 20(3)

By

Rachit Garg

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October 16, 2021

This Article is written by Harmanjot Kaur and the article has been edited by Khushi Sharma (Trainee Associate, Blog iPleaders) and Vanshika Kapoor (Senior Managing Editor, Blog iPleaders).

Table of Contents

Introduction

“No one can be guilty unless proved beyond a reasonable doubt.”

This is the cliché legal maxims at the start of law school or even CLAT preparation; and ends up only when we fly to a big corporate law firm, where all we do is merger and acquisition, or other IPR related jobs. In litigation, this is one of the most persuasive lines, which governs all the laws related to the Evidence Act and Criminal Justice.

The former President of India, Dr R.Venkataraman also observed the present system[7]:

“The Adversarial System is the opposite of our ancient ethos. In the panchayat justice, they were seeking the truth, while in the adversarial procedure, the Judge does not seek the truth, but only decides whether the charge has been proved by the prosecution. The Judge is not concerned with the truth; he is only concerned with the proof. Those who know that the acquitted accused was, in fact, the offender, lose faith in the system”.

However, it is worth noting that there are two types of criminal justice systems; namely: an adversarial or an inquisitorial system of criminal justice. The Doha Convention lays some of the key features about this. In the following heads, we will discuss which system has India adopted and why we made such a choice.

Which countries follow the inquisitorial system of criminal justice?

Countries such as France and Italy, as opposed to common law systems. They believe in the rigorous procedure of the inquisitorial system of criminal justice.

What are the crime rates in countries which adopt the adversarial system of criminal justice?

In the adversarial system, the jury acts as an independent referee, who would hear both the sides of the victim and offender and present his judgement through analytical legal reasoning. Afghanistan, India, Pakistan, South Africa, Wales, England, Australia and the United States of America have an adversarial system of criminal justice.

What are the crime rates in countries that follow the inquisitorial system of criminal justice?

Inquisitorial or accusatory system the judge is in a position to hold an enquiry about all the related offences. Here the judge himself investigates everything with the aid of the investigation team beyond reasonable doubts, to make the accused liable for the offence. It is more prevalent in France and other European countries like Germany, New Zealand, Italy and Austria.

Provisions regarding Article 20(3) in Indian Constitution

Article 20(3) talks about the system of self-incrimination. This means that no one can be made liable or asked to give any evidence against one’s own self. However, we see this in complete contrast with what plea-bargaining is. It is admitting that you were wrong by a criminal.

In the case of Selvi v. State of Karnataka, the court said that the NARCO analysis is inadmissible in the court of law. In the case of Amrit Singh v. the State of Punjab, the question was whether the accused who has committed rape was asked to take the hair string for the DNA analysis, amount to self-incrimination? The court held that in a narrower sense it may not be seen as a violation of Article 20(3). This can be compared to a hair string found nearby with other twigs or present near dried leaves of the crime scene. However, if a similar hair string has been taken from the hair scalp without the permission of the accused, by force, it may amount to self-incrimination.

Therefore, we see that the variation of the term ‘self-incrimination’ varies from case to case. It is a question of the facts and circumstances related to a particular case.

However, we see that there is a right to remain silent also present in the wider context of Article 20(3). There are areas where the accused has the right to remain silent and not admit his crime. Here, the police can investigate the crime scene. Later, the findings as evidence can help the courts to judge whether a person is convicted or not.

Also, free legal aid and timely presentation before the courts is also crucial to secure the rights of

the accused. Here, the landmark judgement of Joginder Singh vs the State of UP comes into play. Also, the reasonable period and reason for the conviction should be clearly mentioned. Furthermore, the aid and support from friends, family and legal support is the right of the accused which cannot be denied. The presentation of the case before the nearest magistrate is a necessity so that justice should prevail. This was held in the case of Babalal Desai vs the State Of Maharashtra.

Pros of the adversarial system of criminal justice?

Can encourage speaking truth

In the case of plea bargaining, there are chances that due credits are awarded to those who actually dare to speak the truth. Here there are chances where the term of the sentence can be reduced in one way or the other. This is dependent on the areas such as whether the person has a strong ethical background related to the need to speak the truth.

In accordance with the traditional ethos of our culture

Indian society traditionally follows the pattern where speaking of truth is encouraged. Also, keeping an eye on the increased population in the Indian society, we see it as a viable option to speak the truth rather than to shy away from it.

Speedy way as compared to the inquisitorial system

The system is speedy as compared to the other counterpart. This is because of the fact that India has a very high population rate. This is true even after looking at the previous trends of the growing population and various surveys conducted worldwide.

Keeping an eye on the population of India, it was suitable

Looking at the comparative trend of the adversarial and inquisitorial system of justice, we see that the population of India is increasing at a tremendous rate. It is not feasible to actually go and think of the ways through which we can devise ways to incorporate the inquisitorial system and at the same time ignoring the area of India’s increasing population. Just trying to incorporate the new techniques won’t guarantee success. Similarly, it is necessary to see socio-cultural and economic backgrounds before finalizing a strategy.

Can put the parties into a position of negotiation

There are various ways such as compounding of offence, increase or the decrease in the cost of the fine or damages along the way. We should appreciate that the provision of plea bargaining does help the courts to speed up the process and decide whether a person is convicted or not. This puts the parties in a position to compromise the damages.

Furthermore, the areas such as application of bail provisions, applying for it also becomes handy if the convict accepts his defeat. Here is also the most important provision of negotiation with anyone.

Also later, the convict can readily apply for pardoning, commutation and such related areas so that the president can grant them some relief for their truthfulness.

Position of Plea Bargain in an adversarial system of criminal justice

Plea bargaining was a special provision added on July, 5th 2008 in the Chapter XXIA of CrPC, 1973. This is a kind of pretrial negotiation between the accused and the prosecution. This is an alternative manner to deal with criminal cases. On one hand, where it prevents the rigorous process of trial and collecting evidence, on the other hand, it increases the speed of the justice system.

Limitations to the Plea Bargaining

Not applicable to conditions related to socio-economic offences of the country

Nitin Nagindas Hundiwala And And vs The State Of Maharashtra, 2019 states that plea bargaining is not applicable to the conditions which threaten socio-economic conditions of the country.

If the offence threatens the sovereignty of the constitution, unity and integrity of the people or creates communal violence; then such an act would be outside the purview of plea-bargaining. Similarly, in the case of sedition, crime against the Union of India such as hate speech promoting Naxalism, Terrorism etc.; plea-bargaining is not applicable.

It does not apply to the offences against women

If the crime committed is against a woman or a child under the age of 14 years, in that case, the provision of plea bargaining is not applicable.

It is not applicable in case the convict was previously accused of a crime

Under S.265B of CrPC Amendment 2005, an explicit provision is laid down, which states that this provision is not applicable in case when the accused was previously convicted of an offence.

It is not applicable against a habitual offender

In the case of State of Gujarat vs Natwar Harchandji Thakur, 2005 it was held that plea bargaining is not applicable in the case of a habitual offender.

It is not applicable against juvenile offenders

In the case of Girraj Prashad Meena vs the State of Rajasthan, 2014 it was held that Section 265L explicitly says that the provision of plea bargaining is not applicable in the case of juvenile offences as defined in Juvenile Justice Act, 2000.

Limitations of Plea Bargaining

However, merely the fact of mutually set dispositions, and in-camera proceedings as explained by Judicial First Class vs By Advs.Sri.Abu Mathew, 2016 is still a grey area as there is a scope of self-incrimination as explained by Article 20(3) of the constitution. Similarly, in the case of Joseph v. the State of Kerala, 2015 and Bala Dandapani v. The State of Kerala, 2016 it was observed that there were no formal in-camera proceedings related to the offence of Section 138 of Negotiable Instrument Act. This is a clear violation of Article 20(3) by using pressure tactics to admit the offence. Moreover, instances of false conviction and coercion related to death threats to the accused and the family can be observed, if not treated with due care and diligence. The scope of ‘satisfactory disposition’ varies from case to case.

Which system is better: The inquisitorial or Adversarial system?

According to the strengths and weaknesses of the above systems, the data presented by International data on Crime and Justice, we see that there is an increased crime rate in the case of countries with adversarial systems. The world population review shows that in 2021 the top ten countries with high criminal activities are actually from Africa, the US, Oceania and Latin America. And all these States have these things in common.

A colonial past.
Adversarial System of Justice.
The increased population as compared to the EU and the countries with the inquisitorial system.
Materialistic and Goal-oriented lifestyle.

Which system was adopted by India post-independence for criminal justice

India adopted the adversarial system of criminal justice. This is due to its economical unsound position in the post-colonial era. Furthermore, with the increase in the population and speedy justice, it was a viable option to adopt the adversarial system. Also, the traditions of India talks about truth, non-violence, ahimsa. So, due to philosophical reasons, this system gives a chance to the offender to admit when he was wrong and seek mercy for the wrong deeds. Additionally, India is a land of diversity. There are instances where the Jainism philosophy of ahimsa was so stringent that they even sieve water before drinking. In Hindu philosophy, the idea of integral yoga by Aurobindo Gosh, which aims at the moksha of the entire community collectively was propagated. On the contrary, Sharia law advocates the philosophy of “an eye for an eye” which punishes the offender rigorously.

However, there are cases where India is quite stringent and even impose the death penalty. These are the crimes related to women, rape cases and offences against the sovereignty of the country.

The law is a form of ‘Social Contract’ among the people and the sovereign to govern them in a specific way. Hence, due to socio-cultural traditions and philosophy, India was more inclined towards the adversarial system of criminal justice.

How did India decide a way forward

India has experienced a long history of colonial past. However, looking at the thesis and antithesis of both the systems, India in this case also adopted a hybrid system of legislation. This is on the similar lines of the ‘Quasi-federal’ system as adopted by India as explained by KC Wheare. This can be termed as ‘Adquisitorial System‘ as some of the provisions allow plea bargaining and others are explicitly forbidden, keeping an eye on the integrity and sovereignty of the country. After all, it is truly said by J.N. Bhatt, J.: “A civilisation is judged by the way it treats its criminals.”

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Suo Moto contempt in light of the Prashant Bhushan case

By

Diva Rai

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October 16, 2021

Rafael-verdict_2_20181214_571_855 — Image source - https://bit.ly/3vi9Ykq

This article is written by Niharika Agrawal, from IFIM Law School. This article deals with the concept of suo moto contempt in the light of recent judgment by the Supreme Court in the case of Prashant Bhushan.

Table of Contents

Introduction

Contempt of court is any conduct that tends to disrespect or disregard the authority and the administration of law. The concept of contempt of court is regulated under the Contempt of Court Act, 1971, and Article 129 and Article 215 of the Constitution give power to both the superior courts, that is Supreme court and High Court, to initiate and punish for the same. However, these regulations, especially the Act of 1971, are surrounded by controversies. These controversies were emphasized in the recent judgment in the case of In Re Prashant Bhushan (2020). This article comprises the concept of intra-court appeal or right to one appeal and the requirement of due process in the light of the above case.

Analysis of the Prashant Bhushan case

In this above case, Adv. Prashant Bhushan, one of the activist lawyers of the Supreme Court was convicted of contempt of court for his two tweets in July 2020. According to the Court, the statements in the tweets have created disruption to the administration of justice and might remove the confidence and belief of the public at large from the judicial system, especially the Apex Court and the Chief Justice of India (CJI).

The first tweet was against the Supreme Court along with the past four CJIs and their role in destroying Indian Democracy in the last six years without even a formal emergency. Another tweet was remarked against the former CJI S A Bobde criticizing him for riding a motorbike of Rs. 50 lacs belonging to the ruling party BJP leader at his home town Nagpur, without helmet and mask, during a pandemic when the Supreme Court is under lockdown mode and the citizens are restricted to the fundamental right to access justice. Based on the above tweet, three judges of the Supreme Court have issued a notice for contempt of court and initiated suo moto criminal contempt of court proceedings against Prashant Bhushan.

The Supreme Court of India consisting of three Bench judges, in this case, held that the two tweets were related to distorted facts, and hence Prashant Bhushan was guilty of criminal contempt and was fined Rs.1. It was also contended that if the contemptor fails to pay the fine, he will be imprisoned for 3 months and would be barred from practicing for 3 years. There were many criticisms against the judgment given by the three Bench judges in the Apex Court.

Criticism against the judgment

Nearly 1500 lawyers from the entire country including senior members of the Bar Council of India expressed their disagreement over the conviction by the Supreme Court and urged the Apex Court to take the corrective steps to prevent miscarriage of justice. The lawyers in their statement pointed out the bar that silence under the threat of contempt might undermine the independence and ultimately the strength of the Supreme Court. Such judgments cannot restore the authority of the courts in the eyes of the public. It may however deter the lawyers from being outspoken. The lawyers also stated that an independent judiciary system does not exempt the judges from scrutiny and comment. As a lawyer’s duty, they are free to bring any shortcomings to the notice of the bar, bench, and the public at large. Justice must be allowed to suffer the scrutiny and respect, even though outspoken comments of ordinary men.
A group of 88 academics and civil society criticized the verdict of the Supreme court and stated that the lawyers affirm their right to criticize and express their disagreement with the actions or inactions of the Supreme Court whenever necessary.
The Mazdoor Kisan Shakti Sanghathan also criticized the verdict. They considered the judgment as a “ blot on the history of independent, democratic and free India.” According to them, the tweets were legitimate expressions of the critique of the court and the CJIs.

The Supreme Court has decided to launch a probe into the circumstances under which a person can publicize allegations of corruption against the judiciary. This probe contains the argument on a procedure that needs to be followed by the courts if the comments are made in public against any sitting or retired judges.

Adding to the above probe, retired Supreme Court judge, Justice Kurien Joseph also issued a statement for creating a five-judge Constitution bench to hear the case of Prashant Bhushan against contempt of court. He observed that the case involves substantial questions of law on the interpretation of the Constitution of India and has serious repercussions on fundamental rights. The substantial question of law, in this case, was whether a person who is convicted of a suo moto case should get an opportunity for an intra-court appeal in all other situations of conviction for criminal matters.

Right to appeal

In the case of Ashoke Kumar Rai v. Ashoke Arora and anr. (1991) the Calcutta High Court held that contempt proceedings, be it civil or criminal, the guilt of the alleged contemnor must be proved beyond a reasonable doubt. It was observed that an appeal shall lie from any order or decision of the High Court in the exercise of its jurisdiction to punish for contempt of court in two conditions.

When the order or decision is that of a single Judge Bench and should not be less than two judges of the court.
Where the order or decision is that of a Bench of the Supreme Court.

Section 19 of the Contempt of Courts Act, 1971 deals with the provision for an intra court appeal. This provision is applied when the order is passed by the Single Bench judge of the High Court and also when the order is passed by the Division bench, an appeal can be filed in the Supreme Court of India. However, in the case where a person is convicted in suo moto criminal contempt by the Supreme Court, the benefit for the right to appeal is not available. The objective of the right to appeal provided under this provision of the act is to ensure legal safeguard and to avoid all the minute probability of miscarriage of justice. Justice Kurien opined that the absence of intra-court appeal in the situation of conviction by the Supreme Court is one of the loopholes of the 1971 Act which keeps the defendant in an unfair position and also violates the law of natural justice. The right to appeal is found to be a requirement of due process and is also the essence of the judiciary. He also stated that “let justice be done though the heavens fall” which is the fundamental basis of the administration of justice by courts, there is no justice or any miscarriage of justice, heavens may certainly fall. It is the duty of the Apex Court to avoid such circumstances.

Further, he pointed out the scope of Article 145 (3) of the Constitution of India which consists of a quorum of at least five judges for deciding any case that involves a substantial question of law as to the interpretation of the Constitution. Accordingly, the present case is not just about one or two individuals but involves larger issues about the concept and jurisprudence of the country regarding justice itself. Such cases need to be heard in detail at a physical meeting that involves the scope for a broader discussion and wider participation. Lastly, he quoted that “Men may come and men may go, but the Supreme Court of India should remain forever as the court of supreme justice”.

After the pronouncement of the judgment by the Supreme Court, Prashant Bhushan filed a writ petition in the Apex Court seeking the right to appeal against his conviction in the contempt of court case and also requested the court to review the sentence of the previous judgment by a different and larger bench. The question of law that arose, in this case, was whether a person who is convicted of a suo moto contempt case should get an opportunity for an intra-court appeal in all other situations of conviction for criminal matters.

In the review petition of Adv. Prashant Bhushan contended that the right to appeal is a fundamental right available in the Constitution of India as well as the right guaranteed under international law that acts as a “vital safeguard against wrongful conviction and enables truth as a defense”. Such a right would mitigate the possibility of arbitrary decisions. It is also contended that whenever there is a question of unavoidable conflict of interest and the fact of liberty is at stake, certain basic provisions to safeguard it has to be provided against arbitrary, vengeful, and high-handed decisions. In cases like contempt of court, the Supreme Court of India plays the role of prosecutor, the witness, and the judge. Hence, as a judge the power of the Supreme Court for conviction and sentencing the accused is unlimited and arbitrary and no one can act as a suitor and as a judge at once. It was also observed the necessity of minimizing such decisions of the court as they may cause great injustice to the alleged contemnor and also bring disrepute to the courts. Lastly, he sought a request to frame new and special rules and guidelines “providing for an intra-court appeal against conviction in original criminal contempt.”

For supporting his contentions on framing special rules and guidelines, he cited the precedent case of Mohd. Arif v. Registrar, Supreme Court of India (2014), where the Supreme Court framed special rules to deal with the cases related to the death penalty that needs to be followed while granting the plea. He also claimed that his petition aims to bring important procedural safeguards by the court while considering the cases of criminal contempt in original proceedings and also when the court does not act as an appellate court.

Further, he cited the case of Rupa Ashok Hurra. Ashok Hurra, (2002), in which the Supreme Court devised a special remedy like a curative petition against a final judgment of the Supreme Court on certain limited grounds on the basis of which he argued that the right to appeal against conviction in original criminal cases is a substantive right under Article 21, and also comes under principle of natural justice. The absence of the right to appeal is a violation of the fundamental right under Article 21 of the Constitution.

Further, he cited Article 14(5) of the International Covenant on Civil and Political Rights which was ratified by India, which states that the right to first appeal is a right available even where the trial is by the highest court and review is not substantive for an appeal. In case if the contemnor claims the defense of truth during the proceeding and is rejected by the first bench, they can be challenged for review with the larger bench; such cases are addressed in Intra court appeals.

Discrimination under Article 14 of the Indian Constitution was emphasized by the contemnor and stated that any person charged with similar contempt of High Court has the right of appeal in the Supreme Court, however, this right is not available to the person charged with criminal contempt of the Supreme Court. Such discrimination is ex facie discriminatory, as the law does not discriminate contempt of Supreme Court from that of High Court.

The Contempt of Court Act, 1971 has the spirit to provide a procedure in the top court that can regulate the proceeding for contempt of the Supreme Court regarding the intra-court appeal. Introduction to the right to appeal in the Supreme Court in suo moto contempt case may vanish all the criticisms against the larger powers of the court to punish the contemnor. It is also the best solution for a sentence of imprisonment for contempt that even involves the fundamental question of personal liberty. There should be no exception to this universally recognized principle of the right to appeal in the case of sentences for contempt of oneself.

In the case of M. H. Hoskot v State of Maharashtra (1979), a three-Judge Bench of the Supreme Court has examined the import of Article 21 to stress the due process that can lead to the deprivation of life and personal liberty should be fair and reasonable, conforming with “civilized norms like natural justice rooted firmly in community consciousness, not primitive processual barbarity nor legislated normative mockery”. The Court held that with respect to the exceptions, a single right of appeal on facts, where a criminal conviction is fraught with long loss of liberty, is basic to civilized jurisprudence. It is essential to fair procedure, natural justice, and normative universality save in special cases like the original tribunal being a high bench sitting on a collegiate basis. Also in the case of Dadu v State of Maharashtra (2000), it was observed that not providing one right of appeal would negate the due process of law in the matter of dispensation of criminal justice. Hence, there requires due process in the case of suo moto contempt.

Conclusion

The right to appeal is a fundamental right that safeguards from arbitrary convictions by the Superior courts. Every person in the country has a right to freely express his or her expression that is made in the interest of the public and is true. A conviction for such expression is a violation of their freedom of speech and expression and not allowing them to appeal is another violation of their rights. There should not be any discrimination on the powers of the court to appeal in similar matters such as contempt of court. After the analysis of the above case, it can be observed that there is a need for urgent and tremendous change in the due process of law in the matter of suo moto contempt cases and intra-court appeal in the criminal matters of Contempt of Court.

References

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