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Technological developments and social impact caused by cyber law

By
Sneha Mahawar
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0
Cyber law

This article is written by Raslin Saluja, from KIIT School of Law, Bhubaneswar. This article focuses on the various aspects of societal impact created due to Cyber Laws.

Introduction

With the rise and evolution of technology, we never know what is going to be the next thing for the future. Earlier, our horizons and boundaries were limited to the physical world we live in. Today, we have the internet and social media which are taking over all of us. Even the laws have matched the pace of time and now they have also progressed and become inclusive and accommodating of these unfolding dynamics. These developments have changed the way people work and interact. It has even become critical in the areas of economic activity underpinning many businesses and in general day to day functioning of society. Thus, in this article, we explore the social impact that Cyber Law has unleashed.

Role of Cyber Law

The law of the internet encompasses a legal framework designed to deal with the issues of Cyberspace. It identifies and recognizes the suitable standards for acceptable behaviour of various entities who are the information and communication technology (ICT) users. It establishes the guidelines for protecting its users and derives the socio-legal sanctions for unlawful practices with the aim of mitigating/preventing harm to the system, services, data, infrastructure, people, and specifically human rights. It facilitates investigations and inspections for the prosecution of online crimes beyond the geographical and physical boundaries of the world. It enables all the countries to come together and coordinate on matters of Cybercrime and regulate the matters of criminal justice in Cyberspace. It provides for the code of conduct for all internet users, computer and digital technologies, government powers and duties, various actions for the public and private organizations, rules of evidence and criminal procedure, and the general regulation of activities taking place online. Thus, it is an ever-evolving combination of substantive, procedural, and preventive law.

For the offences committed in the digital platform, Cyber Law acts as a bulwark. Herein, either the computer system itself is a target or it is used as a means to commit a crime. These crimes could be committed against any individual, group of people, organization, or country with the intent to cause physical/mental/financial harassment. It could be through attacking a computer, targeting information and stealing data, disabling or damaging services, spreading viruses, leaking confidential information, or even corrupting the system. These digital crimes have been on an increase at alarming rates with frequent reports of phishing, ransomware attacks, email frauds, denial of services, hacking, banking fraud, and identity theft. Thus, in the present era when all our information is prone to Cyber threats, whose behaviour is a bit difficult to understand, and in turn restricts its prevention in the earlier phases of such attacks need proper analysis and understanding of their impacts in the various areas of the society.

Importance of Cyber Law

  • It keeps in check and regulates electronic governance.
  • Keeps track of all electronic data.
  • It encompasses the legal aspect of all the actions and their reactions taking place online.
  • It aids in combating illegal Cybercrimes by promoting due diligence.
  • It extends security for individuals, organization as well as government infrastructure, and critical information.
  • It constantly tracks all electronic transactions and activities taking place and ensures their protection and security.

Besides as of early 2021, around 4.66 Billion people use the internet, and that number increases by 7% annually. This also means that every single day almost 8,75,000 new users join in. This swift increase in the number of users projects an inevitable increase in Cybercrime and therefore it is important to develop Cyberspace that has a safe and secure environment for its users.

Overall impact over the organizations

Considering the rapid growth of technology, the internet has become a significant aspect of our everyday lives. Many companies too have adapted to continue their operations online. The government too, in order to reach more people and make the work more convenient, has started providing online services. These laws mainly impact the industries working in sensitive sectors like those of finance, banking, insurance, and telecommunications. Entities involved in these sectors had to reflect higher standards of Cybersecurity due to the intervention of the regulations and compliances and their commitment to keeping up with the international standards. Other areas like e-commerce, IT, and services enabled by the IT sector have also had to show preparedness due to the inflow of foreign direct investment as they have complied with their parent entities functioning abroad.

Another area that needs focus is digital payments as it has increased the phenomenon in the online spaces. To that end, the Reserve Bank of India has been working proactively requiring the companies dealing with the services to build secure authentication security mechanisms (such as 2FA authentication, EMV chips, PCI DSS compliance, and tokenization). Even the government has been cooperative in issuing consultative papers for feedback from the private sector to push the policy formulation for improved Cybersecurity laws and strategies to deal with complex matters like that of the National Cyber Security Strategy which would shed light on developing appropriate response mechanisms for the enhancement of the security measure in all the governmental as well as other sectors. The government has also provided some beneficial guidelines for both the private and public sectors to enhance their Cybersecurity measures. One among them is the Public Procurement Order 2018 for Cyber Security Products wherein the strategy was that the government agencies will prefer Cybersecurity products that will be procured from domestically manufactured entities.

Impact on the people

In a survey conducted among 1008 UK adults working for companies dealing with information technology devices, it revealed that at least 47% of the respondents have been the victims of Cybercrimes issues, followed by 16.5% having at least one social media account breached or defaced. As many as 43% of people believed it has been making their life harder and has made being productive challenging. The reliance on these services has made them more prone to virtual crimes and is likely to even convert into physical acts of crimes and terrorism.

This has also made people more concerned about taking preventive and protective measures, like following the statistics from the previously mentioned source, about 57% of people claim to have changed their passwords for websites and online services on a regular basis, 52% of people have taken steps to strengthen their anti-virus protection, 49% of people have started using PIN or password protection on their tablets and smartphones, 46% now avoid duplicating passwords across multiple sites and services, 28% of people, where supported, have activated two-factor authentication for logging in, and only six percent of people have done nothing to improve their online security.

Present scenario

Human beings are social beings who have now chosen to spend considerable time online in Cyberspace. As we become more and more dependent on the internet, the importance of Cyber Law is increasing in the day-to-day functioning of our society.

As long as self-policing mechanisms are not in place working effectively on their own, government interventions will be there. The idea is one cannot get carried away under the delusion that they can hide behind their screen under their cloak of anonymity and commit criminal activities. There are going to be electronic footprints and trails that would be used to track them for prosecuting for legal consequences. Thus this calls for due diligence on the part of the users to be very sure of the information they are letting online, to have repetitive revisions to avoid any potential undesirable legal consequences, and to be diligent in the actions they are taking. At this point in time, almost every internet user has one or more accounts on various social media platforms and that is why we must all adhere to certain precautions. It could be monitoring the information that we put online and decide how much information we want to share out in public or to a limited audience. People, in general, have become more conscious of the choices they make online. The control and choice over disclosure of the information are in the hands of the individual which allows them the freedom to identify their space. The existing laws have already outlined the specific human acts and involvement to cause potential breaches, beyond that it is upon us to analyze the long-term impact of our actions.

Even as the influencer and the OTT (over the top) culture is rising in India, the government has introduced new rules to regulate social media and OTT platforms. It mainly focuses on limiting and curbing the usage and propagation of hate speech on social media. It allows the influencers to block such accounts who continuously post filthy comments and allow them to address the grievances they faced online. The inappropriate messages and tweets to the first originator will also be under the supervision and tracked as per the government or a court order directed to that particular platform. The government has also made it clear that it will not encourage anything that could be a possible threat to national security. These rules also aim to prevent and control any misuse of personal content as well as obscene content.

Impact of COVID-19

Despite the implementation of stringent laws, the pandemic in the year 2020 reflected a drastic increase in the use of online payment portals which has, in turn, led to an increase in frauds. To that end, even the education and health sectors had also undergone severe attacks after the pandemic hit. Even the security breaches cases saw a hike of 500% that victimized many in India after the lockdown was announced. With all this increased activity and dependence on the usage of the internet, these crimes are bound to happen. At the very least one can prepare themselves to avoid being in such circumstances.

Recommended best practices

While it depends on various factors, individuals or organizations may choose to respond differently to any incident that took place. They could deploy detailed information security policy based on approval of the board or conduct regular monitoring over transactions, they could set up risk mitigation plans or conduct risk assessing programs. For companies, they could keep the stakeholders updated and allocate personnel to engage with regulatory authorities to deal with clients, service providers, etc. Depending on the sector, organizations can also reach out to ICERT and seek advice on incident recovery, containing the damage, and restoring their systems to operation. From time to time, ICERT also issues advisories on actions recommended for parties that have been affected by Cybersecurity incidents

Conclusion

The IT laws have made life simpler. To cover the bridge between the rapid technological innovation and the appropriate enactments we need to focus on human behaviour. This method would be the most reliable. We can minimize the potential threats of Cyber attacks or crime by just being consciously aware while using the internet and various other available platforms online. It is not very difficult to ensure our safety with very minimal effort. This might make people apprehensive of every action they take online however, in the backdrop of the evolving law, it is perhaps important to do so. People need to realize that at the end of the day, they are interacting with another person who happens to be behind the screens. The protection provided is only to safeguard and minimize the vulnerabilities to security threats which might have adverse consequences by unauthorized access, collection, alteration, mishandling, and disclosure of information.

References

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Critical analysis of anime in the light of current copyright challenge

By
Oishika Banerji
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0
Image source: https://blog.ipleaders.in/how-to-access-copyright-office-facilities/

This article has been written by Pendekanti Lakshmi Supraja, pursuing the Certificate Course in Media and Entertainment Law: Contracts, Licensing and Regulations from LawSikho.

Introduction

Anime has become a major source of entertainment throughout the world in recent times.  It is popular among all ages of people. Even famous OTT Platforms like Netflix, Disney Hotstar have started streaming anime to attract people.  With the advent of technology, the creators of anime are prone to unauthorized exploitation of their work by the public in the name of fan-based activities which can be stated as piracy. These activities affect the main aim of the copyright law that is to balance the exclusive rights of the author and public policy because by doing so the fans are violating the rights of the author which are granted to them as per the copyright law. This act of piracy has caused problems to legitimate licensing and distribution companies. New and unpredictable methods of infringement have been introduced by the internet which is the result of technological development. So it is necessary to analyze the problems, perspectives, strategies to deal with the copyright infringement and copyrightability of the anime.

Copyright law and anime

The copyright law classifies the exclusive rights of the original author into economic and moral rights. Economic rights include the right to reproduce, the right to communicate to the public, the right to translate, the right to adapt and exploit the derivative works. Moral rights deal with the reputation of the author and the right to safeguard his integrity.  If any third party performs any activities mentioned above without the authorization of the author, then it amounts to copyright infringement. 

The law recognizes two mechanisms where the exclusive rights and control of the work vests even with the other party along with the original author. Firstly, if the work made by the original author is during employment and contract for service, secondly when the author transfers his/her rights to commercial intermediaries who will decide how the copyright should be used. The anime is protected under artistic work and creative work of copyright law. In the case of anime, the commercial intermediary would be publishing houses and production houses that adapt the work of the original author and reproduce it to their desired form with the authentication of the original author.   However, the copyright law has limited the infringement acts by excluding the research, private study, and for non-commercial purposes but does not explicitly mention the promotion of culture.

Analysis of Japanese anime

One of the famous anime is Japanese anime which has gained huge popularity not only in the home country but also in other countries like the U.S, China, etc. The animation and manga were described as new and emerging media arts along with feature film in the 2000 White Paper of Japanese Government Policies in Education, Science, Sports, and Culture.  In 2010, when a survey was made among Chinese youth regarding their favorite animation about 60% preferred Japanese Anime. In 1963, while setting a foundation for modern Japanese Anime with his work “Tetsuwan Atomu” Osama Tezuka did not expect the significant growth of anime that is prevalent now.

Due to the popularity, many fan communities have been created that act as a bridge between the original authors of anime and the general public. The phenomena of Fandom will be created when a person fond of already created work portrays the specific genre which he/she felt attractive that will lead to the formation of a community with the fans who share similar interests. Within these communities’ fans share different news, spread comments.

To show their affection towards the anime many fans created groups that take the components from the original anime and create derivative works that include translating the work to another language, taking storyline and developing different work, creating audio-visual content with music, and so on. Although these activities are encouraged by many fan communities, they are deemed as copyright infringement in most countries. Generally, fan-based works are classified as fansubs, fanfics, and fanvids, doujinshi. The copyright law is challenged by both domestic and international fan-based activities.

The legality of fan-based works

  • Doujinshi

Doujinshi is a type of fan-based work where the authors take characters, background from manga, anime, video game sources to develop them into a different storyline so that they get profits by selling the anime. As per the Japanese Copyright Law, Article 18 to 28 prescribes the list of rights granted to the author. And the communities involved in doujinshi violate the right to translation, the right of preserving the integrity of the author, and the right to exploit the derivative works of the original authors of anime. Although there are statutory exceptions for copyright infringement this work cannot be included in that since it can seem commercial rather than criticism. Even in countries like China and the U.S, a doujinshi is an act of copyright infringement because of its commercial nature and it affects the original content which is already created.

  • Fansubs

Fansubbing can be defined as “a particular type of non-commercial translation and subtitling process of foreign mass media products.” Unlike Doujinshi which is less ambiguous, the fansubs encroached on the rights of the authors more clearly. If we observe the elements of fansubbing individually, we can find that it is merely a translation of the existing original content. The translation is included as derivative works and is copyrightable. Committing such an act without the prior permission of the author amounts to copyright infringement. These works act as a pathway that connects international fans with domestic content. Even though there is no commercial transaction involved in these types of works the online publicity is not included in the statutory exceptions of copyright law.

  • Fanfics and fanvids

When compared to the above-mentioned cases, the determination of copyrightability of both the fanfics and fanvids is complicated because in this type of works the court has to determine whether the work is original or derivative. As per the interpretation of many case laws by the Chinese Supreme Court, the work will be deemed to have independent copyright if the expression of the works is “on the same theme” but are “creatively and independently completed”. However, in the case of fanfics and fanvids even though they are departed from the original, they still constitute copyright infringement if the derivative works prejudice the original works. While enforcing the copyright law in the domestic markets, a balance can be set between the damages and benefits of fan-based activities.

International usage and market of anime

Before the advent of technology, foreign countries used to share from the domestic country through DVDs and VHSs. The more demand for anime works and the transactional costs imposed on the foreign fans induced them to create derivative works of the original content without the prior authorization of the author. People used to conduct conventions where fans from different countries attend, share their views, work and sell the merchandise they created. These conventions accelerated the piracy of anime. With the advent of technology, foreign fans used to download the content illegally because unlike in the previous days they need not pay any transactional costs. Other than the piracy the countries like Japan faced other problems related to market access and they are as follows:

  1.  Some fan communities argue that these anime works are public goods since they benefit all members of society and they do not have such strict copyright protection. By using this as a reason many unauthorized online distributors have emerged that led to cat and mouse games between them and copyright holders.
  2. Even though there is an international convention called National Treatment, some countries like China obstruct the free entry of anime that have economic and political policies. They treat local and foreign products differently by the promotion of socialistic culture.
  3.  Some countries lay down censorship on foreign audio-visual work that limits the broadcasting hours and streaming time of the programs. For example, the U.S , although it has a close relationship with Japan, they broadcast the content by imposing censorship guidelines some time they modify the content according to their local environment. In such cases, the integrity rights of the author are encroached and also lead to fan-creating fansubs.
  4. As there is the involvement of transnational markets the copyright owners have to undergo high transactional costs that include marketing costs, promotions, and advertising.
  5. Compared to Hollywood movies, Japanese Anime does not have much publicity worldwide and it is not given priority by seeing it as “for child consumption”.

The rationale for activities of fan communities

The fan communities strongly believe that their activities are different from physical theft as there is not much priority given to commercial transactions. They strongly argue that even though it is illegal to copy without authorization it is not morally wrong. They contended that the uneasiness and complications regarding the exclusive rights in the copyright law led them to do such unauthorized activities. The fan communities see such activity as an act of pleasure that helps in exchanging information with others. They want their culture to be known to all the people in the world and propagate their culture through these fan works and exchange their cultural views. They supported their actions by emphasizing the monopolistic activities of the film and music industries who are prioritizing their interests rather than focusing on the welfare of the public. The legitimate content and the merchandising products are very costly and the industry is gaining profits that leave them with an option to unauthorized copying and sharing. They argued that they access the online content if they do not  find the content anywhere else. They also give reasons like humanitarian grounds such as freedom and democracy. They pointed out that the less accessibility of the content triggers them to fill the gaps for the demand and supply. The fan communities also set up certain norms and treat the above-mentioned reasons as ethics. 

The approach of Japan and the US in dealing with unauthorized online sharing of content

In the U.S, there will be the issuance of mass ‘John Doe’ orders to the infringers whereas in Japan they are dealt with individuals which can be observed from two different cases and the court approach towards the infringers.

In the case of A&M Records, Inc. v. Napster, Inc. the Ninth Circuit in the United States found a file-sharing platform Napster as an infringer for sharing the copyrightable content with people in his network. It was also held that the infringer did not satisfy the test of fair use and hence it does constitute infringement. Whereas in Japan where a similar case was dealt with in 2009, the Supreme Court of Japan held “Winny” a file-sharing platform is not an infringer because he did not have the intention to infringe the content rather use it for legitimate purposes.

We can say that different approaches of different countries create loopholes for the infringers that cause the unauthorized exploitation of the anime.

Adopted strategies 

By copyright owners

If we deeply analyze the activities of all the fan communities, not all of them infringe on commercial purposes; rather, they follow certain norms which they have formulated. One such norm is called “STOP WHEN LICENSED”. As per this norm, the Japanese fan communities will stop creating unauthorized content once they license content to legitimate websites in the U.S. Hence the copyright owners give the license to make derivative works to many anime websites.

Although the activities of fan- communities are frowned upon by the copyright owners some are tolerated by the copyright owners. They deemed those activities as promotion to their content and respect their affection. Sometimes the copyright owners conduct meetings with such fan communities and also launch the fan-created version. They called this strategy “ tacit tolerance”. We can see many instances like J.K Rowling, Hatsune Miku, etc who cooperated and tolerated the derivative works of the fan communities. But instead of differentiating them and claiming them illegally the tolerance to such activities is not advisable.

By government

If the copyright owners are unable to handle the misuse of “tacit tolerance” then the Government must step in. And one such measure is that the Ministry of Economy, Trade, and Industry in Japan announced a plan called “Manga Anime Guardian Project” (MAGP) to safeguard the anime from international copyright infringement. MAGP has created a specific website that contains the links of all the legitimate translated anime and manga. METI intends to bring up all the individual websites that promote the illegal content of anime and prevent them from committing the act of piracy. However, it was criticized by many people saying that it will affect even the fan-based works which are genuine. There are also certain drawbacks to MAGP

  • Firstly, this website contains only links to the licensees and not the new content. Fans who always wanted to be up to date with the content will not find it as an option.
  • Secondly, the links in the website do not lead to legitimate content rather it will take the fans to the advertisement where it shows the infringing websites to watch content other MAGP’s websites.
  • Thirdly, some links in this website are pay per view which discourages the fans to watch legitimate content.

The companies license their content to many websites, OTT Platforms which pave the way for legitimate usage of anime content. However, due to the speed and less cost fans prefer illegal fan-based works to these legitimate websites.

Suggestions

The solutions can be by both governmental proposals and non-governmental proposals. There should be an introduction of a new fair use exception or introduce an exemption period / interpretive right. From the copyright owners’ perspective, they should grant   Creative Common Licenses and No Action Policy that are revocable exemption notices issued by the copyright owner to grant authorization of the content. The copyright owners should maintain good relationships with the fan communities like exempting some fan communities from infringement mentioned in their websites. For better results, it is the duty of the industry. The industry has to set up official websites with similar functions of fan communities to unite them with the copyright owners and all the fans should be allowed to participate in fun activities. This strategy will encourage the fan communities to upload their content to the official websites.  The copyright term for the anime should be short duration because of its disposable nature because the popularity of one anime will fade out after a certain period and hence providing long-term copyright protection for such works is not advisable.

Conclusion

The copyright law is being driven by economic forces rather than the welfare of the public. Many measures which are imposed by the government are favoring the author that affects the balance to be established through copyright law. Though Anime acts as the bridge where two ends meet it does create certain complications that cannot be taken care of instantaneously. All the aspects of the industry should be vigilant of their actions so that they cannot create any loopholes that can be misused by fan communities.

References

  1. Tianxiang He* What Can We Learn from Japanese Anime Industries?  The Differences Between Domestic and Overseas Copyright Protection Strategies Towards Fan Activities
  2. Allison Hawkins, “Piracy as a Catalyst for Evolution in Anime Fandom” The American Journal of Comparative Law
  3. Emily Schendl, “Japanese Anime and Manga Copyright Reform” Washington University Global Studies Law Review, Volume 15 Issue 4 Symposium: Seventy Years After Nuremberg
  4. Lee, H. K. (2011). Cultural Consumer and Copyright: A Case Study of Anime Fansubbing. Creative Industries Journal, 3(3), 237-252. https://doi.org/10.1386/cij.3.3.237_1.

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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Doctrine of strict liability reiterated by the Madras High Court

By
Rachit Garg
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0

This article is written by Sahaja, from NALSAR University of Law, Hyderabad. This article covers the principles of strict and absolute liability in India and its evolution through the years.

Background

A single-judge bench of the Madras HC, in a recent case, ordered the Tamil Nadu government to pay interim compensation to the parents of a newborn whose thumb was severed off by a nurse in a government hospital in Thanjavur. 

A hospital staff nurse accidentally severed a part of the 14-day-old child’s left thumb while removing the pediatric venflon (cannula) that had been wrapped in surgical tape. The amputated thumb was stitched up right away by the doctors. In addition, a group of doctors kept the child under observation. The plastic surgeon, who was supported by a paediatric surgeon, did another operation.

The parents of the child submitted a request for compensation and their counsel submitted that despite the surgery, the child’s thumb was not fully fixed, resulting in a permanent handicap. They also claimed compensation for the trauma that was a consequence of seeing the severed finger. 

In this circumstance, the Madras HC reiterated the doctrine of strict liability theory and ordered interim compensation by the Government hospital as there was clear negligence on the part of the nurse. 

History of the doctrines of strict and absolute liability in India

With a few exceptions, the rule of absolute liability is identical to the rule of strict liability. This rule of absolute liability applies without limitation or exemption, making a person fully accountable for any mistake. The capacity to hold anyone completely responsible for their actions and the application of severe penalties constitute these liabilities’ ultimate liability. 

In the case of Rylands v. Fletcher, 1868, the Court established the principle of strict liability which was seen as a solid and concrete concept needing no further analysis in India.  Strict liability is a rule that holds anyone who owns a hazardous or dangerous thing on their property responsible for any damage caused by the object’s escape, regardless of the individual’s intent to create such damage or harm.

Following the Bhopal Gas Tragedy, 1989 and the oleum gas leak, the Indian judiciary determined that it was necessary to develop a paradigm to deal with such unusual situations, in which the defendant should bear full responsibility for the activity that resulted in such large-scale losses.

Defences against strict liability and absolute liability

Strict liability refers to a party’s liability that is imposed without a finding of fault. The plaintiff merely needs to show that the tort took place and that the defendant was to blame. Situations that are considered inherently harmful are subject to strict liability under the law. It deters irresponsible behaviour and unnecessary legislation by requiring potential defendants to take all reasonable precautions. 

For the application of strict liability, one must possess a dangerous substance and this dangerous substance must escape from the premises of the owner.

The exceptions to strict liability are:

  • Plaintiff’s fault- If the escape of the dangerous substance is due to the fault of the plaintiff, the defense can be pleaded.
  • Act of God- If the event was unprecedented and was beyond the control of a human
  • Act of the third party- If the event occurred due to the act of a third party which was unforeseen in natural circumstances.
  • Consent of the plaintiff- If the act was done at the wish of the plaintiff.

Strict liability minus exceptions is the definition of absolute liability. If any person is engaged in any activity and any injury is caused to another person as a result of that conduct, the person engaged in that activity will be held absolutely liable. The strict liability exception would not be considered.

This is what distinguishes absolute liability from strict liability. A person who is accountable under strict liability can claim the exceptions set forth in strict liability, whereas absolute liability has no exceptions.

Why is absolute liability more prevalent in Indian practice than strict liability

The rule established in the case of Rylands v. Fletcher is that:

  • The defendant must have brought something dangerous or something that might cause danger onto his or her land. 
  • There must be a non-natural use of this land that leads to the accident. 
  • The substance brought to the land must be such that when it escapes it causes mischief. 
  • There needs to be an escape of the substance 
  • The escape must cause mischief and this must be foreseeable as the natural cause of the escape of such a substance.

Since this above rule was stated, a number of defences have been developed against the rules of strict liability. Some of these defences are discussed in the previous section of this article. 

As this rule of strict liability took many defences into account not many people could be held strictly liable for the consequences of their actions that caused harm. As a result, it was necessary to create a more stringent law with the same goal. 

The Apex Court of India in the M.C. Mehta case examined the need to modify the 19th-century rule of strict liability, concluding that the principle established in Ryland v. Fletcher of strict liability cannot be applied in the modern world because the principle was developed in the 19th century, and this principle of tortuous liability cannot be taken into account without any modifications.

Industrialization

India’s economy is still in its early stages of development. The strict responsibility rule has been around for a long time. The old rule was developed when there was very little industrial progress, hence it is inapplicable in a rapidly rising country like India. Due to the fast process of industrialization and the constant use of inherently dangerous substances in industries and factories, it is necessary to establish a rule of law that makes people accountable for any foreseen dangers that their actions could possibly cause. 

Use of land for agriculture

In India, the land is primarily utilised for farming. As a result, it is ideal to store water in a large tank for irrigation purposes. A similar situation does not exist in the country from which it was chosen. As a result, it does not make sense from an Indian standpoint. It is also important to make sure that this water is stored efficiently and carefully such that it does not cause any harm. 

Archaic rule

The old regulation was established in the nineteenth century, almost 150 years ago, when the social and economic situation was drastically different. It is also important to note the growth of science and expertise in the present situation which calls for more safety and precautionary measures that need to be taken.  As a result, it was required to create a rule that met the current requirements.

Due to the reasons stated above, legal professionals prefer to use the principle of absolute liability even in cases where an act that has caused harm is due to the natural use of land or even if the substance is not a dangerous one. For example in the recent case(Lg Polymers India Private Limited vs Andhra Pradesh Pollution Control) of the gas leak in Visakhapatnam. This happened due to a gas leak from a plant of LG Polymers which led to severe consequences. The Court in this case had applied the principle of strict liability which was criticised since the rule of absolute liability had to be applied in such cases as the land being used was not for a non-natural cause and the gas that leaked was indeed harmful substance. 

Difference between absolute and strict liability

The Supreme Court defined the difference between strict and absolute liability standards in M.C. Mehta v. Union of India, as follows:

Only those firms engaged in hazardous or intrinsically dangerous operations will be held liable under absolute liability, implying that other industries not falling within the aforesaid purview will be subject to the strict liability regulation.

It is not essential for a harmful thing to escape one’s own land; it simply implies that the law of absolute liability applies to those hurt both within and outside the premises.

The Ryland V Fletcher rule applies solely to non-natural uses of land, whereas the new rule of absolute liability applies to all uses of land. Though a person uses a dangerous material that is a natural use of land and the substance escapes, he will be held accountable even if he took all reasonable precautions.

There are no exceptions to the norm of absolute liability, although there are several exceptions to the rule of strict liability.

Medical negligence in India and related law

Negligence is defined as the failure to take necessary precautions. Negligence is no exception. It’s only that in cases of medical negligence, the defendant is the doctor. Negligence is punished both as a criminal offense and as a tort. 

A doctor has specific responsibilities of care to his patients, and if the doctor fails to discharge such obligations, it is considered a breach of duty, and the patient has the right to sue. A doctor commits a breach of duty when he fails to provide the level of care that a reasonable doctor would. In most cases, the complainant has the burden of proving carelessness. Any charge of negligence against a doctor must meet a higher burden of proof under the law. In order to win in cases of medical negligence, the patient must first make a claim against the doctor.

In general, a doctor’s liability arises when a patient is injured as a result of the doctor’s defective behaviour, which fell significantly below the reasonable standard of care.

Section 304A, 337, and 338 of the Indian Penal Code deal with the case of medical negligence as a criminal offence. The claim for damages in civil liability is made in the form of compensation. If there is a breach of duty of care while operating or while under the supervision of the hospital or a doctor. They are held vicariously accountable for any wrongdoing and must pay damages in the form of compensation. 

Suresh Gupta v. NCT Delhi, 2004–  A recently married 31-year-old had a small problem in his nose and a small incision had to be made. The doctor made the incision in the wrong place, which gave rise to his death. Held that the standard of negligence to be proved against doctors in such cases needs to be so high as to show apathy towards the patient, in which cases the person may be held to be liable. When the death of the patient is a result of an error of judgment or an accident, it would not be a case where he would be criminally liable. For this act of negligence, the doctor may be liable in tort but his carelessness or want of due attention and skill cannot be described to be so reckless or grossly negligent as to make him criminally liable.

Jacob Mathew v State of Punjab, 2005– In this case, an aged patient in an advanced stage of terminal cancer was experiencing breathing difficulties, and the oxygen cylinder connected to the mouth of the patient was found to be empty. By the time replacement could be made, the patient had died. The Supreme Court not only approved the principle laid down in the previously mentioned case which is Dr. Gupta case but also opined that ‘negligence in the context of the medical profession necessarily calls for a treatment with a difference…a case of occupational negligence is different from one of professional negligence.’ Delving into the liability of a doctor for his rash or negligent act leading to the death of his patient, it ruled that:

A professional may be held liable for negligence on one of the two findings: either he was not possessed of the requisite skill which he professed to have possessed, or, he did not exercise, with reasonable competence in the given case, the skill which he did possess. The standard to be applied for judging, whether the person charged has been negligent or not, would be that of an ordinary competent person exercising ordinary skill in that profession.

Conclusion

As mentioned in the previous sections, absolute liability is a comparatively new and modern rule of law that is applicable to hold the defendant strictly liable for his or her actions that cause harm in society. This principle and rule of law has evolved from the previous law of strict liability which does have exceptions and defences that can be exercised by the defendant. 

Legal professionals rely on the rule of absolute liability when dealing with cases that concern firms engaged in hazardous or intrinsically dangerous operations since in such cases the consequences and harmful effects of such actions are foreseeable by a reasonable man and undue care and precautions need to be kept in mind while dealing in such operations. For other industries and acts, the doctrine of strict liability can be applied. For example, in cases of medical negligence. 

References

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Recent judgements passed by the Supreme Court of India on arbitration

By
Rachit Garg
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0
Judicial interpretation in arbitration
Image Source: https://rb.gy/l7mswr

This article is written by Dnyaneshwari Patil, from RTMNU Babasaheb Ambedkar College of Law, Nagpur. In this article, she discusses various recent judgments passed by the Supreme Court on arbitration. 

Introduction 

Arbitration is a form of alternative dispute resolution (ADR). This form has certain advantages such as lower cost, informal, flexible process, greater likelihood of settlement, choice of forum etc. People prefer arbitration as it is less expensive than litigation. Arbitration in India is trending since the establishment of the Arbitration Act, 1940. After some criticism faced by the law, India adopted the United Nations Commission on International Trade Law (UNCITRAL) Model Law on International Commercial Arbitration, 1985. It enacted the Arbitration and Conciliation Act, 1996. Since then, several cases have been referred to the higher court of appeal. In this, we will discuss the recent judgement passed by the Indian courts to reduce the scope of intrusion in the arbitral process and make India an arbitration-friendly jurisdiction.

Recent judgments on the Arbitration Laws

State of Gujarat and Ors. v. Amber Builders (2020)

In this case, Amber builder was awarded a work contract by the state of Gujarat for repairing a section of a national highway. A dispute arose between them concerning the work, and the state of Gujarat threatened them to withhold the payment from the security deposits and bills of other pending works. This was challenged before the Gujarat High Court. However, the Court held in favour of Amber Builder, saying that the state of Gujarat cannot recover the recoverable amount. So the following judgment was challenged, and it was raised that the High Court lacked jurisdiction to hear the dispute. The dispute needed to be referred to the Tribunal and the Tribunal was empowered to grant interim relief in the form of an interim injunction. Thus, whether the Gujarat Public Works Contract Disputes Arbitration Tribunal (GPWCD arbitration tribunal) constituted under Gujarat Public Works Contract Disputes Arbitration Tribunal Act, 1992 (Gujarat Law, 1992), has the power to issue interim relief under Section 17 of the Arbitration and Conciliation Act, 1996. 

The Supreme Court held that under the Gujarat Public Works Contract Disputes Arbitration Tribunal Act, 1992, it is compulsory to refer all the work contracts between the State Government and the contractor to the arbitration tribunal. Therefore, on a conjoint reading of the Arbitration Act, 1996 and the Gujarat Act, the GPWCD Arbitral Tribunal has requisite jurisdiction under Section 17 of the Arbitration Act, 1996 to order interim relief. 

Vijay Karia v. Prysmian Cavi E Sustemi Srl & Ors.(2020)

In this case, the respondent initiated arbitration under the London Court of International Arbitration Rules (2014). The London Court of International Arbitration passed the foreign award directing the appellant, an Indian entity, to transfer securities to the Respondent, which is a foreign entity,  at a discount of 10%. However, according to Foreign Exchange Management Act, 1999 (FEMA), the transfer should be made at the prevailing fair market value, and no lesser. Thus the appellant challenged the enforcement of the foreign award, alleging that it contravened the “public policy of India ” by violating FEMA’s provisions. 

The Supreme Court held that countries in which the award is rendered have far more power to review an arbitral award than the courts in which the execution of the award is sought. India being a secondary jurisdiction, has less capacity to interfere with foreign awards from the country having primary jurisdiction.

SC further added that the ground of natural justice could only be invoked only if the appellant was not offered a fair opportunity of hearing. Thus, the SC rejected the contention of the appellant pleading violation of fundamental policy by saying that the fundamental policy cannot be equated with any provision of the statute which could be easily rectified.  

M/s Dharmaratnakara Rai Bahadur v. M/s Bhaskar Raju & Brothers (2020)

In this case, the claim was made, after a dispute arose regarding a lease deed that was not sufficiently stamped or registered as per the Karnataka Stamp Act, 1957, that whether an insufficiently stamped lease deed could invoke the arbitration clause mentioned in the deed. 

Further, it was also admitted that the respondent did not pay the stamp duty and penalty even after being directed by the registrar, High Court of Karnataka.

The Supreme Court held that when a deed or any document containing an arbitration clause, the court, in the beginning, considers whether an objection is raised on its behalf or not, or whether it is duly stamped. So, Section 35 of the Karnataka Stamp Act requires the document to be duly stamped in order to be admissible in evidence and acted upon. Hence, unless the stamp duty and penalty due are not paid regarding the instrument, the court cannot act upon its arbitration clause as it is a part of an unstamped instrument.  

Mankastu Impex Private Limited v. Airvisual Limited (2020)

In this case, Mankastu Impex entered into a memorandum of understanding (“MoU”) with Airvisual regarding the distribution of Airvisual’s air quality monitors. It mentioned and agreed that Mankastu Impex would be the exclusive distributor of Airvisual’s air quality monitors for five years. However, the dispute arose when Airvisual was acquired by IQAir, who rejected the exclusive rights of sale of Airvisual’s products by Mankastu Impex. Subsequently, Mankastu Impex invoked the arbitration clause mentioned under the MOU, which stated that any disputes arising regarding the MOU should be referred to and resolved by arbitration administered in Hong Kong, which would be the place of arbitration. 

The SC held that the mere expression ‘place of arbitration’ does not show the intention of the parties to make it a juridical seat of arbitration. However, the words in the MOU, ‘arbitration administered in Honk Kong’, states that the place of arbitration, Hong Kong, is indeed intended by the parties to be the ‘seat of arbitration’. Thus the SC held that it could not have jurisdiction in this matter.  

Quippo Construction Equipment Limited v. Janardan Nirman Pvt. Limited (2020)

In this case, a contract was entered into between the parties. The dispute arose when the respondent failed to pay the outstanding dues, and thus the appellant invoked the arbitration against the Respondent to recover outstanding dues. An ex-parte award was passed against the respondent as the respondent denied the existence of the arbitration clause and did not participate in the proceedings. The respondent challenged the award at the Court at Alipore, under Section 34, for setting aside the award. The court ordered that it does not have a requisite jurisdiction and held that the jurisdiction lies at the court of New Delhi for the concerned matter. Thus, the respondent challenged this order of the Court of Alipore before the Court of Calcutta. He again contended that the arbitration agreement does not exist and objected to the venue of the arbitration as Delhi because one of the agreements stated Calcutta as the venue of arbitration. The High Court accepted this petition. Thus, the appellant, being deprived by the high court’s decision, challenged it before the SC. The issue raised was whether the respondent could challenge the venue of arbitration when it failed to participate and raise any submission in the arbitration proceedings. 

The SC held that the High Court of Calcutta erred in setting aside the order of the Court of Alipore, and the respondent could not raise any submission and object to the venue of the jurisdiction. It further held that a party is free to object to the jurisdiction of the arbitral tribunal within the time prescribed in Section 16(2). Once the party fails to do so within the specified time, it loses its right to object.  

Patel Engineering Ltd. v. North Eastern Electric Power Corporation Ltd. (NEEPCO) (2020)

In this case, the respondent filed three appeals under Section 37 of the arbitration act before the High Court of Meghalaya after its three applications under Section 34 of the Arbitration Act for setting aside the arbitral order were rejected by the Additional Deputy Commissioner. Being aggrieved by the High Court order, the petitioner filed a special leave petition before the supreme court which got rejected. Then, the petitioner filed review petitions before the Meghalaya HC, asserting that the order of the HC ‘suffers from error apparent on the face of the record as it had not taken into consideration the amendments made to Arbitration and Conciliation Act, 1996 by Amendment Act of 2015’. The same was dismissed, and consequently, it led to the present challenge before the SC.  

The SC held that the amended section would apply to the present case and also reaffirmed its decision in Associate Builders v. Delhi Development Authority (2014) and Ssangyong Engineering and Construction Company Limited v. National Highways Authority of India (2019). The patent legality can be a ground for setting aside the award if:  “the decision of the arbitrator is found to be perverse, or so irrational that no reasonable person would have arrived at the same; or, the construction of the contract is such that no fair or reasonable person would take; or, that the view of the arbitrator is not even a possible view.”

Thus the Meghalaya HC has reached a correct conclusion by setting aside the award, which was patently illegal or perverse. Therefore, the High Court, based upon a judgment that is no longer good in law, has correctly decided on the test set out in Associate Builders. Hence, the SC will not interfere with the impugned orders and dismiss the special leave petitions. 

Centrotrade Minerals and Metal Inc. v. Hindustan Copper Ltd. (2020)

In this case, a dispute arose from a contract entered between the parties dealing with the sale of copper concentrate. The appellant invoked the arbitration clause, containing a two-tier arbitration procedure. In this agreement, it was mentioned that the first tier arbitration shall be settled in India and then the aggrieved party can make an appeal to the International Chamber of Commerce (ICC)  in London. The arbitration in India resulted in the NIL award. Subsequently, it was appealed in ICC London. Even before the passing of the award, the respondent challenged the arbitration clause in Rajasthan High Court, which resulted in an ad interim ex parte stay granted in favour of the respondent; however, it was vacated by the SC. Thus the SC allowed the continuation of the arbitral proceeding. Eventually, the award was passed by the arbitrator of ICC in favour of the appellant. The respondent objected to its enforcement. 

After a series of litigation, the matter came before the SC, and the question raised was, what is the legality of two-tier arbitration procedure in India and whether the appellate ward from ICC was enforceable?

The three-judge bench held that under the law of India, the two-tier arbitration process is permissible and valid. The parties are free to enter into an agreement that provides non-statutory appeal so that there is less interference by the court and can avoid the court procedures. The respondent contended that the passing of the award was foul of Section 48 of the Arbitration Act, and they were not able to present their case and were not provided adequate time to present the documents in support of the case. Thus the Court found that despite being requested to be present before the tribunal and present their evidence in support. At the time of passing the award, the respondent asked for additional time to submit their response. Thus, the respondent side failed to exercise those opportunities. Thus, the Court found that the respondent chose not to adhere to the timelines and held that the foreign award could be enforced in India. 

Avitel Post Studioz Limited and Ors. v. HSBC PI Holdings (Mauritius) Limited and Ors. (2020)

In this case, Avitel and HSBC entered into two agreements, the Share Subscription Agreement, by way of which HSBC invested USD 60 million in Avitel to acquire 7.80% of its shareholding and the Shareholders’ Agreement (“SHA”). Both contained the provision providing for arbitration. A dispute arose between them; HSBC alleged that the promoters of the Avitel represented were on the verge of finalising a lucrative deal with the British Broadcasting Corporation, and hence, it invested in Avitel. However, HSBC found that there exists no contract as such and the 51 million USD invested by HSBC was already siphoned off to the companies in which the promoters of the Avitel have stakes. Thus, HSBC invoked the arbitration clause, and an award was passed favouring HSBC by holding its contention as accurate. The matter was then taken to the SC. HSBC filed a petition under Section 9 of the Arbitration and Conciliation Act seeking an order of deposit of the full claim amount of USD 60 million. 

Challenging the enforcement award, Avitel contended that disputes regarding criminal offences, such as forgery and impersonation, are not arbitrable under Indian law and thus eventually making the award unenforceable. On the other hand, HSBC contended that the non-arbitrability could be invoked if the severe allegations of fraud would vitiate the arbitration clause. 

Thus the SC laid down the test when the severe allegation of fraud would invoke non-arbitrability:

(1) Does this plea permeate the entire contract and, above all, the agreement of arbitration, rendering it void, or

(2) Whether the allegations of fraud touch upon the internal affairs of the parties inter se having no implication in the public domain.

If cases do not meet the requirement of the above-laid test, then they are arbitrable. Hence, the SC held that the present case is of civil matter and upheld that the amount of USD 60 million to be kept aside for enforcement of the award in India. 

Deccan Paper Mills Co. Ltd. v. Regency Mahavir Properties and Ors (2020)

In this case, the Deccan paper mill filed a suit against the Regency Mahavir Properties and others, contending that the declaration of the agreement and deed of confirmation is null-ab initio, illegal and not binding on the plaintiff as it was obtained by fraud. The appellant was under the impression that the development of the property would be carried out quickly, and the person carrying it out is the ex-partner of the respondent. However, later noticed that the ex-partner is not carrying out the development. The respondent filed an application under Section 8 of the Arbitration and Conciliation Act, the same was accepted, and the matter was referred to arbitration. The appellant approached the Bombay High Court, challenging the district court’s decision for referring the matter to the arbitration; however, the HC upheld the decision. Finally, the appellant approached the SC, wherein it challenged the arbitrability of the matter as it arose out of the contract that was fraudulently executed. Appellant contended that it comes within the exceptions of the Booz Allen Case, as the proceeding is a proceeding in rem under Section 31 of the Specific Relief Act, 1963. Appellant further prayed that the documents and deed should be cancelled. 

The SC held that just because a particular transaction has criminal overtone does not mean that the subject matter is it is not arbitrable. Further, it held that cancellation of the deed under Section 31 of the Specific Relief Act would be action in rem, and under Section 34, it would be action in personam would be wholly incorrect. Thus, action initiated under Section 31 is an action in personam and not in rem. 

Balasore Alloys Limited v. Medima LLC (2020)

In this case, the appellant entered into an agreement relating to transactions of purchase of High Carbon Ferro Chrome by the respondent. Disputes arose between the parties regarding the transaction. The purchase order was regularly entered, provided for an arbitration clause, and the venue for arbitration was Kolkata, India. Thus the appellant relied on this clause for the resolution of disputes. However, the respondent relied on the umbrella agreement provided for resolving disputes before the International Chamber of Commerce. Both started the arbitration proceedings at the same time, one at ICC and the other at Kolkata. The respondent argued that the initiation of the proceeding by the appellant is not bonafide as the respondent already invoked the arbitration by the issue of notice, and the arbitral tribunal was already constituted. 

Thus the SC relied on the Olympus Superstructure Pvt. Ltd. v. Meena Vijay Khetan and Ors, (1999), and held that the two arbitration clauses should be harmonised and the main agreement should be taken into consideration for resolving the disputes. The rationale behind it was to avoid the contradiction of the awards regarding the items overlapping in the agreement. Thus, the umbrella agreement was considered the main agreement, and the appellant’s contentions were rejected. 

PASL Wind Solutions Pvt.  Ltd.  V. GE Power Conversion India Pvt. Ltd. (2021)

In this case, a dispute arose between the parties regarding the agreement for the purchase of the convertors. The parties executed a settlement agreement providing for arbitration in Zurich as the seat of arbitration according to ICC rules. PASL referred to the disputes under the settlement agreement, and the award was passed in favour of GE power. Thus the GE filed for enforcement of the award before the Gujarat High Court. The HC held that the parties could choose the seat of arbitration outside India and further held that the remedies under Section 9 are not available to the parties as they choose a foreign seat of arbitration. Remedies are available to “international commercial arbitration”, and according to Section 2(1)(f) of the Arbitration and conciliation Act, it has not fulfilled the criteria of the definition of “international commercial arbitration” as at least one party must be a foreign entity.

Therefore an appeal was filed before the SC and it was held that Part I and II of the Act, 1960 is mutually exclusive and the definition of the “international commercial arbitration” would not apply to Section 44 of the Act, which falls under Part II. Section 44 is party neutral and seat-centric provision and thus, Indian parties could choose a foreign seat of arbitration. Further, the SC held that the definition of the “international commercial arbitration” in this context does not refer to the definition under Section 2 but is seat-centric terminology that relates to arbitrations taking place outside India. Therefore the relief under Section 9 is available to the parties whose international commercial arbitration is taking place outside the country. Therefore the  Indian parties are free to choose a seat of arbitration outside India. The parties are free to choose foreign law, but if the law is found against India’s public policy, the law will not be enforced. 

Government of India v. Vedanta Limited and Ors (2020)

In this case, the government of India entered into a production sharing agreement (“PSC”) with Cairn India Ltd. (later obtained by Vedanta) for exploring and developing petroleum resources in the Ravva Gas and Oil field. The dispute emanated from the provision mentioned under the PSC about the development cost to which the respondent was entitled. The provision was about the base development cost. The respondent incurred the base development cost, which was higher than the amount contractually capped. The respondent requested an increase in the cap to the government of India to recover the cost incurred by them under the PSC.

Thus, they referred the matter to the Malaysian Tribunal, and an award was passed stating that the base development cost was to be paid by the appellant for the cost incurred for the contract 2000-2009. After the progression of appeal, the matter finally arrived at the Delhi High Court. The respondent filed for the enforcement under Section 47, read with Section 49 of the Arbitration and Conciliation Act, 1996. An application was filed by the Government of India rejecting the enforcement of the award on the contention that the award was against the public policy of India and contained matters beyond the scope of the submission to arbitration. The Delhi HC rejected the government’s contentions and accepted the condonation of the delay application filed by the respondent. Further, the HC directed to enforce the award. Consequently, the order was challenged by the appellant before the SC. 

The SC held that the enforcement of the petition was filed within the period of limitation as prescribed in Section 137 of the Limitation Act, 1963. Even if there is a delay, there are sufficient grounds to condone the delay. 

The SC reiterated that the enforcement court would not correct the awards’ errors under Section 48 or review the merits of the award. Thus, the Court cannot exercise appellate jurisdiction over the foreign award. The court further stated that the appellant failed to prove that it was contrary to the basic notion of justice as, first, the appellant failed to prove the violation of procedural due process in the conduct of arbitral proceedings and failed to prove that it was in violation of the public policy of India. Therefore, the SC upheld the judgement of the Delhi HC.

Chintels India Ltd v Bhayana Builders Pvt Ltd (2020)

In this case, a challenge was filed before the Delhi High Court under Section 34 of the Arbitration and Conciliation Act after the prescribed period of three months. The HC refused to condone the delay and consequently dismissed the challenge. It was appealed before the Division Bench but being bound by the ratio of the judgement BGS SGS Soma (2019). Consequently, it was dismissed. Thus, the Division Bench granted leave to appeal to the Supreme Court. So the issue raised was Whether the order refusing to condone the delay in filing an application under Section  34 of Act 1996 is an appealable order under Section 37 of the Act, 1996.

The Supreme Court in this observed that the delay was condoned in BGS SGS Soma was not the final decision on the challenge; however, in the present matter, the refusal of condonation of delay would be finally resulting in dismissal of the challenge. Therefore the court held that one could appeal under Section 37, not just on the basis of merits but also for condonation of delay. Further, the Court also reaffirmed the position that Section 5 of the limitation act 1963 does not apply to Section 34 of the arbitration act challenges. Any delay of three months and thirty days could be condoned.  

Arun Kumar Kamal Kumar and Ors v. Selected Marble and Ors. (2021)

In this case, the appellant entered into licence agreements with the respondent concerning the running of the restaurant cum sweet shops on the respondent’s premise. A dispute arose regarding the agreement where the appellant contended that the respondent violated the terms of the agreement. The appellant also contended that the respondent did not make adequate arrangements for the supply of electricity, due to which business could not continue. Thus, the shop premise remained closed for more than five years. Hence the respondent filed a suit before the Delhi HC, against the appellant for non-payment of the commission and refused to hand over the premise under Section 20 of the Arbitration Act. The business was reopened for a few months. The HC appointed an arbitrator, during the arbitral proceeding, the arbitrator ordered the appellant to file a statement of account by calculating the commission payable to the respondent; the appellant did as directed. On the basis of the statement of account, the damages were calculated by the arbitrator. Although the appellant contended that there existed an inadvertent error in the statement which was meant to be corrected, the arbitrator refused to accept the appellant submission and passed the award. After a series of appeals, the present matter was brought before the Supreme Court.

According to the licence agreement, the SC observed that the appellant needs to vacate the premises when any dispute arises. However, the appellant failed to do it until the arbitration proceeding commenced. Therefore the tribunal correctly held that the appellant needed to pay for the damages. The SC upheld the decision of the Division Bench of the HC that the matter was a case of tenancy and not of a licence. As per the division bench of the HC, the tenant was liable for rent and damages even after the destruction of the premises and the only way to stop the running of the rent is to surrender the premises.

Thus the SC upheld the decision that the appellant was not allowed to withdraw their own statement of account.

Conclusion 

The Supreme Court has passed numerous judgments regarding arbitration. From the judgments mentioned above, one can say that the SC aims at reducing the intrusion of the courts in arbitration and matters and pave the way for arbitration-friendly jurisdiction.  

Reference 

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India’s opportunity to understand from foreign principles in telegram copyright infringement case

By
Oishika Banerji
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0

This article has been written by Shradha Jain, pursuing the Diploma in Intellectual Property, Media and Entertainment Laws from LawSikho.

Introduction

The circulation of e-newspapers and their legality under copyright law have been frequently debated. Similarly, prominent news publisher Jagran Prakashan Limited (‘Plaintiff’) discovered that their e-paper was freely disseminated online, using messaging network Telegram (‘Defendant’), which was otherwise exclusively available to its members. Super Cassettes Industries Ltd. v. Myspace Inc. & Anr., the dominant case in India, focuses on ‘specific and actual knowledge of the inclusion of copyrighted content, which is pragmatic to be placed before a human agency (defendant) for establishing responsibility. However, there is little to no jurisprudence analyzing the repercussions when the intermediary has “no knowledge.” Telegram as a platform is free to use, unrestricted, and devoid of any content restrictions. In the absence of the foregoing, it would be prudent to take inspiration from established ideas in the European Union (‘EU’), and the United States.

In this article, I shall explore the circulation of e-newspapers and their validity under the copyright law, the Jagran Prakashan Limited vs Telegram, the Right of injunction vis-à-vis safe harbor under mere conduit in EU, and doctrine of inducement under US copyright laws and how it is an opportunity for India to understand from foreign principles.

Circulation of e-newspapers and their validity under copyright law

The e-papers are divided into two categories:

 (1) those that have a user agreement and

 (2) those that do not.

The reason for categorizing e-papers in these two groups is that they impose contractual obligations on the reader under “Terms of Use” regulations. As an example, The Times of India e-paper falls under the first category since the subscription plainly states:

  1. Articles may be shared through email, Facebook, and Twitter.
  2. It does not permit the sharing or downloading of PDFs of pages or publications.
  3. It is not possible to print or cut pages.

The United States copyright law, like India’s, does not define “Fair Use,” but has incorporated a variety of uses that will come under the concept of fair use. According to 17 US Code§107 “Limitation on Exclusive Rights,” fair use of a copyrighted work includes a reproduction of copies, phono recordings, or any other methods mentioned in § 106 & § 106A for critique, comment, news reporting, teaching (including multiple copies for classroom use), scholarship, or research are all acceptable forms of expression.

Section 52 of India’s Copyright Act is consistent with Article 13 of TRIPS (Trade-Related Aspects of Intellectual Property), which states: Members must limit limitations or exceptions to exclusive rights to specific extraordinary situations that do not conflict with regular utilization of the work and do not unnecessarily harm the right holder’s legitimate interests. In today’s developed world, while the need for “fair dealing” must be upheld in the public interest at large, it is critical to pay close attention to the latter part of Article 13, which states that the user should not conflict with a normal exploitation of the work and should not unreasonably prejudice the right holder’s legitimate interests. According to the Indian court in Bennett Coleman & Company Limited &Ors. v. Ajay Kumar & Ors, the widespread distribution of PDF versions of e-newspapers via messaging applications reduces the number of visits to news websites. A significant number of visitors to a publication’s website can result in increased market visibility and future subscriptions.

To manage large unlawful distribution on messaging applications, newspaper companies must develop legal tactics and technical solutions. The answer to this challenge must take into account both legal and technological considerations. Unfortunately, even after getting the necessary relief from the courts, the legal remedies available to newspaper businesses against aggregators, individuals, and other social media group administrators for spreading e-newspapers in their entirety are very hard to execute. In India, the implementation of court orders is complicated, and identifying people or groups on messaging applications is tough. From a practical viewpoint, even John Doe’s orders—in which an injunction is granted against an unknown defendant—can not completely stop the illicit distribution.

Jagran Prakashan Limited vs Telegram

Background

M/s. Jagran Prakashan Ltd. (“Plaintiff”) is the proprietor of the physically delivered daily Dainik Jagran, which is now also available online to its readers. However, it cannot be downloaded for distribution. It was recently brought to Plaintiff’s attention that their publication was being unlawfully disseminated via Telegram Channels, resulting in monetary loss, infringement of their copyrights and trademarks, and the filing of the current lawsuit. The Dainik Jagran website includes a security mechanism that prevents people from downloading the newspaper. Jagran Prakashan Ltd. is the only proprietor of the trademark ‘Dainik Jagran,’ with variants registered in a variety of classes.

Telegram FZ LLC (“Defendant”), via its application Telegram allows its users to create channels and share files, in this instance illegally acquired current edition PDF copies of the Plaintiff’s e-paper, as well as allowing readers to download all prior editions of the e-paper, which a user would otherwise only have access to if he subscribed to the e-paper.

Issue

The question was whether there was an infringement of the plaintiff’s right by creating a channel that led to the unauthorized distribution of the Plaintiff’s e-paper in PDF form by several unidentified users (Defendant), thereby infringing on the trademark and copyright existing in the said e-paper.

Judgment

The Court determined that the balance of convenience was in favor of Plaintiff and that Plaintiff had shown a prima facie case, awarding Plaintiff an ad-interim injunction. The Court has ordered Defendant to provide the basic details of the channels’ subscribers and to take down or disable the channels within forty-eight hours of receiving the order.

The Court agreed with Plaintiff that Defendant could not continue to claim intermediary status, and ordered the Defendant to block the infringing channels and divulge the identities of all individuals who had created each of these channels.

The doctrine of inducement under US laws

The inducement rule is a standard that a US court can apply to assess whether responsibility for third-party copyright infringement can be attributed to the distributor of the equipment used to infringe. In MGM Studios v. Grokster Ltd. the United States Supreme Court ruled unanimously that the defendant, a company that facilitates peer-to-peer file sharing, could be sued for IPR infringement because it used to affirmatively promote file sharing, thereby encouraging direct infringement and profiting vicariously from such direct infringement committed by a third party.

Furthermore, in Arista Records LLC v. Lime Group LLC, the United States District Court for the Southern District of New York held that, while granting a permanent injunction to shut down the defendant’s file sharing facility, it would be practical to claim infringement equally against the defendant because it exercises control and receives benefit over such messages being circulated. This verdict was likewise generally founded on the theory of inducement, according to which the intermediary used to encourage infringement and vicariously contribute to benefit.

Right of injunction vis-à-vis safe harbor under mere conduit: The EU way

The EU Member States are required by Directive 2001/29/EC on Copyright and Directive 2004/28/EC on Intellectual Property Rights Enforcement to provide right holders with the exclusive right to seek an injunction against those online intermediaries who purport to violate their intellectual property rights. This concept is important because the plaintiff can effectively limit future distribution of such PDF copies by anonymous individuals. In the Indian context, which emerged in the Taj Television case in 2003, a John Doe Order is the counterpart. Though this technique of requesting an injunction is controversial due to the lack of precedential protections, in the absence of the defendant’s agent in India, such an injunction order might assist the plaintiff in preventing any unintended harm until the necessary parties are implemented.

The European Union E-Commerce Directive 2000/31/EC includes ‘Safe Harbours’ in Articles 12, 13, and 14 to assist intermediaries that want to play a passive role to avoid responsibility. The notion of ‘Mere Conduit’ under Article 12 is pertinent here, wherein the intermediary (1) must not have initiated the transmission; (2) must not have chosen the receiver of the transmission; and (3) must not have chosen or modified the material contained in the transmission. For Telegram in this case, if Mere Conduit is used, the transmission takes place between two or more anonymous persons with no intermediary control and, in the absence of any changes, a passive function. Furthermore, as previously stated, Telegram lacks the ‘knowledge’ component, making it a great match per Recital 42 of the E-Commerce Directive. Combining these factors, Telegram can use Safe Harbour to defend its lack of control over the material and the lack of express awareness of such content on its platform.

Conclusion

Several variables, such as financial motivation, editorial control, or data storage and alteration, must be considered for assessing responsibility. Surprisingly, the real violative activities are those of a third party that shares content, but the responsibility is sought against the intermediary, who in this case does not know such content. It is an excellent chance for the Delhi High Court to seek assistance from these globally established principles and incorporate them into a leading precedent that balances both the middleman and the group chat parties for the Indian context.

References 

  1. https://www.ipwatchdog.com/2020/06/27/illegal-circulation-e-newspapers-online-messaging-apps-implications-copyright-contractual-violations/id=122828/.
  2. https://www.complybook.com/blog/jagran-prakashan-limited-v-telegram-fz-llc.
  3. https://spicyip.com/2020/07/telegram-copyright-infringement-case-indias-chance-to-seek-inspiration-from-foreign-principles.html.

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The National Education Policy 2020 and Students’ and Teachers’ Holistic Advancement through Quality Education (SARTHAQ)

By
Rachit Garg
-
0

This article is written by Amrit Kaur, from the Dr B.R. Ambedkar National Law University, RAI, Sonepat. The article talks about the National Education Policy 2020, SARTHAQ – the implementation plan and the related aspects.

Introduction

Education plays a critical role in realising one’s full human potential and creating an equitable and just society. An educated society is the biggest asset of a nation as it is the educated youth that leads a country to the path of national development. Quality education is not just a change in life, but a creative and character-building experience that affects citizenship positively. Creating a fair and equitable society with educated students contributes highly to the fight against the rising challenges of the country’s development. But, providing access to such high-quality education has been India’s major concern for a very long time.

Goal 4 (SDG4) of the 2030 Agenda for Sustainable Development, ratified by India in 2015, intends to “ensure inclusive and equitable quality education and promote lifelong learning opportunities for all” by 2030. Such a high objective would necessitate the reconfiguration of the whole education system to support and encourage learning to accomplish all of the essential targets and goals (SDGs) of the 2030 Agenda for Sustainable Development. So, moving towards the same goal, the Indian Government has rolled out a new National Education Policy and its implementation plan.

About the National Education Policy, 2020

The National Education Policy (NEP) 2020 based on the recommendation of the Kasturirangan Committee is the first education Policy of India of the 21st century. The first National Education Policy of India was passed in 1968 under Indira Gandhi’s Government on the recommendations of the Kothari Commission. The second National Education Policy came under the government headed by Rajiv Gandhi in 1986. The 1986 NEP was revised further in 1992 when P.V. Narasimha Rao was the Prime Minister. Thus, the NEP 2020 is the third educational Policy of India and thus replaces the 1986 Policy. 

The National Education Policy 2020, is based on five guiding pillars of access, equity, quality, affordability, and accountability. The NEP 2020  addresses many growing challenges in India’s existing educational Policy. The Policy will help in preparing our youth to meet the various national and global challenges of the present and the future. 

At the grassroots level, consultations were held with the villages, blocks, urban local bodies, districts and States. In addition to briefings and dialogues with MPs, Ministers of Education, Government of India ministries, self-governing organizations, stakeholder representatives, the Central Advisory Board for Education, the Parliamentary Committee, etc., talks with the public were held throughout the preparatory phase. Thus, the new National Education Policy 2020 has been prepared by extensively examining all discussions, including ideas submitted by individuals online.

The Policy recommends revising and reworking all areas of the educational structure, including regulation and governance, in order to build a new system that is consistent with the ambitious aims of 21st-century learning. The Policy is divided into four parts: 

  • The 1st part talks about the School Education;
  • The 2nd part talks about the Higher Education;
  • The 3rd part talks about other key areas of focus; and
  • The 4th part talks about making the Policy happen.

The whole Policy will be in operational mode in the decade of 2030-40, which will be followed by another complete review.

Key takeaways of National Education Policy, 2020

  • The National Education Policy of 1986 was based on “10+2” structure of school education, whereas the NEP 2020 rolls out a “5+3+3+4” structure for the school education corresponding to the age groups: 
  1. 3-8 years (foundational stage)
  2. 8-11 (preparatory stage)
  3. 11-14 (middle stage)
  4. 14-18 (secondary stage)

This will help in bringing early childhood education which is also known as the pre-school education for the children of the age-group 3 to 5 years to be included in the scope of formal schooling.

  • 6% of the country’s GDP will be spent on education as compared to the earlier 1.7% share of the education sector in the country’s GDP.
  • The Policy proposes the opening up of Indian Higher Education to foreign Universities.
  • The NEP  proposes to teach children up to Class 5 in their mother tongue or their regional language.
  • It proposes to roll out a four-year based multidisciplinary undergraduate programme with various existing options.
  • It also proposes the phasing out of the M. Phil programme.
  • It recommends that all schools offering single streams be phased out by 2040 and that all universities and colleges must strive to become interdisciplinary by that time. 
  • It stresses the need for more focus on vocational studies at the school level. It talks about providing internship opportunities to the students of grades 6-12 to learn vocational subjects.
  • It proposes to set up the Higher Education Commission of India (HECI) as a single encompassing umbrella body for all higher education, except for medical and legal education.
  • To address the e-education demands of both school and higher education, the Ministry of Human Resource Development (MHRD) will establish a specialized unit to coordinate the development of digital infrastructure, digital content, and capacity building.
  • The Policy proposes that three languages should be learned by children and these languages will be the choices of States, regions, and the students, so long as at least two of the three languages are indigenous to India.
  • PARAKH, an autonomous agency of the Ministry of Education will develop national guidelines for assessment standards to ensure the comparability of academic standards amongst students throughout all institutions.

Thus, the NEP has several features and takeaways, out of which, some have been talked about above. The NEP 2020 strives to lead India’s education on the path of modernisation by making India a “global knowledge powerhouse”.

Principles of the National Education Policy, 2020

Some of the basic principles of the National Education Policy 2020 are as follows:

  • To recognize, identify and encourage the uniqueness of each student via awareness and promotion by teachers and parents for the holistic development of each student both in academia and in non-academia.
  • Flexibility allows learners to pick their course and curriculum and choose their way of life in accordance with their abilities and interests.
  • To promote human & constitutional values such as empathy, cleanliness, civility, the spirit of democracy, the spirit of service, the respect for property, science, freedom, accountability, plurality and equality, as well as justice.
  • Extensive use of teaching and learning technologies, removal of language barriers, increased access to Divyang students and effective planning and administration of education.
  • ‘Light but tight’ regulatory framework to maintain the education system’s integrity, openness and resource efficiency through auditing and public disclosure and to promote independence, good governance, and empowering innovation as well as off-the-box concepts. Excellent research to be a prerequisite for excellent education and development.
  • Focus on regular learning formative evaluation rather than a summative evaluation that promotes the ‘coaching culture’ of today.
  • There to be no harsh division between arts and science, curricular and extracurricular activities, professional and academic streams, etc. to prevent detrimental hierarchies between and between silos of various learning domains.

Vision of the National Education Policy, 2020

  • To build an education system rooted in Indian ethos that contributes directly to transforming India, that is Bharat, sustainably into an equitable and vibrant knowledge society, by providing high-quality education to all, and thereby making India a global knowledge superpower.
  • To develop the curriculum and pedagogy of the country’s institutions in a way that creates and fosters a deep feeling of respect towards our fundamental duties and constitutional values and hence developing a conscious awareness of one’s roles and responsibilities in this ever-changing world.
  • To instil deep-rooted pride in being an Indian, not only in thought, but also in the spirit, consciousness and deeds, and developing knowledge, skills, values and provisions which promote a responsible commitment towards human rights, sustainable development, livelihood and international well-being, and reflect a genuine global citizen.

What is SARTHAQ?

The Department of School Education and Literacy has developed an indicative and suggestive NEP Implementation Plan for School Education i.e. ‘Students’ and Teachers’ Holistic Advancement through Quality Education (SARTHAQ)’, to help states and UTs achieve the goals and objectives of the National Education Policy (NEP) 2020. The plan has been made keeping in mind that education is a subject under the concurrent list and thus lives up to the spirit of federalism in India. This implementation plan is divided into two parts: Part 1 and Part 2. The Plan was released as a part of celebrations on 75 years of India’s Independence which lead to the ‘Amrit Mahotsav’.

An extensive consultation process involving states and UTs, independent boards and 7,177 recommendations received from different stakeholders, has produced this implementation plan – SARTHAQ. ‘Shikshak Parv’ was a teacher’s celebration specifically held between September 8 and 25 last year i.e. 2020 to debate several proposals and implementation methods of NEP-2020 which provided around 15 lakh suggestions.

SARTHAQ’s main objective is to describe activities in a way that clearly defines goals, results, and timeframes, i.e., it associates NEP recommendations with 297 tasks, as well as accountable agencies, deadlines, and 304 task outputs. It has also attempted to ensure that the indicated activities are constructed on top of the existing structures rather than constructing new ones. As a result, SARTHAQ is designed to adhere to the Policy’s spirit and meaning while also being phased in.

States and UTs are given the option to adjust this plan to local contexts and also to alter its needs and demands accordingly. This Implementation Program outlines the NEP-2020 roadmap and the path forward for its seamless and efficient implementation throughout the next 10 years. It is generally suggestive/indicating in character and will be revised from time to time depending upon input/feedback received from the concerned stakeholders. This NEP Implementation Plan has been developed as a working document. Furthermore, the timelines given in this document are approximated and the implementation agency has the autonomy to decide the real timeframes.

The program seeks to provide children in elementary and secondary schools with an all-around development. It will also provide students and teachers with a safe, secure, accessible, and rich learning environment. This plan initially describes the general aims/recommendations to be accomplished (as cited from NEP 2020) and then gives a systemic intervention strategy to attain the stated Policy’s objectives. Moreover, it provides Policy suggestions covering each topic, such as early childhood care and education, foundational literacy and numeracy, etc.

It has been envisaged that this implementation plan which is finalised after incorporating suggestions from various stakeholders will work towards achieving the goal of National Education Policy 2020 at the grassroots level and thus will create awareness, motivation and competencies among the concerned stakeholders and thereby transform the whole education system of the country. 

Objectives of SARTHAQ

The Implementation Plan SARTHAQ strives to fulfil the following aims of the National Education Policy 2020 as its objectives:

  • The plan will open the door for revisions to the curriculum, including new national and state framework curricula for schools and early childhood education and care.
  • The initiative will focus on increasing children’s enrolment ratio such as the Gross Enrolment Ratio (GER) and Net Enrolment Ratio (NER), increasing the transition rate and the retention rate at all levels and will also focus on reducing dropouts and out of school children.
  • It will help in providing access to high-quality Early Childhood Care and Education (ECCE) and Universal Acquisition of Foundational Literacy and Numeracy for all students in Grade 3 by 2025.
  • The quality of teacher education programs will also be improved.
  • It will concentrate on experimental education.
  • The program includes vocational training, sports, the arts, Indian knowledge, expertise skill of the 21st century, citizenship values, and environmental conservation awareness in the curriculum.
  • To achieve improvement at all levels of learning outcomes with a focus on mother tongue, local or regional languages in early years of learning.
  • To improve the infrastructure both physical and online, including, creating barrier-free access and sharing of resources amongst different schools.
  • To create uniform standards for learning outcomes and governance in public and private schools by developing an online, transparent public disclosure system, by establishing SSSA (State School Standards Authority)  in States, by integrating technology with education planning and governance, and by looking after the availability of information and communication technology and quality e-content in classrooms.

Implementation of SARTHAQ 

As stated earlier, in the implementation plan, SARTHAQ recommends 297 tasks with their estimated timeline. Part 1 of the implementation plan consists of seventeen chapters, each chapter having its specified tasks and the agencies which will be implementing those tasks within the specified time limit:

  • Chapter 1 recommends 26 tasks for Early Childhood Care and Education.
  • Chapter 2 recommends 33 tasks for Foundational Literacy and Numeracy. 
  • Chapter 3 recommends 23 tasks for reducing the dropout rates and for ensuring universal access to education.  

Similarly, every chapter recommends a different number of tasks for its specific implementation. Part 2 of the implementation plan consists of five annexures.

The implementation plan proposes to implement all 297 tasks by the year 2025. It is only task 10 who’s timeline is not yet fixed because it puts the responsibility of the same on The Ministry of Women and Child Development (MWCD). This task talks about enhancing the Anganwadi Centers for universal access to Early Childhood Care and Education (ECCE). This will strengthen the Anganwadis and the timeline of the same is yet to be decided by the MWCD itself.

Importance of SARTHAQ for the Indian states and UTs

The implementation plan is so flexible that it allows the respective states and UT’s to implement the tasks according to the respective needs of that particular state. The flexibility of this implementation plan will allow the Center and States to implement and jointly monitor it. All the suggestions and inputs received during the drafting of the plan have been deeply analysed by expert groups. The important suggestions given by various states and UT’s and the related stakeholders have been incorporated in the final implementation plan. Some of the states though have not submitted their feedback but the Policy mentions incorporating them as soon as they are received. This suggested implementation plan is intended to assist States and UTs in fine-tuning their implementation and enforcement strategies as laid forth in NEP 2020. The final draft of the plan was implemented after receiving comments and holding virtual meetings with the states and UT’s on the initial draft. 

Thus, the plan is of great importance for the states and UT’s because, firstly, it incorporates their suggestions; secondly, allows them to locally contextualise the tasks as per their needs and thirdly, it will streamline their efforts under the NEP 2020 with the national outlay.

Need for educational reforms in India

Education serves as an undercurrent for any and every nation but the lagging and static nature of the Indian education system has always remained a hurdle in the path of development of the country. In recent years, the Samagra Shiksha (formerly Sarva Shiksha Abhiyan) and the Right to Education Act (2009) have been important measures for achieving almost universal enrolment, but retention of students has been a serious issue and thus calls for the need for reform.

There are several flaws in the present education system of India because of which the need for educational reforms like the National Education Policy 2020 and SARTHAQ Implementation Plans have been called for. Our existing education system reflects the techniques and teaching methods that were adopted almost two centuries ago. Some of the flaws are as follows:

Rote learning

India has progressed so much and uses technology and other resources so efficiently but its education is still one that is based on rote learning. Our education system lacks practical knowledge. Theoretical knowledge is the major focus of our education system. Basic theoretical knowledge is essential, however, theoretical knowledge is more central to our education system than practical knowledge and it does not even give equal importance to both.

The system of evaluation

Marks still play a key role in determining children’s future, and this frequently creates a sense of pressure on the children. This overburdening of the students leads them to under-perform. There is a need that the assessment should focus more on the class engagement of a student, their projects, communication skills, leadership qualities and extracurricular activities, instead of concentrating only on the evaluation of a three-hour test. This will help in the overall evaluation of the students and this type of assessment would be the best way possible.

Treating every subject as equal

In India, still, every subject and stream is not treated equally. It is a well-perceived notion that the students who opt for the science subjects and streams are on the top of the stream hierarchy. The students who pursue these socially highly perceived subjects are forced to work and act like machines. On the other hand, the students who go for arts and humanities stream, or for that matter, for subjects like language and communication etc. are looked down upon.

Untrained educators

Educators or teachers play a very important role in the education system but the current Indian education system lags only for the need of well educated and trained teachers. The untrained teachers could not efficiently play their part in shaping the future of their students and hence end up becoming a hurdle in a child’s holistic development.

Lack of funds

Lack of funds is the main concern for the Indian education system. The current education system is not developed up to the mark because almost every government educational institution has insufficient fund sanctions and hence the infrastructure, libraries etc are not developed. Even when sufficient funds get sanctioned, the evils of corruption and red-tapism wipe in. On the other hand, private education institutions are so expensive that most students cannot afford them though there is the availability of sufficient funds.

Ignorance of the importance of Indian or regional/native language

The current education system fails to understand the importance of the role, the Indian or regional/native language could play in a child’s education. Today, the main language of instruction in every institution is English.

Brain Drain

The most intelligent and the educated people in India prefer to go abroad for jobs and other opportunities. This keeps our country devoid of the pool of the assets of our country. This phenomenon is known as brain drain. Therefore, our education system and the country could not benefit from such valuable assets.

Thus, all these flaws in our current education system call for reform for the greater good of Indian society. Though it should be pointed out here that almost all of these flaws have been looked upon and have been tried to be corrected in the NEP 2020 and the Students’ and Teachers’ Holistic Advancement through Quality Education Implementation plan.

Is the NEP 2020 enough to reshape the Indian education system?

It is sure that the National Education Policy (2020) will definitely have long term effects on the Indian education system and will also help in reshaping the existing education system but the question of it being enough is the one that is and will always be debated about. The final NEP 2020 is a far shorter version than the previous NEP draft versions. This final NEP 2020 as stated earlier aims to rework the present education system through paradigm shifts. While the new NEP seeks to integrate the Indian education system with global patterns, to eliminate “rote Learning” and instil trust and nationalistic pride in pupils, there are many educationalists who feel that the disproportionate thrust on education vocalisation in this Policy may come at the cost of rounded and holistic learning of a child at an early stage. 

But this notion of theirs will be tested overtime only. The Policy is based on practical and holistic lines but the main problem as pointed out by many is the implementation of the same. The problem of its implementation has been looked after by this SARTHAQ implementation plan. Moving on to the main question of whether the Policy is enough to reshape the Indian education system, the answer of the same cannot be given at this point of time.

Though the Policy is a positive step as the current education models should be evaluated in line with the global economic challenges, such as technology progresses, rapid globalization and unforeseen events like the COVID-19 pandemic, which transform future work. But again the Policy needs to be time tested. As every new Policy or programme takes three to five years to start showing its results, the same goes with this Policy.

Issues related to NEP 2020

The following are the issues related to NEP 2020:

Mismatch of knowledge-jobs

The amount of knowledge and skills provided and the employment availability continue to differ. Since Independence, this is one of the key difficulties in India’s education system. 

Silence on the emerging educational fields 

NEP 2020 is silent on education related to technological fields which are still developing like artificial intelligence, cyberspace, nanotech, etc. and thus, the Policy has failed to keep a check on this issue.

new legal draft

Extensive resource requirements

An aggressive public expenditure target has been set at 6 percent of GDP. The fact that the tax-to-GDP ratio is low, and conflicting claims on national health, national security and other core sectors exist, the mobilization of financial resources will be a major issue. The true test is how the Policy provisions will be backed by the budgeted amount.

The way forward

Cooperative Federalism-a necessity

Since education is a subject under concurrent list which means both the Centre and the state governments can make laws on it, thus the Center and the states can only execute the suggested reforms collectively. Though the SARTHAQ implementation plan has the spirit of federalism on paper, the same needs to be followed throughout the period of Policy implementation on the ground level.

Strive for education universalization

The establishment of ‘inclusion funds’ is needed to enable the children with disadvantages in social and educational backgrounds to pursue their schooling. In addition, a regulatory framework has to be put in place that can monitor the profit from uncounted donations in education.

To bridge the digital divide

As technology is a force multiplier, the gap between the haves and have notes may also be expanded with unequal access to it. The State must thus deal with the glaring discrepancies in access to digital education technologies.

Coordination between ministers 

Vocational training is emphasized extensively throughout the Policy, but strong cooperation between education, skills and the labour ministry has to be established to make it efficient.

Conclusion

The NEP 2020 is an excellent strategy for making the education system comprehensive, adaptable, interdisciplinary and aligned with the demands of the 21st century and the Sustainable Development Goals of 2030. NEP 2020 will make it more crucial for children to not simply study but more crucially make them learn how to learn via rapidly changing employment and global ecosystems. Education will therefore evolve towards less content and more learning on how to critically analyze and fix problems. The gap between the existing state of learning and what is necessary will be filled by substantial reforms under NEP 2020.

The goal of NEP 2020 is that every child at every stage should achieve the highest learning outcomes. Substantial improvements under the NEP 2020 will close the gap between present and essential learning conditions. Thus, the intention of Policy looks in many ways ideal, but the key to success resides in its implementation plan.

The NEP 2020 drafting committee has attempted to design a broad-ranging Policy that takes into account many perspectives, global best practices exercised in the field of education, experiences of the ground level experts and suggestions from the related stakeholders. The ambition of the Policy is aspiring, but it is the implementation roadmap i.e. SARTHAQ, which will decide if the NEP 2020  genuinely promotes an all-inclusive education that trains educational institutions and makes them future-ready.

References

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Governance and the judiciary

By
Sneha Mahawar
-
0
Governance

This article is written by Ronika Tater, from the University of Petroleum and Energy Studies, School of Law. In this article, she discusses the role of the judiciary in good governance with the support of various provisions and case laws.

Introduction

“The seat of Justice is the seat of God”.

– Mahavir Tyagi. 

While framing the Constitution, the members of the Constituent Assembly knew that the judiciary is an extension of the rights and courts should be envisaged as the rights forced. The judiciary looked like the arm of the social revolution during the colonial period, upholding the nationality and the integrity of Indians. The Indians were not able to gain it during the colonial period as the Britishers were afraid that social change would impact their rule. However, under the Constitution, all this was changed. The judiciary was seen as one of the most tangible pieces of evidence of independence. Progressively, the judicial administration has been able to meet the desire and needs of the changing time and society of modern India.

What is governance

Governance in layman language means how the government should function. It means the process of decision-making and the procedure by which the decision is implemented. It is often realized that the quality of the government depends upon the States. Over time, with changing government, the definition of governance has also been adapted. In the contemporary world, the majority of the States are founded on the principle of a ‘Welfare State’. It is a concept of government where the State ensures full participation of their respective citizens to achieve the common good to attain optimum growth and development of the individual, thereby preserving the societal interests. This evolution has led to ‘Good Governance’, which is an umbrella concept comprising the basic values of the society concerning economic, political, and socio-cultural issues. It also encompasses basic human rights and duties which need to be followed through an accountable and upright administration. 

The United Nations Commission on Human Rights states that the key features of good governance consist of transparency, responsibility, accountability, responsiveness, and participation to the needs of the inhabitants. A government is expected to fulfill its commitment and enable an environment suitable for the enjoyment of human rights and individual growth. It is also expected to ensure accountability and transparency in the use of public resources by utilizing the funds for the benefit of the public. In short, it means active participation in public policy-making, an independent judiciary, the separation of power between the legislature and the executive, and effective administration for check and balance.

Meaning of democratic government 

Democracy is vibrant and considered as one of the best forms of good governance, as it signifies government of, by, and for the people. It has evolved considering the change in the society and the minds of the people for attaining dignity and right to participate in the decision-making process that led to the policies. It involves equal accountability of all before the law, irrespective of their status, religion, caste, sex, language or race. India is a democratic country and it follows the definition as ‘a government by the people, of the people and for the people. India’s founding fathers and mothers have entailed in the Constitution both the nation’s ideals and the institution for achieving the objective. These ideals consist of national unity, integrity, a democratic, and equitable society. The new government was formed with a democratic spirit using both constitutional and democratic institutions.

Democratic features of the Constitution

The democratic features of the Constitution were cautiously drafted by the Constituent Assembly. To constitute India into a sovereign, socialist, secular, and republic, a bill of rights providing equality under the law, personal liberty, and an independent judiciary was to become the base of the new society by replacing the traditional hierarchy and its repression. Hence, parliamentary democracy was chosen as the form of the government in which the State power is divided into the three main pillars, namely the legislature, the executive, and the judiciary.

What is the conscience of the Constitution

The Indian Constitution is first and foremost a social document. The Fundamental Rights in Part III and Directive Principles of State Policy in Part IV were included in the Constitution with the hope that one day the tree of true liberty would bloom in India. The fundamental rights are those rights of citizens or those negative obligations of the State to not violate individual liberty. These rights are provided in the Constitution namely, the right to equality, the right to freedom of religion, the right against exploitation, the right to property, cultural and educational rights, and the right to constitutional remedies. To enforce any violation of fundamental rights, the citizen can move to the Supreme Court and other courts.

Part IV of the Constitution covers Directive Principles of State Policy (DPSP) which is the fundamental principle for good governance in the country. It defines the clearer statement of the social revolution, to make India free from coercion and to provide for a surrounding that ensures the growth and development of each individual to its best selves. The State, while making laws, should abide by the DPSP. Moreover, the principles are not enforceable in the court of law but they are fundamental in the governance of the country. The essence of DPSP is provided in Article 38 which reads, “the State shall strive to promote the welfare of the people by securing and protecting as effectively as it may a social order in which justice, social, economic, and political, shall inform all the institutions of the national life”. Hence, these two are the conscience of the Constitution.

Role of judiciary in promoting good governance

To ensure that the promises of an independent nation would not remain merely on paper, the Constitution framers made provision for the independence of the judiciary. Indian judiciary is the custodian and the guardian of the Constitution. It should be above reproach, free from coercion, and political influences. The function of the judiciary is paramount as it is not only the watchdog against the violation of fundamental rights but it also looks after any discrimination provided by the State, abuse of the State’s power, arbitrariness, etc. The founding father of the American Constitution, James Medison, has rightly expressed the true meaning of the judiciary in India is “truly the only defensive armour of the country and its Constitution and laws”.

One of the essential functions of democratic governance is the presence of constitutional limits on the extent of government power. Such limits include periodical elections both in the centre and the state, an independent judiciary that guarantees the citizens protection of their rights, and seeking redress from the government actions. The judicial system is the most important facet of good governance and plays an essential role in ensuring better public governance. Hence, to resolve various issues the Constituent Assembly has rightfully made two sections of the judiciary in the Constitution: the Union Judiciary, that is, the Supreme Court, and the State Judiciary, that is, the High Courts in the states. The judiciary through its various rules, regulations, and procedures resolves disputes ranging from various issues of environment, health, human rights, gender justice, education, minorities, police reforms, election, etc., keeps in check the constitutional validity of the parliamentary amendments in the Constitution. It has played a significant contribution to good governance through its judicial precedents.

Case laws

The Indian judiciary has played a pro-active role in elaborating the scope of the fundamental rights consistently, rigidly opposing the intrusion of any State agent while exercising its function thereby, upholding the rights and dignity of the individual. This is called the true spirit of good governance. Over time, the Courts have issued various guidelines and commands for law enforcement. In the case of Hussainara Khatoon and others v. Home Secretary State of Bihar (1979), the Court observed a travesty of justice of under-trial prisoners in custody due to unrealistically deal by imposing conditions of bail by the magistrate or the police. The Court issued corrective guidelines as per the procedure established by law and held that as per Article 21 depriving a person of life or personal liberty should be done in a reasonable, fair, and just manner.

In a similar case of Prem Shukla v. Delhi Administration (1980), the Supreme Court observed the practice of using handcuffs and fetters on the prisoners as violative of their fundamental right under Article 14 right to equality before the law, Article 19, and the right to life under Article 21. The act to bind a man’s hand and foot with hoops of steel, shuffle him in the streets, stand for long hours in the Courts, torture has led to dehumanizing the prisoner thereby, violating his personhood and the value of our constitutional culture. In the case of, D.K.Basu v. State of West Bengal (1997), the Court observed that custodial torture to be a clear violation of human dignity and stated that the law does not permit the use of third-degree methods of torture for extracting a confession. The action of the State should be in a fair, just, and reasonable manner.

The Supreme Court of India has also been proactive and progressive in issuing guidelines on preventing sexual harassment in the workplace. In the case of, Vishaka v. State of Rajasthan (1997), the Court extended directives for equal status in employment. In the Secretary Ministry of Defense v. Babita Puniya (2011), the Court observed that the physiological differences between men and women do not constitute a valid argument for denying equal opportunity to women officers. The court in this case put reliance on the progressive social transformation and directed the Union Government to ensure that all the women officers in the army shall be granted a permanent commission as par as with their male counterparts.

Further, the judiciary is also played as the guardian of the preamble of the constitution. In the case of Kesavananda Bharati v. the State of Kerala (1973), the 13 Bench judges examined the correctness held in the case of Golak Nath v. the State of Punjab (1967) to determine the question of law relating to Parliament’s power of amendment of the constitution. The Court in the Kesavananda case held that Article 368 does not empower the Parliament to amend the basic structure of the Constitution. 

The Indian judicial system, through its judicial pronouncement, has contributed to good governance. The judiciary has protected the rights including the right to life and liberty, right against torture or inhumane treatment, right to due process and fair treatment, right of presumption of innocence until proved guilty, right to be tried speedily, right to equality, etc.

Judicial review and governance

The members of the Constituent Assembly believed judicial review to be an essential power of the courts. Judicial review of legislative and executive action is one of the important developments in the field of public law. The concept of judicial review was first developed in the famous case of Marbury v. Madison (1803). In the case of Chandra Kumar v. Union of India (1997), the Court held that the power of judicial review over legislative action is envisaged in the Supreme Court under Article 32 and in the High Court under Article 226 is an integral part of its basic structure. The judicial review is exercised by the court to review any law passed by the Parliament and to maintain its accountability, and in case if it goes against the rule of law to declare it null or void. Further, it is important to note that the Constitution does not provide the judiciary to a super-legislature or enter into the function of the other two organs. In S.R Bommai v. Union of India (1994), the Court held that there is a certain circumstance whether the political elements rule and there is no possibility of judicial review. 

Conclusion

The judiciary has played a quintessential role in developing the right jurisprudence by expanding the libertarian and democratic values through judicial pronouncement. The influence of the court is not limited to resolving the final dispute, but also as a frontline guard to constitutional value and the fundamental principle of good governance. Dr. B.R. Ambedkar rightly said that one single integrated judiciary having jurisdiction to provide remedies in all cases of constitutional law, civil law, and criminal law is “essential to maintaining the unity of the country”.

References

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Preconceived notions of the society surrounding live-in-relationships vis-a-vis Gulza Kumari v. State of Punjab

By
Rachit Garg
-
0
Live in relationship

This article is written by Gursimran Kaur Bakshi from the National University of Study and Research in Law, Ranchi. The author of this article has explored the legitimacy of live-in-relationships in India in regards to a recent judgment of Gulza Kumari v. State of Punjab. 

Introduction 

 “It’s a fool that hangs on to the traditional standards and hopes that the world will come around him”

-Joseph J. Ellis.

Rigid societal stereotypes elude certain sections of society to enjoy fundamental rights to the fullest. There are various preconceived notions in the society that we are surrounded by. These notions are rooted in the parochial mindset that has the ability to deprive basic rights to the human being.

Recently, a live-in couple sought protection from the High Court of Punjab and Haryana against their parents from whom they were apprehending danger. Since one of the petitioners was not of marriageable age, they were residing together and were intending to get married soon. In Gulza Kumari v. State of Punjab(2021), Justice H.S Madaan observed that their non-marital relationship is not socially and morally acceptable. Hence, the petition was dismissed accordingly. 

This judgment surely reflects the preconceived notions followed by the majority on live-in-relationships in India. However, the judgment while preaching through the lines of societal morality fails to consider constitutional morality. 

In Navtej Singh Johar v. UOI (2018), the Supreme Court observed that shoving popular sentiments which are in tune with majoritarianism violates the principle of constitutional morality. It precludes constitutional justness and has the ability to transgress in the sphere of fundamental rights. 

It would not be wrong to infer that the legitimacy of live-in-relationships in India is currently governed through popular sentiments. However, it should not be the case because the legislature in the Protection of Women From Domestic Violence Act, 2005 (PWDVA) has shown its intention of protecting live-in relationships by recognising them within the definition of domestic relationships. 

Further, the courts have interpreted Section 125 of the Criminal Procedure Code, 1973 (CrPC), to include women irrespective of their marital status. The courts have also, from time to time, read both the PWDVA and Section 125 of the CrPC to include live-in-relationships through the parameters of fundamental rights. That being the case, the recent judgment of Gulza Kumari v. State of Punjab(2021) is incorrect in the eyes of law. 

Let’s see why.

The legitimacy of live-in relationships in India  

Marriage in India is sacrosanct and is traditionally seen as the union of a male and female. In India, the major enactment that governs marriage is the Hindu Marriage Act, 1955 (HMA). The HMA defines marriage as:

  • Between a male of 21 years and above and a female of 18 years and above.
  • Both have performed Saptapadi before the sacred fire. 
  • The couples must fulfil the prerequisites of marriage as laid down in Section 5 before performing the Hindu marriage ceremony as per Section 7 of HMA. 

Other than the HMA, inter-religious marriages are governed through the Special Marriage Act, 1954. Apart from this, Muslims, Christians, and Parsis have their own personal laws that regulate the subject of marriage. 

However, currently, no enactment deals with a marriage between same-sex couples. This is despite the fact that Section 377 of the Indian Penal Code, 1860 which criminalised consensual sex between same-sex adults has been read down in Navtej Singh Johar v. UOI (2018).

Issues with recognition of live-in relationships

  • First, marriage is understood as a union between a male and a female-only. This is reflected, for instance, in Section 5 of the HMA where a male and a female can only marry each other. Thus, there is no recognition of same-sex marriage.  
  • The right to procreate is also understood from the traditional perspective of marriage. Such understanding has now become obsolete given the fact that the lives of human beings grow transcendentally. India is progressing in its ability to make spaces for those sections of the society that have faced discrimination historically. 
  • There is a need to understand the freedom of choice to choose one’s partner and the right to procreate as independent human rights, arising from the constitutional framework of the right to personal liberty under Article 21. Doing so there must also be efforts in accepting relationships other than those made within the traditional boundaries of marriage. 

These above issues create a hindrance in the recognition of live-in relationships.  

Live-in relationships under the Protection of Women From Domestic Violence Act, 2005

A live-in relationship can be explained as when two consenting adults are residing together outside wedlock in a relationship similar to that of marriage for a reasonable period of time. As early as 1978, the Supreme Court in Badri Prasad v. Dy. Director Of Consolidation (1978) was faced with the issue to decide the legitimacy of the marriage between a man and a woman who happened to be living with each other for the last fifty years as husband and wife. 

The Court held that a strong presumption arises in favour of marriage if the couple has been living for a long time with each other. Such presumptions can only be challenged with a heavy burden of proof to be discharged. It means that there must be evidence to the contrary. 

The PWDVA is probably the only enactment that recognises relationships other than just marital relationships. It is because the PWDVA legislation seeks to attain a social purpose. It is to protect women from desertion, domestic violence and all kinds of physical, mental, and financial abuse that can take place in a relationship. 

Since domestic violence and abuse is a social evil that can take place between couples with or without wedlock, the Act seeks to protect all relationships which can be accommodated within the broader definition of domestic relationships under the Act. 

Section 2(f) of the Act defines a domestic relationship as a “relationship between two persons who live, or have, at any point of time, lived together in a shared household, when they are related by consanguinity, marriage, or through a relationship in a nature of marriage, adoption or are family members living as joint family.” 

Further, it defines a shared household under Section 2(s) as a household where the aggrieved person (the woman) lives or has lived at any stage of the domestic relationship either singly or with the respondent (the man).   

The Court in D. Velusamy v. D. Patchaiammal (2010) observed that Act would also protect a woman in a live-in relationship (a relationship in nature of marriage) provided:

  • The couples should share a domestic relationship. 
  • They must be of a legal age to marry or at least be qualified to enter into a legal marriage.
  • They must voluntarily cohabit for a significant period of time. 
  • Their relationships must appear as being akin to spouses. 

This position to include live-in relationships within the ambit of domestic relationships under PWDVA has also been recognised by the Supreme Court in Indra Sarma v. V.K.V. Sharma (2013). The Court observed that live-in relationships or relationships like marriage are neither a crime nor a sin even though it may be considered socially unacceptable. 

This case is especially important in the context of discussing the Gulza Kumari order. It is because in both the two cases, the Court did consider the societal parameters attached to this concept, but at least the Supreme Court upheld the order based on law. Whereas, the Court in Gulza Kumari failed to look at the precedent which is the law of the court since it was given by the highest court of the land.  

Further, in Tulsa & Ors v. Durghatiya (2008), it was considered that since a man and a woman are living together and sharing a relationship similar to that of marriage for a reasonable period of time, they will be presumed as husband and wife under Section 114 of the Indian Evidence Act, 1872.

Recognition of live-in-relationships for the purpose of granting maintenance under Section 125 CrPC

In 2003, Dr. Justice V.S Malimath Committee’s Report on Reforms in Criminal Justice System recommended for a wider interpretation of Section 125 of the CrPC to include relationships that are similar to the nature of marriage under its ambit. 

The issue of maintenance in a live-in relationship first came up in S. Khushboo v. Kanniammal ( 2010) and then subsequently in D. Velusamy v. D. Patchaiammal (2010) but under two different legislations. 

In Vimal (K) v. Veeraswamy (K) (1991), the Court interpreted Section 125 of the CrPC and held that the objective of the provision is to achieve a societal purpose, it shall prevent destitution and vagrancy. The Court stated that the term wife under Section 125 of CrPC must include a woman who has been divorced by a husband, who has obtained a divorce and has not remarried. It was also held to include a woman living in the nature of marriage but not having the statutory status of a wife.

Previously, in Mohd. Ahmed Khan v. Shah Bano Begum (1985), Section 125 CrPC was held to be a secular provision to prevent the exploitation of the weaker section under Article 15(3) of the Indian Constitution. In this case, the Court granted a relief under Section 125 CrPC to a Muslim woman who was left destitute when her husband divorced her by pronouncing triple talaq. 

Post Vimal’s case, the issue of granting maintenance under Section 125 CrPC to women living in a nonmarital relationship came up again in Chanmuniya v. Virendra Kumar Singh Kushwaha (2010). 

The Court referred to cases like Gokalchand v. Parvin Kumari (1952), Badri Prasad v. Dy. Director of Consolidation & Ors (1978) and Tulsa and Ors. v. Durghatiya & Ors (2008) to make a point that where there is a continuous cohabitation, the law will favour the presumption of marriage for the purpose of Section 125 CrPC. Strict proof of marriage is not a pre-condition to invoke Section 125 CrPC.

Section 125 CrPC was earlier Section 488 under the 1889 Criminal Procedure Code. However, in the latter provision, the ability to seek maintenance was dependent on the continuation of marital status. Thus, these cases can be relied on to at least make this point clear that the courts never explicitly made the live-in-relationships illegitimate unless an express law stated otherwise.  

Further, in D. Velusamy v. D. Patchaiammal (2010), the Court recognised live-in-relationships to the nature of marriage within the definition of domestic relationship under Section 2(f) PWDVA. It held that the issue of compensation under the Act can arise where the woman suffers from economic abuse in that relationship. 

Section 3(a) defines domestic violence which includes all physical, mental, and economic injuries caused to the female by a male in a domestic relationship. This would cover a situation in a live-in-relationship where a woman has left her job or is dependent, wholly or partially on the male counterpart for financial and economic resources in a live-in-relationship and the man decides to leave her for whatever reasons. 

In such cases, a remedy can be invoked under the PWDVA, provided that the conditions laid down under D. Velusamy v. D. Patchaiammal (2010) relating to the live-relationship can be covered under the definition of domestic relationship under the Act. 

The woman can then apply for compensation or damages under Section 12(1) of the PWDVA before the Magistrate or before a legal proceeding. The Magistrate can grant maintenance under Section 20(1)(d) or if the relief is sought in a legal proceeding, the court can grant it under Section 26(1).

These cases point out the uniformity that the courts have maintained in favouring the presumption of marriage. However, the Court in Gulza Kumari v. State of Punjab (2021) failed to consider the precedents, some of which are law of the land. This is especially concerning since the petitioners were clear that they would soon be getting married. 

The Court failed to note that the law has been consistent in protecting relationships that are similar to that of marriage. The Court perhaps got swamped with popular sentiments rather than being convinced of the law.

new legal draft

It is also to be noted that the law always favours giving legitimacy to their relationship and to extend protection under the domestic and matrimonial laws. In Rajeeve v. Sarasamma & Ors (2021), the Kerala High Court held that the long cohabitation between a man and a woman will lead to a valid presumption of marriage even if there is no direct evidence of ceremonial marriage. 

However, when there is a simultaneous cohabitation, one pursuant to a ceremonial marriage and the other not pursuant to a ceremonial marriage, the law will lean in favour of the former. A female partner in a live-in relationship cannot have a better claim than a legally married wife.

Recognition of live-in-relationships under the Juvenile Justice Act, 2005

The Juvenile Justice Act, 2015 (‘JJ Act’) recognises live-in relationships for the purpose of the adoption of a child. Recently, on 10th April 2021, the Kerala High Court in a judgment (name of the case is not available) was faced with an issue to determine whether live-in couples could be presumed to be married couples for the purpose of the JJ Act.

Facts of the case

  • According to the facts, a couple met each other during the tragic 2018 floods in Kerala. They were from different religions as the boy (John) was a Christian and the girl (Anitha) was Hindu by faith. 
  • They wanted to get married and waited for their parents’ approval. But before that, the girl became pregnant and gave birth to a girl. However, John seemed to have broken the relationship with Anitha after that. 
  • Anitha, unable to handle the situation as being a single unmarried mother that traumatised her and she decided to surrender the daughter to the Child Welfare Committee in Ernakulam under Section 35 of JJ. However, the couple later met again and decided to get custody of the child.

Order of the court  

  • The Court while deciding the issue under Section 38 of JJ which puts an obligation on the committee to trace the parents of the surrendered child, observed that marriage as a social institution depends on statutory law. However, it has no bearing on the concept of Juvenile Justice which is to protect the welfare of the child. 
  • Since the parental rights of biological parents are a natural right, they have no dependency on marital status. In a live-in relationship, a couple acknowledges certain mutual rights and obligations and offspring in such a relationship means that they have also acknowledged biological parental rights. 
  • Thus, the artificial difference between legally married and unmarried has nothing to do with parental rights. Since the law leans in the favour of legitimacy, it is important that the law favours the presumption of marriage in a live-in relationship. 
  • This is to protect the child born out of that nonmarital relationship from any kind of stereotypes. The same is in consonance with the best interest of the child recognised under the Child Rights Convention, 1989. 

In Revanasiddappa & Anr vs Mallikarjun & Ors (2011), the Supreme Court even recognised the coparcenary right of a child born out of void marriage in the Hindu joint family property. In this case, the second marriage of a person is held to be void because the first marriage was already subsisting. 

The issue was whether the child born out of the void marriage would be entitled to claim a share of the ancestral property. The Court held in affirmative by broadly interpreting Section 16(3) of the Hindu Marriage Act, 1955, which allows the child born out of void marriage to acquire property (both self-acquired and ancestral).

Hence, it should be concluded that there could be illegitimate parents but the law will not allow the child to be declared illegitimate. It protects the best interest of the child including those born outside the marital relationship. 

Judicial pronouncement on live-in relationships 

Live-in relationship vis-a-vis the fundamental right to freedom of choice  

In  Salamat Ansari v. State of UP (2020), the Allahabad High Court observed that the right to choose a partner of choice is a fundamental right under Article 21 of the Constitution of India. It forms a part of Article 21 because it is connected intrinsically with personal liberty which cannot be exercised without the right to make personal choices such as the right to live with a person. 

The freedom of choice to choose a partner and the right to live with dignity is to be exercised without the unnecessary interference of the state. 

The Court also observed that the right to choose a partner of choice is statutorily conferred to the person after attaining the age of majority. But does it mean that those on whom such right is not conferred be deprived of the same? The answer is no unless there is a clear statutory prohibition. 

Of course, no specific statutory law confers legitimacy to live-in relationships in India right now but to reside together as a couple still exists as a fundamental right. It is because the Constitution does not discriminate between who is married and who is not for the purpose of exercising their rights, provided that the person has attained the age of majority. 

The Gulza Kumari v. State of Punjab (2021) order has thus drawn a lot of criticism for the right reasons. Within weeks after this order was passed, the High Court of Punjab and Haryana passed another judgment but with totally opposite reasoning. 

In Pushpa Devi v. State of Punjab (2021), the petitioners, a girl about 21 years old and a boy of 19 years old sought the protection of the court to guard their live-in relationship from their parents, who were willing to kill them for the sake of family prestige. Since one of the petitioners, the boy, has not attained the age to marry which is 21 years old, they were not able to marry.

The Court through Justice Arun Kumar granted them the protection of life and personal liberty on the ground that both petitioners have attained the majority and they have the right to exercise their choice. This case seems to also highlight the importance of attaining the age of majority and how it changes the way constitutional protection can be granted against the state’s interference. 

On a similar understanding, the Punjab and Haryana High Court has passed orders for the protection of live-in couples in Megha and another v. State of Haryana(2019) and Komalpreet Kaur and another v. State of Punjab(2021).

In Sanjay v. State of Haryana (2021), the High Court of Punjab and Haryana came to the rescue of another live-in couple who met on Facebook, fell in love, and decided to reside together. The court also recognised that the live-in relationship is not a new phenomenon but the society has not evolved to the extent of accepting such relationships without raising eyebrows to such relationships.

On a similar understanding, the High Court of Rajasthan in Smt. Divya Shekhawat & Anr. v. State Of Rajasthan & Ors (2021), observed that society has no right to regulate how individuals are going to live their lives, especially if they are major.  

Previously, the question of the legitimacy of live-in relationships came up before the Supreme Court in Nandakumar v. State of Kerala (2018) through an appeal from the Kerala High Court. According to the facts, a couple married each other and started living together but the male had not attained the marriageable age of 21. 

The father of the female filed a Habeas Corpus petition, pleading for the custody of the daughter since the couple was not competent to marry. The Kerala High Court thereby granted the custody of the female to his father. However, the Supreme Court reversed the order on the ground that the case did not concern the validity of the marriage since the couple had attained the age of majority and they have the right to live together. 

In Shafin Jahan vs Asokan K.M. (2017), the Court expressly recognised that the choice of an adult person has been conferred esteemed status in the Constitution through the fundamental right under Article 19 and Article 21, provided, that the said choice does not transgress any valid legal framework. 

This right may get in conflict with social and moral values but these values are not above constitutionally guaranteed freedoms. This judgment read with Navtej Singh Johar v. UOI (2018) and NALSA v. UOI (2014), would surely allow us to appreciate that the choice of an adult is an innate part of their personal identity.

Another case that elaborately deals with the importance of the choice of an individual is Soni Gerry v. Gerry Douglas (2018). According to the facts, a Habeas Corpus petition was filed against an adult daughter who wanted to return back to Kuwait to her father for further studies. But her mother alleged that she was being forced to live with her father. 

The daughter appeared before the Court in person and categorically stated her intention to go back to Kuwait. The Court while dismissing the petition observed that attaining the age of the majority in an individual choice has its own significance. In Shakti Vahini Vs. Union of India (2018), the Court observed that the choice of an individual is an inalienable part of human dignity and dignity sans the right to choose cannot exist. 

Right of live-in relationship vis-a-vis the right to privacy 

Another way through which the right to choice and freedom to stay in a live-in relationship can be analysed is through the right to privacy. The Supreme Court in K.S Puttaswamy v. UOI (2017) held that the right to privacy is a facet of Article 21. 

The Court further observed that privacy represents the core of a human personality and recognises the ability of each individual to make choices and to take decisions governing matters intimate and personal. The right to choose a partner relates to the ability of an individual to control vital aspects of their lives including the preservation of personal intimacies. 

Individual autonomy must not be judged from the parameters of the social milieu. This judgement should also be read with Navtej Singh Johar v. UOI (2018). A conjoint reading of the two allows us to understand that the right to privacy will also protect the right to choose a partner of choice for persons of other sexual orientation and gender identity. 

However, recently, the government has opposed recognition of same-sex marriage stating ‘nobody is dying because they do not have a marriage certificate’. Since this being their opinion for granting rights to the third-gender, one can possibly infer their reluctance in recognising their live-in relationship. 

Last year, the Orissa High Court in Chinmayee Jena @ Sonu Krishna Jena v State of Orissa (2020) allowed same-sex couples to reside in a live-in relationship. The Court based its judgment on NALSA v. UOI (2014) and the Yogyakarta Principles. 

The Yogyakarta Principles are based on the recognition of the international human rights of persons of different sexual orientations and gender identity. These principles recognise that same-sex couples have the ‘right to found’ a family under Principle 24 and that is not strictly based on marital status. 

In Paramjit Kaur v. State of Punjab (2020), the Punjab and Haryana High Court while protecting a same-sex couple in a live-in relationship held that legitimacy of their relationship with each other, therefore, is of no consequence viz-a-viz their right to life and liberty.

International understanding of live-in-relationships

Live-in relationships are very common in Europe and America as common-law marriages. Common law marriages are mostly based on contracts where the couple decides to adopt certain rights and obligations. In the United States, there is even a consideration of granting alimony to a woman who has been in a live-in relationship for a substantial period of time. The term ‘Palimony’ was coined to grant alimony to women in live-in relationships. 

In Marvin v. Marvin (1976), a case for palimony came up before the California Superior Court. In this case, a famous actor Marvin Lee was living in a nonmarital relationship with Lady Michelle Marvin and they had also entered into a contractual agreement. 

The contract stated that Martin will provide financial support to Michelle in consideration of the latter giving up her lucrative career as a singer to devote herself as a companion. The Court considered the arrangement legal in law. 

In another case of Helen M. Devaney v. Francis(2008), the New Jersey Supreme Court by majority held that cohabitation in a live-in relationship is not a condition precedent in the cause of action for palimony, provided that there is an existence of the marital-type relationship. 

Conclusion

There must now be a consensus that the legislature and the judiciary have time and again recognised the legitimacy of live-in-relationships. A lot of judgments in the recent past have been progressive in their ability to emphasise the importance of the freedom of choice emanating from Article 21 of the Constitution of India. 

Since this has been the case, the recent Gulza judgment should not be considered as a good precedent as it has the law and the fundamental rights of the petitioners that as a guardian it had to protect. 

There is also some reluctance on the part of the legislature to not give specific rights to the live-in relationships. This could be substantiated from the fact that the recent Surrogacy (Amendment) Bill, 2019, does not allow live-in partners including same-sex live-in partners to opt for altruistic surrogacy. 

There must now be no excuse that the legislature does not confer legitimacy to the live-in relationships because more than the conferment, its realisation is important. Lastly, it is important for a Constitutional Court to forgo precedents that create a hurdle in appreciating the dynamic nature of human rights. 

Reference 

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Social media influencers, freedom of speech and expression, and trademark disparagement

By
Shoronya Banerjee
-
0
Image source: https://rb.gy/2g8krg

This article has been written by Niharika Tiwari, pursuing the Diploma in Intellectual Property, Media and Entertainment Laws from LawSikho.

Introduction

Before purchasing a product be it clothing, beauty products, food, multivitamins, etc., have you ever searched for its review online on different platforms? I am sure each one of us has done this at least once in our lifetimes. With the advent of social media and its various platforms, we have also seen the rise of “social media influencers”. They review a different range of products from different brands and sometimes even collaborate with them. Small businesses also use these tools to promote their products and develop a consumer base. In the current scenario, there have been a boom in the influencer’s viewers and followers as online purchases rose tremendously in the pandemic. According to a survey conducted by the United Nations Conference on Trade and Development and Netcomm Suisse E-Commerce Association, in collaboration with the Brazilian Network Information Center (NIC.br) and Inveon, online purchases across all product categories have increased by 6 to 10 percentage points. The whole influencer marketing is a huge 5-10 billion dollars industry.

So, who is a social media influencer? A social media influencer creates brand awareness and reviews a different range of products through various platforms like blogs, vlogs, tweets, reels which may be sponsored or unsponsored and their popularity depends upon the number of likes, views, shares, and subscriptions across various social media platforms. They use the goodwill that they develop amongst their audience to promote a brand, support a cause and recommend products depending upon what they think of their quality. This power of the influencers cannot be underestimated because they shape the mindset of the consumer’s attitude while purchasing a product. Not everyone dives deep into the intricacies to determine whether a product is of good quality and thus depends upon the opinion of these influencers. But do these influencers carry any responsibility to provide their audience a well-researched opinion on a product and not pass any comment recklessly? Is there any limitation that puts a check on them making them responsible for their credibility? This article will answer these questions in detail. 

What is trademark disparagement?

Comparative advertisement is a strategy used by companies where they compare their products to that of their competitors to show that their products are superior in quality from that of their competitors. However, when this comparison crosses the line and represents other brands in a misleading light through derogatory comments, it becomes product disparagement. This becomes a major concern for the trademark proprietors as such misleading information about their brands made in a malafide manner by the competitors affects the consumer behavior which may put them at a disadvantage. There is a very limited check put by the law on the advertising industry however, the trademark law does refer as to when comparative advertisement causes infringement. 

You must have seen the detergent ads where the product is compared with the quality of the other product but the competitor’s product name is hidden. That is done to avoid any legal issues arising out of the advertisement regarding any disparagement claims. However, even an indirect indication that may lead to the recognition of the product may lead to disparagement. The Advertising Standard Council of India in its code of self-regulation of advertising contents in India has listed certain conditions that have to be taken care of while employing comparative advertisement method such as the comparison should be in the interest of vigorous competition and public enlightenment, same aspects, and purposes of the products should be compared, the comparison should be factual and accurate substantiated by appropriate evidence and above all, the comparison should not mislead the consumers, be libelous, defamatory or be confusing either about the product which is being advertised or with which its comparison is drawn with. However, these conditions of the code are not legally binding and are optional. 

Legal provisions

  • Section 29(8) of the Trademarks Act, 1999:  A registered trademark is said to be infringed if the advertisement of such trademark takes unfair advantage, employs unfair trade practices, damages the distinctive character or the reputation of the trademark.
  • Section 30(1) of the Trademarks Act, 1999: permits comparative advertisement on the condition that it should be related to an “honest practice” and not harmful to the competitor’s trademark or business.
  • Article 19(1)(a) of the Constitution of India: Article 19(1)(a) protects the right of commercial speech in the form of advertisements limited by reasonable restrictions under Article 19 (2) of the Constitution of India. 

Judicial pronouncements

The courts have also intervened to explain what is permitted comparative advertisement as per the law and what will constitute disparagement:

Colgate Palmolive Company & Anr. v. Hindustan Unilever Ltd.

In this case, the Court distinguished positive comparison and negative comparison of two products. A comparative advertisement where one company shows its product to be of superior quality than that of its competitors is a positive comparison that is permitted under the law. However, if one company belittles or denigrates their competitor’s product to show its superiority, it is a negative comparison prohibited under the law as it amounts to disparagement and attacks the goodwill of the competitor’s business. This is against the general rules of the Trademark law. In this case, there was an indirect comparison between Pepsodent and Colgate toothpaste. The court passed an interim injunction to restrain any direct or indirect use of Colgate toothpaste in such a comparison which is detrimental to the reputation of the popular toothpaste brand. 

PepsiCo. Inc. and Ors. v. Hindustan Coca Cola Ltd.

To decide a case of disparagement, the court laid down the following factors in this case:

  • The intent of the commercial,
  • The manner of the commercial,
  • The storyline of the commercial and the message sought to be conveyed by the commercial.

Reckitt Benckiser (India) Limited v. Naga Limited and Ors.

In this case, a comparison was drawn between the famous Dettol soap and the defendant’s Ayurvedic soap. In the advertisement, a pregnant lady was shown laboring while the doctor asked for hot water, instead, a soap was handed over to her. This soap was identified by the viewers as the Dettol soap. She rejects it and says that an antiseptic soap is needed. Then the defendant’s soap is provided to her and then the Ayurvedic properties of the soap are described in the advertisement. Plaintiff claimed that this amounted to disparagement and the intention behind the commercial is malicious. However, the court held that the defendant only stated the truth about the plaintiff’s product and the truth is a complete defense in these cases. There was a misunderstanding created in the minds of the general public that the Dettol soap had the same disinfecting qualities as Dettol liquid. This misunderstanding being clarified either by the defendant or a third party is not illegal under the law. 

Hamdard Dawakhana (Wakf) Lal v. UOI 

In this case, the Hon’ble Supreme Court for the first time considered whether commercial advertisement falls under the ambit of free speech. It was held that the advertisements of prohibited drugs under the specific statute do not fall under free speech under Article 19(1)(a) of the Constitution of India. It also held that as advertisements had the element of trade and commerce, therefore, they do not fall under Article 19(1)(a) however, this decision was then overruled in the case of Tata Press Ltd. v Mahanagar Telephone Nigam Ltd. reaffirming that commercial speech is a part of freedom of speech and expression. 

Reckitt & Colman of India Ltd v. MP Ramachandran & Anr.

This case discussed what are the permitted actions to be used by the competitors while employing comparative advertisements to promote their businesses. A tradesman can declare his products to be the best in the world, even if it’s not true, he can claim that his products are better than his competitors while also comparing the advantages and disadvantages but he cannot falsify claims about the competitor’s product being bad.

Social media influencers and trademark disparagement

The rise of social media influencers has become a trend these days. They have a viewer base of their own consisting of those who trust their judgment about a certain product they review. But is there any check on their freedom to say things about a product or they can say anything? From the concepts discussed above, we can say that false claims cannot be made by the competitors or the influencers about the product in question. So, the legal question here is that is the review given by an influencer restricted by Article 19(2) of the Constitution of India? This question was dealt with in the case of Marico Limited v. Abhijeet Bhansali by the Bombay High Court, where the defendant, Abhijeet Bansali who runs a YouTube channel called Bearded Chokra, put out a video about Parachute Coconut Oil allegedly claiming that it is not a “100 % pure and smells like a dry rotten coconut.” Plaintiff contended that the claims made by the defendant in the video were false and were made to attack the goodwill of Plaintiff. Also, Defendant had given purchase links of other competing coconut oils in the video description, and thus it was not a general review but a commercial activity. 

The Hon’ble Court set an example for the social media influencers about the responsibility they carry and to ensure that their statements do not mislead the general public in this case. The court said that their audience places a lot of trust in their opinions and follows them without much research of their own. They cannot make statements like an ordinary person without any consequences. The Court held that the statements made by the defendant were made with recklessness without any effort to check the truth and falsity of them. It is the burden of the influencers to take extra precautions to ensure that their statements do not deceive the public. In this case, the test or the articles Defendant relied upon to show that his statements in the video were made in good faith were baseless and could not prove his claims. Article 19(2) was also discussed in this case that a person cannot under the garb of free commercial speech put out false and malicious comment which denigrates, belittles, discredits or harms the reputation and goodwill of someone else’s products and only facts to make the public aware are permitted. Such practices detrimental to the distinctive character of the plaintiff’s trademark also amounts to unfair trade practices. The court ordered the video, in this case, to be taken down. This was the first case ever to discuss the liability of social media influencers and their responsibility towards the viewers.

Conclusion

Social media influencers when starting are just like any other person. There are lots of influencers on all platforms trying to make their name. Some swayed by shortcuts to fame may employ such methods to gain traffic to their profile while others may contribute to disparagement by sheer ignorance. So, there is a need for the influencers to be aware of the checks put up by the law on free commercial speech and also be aware of the influence they have and the trust of the people they wield to be responsible for their content. And for the people, it has rightly been said all along that all that is there on the internet may not be true and they need to be vigilant as to the credibility of the content they view. Additionally, there is still a need for a comprehensive decision around trademark disparagement, and with the increase in such practices, it might be dealt with by the courts in the future.

References

  1. https://unctad.org/news/covid-19-has-changed-online-shopping-forever-survey-shows
  2. https://www.bigcommerce.com/blog/influencer-marketing-statistics/#10-most-important-influencer-marketing-statistics-for-2020
  3. http://updates.anandandanand.com/commercial-disparagement/
  4. https://www.lexology.com/library/detail.aspx?g=c200e9b5-d6a9-4584-9e9d-01ede06d2f56
  5. http://www.legalservicesindia.com/article/604/Comparative-Advertisement-&-Infringement-of-Trademark.html
  6. https://www.mondaq.com/india/media-entertainment-law/885770/social-media-influencers-freedom-of-speech-and-trademark-disparagement

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All you need to know about corporate financial distress and failure

By
Diganth Raj Sehgal
-
0
CS+LLB

This article is written by Pranav Sethi from SVKM NMIMS School of Law, Navi Mumbai. This article is an exhaustive analysis of corporate financial distress and failure.

Introduction 

Every business or position has no more than 5 or 7 critical success factors that determine how well it does. Identify the critical things you do that determine your success or failure. Make a plan to get better at each one of them.

– Brian Tracy

In today’s corporate world, where market discipline ensures the survival of the fittest, business failure is prevalent because companies fail to upgrade themselves in response to changing circumstances, causing them to cease operations. The fundamental issue isn’t the frequency of corporate failures, but rather the capacity to predict coming failures using some easily identifiable characteristics. A recurring trend of modifications in these characteristics can aid in the formulation and implementation of preventative strategies to avert such failures. This initiative could help to lower the costs of bankruptcy, avert financial hardship for all stakeholders, and contribute to the stability of the business and financial climate. Due to changes in commercial framework, provision, and application of the law, accounting, and corporate governance norms in different economic contexts such as developing markets, these suggestions cannot be applicable to firm failures in different economic situations such as emerging economies.

Corporate bodies are supposed to come up with a business strategy that matches customer demands to make money, yet many fail before they get off the ground owing to poorly written strategies, managerial inefficiency, and ineffectiveness. A corporation’s failure can also be attributed to its inability to handle the financial resources at its disposal. This might result in a liquidity problem that can be largely attributed to various parts of a company’s activities. A circumstance in which a corporation suffers significant losses and is unable to pay its stakeholders at the end of its working period, all due to managers’ incapacity to mobilize resources and make resource allocation decisions.

There is no chance for expansion, an organization that constantly incurs poor or negative returns is certain to fail sooner or later. When a company’s assets are insufficient to cover its liabilities, it is technically insolvent. A bankrupt company’s total assets will always be fewer than its entire liabilities, resulting in an asset-to-liability ratio of less than one. Technical insolvency and bankruptcy, on the other hand, are always dealt with in the same way in the courts of law.

Defining financial distress

Financial distress is a terminology used frequently in corporate finance to describe any circumstance in which a person’s or a company’s financial state causes them to struggle to pay their bills, particularly creditor loan obligations. Financial suffering that lasts for a long time can lead to bankruptcy.

When a situation of financial trouble arises, it must be handled as soon as possible to avoid the situation worsening. If financial problems are not addressed quickly, they often escalate to greater financial problems. A person or business in financial hardship, for example, may see their credit score decline. Lenders would demand them higher interest rates as a result, making it more challenging for them to borrow money to assist them to get through a period of lower income or revenue.

Financial distress in companies

Even a well to do corporation might go through a time of financial turmoil. Because commercial difficulties can arise for a variety of circumstances some of which are wholly outside the purview of a corporation. A rapid, unanticipated slowdown in the economy overall, for example, could lead to a significant decline in a company’s revenues. Many physical stores that had formerly had a strong, consistent income unexpectedly saw their earnings drop to zero as a consequence of the quarantine and lockdown implemented in the aftermath of the COVID-19 epidemic.

The dramatic rise in interest rates 

A business may have taken out a substantial loan with an adjustable rate of interest. In that case, a considerable rise in interest charges can dramatically raise the cost of repaying the loan, generating financial difficulties for the business.

Of fact, a company’s financial difficulty is frequently caused by managerial failings. Financially, top executives may overextend the organization by drawing the money to fund expansion. If the borrowed funds do not result in improved revenues or profits promptly, the company may find it difficult to repay its debt obligations.

Poor marketing technique

A company’s financial difficulty can also be caused by poor marketing or price decisions. Some significant sources of financial difficulty include an extravagant advertising strategy that fails or inefficient modifications to a product or pricing system that result in a drop in sales. Even the most profitable businesses may make mistakes like this.

Considering the launch of a new beverage product, “New Coke“, by the Coca-Cola Firm in 1995, which was a disaster for the blue-chip company. Consumers overwhelmingly opposed the new beverage, resulting in a significant reduction in income and the refusal of several bottlers to distribute “New Coke”. However, it’s worth noting that when Coca-Cola discontinued New Coke and reintroduced “Coca-Cola Classic,” sales skyrocketed.

Other contributing factors of a financial strain include insufficient accounting, failure to recover accounts receivables on time (which can generate severe cash flow problems), and bad financial processes. Cutting costs, enhancing cash flow or revenues, and debt restructuring to reduce the size of debt payments are the most typical remedies used by businesses to reduce financial difficulties.

Personal financial struggle

Since many individuals struggle to make ends meet and have little or no savings, it is very easy for someone to get into financial trouble. An individual’s financial difficulty, like that of a company, maybe the result of their weak monetary planning or it may be through no fault of their own. The following are some of the most common reasons for personal financial distress:

Unexpected expenses

Unexpected large expenses, such as significant medical costs or a costly automobile repair, are another regular source of financial hardship.

Inability to properly handle finances

Even those with substantial incomes can find themselves in financial trouble if they do not handle their money properly. Expenses, such as credit card payments, can quickly add up, and a person may find themself in financial difficulty. It’s critical to keep a close eye on your finances at all times.

If you find yourself in a financial bind, your best choices are similar to those employed by large businesses: find ways to cut costs and/or raise income, and explore negotiating with lenders for at least a partial reduction in debt payment obligations.

Income loss or reduction

An unexpected loss in income can happen to anyone at any time. You may get terminated or thrown off suddenly from a job, or the organization where you operate might go out of operation, making you jobless. A serious economic crisis or other condition may force you to accept a significant wage decrease to keep your job. Whatever the reason, if you don’t have any money, you may suddenly find yourself unable to pay even your most basic bills, such as rent, utilities, and food.

Signs of financial distress

There are several indicators that a business is undergoing or will experience financial trouble shortly. Profitability issues may indicate a company’s financial health. Struggling to maintain even indicates a company that is unable to maintain itself from internal resources and needs to seek financial support. This raises the company’s operations risks and reduces its creditworthiness in the eyes of lenders, suppliers, investors, and banks. A corporation (or an individual) that restricts access to funds is more likely to collapse.

Revenue declining, poor quality service and cash flow 

Revenue that is declining or growing slowly suggests that demand for a company’s products or services is not meeting expectations based on its current business strategy. Consumers may no longer be impressed with the firm’s offerings if extravagant promotional activities result in little growth, and the company may be forced to close down. Similarly, if a firm provides poor quality items or services, customers will begin to shop elsewhere, eventually causing the company to close its doors. Cash flow can be significantly strained if debtors take too long to pay their debts to the company. The company or individual may be unable to pay its debts. When a business just has one or two key customers, the danger is magnified.

Role of MSMEs

In recent years, India has seen numerous setbacks. Many market sectors have helped to protect the country’s economy in various ways. The Micro, Small, and Medium Enterprises Development Act of 2006 was used by the Indian government to launch the Micro, Small, and Medium Enterprises. MSMEs have played an important role in various areas of the Indian economy since then. It has evolved into a marketplace for beginners to continue businesses, manufacture, and sell things on a small scale and at a reduced cost.

MSMEs have contributed to social welfare in addition to commercial enterprise and have grown in importance throughout time. MSMEs’ contributions to the country’s socioeconomic and economic growth require a specific set of rules and laws. But there have been numerous changes in the industry in recent years, and they have also been regulated, appropriate management is the necessity of the hour. However, thorough inspections and the establishment of rules are required to make MSMEs more successful and beneficial.

MSME – functioning statistics

In the 2017-18 fiscal year, MSME provided 33.4 percent of overall manufacturing output, including 49 percent of total exports. As a result, MSME has a significant impact on the country’s GDP. The number of MSMEs is steadily expanding, and by 2020, many would have registered with India’s Unique Identification Authority (UIDAI). This shows that the MSME sector has been growing steadily. It has evolved into a rapidly expanding sector of the Indian economy. MSME has come a long way from being a small sector to becoming a key source of GDP in a country, and it now requires good governance.

Challenges and plans during COVID-19

In recent years, the MSMEs sector has experienced positive growth. COVID-19, on the other hand, has created a crisis situation for the corporate sector, particularly for MSMEs, which already have limited resources. The government’s Atma Nirbhar Bharat initiative, which was implemented this year, has proven to be a glimmer of hope for MSMEs. Various programs have been put in place to keep MSMEs afloat and prevent them from collapsing. The plans include providing collateral-free loans, a 12-month moratorium term, a 48-month repayment period, consideration of servicing and manufacturing MSMEs as one, and so on. These are only a few of the new MSMEs schemes.

It was critical to implement such programs to save one of India’s most vital sources of income. These plans will help people cope with the hardships that come with a pandemic. Such circumstances have put a strain on the entire industry, forcing many people to come down with their ideas and many others to suffer unwelcome and unexpected losses. The implementation of such programs will be a lifesaver for the MSME sector.

Corporate failure – causes and effects

Corporate failure can be caused by a variety of factors that can be divided into two categories: external and internal. Internal variables are those that are not directly under the control of the failing company, such as competition, the actions of the business community, changes in consumer demand, onerous regulations, and, most recently, the danger of globalization. Good management would plan and put in place all essential systems, as well as offer the required vision, initiating abilities, and perseverance to alter a company’s operations to fulfil it. 

The preceding may be stated as what we term contributing factors of corporate failure, acknowledging the validity of the essential component of management but also the falseness of human judgment:

Internal factors

These are problems that are caused immediately or indirectly by mismanagement or poor corporate governance or a mix of the two, and are detailed below:

Mismanagement

Incompetent leadership, whether due to selfishness, greed, or an absence of competency, is to blame for almost all of the failures covered so far though.

Excessive costs

This resulted from the use of obsolete machinery, outmoded production methods, unproductive sales, a lack of attention to detail, and poor business organization.

Income smoothing

Management frequently engages in income smoothing actions to post larger profit figures than predicted, which would win them rewards and bonuses. In the long run, smoothing income has an impact on corporate operations and can lead to failure.

Inadequate revenue

This is caused by a lack of company sales expertise in terms of customer satisfaction, price policy, or even insufficient marketing.

Overcapitalization

This can be traced back to advertising or later financing, and maybe to rapid development. The sales of corporation stocks may have been misplayed, the business plan might have been ineffective, or subsidiary companies or even other units may have been purchased at inflated prices.

External factors

Excessive competition

A quality product in the hands of a rival poses no greater threat, shock, or fear to a corporation. As a result of competition, numerous businesses have lost market share to competitors and have had to close their doors.

Operation of the business circle 

It is divided into four phases: prosperity, decline, depression, and recovery. During moments of prosperity, most businesses stockpile substantial inventories to meet the ostensibly constant wants of their clients. Many businesses are financially unable to withstand the stress when such inventory must be sold on the open market throughout times of decline or depression, and so as a consequence, many failures happen under depression than at any other period.

Public demand has shifted 

A shift in public demand for a product as a result of technology developments or the emergence of new products can contribute to a company’s bankruptcy.

Casualties

This is what is known as an “act of God” or “act of nature,” and it could be a fundamental reason for problems. Earthquakes, tidal waves, flooding, crises, and other calamities can devastate a business and its practical prospects for success.

Measures to prevent commercial failure

One in every 3 new small enterprises fails during the first two years, as shown in a report conducted by the US Small Business Administration (SBA). According to the same report, more than half of those who start a business fail within the first four years (56 percent). Irrespective of the state of the economy, small business entrepreneurs can take various steps to avoid losing all of their time, money, and effort in a failing venture.

Accurate projections

Most entrepreneurs are natural optimists. They see that their beliefs have the potential to transform society, and they adopt an optimistic mindset towards their efforts. This optimism, on the other hand, may cause them to overestimate their potential income while underestimating future costs. These exaggerated expectations may lead to poor business decisions based on erroneous facts. To keep their business aspirations alive, the owners must remove their rose-coloured glasses and produce accurate income and cost estimates.

Create a solid business plan

Before starting a firm, small company owners can use the SBA’s services to prepare a business plan. As the saying goes, “If you fail to plan, you plan to fail.” While no entrepreneur sets out to establish a firm to fail, many of them begin by failing to plan. A solid business plan is a must-have for any company’s success. 

Avoid high debt

For a small company, loans, credit cards, and other forms of debt can be a double-edged sword. Although most businesses rely on some form of credit to obtain the capital they require to launch, the disadvantage of credit arises when it comes time to return the loans. When a company spends the majority of its cash flow on debt repayment rather than expanding its client base or hiring new staff, it loses the ability to compete. Some businesses may want to restructure their debts. Companies that are unable to fulfil their obligations might use this process to renegotiate their debts and adjust their repayment terms to enhance their liquidity.

Cash flow management

Cash flow is a problem for a lot of new firms. These businesses must strike an equilibrium between bringing in income through sales and financing their costs. When a corporation endures prolonged durations of negative cash flow, the repercussions are similar to those of a person experiencing a decrease of blood flow: lethargy, incapacitation, and eventually death. A struggling start-up must do everything it can to generate income while keeping expenses to a minimum.

India’s corporate management failures

Here’s what some of India’s worst corporate governance failures were caused by unethical business practices.

Cafe Coffee Day

From one stage, the coffee business Cafe Coffee Day (also known as CCD) had over 1750 locations across the country. In the 2000s, it was India’s largest coffee chain. V. G. Siddhartha, the proprietor, comes from a distinguished family that has been farming coffee beans for almost 140 years. A conversation with a German coffee maker encouraged him to open Cafe Coffee Day as a Starbucks competitor just as the cafe culture was gaining traction around young people. After going public in 2015, it appeared like things were only going to get better, with reports that Coca-Cola was intending to spend a massive 2,500 crores in the company.

Nevertheless, in September 2017, the Income Tax Department launched raids at more than 20 locations associated with Siddhartha. He was said to be in a lot of debt. In the fiscal year ending March 31, 2018, his Coffee Day Enterprises Ltd’s net loss increased to Rs. 67.71 crore, up from Rs. 22.28 crore the preceding year. Considering revenue of 122.32 crores, this is the case. In 2019, he disappeared unexpectedly one evening.

He stated in a letter to the CCD Board that he was being forced by “one of the private equity partners” to buy back shares, a deal he had only partially finished six months before by borrowing a huge amount of funds from “a friend.” His body was discovered 36 hours after he disappeared in Mangalore. It appeared to be a suicide case.

Siddhartha appears to have taken on debt in his capacity to purchase land and engage in long-term projects, with unhappy lenders trying to contact him for immediate returns. While the decade of the 2000s witnessed the rise of Cafe Coffee Day, it also witnessed a growth in debt. The business required funding for both operations and capital expenditures. Around $149 million was invested in 2010 by Standard Chartered Private Equity (Mauritius) II Ltd, KKR Mauritius PE Investments II Ltd, and Arduino Holdings Ltd (who later transferred the debentures to NLS Mauritius LLC). Standard Chartered Private Equity (Mauritius) II Ltd’s compulsory conversion stock options, as well as KKR Mauritius PE Investments II Ltd and NLS Mauritius LLC’s compulsory convertible debenture, were transformed into share capital at the time of disclosure. The consolidated debt had grown to Rs. 2,700 crore by June 2015.

ICICI Bank-Videocon bribery case

After filing a criminal case for money laundering based on an FIR registered by the Central Bureau of Investigation (CBI) against the Kochhars, Videocon’s Dhoot, and others, the Enforcement Directorate detained Deepak Kochhar in September 2020. According to the federal investigation agency, Videocon Industries wired Rs. 64 crore to Nupower Renewables Pvt. Ltd. (NRPL) on September 8, 2009, out of a loan amount of Rs. 300 crore sanctioned by an ICICI Bank panel led by Chanda Kochhar (wife of Deepak Kochhar). The funds were transferred the next day after the loan was disbursed. Deepak Kochhar owns NRPL, which was previously known as Nupower Renewables Limited (NRL).

The Satyam scandal

Satyam was a publicly traded firm with a great standing and had even won the Golden Peacock Global Award for corporate governance at one time. However, the corporation conspired with auditors to deceive investors, regulators, the board of directors, and other stakeholders through false accounting methods. When the company’s Chairman Ramalinga Raju admitted to misrepresenting accounting practices, the fraud was exposed, and regulators such as the Securities and Exchange Board of India (SEBI) stepped in and began initiating measures.

Satyam’s intention to spend Rs. 7,000 crores in Maytas Properties and Maytas Infrastructure sparked the controversy. These businesses were controlled by Raju’s relatives. The investments were approved by the board on December 16, 2008, but the investors were against them. Assets such as cash and bank deposits were exaggerated, while debts were downplayed, causing the firm’s records to be falsified. As a consequence, the investors sued Satyam in a variety of ways. The Satyam board’s decision was overturned after the Maytas deal and accompanying challenges. Satyam was barred from conducting any operations for eight years by the World Bank, and four independent directors resigned.

The Satyam case generated pushback from corporate India, with many demanding immediate regulatory changes. Several organizations, including the Confederation of Indian Industries (CII), the National Association of Software and Services Companies (NASSCOM), and the SEBI Committee on Disclosure and Accounting Standards (SEBI Committee), among others, began searching into reforms to the Audit Committee, Shareholder Rights, and Whistle-blower Policy, among other things. These committees provided a variety of recommendations, which were then considered by the legislative body.

YES Bank

In March 2020, the Reserve Bank of India (RBI) gained possession of YES Bank in the absence of a realistic recovery strategy and the benefit of YES Bank’s depositors. YES, Bank’s narrative is straight out of a John Grisham novel. It began as a non-banking financial company (NBFC) in 1999 and expanded into a full-fledged bank in 2003. Former Managing Director and CEO Rana Kapoor was known for supporting up the market by consenting to distribute loans to corporate borrowers refused by other banks, and his board members were continuously fighting for the top slot. The bank would levy a hefty upfront cost, and even the majority of borrowers were willing defaulters.

YES, Bank’s monetary situation has been steadily deteriorating, owing to the bank’s failure to generate cash to handle possible loan losses and subsequent devaluations, as well as investors’ invocation of bond covenants and withdrawals of deposits. In recent years, the bank has also faced major governance concerns and procedures, which have contributed to its continuous collapse. The RBI worked closely with the bank’s management to identify methods to improve the bank’s balance sheet and liquidity. The bank’s management told the RBI that it was in discussion with several investors and that they were likely to succeed.

According to a filing on the stock exchange dated February 12, 2020, the RBI was also in talks with a few private equity firms about capital infusion options. These investors met with senior RBI officials but were unable to infuse any funds due to a variety of factors. Because a bank and market-led restoration are preferable to a regulatory restructuring, the RBI made every effort to assist such a process and provided YES Bank’s management ample time to develop a meaningful revival plan, which did not materialize. Meanwhile, the bank was experiencing continuous liquidity outflows.

Conclusion 

Poor management of a corporate entity is evidenced by lack of focus,  lack of transparency of obligation, operational activities, and productivity, an inappropriate approach of reporting accountants, lack of integrity in the corporate affairs internal process and system, poor self-decision making by those in charge of a concern’s affairs. The inappropriate site, too quick expansion, lack of prior institutional structure and capital allocation, incapacity to advertise big volumes of items, and poor credit collection through marketing networks are all reasons for failed business in India. It creates a vicious cycle in the business world. Poor cash flow management and the razor-thin margins offered to SMEs in competitive marketplaces reliant on distribution networks are two major causes of failure. These can be examined and observed.

References

 

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