Sri Basudeb Debnath and others v. Union of India and others : case analysis

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October 14, 2021

This article is written by Vanya Verma from Alliance University, Bengaluru. This article talks about the case of Sri Basudeb Debnath and others v. Union of India and others in detail along with reference to other relevant cases.

Table of Contents

Introduction

It is not uncommon to find a large number of people, mainly at lower levels, working in various government offices on a casual, temporary, or contractual basis. Even if the type of work performed by both classes of employees is the same or similar, such employees are frequently paid less and do not receive any perks or benefits when compared to employees in regular positions within the same government department. If you stay in a government guest home, visit a national park, or are aware of the classification of employees in any given government department, you will see their misery and grievances. Several of these employees have worked for the government as contractual or ad-hoc appointees/workers for decades.

In this article, we will be reading about the workers claim for regularisation with respect to the case of Sri Basudeb Debnath and others v. Union of India (2021) which was presided by a two-judge bench comprising of Hon’ble Chief Justice, Mr. Akil Kureshi and Hon’ble Mr. Justice S.G. Chattopadhyay of the Tripura High Court. Let us further study the facts and judgment of the case.

Facts of the case

For numerous years, petitioners in WP(C) No.1162 of 2018 have worked as casual labourers at the office of the Accountant General (Audit), Tripura, on the job of Multi Tasking Staff (MTS). They were paid a fixed monthly wage. They claim that some of them have been working for more than 20 years continuously. Many of them have served in this service for more than ten years. Few of them had lately been engaged. The petitioners provided a chart showing their year of initial engagement and cumulative length of service as of 17.01.2017.

The petitioners assert, there is no serious dispute that in the department there are 34 sanctioned posts of MTS. Many of these positions have been vacant for a long time. Due to a huge number of vacancies in the cadre, the department was forced to hire temporary workers like the petitioners to do crucial jobs like cleaning and driving the official car. The petitioners have presented a letter dated 11.10.2010 addressed by the Sr. Deputy Accountant General (Audit) to the Comptroller & Auditor General of India, stating that only 19 positions in the MTS cadre were filled out of a sanctioned strength of 34. Maintaining cleanliness, upkeep of the sections, sanitation work of the building and office premises, cleaning, dusting, watch and ward, delivery, and other MTS activities were therefore tough to manage. As a result, he had to hire 9 people on a casual basis.

The petitioners also produced another such letter dated 12.10.2012 from the Accountant General (Audit) to the Principal Director (Staff), Office of the Comptroller & Auditor General of India, in which it is stated that the office has not made any recruitments to the post of MTS and that day-to-day work is managed by engaging casual workers. The petitioners also produced a letter dated 20.03.2017 from the Deputy Accountant General/Administration in response to the queries raised on their behalf under the Right to Information Act (RTI). It was mentioned in this letter that there are currently 34 casual workers competing for the same type of work.

The respondents sent the contested communication on January 20, 2017. It was a letter from the Assistant Comptroller and Auditor General to all Heads of Department in the North East, stating that, as of April 1, 2017, no funds will be allocated under the heading “Wages” except in exceptional circumstances, and that, if necessary, proposals for the outsourcing of staff in various categories to fill vacant posts will be furnished. All petitions would be terminated if these standards were followed. As a result, these petitioners filed WP(C) No.353 of 2017 and related petitions. In the abovementioned petition, the Single Judge of this Court directed the respondents to maintain the status quo on June 5, 2017.

A uniform ruling dated September 25, 2017, was used to dismiss all of the petitions. The Court held that the issues should be determined by the Central Administrative Tribunal and that a writ petition could not be brought in the first instance. The Court prolonged the interim ruling by 15 days while allowing the petitioners to appeal to the Central Administrative Tribunal. Following that, the petitioners filed Original Application No.283 of 2017 with the Central Administrative Tribunal’s Guwahati Bench. This Original Application was dismissed by the impugned judgment of 05.09.2018, which directed the department to dismiss the petitioners’ representation within four months of receiving a copy of the ruling, providing the petitioners with a chance to be heard, and issuing a reasoned order. The petitioners then filed the current petition, which resulted in a new interim injunction preventing their termination.

The petitioners were employed on a part-time basis at the Audit Wing of the Accountant General’s Office in Agartala, Tripura, against sanctioned MTS positions. They had not specified the length of their engagement in their cases. However, they have been told that they’ve all been working together since 2010.

Points raised by the petitioners

In light of these facts, learned counsel for the petitioners raised the following points:

All of the petitioners were hired to fill clear gaps. All of the petitioners have a Higher Secondary School pass, which is required by the recruitment guidelines for the position in question. In light of the Supreme Court’s decision explaining the Constitution Bench ruling in the matter of Secretary, State of Karnataka and others v. Umadevi and others (2006), the petitioners must be awarded regularisation after years of casual employment.
The petitioners have the right to claim remuneration in the minimum of the scale granted for regular incumbents after multiple years;
In any situation, the petitioners’ services cannot be terminated due to outsourcing of the task. Any attempt by the department to do so would be a violation of the principle that one informal engagement cannot be substituted by another.

The opposition of petitioners argument

On the other hand, experienced counsel for the Attorney General’s office opposed the petitioners, arguing that the petitioners could not seek regularisation in service because of the Supreme Court’s ruling in the matter of Umadevi. Without any sort of selection or open competition, all of the petitioners were hired. The department intended to outsource the task to increase efficiency. Their involvement is still ongoing as a result of interim orders issued by the courts.
In the matter of Umadevi, the Supreme Court’s Constitution Bench considered the common practice of hiring casual workers in government organisations and enterprises, keeping them for a long time, and then regularising them. Such behaviour was widely condemned, with the argument that all public jobs must be subjected to the norms of equality enshrined in Articles 14 and 16 of the Constitution. Any interaction that does not involve an open competition will violate these rules.
The following was observed: “As a result, it is clear that adherence to the rule of equality in public employment is a fundamental feature of our Constitution, and since the rule of law is at the heart of our Constitution, a court would be disabled to uphold a violation of Article 14 or order the disregard of the need to comply with the requirements of Article 14 read with Article 16 of the Constitution. As a result, in accordance with the scheme for public employment, this Court while laying down the law, has necessarily to hold that unless the appointment is in terms of the relevant rules and after a proper competition among qualified persons, the same would not confer any right on the appointee.”
Further, it stated that “they cannot be considered to be holders of a post, as this Court has held because a regular appointment could only be made by making appointments consistent with the criteria of Articles 14 and 16 of the Constitution”. The right to be treated similarly with other daily wage employees cannot be extended to a demand for equal treatment with individuals who are employed regularly. That would be treating unequals on a level playing field. It cannot also be relied upon to assert a right to be absorbed in service even though they were never picked under the relevant recruitment procedures. As a result, the arguments based on Articles 14 and 16 of the Constitution are overruled.

Observations made by the Hon’ble Supreme Court

Having said that, a small window for consideration of regularization was kept open when the Supreme Court made the following observations:

“One aspect should be clarified. There may be cases where irregular appointments (not illegal appointments) of duly qualified persons in duly sanctioned vacant posts have been made, as explained in S.V. Narayanappa (1966), R.N. Nanjundappa (1971) and B.N. Nagarajan (1979) and the employees have continued to work for ten years or more without the intervention of orders of the courts or tribunals. The merits of regularising the services of such employees may have to be assessed in light of the principles established by this Court in the judgments referred above, as well as in the light of this judgment. In this context, the Union of India, State Governments, and their instrumentalities should take steps to regularise the services of such irregularly appointed persons who have worked for ten years or more in duly sanctioned posts but not under the cover of orders of courts or tribunals, as a one-time measure, and should also ensure that regular recruitments are undertaken to fill that vacant sanctioned posts that require to be filled up, in cases where temporary employees or daily wagers are being now employed. Within six months of this date, the process must be started. We also clarify that any regularizations that have already been made but are not currently under appeal do not need to be reopened as a result of this judgment, but there should be no further bypassing of the constitutional requirement by regularising or making permanent those who have not been duly appointed as per the constitutional scheme.”

As stated in the said section of the judgment, if an employee’s employment has lasted more than 10 years without the intervention of court orders, the regularisation of such employees’ services must be considered as long as the initial engagement was irregular but not illegal, and such engagement was against sanctioned posts. This was also referred to as a one-time action. The Supreme Court in Umadevi did not specify which types of engagements would be considered irregular and which would be considered illegal. According to the tenor of the decision, any engagement signed without open competition and hence without conforming to the equality standards derived from Articles 14 and 16 of the Constitution would be unconstitutional.

State of Karnataka and others v. M.L. Kesari and others

The matter was regarded slightly differently in the State of Karnataka and others v. M.L. Kesari and others, (2010). We can trace the facts before considering the Supreme Court’s important observations in the case. It was a case in which the initial petitioners were employed on a daily basis by Zila Panchayats in various capacities between 1985 and 1987. Without the involvement of the Court, they were kept on daily wages for another 15 years. They filed writ petitions with the Karnataka High Court in 2002. In a writ appeal decided on July 28, 2004, the Division Bench found that these petitioners were entitled to regularisation, subject to certain restrictions. The State of Karnataka took the case to the Supreme Court to overturn this decision. After the Constitution Bench decision in the case of Umadevi, the Supreme Court decided the State of Karnataka’s appeal. The ratio in the Umadevi case (supra) was explained as under:

“It is clear from the foregoing that there is an exception to Umadevi (2006)’s general guidelines against “regularisation” provided the following conditions are met:

The employee in question must have worked in a lawfully sanctioned position for at least ten years without the benefit or protection of any court or tribunal interim order. In other words, the State Government or its instrumentality should have hired the person and kept him in service for more than ten years voluntarily and continuously.
Even if irregular, the appointment of such an employee should not be illegal. The appointments will be regarded as illegal if they are not made or continued against sanctioned postings, or if the people appointed do not have the required minimum qualifications. However, where the individual hired had the required qualifications and was working in a sanctioned position, but was hired without going through an open competitive selection procedure, such appointments are regarded as irregular.

The true effect of the direction is that all persons who have worked in vacant positions for more than ten years as of 10-4-2006 (the date of the Umadevi decision), without the protection of any interim order of any court or tribunal, and who have the required qualifications, are eligible to be considered for regularisation. The fact that the employer did not carry out such a regularisation exercise within six months of the decision in Umadevi, or that such an exercise was carried out only concerning a small number of employees, does not preclude such employees from being considered for regularisation in accordance with the above directions in Umadevi as a one-time measure.

Amarkant Rai v. State of Bihar

As previously stated, there is no elaboration in the case of Umadevi as to which types of appointments should be treated as illegal and which as irregular, and thus the observation that even an engagement made without competition with qualified candidates would be an irregular appointment must be regarded as the Court’s observations in the said case of Kesari. The Court referred to the decisions in the cases of Umadevi and Kesari and gave the following directions in the case of Amarkant Rai v. State of Bihar (2015):

“In our opinion, the exception carved out in the Umadevi case applies to the facts of the present case. The respondents have not produced any evidence that the appellant lacked any qualifications or had a blemished record during his employment of more than two decades. It’s worth noting that the services of similarly situated people on daily wages, such as Yatindra Kumar Mishra, who was hired on a daily rate to work as a clerk, have been regularised since 1987. Despite working for an unsanctioned post at first, the appellant has been working for a sanctioned post constantly from 3-1-2002. We are inclined to award monetary benefits to be paid beginning January 1, 2010, because there is no material on record regarding the details of whether any other night guard was appointed against the sanctioned post. In the facts and circumstances of the case, we are inclined to award monetary benefits to be paid beginning January 1, 2010.”

Narendra Kumar Tiwari and others v. Jharkhand State and Others

The last decision in the line that has to be referred to and that is significant in the light of our circumstances is one in the case of Narendra Kumar Tiwari and others v. Jharkhand State and Others (2018). It was a case in which a significant number of daily rated or contractual workers employed by the Jharkhand government petitioned the High Court to have their services regularised. The High Court refused to award the relief because of the state of Jharkhand’s regularisation laws, which they had challenged in the Supreme Court.

It was contended that none of these people had completed ten years of service on the day the decision in Umadevi was handed down, and hence could not be regularised. While allowing their appeal, it was noted that the judgment in Umadevi was meant to put an end to the destructive practices of appointing daily wage workers irregularly or unlawfully and keeping them on permanently. For this reason, the notions of one-time measure and cut-off date were developed in the hopes that the State would stop making irregular and illegal appointments and start making them regularly. After referring to the judgment in the case of Kesari, the Supreme Court made the following observations:

Following that, after referring to the Supreme Court’s use of the term “one-time measure” in the case of Umadevi, it was noted that the purpose of Umadevi’s direction was twofold. The first was to ensure that those who have served for more than 10 years without being protected by any interim decisions issued by courts or tribunals before the date of the decision in Umadevi are considered for regularisation due to their long service. Second, departments/instrumentalities must ensure that they do not continue to employ people on a daily wage/ad hoc/casual basis for long periods and then regularise them on the basis that they have served for more than ten years, thus circumventing the constitutional or statutory provisions governing recruitment and appointment.

Irregular appointments in respect to Umadevi judgment

The fact that the State of Jharkhand continued with irregular appointments for nearly a decade after the Umadevi decision shows that it believes it is acceptable to continue with irregular appointments and, when necessary, terminate the services of irregularly appointed employees based on their irregular appointment. This is nothing more than the exploitation of employees, as they are denied regularisation benefits and have the sword of Damocles hanging over their heads.

This is exactly what the cases of Umadevi and Kesari were attempting to avoid. The aforesaid cases lead to the conclusion that the directives in the case of Umadevi cannot be interpreted as establishing a fixed cut-off date for applying the concept of 10 years from the date of completion of the engagement without the intervention of the Court. By invoking the Supreme Court’s cut-off date in the case of Umadevi, any such argument would give the State and its authorities complete authority to continue to engage citizens on a casual basis and fail to acknowledge any of their rights even after decades of such interaction.

The Supreme Court has stated this in the cases of Kesari and Narendra Kumar Tiwari. Many of the petitioners in the current case were working against sanctioned posts and clear vacancies long before the ruling in the matter of Umadevi. Even after the Constitution Bench’s decision in the matter of Umadevi, these engagements continued until June 2017, with no intervention from the courts. As a result, casual engagements lasted in certain situations for more than a decade following the judgment in the case of Umadevi. If the Government argued that such agreements could not be regularized because of the decision in Umadevi, it would be a contradiction in terms of the State creating new engagements on an ad hoc basis even after the judgment in Umadevi was given. These petitioners would be eligible for regularization if they met the standards outlined in Umadevi, as explained in subsequent decisions in Kesari and Narendra Kumar Tiwari.

Even people who may not be eligible for regularisation cannot be dismissed after soliciting work from them for years by invoking a policy change stating that such work would be outsourced in the future. It may be possible for the government to outsource some of its activities, but not by disengaging people who have been employed for a long time, especially when the vacancies for which such engagements were made are still open. As the petitioners’ counsel properly pointed out, the Supreme Court had stated in Hargurpratap Singh v. State of Punjab and others, (2007):

“We have carefully examined the High Court’s ruling as well as the additional pleadings that have been presented to this Court. It is obvious that, while the appellants may not be eligible for a regular appointment, they are entitled to the minimum pay scale and should be retained until permanent incumbents are appointed. The High Court’s approach is to replace one ad hoc arrangement with another, which is in no way appropriate for these individuals who have obtained expertise that will be more valuable and useful to the institutions concerned, rather than appointing people again on an ad hoc basis. As a result, we reverse the High Court’s instructions to the degree that they deny the appellants’ claim to a minimum pay scale and continued employment until regular incumbents are appointed. We direct that they remain in service until regular appointments on the minimum wage range are made. As a result, the appeals will be partially granted.”

It was also not open for the State to continue to pay fixed wages to these workers for decades together when:

Their engagement was against sanctioned posts;
They have been continued for a long period;
They fulfil the educational qualifications prescribed for the post;
The work is perennial;
They have been engaged virtually continuously throughout since their initial engagements and
They are doing the same work which regular staff members are doing.

They may not be treated in the same way as normal government employees in terms of salary and benefits, but they are covered under the principle of “equal pay for equal work,” as detailed in the case of the State of Punjab and others v. Jagjit Singh and others (2017), they are entitled to daily salaries based on the lowest of the scales provided for the post in question, minus other allowances.

The following is a relevant portion of the Supreme Court’s decision in the matter of Jagjit Singh:

“In our opinion, establishing artificial restrictions to reject the results of labour is erroneous. An employee hired for the same job who fulfils the same duties and obligations cannot be paid less. In a welfare state, of course not. This behaviour is not only degrading, but it also goes against the basic foundations of human decency. Anyone who is forced to labour for a lower wage is not doing it willingly. He does so to provide food and shelter for his family, even if it means sacrificing his self-respect and decency, his self-worth, and his integrity. He understands that if he does not take the lower wage, his dependents will suffer greatly. Any act of exploitative enslavement that arises from a dominant position is defined as paying less salaries than others in a similar situation. As it forces involuntary subordination, the behaviour is unquestionably repressive, suppressive, and coercive.”

The Tribunal should not have referred the petitioners to the departmental authorities, in our opinion. The agency had made it plain that none of the petitioners has any claim to any rights beyond those that have been given to them. In other words, not only did the department oppose their regularisation, but it also believed that their services should be terminated. In these circumstances, it would be pointless to ask the department to issue a speaking order on their behalf.

Outcome of the case

In this case, applications are dismissed with the following instructions:

The respondents shall appoint a committee to review the petitioners’ petitions for regularisation. Regularization will be granted to petitioners who meet the following criteria:

Those petitioners who held necessary educational qualifications at the time of their initial engagement.
They had completed more than 10 years of engagement before the High Court granted them protection against termination for the first time;

None of the petitioners will be fired as a result of the work being outsourced. However, the department would be free to make appointments regularly, and the petitioners would be required to relinquish their positions if they were not qualified for regularisation. It is also possible that the department will terminate the positions, in which disengagement will occur according to the principle of last come, first served.
Until any of these petitioners are regularised, and until those petitioners who do not qualify for regularisation but continue to work in the same capacity are regularised, they shall be paid daily wages at the minimum scale of pay prescribed for the post in question, without attendant allowances;
The revised wages shall be paid from the date of the judgment; and
The regularisation process shall be completed within six months of the date of the judgement.

Petitions were dismissed as a result. If there are any pending applications, they will be discarded as well.

Conclusion

In this case, the petition was subsequently dismissed and it was also held that if there was any pending application then that also stands disposed of.

References

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Solas OLED’s patent infringement suit against LG and Sony

By

Diganth Raj Sehgal

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October 14, 2021

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patent_0 (1) — Image Source: https://rb.gy/7t4fd1

This article has been written by Ashutosh Singh, a student of BA.LLB (Hons), at Amity Law School, Amity University Kolkata. The article analyses the Solas OLED patent infringement suits against LG and Sony.

Introduction

Solas shares directors and the same office address in Dublin with other companies such as Data Scape, Aris Technologies, and Arigna Technologies. These companies do not produce anything of their own and instead fight for alleged breach of patents they have acquired with the other companies. The companies are managed by Atlantic IP Services and backed by Magnetar Capital. Scramoge Technology, which is another company managed by Atlantic IP Services, has acquired more than 100 patents from LG. This came post-Solas victory over LG after which LG agreed to license Solas’s patent portfolio, allowing it to legally use its patents in the products it makes both for itself and other consumer electronics companies such as Sony and Panasonic.

Aoife Butler (General Counsel & VP of licensing with Atlantic IP Services Ltd) said that infringement of Intellectual Property is a serious matter and its impact ranges far beyond the parties who are directly involved in lawsuits. The range includes inventors whose inventions may be stolen or researchers whose projects are denied the requisite funding because of lost sources of revenue. This article explains the two lawsuits (Germany and the US) that Solas OLED filed against LG group of companies and Sony group of companies, which bent them to accept licencing with Solas OLED.

Patents

According to WIPO, a patent is an exclusive right permitted for an invention. The new invention has to be a product or a process that offers a new way of doing something or proposes a new technical solution to a problem. For getting a patent, a patent application has to be filled with technical information about the invention and it must be disclosed to the public. The patent owner has the exclusive right to prevent others from the exploitation of his/her patented invention.

In practice, patent protection of an invention means the following:

It cannot be commercially made.
It cannot be used.
It cannot be distributed.
It cannot be imported or sold by others without the patent owner’s consent.

Patents are territorial rights. The patent owner’s exclusive rights are applicable only in the country or region in which a patent has been filed and granted, under the national law of that country or region. The protection is granted for a limited period, which is generally 20 years from the date of applying.

About Solas

Solas, an Irish company has been a leading licensor and owner of technology that focuses on the OLED market which covers a range from the smallest OLED watch to the largest OLED TV. The intellectual property of Solas is essential for having the design, circuitry, and manufacturing of OLED displays, which will be of use in the future too. One of the most wide-ranging OLED portfolios in the world is being assembled by Solas which provides for new competitors in the OLED market. The competitors are given the freedom to operate, which gives the existing companies the power to defend their market positions. In the Solas portfolio, there are already existing licensees which include market leaders in the OLED display, computer, digital camera, and the smartphone market. Solas has continued to pursue, evaluate and acquire patents in the OLED space.

About LG group of companies

LG is headquartered in Seoul. It is a South Korean electronics manufacturer which was founded as Goldstar by Koo In-Hwoi in 1958. The company started to manufacture home appliances and consumer electronics for the local market after the Korean War. It was the first company to produce televisions, washing machines, radio equipment, televisions, refrigerators, and air conditioners in South Korea. Initially, the company operated under the Goldstar branding, but later it merged with Lucky Chemical and LS Cable, and LG group companies in 1995. In 1982 the company first set up its overseas production facility in the US. Goldstar officially became LG Electronics in 1994. To expand its holding in the US, LG had acquired a US-based television manufacturer Zenith and in 1995 launched the world’s first CDMA digital mobile phone. The company had made a joint venture with Philips in 1999, which is now known as LG Display, for designing and developing the liquid crystal displays better known as LCDs. LG Electronics has made a huge contribution to the world’s consumer electronics and home appliances industry time and again. It became one of the top 100 global brands in consumer electronics in 2005. The LG Display manufacturing unit had become the world’s largest LCD panel manufacturer in 2009. The company has been making solar solutions, energy storage systems, stylers, commercial display solutions, lighting products, energy management solutions apart from motors and compressors.

About Sony group of companies

Sony Group Corporation is commonly known as Sony. It is a multinational conglomerate of Japanese origin headquartered in Konan, Minato, Tokyo. Being a major technology company, it runs and manages one of the world’s largest manufacturers of professional as well as electronic products, the largest video game console company, and video game publishing company. Sony Entertainment Inc. is now one of the largest music companies as it is the largest music publisher and the second-largest record label. It is also one of the largest film studios, which makes it the most wide-ranging media company.

In Japan, it is the biggest media conglomerate in size which has overtaken the privately held, family-owned Yomiuri Shimbun Holdings, which is the largest Japanese media conglomerate by revenue. Sony has a huge image sensor market and ended 2020 with a 40% market share in the image sensor market making it the largest manufacturer in image sensors. It is the second-largest manufacturer of cameras too. It is one of the biggest players in premium TV and also the second-largest TV brand by market share in 2020. In 2004 Sony had first introduced the Triluminos Display, which enhances the colour reproduction technology and it was featured in the world’s first LED-backlit LCD televisions. This technology was widely used in most of Sony’s products, including laptops, smartphones, and computer monitors. Sony had released a new and improved version of the technology in their television products, which merged the quantum dots in the backlit system in 2013. This was the first time quantum dots were being used for commercial purposes. The company also introduced a prototype of the ultrafine RGB LED display, which was called the Crystal LED Display.

Meaning of OLED technology

OLED (Organic Light-Emitting Diodes) is a flat light emitting technology, which is made by a series of organic thin films which are placed between two conductors. When the electrical current is being applied, a bright light is emitted. OLEDs have such a light display system that it does not require a backlight. Therefore, they are thinner and more efficient than LCD systems which require a white backlight. OLED display systems also provide the best image quality ever which can be made flexible, foldable, transparent, rollable, and stretchable soon. OLEDs represent the future of display technology. OLEDs have an amazing picture quality with a fast response rate, infinite contrast, brilliant colours, and wide viewing angles.

AMOLED production worldwide is done by the Samsung company, which makes over 400 million displays in a year, which is mostly related to smartphone-sized AMOLEDs that are rigid and flexible. LG has been the world’s leading OLED TV panel maker and has now started to produce small-sized flexible OLEDs. Besides Samsung and LG, there have been several other display makers that are starting to mass-produce small-sized OLED displays. What makes OLED unlike anything else is itself-lit pixels technology. The self-luminous display technology makes most of the difference in the customer’s viewing experience. The LG OLED TVs are capable of showing extreme unique design and realism in the display as compared to the LED TVs which are restricted by the backlight technology.

German Patent Law

German patent law is mainly governed by the German Patents Act, 1980 (Patentgesetz), the European Patent Convention. A patent in Germany can be acquired in the following different ways:

Through the direct filing of a national patent application with the German Patent and Trademark Office (DPMA),
Through the filing of a European patent application, or
Through the filing of an international application under the Patent Cooperation Treaty followed by the entry into either the European phase or the national (German) phase of the said international application, The German patent has a term of 20 years.

The unique thing about the German patent litigation system is that it is one of the few patent systems where the issue of patent infringement and patent validity are dealt with by different courts. The district courts deal with patent infringement. The Federal Patent Court is in charge of deciding the validity of patents. This kind of system is every so often dubbed as ‘Bifurcation System’.

Patentability jurisdiction in Germany

In Germany, patentable inventions must involve a step that is inventive and it must be new and must have an industrial application. The German Patents Act mentions the novelty criteria under Sections 1 to 3. Section 1 of the Patent Act, does not consider the following as inventions:

Discoveries, scientific theories, and mathematical methods;
Ecstatic creations;
Schemes, rules, methods for performing mental acts,
Playing games,
Doing business and computer programs, and
Presentations of information.

Only when protection is desired for the subject matter or activities referred to as such, this provision is applicable.

All Intellectual Property rights that include patents are subject to territoriality, which means that they only have effect in the country or territory for which they were granted. Therefore, rights conferred by a patent granted by the DPMA can only be asserted in Germany. It is of course also possible to extend a patent application at the German Patent and Trade Mark Office (DPMA) to other countries.

Patent infringement (Germany)

In Germany, patent litigation proceedings are held before courts dedicated to patents in civil courts of the first and second instance with one or more dedicated chambers for patent litigation. Procedural law requires that the competent court for a given case is decided based on the place of business of the alleged patent infringer or based on the location where the alleged patent infringement took place. However, plaintiffs are not tied to a specific location, but can generally choose the patent court. The most frequented courts for patent litigation are the four regional courts in Düsseldorf, Munich, Mannheim, and Hamburg.

The German patent law does not allow the infringement court to decide about the validity of the patent. It cannot declare a granted patent invalid. Only the Patent Office (in opposition proceedings) or the Federal Patent Court has the authority to decide to revoke a granted patent or declare it invalid. To overcome this hurdle, after being served with an infringement claim, the alleged patent infringers usually file nullity suits with the Federal Patent Court (Munich). This separation of the assessment of infringement on the one hand and validity, on the other hand, is called “bifurcation” and is a distinguishing feature of German patent law.

Solas’ infringement suit against LG and Sony in Germany

Irish organic diode (OLED) IP firm Solas, won a violation action in Germany. The judgment alleged that the defendants had infringed Solas’ German patent concerning an impression circuit for light-emitting diodes called OLED. The technology in question is utilized in screens in certain LG and Sony OLED televisions. The Dublin based Solas OLED licensor of technology that focused on the OLED market won a case in Germany against:

LG Display Co,
LG Display Germany GmbH,
LG Electronics Inc,
LG Electronics Deutschland GmbH,
Sony Europe BV.

The detailed judgement which consisted of 43 pages was delivered on 6th November 2020, within the Mannheim District Court in Germany.

After the decision, Ciaran O’Gara, manager of Solas, said that they were pleased with the Court’s decision, particularly the Court’s appreciation of the efforts of patent licensing companies like theirs. Also, the decision by the Court allowing an injunction to the defendants, in this case, would encourage infringers to acquire a license and be a part of the system and also of the applicable legal and economic order. She further added that It is through this method that innovators are rewarded and encouraged to continue innovating.

The defendant companies are obliged to follow the given acts, as a result of the decision in this case:

Cease and desist from marketing infringing products in the territory of Germany.
All infringing products will have to be recalled from commercial customers.
They are going to have to explain and give to Solas, detailed accounts to establish damages owed by the defendants for sales of infringing products in Germany dating back to April 2009.
The defendants are also obliged to pay to Solas the security as instructed by the Court.

The Court also added that it is an incontestable fact that the plaintiff isn’t active within the market as a manufacturer, but rather exploits the research and development work undertaken by the University of Stuttgart. This doesn’t constitute an illegitimate business purpose but instead, the plaintiff directly/indirectly provides financial support to the university’s research and development activities in favour of the commercial technology market.

Post the judgement, Solas OLED Ltd. has entered into a Settlement and License Agreement with LG Display Co. resolving several patent infringement actions brought by Solas against LG Display and a certain number of its customers, including Sony Corporation. The patent license not only creates space for the OLED TV marketplace for LG Display, but also for the customers of its OLED panels, which include Sony and Panasonic. The licensing of the Solas patent portfolio means that the true innovators that are the scientists at Stuttgart University, are recognized for their ingenuity and the University gets to participate in the great success of the protected technology so that it can continue to create and develop exciting new technologies.

United States Patent Law

A patent equips the holder of the patent with exclusive rights to exclude others from making, using, importing, and selling the patented product for a limited time. The United States patent law is codified in Title 35 of the ‘United States Code‘.

The US Constitution, by the provision in Article 1, Section 8, Clause 8 (1789), authorizes the US patent system. The Constitution on the matter states that Congress shall have the authority to promote the progress of science and other useful arts, by safeguarding for a limited duration of time the exclusive right to authors and inventors, for their writings, works, and discoveries. However, for this exclusive right, immediate disclosure of the patented information to the U.S. Patent and Trademark Office (PTO) is required. The time the protection has expired, the patented innovation enters the public domain. These exclusive rights of the patent holder begin on the date that the patent is issued, and usually expire twenty years from that date. The patent term may be extended under certain circumstances where a lot of time has been spent in regulatory review or for delays due to certain PTO procedural failures.

Requirements for patentability

The five primary requirements for patentability in the US are as follows:

Patentable subject matter

“Statutory” simply refers to the question of whether the invention involves subject matter that can be patented. 35 U.S.C. Section 101 states that the following are patentable under this provision:

Any new machine;
New and useful processes;
Manufactured articles;
Compositions of matter;
Any new and useful improvement.

However, the Supreme Court holds that the given provision contains inherent exceptions to patentability, such as:

Data structures;
Laws of nature;
Natural phenomena;
Electromagnetic signals;
Non-functional descriptive material like books or music;
Abstract ideas.

It should have utility

A utility patent is a patent that covers the creation of a newer or improved version which is a useful product, process, or machine. A utility patent, generally known as a ‘patent for invention’, forbids other individuals or companies from making, using, or selling the invention without authorization from the patent holder. When most people refer to a patent, they are presumably referring to a utility patent. Utility patents are very valuable assets because they offer inventors exclusive commercial rights to producing and utilizing the most recent technology but utility patents are difficult to procure because they are cumbersome, hard to write, maybe time-consuming, and expensive to undertake. Also, their complexity makes them difficult to understand. The nature of a utility patent is covered in Title 35, Part II, Chapter 10, Subsection 101 of the U.S.C. Utility patents are issued by the US Patent and Trademark Office (PTO) and last for up to 20 years. The United States PTO claims that more than 90% of all patents granted are utility patents.

It should have novelty

Novelty is another requirement for a patent claim or a product to be patentable. An invention is not considered new and therefore not patentable if it was already known to the public before the patent application date, or before its date of priority if the applicant claims priority of a previous patent application. The purpose of the novelty requirement is to prevent prior art from being patented again. Essentially 35 U.S.C. Section 102, which sets forth the doctrine of anticipation by requiring novelty of the invention, requires the patent applicant to establish that the invention is new. The US is a “relative novelty” country meaning that the US patent laws have a provision for a one-year grace period from the time of public disclosure or commercial use within which an inventor may be allowed to file a patent application and still obtain a valid patent.

The Supreme Court and Novelty

The Supreme Court has emphasized time and again that ideas that aren’t novel or useful, are as a result, not patentable. They are:

Laws of nature;
Ideas that are abstract in nature;
Products resulting from natural phenomena.

The following four categories are, however, patentable:

Compositions of Matter;
Articles of Manufacture;
Processes;
Machines.

The non-obviousness factor

The most complex and challenging requisite for acquiring a patent is non-obviousness. It is outlined in 35 U.S.C. Section 103, and generally it requires the United States PTO to establish if an invention would be obvious to a normal person in the field. In other words, it means that a person who has a general understanding of the field but not necessarily a person who has the same degree of expertise as the applicant. However, it requires more than not being obvious to the ordinary person or a person with an average education. An inventor must also do the following before applying for patent rights. They are:

Conduct a patent search.
Study the prior art to predict whether an examiner will find his or her invention non-obvious.

The examiner in the United States PTO will decide whether the invention would be considered obvious to a normal person which can be a difficult analysis since it involves a review of previous patents of inventions similar to the invention for which the inventor seeks a patent. The complexity lies in the next step where the examiner will try to combine two or more patents and in a combination check similarity to the previous patents. If the examiner is successful in finding a combination, then the invention becomes an obvious combination.

The enablement requirement

Enablement looks at placing the subject matter of the claims generally in the possession of the public. The requirement is outlined in 35 U.S.C. Section 112. It provides that once the first four patentability requirements are satisfied the applicant must describe the invention with enough particularity/clarification in a manner that those skilled in the art will be able to understand it and be able to make and use it. This requirement has three major parts. They are:

The enablement requirement.
The best mode requirement.
The written description requirement.

Enablement looks at placing the subject matter of the claims generally in the possession of the public.

Patent Infringement (US)

35 U.S.C. Section 271 provides that anyone during the term of the patent, is infringing the patent if they do the following:

Make;
Use;
Offer to sell or sells any patented invention domestically;
Import a patented invention into the US during the term of the patent;
Actively induce someone else to infringe the patent.

Similarly, anyone who offers to sell, or sells, or imports a material component of something that is patented, is also liable as a contributory infringer. To take action against an infringing product, a patent owner will have to sue the infringer in a civil lawsuit. To know whether there was an infringement involves a two-step check by the court. They are:

Claim construction is made based on the claim language, the written description of the specifications of the patent, the patent prosecution history, and extrinsic evidence to understand the patent. Claim terms are generally given their ordinary meanings unless the specification describes a special definition.
Each of the elements that the patent claims will be compared with the invention that is claimed to be infringed.

After these elements are verified and found to be matching the elements of the invention, an infringement will be found.

Solas infringement suit against LG and Sony in the US

Complaint about infringement

Solas OLED Ltd. filed a patent infringement complaint of US Patent No. 7,432,891

(entitled-Active matrix drive circuit) against Defendants:

LG Display Co;
LG Electronics, Inc;
Sony Corporation.

The infringed products are OLEDs- organic light-emitting diode (OLED) television displays and televisions incorporating such OLED displays. LG Display designs produce and sell the infringed OLED television displays. Defendant LG Electronics designs produces and sells the televisions incorporating the infringed LG OLED displays and Sony sells and also designs and produces these infringed televisions that incorporate these LG OLED displays. Solas asserts claims for violation of patent rights against the defendants under the patent laws of the US, including 35 U.S.C. Section 271 and Section 281.

The Court has original jurisdiction over Solas’ patent infringement/violation claims under 28 U.S.C. Sections 1331 and 1338(a). The defendants were accused of persistently and tenaciously indulging in activities directed at the US, in particular, the accused OLED Case 6:19-cv-00236-ADA televisions for selling to distributors and end-users within the US and selling and directing marketing efforts to support such sales. The defendants, in this case, are jointly and severally accountable for infringing the asserted patent. Defendants’ liability arises out of a similar transaction, occurrence, or series of transactions or occurrences. The accused product features are about the driving circuitry for pixels of the accused OLED display particularly, the compensation functionality and associated circuitry for measuring and compensating for changes in driving transistor characteristics.

Claim for infringement

On October 7, 2008, the US Patent and Trademark Office issued US Patent No. 7,432,891, entitled “Active-matrix drive circuit”. Solas is the owner of this patent with full rights to pursue recovery remedies for infringement, full rights to recover past and future damages, and royalties too. A point to be noted here is that the claim of the 7,432,891 patent is valid, enforceable, and also patent-eligible. The defendants have offered for sale, sold, and used accused products that infringe the 7,432,891 patent and continue with these activities in the United States. The defendants have also imported the infringing products into the US. The 7,432,891 patent claims priority to the German patent “Active-matrix drive circuit” under 35 U.S.C. Section 119(a), allowing a claim this time of US priority, under certain conditions, for an application for a patent for the identical invention in a foreign country”. The defendants have infringed the 7,432,891 patent and still do so by supplying material parts of the invention within the United States, in particular, the circuitry designed specifically for performing the compensation functionality described in Sections 10, 11, and 12, including circuitry for measuring the driving current, conducting a voltage comparison, and providing a compensating voltage signal. Solas demanded trial by jury of all issues.

The relief requested by Solas

A judgment and order requiring that the defendants are asked to pay Solas the compensatory damages including expenses and costs, and prejudgment and post-judgment interest for its infringement of the accused patents, as provided under 35 U.S.C. Section 284.
A judgment that the defendants have willfully infringed the 7,432,891 patent so that Solas is entitled to augmented damages as a result of such wilful infringement.
An injunction prohibiting the defendants from further acts of infringement of the 7,432,891 patent.
A finding that this case is special under 35 U.S.C. Section 285, at a minimum due to Defendants’ willful infringement, and an award of Solas’ reasonable attorney’s fees and costs.

A settlement between Solas OLED and LG

Solas OLED Ltd. has given licenses to consumer electronics manufacturers post the Solas OLED case against LG and Sony. It has announced that it has entered into a settlement and license agreement with LG Display Company. This has resolved a number of patent infringement actions brought by Solas against LG Display and a certain number of its customers, including Sony Corporation. The terms of the agreement, however, are confidential, but it brings to an end the respective patent litigation between Solas and LG, and also, counter-actions, concerning Solas’ OLED technology in Germany, China and the United States.

Conclusion

Post the patent infringement case judgments in favour of Solas, LG Display has taken a license to the Solas patent portfolio. The biggest advantage is that the patent license frees up the OLED TV marketplace for LG Display. It also does the same for the customers of OLED panels, including Sony and Panasonic. As a result of the licensing of the Solas patent portfolio, the true innovators, that is the scientists at Stuttgart University, are recognized for their ingenuity and invention. The University gets a boost and it is participating in the great success of the protected technology so that it can continue to create and develop exciting new technologies. In business decision-making processes, patents play a significant role since they show strategies and development trends and are an inducement for the development of innovations and technology. Patents can also be an important factor in the evaluation of companies because the patent portfolio of a company is a valuable asset and uncovers the innovative potential of a company. Patent protection strengthens the position of an enterprise in the global market and is a very important location factor too.

Multinationals and mammoth companies tend to bully court proceedings to turn it into their favour and it is commendable when courts are willing to dig in to reach the correct decision despite that and smaller companies are given equal footing against gigantic companies in a court of law.

References

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Jus Sanguinis Citizenship and statelessness in India and South Africa : a critical analysis

By

Sneha Mahawar

-

October 14, 2021

0

This article is written by Somya Jain, from the Vivekananda Institute of Professional Studies. The article analyses the concept of Jus Sanguinis citizenship and statelessness with respect to India and South Africa. It also establishes the current issue underlying the Citizenship Amendment Act, 2019.

Table of Contents

Introduction

Citizenship, by many, is presumed to be one’s national identity determined by birth, ancestry, ethnicity, culture and upbringing. Legally speaking, citizenship is considered to establish a relationship between an individual and the corresponding nation-state. Possessing citizenship of a country will grant an individual all the prospective rights that a citizen of that country has. Rights such as the right to vote, protection by the state, the right to hold office etc, are acquired with citizenship.

Although nationality and citizenship are used interchangeably, there lie differences between the same. The most substantial difference between the two is while citizenship is a legal concept and is generally provided by the government on effectuating the provided conditions, on the other hand, nationality is a racial and an ethnic concept that is acquired mainly by birth. Further, citizenship can be changed but nationality on the other hand cannot be changed or reversed.

There are two main doctrines that govern the granting of citizenship. They are:

Jus Soli- it is a type of citizenship that is given on the basis of birth in a country.
Jus Sanguinis- It is that type of citizenship that is conferred upon a person based on his/her parent’s nationality. Basically, the child obtains citizenship through descent independent of where his/her parents are born. So, a child born in India must have at least one parent who holds Indian citizenship for the child to obtain the citizenship of India.

Understanding statelessness as per International Law

According to Article 15 of the Universal Declaration of Human Rights (hereinafter UDHR), every person is entitled to a nationality. This connotes that no person should be stateless by avoiding it by all means, through the possession of nationality. The concept of statelessness has been largely covered under two conventions namely, the Convention on Status of Stateless Persons, 1954 and the Convention on Reduction of Statelessness, 1961.

Article 1 of the 1954 Convention relating to the Status of Stateless Person defines a stateless person as a person who is not considered a national by any nation under the operation of its laws. According to this definition, the Convention will be applicable to those persons who do not have any nationality as compared to those who have no effective nationality. The present Convention elaborates the rights and duties of the stateless person in a country. Further, Article 3 of the Convention specifies that every contracting state will apply the provisions of the Convention without discriminating against the stateless persons on the basis of religion, race and country of origin.

1961 Convention on Reduction of Statelessness was constituted with the aim to eliminate statelessness from all aspects and giving effect to Article 15 of UDHR. Article 1 and Article 2 of the Convention establishes the treatment of a stateless person by either granting nationality on the basis of birth or upon application or by granting nationality to those children who are found to be abandoned in a respective State.

The statelessness can be divided into De Jure and De Facto statelessness. De Facto statelessness can be defined to include people who are outside their country of nationality and unable to take its protection. In other words, the question of not holding an effective nationality is covered under the scope of De Facto statelessness. As far as De Jure statelessness is concerned, it extends to cover all those people who are not considered as a national of any State under the operation of its law. The term De Jure has not per se been mentioned in either of the Conventions discussed above. On the other hand, the term finds its way back to the Final Act of the 1961 Convention. However, according to the 1961 Conference on the Elimination or Reduction of Future Statelessness, Resolution No. 1 of the Final Act of the 1961 Conference on the Elimination or Reduction of Future Statelessness, the States are mandated to provide nationality to both De Jure and De Facto stateless persons.

Another prominent Convention relates to the rights and status of the refugees in signatory countries. The 1951 Convention relating to the Status of Refugees defines the term refugees and outlines the rights of refugees, as well as the legal obligations of States to protect them. The underlying principle in the Convention was non-refoulment. That is to say, a refugee should not be sent back to his country where he would face serious threats of life and freedom, barring certain exceptions of people like war convicts or who are dangerous to the security of the country.

The International Covenant on Civil and Political Rights, adopted in the year 1966, ensures numerous human rights to people ranging from freedom of thought and expression, protection from torture and inhuman treatment through punishment, fair trial rights, privacy to non-discrimination on the basis of religion and other factors.

The International Covenant on Economic, Social and C u ltural Rights 1996, seeks to ensure that the economic, social and cultural rights of the people are observed irrespective of his/her citizenship. As far as the concept of statelessness is concerned, if a person is denied citizenship in the contracting States then it would exclusively deny the said human rights. Therefore, every contracting State must ensure that statelessness is removed paving the way for fulfilling the above stated rights.

Another Convention in the international forum is the Convention on the Rights of Child 1990. Recognising the status of a child, who is most vulnerable to statelessness, this Convention was introduced. As per Article 7 of the Convention, every child has a right to obtain nationality immediately after his birth. Further, the Article states that every signing State should assure the implementation of these rights as far as possible so that no child is left without any nationality.

Statelessness in India

Legislations governing citizenship and statelessness in India have been in constant rumours for some years now. The creeping whims of the concept of citizenship have occurred due to India’s denial of committing towards the established International Law. India is not a signatory State of Convention on Status of Stateless Persons, 1954 and the Convention on Reduction of Statelessness, 1961. Further, India failed to ratify the Refugee Convention of 1951. Despite such advancements in International Law, India refuses to incorporate these positive changes under its domestic Laws. This rejection has adversely affected India as no robust system for citizenship has been provided to the citizens. The concept of nationality has been separately dealt with by India in a number of legislations. Some of them are:

The Constitution of India

The Constitution of India is the first document which deals with the provision of citizenship. Article 5 of the Constitution elaborates citizenship at the time of commencement of the Constitution. Although the Indian Constitution nowhere mentions the definition of citizenship, Article 5 expressly establishes who should be a citizen of India. It specifies that any person who is either born or whose parents were born on the territory of India, or who has been ordinarily resident in India for at least five years before the commencement of the Constitution, shall be deemed to be a citizen of India if he had a domicile in the territory of India at such commencement. Further, Article 11 of the Indian Constitution empowers the Parliament to either make or resolve the laws relating to citizenship.

As far as the word domicile is concerned, a plethora of judgments have been passed defining the same. In the case of Abdus Samad v State of West Bengal (1973), the Supreme Court defined domicile as a place which a person has fixed for his/her habitation along with the family for the greater purpose of permanent settlement.

The Citizenship Act, 1955

The Parliament enacted the Citizenship Act in the year 1955 (hereinafter 1955 Act), and the Constitution along with this Act formed the epicentre for dealing with citizenship and statelessness in India. There are five types of ways that are recognised under the Act to provide citizenship to people. These are:

By birth;
By descent;
By registration;
By naturalisation;
By incorporation of new territory.

1. Citizenship by birth

Section 3 of the 1955 Act renders automatic dissemination of citizenship to a person born in the territory of India. It is largely called Jus Soli.
It was stated that if a person was born in India on or after January 26, 1950, and before July 1, 1987, then the person will be a citizen of India. Furthermore, if a person is born after July 1, 1987, but before the commencement of the Citizenship Amendment Act 2003, then he/she shall be considered as a citizen of India only when one of his/her parents was a citizen of India at the time of his/her birth.
From the perspective of statelessness, the 1955 Act fails to appreciate a situation where neither of the parents was a citizen of India or was without a nationality. The Act also states that if the child is born to illegal migrants then the child will not receive citizenship by virtue of Jus Soli. This results in creating statelessness by operation of law, as such a child is prevented from acquiring citizenship through the other parent.

2. Citizenship by descent

Section 4 of the 1955 Act deals with a situation where citizenship is non-automatic in nature and will be granted when the people who are born outside the territory of India follow the requisite preconditions established in this regard. This is called Jus Sanguinis.
The Citizenship Amendment Act 1986, replaced Jus Soli with a stricter doctrine of Jus Sanguinis.
There are three phases covered under Section 4 of the 1955 Act. Firstly, if a child is born outside India between 26 January 1950 and before 10 December 1992, then if his/her father is an Indian citizen, he/she will also be considered as an Indian citizen.
In the second phase, if a child is born outside India between 10 December 1992 and 7 January 2004 and when either of his/her parents is an Indian citizen, then the child will also be an Indian citizen
Lastly, if the child is born after 7 January 2004 then it will be dealt with in a similar manner as that of the second phase. There should be a declaration made by the parents that the child does not hold any other passport.
The position in India in this regard is pretty much clear and well established to cover the stateless persons as well.

3. Citizenship by registration

Section 5 of the 1955 Act establishes different situations where a person on an application being made, can be registered as a citizen of India.
It included those categories of people whereby a person of Indian origin who is currently a resident of India for 7 years or more before making an application, or a person of Indian origin who is resident in any place outside undivided India, or a person who is married to an Indian citizen and is a resident in India for 7 years or more before making an application, or minor children of persons who are citizens of India, or a person of full age or capacity whose parents are registered as citizens of India, or a person of full age and capacity who was earlier a citizen of independent India and is resident in India for 12 months before making an application, or a person of full age and capacity who has been registered as an Overseas Indian citizen for 5 years and has resided in India for 12 months before making an application.
The term ‘parent’ has not been clarified whether it would include an adoptive parent or biological parent in the Act. This further leaves a gap in interpreting whether a child born through adoptive parents will be eligible for citizenship in the present scenario and this situation, in turn, leads to statelessness.

4. Citizenship by naturalisation

Section 6 of the Citizenship Act 1955 along with the Third Schedule of the Act deals with citizenship by naturalisation. Such a type of citizenship is granted when the person fits in no other category.
The requirement stating that a person must not be an ‘illegal migrant’, as established by the 2003 Amendment Act, many people are ousted from the arena of citizenship by naturalisation.
Further, if a person has not previously renounced nor has he been deprived of Indian citizenship, then such a stateless person will not be allowed citizenship by way of naturalisation.
As per Rule 10 of the Citizenship Rules 2009, one of the prerequisites for a person to obtain citizenship by naturalisation is that he should have adequate knowledge of at least one of the many languages as specified under Schedule eight of the Constitution. This clause has added to the already prevalent situation of statelessness as most people are unaware of these languages. Therefore, the Act can be considered to be too rigid in its essence as it denies citizenship to those stateless people who have no other avenues in this regard.

5. Citizenship by incorporation of new territory

Section 7 of the 1955 Act deals with citizenship by incorporation of new territory.
It elaborates a situation where the territory of India is extended to states outside India. Thereby, when a state not previously included within the territory of India becomes a part of India then citizens of that state become citizens of India.

The Citizenship Amendment Act, 2003

The Citizenship Amendment Act 2003, is one of the principal amendments that brought about some major changes in the original Act of 1955. Some of them are:

For a person to be eligible for citizenship through naturalisation, the 1955 Act established the requirement of residency in India or service of a Government in India for 12 years for periods amounting to the aggregate of a minimum of nine years, but according to the 2003 Amendment Act, the period was increased to 14 years and 11 years respectively. This change in the time period has left many stateless people in a state of hysteria and limbo.
The First Schedule of the original Act was omitted and the term ‘specified country’ was replaced with ‘illegal migrants’ which was defined as a foreigner entering India without any valid documents or includes those who have stayed without a permit. This has posed a threat to the stateless people who were looking for obtaining citizenship in India as many do not constitute the relevant documents proving the same.
Moreover, the usage of ‘illegal migrants’ in Article 5 of the Amendment Act denies citizenship to every parent who is considered an illegal migrant along with their minor child. For obtaining the certificate of citizenship in such situations, a copy of a valid passport, residential permit, and proof that each parent of the minor child is an Indian citizen is essential. The absence of the same will render the citizenship of the minor child impossible leaving them under the head of a stateless person.

Other Legislations

There are other legislations that cover the concept of statelessness in India. Some of them are:

The Census Act 1948, establishes the need to record the strength of the population. In general practice, those who do not have any nationality or lacks citizenship are omitted to be included in the census. This may deprive them from protecting their rights under International Law. Further, they may be non-existent on papers due to which it becomes difficult to study their hardship and provide proper redressal.
According to the Foreigners Act 1946, the Central government is empowered to regulate the entry, presence and departure of foreigners in India. Section 8 of the Act does not expressly include a stateless person in its definition of a foreigner. However, people who have uncertain nationality, for the purpose of the Act, will be considered to hold the nationality of the last connected place.
According to the Passport Act 1967, a separate category of stateless people is recognised for issuing certificates of identity. This is the only Indian Act that has acknowledged the rights of stateless persons and has identified them to include people who reside in India but have no nationality or who are foreigners but whose nationality is doubtful.
The Registration of Births and Deaths Act, 1969 ensures that every birth within the territory of India is registered irrespective of them being citizens or non-citizens. Although such a step does not exclusively tackle the problem of statelessness, it ensures proof of the link between a person and the State of birth.

The underlying issue of the Citizenship Amendment Act, 2019

Indian parliament in the year 2019 enacted the Citizenship Amendment Act 2019 (hereinafter CAA 2019) which brought about an uproar in the midst of the general public. One of the major concerns of the public regarding the amendment was the differentiation created on the basis of religion. Highlighting the substantial amendments brought by the Act, some of them include:

The CAA 2019 amends Section 2(b) of the 1955 Act which defines ‘illegal migrants’. The amendment excludes persons belonging to minority communities of Jains, Hindus, Sikhs, Parsis, Buddhists and Christians belonging to Afghanistan, Bangladesh and Pakistan from the ambit of illegal migrants.
The amendment further added a separate Section 6B which reduced the period of citizenship by naturalisation from 6 years to 5 years but the period of naturalisation for Muslim immigrants remained the same i.e. for 12 years.

The above features or amendments manifested several negative views from various International organisations like according to the Office of the United Nations High Commissioner for Human Rights (OHCHR), the CAA 2019 is “fundamentally discriminatory in nature”. In addition to this, the United States Commission on International Religious Freedom (USCIRF) termed the amendment Act as “a dangerous turn in the wrong direction”.

Reasons for opposing the CAA, 2019

With the advent of the Citizenship Amendment Act 2019, there have been constant sparkes amongst the people who support it and the ones who are against the Act. There have been protests by many across the country. Thereby, it is imperative to understand the hue and cry behind the Act and its relative impact on human rights.

One of the most substantial arguments placed by the opposers was that the Act was violative of Arti c le 14 of the Constitution of India which states that no person shall be denied equality before the law or equal protection of laws within the territory of India. This also covers the situation where a person is a foreigner and is residing in India, then he should also be governed by the same law. But the government can surely provide some exemptions. So, the intelligible differentia can be provided but it should be reasonable enough to be justified in guaranteeing classification on that basis. In the case of Chiranjit Lal Chowdhury v. Union of India (1950), the Supreme Court observed that to classify and differentiate, the intelligible differentia should be reasonable and that the legislature is free to classify the communities but only after perusing the degree of harm rendered on that community. After analysing the Amendment Act based on these contentions, it was claimed by the people that the Act did not provide for reasonable classification and merely discriminated against people on the basis of religion and place of their origin.
The Act was also attacked as it was not considered to be secular in its practice. It was contended that secularism forms the basic structure of the Constitution and therefore it cannot be changed. In the case of S.R. Bommai v. Union of India (1994), the Court held that secularism is a part of the basic structure of the Constitution and any act in violation of the principle of secularism will be violative of the Constitution. The present Act, according to the people, is solely based on denying citizenship to Muslims which is thereby violative of the principle of secularism.
Several petitions were filed in the Supreme Court regarding the same. Approximately, 140 cases pertaining to the Act being violative of Article 14, Article 21 dealing with the right to life, Article 15 dealing with the prohibition of discrimination on grounds of religion, race, caste, sex or place of birth, Article 19 establishing the right to freedom as well as the constitutionality of the Amendment Act 2019 has been filed before the Court.
Further, as per the Statement of Objects and Reasons clause under the Citizenship Amendment Bill 2019, the objective of the Act is to protect minority communities from persecution. But ironically, the Act establishes an indirect ground for the Muslim community persecuting them in a similar manner.
The protest against the Act started majorly in Assam as it invalidated the purpose of the National Register of Citizens (hereinafter NRC). NRC was constituted to create a list of people who will be granted citizenship in India. It refused citizenship to all the people who were illegal migrants and were living in Assam for a very long time irrespective of their religion. This meant that even the Hindus who were illegally staying in Assam were rejected for citizenship. But after the CAA 2019 came into force, only Muslims from neighbouring countries were denied citizenship. This posed a great threat to the culture and the ethnicity of Assam as other illegal migrants who belonged to communities other than the Muslims were granted permission to reside and were given citizenship in India.

Rights of illegal migrants in India

Illegal migrants or refugees who are not granted citizenship in India can claim refugee or asylum in India. Despite a large number of refugee seekers, India has not constituted any robust national legislation governing the same. Further, legal policy regimes do not apply uniformly across groups of refugees or asylum seekers; and India is not a signatory to the 1951 Convention on Refugees or the 1967 Refugee Protocol. But, the Constitution of India grants some rights to illegal migrants for their protection.

Article 21 of the Indian Constitution provides the right to life and liberty to every person resident in India. In the case of Louis De Raedt vs Union of India (1991), the Court has extended the scope of Article 21 to include foreigners as well. But, the Court further denied that Article 21 does not deal with the right to reside and settle in the country to a foreigner. Such a right is only reserved for Indian citizens. In the present case, the accused contended that he was expelled from India without giving any notice for the same. The Court held that the central government reserves the right to expel any foreigner and that there is no hard and fast rule for any procedure to be fulfilled. In another case of State of Arunachal Pradesh v Khudiram Chakma (1993), the Supreme Court held it cannot be denied that Article 21 of the Constitution extends its scope to include foreigners as well to provide them with the right to life and liberty but that right does not include the right to reside. Further, the Court observed that this Article also includes the right to a fair trial and it is also applicable to aliens.

The role of the judiciary in expanding and liberally interpreting the Constitution has protected many stateless persons. In the case of National Human Rights Commission v State of Arunachal Pradesh (1996), the Court restrained the unwarranted expulsion of the Chakma refugees from the state. The Court further directed the government to ensure that the right of life and personal liberty of every member of the Chakma community should be protected at large.

Apart from the Constitutional protection, human rights have also been ensured to the illegal migrants. In the case of Sarbananda Sonowal vs Union of India (2005), the constitutionality of the Illegal Migrants (Determination by Tribunals) Act, 1983 (hereinafter IMDT Act) was challenged. The Act was applicable only in the state of Assam and was constituted to find any illegal migrants. One of the prominent essentials of the Act was that it was based on ‘presumption of innocence’ that means the authority or the person challenging the status of a person should prove that the respondent is an illegal migrant. This Act was found to be in violation of the Foreigners Act 1946 that stated the principle of ‘reverse onus’ that means the person whose status has been challenged has to prove that he is not an illegal migrant. Thus, the Court held the IMDT Act unconstitutional and violative of a greater Act of Foreigners Act.

The concept of statelessness applied by South Africa

South Africa has been one such country that has established an exception to the concept of statelessness. Citizenship in South Africa is governed by the South Africa Citizenship Act, 1995. Similar to India, South Africa transformed from Jus Soli citizenship to Jus Sanguinis citizenship over the years. Some of the features of the Act are:

According to Section 2(1)(b) of the Amendment Act of 2010, any person born in or outside the territory of South Africa should have at least one parent who has the citizenship of South Africa. This provision surely restricted the people from having citizenship of South Africa.
But, keeping in view the set International Conventions and the growing need for human rights, South Africa has incorporated within its legislation the need to provide citizenship to people not covered under the above principle. Section 2(2) of the Act provides ‘statelessness exception’ by recognising the citizenship of those people who are born in South Africa but do not have any citizenship or nationality of any country or have no right to such citizenship or nationality, so long as the birth is duly registered. This curbs the gap created by the Act causing the children to suffer from statelessness. In the case of Mulowayi v Minister of Home Affairs (2019), a Congolese couple renounced their Congolese citizenship. Meanwhile, when they were stateless, they had a child whose nationality was denied as the parents were stateless. The Constitutional Court held that a child will obtain nationality even though the parents do not have one.
The Right to education is provided to every child within the boundaries of South Africa irrespective of his nationality or citizenship. In a recent case of Centre for Child Law and Others v Minister of Basic Education and Others (2019), it was held by the Court that the right to education cannot be denied to any child even if does not have the immigration status. The Court observed that the nationality should be observed for controlling the immigration but it should not extend to restrict any child of his/her fundamental rights.
Apart from the above features, Section 10 of the Act states that if a parent ceases to remain a South African citizen then a minor child who is not born in South Africa will also cease to be a South African citizen.
The Citizenship Act only recognises the status of citizenship of a child born in South Africa and does not consider the status of migrant children. In such cases, a special permit or exemption has to be sought by the Department of Home Affairs.
In the case of Chisuse v Minister of Home Affairs (2020), the Court observed that citizenship is not just a legal status rather it enumerates a person’s identity and their sense of belonging to a community. The Court upheld that in accordance with the 1955 Act, Section 2 would accommodate all those individuals who acquired their citizenship in South Africa by either birth or descent. Under the amended Section 2(1)(b), if one of the parents has South African citizenship then the child is said to obtain citizenship by birth.
In another landmark case of Lumka Nzama v Minister of Home Affairs (2018), two prominent questions were raised. Firstly, the role of courts and litigation while addressing matters concerning statelessness. In the present case, the Court held Lukma a citizen of South Africa and ordered for activate his identity card again. The second question deals with the issue of whether the fathers have the right to pass their nationality to their children. Lukma struggled to obtain nationality when his father tried to register him. He could not acquire the nationality status from his mother as she was a Swazi national and according to their law, women are prohibited from passing their nationality. Further, in another case of Naki v The Minister of Home Affairs (2018), the Court held that births of all children born in South Africa can be registered, regardless of the legal status of their parents. While interpreting the law, the Court took a wider stance by stating that unmarried fathers or single fathers can also pass on their nationality to their children as otherwise, it would deprive the children from enjoying their rights enshrined under the Constitution.

In addition to this, Article 5 of the African Charter on Human and Peoples’ Rights states that every person shall have a right to dignity and to recognition of legal status. This Article has confirmed that statelessness is a violation of the right of human dignity and legal status. Keeping in view the above lacuna, a Draft Protocol to the African Charter on Human and People’s rights on the specific aspects to the Right to a Nationality and the eradication of statelessness in Africa was constituted. The main objective of this protocol was to provide solutions for the resolution of the practical problems linked to the recognition and exercise of the right to a nationality, to eradicate statelessness along with studying the relations between individuals and States. The Protocol has tried to eradicate statelessness from all aspects and protect the rights of a stateless person who suffers due to the lingering lacuna in his/her legal status. Thereby, in order to guarantee nationality to people, a comprehensive framework of the African Union has been instituted in terms of this protocol.

Conclusion

While comparing the Citizenship Act of South Africa with that of India, it is clear that India lacks in establishing a robust and complete system for people not carrying the citizenship status. On the other hand, South African Citizenship Act protects the human rights of stateless persons keeping it on a greater pedestal. There is all the more reason for India to recognise the rights of stateless persons and not create a bifurcation between the people on the basis of religion. Keeping aside the political agenda, it is imperative for India to reconcile with International law and analyse the shortcomings of the present Domestic law.

References

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Best business structure for foreign companies in the Indian market

By

Abanti Bose

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October 13, 2021

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This article is written by Mayank Jain, pursuing Diploma in US Contract Drafting and Paralegal Studies from LawSikho and Shreya Singh pursuing B.A.LL.B from Gitarattan International Business School, GGSIPU. The article has been edited by Smriti Katiyar (Associate, LawSikho).

Introduction

India has always been open to new jobs and more opportunities, and in no way has neglected Foreign Direct Investment(FDIs) which in turn have provided an overall boost in the targeted economies. The Indian market offers the best trouble-free and fitting business environment to foreign companies who are willing to establish a business in India. According to the UNCTAD World investment report inflow in FDI was at an all-time high at USD 51 billion in the year 2019. India has also been ranked 12^th among the top 20 countries for FDI.

According to UNCTAD’s ‘Global investment, trends monitor 2020’ India is the largest FDI recipient in South Asia. Under Ease of Doing Business Report 2020 published by the World Bank, India has been ranked 63^rd out of 190 countries and has been in the 10 most improved economies for the third year in a row. India, as we can witness, is surely an investment-friendly country for people seeking to invest here. It has not only attracted major companies but also small-medium sized enterprises, a major attraction we can see is MNCs such as Amazon, Unilever, Adidas, Coca-Cola, etc.

Having to start a business, one must have a clear picture of every aspect as to what possible alternatives are available. In this article, we will be talking about the best business structure for foreign companies looking to enter into the Indian market along with their incorporation procedure and much more.

Structure in which foreign company can make an entry in India

A company can enter the Indian market in the following ways:

Incorporation of company,
Joint venture,
Limited liability partnership,
Branch office,
Licence office,
Project office.

Incorporation of company

It is one of the most common and widely appreciated structures. The encyclopedia legislation makes it more attractive and easier to understand. It is a legal entity that is formed by a voluntary association of people. It is an “artificial person”, invisible, intangible, created by or under the law, and is also known as corporate personhood i.e., an entity is separate from individuals who own it. It can be a hybrid of both natural and legal persons as well.

It is a corporate body and is incorporated with the sole motive of profit generation. A company may be incorporated as a private or public structure.

Limited liability

This locution says that a financial liability of an investor in a business is limited. Putting it in layman’s language we can say that the investor is not personally liable for the debts and liability of the limited company.

In the case of a sole proprietorship, the liability is unlimited.

Subscriber’s

It requires a minimum of two directors to establish a private company in India. For such incorporation, one of the directors of a private company must be both an Indian citizen and an Indian resident. Whereas three directors in the case of a public company are required, two being foreign nationals and one a local Indian citizen.

Incorporation and registration

When it comes to company registration, the promoter of the company must contact a government organization namely ROC (Register of Company) which is present in every state and is formed by the government particularly for handling the affairs of Companies. The promoter will be required to fill a form that is INC-32 along with some attachments which particularly include:

The company’s crucial documents are the memorandums of association and articles of association duly signed by all members,
A declaration stating that the requirement of the Act is complied with,
And address for correspondence till its registered office is established.

Now once the form has been filled and approved by our ROC, a certificate of incorporation will be issued which includes the CIN corporation identification number, which is the only official document that gives the company a legal existence.

Joint venture with Indian partners

It is one of the preferred forms of business structure for already established firms. A JV is a partnership where two or more people or companies come together to form a new entity separate from its parent firm for the conduct of commercial projects.

It’s a relationship that is built between the exporter and an entrepreneur in the importing country. In sectors where 100% FDI is not allowed a joint venture can be the best option for entering into a market with low-risk options for companies.

For example, the joint venture of Pepsi consists of Voltas and Punjab Agro industries corporation.

Incorporation

In the case of JV companies’ incorporation, the Companies Act, 2013 requires that they must submit a Memorandum of Association (MOA) and Article of Association (AOA) which will act as a charter document of the company. It should be noted that the agreement between the partners should be well versed and it must be included in the AOA of the JV company to protect any future conflict.

These do not require any such official paperwork with the state or federal government and are the result of a contractual obligation entered upon by the entities for a purpose.

Repatriation

Here, in India, the structure is such that it allows free of charge repatriation of profit once the entire domestic and federal tax and liabilities are met.

What is a Limited Liability Partnership (LLP)?

The LLP is viewed as an alternative to a corporate business vehicle. This structure provides partners with the flexibility of organizing their internal structure. Owing to its flexible nature it is most suitable for small enterprises and investment by venture capital start-ups.

It’s a separate legal entity from its partners and therefore, is itself liable for the full extent of its assets keeping the liability of partners limited.

The name of the company must end with the word “limited liability partnership “or its abbreviation.

The LLP act requires that one of the partners in it must be in India.

Subscriber’s

Every LLP shall have at least two designated partners, who are individual’s and at least one of them shall be a resident of India (182 days’ time period is required to be qualified as a resident).

If at any time the number of partners of an LLP is reduced below two and the LLP carries on business for more than six months while the number is so reduced, the person, who is the only partner of the LLP during the time that it so carries on business after six months and has the knowledge is the fact that it is carrying on business with him alone, shall be liable personally for the obligation of the LLP incurred during that period.

Incorporation

To incorporate LLP, one must begin by filing documents online attested with a digital signature (DSC). So, the promoter of the company must obtain the DSC certificate in the first place. After that, one must apply for the DD and the same is needed to be signed by directors. For a company to get its DIN (director identification number) and name approved is of foremost importance therefore, an application for allotment of DIN under form DIR-3 and LLP-RUN (reserve unique name – limited liability partnership) is filed. Resubmission of the form shall be allowed to be made within 15 days.

Form FiLLiP (form for incorporation of limited liability partnership) needs to be filed with the registrar of the state along with the fees involved, which will provide the company with a legal existence.

Finally, you have to file an LLP agreement.

FEMA provision

When getting to know about foreign exchange operations one must have a clear picture as to what FEMA provision says;

The formation of branch office/ liaison office/project office or any other place of business in India by foreign organizations is regulated under Section 6(6) of the Foreign Exchange Management Act, 1999, and from time to time these rules are amended to embody the changes in the regulatory framework and published through amendment notifications.

Section 6(6) of FEMA, 1999 can be read as:

“Without prejudice to the provisions of this section, the Reserve Bank may, by regulation (the Foreign Exchange Management (Establishment in India of a Branch Office or a Liaison Office or a Project Office or any Other Place of Business) Regulations, 2016), prohibit, restrict, or regulate establishment in India of a branch, office or other places of business by a person resident outside India, for carrying on any activity relating to such branch, office or other places of business.”

Registration of a foreign company

Rule 3 (3) of Companies Rules, 2014 says that:

A foreign organization shall, within 30 days of the establishment of its business in India, file with the Form FC1 with such fee as provided in Companies (Registration Offices and Fees) Rules, 2014 and with the documents required to be delivered for registration by a foreign company in accordance with the provisions of sub-section (1) of section 380 and the application shall also be supported with an attested copy of approval from the Reserve Bank of India under Foreign Exchange Management Act and also from other regulators, if any, compliance is need by such foreign organizations to institute a place of business in India or a declaration from the authorised representative of such foreign organizations that no such compliances are required.

Branch office

It is a method whereby a company incorporated outside a country by extension can enter into the market of India. It is not a separate legal entity and is suitable for those foreign companies who want to set up a temporary office in India.

The name of the branch office shall be the same as that of the foreign parent company and for each new office of such a branch, a fresh approval is required from RBI with justification.

Who can enter?

The foreign parent company to enter into the Indian market must have a profitable track record of five years in a row with a net worth of more than $1,00,000/- duly supported by the financial statement.

Taxation in India

The branch office is an extension of its overseas branch. Talking about taxation it is basically a surcharge function. The income tax on the profits of the branch office of foreign entities in India is 40% plus surcharges as applicable.

A dividend that is paid to its parent company is not taxed in India.

Is repatriation allowed?

There is an easy way out for the repatriation of funds to the parent company.

The profits of the branch office are freely allowed to be remitted from India to its parent company after payment of applicable taxes in India.

Procedure for incorporation

All the required documents are to be filed along with FNC Form, which must be submitted to the designated Authorised Dealer Category–1 bank (the banks with an RBI license to buy and sell foreign exchange for specified purposes). Authorised Dealer category-1 bank after due diligence and looking into all aspects of the promoter, if thinks that everything is in compliance with what is required, will forward a copy of Form FNC to RBI who will allot a UIN (Unique Identification Number) to a branch office. An applicant after receiving permission for setting Branch Office shall inform the Authorised Dealer category-1 bank as to date Branch Office has been set up, this information is further transferred to RBI by the Authorised Dealer bank.

Registration

After approval, the Branch Office needs an application for registration of the branch office of the foreign company which can be done by filing Form FC-1 within 30 days of such approval. In case there are Indian directors the DIN number of such directors is needed, and the digital signature of the authorised signatory is required to e-file statutory forms with the ROC (Register of Company) for their approval.

Finally, the branch office requires to register it with the state police

Liaison office

It can be termed as representative of the parent company.

It was mainly introduced when people per se do not have commercial activity and tried to have their communication. A liaison office is basically provided to someone who wants to understand or set up communication with various stakeholders in India and overseas.

It is a fundamental means of building relationships among places of business or head office and entities in India.

These are not involved in any commercial or industrial activity but rather in marketing and promotional stuff and therefore, liaison officers are expected to do the same.

The liaison office is only a cost centre and outward remittance is not allowed except upon closure of the liaison office, as it is assumed that there is no activity, and no activity means no income.

Taxation

No tax as such is required. Since those are not meant to earn income, the Indian government does not add them.

Qualifying conditions

A profit-making record during the previous three financial years in the home country.
The net worth of not less than USD 50000 or its equivalent.

Documents required

Memorandum Of Association (MOA),
Article Of Association (AOA),
Last year’s audited financial statement.

Procedure for incorporation

Firstly, designate a Bank and branch where your account will be opened that will be an Authorized Dealer Bank (Authorised Dealer Bank) for your Liaison Office in India. Then an application with all necessary documents with RBI through Authorised Dealer Bank needs to be submitted. After obtaining approval from RBI and UIN number, one can apply to ROC for:

Certificate of Establishment of Place of Business in India,
Registration for PAN with Income Tax Authority,
Registration for TAN with Income Tax Authority,
Opening an account with the Bank and obtaining account numbers, etc.

Repatriation

The funds can be repatriated only on the closure of the liaison office.

Activities permitted

Liaison officer can represent the overseas head office in India,
It can promote import and export between countries,
Promoting collaborations between an Indian company and overseas parent company,
Acting as a communication channel between the parent company and the Indian company.

Project office

A project office is for specific or mandated purposes.

Few permissions need to be obtained before you establish a project office in India:

A foreign company may open a project office in India subject to a secured contract with an Indian company to execute a project in India and that it fulfils specified criteria.
It should be funded by overseas remittances i.e., it should be, fund a project in India.
An entity in India, who has awarded the contract, has been granted a term loan by a Financial Institution or bank in India for the Project.
The project should have approval from the appropriate authority.

Repatriation

Project officers are permitted to make intermittent remittances subject to the production of prescribed documents.

Activities permitted

Project office by its definition has clearly stated what a project office can do.

Conclusion

As an overall conclusion, I will say that growing a business internationally is no easy feat, for a large organization or small business that are looking to enter a new market. India is an attractive investment market when it comes to the question of where to invest. There is enormous potential in the Indian market and the relaxed FDI norms act as a cherry on the cake for the foreign companies making their way to India. These articles help you to explore the various alternatives available and make a decision for your business. A company making its entry into the Indian market can do so by registering itself as a completely Indian legal entity or as a foreign company. Being aware of the intricacies involved in structuring an entity in a different country, one must have a very clear picture before finalizing and taking any step.

References

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

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

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Data anonymization under GDPR case study of Taxa 4×35

By

Rachit Garg

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October 13, 2021

0

Blockchain — Image Source - https://rb.gy/jerbwa

This article has been written by Pulkit Chaudhary pursuing a Diploma in International data protection and privacy Laws from LawSikho. It has been edited by Smriti Katiyar (Associate, LawSikho).

Table of Contents

Introduction

Last two decades have turned the world around from a Global Village to the Digital Village with almost everything being digitized, in which data has become the ultimate treasure. Data has gained a lot of importance in the last few years among the various domains of human life like education, research, health, business, marketing, technology etc.

Data Protection Legislations around the world

With the upsurge of use of personal data for business/as business (in case of Data Brokers), the need for the protection of personal data, including the sensitive personal data against unlawful use and leaks has enlarged over time and consequently many states came up with data protection legislations around the world like The General Data Protection Regulation¹ (hereinafter as “GDPR”) in Europe, Brazil’s Lei Geral de Proteçao de Dados (LGPD), Australia’s Privacy Act, California Consumer Privacy Act ( hereinafter as “CCPA”), Japan’s Act on Protection of Personal Information etc.

Position in India

In India , the Supreme Court has become proactive towards the protection of privacy of the citizens as the apex court came up with and observed the right to privacy as a fundamental right in the landmark case of Justice K.S. Puttaswamy (Retd.) Vs. Union of India². The government of India is also pushing towards the personal data protection legislation and came up with Personal Data Protection Bill, 2019 which is pending for scrutiny before the Joint Parliamentary Committee for further course.

Cyber Threats, GDPR and Non-Compliance

The cyber security domain acquires a special status given its ability to deploy all kinds of preventive measures that mitigates the impact of various cyber threats and attacks that may impact the data for which the protection is required. The cybersecurity industry took off not only on account of GDPR but also because of different data protection legislations around the world placing emphasis on the privacy rights of the data subjects. In the present era, cyberattack is one of the most severe threats to human life at the global level.

In fact, according to the latest ENISA³ report, the 15 most frequent cyber threats faced in 2017 include several issues relating to data leakage and to identity theft, such as phishing and spam campaigns to obtain banking credentials. Thus, although complying with the GDPR may seem tedious, it represents an excellent opportunity for organizations. The data or identity theft poses a huge risk and it extends to the maximum when the data so targeted, leaked or stolen is related to sensitive banking credentials, biometrics etc.

In this respect, it is important for the data controller/processor entities to check the background of this legislation which contemplates the need for such entities to foresee the cyber risk, analyze the same and adopt suitable technical and organizational measures to deal with such risks. The regulation requires the deployment of all the necessary organizational and technical measures to prevent the cyber threats for the protection of data (Article 28 of GDPR). In order to deal with such issues effectively and efficiently, the companies shall plan their strategies accordingly.

Under such circumstances, the data protection legislations make the entities responsible in case of breach or data leaks for using the personal data of the subjects, even with their consent, where entities have not deployed proper technical or organizational measures for the protection of data of its subjects. The violation of basic principles of GDPR can result in exaggerated fines of up to four percent of annual global revenue.

Additional Consequences of non-compliance of GDPR

Damage to Reputation –In the event of data leak, breach, non-compliance, the faith of the consumer on the organization gets shaken and consumers tend to look for more worthy organizations. Even a formal reprimand can result in loss of market share and reduced consumer confidence.
Cost of Damage Control – Once the data leak has happened or non-compliance sanctions have been imposed, it will be costly to pay penalties, conduct investigations and implement remedial measures.
Withdrawal of Certification – Supervisory authorities can mandate withdrawal of a certification.
Prohibition on Processing – Supervisory authorities may also order a temporary or permanent prohibition to keep your organization from processing personal data.
Liability for Damages – As per Article 82 of the GDPR, an individual who has suffered material or non-material damage as a result of an infringement of the GDPR can claim compensation from both data controllers and data processors.

Data anonymization as data protection technique

In order to tackle the threats to personal data of the data subjects, most of the organizations deploy appropriate technical and organizational measures amongst which Data Anonymization is one important weapon in the hands of the organization which helps it to prevent the misuse of the leaked data.

What is Data Anonymization?

Data anonymization is the process by which the organizations prevent and preserve the confidential or sensitive information which gets leaked, breached or in any way compromised , with or without, proper measures (technical and organizational) adopted by the organization to prevent such breach. In this process the sensitive personal data is combined and shuffled with random anonymous data which makes the identifiable personal data unidentifiable and restricts its misuse.

⁴

Definition of Data anonymization under the GDPR is as follows:

Article26 defines anonymous information as ‘…information which does not relate to an identified or identifiable natural person or to personal data rendered anonymous in such a manner that the data subject is not or no longer identifiable’.

Data anonymization methods

Data anonymization combinations are designed as a way in order to protect the personal identifiable data automatically in the event of data breach. Some of the data anonymization methods are as follows:

Synthetic data- In this technique the algorithm is set in such a way that it generates random artificial data sets in place of the original data set containing identifiable personal data.
Shuffling- The identifiable data set is shuffled with random raw data and is swapped/rearranged in such a way, to render the data unidentifiable.
Scrambling- In this technique the letters/numbers of the identifiable data are mixed and rearranged.
Pseudonymization- The profiles and sensitive information is mixed with fake identifiers.
Generalization- In this technique, some part of the information is eliminated which makes the information less prone to be identified so that the accuracy of the data can also be maintained.

Some Advantages and Disadvantages of Data Anonymization

Advantages	Disadvantages
1) Strong measure against the misuse of data	Difficulty in obtaining consent of data subject to set data anonymization algorithms in case of sensitive information.
2) Protection against loss of trust and market share.	Restricted use towards targeted purpose.
3) Consistency in data flow and better processing results.	Difficulty in tracking the relevant data set.

Therefore, it is required on the part of the organization to adopt proper measures to protect the vital interests and rights of the data subjects and retain the trust and satisfaction of the consumers towards the organization. After adequately addressing the above mentioned concerns relating to data anonymization, the data can again be decrypted and be brought back to the original data set with help of the data protection professionals in the organization.

This process is known as De-anonymization or re-identification.

The case of Taxa 4×35

Facts

This case relates back to 2018 where a Denmark taxi company namely Taxa 4×35 was audited by the supervisory authority of Denmark, Datatilsynet, which found that Taxa had implemented a data retention policy but had failed to follow it. In this case the investigators found that Taxa had retained the personal data of the subjects i.e. almost 9 million taxi drivers beyond the period of two years as mentioned in the retention policy. To be very specific, Taxa had erased the name, address, email of the data subjects but still retained their phone numbers beyond the period of two years and claimed the phone number to be the account number and contended the same reason to be the legitimate purpose of processing. Along with the same contention, Taxa also admitted the fact that the phone number was not required for the purpose rather an anonymized data would fulfil the purpose. However, the computer systems deployed by Taxa 4×35 were unable to convert the phone number of the data subjects into the anonymized data which is unidentifiable in nature.

Observations

The Danish Data Protection Authority observed that:-

That the organization cannot set a deletion deadline which is three years longer than necessary simply because the company’s system makes it difficult to comply with the rules.”

Penalty-In March, 2018 the Danish DPA fined Taxa 1.2 million kroner (US$180,000), its first fine under the GDPR.

In its ruling, the Danish DPA found the violation of Article 5 of the GDPR in three ways which violated purpose limitation, storage limitation and data minimization.

Purpose limitation: Article 5(1)(b) of the GDPR provides that the data shall be used only for the legitimate purposes and not for any other purpose not in consonance with the original purpose. Taxa violated this principle when it transformed the numbers into a unique and anonymous account number and even admitted the fact that the phone number was not necessary, only an account number was needed to be linked with the taxi ride.

Storage limitation: Article 5(1)(e) of the GDPR requires the organizations to comply with the requirement to keep the identifiable personal data of its subjects for a limited period, not longer than is necessary for the purposes for which the personal data is processed. The data retention policy of Taxa stated that the data shall be retained for the period of two years and Taxa only deleted the name associated with the taxi-ride but kept all the taxi-ride data relating to the ride (date, GPS coordinates of starting and ending location, distance, payment) and associated that with the customer’s phone number for an additional three years. This was the gross violation of the aforesaid provision of GDPR.

Data minimization: Article 5(1)(c) of the GDPR puts obligation upon the organization to gather the data which is adequate, relevant and limited to what is necessary for which it is processed. In this case Taxa contended that it had met the requirements of the aforesaid provision as it had removed the names associated with the phone numbers but their data systems were unable to transfer the data from mobile numbers to the unique account number. At this, the Danish DPA turned down this contention and stated that “in no uncertain terms, that costs associated with migrating personal data to a new anonymous data structure do not justify continued use of the phone number beyond the retention policy.” ⁵

Conclusion

The ultimate aim of the GDPR is to empower the individuals to retain the control over their personal data and simultaneously enable the companies to use the data and reap its benefits. By understanding the interpretation and purpose of the GDPR the companies can adequately comply with its provisions and can prevent the hefty fines that can be imposed in the cases of non-compliance. There was a lack of effort on part of Taxa with respect to rights of the data subjects and therefore it suffered a huge penalty to the tune of 1.2 million kroner (US$180,000).

In our journey to be data protection professionals, these loopholes shall be kept in mind and be adequately addressed to prevent the chances of non-compliance and sanctions.

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

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

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All you need to know about the Memorandum on Cooperation between the Competition Commission of India and the Japanese antitrust regulators

By

Rachit Garg

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October 13, 2021

0

This article is written by Vandita Bansal, from Symbiosis Law School, Noida. The article discusses the recent MoC signed between India and Japan.

Table of Contents

Introduction

The Memorandum of Cooperation (MoC) between the Competition Commission of India (CCI) and Japan’s competition body, the Japan Fair Trade Commission, was ratified by the Union Cabinet of India on July 8, 2021. (JFTC). The MoC’s goal is to encourage and improve cooperation in competition law and policy. According to an official statement published by the Ministry of Corporate Affairs,(MCA), the MoC would allow the CCI to imitate and learn from JFTC’s lessons and experiences.

According to the MCA, the MoC would strengthen the CCI’s implementation of the Competition Act, 2002 (Act), benefiting consumers by enhancing equity and equality. The MoC intends to strengthen cooperation through a variety of means, including the exchange of information and capacity-building activities in areas such as technical cooperation, group discussions, and enforcement cooperation.

Competition Commission of India (CCI)

The most effective way by which we can ensure that a common man gets access to the spectrum of choices for different products and services at the most reasonable rates is known as competition. Producers will have a greater motivation to innovate and specialize as competition grows. Consumers would benefit from lower prices and a broader range of options as a result of this. To attain this goal, there must be fair competition in the market. The objective is to establish and maintain fair competition in the economy, which will give producers a “level playing field” and make markets operate for the benefit of consumers.

The Competitions Act (2002)

The concept of current competition policies is followed by the Competition Act, 2002, as revised by the Competition (Amendment) Act, 2007. The Act bans anti-competitive agreements, enterprise abuse of dominant position, and combinations (acquisition, gaining control, and M&A) that create or are likely to produce a substantial adverse effect on competition inside India. Section 18 of the Competition Act of 2002 allows CCI to engage in any agreement or arrangement with any foreign agency to carry out its responsibilities or execute its powers under the Act.

Objective

The goals of the Act are supposed to be fulfilled by the Competition Commission of India.The CCI is composed of a Chairperson and six members nominated by the central government. It is the commission’s responsibility to remove anti-competitive activities, encourage and sustain competition, defend consumer interests, and ensure free trade in Indian markets. The commission is also expected to provide a view on competition problems in response to a complaint from a statutory entity created under any statute, as well as to engage in competition advocacy, raise public awareness, and provide competition training.

Japan Fair Trade Commission

The Japan Fair Trade Commission is the competition regulator of Japan handling all trade concerns. It is a Japanese government body in charge of regulating economic competition and enforcing the Antimonopoly Act (1947). When implementing the AMA (Anti-Monopoly Act), the JFTC (Japan Fair Trade Commission) considers the elements of digital markets in relation to other industries; anti-competitive agreements between rivals in digital markets are not entitled to any special regulations or exemptions.

The Federal Trade Commission’s International Antitrust Program

The Federal Trade Commission takes the lead in encouraging international collaboration and agreement on good antitrust practices and policies. To maintain the commission’s competition mandate in a global economy, the FTC has long promoted its foreign antitrust programs.

Objectives of the programme

Global competition authorities are constantly challenged with cross-border transactions, shared policy issues, and multinational monopolies. In the past, the CCI has dealt with several Japanese corporations in both enforcement and merger-related concerns. For example, the CCI decreased the penalty issued on two Japanese businesses in 2019 in response to a leniency appeal exposing pricing coordination, market allocation, and bid-rigging in the electrical power steering systems market. Considering this, coordination between regulatory bodies from various nations is necessary. MoCs have emerged as a key method for enhancing cooperation and the implementation of competition rules.

Agreements on international cooperation help both competition authorities and the corporations under antitrust inspection. They minimize the number of tasks and save regulatory bodies both personnel and economic resources. Such arrangements also decrease the potential of substantive or procedural disputes in competing audits for corporations. Legal differences and geographical restrictions, however, may reduce the scope of such cooperation. The International Competition Network (ICN), a dedicated but informal forum for competition law to keep constant interactions and handle practical competition problems, is an ideal example of international antitrust cooperation.

International antitrust cooperation and the Competition Commission of India

Section 18 of the Act allows the CCI to sign such agreements with foreign antitrust organizations in order to give logical meaning to the “effects doctrine” stated in Section 32 of the Act.

The CCI has signed Memorandums of Understanding (MoUs) with competition authorities in different jurisdictions, including Europe, the United States, China, Canada, Australia, Russia, Brazil, and South Africa. In addition, the CCI has cooperated with international antitrust agencies on international deals such as the Dow Chemical-Dupont, Holcim-Lafarge, Bayer-Monsanto, and Linde-Praxair mergers.

The CCI has also recognized the importance and benefits of international cooperation on several occasions. In a 2020 ICN conference, the CCI’s Chairperson acknowledged the importance of international cooperation and information exchange with other authorities to deal with both enforcement and merger issues, particularly in cases involving digital marketplaces. The Chairperson stated that the CCI will aim to collaborate with its international counterparts through venues such as ICN in order to exchange best practices.

Outline of the MoC

On August 6, 2021, the Japan fair trade commission (JFTC) signed a Memorandum of Cooperation (MoC) with the Competition Commission of India (CCI), India’s competition authority held online. The MoC was signed by Mr. Kazuyuki Furuya, Chairman of JTFC, and Mr. Ashok Kumar Gupta, Chairperson of CCI. It intends to develop and strengthen collaboration in the areas of competition law and policy through information exchange as well as different capacity development efforts in technical cooperation, experience sharing, and enforcement cooperation.

Purpose and principle of cooperation

JFTC and CCI recognize the value of cooperation and communication in the domain of better enforcement of each country’s competition policies and guidelines through the expansion of cooperative relationships for the eﬃcient functioning of markets and the economic wealth of their respective citizens.

Notification

Each competition authority will inform the other competent authority of its enforcement operations that the informing competition authority believes may have an impact on the other competition authority’s strategic interests.

Exchange of information

The competition authorities would exchange information to the extent that it was consistent with each country’s laws and regulations, as well as the significant concerns of each competition authority, and within its reasonable resources available.

Technical cooperation

The competition authorities might cooperate on technical cooperation projects.

Coordination of enforcement activities

When examining competition issues that are linked to one another, the competition authorities can consider cooperating with their enforcement operations.

Communication

Under this MoC, periodic working meetings can be held as per the commission authorities.

Why is Competition Law imperative

Significantly, the CCIs have the goal of ensuring that the merger and misuse of entities and domination that apply to all investments in India, including foreign investors, do not have a negative impact on competition in India’s market. Foreign investors are not permitted to enter into anti-competitive agreements or to misuse their power.

The provisions of the Competition Act of 2002 do not restrict foreign direct investment inflows to the nation, but rather offer an incentive to these imports. As a result, India’s policy reflects broader research of a beneficial relationship between competition rules and foreign investments.

Conclusion

With this MoC, the CCI has improved its capability to effectively analyze international mergers and identify and ban global monopolies. Ironically, the MoC follows the CCI’s recent expansion of analysis of digital market concerns, which mainly comprise cross-border difficulties. The agreement is intended to improve India-Japan ties and enable the nations’ antitrust agencies to work more effectively together to create good competition law adjudication.

References

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All you need to know about EDBP/s Guidelines on Post-Schrems II GDPR Compliant data transfers

By

Abanti Bose

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October 13, 2021

0

GDPR — Image Source - https://rb.gy/dsafke

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

Table of Contents

Introduction

The European Data Protection Board (EDPB) is an autonomous European body with an objective to ensure consistent application of the General Data Protection Regulation (GDPR) and in order to promote cooperation among the EU’s data protection authorities.

It was on the 11^th Nov. 2020 the EDPB directed the companies around the world a new map to guide the data flows. The EDPB published two documents which are the recommendations on supplementary measures and EU essential guarantees. This document highlights the assessment process for efficient foreign protection as per the EU laws when the personal data is transferred abroad and a set of EU approved safeguards that the companies can implement even when the foreign protection is judged lacking when it is compared to EU legal standards.

Background

The Court of Justice of European Union (CJEU) of 16^th July 2020 upholds in Data Protection Commission v. Facebook Ireland Ltd., Maximillian Schrems, C-311/18 that the provisions of GDPR (Article 46 (1) and 46 (2) (c)) must be interpreted in order to enforce appropriate safeguards, enforceable rights and effective legal remedies required under the GDPR must ensure that the data subjects whose personal data are transferred to a third country pursuant to standard data protection clauses shall provide a level of protection which is essentially equivalent to guarantee within the EU. There has to be a level of protection of natural persons which is equivalent to that of the protection and safeguards guaranteed by the GDPR where the transfer of personal data is to a third country that is carried out. The CJEU came up with various such guidelines in order to safely transfer data.

Guideline for global data flow

The EDPB directs the recommendation to the companies which are charged with implementing them. This part of the article mentions the step-by-step guideline for implementing this recommendation. This is a six-step plan in order to assess and protect global data flow which is in line with the ruling in Schrems-II.

Guideline 1 and 2 : transfer mapping and transfer mechanism

The first step is advice by EDPB to exporters for them to know the transfer and the second step is to verify the transfer tool by which the transfer happens.

As per the current practice, this recommendation refers to standard contracts, ad hoc contractual clauses, binding corporate rules (BCR), adequacy, consent or other GDPR Article 49 derogation (exemptions for cross-border). The EDPB mentions that if the transfer is to a country that is deemed adequate by the European Commission so long as the decision is in force the company will not have to take any further steps in order to monitor the adequate decision that remained valid.

If this transfer of data is to any of the 12 countries or territories that are deemed to be adequate the EDPB seems to suggest that such transfer is acceptable but the CJEU decision can change the equation. EDPB in its recommendation mentions the encryption safeguards that are essential for data routed through a non-adequate country in transit to an adequate one which is a potential suggestion for the universal need for additional safeguard.

Guideline 3 : examine if the non-EEA protection is enough

EDPB recommends that in case there are provisions in law or practice of the third country which may run contrary to or deviate from the effectiveness of the appropriate safeguards of the transfer tools the company is relying on the specific transfer. The essential guarantees mentioned by the EDPB are as follows:

The processing of data shall be based on clear, precise and accessible rules.
The necessity and proportionality with respect to the legitimate objective pursued need to be demonstrated.
There has to be an existence of an independent oversight mechanism.
There are supposed to be effective remedies that need to be available to the individual.

EDPB cautions against relying upon subjective factors like public authorities that may access the data which is not at par with the EU standards rather than considering the laws governing access and protection directly. It means that the legal requirement and authorities should be given more importance when it comes to assessing the practical likelihood that your data will be of interest to and accessed by authorities. After the CJEU’s (Courts of Justice of The European Union) July 16^th decision, many companies did consider such likelihood as part of their assessments having few other options at their disposal. The EDPB statement mentions that many companies may need to reassess their approach.

With respect to the Recommendation of Essential Guarantees, the EDPB offers companies’ recommendations on safeguard and has a very brief list of possible sources of information to assess foreign protection. These include cases from CJEU, European Court of Human Rights, European Commission adequate decisions, resolutions and reports from the intergovernmental organisation and regional bodies.

Guideline 4 : search and implement supplementary measures

This is one of the crucial steps suggested by EDPB. EDPB mentions that there have to be supplementary measures that shall be taken in order to bring the level of data protection transfer to the EU standard of essential equivalence.

One has to abide by this step where the organisation’s assessment in step three reveals that the third country legislation conflicts with implementing Article 46 GDPR which is an appropriate safeguard when there is a transfer to other countries. EDPB has listed out a non-exhaustive list of such measures in annexe two of the recommendations. This details down the great attention and scrutiny in the days ahead. If there can be no supplementary measures that can be taken in order to remedy the deficiencies then the transfer must be stopped.

The supplementary measures that are to be provided by EDPB encircle around technical, contractual and organisational measures. For every category, EDPB outlines appropriate additional safeguards as well as scenarios that might be available but in situations where these measures cannot be taken, there shall not be any data transfer and it should be stopped.

Following are the suggestions for these safeguards.

Technical safeguards

A very predictable safeguard is encryption, which can be used for technical safeguards. Companies and organisations shall take appropriate measures to abide by this encryption as an appropriate safeguard under this context. The EDPB shows six separate facets of encryption protocol in order to prove the sufficiency. Before transmission, there has to be strong encryption, check if the encryption can survive cryptanalysis by public authorities, perfect implementation of the encryption algorithm and maintenance of keys in the EEA.

An organisation should pay particular attention where there are no effective technical safeguards found. These circumstances include data processing in the clear by the cloud service provider (that is, unencrypted processing) of the data that is sent to a remote location and accessed at a remote location and use of this data from a third country for business purposes such as human resource processing.

Contractual safeguards

It has been clarified right away by EDBP that as contracts cannot bind government authorities, contractual safeguard shall only remedy deficiencies that are essentially equivalent protection when implemented as part of a broader package of supplementary measures.

One of the very crucial safeguards described by EDPB is that an importer who imports data shall commit to transparency. EDPB mentions that if there is such safeguard then it will assist the exporters in conducting its required assessment. EDPB mentions the call for transparency regarding the laws governing government under which the government has access to data in the recipient jurisdiction and potentially certification that the importer has not created any channel that enables the government to access its data.

Enhanced audits verify whether data has been provided to government authorities, commitments to notify the data exporter in situations where the importers can no longer comply with the commitments due to the change in the laws of the country or case of “warrant canary” that a government access request has not been received until and unless it has. The EDPB notes that an importer shall notify the EU exporter of its inability to match the commitments before data is accessed by government authorities in practice.

Another recommendation of EDPB is, contractual commitments by the data importers to challenge government access to data in court before disclosing it, where bases for such challenges exist.

Lastly, EDBP proposes contractual commitments in order to enable data subject rights. These include commitments not to discuss data with government authorities unless expressed consent is taken from the data subjects. In addition to that, a notification to data subjects of requests shall be provided which shall be at par with the law so that the affected data subjects can seek redressal in the EU, through DPAs or the courts.

Organisational measures

EDPB mentions that there are safeguards that shall be paired with contractual guarantees and technical protection to provide corresponding protection which shall be assessed on a case-by-case basis in the context of specific transfer.

Internal policies for the transfer governance with a group of enterprises is an example where implementation of these policies can be complex. EDPB explains that these policies shall provide a clear allocation of responsibilities, reporting challenges and ways to respond to the government access requests. EDPB further mentions that government access request, procedural step to challenge unlawful or disproportionate request as well as transparency to data subjects.

Other measures for an organisation can include transparency policies, akin to those discussed under contractual measures, data minimisation procedures, security standards recognised internationally, such as ISO standards and policies or commitments not to transfer the data onward to other countries which may not provide essentially equivalent protections.

Extensive assessments

Once the organisation has conducted an extensive assessment and kept in place sufficient additional safeguards where that is realistically possible, the EDPB asks them to keep documenting their approach and seek authorisation where required by the chosen transfer mechanism and to reassess the approach regularly.

Conclusion

The EDPB recommendation can turn out to be complex and it might take a while for the companies and organisations to get this perfectly implemented. It can be frustrating for companies as the compliance can be challenging if a proper data protection lawyer is not engaged to guide them as these compliances are mandatory for enabling and protecting data flow so that EU’s global economy and society can function, considering the increase in remote data-enabled engagement during the pandemic.

EDPB and DPAs are doing quite the impossible task of providing concrete examples and options for companies to address a nearly impossible task by searching ways to maintain EU data protection standards in an inherently global and multicultural world in which norms and laws diverge.

References

Caitlin Fennessy, A breakdown of EDPB’s recommendations for data transfers post-‘SchremsII'(11^thNov.2020) https://iapp.org/news/a/a-break-down-of-edpbs-recommendations-for-data-transfers-post-schrems-ii/
Recommendations 01/2020 on measures that supplement transfer tools to ensure compliance with the EU level of protection of personal data (10^th Nov. 2020) https://edpb.europa.eu/sites/default/files/consultation/edpb_recommendations_202001_supplementarymeasurestransferstools_en.pdf.
EDPB issues finalised Schrems II guidance on ensuring compliance for data transfers, (28^thJune 2021) https://hsfnotes.com/data/2021/06/28/edpb-issues-finalised-schrems-ii-guidance-on-ensuring-compliance-for-data-transfers/
Clint Monteith, EDPB Issues Draft Guidance on Post-Schrems II GDPR Compliant Data Transfers(23^rdNov.2020) https://www.dwt.com/blogs/privacy–security-law-blog/2020/11/edpb-draft-guidance-gdpr-data-transfers
Rob Stubbs, Data Sovereignty and Privacy Compliance Post Schrems II, https://www.infosecurity-magazine.com/opinions/data-privacy-compliance-post/

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Global importance of the wetland sites – laws to protect wetlands in India

By

Rachit Garg

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October 13, 2021

0

This article is written by Pranjali Aggarwal from University Institute of Legal Studies, Punjab University, Chandigarh. This article elucidates the importance of wetlands and various laws that protect the wetlands in India.

Table of Contents

Introduction

Many major civilizations in history have been found near the wetlands only. For instance, the Mesopotamian Civilization between Euphrates and Tigris River or the Indus Valley Civilization on the banks of river Indus. This clearly portrays the significance of wetlands. Wetlands are ubiquitous. They are found from the tundra to the tropics and on every continent except Antarctica. The wetlands only cover around 6% area of the Earth but still, almost 40% of the species of plants and animals thrive in wetlands.

Definition of wetlands

Wetlands are the areas where water is the prime factor that determines the environment, types of flora, and fauna of the place. The wetlands are mainly found where the water level is at par with or near the surface of the land or if the land is covered by water. According to the Intergovernmental treaty “The Convention on Wetlands,1971” also known as ‘Ramsar Convention’, the wetlands refer to the “areas of marsh, fen, peatland, or water, which can be either naturally existing or made by humans artificially, either perennial in nature or temporary, water in the area can be static or flowing, the water could be saline, brackish or fresh and includes areas of marine water that are not more than six meters deep at the time of low tide”.

The variation in soil, water chemistry, hydrology, weather conditions, vegetation are a few factors that lead to the formation of different kinds of wetlands.

India and wetlands

According to the National Wetland Atlas, a project sponsored by the Ministry of Environment and Forests (MoEF), India’s 4.7% land amounts to wetlands which encompasses almost 15.3 million hectares of area under it. In India, there are around 757.06 thousand wetlands out of which inland wetlands cover 69%, coastal wetlands 27% and other wetlands around 4% of the total area. The wetlands in India consist of the river basins of Ganga and Brahmaputra, the wetlands situated in the Himalayas, saline and temporary wetlands in the arid and semi-arid areas, lagoons, backwaters situated in the coastal region, the coral reefs in the marine wetlands, and others. India is the house of the diversity of wetlands and they play an imperative role in the life of an individual as well as the economy. Despite the fact that wetland is a significant ecosystem, still, they are subjected to several threats because of human activities like urbanization, construction of dams, inducement of chemical fertilizers and other pollutants in the wetlands, etc. These threats have led to a reduction in the area of wetlands in India and therefore they need to be conserved. Even the provisions of the Constitution of India support the conservation of wetlands.

Importance of wetlands

Water purification -The forests are remarked as the ‘lungs of the earth’; similarly, wetlands are considered to be the ‘kidneys’ because they aid in filtering waste from the land. They trap all the loose particulate matter from the water before it enters the larger water bodies thereby, controlling water pollution by filtration of the pollutants.

Controlling carbon emission – The wetlands are naturally capable of sequestering carbon emissions. Through the process of photosynthesis, they absorb and trap a large amount of carbon in the form of biomass within them. The plants present in the wetlands grow rapidly; that’s why they absorb a large amount of carbon and as the soil present in the wetlands is deprived of oxygen (anaerobic), so the carbon present decomposes very slowly. Thus, the wetlands are aptly called wetland sinks.
Source of livelihood – Wetlands are being used for agriculture and several allied activities like fishing etc. The soil of the wetland is rich in nutrients and it also supports aquatic life. Several crops like rice, berries, maize, wheat, etc can be grown which provides livelihood to the farmers. The trees like mangroves, birch, etc are found in abundance in the wetlands which are sold as timber in the market.
Source of food – The abundance of water as well as nutrients create a perfect environment for growing crops. Thus, a large variety of food grains can be grown in these areas that cater to the food requirements of the people.
Supports plants and animal communities – Wetlands are often remarked as ‘Reservoir of Beauty’. The wetlands are a storehouse of minerals and nutrients that supports the existence of different species of flora and fauna. The wetlands are natural habitats of many endangered animals like the Everglades Snail hike, Eastern Indigo snake, and almost 80 others; thus wetlands are imperative for the conservation of various species.
Provides recreational activities and tourism – Many wetland sites (like coral reefs) attract a lot of tourists. People visit to see picturesque scenery and engage in recreational activities like hiking, boating, and birdwatching, etc. This helps to create employment opportunities for several people and benefit the economy also.
Historical, scientific, and cultural values – Many communities are connected culturally and historically with the wetlands. Many religious places are situated on or near wetlands only, thus holding a special value for the people. The wetlands are still to be properly researched upon thus are important from a scientific aspect.
Erosion check – The wetlands act as the binder for the soil. The roots of the plants of the wetlands penetrate deep down in the land thus preventing the erosion of the soil.
Prevention of floods – The wetlands are just like sponges and in case of floods, the excess water is being absorbed by them and the dense forest areas help to slow down the floodwater. Thus, it helps in controlling floods.
Aesthetic appeal – The wetlands mostly have forests and a water source which is the apt representation of natural beauty. The serene sites with flora and fauna are aesthetically appealing and thus adds to the beauty of the area.
Groundwater replenishment – The wetlands are porous in nature, so they absorb the water, and thus the level of groundwater is recharged.
Combating climate changes– All the above-mentioned points lucidly portray the importance of wetlands in dealing with climate changes. Not only does it curb the pollution level by trapping carbon emissions but also helps in the flourishing of natural flora and fauna, control soil erosion, and restoration of groundwater. These all aspects are significant in the conservation of nature and tackling climate changes.

Threats to wetlands

The wetlands are facing several threats due to which the land under wetlands is reducing day by day. The major threats faced by the wetlands include the urbanisation and anthropogenic pressure, dumping of solid waste by industries, exploitation of the land for food, wood and fodder, industrial and agricultural activities near the wetlands, intoxicants and waste from industries and aquaculture etc.

Constitutional provisions for the wetland protection

Article 21 of the Constitution

As held in the case of Subash Kumar versus the State of Bihar (1991), Article 21 not only guarantees the right to life but also the right to live in a healthy & hygienic environment and the same stand was echoed in Virendra Gaur versus State of Haryana (1994). Thus, every citizen is entitled to the right to a clean environment which also implies the fact that preservation of the environment is necessary. The wetlands are an important ecosystem to maintain balance with other ecosystems and they are considered natural purifiers for the environment. Thus, their protection is crucial to enjoy the right to life as the right to a clean environment is also enveloped around it.

Article 48-A of the Constitution

The Directive Principles of State Policy impose a duty on the state to develop laws and policies related to subjects mentioned under it in the interest of justice. Article 48A is one of the DPSPs that deals with the protection and improvement of the environment and safeguarding of forests and wildlife.

Though DPSPs are not legally enforceable, but if we read both Article 21 and Article 48A together, then it could be inferred that it is the legal duty of the state to develop laws for the conservation of the environment, forests, and wildlife. In the landmark judgment of the Honorable Supreme Court in M.C.Mehta versus Union of India (2002), it was held that the protection and improvement of the environment is the duty of the state. The wetlands support bountiful species of forests and wildlife and are an integral part of the environment. Thus, as per provisions of Article 48A, the state needs to introduce policies and statutes to protect the wetlands.

Article 51(A)(g) of the Constitution

Article 51(A)(g) is the fundamental duty envisaged under Part IV-A of the Constitution. This Article was incorporated in the Constitution of India through the 42nd Constitutional Amendment, 1976 to comply with Article 29(1) of the Universal Declaration of Human Rights. This Article imposes the duty over citizens to conserve and improve the environment and follow a benevolent approach towards all the living creatures. This duty thus implies the safeguarding of wetlands.

Article 31-A

Article 31A was integrated into the Constitution of India through the Constitutional First Amendment Act,1951. Clauses (a) and (b) of the Article empowers the state to acquire any estate or property so that it can be properly managed or such acquisition is for the welfare of the public at large. Thus, according to this provision, the government can acquire wetlands for its management and protection.

Laws for conservation of wetlands in India

Ramsar Convention

The intergovernmental treaty to conserve and wisely use the wetlands was signed in 1971 in the city of Ramsar in Iran. Since its inception, it has been called the Ramsar Convention. The Convention recognizes and designates different wetlands from the world as Ramsar sites. The chosen wetlands are incorporated in the Convention’s List of Wetlands of International Importance. Presently, 170 countries have become a signatory of the Convention, and around 2300 sites throughout the world have been earmarked as Ramsar sites.

The countries signing the Convention have to oblige to the three pillars that are:-

The wetlands should be wisely used.
Recommend the wetlands to designate them as Ramsar sites and to effectively manage the wetlands.
Countries should cooperate with each other regarding the shared or transboundary wetlands.

India and Ramsar Convention

India became the contracting party of the Ramsar Convention on 1st February 1982. There are 42 wetlands of India that are declared as Wetlands of International Importance. Since the ratification of the Convention, India has been administering steps to conserve wetlands. The signing of the Convention only imposes the duty to wisely use the wetlands and to conserve them. There are no set of rules that are to be adhered to, only the guiding framework in form of the three pillars of the Convention has been enunciated. The Ramsar Convention helps in the protection of wetlands in the following ways:-

The Convention acts as the foundation for the national policies and laws regarding the protection of wetlands. This helps them to employ wetlands to use by following principles of sustainable development.
It provides a platform for the country to put forward its voice on the issue of wetland conservation before all the signatories.
The wetlands that are designated as Ramsar sites become important for the government also. The government puts its best foot forward and invests more funds for the protection of Ramsar sites.
It also encourages conservation and improvement of other wetlands so that they can be added to the list of international importance.
The Convention helps to access the latest information and measures adopted worldwide pertaining to the conservation of wetlands.
International cooperation is encouraged which creates several opportunities like increased funding, support for the projects about conservation of wetlands.

Wetlands (Conservation and Management) Rules, 2017

The Wetlands (Conservation and Management) Rules, 2010 were the first-ever specific guidelines related to wetlands in India formed as per the provisions of the Environment Protection Act, 1986. These rules were drafted by the Ministry of Environment, Forest and Climate Change (MoEF&CC). Despite these guidelines, the wetlands were degrading, thus these were not able to fulfil the purpose for which they were enacted.

Thus to overcome the inadequacies in the previous guidelines, the Draft Wetlands (Conservation and Management) Rules, 2016 was developed by the Central government. After reviewing all the comments and suggestions from the public, the Wetlands (Conservation and Management) Rules, 2017 were enforced on 29 September 2017. The 2017 guidelines replaced the guidelines of 2010.

The key features of the Wetlands (Conservation and Management) Rules, 2017 are as follows:

Establishment of State Wetland Authority

The rules direct the establishment of State Wetland Authority or Union Territories Wetland Authority in each State or Union Territory according to Rule 5(1) and Rule 5(2) respectively. The Authority will be headed by the Environment Minister of the state and other government officials will be its members. The members will also encompass at least one expert belonging to each field of wetland ecology, hydrology, fisheries, landscape ecology, and socioeconomics. The experts shall be nominated by the respective state governments.

Functions of the State Wetland Authority have been as follows-

The comprehensive lists regarding the identification of wetlands shall be revised and updated accordingly after ten years.
The projects or activities that can be undertaken by people on or near wetlands shall be explicitly mentioned in a list.
The state government can prohibit certain activities other than mentioned in the guidelines for the areas under their jurisdiction according to the need.
The measures to create awareness about the importance and preservation of wetlands among locals and other key people should be adopted
The framework and policies should be formulated so that wise use of wetlands can be made. (as per Rule 5(4)(g))
To suo motu advice on any matter or as directed by the state or Union government.

National Wetlands Committee

The National Wetlands Committee shall be set up according to the Rules of 2017(Rule 6(1)). This committee is to be headed by the Secretary of MoEF&CC.

The functions of the National Wetlands Committee are as follows:-

The supervision and regulation of all the state authorities regarding their working.
To ensure proper implementation of the rules in each state.
To act as the advisor for the Central Government on the matter related to conservation and wise use of wetlands.
Develop the policies on the basis of wise use of the wetlands.
Advice on collaboration with the international agencies for the conservation of wetlands.
Suggest names of wetlands to be designated as Ramsar sites.

Prohibition of activities

Performance of certain activities was explicitly banned by the guidelines on the notified wetlands that are as follows:-

Establishment or expansion of any industry
The conversion of wetland for non-wetland purposes, even intrusion that may harm the ecology of the wetland is also prohibited.
Usage of wetlands as dumping ground for solid waste.
The influx of untreated chemical wastes and sewage from industries, houses, villages, etc in the wetland.
The construction of any infrastructure that is permanent in nature except for boat jetties
Poaching and trespassing.

Penalties

If an act of any individual or organization violates the rules set by the Authority, then the action against such a party can be taken as per the Environment (Protection) Act,1986.

National Plan on Aquatic Ecosystems (NPAC)

The National Plan for Conservation of Aquatic Ecosystems was enacted in the year 2015 after the amalgamation of the National Lake Conservation Plan and the National Wetlands Conservation Programme. This plan works for the protection of both wetlands and lakes. The Act is administered by the Union Ministry of Environment and Forests.

The main objectives of this plan are:-

The foremost objective is the holistic conservation of the wetlands.
It also focuses on other related aspects like ameliorating water quality, biodiversity, etc.

Thus, this plan ensures the conservation of wetlands.

Other laws that indirectly help in the conservation of wetlands

Some laws are not directly enacted for the conservation of the wetlands but cover its protection within its ambit because the wetlands coincide with the subject matter of that laws. Some of them are as follows:-

National Environment Policy, 2006

The National Environment Policy, 2006 was incorporated in the Indian legal regime because of the rising importance of the environment in one’s life. The wide interpretation was given to Article 21 and the right to a clean environment was also added within the ambit of the right to life in the case of Subhash Kumar v. State of Bihar (1991). Even Articles 48A and 51A support this right.

This strategy includes several measures for the conservation of wetland that are as follows:-

A proper mechanism as per law should be set up that will help in the identification of the wetlands that need conservation. It will also aid in the process of conservation so that wetlands are not degraded further.
Steps to encourage sustainable tourism on certain wetlands should be taken. The local communities and public agencies should be taken on board to build wetland as a tourist spot. This will not only help in preserving the wetlands but will also help in creating livelihood opportunities for the people.
Any development or infrastructure project to be undertaken should be properly analyzed and the impact on wetlands should be noted. The approval for such projects should be given accordingly.

Wildlife (Protection) Act,1972

The Wildlife (Protection) Act, 1972 came into force on 9th September 1972. This Act majorly deals with the protection of wild animals, birds, and plants. It has provisions for the prohibition of hunting and regulates all the national parks, wildlife sanctuaries, zoos, etc. in order to conserve the flora and fauna. This statute does not explicitly cover wetlands but the wetlands that coincide with the national parks or wildlife sanctuaries are under the ambit of the Act.

Forest Laws

The laws formulated for the conservation of forests like the Indian Forest Act,1927, the Forest (Conservation) Act,1980, and State Forests Acts. These laws are enacted to conserve forest cover and wildlife. The wetlands that fall under the ambit of these laws are governed as per the provisions of forest laws only. They do not fall under the Wetlands (Conservation and Management) guidelines.

Indian Fisheries Act,1857

The Indian Fisheries Act,1857 protects fish but as wetlands are storehouses of a wide variety of species, thus this Act ensures the protection of wetlands also. The provisions for the protection of wetlands are as follows:-

The licensing of the boats in the wetlands (estuaries, lagoons) has been made mandatory so that strict check on them is maintained. This helps to curb the degradation of wetlands through human activities.
The dumping of solid wastes in wetlands is prohibited and any person found guilty shall attract the liability as per the Act.
The encroachment, pollution, unauthorized construction on or near the wetland area shall be treated as the cognizable offence and will be punished accordingly.
Even steps to create awareness regarding the importance of biodiversity, fisheries, wetlands can be undertaken.

Other laws like Territorial Water, Continental Shelf, Exclusive Economic and other Marine Zones Act,1976, Water (Prevention and Control of Pollution) Act,1977, Coastal Zone Regulation Notification,1991 , etc also cover provisions to conserve wetlands.

State laws regarding conservation of the wetlands

The Kerala Conservation of Paddy Land and Wetland Act, 2008

This Act was implemented by the Kerala government in the year 2008. The main purpose behind this Act is to prevent the conversion of wetlands and paddy land for other purposes. The Act ensures the sustainability of these ecosystems.

The main provisions of the Act are as follows:-

The committee that shall monitor and supervise all the activities should be formed at a local level in each Panchayat or Municipality, district level, and state level.
The Reporting officers are appointed under the Act. Their main task is to report any violation of the Act to the Revenue Divisional Officer.
The wetlands should be maintained and their reclamation after the inception of the Act is banned.
If any person is found guilty for the conversion of wetland in such a way that it cannot be reverted to its original state, such person shall be liable for imprisonment ranging from six months to two years and a fine of a minimum of Rs 50,000 that can extend up to Rs 1 lakh.

Andhra Pradesh Water, Land, and Trees Act, 2002

The Andhra Pradesh Act, 2002 came into force on 1 July 2002. This Act primarily deals with the conservation of water, expansion of tree cover, and the replenishment of groundwater. The wetlands though not directly covered under the Act, but are incidentally protected under it because wetlands naturally help in the conservation of water and flourishment of the tree cover. The major steps employed under the Act are as follows:-

The Water, Land and Tree Authority has been set up under the Act that will regulate and supervise all the work done to preserve natural resources.
The efforts for the conservation of wetlands are made by permanently demarcating the area and by preventing any sort of encroachments.
All the groundwater sources will be managed by the authority.
Appraising local communities about the methods and significance of conservation and engaging them in the protection of natural resources.

East Kolkata Wetlands (Conservation and Management) Act, 2006

The East Kolkata Wetlands (Conservation and Management) Act, 2006 came into force on 11th October 2006. It is applicable to the Ramsar site of East Kolkata. It is formulated to conserve wetlands by the adoption of the following measures –

Banning its conversion or further degradation.
Establishing East Kolkata Wetlands Management Authority to look after the wetlands.
Any action that is against the principles of the Ramsar Convention is not allowed.

The West Bengal Wetlands and Water Bodies Conservation Policy (2012) is a draft policy formulated to conserve the wetland areas by the four-member expert committee that suggests some measures for the conservation of the wetlands in Kolkata. It is also developed by adhering to the basic outline of the Ramsar Convention.

Conclusion

The wetlands have acquired critical importance due to their role in water security, support to plants and animals, role in mitigating pollution and occurrence of other natural phenomenons like floods, erosion, etc. Despite their immense value, wetlands are subject to anthropogenic and non-anthropogenic pressures. This results in the degradation of wetlands through shrinkage, drainage, reclamation, pollution, and habitat destruction.

There are several laws that remark conservation of wetlands but they are not yielding desired results. The strategies and measures built on the lines of holistic and multidisciplinary approaches are needed in order to conserve and manage wetlands. They should be based on scientific knowledge. All the key stakeholders from diverse strata should come forward in the conservation of wetlands.

References

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Custodial deaths : the underlying procedure for inquiry

By

Diva Rai

-

October 13, 2021

0

This article is written by Ms. Somya Jain, from the Vivekananda Institute of Professional Studies. The article establishes a detailed study of the procedure for inquiry to be undertaken while dealing with a case of custodial death.

Table of Contents

Introduction

The death of a person, while he is held in custody, is one of the worst kinds of offence in the history of human rights. Custodial deaths are not of recent origin rather they found their existence in the past. However, in recent times the cases of custodial deaths have increased at an alarming rate and have become a matter of great concern for the evolving society. Offences such as these raise questions on the applicability of fundamental rights and the underlying implications on human rights. The word custody denotes guardianship and even if we consider the definition from the perspective of arrest or incarceration, it would not include the causing of suffering to the oppressive and overpowered detainee to display superiority. It directly flouts the basic rights of the citizens and is upfront detrimental to human dignity. However, while considering the affirmative actions taken against such offences many custodial deaths are not investigated and even if, after a considerable amount of delay, these incidents are investigated, they are pictured as death due to natural causes because of the diplomacy of the bureaucrats. Therefore, it is required to have stringent laws and the corresponding rules to avoid any such incidents to take place. The concerned authorities have time and again laid down some procedures which have to be followed by police in order to curb custodial violence.

Procedure enshrined under Section 176(1A) of the Code of Criminal Procedure

One of the biggest challenges faced in combating the offence of custodial violence was the initial probe which was generally taken by the police counterparts. The “brotherhood of the police” would hinder the investigation as the police officials would prefer to remain silent on the same and not break the underlying ties of companionship (State of MP v. Shyamsunder Trivedi 1997). Even though at a subsequent stage, the cases may be transferred to independent authorities like CBI or SIT, the prima facie evidence like the post-mortem reports may be destroyed in the procedure which would render the transfer futile. To counter this facet of the issue Section 176(1A) was introduced in the Code of Criminal Procedure, 1973 through the amendment of 2005.

The general clause of Section 176(1) of the Code empowers any magistrate, having jurisdiction, to hold an inquiry into the cause of unnatural death in addition to or instead of the investigation held by the police officer. However, such power is merely discretionary in nature and does not have to be followed mandatorily.

With the addition of Section 176(1A) in the Code, custodial violence has been recognised in legal parlance as one of the brutal forms of crime. The Section stipulated that if:

A person dies or disappears or,
A woman is alleged to have been raped,

while such a person or woman was in the custody of the police or in any other custody as authorised by the court, then it is mandatory for the judicial magistrate or metropolitan magistrate, having competent jurisdiction, to conduct an inquiry into the matter in addition to the inquiry or investigation conducted by the police.

This provision is a special provision dealing only with the custodial offence. Therefore some of the essential characteristics of the provision are:

The inquiry to be conducted by the judicial or the metropolitan magistrate will run parallel to the inquiry or the investigation undertaken by the police authorities.
The provision poses a mandate on the magistrate to conduct the concerned inquiry. The word “shall” has been used instead of “may” which indicates the obligation imposed on the authorities.
Further, through the amendment, the executive magistrate ceased to be the relevant authority to conduct such inquiries. Rather the judicial magistrate or the metropolitan magistrate has been granted the duty to conduct the inquiry.

However, for the past 10 years, the provision has been interpreted in a restrictive sense. While reading Section 176, it envisaged that the executive magistrate may conduct an inquiry in the case where unnatural death had taken place in addition to the inquiry conducted by the police. Similarly, when Section 176(1A) came into existence it was interpreted to restrict its scope only to those cases where the death did not take place naturally, rather it was the result of custodial violence. It was only when there were no suspicious circumstances, foul play, lack of evidence or allegations of an offence, that Section 176(1A) would be applicable. This restrictive meaning led to an invariable increase in the cases of custodial offences being registered as incidents of natural deaths.

According to the National Crime Records Bureau (NCRB), out of 76 total cases of custodial deaths in 2020, 31 were recorded as suicides and 34 as being caused by illnesses. Only one death was recorded due to physical assault in police custody. Similarly, almost 70% of deaths in police custody in the past decade (out of a total of 1,004) have been attributed to illness, suicide or death from natural causes. Further, the Indian Annual Report on Torture 2020 gives a detailed analysis of all the cases of death and violence committed while in police custody. It illustrates the various reasons that were highlighted while investigating these cases. Thereby, the entire data along with the detailed analysis has been contemplated within the concerned report.

Considering the above data, recently, the National Human Rights Commission (hereinafter called NHRC) passed an order to take a probe in all the cases of custodial deaths irrespective of whether the cases are suspicious of foul play or not. Expanding the ambit of the provision it was ruled that only after conducting an inquiry by the judicial or the metropolitan magistrate can it be said that the custodial death took place due to illness or some other natural cause. Prior to the said inquiry nothing should be attributed as to the cause of death, disappearance or rape alleged to have been committed while in police or any other authorised custody.

Further, the Supreme Court in a Public Interest Litigation Petition (2020) directed all the states and union territories to strictly implement Section 176(1A) as it was observed that out of 827 cases of death or disappearance of persons in police custody between 2005 and 2017, a judicial inquiry was ordered only in 166 cases i.e. 20% of the total cases. Similarly, in the Jeyaraj-Benix custodial death case, the Court has to make a suo moto intervention to order an inquiry by the judicial magistrate.

Apart from this, Section 176(5) was also instituted through the amendment of 2005. The provision mandates the judicial magistrate, the metropolitan magistrate, the executive magistrate or the police authorities conducting an inquiry to send the body within 24 hours to the closest civil surgeon or any other qualified person. If the same is not possible, reasons must be recorded in writing.

NHRC Guidelines

The National Human Rights Commission of India was set up through a parliamentary Act known as the Protection of Human Rights Act 1993. It aimed at better protection and promotion of human rights in India. It complements both the domestic as well as international principles and thereby safeguards human rights by all means. The NHRC gave certain guidelines in furtherance of the augmenting custodial violence in India. Some of them are:

Initially, when the information of any custodial death is received, the magisterial enquiry should be undertaken at the earliest without any delay.
The enquiry magistrate should observe some duties while performing their task. The enquiry officer must visit the place of occurrence and note down all the underlying facts and the corresponding evidence. In addition to this, the officer must try to identify natural witnesses who must have been present at the time of the incident. The intention of the police authority alleged to have committed the concerned crime should be subject to close scrutiny for its veracity.
A public notice should be issued in any vernacular newspaper to inform the witnesses concerning the case. The officer must ensure that the information must reach all the concerned people, especially the relatives of the victim.
A fair opportunity should be granted to the relatives of the victim to represent their stance.
The magisterial enquiry should include the following aspect:

The circumstances of the death.
The manner and sequence of incidents leading to death.
The cause of death.
Any suspicion of foul play that emerges during the enquiry or any person found responsible for the death.
The role played by the public servant in committing or omitting the concerned act.
Adequacy of medical treatment provided to the deceased.
The enquiry magistrate must consider every document and report and must analyse the same very minutely. Some of the important documents as per the guidelines must include:

Inquest report.
Post-mortem report.
Viscera analysis report
Histopathological examination report.
Initial health screening report of the prisoner.
Final cause of death.
Medical treatment records.
Inquiry/ investigation report of the police.
FIR/General Diary (GD) entries/any other relevant police records.
Ballistic examination reports of weapon and cartridges.
Forensic examination report of ‘hand wash’ of the deceased to ascertain the presence of residue of gunpowder.
The fingerprint expert reports on fingerprint impressions available on weapons alleged to have been used by the deceased.

The magisterial enquiry report must necessarily include the gist of documents, analysis reports, recorded statements, discussions that took place and the conclusion. The report must indicate the cause of death. If the act was due to the commission or the omission of the police, then the names of the public officials concerned with the same should also be mentioned.
All the statements made by the witnesses, relatives or the medical examiner and the external reports that were referred by the enquiry officer must be attached along with the relevant annexures.

The NHRC should be intimated about the custodial deaths within 24 hours of occurrence. Further, the NHRC has also set a deadline for submitting all the relevant documents and reports including the post-mortem report and managerial enquiry report, after the completion of the inquiry, within 2 months of the incident.

Registration of FIR

Registering an FIR even in case of custodial violence was held to be mandatory in nature under Section 154 of the Code which discloses that if any information is received regarding the commission of a cognizable offence then it should be reduced into writing. Similarly, Section 176(1A) deals with cognizable cases whereby death has occurred in the custody of the police or any other relevant authority. Therefore, it is requisite for the authorities to register an FIR in the case of custodial deaths.

However, it has been observed that many police officers forbid registering an FIR in case of custodial death. The solution to this problem was suggested by the Law Commission in its 152nd report. The Commission recommended the addition of a new provision that would separately deal with custodial violence cases and would empower the aggrieved person to approach the judicial magistrate if the police precluded from lodging an FIR.

Accordingly, Section 154A was recommended to be added by the Commission. The proposed Section incorporated that if any police official refrains from lodging an FIR, then:

The aggrieved person can approach Chief Judicial Magistrate if custodial violence has taken place not resulting in the death of the victim, or
The Sessions Judge, if the custodial death has taken place, or
Suo moto inquiry can be conducted in case the court on preliminary inquiry is satisfied that a prima facie case is present.

However, the provision never found its way into the Code. If the provision would have been incorporated, it would have ensured a better criminal investigation through the hands of the judiciary leading to a more enhanced system of justice.

Directions to video record and photograph autopsy proceedings

The NHRC issued certain guidelines regarding video-filming and photographing the post-mortem examination if the death has occurred in police custody. The recording must be then sent to the Commission for further inquiry. The objectives for the same can be enumerated as under:

To record the detailed discovery of the post-mortem examination, especially the marks indicating any kind of brutality and violence.
By video graphing the entire procedure, the probability of undue influence or suppression of material facts can be ruled out.
To facilitate an independent review of the post-mortem examination report at a later stage if required.

The guidelines extensively enshrine upon the manner in which video graphing of the examination should be undertaken. Further, a Model Autopsy Form has been prepared by the Commission which has to be filled accordingly.

Custodial Jurisprudence in the case of D.K. Basu v. State of West Bengal (1997)

The Supreme Court in the landmark case of D.K. Basu v. State of West Bengal (1997), established the concept of custodial jurisprudence by providing some directives to be followed while dealing with cases of custodial violence. Some of the guidelines are:

The use of third-degree methods or any form of torture to extract information is not permitted.
The police officials who carry out interrogation and arrest must bear clear, visible and accurate nametags and identification along with their designation. Following this, particulars of all the officials should be maintained in a register.
The arrestee or the detainee should be granted the right to inform any relative about the arrest and the place of detention. Followed by this, the arrestee should also be informed about the offence committed and the rights vested with the detainee.
The lawyer of the arrested person can be present at the time of interrogation but not throughout.
Further, an entry should be made in a register regarding the name and place of the detention centre followed by the name of the relative of the arrested person and the personnel under whose custody he has been detained.
Subsequently, the arrestee should be examined by a medical examiner at the time of arrest if they request it. All the injury marks must be recorded in an inspection memo signed by both the arrested person and the police officer concerned. A copy of the memo should also be provided to the detainee.
The arrested person should be subject to a medical examination every 48 hours by a trained doctor who has been approved by the State Health Department.
Further, a copy of all the documents and the relevant entries along with the memo should be sent to the area magistrate for their record.
The police officer concerned for the custody of the arrested person should inform the police control room about the arrest within 12 hours.

Conclusion

Arresting or detaining a person does not lead to the extinction of all the fundamental rights per se. The right to life and dignity is one such right that cannot be deprived of any human being. Hence, when a person is detained, it is the responsibility and the duty of the detaining authority to guarantee the life and the physical integrity of such a detainee. Therefore, if someone dies while in custody, it is only relevant to conduct an independent investigation irrespective of the cause of death which may be a result of unlawful killing, ill-treatment or inadequate living conditions or it may even be natural or accidental. A prompt, impartial and effective investigation is essential for ascertaining the cause of death, preventing similar incidents in the future and ensuring the security of other prisoners. Along with this, steps should be taken to curb the growing menace of custodial violence.

References

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Engineering Analysis Centre of Excellence Pvt Ltd v. the Commissioner of Income Tax & Another

By

Rachit Garg

-

October 13, 2021

0

This article is written by Vanya Verma from O.P. Jindal Global University. This article deals in depth with the case analysis of Engineering Analysis Centre of Excellence Pvt Ltd v. the Commissioner of Income Tax & Another.

Case	Engineering Analysis Centre of Excellence Pvt Ltd v the Commissioner of Income Tax & Another
Citation	LL 2021 SC 124
Court	Supreme Court of India
Date of Judgement	2nd March 2021
Parties	Appellant- Engineering Analysis Centre of Excellence Private LimitedRespondent- Commissioner of Income Tax
Judges	R.F Nariman, Hemant Gupta and BR Gavai

Table of Contents

Introduction

The case is about the amount paid by Indian corporations to utilise foreign software and whether or not it is taxable as royalty. The case also addresses the question of whether TDS can be deducted for software purchased from overseas software suppliers.

Important provisions

Section 195 of Income Tax Act, 1961
Section 201 of Income Tax Act, 1961
Section 9(1)(vi) of the Income Tax Act, 1961

Facts of the case

Two sets of appeals were heard by the Supreme Court, one from the High Court of Karnataka and the other from the judgments of the High Court of Delhi. The contradictory rulings on the issue by the Authority for Advance Rulings (AAR) were also set to rest by the Supreme Court.
The appellant, in this case, was an Indian resident who sells shrink-wrapped computer software that was imported straight from a non-resident corporation. As the transactions comprised a sale of goods, the appellant did not deduct tax on the payments made to the non-resident entity. But on the other hand, the claim of the Department of Revenue, Ministry of Finance (Revenue) was that the transaction between the parties was a copyright for the right to use the software, which resulted in royalty payments, and consequently assessed that tax should be deducted at source under Section 195 of the Act.
When the matter was brought before the High Court of Karnataka by various assessees, the High Court upheld the appeal, citing its decision in CIT v. Samsung Electronics Co. Ltd. & Others (2012) which held that what was sold as computer software included a right or interest in copyright, resulting in the payment of royalty and being deemed to be an income of the resident in India under Section 9(1)(vi) of the Act, requiring the deduction of tax at source.
The appellant, along with other assessees, filed civil appeals with the Supreme Court after being aggrieved by the decision of the court.
The Supreme Court divided the appeals into the four kinds of software payments listed below:
- Category 1: A non-resident selling software straight to an end-user.
- Category 2: Non-residents selling software to Indian distributors for resale to Indian end-users.
- Category 3: Sale of software to a foreign distributor for resale to end customers in India by a non-resident.
- Category 4: Software that is bundled with hardware and distributed to Indian distributors or end-users by foreign providers.

The Appellant fell under the second category.

Important questions before the Court

Whether the payment is for the transfer or use of copyright

A copyright refers to the exclusive right to do or authorise specific acts concerning a “work,” such as the exclusive right to reproduce the copyright in the work in any material form and exploit it through sales, transfers, or licences, among other things. Making copies or adapting a computer programme to use or make backup copies as a temporary safeguard against loss, destruction, or damage to use it does not constitute a copyright violation.

For the purposes of the Indian Copyright Act, 1957, a computer programme (software) qualifies as a “literary work” (ICA). According to Section 30 of the ICA, the owner of copyright in a “literary work” has the right to grant any interest in his rights in exchange for a royalty payment by way of a licence. When a licence is issued, an infringement of copyright under the ICA occurs only when the rights are used in a way that is adverse to the licence.

The Supreme Court examined the Act’s definition of royalty, as well as relevant tax treaties and court decisions, and came to the following conclusions:

Copyright is a negative exclusive right that allows you to prevent others from performing specific acts.
Copyright is a privilege in the form of an intangible, incorporeal right. Copyright ownership in a work differs from copyright ownership in the physical medium in which the copyrighted work may be incorporated.
The transfer of ownership of the physical substance in which copyright exists gives the purchaser the right to do whatever he wants with it, except the right to reproduce it and distribute it to the public unless such copies are already in circulation and the other acts listed in Section 14 of the Copyright Act.
No copyright is parted with and, as a result, no infringement occurs when the core of a transaction is to authorise the end-user to have access to and make use of the “licenced” computer software product over which the licensee has no exclusive rights, as recognised by Section 52(1)(aa) of the Copyright Act. It makes no difference whether the end-user has access to computer software that is tailored to their needs or not.
A non-exclusive, non-transferable licence that merely permits the use of a copyrighted property cannot be read as a licence to exercise all or any of the enumerated rights outlined in Section 14 of the Copyright Act as held in the case of the State Bank of India (SBI) v. Collector of Custom, Bombay (1999).

Producing a copy or adaptation of a computer programme for the purpose of which it was delivered, as well as making backup copies to protect against the loss, does not constitute a copyright infringement under the Copyright Act. Infringement would not occur simply by storing a computer programme. The agreement’s nomenclature is irrelevant; what matters is the true nature of the transaction in light of the agreement’s general provisions and surrounding circumstances.

The Court determined that what the non-resident supplier “licences” to the distributor and resells to the resident end-user or directly supplies to the resident end user is the sale of a physical object with an embedded computer programme. The transfer of copyright in software is not included in such a sale of goods.

Royalty as defined by the Act or the tax treaty

Under the Tax Treaties, the term ‘royalty is defined as a payment received for the use or right to use any copyright in a literary work. Insofar as transfer of all or some rights includes granting of a licence in respect of any copyright of any literary work, the meaning of the word under the Act is distinct and broader than the Tax Treaty.

Because the licence offered to distributors and end-users creates no interest or right in the software, it does not constitute the “use of or right to use” of copyright and thus does not qualify as royalty under the Tax Treaty.

The phrase “in respect of” in the Act indicates “in” or “attributable to,” according to the Court. As a result, to qualify as royalty under the Act, there must be a transfer of all or any rights in copyright, whether by licence or otherwise. Payments made for such licences do not qualify as royalty under the Act (up to 2012) or the Tax Treaty since the licence given to distributors and end-users did not involve the grant of any interest in the rights of a copyright owner.

Explanation 4 to Section 9(1)(vi) inserted by the Finance Act, 2012, which states that a transfer of all or any rights includes a transfer of all or any rights for the use of computer software, broadens the definition of royalty and is not intended to be clarified. Furthermore, because the definition of royalties under the Tax Treaty is narrower and more advantageous, the Act’s requirements would be inapplicable, and there would be no obligation to withhold taxes under Section 195 of the Act.

Revenue had sought to rely on the Supreme Court’s decision in PILCOM v. CIT (2020), which dealt with Section 194E of the Act, for the proposition that tax must be deducted at source regardless of whether the non-resident assessee is otherwise liable for tax. The Supreme Court stated that accepting the Revenue’s argument would result in absurd consequences as taxes would have to be withheld even if the income was not taxable in India, which was not the intent of the legislature. As a result, the aforementioned judgement has no bearing on the determination of withholding tax obligations under Section 195 of the Act.

Retrospective amendment

The Finance Act of 2012 added Explanation 4 to Section 9(1)(vi), which increased the concept of “royalty” under the Act (with retroactive effect from 1 June 1976). A person who made a payment before 2012 cannot be expected to use the extended definition of royalty, which did not exist at the time the payment was made, to determine withholding requirements under Section 195 of the Act. The substantive revision to the Act does not force a person to perform the impossible, i.e., where a disability prevents a person from obeying the law, the alleged disobedience of the law is pardoned.

Relevance and India’s positions on the OECD commentary

The concept of “royalty” provided under the Tax Treaty is similar to the OECD Model Convention’s definition of royalty. As a result, the OECD Commentary might be consulted, which states that making a copy or alteration of a computer programme to enable the use of the software for which it was provided does not entail royalties. This also proves that payments made by distributors and end-users are not considered royalties.

Even though the Indian government has expressed reservations about the OECD commentary on royalties, such complaints would not alter the commentary’s applicability unless they were included in the treaties through bilateral negotiations with the respective countries. The Court noted that even though India has negotiated or altered tax treaties with several countries after expressing its reservations, the concept of royalty had not changed and remained comparable to the OECD Model Convention definition. As a result, the OECD Commentary on Article 12 of the OECD Model Convention will continue to be persuasive in interpreting the term “royalties” as used in Tax Treaties.

Issues

The issues before the Supreme Court were as follows:

Whether the sum paid by Indian enterprises to use foreign software is taxable as royalty as defined in explanation 2 to Section 9(1)(vi) of the Act and the Double Taxation Avoidance Agreement (DTAA)?
Whether the payer was required to deduct tax at source on such payments under Section 195 of the Act.

Arguments by the appellants

The purchase of computer software by a resident Indian distributor for resale is a sale of goods. Even the end customer was only given a limited licence to use the goods by themselves.
The definition of “royalties” provided under DTAA did not include derivative products of the Copyright. It is well established that the DTAA provisions regulate the taxability of income since they are more favourable to the assessee. Furthermore, the OECD Model Tax Convention on Income and Capital (OECD Commentary), the UN Model, and the United States Internal Revenue Code, among others, do not consider the sale of copyrighted material to be royalty.
Amendment to Section 9(1)(vi) in 2012 could not be applied retroactively to assessment years before 2012.
The foreign supplier’s distribution right would not extend beyond the first sale of copies of the work to other people, according to Section 14(b)(ii) of the Copyright Act.

Arguments by the respondents

Explanation 2(v) to Section 9(1)(vi) of the Act merely clarifies the law in effect since 1976, when Section 9(1)(vi) of the Act was first enacted.
DTAAs would not apply to “persons” who are not assessees as defined in Section 195 of the Act.
According to the ruling in PILCOM v. CIT (2020) tax must be deducted at source under Section 194E of the Act, regardless of whether the non-resident assessee is otherwise liable for tax.
In some circumstances, the original owner relinquishes copyright because the software adoption could be produced, albeit for installation and usage on a specific computer.
Making copies or adapting a computer programme from a legally obtained copy for non-commercial, personal use would not be considered infringement under Section 52(1)(a) of the Copyright Act; nevertheless, the converse would be considered infringement.
Distributors will be exempt from the doctrine of first sale/principle of exhaustion.
Tata Consultancy Services v. State of AP (2004), in which it was held that software recorded on compact discs are products for sales tax law, cannot be applied to the Act.

Judgement

In a lengthy decision, the Supreme Court found that:

When the DTAA is applied, the Act’s provisions can only be applied to the degree that they are more beneficial to the assessee.
If a non-resident is obligated to pay tax under Section 9 read with Section 4 of the Act and the DTAA then only a tax deduction at source can be allowed under Section 195 of the Act. The PILCOM decision would not be applicable in this present case.

Producing copies or adapting a computer programme to use it for the purpose for which it was delivered, or making backup copies, does not constitute an infringement of copyright and does not amount to parting with copyright, according to modified Sections 14(b)(ii) and 52(1)(aa).
To determine the true nature of a transaction, the EULAs must be read as a whole. According to Tata Consulting, a licence is the selling of a physical thing that has embedded computer software and is thus a sale of goods.
The Act’s Explanation 4 to Section 9(1)(vi) cannot be applied retrospectively.

As a result, the Supreme Court ruled in favour of the assessees in all four categories.

The Court declared that software companies are no longer required to pay TDS when purchasing software from international providers. The verdict would reduce the cost of software purchases for Indian companies since foreign sellers may choose to drop prices to take advantage of the tax relief.

This decision is said to be extremely beneficial to software companies. The Supreme Court clarified that “there is no obligation on the persons mentioned in Section 195 of the Income Tax Act to deduct tax at source, as the distribution agreements/EULAs in the facts of these cases do not create any interest or right in such distributors/end-users,” citing the definition of royalties in Article 12 of the DTAA.

In terms of the taxability of royalties paid to foreign corporations for the use of their software by Indian firms, the Court ruled that payment for utilising foreign software did not amount to a royalty payable in India. The Court determined that the amounts paid by resident Indian end-users/distributors to non-resident computer software manufacturers/suppliers are not royalty payments for the use of copyright in the software and that they do not result in any income taxable in India, thereby excluding the persons referred to in Section 195 of the Income Tax Act.

Taxpayers, on the other hand, argued that the non-resident owner retains the proprietary rights in the programme and that the Indian company’s usage of the software is limited to producing backup copies and redistribution.

Conclusion

The Supreme Court’s decision, which came 20 years after the issue began, has clarified and resolved contradictory opinions held by the High Courts of Karnataka and Delhi, as well as the AARs. The decision is a positive step that will have a wide-ranging influence on software businesses doing business in India.

References

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