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Section 13 of Hindu Marriage Act, 1955

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This article has been written by Oishika Banerji and has been subsequently updated by Jaanvi Jolly. This article attempts to provide  detailed analysis of Section 13 of the Hindu Marriage Act, 1955. It discusses the recent developments in the arena of divorce by mutual consent. It also provides the latest interpretations and case laws on the grounds of divorce. The brief history of the law on divorce along with a discussion of the changes brought about in the Hindu Marriage Act by the Uniform Civil Code enacted in the state of Uttarakhand.

Table of Contents

Introduction 

The Chhattisgarh High Court in the recent case of Saroj Lata Rajak vs. Vikas Kumar Rajak (2022), made an apt comment, that, “The matrimonial Home cannot be built with bricks and stones but with love, respect and care between the spouses”. Where there are no roses left, but only thorns, It is imperative in the interest of justice that such marital bonds must be allowed to be dissolved. It has been acknowledged that in some cases divorce is not always a detestable step, rather it is a need of contemporary society. However, the acknowledgement of this reality did not exist earlier.

The Hindu Marriage Act, 1955 was considered a watershed legislation as it brought about a radical change in the institution of marriage by the introduction of the concept of divorce under Section 13. Herein, the marital remedy of divorce was introduced for the first time. The ground of adultery becomes available if the other spouse, after the solemnization of marriage, had sexual intercourse with a person other than his/her spouse. The ground of conversion is available if the respondent has converted to another religion. The dissolution of marriage can also be sought if the respondent has been suffering from unsoundness of mind or a mental disorder or has been suffering from venereal disease in a communicable form. Additionally, if there is no resumption of cohabitation for a period of 2 years or upwards after the decree of judicial separation is passed or in case there is a failure to comply with the decree of restitution of conjugal rights for a minimum period of 1 year, then either of the spouses may seek a divorce decree. All of the above-mentioned grounds are combined in the category of the fault-based grounds of divorce.  However, The ground of unsoundness of mind or suffering from an incurable form of leprosy or venereal disease has been unheard of for seven years. Although, the supervening circumstances are beyond the control of the party, nevertheless, they have the potential to frustrate the marital relationship. Therefore, the Law Commission of India has identified these events as valid grounds for divorce, symbolising them as grounds for frustration.

History of the law on divorce

Under the traditional Hindu law, marriage was a sacred union of the souls and therefore the provision for divorce was not provided. It was the first time under the Hindu Marriage Act, 1955, that the right to seek divorce on the grounds provided in the Act was conferred upon the parties.

The earliest evidence of divorce is found in Roman law, where both marriage and divorce were considered the private acts of the parties and they could get into a marriage or get out of one at their own will. There was the absence of any formalities or intervention by an authority. 

In England before 1857, an Act of the Parliament was required to dissolve a marriage. Therefore, after the demand by the masses, divorce was recognised under the Matrimonial Causes Act 1857. However, it only recognised adultery as the sole ground for divorce. This clarifies that in the beginning, the only grounds available to seek divorce were fault-based ground. Divorce as a legal option for separation was introduced in British India for the first time in the year 1869 which was majorly for the Christians seeking a divorce. 

The Special Marriage Act, 1954 was the first legislation that recognised the concept of divorce, followed by the Hindu Marriage Act, 1955, which was the first law, recognising divorce among the Hindus. These statutes provide the provisions for divorce, however, the term divorce is not expressly defined, It merely allows for the dissolution of a marriage, if any of the given grounds are satisfied. Before the coming up of these legislations, only the death of one of the partners was recognised to bring an end to a marital bond. Even now, the initiation of a divorce proceeding by either of the spouses is not just frowned upon, rather the spouses are labelled, and there exists a strong bias against divorced people. It is considered some sort of disability. During the British era, the Divorce Act of 1869 existed which was majorly applicable to the Christian population and had a very specific goal to provide a matrimonial remedy for the Britishers who had settled in India. Apart from this, there was an absence of any legislation dealing with the topic. 

Application of Hindu Marriage Act, 1955

As per Section 2 of the Hindu Marriage Act, its provisions are applicable –

  1. To a person who is a Hindu by religion in any of its forms or developments;
  2. To a person who is a Buddhist, Jain or Sikh religion;
  3. To a person who is not a Muslim, Christian, Parsi, or Jew by religion and is domiciled in the territory to which this Act extends. Unless it is proved that he would not be governed by the traditional Hindu law or its customs. 

Types of marriages under Hindu Marriage Act, 1955

The Hindu Marriage Act,1955 envisages three types of marital bonds, that are, valid marriage, voidable marriage, and void marriage. 

Void marriages are discussed under Section 11. Any marriage solemnised in violation of Section 5 (i), (iv), and (v) is declared to be void ab initio and has no sanctity in law. Any marriage which is a bigamous marriage or is solemnised within prohibited relationships or within sapindas is void marriage. The parties may get a decree of nullity in such a case, however it is not necessary.

Voidable marriages are discussed under Section 12, wherein some infirmity exists in the marriage. For example, whether consent is obtained by fraud or force or by concealing a material fact or where the wife was pregnant at the time with the child of some other man and the petitioner was unaware of this. These marriages may be annulled by the parties by seeking a decree of nullity, thus the process of getting it annulled has to be performed by the parties. They have the discretion to take the matter to the court or not. If they do not file for annulment within the given period the marriage converts into a valid marriage and if they file for an annulment within the given time period the marriage becomes void ab initio. 

Valid marriages are the ones where all the conditions given under Section 5 etc are fulfilled. It is only in valid marriages that the parties can seek a divorce. Valid marriages also include voidable marriages that were not annulled by the parties in the period prescribed.

Theories of divorce found under Hindu Marriage Act, 1955

Under the Hindu Marriage Act, 1955, three theories have been accommodated, which can be divided into two categories, fault and no-fault theories. 

The Fault based theory 

According to this theory, any party could file a petition for divorce when the other spouse was guilty of a marital offence, for example, adultery, cruelty, desertion, etc. Under this theory, it is only the innocent party who gets a right to dissolve the marriage via a decree of divorce. The innocent part is considered as the victim and is therefore offered an option to dissolve their marriage.

The Irretrievable Breakdown Theory

According to this theory, the party filing for the divorce does not have to prove any fault on the part of the other spouse. Under this theory, if the spouses are of incompatible nature or have irreconcilable differences, that cannot be resolved or repaired they can seek dissolution of marriage. in India, the ground of irretrievable breakdown to seek divorce has not been recognised. However, we see the presence of this theory under Section 13 (1-A). Where even after the decree for judicial separation or for restitution of conjugal rights has been passed between the parties there has been no resumption of cohabitation for a minimum period of one year. 

The Consent Theory 

This theory allows both parties to the marriage to seek a dissolution via a joint motion. Where both parties agree that they do not wish to continue their marital bond. This theory was recognised by the 1976 Amendment to the Hindu Marriage Act 1955, which introduced Section 13B providing for divorce by mutual consent.

Section 13 of Hindu Marriage Act, 1955 

The Hindu Marriage Act, 1955 seeks to protect the sanctity of a marriage at every step. Section 9, which provides for restitution of conjugal rights, provides for an attempt to reinstate the spouses in the conjugal environment of each other and attempt to resurrect the performance of marital obligations. 

Further Section 10 provides for judicial separation which is a preliminary step to divorce. Section 13A provides that where a petition for divorce has been filed, the court on the application of its judicial mind and with reference to the circumstances of the case is empowered to pass a decree for judicial separation instead of a decree for divorce if it feels that there is still scope for reconciliation between the parties.

 Section 13B, which provides for divorce by mutual consent also provides for sufficient time between the two motions to enable the parties to rethink their decision to separate and attempt reconciliation of their differences, if possible. Section 23(2) and (3) provide for the power of the court to attempt reconciliation between the parties, and for this purpose, the proceedings can be adjourned for a period not exceeding 15 days and the matter can be referred to a mediator to attempt reconciliation. 

Additionally, Section 9 of the Family Courts Act, 1984 provides that a Family Court shall in every proceeding in the first instance assist and persuade the parties to arrive at a settlement. In every case where the Family Court thinks that there is a possibility of settlement between the parties, it is empowered to adjourn the proceedings and make attempts to effect a settlement. Therefore, it is abundantly clear that the aim of every marriage-related legislation is to ensure the continuity of marital bonds.

The marriage cannot be forced on individuals and the court must not act as a hangman or as a counsellor to compel the parties to continue to live as husband and wife. A marriage, especially where the meeting of minds between them has irrevocably ended.

Section 13(1) of the Hindu Marriage Act, 1955 presents the general grounds of divorce that are available to both parties involved in a marriage. Clause 1-A was introduced in the Act of 1955 by the Hindu Marriage (Amendment) Act, 1964, which provides two further grounds for obtaining a divorce decree. Section 13(2) specifically provides four grounds that can be availed for getting a divorce only by the wife. The grounds for divorce can be viewed from two perspectives:

  1. Marriage is an exclusive relationship, and if it is not, it is no longer considered marriage. Marriage also indicates that the parties would live in peace and trust with one another. Cruelty, or the threat of cruelty, undercuts this fundamental condition of marriage. The essential premise of marriage is that both parties will live together, however, if one party abandons the other, this premise is no longer valid. As a result, infidelity, abuse, and abandonment are all detrimental to a marriage’s basis.
  2. From a different perspective, the above acts are marital offences committed by one of the marriage partners. There is a semblance of crime here. Divorce is viewed in this light as a means of punishing the partner who has proved himself or herself unworthy of association. The guilt or offence theory of divorce which states that the offence must be one that is recognised as a basis for divorce is the consequence of the discussed perception. 

General grounds for divorce 

There are seven general grounds as provided by Section 13(1) which can be availed by both parties in a marriage in order to dissolve the same. The grounds of cruelty and desertion, which were originally the grounds only to seek judicial separation were by the Amendment of 1976 added as the grounds to also seek divorce. Further, apart from these 7 grounds, Section 13(2) provides for four additional grounds only to the wife. Later on, by the 1976 Amendment Act, Section 13B  was also added, which provided for divorce by mutual consent.

Section 13(1)(i) : divorce on the ground of adultery

This Section deals with adultery as a ground for divorce that is available to both parties in a marriage. Adultery is defined as voluntary sexual activity outside of marriage with any person other than one’s spouse. It is the petitioner’s responsibility to show that there was a valid marriage and that the respondent had sexual relations with someone other than him or her. At the time of the act, the marriage must be intact. To seek divorce on the ground of adultery, even a single adulterous act is sufficient on the part of the respondent and there is no requirement to prove that he or she has been living in an adulterous relationship. The sexual act must be voluntary and such ground cannot be claimed in the case of rape. Such sexual acts must be committed during the continence of the marriage and the question of whether a party was sexually active prior to the marriage leading to premarital pregnancy or the man fathering a child would not be grounds to seek divorce claiming adultery.

As per Section 23(1)(b) of the Hindu Marriage Act, 1955, the Court is duty-bound to ensure that the petitioner must not have been an accessory to or had connived with or condoned the act of adultery complained of. In such a case, he would lose the right to seek divorce on the grounds of adultery. 

Further, the question of the interpretation of the term ‘any person’ in this section is open to interpretation and the position is not clear after the landmark cases of Navtej Singh Johar vs. Union of India, (2018) wherein the homosexual and queer relationships were given legal recognition and the case of National Legal Service Authority of India vs. Union of India, (2014) wherein the transgender community was given recognition as the third gender.

The question is open, whether a gay or a lesbian relationship or a sexual relationship with a transgender would also fall under the term ‘any person’. In other words, if a man, married to a woman, is involved in sexual activity with another man, would this be considered an adulterous act for Section 13? 

Before these judgements the only legally recognised relationship was between the heterosexual individual and therefore, adultery was only interpreted to mean the sexual act outside marriage with a person other than one’s spouse. In the case of a wife the term ‘any person’ was interpreted to be a man and in the case of a husband, a woman. Now after these landmark judgements, the term ‘any person’ needs to be expanded in its amplitude. 

If this is not done, the sexual relations of a wife with another woman would not give the aggrieved husband a ground to seek divorce, however, if such sexual act would have been committed by the wife with a man, the ground would have been available. This interpretation does not fulfil the purpose of the provision, which is to protect the sanctity of marriage. 

Judicial decisions discussing adultery as a ground for divorce

The Madras High Court had ruled in Subbarama Reddiar vs Saraswathi Ammal (1996), that a single act of adultery is sufficient grounds for divorce or judicial separation. The unwritten taboos and laws of social decency in this nation, particularly in village regions, must necessarily be taken into account. Unless an excuse is given that is consistent with an innocent interpretation, the only conclusion that the court of law can draw from the fact that an unknown person was found alone with a young woman past midnight in her apartment, in an actual physical juxtaposition, is that the two have committed an act of adultery together.

In Joseph Shine vs Union of India (2018), the Supreme Court declared that adultery is not a crime and repealed Section 497 of the Indian Penal Code, 1860. It has been noticed that two people may separate if one of them cheats, but attaching crime to infidelity is taking things too far. Also under the provision punishing adultery, the woman was considered to be the property of the husband as it was the husband who was given the right to prosecute the other man and not the wife. Further, the wife was not even considered as an abettor to the crime. Therefore, it was clear that the provision only sought to protect the proprietary rights of the husband over his wife. Adultery is a private problem, and how a couple handles it is a matter of extreme privacy. This lack of moral commitment in marriage, which damages the relationship, has been left to the couple’s discretion. They have the option to proceed with the divorce if they so want.

Section 13(1)(i-a) : divorce on the ground of cruelty

Cruelty is just one of the splinters of a collapsing structure where the substratum of the marriage has broken down in a way in which the structure cannot be preserved or rebuilt

Cruelty was not a ground for divorce prior to 1976. It was only a ground to seek judicial separation. Cruelty was made a ground for seeking a divorce by the 1976 Amendment Act under Section 13(1)(i-a). According to the Oxford Dictionary, the term “cruelty” has been defined as the ‘ disposition to inflict suffering, it’s been used to describe human behaviour or conduct in general. In matters of matrimony, It is how you behave with the spouse and includes a person’s conduct towards the matrimonial obligation. It is a term that is subjective and can be interpreted as per the facts of each case. Cruelty can be mental or physical, and it can be purposeful or inadvertent. Cruelty can take many forms, including physical and emotional abuse. Physically abusing or injuring one’s spouse qualifies as physical cruelty. It is difficult to decide as to what constitutes mental cruelty. Cruelty is also an offence under Section 498A of the Indian Penal Code, 1860. 

Some of the essential elements that constitute cruelty have been presented hereunder: 

  1. The alleged wrongdoing must be “grave and serious.”
  2. It is unreasonable to expect the petitioner to live with the respondent.
  3. It has to be more serious than the “normal wear and tear of married life.”

False charges of infidelity, dowry demands, alcoholic, wife’s incompetency, the partner’s immoral lifestyle, incompatibility, and violent partner are just a few examples of mental cruelty.

Mental cruelty is a state of mind. It is a feeling of deep anguish, disappointment, and frustration in one spouse caused by the conduct of the other for a long time.

Cruelty is subjective and what may be cruelty in one case may not be cruelty in another. It differs from person to person depending on the facts and circumstances of the case. Factors like- upbringing of either party, education level, social and cultural background, social and financial status, customs and traditions, religious beliefs, human values, etc. would play an important role with reference to the circumstances of the case.

Further, the concept of mentality cannot remain static. It is bound to change with the passage of time. What may be mental cruelty today may not be mental cruelty with the passage of time. Therefore, there cannot be a straight jacket formula to determine cruelty.

Under Section 23(1)(b) of the Hindu Marriage Act, 1955, the court is duty-bound to check that the petitioner has not in any manner condoned the cruelty meted out by the respondent. The condonation acts as a clean slate upon the cruelty in the relationship. However, if the acts of cruelty that were once condoned by the spouse are repeated, the divorce petition cannot be dismissed under Section 23(1)(b) as clarified by the Allahabad High Court in the case of Richa Mumgaie vs. Harendra Prasad (2024).

Judicial decisions discussing cruelty as a ground for divorce

Prior to 1976, cruelty was not a ground for divorce but to seek judicial separation. It is only by the 1976 amendment that it has been added as a ground for divorce. Under Section 10, cruelty had to be severe enough to make the plaintiff reasonably fear that living with the other party would be harmful or injurious. Previously, this had to be proven to seek judicial separation, but this requirement has now been removed by the 1976 Amendment to the Hindu Marriage Act. Resultantly, it is no longer necessary to prove such an existence of apprehension. Now, what is required is that it would be sufficient to show that the conduct of one spouse is so abnormal or below the accepted norm that the other spouse cannot reasonably be expected to live in such a marital bond. The conduct is no longer required to be so atrociously abominable, which would cause a reasonable apprehension that it is injurious or harmful to cohabit.

While deciding on the case of Savitri Pandey vs Prem Chandra Pandey (2002), the Supreme Court of India observed that cruelty has not been defined under the Hindu Marriage Act, 1955, but it is considered in marital problems as conduct that endangers the petitioner’s life with the respondent. Cruelty is defined as an act that endangers a person’s life, limb, or health. Cruelty, for the act, is that one spouse has handled the other and expressed such emotions against her or him as to have inflicted bodily damage, or to have created cheap anxiety of bodily injury, suffering, or to have wounded health. Cruelty may be both physical and emotional. Another spouse’s behaviour that creates mental agony or anxiety about the opposite spouse’s marital situation is referred to as mental cruelty. 

  1. In the case of Smt. Nirmala Manohar Jagesha vs. Manohar Shivram Jagesha (1990), the Bombay High Court held that in a divorce case, “false, baseless, scandalous, malicious, and unproven allegations made in the written statement may amount to cruelty to the other party, and that party would be entitled to a divorce decree on that ground.”
  2. In the case of Manisha Tyagi vs. Deepak Kumar (2010), it was held that to prove cruelty it is enough that the conduct of one spouse is so abnormal or below the accepted norm that other spouse cannot be reasonably be expected to put up with it. It is not necessary to establish any form of physical violence or even a reasonable apprehension of physical violence. Where there is continuous ill-treatment or cessation of marital intercourse or indifference between parties it may lead to cruelty.
  3. In the case of Joydeep Majumdar vs. Bharti Jaiswal Majumdar (2021), the Apex Court observed that for dissolution of marriage at the instance of the party who alleged mental cruelty, the impact of such mental cruelty must be that it is not possible to continue the marital relationship. The wrong party cannot be expected to condone such conduct and continue to live with his or her spouse. The degree of tolerance required in every case would be different, depending from couple to couple with reference to their background, level of education, and the status of parties.
  4. While deciding the case of Samar Ghosh vs Jaya Ghosh (2007), the Supreme Court of India opined that when cruelty takes the form of harmful reproaches, complaints, accusations, or taunts, the general rule is that the whole marriage connection must be evaluated. This rule is especially important when the cruelty takes the form of injurious reproaches, complaints, accusations, or taunts. It is undesirable to consider judicial pronouncements to create certain categories of acts or conduct as having or lacking the nature or quality that renders them capable or incapable of amounting to cruelty in all circumstances. After all, it is the effect of the conduct, not its nature, that is of paramount importance in assessing a cruelty complaint. 
  5. In the case of XXX versus XXX 2021, the Kerela High Court discussed the question of whether ‘marital rape’ can be considered as a ground for divorce under mental cruelty. It was held that although IPC does not deal with marital rape, the same can be considered as a ground for divorce under cruelty. Marital rape occurs when the husband treats the body of his wife as something owing to him and commits a sexual act. The right to respect his or her mental integrity encompasses bodily integrity and therefore any disrespect or violation of bodily integrity is a violation of individual autonomy. Therefore, marital rape was held to be a good ground to claim divorce.
  6. In the recent case of X vs. Y (2024), It has been observed that accusing a spouse of being in an extramarital relationship along with denying the paternity of the children would be considered mental cruelty. 
  7. The Telangana High Court in the case of D. Narsimha vs. D Anita Vaishnavi (2024) held that the act of a spouse to damage the reputation, social, standing, or work prospects of another would be considered cruelty, Further depriving the spouse of being on social media websites like Facebook and Instagram may also amount to cruelty.

Whether one spouse has been cruel to the other is largely an issue of fact, and precedent cases are of little significance. The court should consider the parties’ physical and mental conditions, as well as their social status, and the impact of one spouse’s personality and conduct on the mind of the other, weighing all incidents and quarrels between the spouses from that perspective. Further, the alleged conduct must be examined in light of the complainant’s capacity for endurance and the extent to which that capacity is known to the other spouse.

Section 13(1)(i-b) : divorce on the ground of desertion

The Indian Parliament explains in Section 13(1)(i-b) of, the Hindu Marriage Act, 1955 that “the expression ‘desertion’ means the desertion of the petitioner by the other party to the marriage without reasonable cause and the consent or against the wish of such party and includes the willful neglect of the petitioner by the other party to the marriage, and its grammatical variations and cognate expressions shall be construed accordingly”. In other words, desertion refers to one spouse’s permanent absence or forsaking of the other for no apparent cause and without the agreement of the other. Desertion is not merely a withdrawal from a place, rather it is also a withdrawal from the state of things. The law seeks to enforce the recognition and the discharge of common obligations of a marital state.

This desertion must be for a continuous period of not less than two years immediately preceding the presentation of a petition seeking a divorce.

Justices R.P. Sethi and Y.K. Sabharwal of the Supreme Court of India while deciding on the case of Savitri Pandey vs Prem Chandra Pandey (2002) had viewed that there can be no desertion without previous cohabitation by the parties. 

Two key requirements must exist for the offence of desertion in the case of a deserting spouse:

  1. The fact of separation, meaning that the petitioner and the respondent should be either physically or mentally apart from each other (Factum Deserdendi);  and 
  2. The intention to desert the petitioner for a permanent period (animus deserendi).

Similarly, in the case of the deserted spouse, two components are required, namely,

  1. The absence of consent or against the will; and
  2. The lack of a reasonable cause for the partner leaving the matrimonial house.

Further, desertion can be of two types, actual and constructive. In actual desertion, the respondent is the one who leaves the matrimonial house, thereby deserting the petitioner. In virtual assertion, the behaviour of the respondent is such, it gives the petitioner reasonable cause to leave the matrimonial house. In the latter case, although it is the petitioner who has moved away from the household, it is the respondent who is held guilty of desertion due to his conduct. The burden of proof to prove desertion is upon the petitioner up to the limit of ‘preponderance of probabilities’. This means that the person filing for divorce on the grounds of desertion must prove their case to the extent that the court is convinced that the “existence of the fact is more probable than its non-existence

Judicial decisions discussing desertion as  a ground for divorce

  1. In the case of Baker vs. Baker, (1952), the court observed that there may be a desertion, although the spouses are living in the same dwelling. The key factor is that one spouse has forsaken and abandoned the other. The Court explained that the couple, although sharing a dwelling, have effectively become two separate households.
  2. The Supreme Court of India, while dealing with the case of Bipin Chander Jaisinghbhai Shah vs Prabhawati (1956), had observed that the offence of desertion is a path of behaviour that exists independently of its duration. However, as a ground for divorce, it must have existed for at least 2 years before the presentation of the petition or, in the case of a cross-charge, of the answer. Desertion as a basis for divorce varies from the statutory grounds of adultery and cruelty in that the act that leads to desertion isn’t necessarily full, but rather inchoate. Desertion is a continuing offence until there is a presumption of cohabitation. It was also further held that the petitioner bears the burden of proving the elements required in the Section in respect of both spouses. It is only when the fact of separation and the animus deserendi coexist that the offence of desertion commences.
  3. In the case of Mrs.Saraswathi Palaniappan vs. Vinod Kumar Subbiah (2013), Justice T Raja of the Madras High Court had observed that when a wife has miserably abandoned the matrimonial house, she cannot sue for restitution of conjugal rights, especially after a seven-year absence and having been found guilty of cruelty in the husband’s favour.
  4. In the case of Debananda Tamuli vs Kakumoni (2022), the Apex Court observed that a deserted spouse must prove factors of separation and intention on the part of the deserting spouse to bring the cohabitation to a permanent end. The fact that the deserting spouse visited the matrimonial house on the death of her mother-in-law and stayed for 1 day, it cannot be said that she came to the matrimonial house to resume cohabitation, as in such case, the intention on the part of such spouse is not established.
  5. The Allahabad High Court in the case of Vipin Kumar Agarwal vs. Manisha Agarwal, (2024) LiveLaw (AB) 426 held that a mere allegation that the wife forced the husband out of the matrimonial house would not be sufficient to establish desertion. Rather the husband must show that he made honest efforts to return back to the house but was not accepted by the wife.

Section 13(1)(ii) : divorce on the ground of Conversion

Section 13(1)(ii) of the Hindu Marriage Act, 1955 provides that a divorce can be granted if one spouse ceases to be Hindu and converts to another faith without the consent of the other. A person’s conversion to a non-Hindu faith, such as Parsis, Islam, Christianity, or Zoroastrianism, is known as ‘ceasing to be Hindu’. If a person converts to Jainism, Buddhism, or Sikhism, he remains a Hindu since Sikhs, Jains, and Buddhists are Hindus by faith and are covered within the ambit of the Hindu Marriage Act, 1955.

Judicial decisions recognizing conversion as a ground for divorce

  1. In light of the case of Suresh Babu vs Leela (2006), the Kerala High Court had observed that the Hindu Marriage Act, 1955 does not grant any rights to a Hindu spouse who converted to another religion. He or she, on the other hand, exposes himself or herself to a divorce suit by the other spouse based on such conversion. Under Section 13(1)(ii) of the Hindu Marriage Act, 1955, the spouse who is still a Hindu has the right to seek dissolution of the marriage with the partner who has converted to another faith since the marriage. The right of a non-converting spouse to remain married is unassailable. The Act makes no provision for the non-converting spouse’s right to convert. The Hindu Marriage Act, 1955 also does not mention that the conversion must be done without the permission of the other spouse for that spouse to file for divorce. If the other spouse consents, a conversion does not cease to be a conversion within the meaning of Section 13(1)(ii).
  2. The Delhi High Court had observed in the case of Teesta Chattoraj vs. Union Of India (2012) that while conversion to another religion is a ground for divorce, a spouse may be denied divorce even if the other spouse has embraced some other religion if the former provoked the latter to such conversion. 

Section 13(1)(iii) : divorce on the ground of unsoundness of mind 

Section 13(1)(iii) of the Hindu Marriage Act, 1955, allows a petitioner to get a divorce on the ground of unsoundness of mind. To seek a divorce on such a ground, the respondent must be either incurably of unsound mind or should be suffering continuously or intermittently from a mental disorder of a kind that the petitioner cannot be reasonably expected to live with the respondent. This unsoundness of mind or mental disorder is a post-marriage situation and need not necessarily be present at the time of the marriage. A mental disorder existing at the time of the marriage can be a ground for annulment of marriage under Section 12(1)(b).

The mental disorder should be such that it militates against the continuance of marriage. The test to see the degree of unsoundness of mind was given in the case of Whysall vs. Whysall (1959). Wherein it was stated that the practical test is found in the phrase ‘incapable of managing himself and his affairs, including the problems of married life. The burden of proof to prove the unsoundness of mind of the respondent and also that such unsoundness is incurable is upon the petitioner. 

Unsoundness of mind  as  a basis for divorce has two requirements:

  1. The respondent was mentally ill for an indefinite period, which means that it is incurable,
  2. The respondent is suffering from a mental disease of such a nature or severity that it would be unreasonable for the petitioner to continue living with him or her.

Judicial decisions  discussing divorce on the ground of  unsoundness of mind 

  1. In the landmark case of Sharda vs. Dharampal (2003), the question arose can the Family Court direct a party to undergo a medical examination in order to prove the unsoundness of mind and would such an order violate Article 21? The court said that for the purpose of grant of decree of divorce, the plaintiff must establish that the respondent is suffering from an unsound mind that is incurable or a mental disorder of such a nature that the plaintiff cannot be reasonably expected to live with him. The medical testimony would be of considerable assistance to the court. However, the Hindu Marriage Act or any other law does not contain any provision that empowers the court to issue the direction to a party in a matrimonial proceeding to compel the respondent to submit himself to a medical examination. However, that does not preclude the court from passing such an order. Further, it held that in a case for divorce based on the ground of unsoundness of mind or impotency, the petitioner would always insist upon the medical examination of the respondent and if the court allows the respondent to take the plea under Article 21, then it may become impossible for the court to arrive at the conclusion and may render these grounds of divorce, useless. Therefore, the family court has the power to order the person to undergo a medical test and such an order would not be a violation of the right to personal liberty and privacy under Article 21. However, such an order must be passed if the petitioner has a strong prima facie case. The court cannot force the respondent to undergo such an examination. However, if he refuses to submit himself to such an examination, the court is entitled to draw adverse inferences against him.
  2. The Supreme Court of India had declared in Ram Narayan vs. Rameshwari (1988) that in cases of schizophrenia mental condition, the petitioner must prove not only the mental disorder but also the fact that the petitioner could not fairly be expected to live with the respondent.
  3. The Madhya Pradesh High Court had decided in the case of Smt. Alka Sharma vs. Abhinesh Chandra Sharma (1991), that as the wife was rigid and nervous on the first evening of marriage and was found to be unable to work with domestic equipment it was ruled that she was suffering from schizophrenia and that her spouse was entitled to a divorce.

Section 13(1)(iv) : divorce on the ground of leprosy

In its findings, the Law Commission of India suggested that any legislation that discriminated against leprosy patients be repealed. India is also a signatory to a United Nations resolution that advocates for the abolition of discrimination against leprosy patients. Section 13(iv) which had the provision of leprosy contained in it as a ground for divorce, has now been omitted by the Indian Parliament on 13th February 2019 with the passage of the Personal Law Amendment bill.

Section 13(1)(v) : divorce on the ground of respondent suffering from venereal disease of communicable form

Section 13(1)(v) of the Hindu Marriage Act of 1995 establishes a reason for divorce in cases of infectious venereal disease. If one of the spouses has a sexually transmitted disease that is both incurable and transmissible, it might be used as a basis for divorce. The term “venereal illness” refers to a condition such as AIDS. 

Judicial decisions on the grounds of venereal disease

  1. In Smt. Mita Gupta vs. Prabir Kumar Gupta (1988), the Calcutta High Court had opined that while the venereal disease is a cause of divorce, the partner who is responsible for the contagion may be denied relief even if the other partner suffers as much.
  2. The Supreme Court had ruled in Mr X vs. Hospital Z (1998) that either husband or wife might divorce on the grounds of venereal illness and that a person who has suffered from the disease cannot be claimed to have any right to marry even before marriage, as long as he is not healed of the condition. 
  3. The Madras High Court had viewed in the case of P. Ravikumar: vs Malarvizhi @ S.Kokila (2013) that any contagious infection caused by sexual intercourse is defined as a venereal disease under Section 13(v) of the Hindu Marriage Act, 1955. HIV is a sexually transmitted illness. As HIV had not been discovered in 1955, it was not included in the Act. However, because venereal disease in a communicable form is one of the grounds for divorce, any disease being venereal in a communicable form will also fall under the provisions of Section 13(v) of the Hindu Marriage Act, 1955, and thus it cannot be claimed that a petition cannot be filed on the basis that HIV positive is not included in Section 13(v) and thus divorce cannot be granted. It can very well be granted. 

Section 13(1)(vi) : divorce on the ground of renunciation of the world by entering a religious order

When one of the spouses decides to enter a holy order and renounces the world, the other spouse has the right to submit a divorce petition under Section 13(1)(vi) of the Hindu Marriage Act, 1955. Renouncement of the world by entering any religious order must be absolute. It is the equivalent of civil death, and it prevents a person from inheriting or exercising their right to divide.

In the case of Sital Das vs. Sant Ram (1954), it was decided by the Supreme Court of India that someone is considered to have entered a religious order if they participate in a few of the faith’s ceremonies and rites. For example, if a man or woman joins a religious order but returns home on the same day itself and cohabits, it cannot be used as a basis for divorce since he has not forsaken the world. 

Section 13(1)(vii) : divorce on the ground of presumption of death

According to Section 13(1)(vii) of the Hindu Marriage Act, 1955, if a person has not been heard of as being alive for at least seven years by people who would naturally have known of it if that party had been living, that person is presumed to have died. According to Section 108 of the  Indian Evidence Act of 1872, if a person has not been heard from in at least seven years, he or she is presumed to be dead, it is also known as judicial death. This is a presumption of fact. The petitioner may be granted a divorce on this basis. However, under ancient Indian Hindu law, a presumption of death is not the same as in contemporary law; twelve years must pass before a person is deemed to have died. The presumption of death under the Act of 1955 can be rebutted if a person has been missing for the last seven years owing to unusual circumstances, such as fleeing a murder accusation. This is based on the presumption which states that the fact that for seven years or more, the respondent has been absent from the life of the petitioner. In normal circumstances this is treated as evidence of the death of the respondent and the marriage may be dissolved on the petition of the petitioner. The object of the rule of presumption is not to establish whether, at a point of fact, the respondent was dead or alive. Rather it presumes that on the date of the petition, the fact was known as to justify the action of the court in granting a divorce under this provision. Therefore, the decree of divorce granted would be valid and effective even if subsequently the respondent is found to be alive.

Judicial decisions on the ground of presumption of death as a ground of divorce 

  1. It was established by the Delhi High Court, in the case of Nirmoo vs. Nikkaram (1968), that if a person presumes his or her spouse’s death and marries another person without getting a divorce order, the spouse might contest the validity of the second marriage after his return. 
  2. The aforementioned law also overrides any existing custom that allows for remarriage after less than seven years, as in the case of Parmeshwari vs. Parkash Chander  (1989), where it was argued that the Karewa marriage customs allow for remarriage after the husband has not been heard from for two and a half years. The Punjab and Haryana High Court concluded that while the spouse cannot be deemed to be deceased until the issue is brought before the competent court, the seven-year timeframe under Section 108 of the Indian Evidence Act, 1872 cannot be reduced to merely 2-3 years.

Section 13(1A) of Hindu Marriage Act, 1955

This provision was added by the Hindu Marriage Amendment Act, 1964. It provides the right to a spouse to file a petition for dissolution of marriage by divorce if there has been no resumption of cohabitation between the spouses even after one year has elapsed from the date of passing of the decree for judicial separation. The term “resumption of cohabitation” does not simply refer to two people living together in the same household, rather it means that the parties have decided to fulfil their obligations which are required in a harmonious relationship.

If there is no other legal ground justifying the denial of the relief of divorce as provided in Section 23 of the Hindu Marriage Act, 1955 the court will grant a divorce order under Section 13(1A). 

The second round to seek a divorce is provided to the parties, in case there has been no restitution of conjugal rights between the parties even after one year of the passing of the decree for restitution of conjugal rights under Section 9. Restoring conjugal rights entails resuming marital obligations. If there has been no restoration of conjugal rights for one year following the issuance of a decree under Section 9 of the Act, either spouse may file for divorce. Before awarding a divorce order, for this reason, the Court must be convinced that the petition does not suffer from any infirmity as per Section 23 of the Hindu Marriage Act, 1955. 

In a recent case X vs. Y (2024), the court reiterated that once the decree for restitution of conjugal rights had been passed and still the defaulting spouse had not resumed cohabitation, this grants either of the parties the right to seek divorce under Section 13 (1A)(ii). Further, this can be considered as desertion by the respondent of the petitioner without any reasonable cause.

Judicial decisions explaining Section 13(1A) of the Act of 1955

In Saroj Rani vs. Sudarshan Kumar (1984), it was held by the top court that, when a husband obtained a decree for restitution of conjugal rights only to seek a divorce under Section 13(1A)(ii) of the Act and prevented the wife from performing her conjugal duties by driving her away from the house, it will constitute misconduct under Section 23(1)(a) of the Act. This is because the husband was taking advantage of his wrongs and thus he was not entitled to any relief. 

In Vishnu Dutt Sharma vs. Manju Sharma (2009), the Apex Court decided that based on a cursory reading of Section 13 of the Act of 1955, the law does not provide for divorce on the grounds of irreversible dissolution of a marriage. In rare situations, however, the court will grant a divorce to the marriage due to irreversible collapse. 

Section 13(2) : special grounds for divorce available only to the wife

Section 13(2) of the Hindu Marriage Act, 1955 provides four grounds for the wife to seek divorce from her husband. These grounds are explained hereunder. 

Section 13(2)(i) : polygamous marriage solemnised prior to the HMA, 1955

Prior to the commencement of the Hindu Marriage Act, 1955, the practice of monogamy was absent under Hindu law. A man was allowed to have any number of wives. However, this rule underwent a major change with the introduction of the concept of monogamy under the Hindu Marriage Act, 1955.

Therefore, under Section 13(2)(i) if more than one wife exists due to a polygamous marriage, which was solemnised prior to 18/05/1955 and is thereby a valid marriage. The wife of such a marriage has been given the right to seek a divorce. 

The following conditions must be satisfied prior to the grant of the decree of divorce on this ground :

  1. Both marriages must have been solemnised prior to the commencement of the Hindu Marriage Act 1955;
  2. Either the husband of the petitioner had married again before the commencement of the Hindu Marriage Act, 1955 or any other wife of the husband was alive at the time of the solemnisation of marriage of the plaintiff before 18/05/1955; 
  3. The wife is alive when the petition for divorce on this ground has been presented by the petitioner. It is immaterial, if, during the proceedings under the Section, the other wife dies or obtains the degree for divorce. It is immaterial whether, during the proceedings under this Section, the other wife dies or seeks for the decree of divorce.  in order to seek divorce under this ground, it is material that the other wife is present at the time the petition was filled.

For instance, H married W on 1/1/1920, he subsequently married W1 on 1/1/1930 and married W2 on 1/1/1940. Since all of these marriages were solemnised prior to the commencement of the HMA, 1955 all the wives would have the right to seek dissolution of their marriage under this ground. The sole stipulation is that the divorce petition would be granted if the other wife was still alive when the petition was presented.

In the case of Venkataramma vs. Venkataswamy (1962) Karnataka High Court held that all the wives may present a petition for divorce and may obtain a decree of divorce as the requirement is that at the time of presentation of a petition, one or more wives must be alive.

Section 13(2)(ii) : husband guilty of committing rape, sodomy or bestiality 

Under this Section, a wife can seek divorce from her husband, if the latter has been guilty of committing rape, sodomy, or bestiality since the marriage was solemnised. It is only after the charges are proved and the husband is finally convicted and no more appeals lie, that this ground would be available. Mere accusations or allegations of such acts would not suffice.

Section 375 of the Indian Penal Code, 1860 makes rape a criminal offence. A person who has carnal copulation with an individual of the same sex or an animal, or non-coital carnal copulation with an individual of the opposite sex, is said to have committed sodomy. Bestiality refers to a human’s sexual union with an animal that is contrary to nature’s order.

Section 13(2)(iii) : decree or order of maintenance

This Section provides the wife the right to seek divorce when a decree of maintenance has been issued under Section 18 of the Hindu Adoptions and Maintenance Act, 1956, or when an order of maintenance has been issued against the husband under Section 125 of the Code of Criminal Procedure, 1973, ( Now under Section 147 of the Bhartiya Nagrik Suraksha Sanhita 2023) and if the following two requirements are fulfilled, in that case the wife has the option of filing a divorce petition against her husband:

a) The fact that she was living separately, and

b) She and her spouse have not cohabitated for at least one year following the issuance of the decree.

In the case of Satinder Singh vs. Bhupinder Kaur (2010), the Delhi High Court stated that it was by the recommendation of the Law Commission in its 59th report that this clause was added. It was aimed at providing the wife a right to seek divorce in case the husband has continued to neglect her ever after an order granting maintenance in her favour has been passed. The absence of cohabitation for a period of a minimum of 1 year clearly establishes that the husband has ceased to value the society of the wife and the need for her company has ended. Only the wife has been granted the right to seek divorce on this ground as, an erring husband who refuses to pay his wife the maintenance despite the order of the court cannot be allowed to contend that since the order has not been complied with, the ground for divorce is available to him. If such ground is made available to him, it would create an easy way for erring husbands to seek divorce.

Section 13(2)(iv) : the option of puberty

India is infamous for the prevalence of child marriages, especially in the states of Rajasthan, Haryana, West Bengal, etc. After acknowledging this reality, this ground was included within the HMA, 1955.

Under Section 5, the age requirement has been stipulated as 18 years for the bride and 21 years for the bridegroom. However, no consequence has been expressly stated in case this condition is violated. This has the effect of treating a child marriage as a valid marriage. This notion is further strengthened by Section 13(2)(iv) which declares it as a ground for divorce, and we must understand that a divorce is only provided in a valid marriage.

It enables the wife to seek a divorce if her marriage was solemnised before she reached the age of 15. She has been given the option of seeking a divorce after she turns 15, but before turning 18. When a child bride reaches puberty, she has the option of seeking a divorce, this is to safeguard females who may have been pressured into marriage. 

This ground must be read with the Prohibition of Child Marriage Act 2005. Under this Act, a marriage of a child, which includes a male below the age of 21 and a female below the age of 18, has been declared voidable. A marriage can be declared voidable by a decree of nullity and a divorce decree is not required in such a case. Further, under the Act, the right to get such marriage annulled is available for a period of three years after attaining the age of majority, which is 18 years for females and 21 years for males. 

Therefore, while the Hindu Marriage Act, considers such marriage as a valid marriage and provides the option of puberty to seek divorce in such case, the Prohibition of Child Marriage Act, expressly declares it to be voidable, which can be annulled by a degree of nullity. 

Section 13A : alternate relief in divorce proceedings

It is evident that the Hindu Marriage Act 1955 attempts at every step to preserve the marital bond between the parties and to reconcile the differences amicably wherever possible. On the same lines, this provision was added by the Marriage Laws Amendment Act, 1976. It empowers the court to which a petition for divorce has been filed to grant a decree of judicial separation instead If the circumstances justify such a course of action. Where the court is of the opinion that there is still a scope for reconciliation between the parties, it may grant a decree for judicial separation instead of a divorce decree. This course of action is not allowed in case a petition for divorce is filed on the grounds of conversion by the respondent (Section 13(1)(ii)) or renunciation of the world by the respondent (Section 13(1)(vi)) or if the spouse has been missing for seven years or more (Section 13(1)(vii)). 

Section 13B : divorce by mutual consent

The Fifty-ninth Law Commission report suggested the inclusion of the provision providing for divorce by mutual consent. This recommendation was also supported by the committee on the status of women in India. As a result, this was included in the Hindu Marriage Act, 1955 by the Marriage Laws (Amendment) Act, 1976. 

Section 13B of the Hindu Marriage Act, 1955 provides for divorce by mutual consent of the parties to a marriage. The parties may file a petition for dissolution of marriage by a decree of mutual consent under Section 13B(1) of the Hindu Marriage Act, 1955 if the marriage is dissolved with effect from the date of the decree. Section 13B(1) of the Hindu Marriage Act read with Section 13B(2) envisages a total waiting period of 18 months from the date of separation to move the motion for a decree of divorce.

The requisites for the presentation of the first petition under Section 13(1) are as follows-

  1. Both parties must present the petition together;
  2. The parties must have been living separately for a period of a minimum of one year; and 
  3. The parties have not been able to live together and have mutually agreed to dissolve the marriage.

The requisites for presentation of the second petition under Section 13(2) are as follows-

  1. The motion must be made by both parties;
  2. This motion must be made at least six months from the first petition but not later than 18 months from the date of the first petition;
  3. After the second motion, the Court will conduct enquiry to examine the truthfulness of the averments of the petition and on being satisfied that the consent is not obtained by fraud, force, etciIt will subsequently pass a divorce decree.

Justice Indira Banerjee while deciding the recent case of Amit Kumar vs. Suman Beniwal (2021) has made the following observations concerning Section 13B of the Hindu Marriage Act, 1955, which provides for divorce by mutual consent and took effect on 27.5.1976, is not designed to damage the institution of marriage. Where a marriage has irretrievably broken down and both spouses have amicably chosen to separate, Section 13B allows the parties to avoid and/or abbreviate needless confrontational litigation.

Tracing the development in the law relating to divorce by mutual consent under Section 13B  

Sureshta Devi vs. Om Prakash (1991)

In this case, the Apex Court interpreted the meaning of ‘living separately for one year or more’ under Section 13B. The term living separately connotes the state of things, they must not be living as husband and wife, nor fulfilling their marital obligations. It has no reference to the place of living.

Anil Kumar Jain vs. Maya Jain (2009) 

In this case, the Apex Court discussed the issue of whether the statutory waiting period prescribed under Section 13B(2) before the filing of the first and the second motion can be waived by the Apex Court under Article 142 of the Constitution. Prior to this judgement, all the courts were waiving this period.

The court categorically stated that it is only the Apex Court that can grant relief to the parties without waiting for the statutorily prescribed waiting period of six months by using its powers under Article 142. Other courts cannot exercise such powers as they are not competent to do so. Therefore, neither the Civil Court nor the High Court can pass orders before the expiry of such period. Further, the Supreme Court can in special circumstances pass appropriate orders to do justice and waive the period, but in normal circumstances, the provisions of the statute must be given effect.  

Hitesh Bhatnagar vs. Deepa Bhatnagar (2011) 

The question that was decided in the present case was can the consent be withdrawn at any stage by the parties under Section 13B? 

The court held that the decree for divorce by mutual consent can be passed only if the following conditions must be fulfilled-

  1. The second motion as required under Section 13B (2) has to be made not before six months from the date of filing of the first motion under Section 13B(1) and not later than 18 months from the date of the first motion.
  2. After hearing the parties to the petition and making an inquiry, if the court is satisfied with the truthfulness of the averments in the petition.
  3. The petition is not withdrawn by either party at any time before the passing of the decree.

Therefore, it is clear that the consent in such a petition can be withdrawn at any time before the decree. The most essential element in the divorce by mutual consent is the presence of free consent of both parties, existing till the decree is passed. The court further noted that non-withdrawal of mutual consent before the expiry of 18 months is immaterial, if the consent is subsequently withdrawn.

Amardeep Singh vs. Harveen Kaur (2017) 

In this landmark case, the question before the Apex Court was, whether the waiting period of 6 months is mandatory or can be waived off under exceptional circumstances.

The court stated that the period was provided by the legislature to enable the parties to rethink and try to reconcile their differences. However, in cases where the court believes that there is no scope for any reconciliation and a case to waive the statutory period has been made out, it may do so. The Apex Court has provided a list of conditions to  be considered to decide whether the case to waive the six-month statutory period has been made out or not :

  1. Where the statutory period of six months in addition to the one-year period in Section 13B(1) of separation has already been undergone before the first motion itself.
  2. Efforts for mediation and reconciliation have failed and the chances of reconciliation are nil.
  3. The parties have settled all incidental matters like alimony, custody, etc.
  4. The court is of the opinion that the waiting period will prolong the agony. 

In such cases, any court where the petition is pending and not just the Supreme Court can waive the waiting period. The waiver application can be filed 1 week after the petition for the first motion has been filed, after giving the requisite reasons for the waiver. The final discretion lies with the court on the analysis of the facts and circumstances. 

Rajat Gupta vs. Rupali Gupta (2018)

In this case, two questions arose before the Delhi High Court. Firstly, where the parties filed the first motion, but one of them does not come to file the second motion can contempt proceedings be initiated against such a party, and secondly can the court force the party to provide his consent?

The court held that the main feature of Section 13 B is that it recognises the unqualified right of a party to the marriage to withdraw its consent. This right exists, notwithstanding any undertaking which the party may have given before. The element of mutual consent should commence from the stage of filing of the first motion and should continue till the time the decree is passed. However, the defaulting party who does not come to file the second motion or withdraw its consent can be liable for civil contempt, if the aggrieved party is able to show that it is due to the wilful breach of the defaulting party that the former has been placed in a disadvantageous position. 

Shilpa Sailesh vs. Varun Sreenivasan (2023)

The issue considered in this case was, whether the Apex Court while hearing a transfer petition or other proceeding exercised powers under Article 142 in view of the settlement between parties and granted a divorce by mutual consent, dispensing with the period and proceedings prescribed under Section 13B. 

The legislative intent behind the incorporation of Section 13B (2) was to give the couples time to introspect before they decide to separate. There are situations of exceptional hardship on account of reconcilable differences. Allegations are made against each other and the respective families and multiple litigations, including criminal cases, are instituted. In such cases, the divorce is inevitable and the cooling of a period of six months breeds misery and pain to the parties. 

In the case of Amardeep Kaur vs Harveen Kaur (2017) as mentioned above, the Apex Court enlisted several questions that the court would ask before passing any order. However, the present judgement proceeds on the interpretation of Section 13 B(2) and does not examine if the Supreme Court can record a settlement agreement and grant a divorce on mutual consent under Section 13 B in the exercise of power under Article 142 of the constitution.

Section 13B of the Hindu Marriage Act, 1955 does not impose any fetters on the powers of the court to grant a degree of divorce by mutual consent on a joint application when the pre-conditions of the Section are fulfilled and the Supreme Court is of the opinion that a decree should be granted. Further, the court on the basis of settlement between the parties while passing a decree of divorce by mutual consent, can set aside and quash other proceedings, including criminal cases to ensure amicable resolution of matrimonial matters. After ensuring that the settlement between the parties is achieved with free consent.

Conclusion 

The Hindu Marriage Act, 1955 Has provided various grounds to dissolve a marriage in case the continuance is no longer conducive. At the same time, it is abundantly clear that every attempt has been made by the legislature to protect the sacred bond of matrimony. In addition, the courts are also duty-bound to endeavour to help the parties reach an amicable resolution wherever the circumstances allow. In light of the constitutional principles of human dignity and individual autonomy, the provision for dissolution of marriage has been provided. 

Frequently Asked Questions (FAQs)

What changes were brought about in the law of divorce under the HMA, 1955 by the 1976 Amendment?

The 1976 Amendment was brought about to liberalise the provisions relating to divorce to enable expeditious disposal of proceedings under the Act and to remove certain anomalies and handicaps that had come into light after the Act was passed.

The following were the major changes brought about by the Amendment-

  1. Hindu Marriage Amendment Act, 1976 has inserted impotency as a ground to declare a marriage voidable under Section 12(1)(a).
  2. Adultery, cruelty, and desertion were inserted as grounds of divorce under Section 13(1) (i), (ii), and (iii) by the Hindu Marriage Amendment Act, 1976. 
  3. Section 5 of the Hindu Marriage Act provides the conditions of marriage, Section 5(ii) (a), (b), (c) were inserted by the Hindu Marriage Amendment Act, 1976.
  4. The wife can now claim divorce under  Section 13(2)(iii) on the ground that a decree or order has been passed against the husband and in favour of the wife, awarding maintenance to her, notwithstanding the fact that the spouses were living separately. Even after one year of the passing of the decree or order, the cohabitation between the parties has not resumed.
  5. The provision for alternate relief in divorce proceedings under Section 13A and divorce by mutual consent under Section 13B was also inserted by the Hindu Marriage Amendment Act,1976.
  6. Special provisions relating to the trial and disposal of the petitions under the Hindu Marriage Act specified under Section 21B were also inserted by the Amendment Act,1976.

What changes were brought about in the Law of divorce under the Uniform Civil Code in Uttrakhand? 

The Uniform Civil Code of Uttrakhand 2024 (hereinafter UCC) is intended to govern and regulate laws relating to marriage and divorce, succession, live-in relationships, and related matters.

  1. Under the UCC introduced in the state, the registration of marriages as well as divorces has been made compulsory. Therefore, now to make a divorce fully legalised in addition to the decree of a court, the registration of such divorce is also to be sought. Further, the Act also sets a timeline for the parties who have already been granted divorce to register such divorces. The omission to register is stipulated to be met with penal provisions. It is a known fact that the registration of any document in India is not an easy task due to the red tapism and corruption found in the department. While the benefit of registration of marriages does fulfil a purpose The rationale behind registration of divorce is still unknown as the decree of a court is a public document and is accessible to all.
  2. In the provisions dealing with marriage and divorce the legislature of the state has omitted to provide any law relating to settlement in a matrimonial relationship, which divides the resources of the spouses equally which were either purchased jointly or separately after marriage. It is a known fact that where ever divorce decree is passed, the courts often do not make specific provisions for permanent alimony and this right has to be claimed independently by separate suits. 
  3. The Uniform Civil Code has set out new rules for consensual sexual relationships outside marriage, which are also known as live-in relationships. The party is duty-bound to notify the registrar within a month of entering into such a relationship and further, even the termination of such a relationship has to be notified to the police. This compels the people in such relationships to disclose the fact of them living together and act in negation of the very idea of privacy. As per the opinion of a section of society, the provision requiring the registration is arbitrary and irrational. They contend that such a move is intrusive upon the privacy of individuals is susceptible to be constitutionally challenged. If two consenting adults decide not to marry, but only live together and start living together are also to be registered. It is in a way making public what they intend to keep private.

What other provisions are related to divorce under the Hindu Marriage Act, 1955?

The following are some of the provisions related to divorce under the Hindu Marriage Act, 1955 :

  1. Section 14 provides that any party to the marriage cannot file a petition for divorce before the expiry of one year from the marriage. However, as per the proviso in case of exceptional depravity or exceptional hardship, the court waive off the time period of one year. This Section acknowledges the time period required after the marriage for some adjustment and therefore ensures that the party spent at least one year, attempting to adjust to the new change circumstances and not take any action in haste. In a recent case of X vs.Y (2024) LiveLaw (PH) 08, the Punjab and Haryana High Court has ruled that Section 14 also applies to divorce sought under Section 13B, and therefore, couples can seek relaxation to file for mutual divorce within one year of marriage.
  2. Section 28 provides for the limitation period to present an appeal against a decree passed. A period of 90 days has been stipulated to present an appeal. Therefore in cases where an appeal lies, It would only be lawful for the spouses to remarry after the period to prefer an appeal has elapsed or where the appeal was filed it has been finally disposed of. This provision has been provided to protect the rights of the spouse who is aggrieved by the decree.
  3. Section 15 provides the time limit when a divorced person may be married after a divorce decree has been passed. It is clearly provided that in case where there is no right of appeal or where the appeal is provided for, however, the time has elapsed to present an appeal or where the appeal has been presented and is dismissed, then the parties can lawfully marry. The fate of a subsequent marriage solemnised in violation of this provision has not been expressly dealt with in the Act. This marriage is neither boiled nor voidable but can be termed unlawful or illegal as it has been performed in violation of the law. The Apex Court in the case of Anurag Mittal vs. Shaily Mishra Mittal (2018), stated that the restriction provided under Section 15 is merely for the protection of the party who is contesting the appeal and would not apply in cases where the parties have mutually settled and decided not to pursue an appeal.
  4. Section 23(2) and (3) clearly reflect the legislative intent of protecting marriages as far as possible and declares that before any relief is granted under the Act, the court must attempt to make an endeavour to bring about reconciliation between the parties. To facilitate amicable settlement and reconciliation, the court can adjourn the proceedings and refer the dispute to a mediator.

References 

  1. https://www.scconline.com/blog/post/tag/Section-13-of-hindu-marriage-Act/
  2. https://frontline.thehindu.com/politics/uttarakhand-ucc-bill-law-implications-for-uniform-civil-code-in-india-women-marriage-relations/article67899026.ece#
  3. https://ucc.uk.gov.in/

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Artificial intelligence for human learning, behaviour change and insight

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Artificial Intelligence

This article has been written by Manasa Raghuvaran pursuing a Diploma in Business English Communication for International Professionals and Remote Workers course from Skill Arbitrage.

This article has been edited and published by Shashwat Kaushik.

Introduction

Artificial intelligence is reconstructing multiple aspects of human life, specifically in education, behaviour change, life enhancements, and decision making. This article explores how AI is being used in human learning and behaviour, providing insights into its applications and future potential. 

The shock of AI on 90’s learners

Think back to our school days in the 90’s, learning was a journey of tenacity and sometimes frustration. We had textbooks, notebooks, and maybe a trustworthy encyclopaedia for research. When we struggled with a tough math problem or did not understand a historical event, our options were limited. We must rely on our own perseverance and handy notes; maybe ask a parent or wait until the next day to ask a teacher for help. It was a more solitary learning experience, where understanding or the solution often came after hours of struggling through concepts on our own. Also, it requires a lot of patience.

Fast forward to today’s students. They have AI at their fingertips. Today’s students have the advantage of AI-powered tools that provide immediate support not only for learning but also for helping students in their career path.

Imagine a high schooler working on a challenging physics concept. With a few taps on their smartphone, they can access interactive simulations, watch educational videos tailored to their learning style, and even get personalised feedback from AI tutors.

This accessibility has transformed the learning process into a more interesting, knowledgeable and engaging journey. It is evident how technology has developed to enrich educational experiences, offering students resources and assistance that previous generations could only dream of.

Mastermind tutoring systems

Intelligent tutoring systems are another groundbreaking application of AI. These AI-driven tools mimic human tutors to generate interactions and engage with the student in real time on demand. Specifically, they help with the homework, explain difficult concepts, provide additional practice exercises and provide feedback. This instant support can be crucial in subjects where students typically struggle, such as mathematics and science.

Moreover, AI excels in data analytics, tracking students’ data to identify performance trends and areas for improvement. Predictive analytics can flag at-risk students early, allowing educators to intervene before problems escalate. By harnessing data, schools can make informed decisions that boost educational outcomes and support student access.

Example: An educational institution in Taiwan used precision education analytics and reported a significant reduction in dropout rates among identified at-risk students. The ability of AI to detect trends and patterns and recommend interventions tailored to student needs enhances students’ success. How awesome it is! 

How AI helps in career development

This is the most common question that is trending among all students and working professionals. While the students are using AI as their career pathway assistant, the working professionals are using it for their skill enhancement to reach greater heights.

The good thing is that AI extends its benefits beyond formal education to lifelong learning and skill development. AI tools facilitate continuous learning by providing suggestions for courses, books, and other educational resources based on individual interests and their learning history.

Platforms like LinkedIn AI use AI to suggest courses that align with the user’s career goals and skill levels. By utilising users’ data, these platforms ensure that learners receive relevant content that helps them advance in their professional lives. 

Is AI Secretly Rewiring Our Brains? The Surprising Impact On Human Behaviour!

AI’s capability to analyse vast amounts of data allows it to understand and predict human behaviour with accuracy. This is specifically useful in developing behaviour change programs.

Decision support

From financial planning to health care diagnosis and customer service, AI-powered decision support systems are affecting human behaviour by giving insights, recommendations and predictions that direct decision making processes.

AI’s takeover: streamlining everyday tasks with automation

This is a piece of cake for all humans. Who will say no to it while the AI is saving humans’ time?

Yes, AI is automating routine tasks by freeing up human time and resources for more complex and creative attempts.

Automation influences human behaviour by changing work patterns and job roles and allowing individuals to adjust to new tasks, workflows and ways of working in AI-enabled environments.

AI’s role in redefining social interactions

AI-powered chatbots and social robots are engaging in conversational interactions with humans, simulating empathy, understanding and emotional support.

These influence human behaviour through companionship, assistance, and entertainment, specifically in contexts where social interaction with humans is limited or unavailable.

How amazing it is to think that AI could be a friend for people who suffer from human loneliness. These AI-driven chatbots or tools help to improve social skills and bring mental peace. Also, this may help those people to come back to their self-love and their lives.

AI’s impact on human behaviour: key insights from CISRO’s experiment

Researchers at CISRO have conducted an experiment on “how an artificial intelligence can influence human decision-making processes.” They have used an AI system called “recurrent neural networks coupled with deep reinforcement learning” and observed susceptibility in human choices in a series of designed experiments. The experiments were designed in such a way as to impact or manipulate human decision making.

In the first experiment, participants were engaged in a game where they were allowed to click the coloured boxes to win the fake currencies. Naturally, people could not resist the chance to win those currencies. Of course, it is a human fantasy to come true.

Now the AI came into the picture. AI has observed and learnt from participants choice patterns and guided them towards a specific choice. Humans have followed the recommendations of the AI to win those fake currencies. Thereby, AI has successfully won by showcasing its ability to influence human decisions.

In the second experiment, the task for the participants is to press a button upon seeing the specific symbol (ex: an orange triangle) and refrain from pressing it for another symbol (ex: a blue circle). Here, AI has preset the symbols to confuse and prompt humans for more errors, resulting in an increase of nearly 25% in error rates. This showcased how AI can take advantage of our cognitive weaknesses in decision making processes.

The third experiment is more like an investment game where participants act as investors, allocating funds to a trustee represented by AI. Different modes of play are involved; one is maximising the AI’s gains and the other is aiming for fair distribution. AI has manipulated the participants’ investment decisions across both modes and achieved its objectives.

The derivations of these experiments are profound. Hence, researchers suggest that AI not only has the ability to understand human behaviour but also to influence it in targeted ways. Such capabilities could potentially be harnessed for various applications, from optimising user experiences on digital platforms to improving decision-making processes in complex environments.

What the research means for the future of AI

Like any technology, AI can be used for good or bad. Proper governance is critical to ensuring that it is applied and used in the right way.It is evident that AI and machine learning systems are often data-hungry. Hence, it is essential to have an adequate ethical framework, data protection, and access protocols in place.

Corporations that use and develop AI must ensure that they understand what these technologies can do and cannot do, as well as the potential risks and advantages.

Ethical concerns surrounding AI

The adoption of artificial intelligence (AI) in the education and skill development sectors holds tremendous promise for revolutionising learning experiences and enhancing skill acquisition. However, the integration of AI into these domains also presents several challenges that need to be carefully navigated, particularly in the realm of ethical considerations.

One of the primary ethical concerns surrounding AI in education and skill development revolves around privacy and data security. AI-powered educational platforms and tools often collect and analyse vast amounts of personal information about learners, including their academic performance, behavioural patterns, and individual preferences. While this data can be valuable for personalising learning experiences and identifying skill gaps, it also raises concerns about the protection and responsible use of this sensitive information.

First and foremost, there is the issue of data privacy. AI algorithms require access to large amounts of data to learn and make predictions. This data can include personal information such as students’ names, addresses, and test scores. It is crucial that this data is collected and used in a responsible and ethical manner.

Second, there is the issue of bias. AI algorithms can be biassed if they are trained on data that is not representative of the population they are intended to serve. This can lead to unfair or inaccurate results. For example, an AI algorithm that is used to predict student performance may be biassed against students from certain demographic groups.

Third, there is the issue of transparency. AI algorithms can be complex and difficult to understand. This can make it difficult for users to understand how the algorithm works and to identify any potential biases. It is important that AI algorithms are transparent and accountable.

Finally, there is the issue of control. AI algorithms can be used to make decisions that have a significant impact on people’s lives. For example, an AI algorithm may be used to decide whether a student is admitted to a particular school or whether they are eligible for a particular scholarship.

To address these ethical challenges, robust measures need to be implemented to ensure that AI tools are developed and used in a responsible and ethical manner. This includes ensuring that individuals have control over their personal data, that data is collected and used transparently, and that AI systems are free from bias and discrimination.

Furthermore, it is crucial to establish clear guidelines and regulations for the development and deployment of AI in education and skill development. These guidelines should outline the ethical principles that AI developers and users must adhere to, as well as the mechanisms for ensuring accountability and oversight.

By addressing these ethical challenges and implementing appropriate safeguards, we can harness the potential of AI to transform education and skill development while upholding the principles of privacy, data security, and fairness.

Example: Organisations must adhere to strict data protection regulations, such as GDPR compliance, to safeguard user data and maintain trust in AI-driven educational technologies.

Implementation challenges like funding, technological infrastructure, and educator training obstruct widespread adoption of AI education and professional development.

To overcome these challenges, we need strategic investment in technology, professional development programs and collaboration among all the stakeholders.

Conclusion

Artificial intelligence is reshaping education, behaviour change and skill development by providing personalised learning experiences, fostering positive behaviours, and supporting career growth. As AI keeps evolving – educators, employers and stakeholders need to address ethical concerns and tackle implementation challenges to fully unlock its transformative potential. By embracing AI’s capabilities and learning from real-world examples, we can build a more inclusive and effective learning and work environment, preparing individuals for success in our rapidly changing world.

FAQ’s

Can AI influence human behaviour?

Yes, AI can shape our actions through personalised recommendations, behavioural nudges and predictive analytics, all aimed at encouraging positive changes like healthier habits and better decision-making.

How can AI help me in daily life?

AI can help humans automate their daily tasks. Also, AI can be used as voice assistants, virtual companions and helps in machine learning financial and fraud detection. 

References

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Dev Kishan and Ors. Lrs. of Kishan Lal vs. Ram Kishan and Ors. (2002)

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This article is written by Subhangee Biswas. The article discusses the judgement of Dev Kishan and Ors., Lrs., of Kishan Lal vs. Ram Kishan And Ors. (2002) in the background of the concept of antecedent debt in the Hindu Undivided Family system. This article proceeds to discuss the facts of the case, stating the arguments of both parties along with stating in detail the laws and precedents involved. The article concludes with the judgement and an overall analysis of the case.

This article has been published by Shashwat Kaushik.

Table of Contents

Introduction 

The Hindu Undivided Family, as a family system in Hindu law, consists of a common ancestor and its male descendants with their wives and children and unmarried daughters. The head of the family is called the Karta, who makes all the decisions for the family. The members of the family are also coparceners (i.e., members of a Hindu Undivided Family having an interest in their ancestral property by birth. To know more about coparceners and coparcenary under Hindu Law, click here) having a share in the joint family property. 

In Hindu law, paying off one’s debts is considered to be a religious, moral, and legal duty. If one does not pay off their debts, it is considered a sin, and the consequences are said to be faced in the afterlife or next birth. The Karta of a family may incur debts due to various reasons; for example, debts may be incurred by the Karta for the benefit of the family or for the marriage of the daughters of the household. If the Karta fails to pay off such debts, the liability to repay them lies with the legitimate legal heirs. 

A ‘Karta’ is prohibited from the sale or mortgage of the joint family property unless such mortgage or sale is backed by a legal necessity, the benefit of the joint family estate or any religious obligation. There is one exception to the category of “legal necessity,”  which is antecedent debt. If the Karta borrows money to secure the joint family estate and then, at a later stage, mortgages the same, the first debt becomes an antecedent debt. This binds the entire property along with the interests of the sons. 

In the case of Dev Kishan And Ors. Lrs. of Kishan Lal vs. Ram Kishan And Ors. (2002), the concept of antecedent debt and the liability of the coparceners to pay off the debts acquired by the predecessor members of the family were highlighted. The case proceeds to discuss the importance of the nature of the debt in deciding whether the liability bound the heirs. The legality or morality of debt also plays an important part in deciding the same. In the instant case, the Karta had executed mortgages and the sale of their joint family properties for the alleged purpose of bearing the expenses of the marriage of his three minor children. Later, the sale was challenged by the son before the Court of Civil Judge, Bikaner on the ground that the consent of the Karta for the sale deed was obtained by undue influence by the buyer and that there was an absence of legal necessity, which made the sale deed void and not binding on them. This led to the filing of the suit. Let us discuss all the sections related to the case in detail.

Details

  • Case name: Dev Kishan and Ors., Lrs. of Kishan Lal vs. Ram Kishan and Ors.
  • Equivalent citations: RLW 2003 (2) RAJ 1250; 2002 (4) WLC 130; 2002 (4) WLN 481.
  • The law involved: Rule of antecedent debt.
  • Appellant: Kishan Lal, represented by his legal heirs after his demise.
  • Respondents: Ram Kishan, Kailash, Madan Lal, Laxmi Chand, Megh Raj and Badri Das.
  • Court: High Court of Rajasthan.
  • Bench: Justice Sunil Kumar Garg.
  • Judgement date: 06th May 2002.
  • Final decision: The Rajasthan High Court dismissed the second appeal by the appellant and upheld the judgement of the lower courts. 

Facts of the case

Background

On March 18, 1969, Ram Kishan and Kailash (plaintiff in the original suit and respondent in the present appeal, hereinafter referred to as respondent) filed a suit in the Court of Civil Judge, Bikaner, against Kishan Lal (defendant in the original suit and appellant in the present appeal, hereinafter referred to as appellant) and also against Madan Lal, Laxmi Chand, Megh Raj, and Badri Das (hereinafter referred to as defendants no. 2 to 5). In the plaint, they prayed that the sale dated May 12, 1967 be declared void against the respondents and the defendants no. 2 to 5.

Proceedings before the learned Munsiff, Bikaner

Details mentioned in the original plaint by the respondents in the suit dated March 18, 1969

The respondents, as well as defendants no. 2 to 5, were members of a joint Hindu family. The Karta of the family was Madan Lal (defendant no. 2). It is alleged that Madan Lal was under the influence of Kishan Lal, the appellant. There were two houses, both of which were joint properties belonging to their family. 

In January 1969, the respondents came to know that Madan Lal (defendant no. 2) had sold both houses to the appellant Kishan Lal on May 12, 1967, through a registered sale deed. The consideration charged by defendant no. 2 was Rs. 2,000, whereas the respondents alleged that the value of both houses came to Rs. 16,000. They further mentioned that the signatures of the defendant’s no. 3 to 5 on the sale deed dated May 12, 1967, were obtained by means of undue influence by defendant no. 2 . Moreover, the consideration amount received was alleged to not have been distributed among the other members by defendant no. 2.

The respondents then approached the appellant and demanded to show the documents. Initially, the appellant ignored but then showed the following two documents to the respondents:

  1. The sale deed, dated May 12, 1967,
  2. The mortgage deed dated May 19, 1964, in which another mortgage deed dated December 6, 1962, was mentioned.

The respondents alleged that defendant no. 2, i.e., the ‘Karta’ Madan Lal, acted under the influence of the appellant, i.e., Kishan Lal, and committed the following acts:

  1. Mortgaged the two houses in favour of the appellant via the above-mentioned mortgage deed dated December 6, 1962 for a consideration of Rs. 500.
  2. Further mortgaged the same properties, in the favour of the appellant via the above-mentioned mortgage deed dated May 19, 1964 for a consideration of Rs. 900.
  3. Executed the above-mentioned sale deed dated May 12, 1967 in favour of appellant.

Moreover, since the properties were sold to the appellant (Kishan Lal), the family members of the joint Hindu family, i.e., the respondents and the defendants no. 2 to 5, living in the properties, became tenants of the appellant and thus, a rent deed was also executed for that purpose between the defendant no. 2 (Madan Lal) and the appellant.

The respondents claimed that since defendant no. 2 executed the sale deed while being under the influence of the appellant, the same should be declared null and void as against the interests of the respondents and defendants no. 2 to 5. 

Moreover, they also claimed that the rent deed should also be declared to be null and void. The respondents cited various reasons and one reason was that there was no legal necessity on the part of the defendant no. 2 to either mortgage or sell the properties in favour of the appellant. The respondents contended that, despite the absence of any legal necessity, if the properties were sold for any illegal or immoral purpose, the deeds would not have any binding effect on them. 

Allegations mentioned in the written statement filed by the appellant in the suit dated March 18, 1969

The appellant, Kishan Lal, filed a written statement on August 4, 1969. In his written statement, he contended that the Karta of the family, defendant no. 2, had taken a loan from him for some legal necessity related to the family. Therefore, the loan should be considered an “ancestral debt,” which makes the respondents and the defendants no. 2 to 5 liable to pay the same back to the appellant. 

The appellant had also denied the existence of any undue influence on this part over the defendant no. 2. He also denied the occurrence of any illegal or immoral transaction. 

He also claimed that, as per the mortgage deed dated December 6, 1962, it was evident that the joint family properties were mortgaged by defendant no. 2 in favour of the appellant, with the intention of marrying his daughter Vimla with the consideration received. Further, the same properties were again mortgaged by the mortgage deed dated May 19, 1964, by defendant no. 2 in favour of the appellant for marrying his two daughters, Vimla and Pushpa. 

The appellant concluded that since there was a presence of legal necessity behind all the transactions, the suit should be dismissed. 

Decision of the Munsiff, Bikaner, in Civil Suit No. 17/69 (116/70 after transfer)

The Munsiff heard both sides, considered the materials and evidence on record and gave his judgement on September 30, 1977. Through his judgement, he decreed the suit against the appellant regarding the two houses and also declared the rent deed null and void against the respondents and defendants no. 2 to 5. 

The learned Munsiff observed that during the three transactions, defendant no. 2 had taken money for the marriage of his children. For the first mortgage deed dated December 6, 1962, defendant no. 2 took Rs. 500 from the appellant for the marriage of his daughter Vimla. For the second mortgage deed dated March 19, 1964, defendant no. 2 took Rs. 900 from the appellant for the marriage of his daughters, Vimla and Pushpa. For the registered sale deed dated May 12, 1967, defendant no. 2 took the sale amount from the appellant for the marriage of his son, Ram Kishan, who is one of the plaintiffs in the suit before the Munsiff. 

The learned Munsiff further observed that the three children, namely, Vimla, Pushpa, and Ram Kishan, were all minors when the mortgage deeds and the sale deed were executed.

It was stated by Munsiff that the loans taken by defendant no. 2 could not be considered “a loan for repayment of antecedent debt” as the purpose of the loan was the marriage of minor daughters. Therefore, the Munsiff concluded that the said transaction could not be termed as a transaction for the payment of antecedent debt.

The learned Munsiff denied the existence of any legal necessity since defendant no. 2 had not incurred the expenses of the marriages of the three children. Moreover, taking a loan to afford the expenses of the marriages of children could not be considered a necessity.

The Munsiff also took note of the age of Vimla and Pushpa at the time they got married. Vimla was 12 years old and Pushpa was 8 years old. It could not be accepted that the loan was taken for their marriages, considering that they were too young for their marriages to be anticipated. 

It was further stated that even if it is accepted that the loans were taken for the purpose of marrying the minor children, the transactions, namely, the execution of the mortgage deeds and the sale deed, become void since they are opposed to the public policy. Marriage of minor children is prohibited under the Child Marriage Restraint Act, 1929, thus, any amount spent on a child marriage cannot be accepted as a “legal necessity.”

The learned Munsiff pointed out the date of execution of the sale deed, which was the same day when the marriage of Ram Kishan took place. Hence, the contention that the amount received as a consideration from the sale deed was to be used for meeting the expenses of the marriage of Ram Kishan was irrational. In this regard, it was held that the amount received out of the sale deed dated May 12, 1967, by defendant no. 2 was not used for the marriage of Ram Kishan. 

It was stated that mortgaging or selling properties worth Rs. 7,000 – 8,000 for a mere consideration of Rs. 400 – 500 under the guise of the marriage of minor daughters could not be trusted. Moreover, the other brothers and the mother of the minor daughters were also earning, hence, the claim that the properties were mortgaged to provide for the expenses of the marriage of the minor daughters could not be accepted. 

Considering the above-mentioned observations, Munsiff concluded the following:

  1. The properties were not mortgaged or sold for any legal necessity,
  2. There was no antecedent debt, 
  3. The respondents and the defendants no. 2 to 5 were not liable under the terms of the sale deed dated May 12, 1967, 
  4. The sale deed dated May 12, 1967, was to be declared null and void as against the respondents and the defendants no. 2 to 5.

First appeal before the learned District Judge, Bikaner

The appellant, Kishan Lal, aggrieved by the judgement and decree dated September 30, 1977, by the learned Munsiff of Bikaner, made a first appeal before the learned District Judge of Bikaner. The appeal was transferred to the learned Civil Judge.

The decision of the Civil Judge, Bikaner in Appeal No. 30/77

The appeal of the appellant was dismissed by the Civil Judge through his judgement and decree dated September 15, 1980, upholding the judgement and decree of the learned Munsiff. 

The Civil Judge held that the debt taken by defendant no. 2 through both mortgages was for the purpose of the marriage of his two minor daughters. Such debt was opposed to public policy since child marriage was prohibited under the Child Marriage Restraint Act, 1929. In this regard, the decision of the learned Munsiff was upheld.

It had already been pointed out by the learned Munsiff that the brothers and the mother of the respondents were earning members. The learned Civil Judge held that the marriage expenses of the two minor daughters and Ram Kishan, who is one of the respondents, were not borne by the defendant no. 2 but were borne by the brothers and the mother, which concludes that the amount received by the defendant no. 2 as a debt through the mortgages for the purpose of marriage of his children was not utilised for the said purpose. 

The Civil judge concluded by holding that the respondents had no liability with regard to the antecedent debt. 

Second appeal before the Rajasthan High Court

Being aggrieved by the judgement and decree, dated September 15, 1980, of the learned Civil Judge of Bikaner, the appellant filed a second appeal before the Rajasthan High Court.

Issues raised before the Rajasthan High Court

The Rajasthan High Court framed three significant questions of law related to the above-mentioned facts. The issues were as follows:

  1. Whether a debt acquired by the adult members of a family for the purpose of the marriage of the minor members of the family is a debt acquired for legal necessity or the purpose qualifies as an illegal purpose.
  2. Whether the debts acquired by the father to repay the earlier mortgages should be considered to be a debt acquired for legal necessity?
  3. Whether the sale made to pay off the previous mortgage debt of the Joint Hindu Family and to incur the expenses of the marriage of a minor member of the family was correctly held as void by the first appellate court?
  4. Whether the debt was taken for illegal purposes since child marriage is against public policy?

Arguments of the parties

Appellant

The counsel for the appellant Kishan Lal made the following submissions:

  1. The debt was acquired by defendant no. 2 for the marriage of his minor daughters and this purpose was a legal necessity.
  2. The debt acquired by the adult members of a family for the purpose of the marriage of a minor member of the family is indeed a debt for legal necessity, though such marriage is prohibited under the Child Marriage Restraint Act, 1929. Therefore, it was argued that the debt acquired by defendant no. 2 from the appellant for the marriage of his minor daughters was out of legal necessity.
  3. The lower courts erred in holding that there was no legal necessity for defendant no. 2 to mortgage the properties and thus the same decision could not be sustained.
  4. Regarding the sale deed, it was submitted that the sale deed was executed by the other defendants, that is, the defendant no. 3 to 5 along with defendant no. 2 and thus, it was legal and could not be set aside as against defendant no. 3 to 5.

The counsel for the appellant also relied on certain judgements to support their arguments. The same has been dealt with under a separate heading in detail in the latter part of the article.

Respondent

The counsel for the respondents made the following submissions:

  1. The debt was acquired by defendant no. 2 from the appellant for the marriage of his minor daughters and this purpose did not qualify as a legal necessity.
  2. Child marriage, being prohibited under the Child Marriage Restraint Act, 1929,  the purpose of the debt becomes illegal so the debt also becomes unlawful debt, and therefore, the alienation of the property could not be accepted as a lawful alienation which has a binding effect upon the minor members of the family.
  3. The expenses incurred with respect to the marriage of a minor child could not be accepted to amount to legal necessity considering the fact that the Act of 1929 prohibits child marriage.

Laws and concepts involved in Dev Kishan and Ors. Lrs. of Kishan Lal vs. Ram Kishan and Ors. (2002)

Doctrine of antecedent debt

In simple words, “antecedent debt” means a pre-existing debt or liability on a claim. It must exist independent of the concerned transaction. 

As defined by Lord Dunedin, an “antecedent debt” is a debt that is “antecedent in fact as well as in time.” There are two essentials:

  1. The debt must be prior in time, and
  2. the debt must be prior in fact.

The rule of antecedent debt is used to decide upon those debts that were created before the adoption of certain laws and regulations. This doctrine provides protection to creditors by allowing them to pursue prior debts; nonetheless, the new laws and regulations alter, cancel, or replace the debts. According to this doctrine, when new laws are enforced, they essentially apply to the debts and commitments made after the enactment. The debts made prior to the enactment would still be governed by the framework that was in force at that time. 

In Hindu law, there is a doctrine of pious obligation, which has originated from customs and ancient texts. According to this doctrine, the next male generation has to repay any existing debt of the father. Two things are to be kept in mind while extending this liability to the son:

  1. The debts are only those debts which are for legal purposes, excluding the debts taken for unethical and immoral purposes. 
  2. The liability of the son is not personal but is restricted to the amount of share obtained from the ancestral property. 

To know more about the doctrine of pious obligation click here.

Combining these two doctrines, it is implied that in the case of a debt acquired by a father, only if such debt is for lawful purposes, the son would be held liable to pay it off. These two doctrines conclude that the son has a religious as well as legal obligation to pay off and settle the debts of their father. However, such liability is only up to the extent of their interest in the joint family property. The sons are not personally liable to repay their father’s debts.

A Karta of the Joint Hindu Family may sell or mortgage the entire joint family property to discharge a debt acquired by him for any legal purpose or even for his own personal benefit. Such alienation of property would be binding on the successors if the following conditions are fulfilled:

  1. The debt was antecedent and independent of the alienation, i.e., the debt and the alienation must be two different and independent transactions, with the debt taking place before the occurrence of alienation, 
  2. The debt was for a legal purpose and not any immoral purpose.

The liability to pay off a father’s debt is only upon the sons and the daughters or female coparceners are excluded from this liability. The liability of a son is not affected by whether the father is alive or dead. Moreover, the father can mortgage or sell the joint family property, including the interests of the male successors, during his lifetime, to pay any antecedent debt. However, the debt must not be for immoral purposes.

Child Marriage Restraint Act, 1929

As the name suggests and according to the preamble, the purpose of the Act was to restrain the solemnisation of child marriages in India. The Act was passed as early as 1929, when child marriages were very common in our country. Girls were often married at the young age of 8 or 9 years old. To curb the increasing practice of child marriages, this Act was passed by the Indian Government, thus, fixing the age of marriage for both boys and girls. Initially, the minimum age for marriage for boys and girls was fixed at 18 and 14 years, respectively. With each amendment, the age for marriage was increased. In 2006, the Prohibition of Child Marriage Act, 2006 replaced the Child Marriage Restraint Act, 1929 wherein, the minimum age for marriage is fixed at 21 and 18 years of age for boys and girls, respectively.

To know more in detail about the Act, click here.

Precedents involved in Dev Kishan and Ors. Lrs. of Kishan Lal vs. Ram Kishan and Ors. (2002)

Parasram and Ors. vs. Smt. Naraini Devi and Ors. (1972) 

In this case, a mortgage was executed to secure a loan for the purpose of the marriage of the minor brother of the mortgagors. It was contended that the mortgagors were gamblers; they had taken the loan for immoral purposes and not out of some legal necessity. Lastly, it was contended that the loan was taken in their personal capacities and not as a member of the Joint Hindu Family. It was prayed that the mortgage debt was binding neither on the family members nor on the family properties. 

The question considered by the Court was whether the minority of the brother of the mortgagors at the time of his marriage would render the mortgage transaction illegal and not binding on the family.

The Allahabad High Court, in this case, had held that the marriage of two Hindus, the male being under 18 years of age and the female being under 15 years of age is not annulled or rendered illegal by the effect of the Child Marriage Restraint Act, 1929. Then it proceeded to discuss the object of the Act, regarding which it stated that the objective is to restrain marriages of minors, but the marriage is not rendered illegal or invalid. The Court continued to add that a debt acquired by the adult members of a Hindu Undivided Family for the marriage of a minor member is not for any illegal purpose as the marriage continues to be legal. This results in the debt being binding on the joint family property.

Rulia and Ors. vs. Jagdish and Anr. (1973)

In this case, a number of mortgage deeds and sale deeds were executed regarding the ancestral land. Two of the sale deeds were found to have been executed for the marriage of the Karta’s minor son. The lower appellate court had upheld the two sale deeds reasoning that both of them were made for consideration and were backed by a necessity, i.e., the expenses of the marriage of the minor child. Though the marriage of the son took place a year after the sale, the age of the child was 15-16 years when the sale was executed. The appellant, thus, had argued that the Karta’s son was a minor at the time of the sale and that the solemnisation of a minor’s marriage amounts to an offence under the Child Marriage Restraint Act, 1929. 

The Punjab and Haryana High Court held that in a case where the Karta of the family executes a sale deed concerning the ancestral land to provide for the expenses of the marriage of the son, who was almost the lawful age for marriage, i.e., the age of majority, then the sale was held to be a valid sale for necessity. Further, it was ruled that where it has been proved that the necessity of two-thirds of the sale price of the ancestral land existed and the remaining sale price was paid to the alienor, such alienation could be said to be for necessity.

Panmull Lodha and Ors. vs. R.B. Gadhmull Lodha and Ors. (1937)

In this case, an application was made on behalf of the minor plaintiff to authorise a certain amount to afford the expenses of the marriage of the plaintiff’s minor sister. Such an amount was to be debited from the share of the plaintiff in the joint estate.

The Calcutta High Court, in this case, held that the Child Marriage Restraint Act, 1929 renders the marriage of a minor in India a punishable offence. It was further observed that the judiciary should not promote such acts that have been penalised by the legislature for being detrimental to society, citing such reasons that the parties agreed to perform such marriages in a place where minor marriage is not punishable by the law of that place. The Calcutta High Court had also stated that when a court-appointed receiver has been entrusted with the handling of a minor’s estate and an application has been made in place of such a minor to authorise some amount as the expenditure of the marriage of his minor sister with a minor boy, the Court should not allow such application that encourages child marriage as defined under the Act of 1929 within India or any other place.

Hansraj Bhuteria and Anr. vs. Askaran Bhuteria and Anr. (1941) 

In this case, the plaintiffs had submitted an application to obtain permission to spend out of the estate, which was being administered by the Court, a certain amount to cover the expenses incurred in the marriage of one of the plaintiffs, who was a minor. The application was challenged by the executors on the ground that the marriage of a minor would be invalid considering the provisions of the Child Marriage Restraint Act, 1929.

The Calcutta High Court, in this regard, held that such an application could not be allowed, as the Court ought not to promote any conduct that the legislature has established as penal, even if such marriage was allowed under the Bikaner Hindu Marriage Act, 1928.

Rambhau Ganjaram vs. Rajaram Laxman And Ors. (1956)

In this case, both the parents had died, leaving their three minor sons. The maternal uncle took the responsibility of the management of the property of the minor sons and became the de facto guardian. He sold some properties belonging to the minor plaintiffs to the defendant to repay the debts incurred for the marriage of plaintiff no. 1. After attaining the age of majority, plaintiff no. 1 filed a suit against the defendant, stating that the sale deed by the maternal uncle in favour of the defendant was void and not binding on them. Further, he demanded the possession of the property, future mesne profits, and also the cost of the suit. The defendant opposed, stating that the property was sold for legal necessity. The trial judge dismissed the suit, stating that the maternal uncle was the de facto guardian and the sale deed was executed as a legal necessity.

It was further held by the Bombay High Court that if a debt has been acquired by the de facto guardian for the marriage of a minor, the alienation executed to meet such debts could not be considered as a lawful alienation and to be binding upon such minors. The same was held considering the fact that the marriage of a minor violates the provisions of the Act of 1929 and thus, the purpose behind the debt was unlawful.

Maheswar Das and Ors. vs. Sakhi Dei (1978)

In this case, one of the sale deeds was executed to afford the expenses of the marriage of a minor. Regarding the validity of such a sale deed, the Orissa High Court held that if the consideration under a sale deed was to provide for the expenses of the marriage of a minor girl, the sale becomes a void transaction as it is opposed to the public policy. 

Faqir Chand vs. Harnam Kaur and Anr. (1967)

In this case, the father of the appellant was the manager of a joint family. He had borrowed some money from the respondent and had mortgaged a joint family property to secure the repayment of the loan. A portion of the loan was to discharge an antecedent mortgage debt. Then, the respondent initiated a suit claiming a preliminary decree for the sale of the property. This led to the initiation of a suit by the appellant, where he claimed a declaration that the mortgage deed was for immoral and illegal purposes and without any legal necessity, and thus, the same was not binding on him.

The Supreme Court held that when the father makes a mortgage of the joint family property as a manager neither for any legal necessity nor for the payment of an antecedent debt but to discharge his debt, his son has the right to challenge the mortgage and such a right is not affected by the obtainment of any preliminary or final decree against the father or the mortgage by the mortgagee.

Pinninti Venkataramana and Anr. vs. State (1977)

In this case, a common question was decided that if a Hindu marriage is solemnised between two parties where one or both of them are under the age as mentioned under Clause (iii) of Section 5 of the Hindu Marriage Act, 1955, such marriage would be void ab initio.

The Andhra Pradesh High Court had held that if a marriage is solemnised in contradiction to Clause (iii) to Section 5 of the Hindu Marriage Act, 1955, the same is neither void nor voidable.

However, regarding this precedent, the Rajasthan High Court observed that since the point involved and the facts of the case were different in nature, relying on the same would not be of any use.

Judgement in Dev Kishan and Ors. Lrs. of Kishan Lal vs. Ram Kishan and Ors. (2002)

Before deciding on the case, the Rajasthan High Court accepted and pointed out a few facts. It was accepted that defendant no. 2, through the mortgage deeds dated 06.12.1962 and 19.05.1964, had mortgaged the above-mentioned properties in favour of the appellant for considerations amounting to Rs. 500 and Rs. 900, respectively. The reason behind mortgaging the properties was to bear the expenses of the marriages of his daughters, Vimla and Pushpa. It was also noticed that both the daughters were minors when the mortgage deeds were executed. However, the consideration received by defendant no. 2 through the mortgages was not utilised for the marriage of the minor daughters.

Regarding the role of the Karta of joint family property, the Court observed that the Karta of a Hindu Undivided Family possesses the power to alienate joint family property for benefit, and this would bind the interests of all the coparceners in the property, including any adult or minor coparcener. The only condition is that the alienation has to be made for legal necessity or in the interest of the estate. Further, the absence of legal necessity behind the alienation of joint family property by its Karta does not render such alienation void but rather makes it voidable at the option of the other coparceners. It was also added by the Court that the expenses incurred in the marriage of both the male coparceners and the daughters of coparceners are included under the scope of legal necessity.

Whether debt taken for marriage of minor children can be regarded as a lawful debt and whether it constitutes a legal necessity

The Rajasthan High Court considered the decisions of the two lower courts. Both of the courts had deduced that the debt was acquired by defendant no. 2 from the appellant for the marriage of his minor daughters. Since the marriage of a minor was against the Act of 1929, the debt also became opposed to public policy. The lower courts also concluded that though the mortgages were executed for the purposes of the marriage of the minor daughters, defendant no. 2 had not utilised the amount so received on their marriages. Therefore, the mortgages made by defendant no. 2 in favour of the appellant were not due to any legal necessity. As a result, both the lower courts held that the loan acquired by defendant no. 2 from the appellant could not be considered to be a loan taken for some legal necessity of the joint Hindu family.

The Rajasthan High Court opined that since the marriage of a minor is prohibited under the Act of 1929, any debt incurred for the purpose of marrying a minor could not be considered to be a lawful debt. It further stated that alienation of family property for the same could not be considered to be a lawful alienation and such an alienation would not be binding upon the minors. The High Court also mentioned that the mortgaging and selling of property to provide for the marriage of minors would be opposed to public policy since child marriage is prohibited under the Act of 1929.

Whether debt incurred by defendant no. 2 to pay off previous mortgages can be regarded as having been incurred out of legal necessity

The Rajasthan High Court observed that a Hindu male may acquire a debt either for his own private purpose or for the legal necessity of the family. The lower courts, in this regard, had held that the debt acquired by defendant no. 2 was not out of any legal necessity for the family. It was also held by them that the alienation of properties done by defendant no. 2 in favour of the appellant was not to pay off the antecedent debt. 

The Rajasthan High Court analysed the concept of “antecedent debt”. It stated that an antecedent debt has to be pre-existing in fact and in time, i.e., the debt must have an independent existence and must not form a part of the impeached transaction. The Court proceeded to state that the Karta of a Joint Hindu Family possesses the right to sell or mortgage the joint family property, including the interest of any of his children for the clearance of a debt made by him for his personal benefit. Such an alienation would bind such a child, provided that-

  1. The debt was antecedent, that is, pre-existing before the alienation took place, and
  2. The debt was not taken for any immoral purpose.

The lower courts had held that the debt acquired by defendant no. 2 from the appellant could not be termed as a debt for the payment of an antecedent debt. Considering the facts of the case and the submissions of both parties, the lower courts concluded that the mortgage or sale of properties by defendant no. 2 was not done to discharge some personal debt but to provide for the marriage of his minor children. Hence, the transaction could not be termed as a transaction for the payment of an antecedent debt since the loan was taken for the purpose of marriage.

The High Court held that since the debt was taken for an unlawful purpose, that is, for the marriage expenses of minor children, the debt was also unlawful. Moreover, it was also stated that the expenses of the marriage of the minor children, which is itself in contravention of the Act of 1929, could not be taken to have constituted a legal necessity.

The decision of the lower courts in this regard was upheld by the Rajasthan High Court that the debt acquired by defendant no. 2 from the appellant could not be regarded as a debt for the payment of antecedent debt as the same was acquired by defendant no. 2 to marry his minor children. 

Lastly, the Rajasthan High Court held that the debt acquired by defendant no. 2 to repay the previous mortgages should not be regarded as having been taken out of legal necessity.

Whether the sale was valid

The Rajasthan High Court, upholding the decision of the first appellate court, held that since the debt was unlawful, it was not acquired for the benefit of the Hindu Undivided Family and it was also not taken to satisfy any antecedent debt, the sale deed amounts to being void as against the interests of the respondents.

Thus, it was held that the sale made to pay off the previous mortgage debts of the Hindu Undivided Family and to afford the expenses of the marriage of a minor member of the family was void as held by the first appellate court.

The High Court then proceeded to analyse the contention of the appellant that the sale deed was valid considering that it was executed by defendant no. 2 and the other defendant no. 3 to 5. It stated that such an argument could not be supported since the respondents had challenged this sale deed. The respondents were minors at the time of execution of the sale deed; hence, the sale deed was not void but it was voidable at the option of the minors, acting through their guardians. The Rajasthan High Court referred to the verdict of the Supreme Court in Faqir Chand vs. Sardarni Harnam Kaur (1967) where the right of the son to challenge a mortgage made by his father to discharge a personal debt was discussed. Then, the Rajasthan High Court proceeded to state that since both the lower courts had held that neither the transactions were backed by legal necessity nor were they taken for payment of antecedent debt, the respondents possessed the right to challenge the concerned sale deed.

Final judgement

The Rajasthan High Court dismissed the second appeal, upholding the decision of the lower courts. The decision by the Rajasthan High Court states the following:

  1. Since child marriage is prohibited under the Act of 1929, debt taken for the purpose of bearing the expenses of child marriage could not be termed to be a lawful debt. 
  2. An alienation of family property made for the same purpose could not accepted as a lawful alienation.
  3. The debt taken could not be said to be for the repayment of an antecedent debt since the purpose behind taking such debt was to bear the expenses of the marriage of the minor children. 
  4. Moreover, since child marriage is prohibited and against public policy, a debt taken for the same purpose could not be said to have been acquired out of legal necessity. 
  5. The sale deed was held to be void since it was made to pay the earlier mortgage debts, the debts itself being unlawful, and to provide for the marriage of minor children, which again, is prohibited by law. 
  6. The respondents possessed the right to challenge the sale deed since it was made when they were minors. This results in the sale deed not being void but voidable at the option of the respondents. Moreover, the sale deed being executed without any legal necessity and not for the purpose of repaying an antecedent debt supports this statement.

Analysis of the case

The case of Dev Kishan And Ors. Lrs. of Kishan Lal vs. Ram Kishan And Ors. (2002) highlights the arrangement of repayment of a debt in Hindu law. The customary practice is that the male descendants are liable to pay the unpaid debts of their male ascendants. However, such liability is not absolute. The present case analyses the same. 

It is seen that two mortgages and one sale of a Hindu Undivided Family property were made by defendant no. 2 for the alleged purpose of the marriage of his minor children. As the case progressed, it was observed that the debts acquired for the alleged purpose were never used for the same. 

When this case came up before the Munsiff of Bikaner, the judge denied the existence of any legal necessity since marriage expenses could not be termed as a legal necessity. The illegality of child marriage under the provisions of the Act of 1929 strengthened this statement. The fact that the debts were not acquired to satisfy an antecedent debt, there was no legal necessity and that child marriage is prohibited under law, made the respondents free from any liability of repayment.

The Civil Judge of Bikaner also upheld this judgement. This led to the appeal before the Rajasthan High Court. 

The High Court, through various precedents, established the fact that any debt incurred for the marriage of a minor child renders the transaction incurring that debt void. The reason behind rendering such debt void is that child marriage is prohibited under law and it is the duty of the judiciary to discourage any conduct that supports acts prohibited by law.

The Rajasthan High Court rightly upheld the decision of the lower courts, stating that given that child marriage is prohibited under law and, moreover, defendant no. 2 had not utilised the same for the alleged purpose, there is no question of the existence of any legal necessity. Additionally, the illegality of child marriage made the alienation of the joint family property unlawful and not binding on minors.

Conclusion

The present case emphasises the importance of the legality of the purpose of acquiring a debt in determining whether the same comes under the scope of legal necessity. 

Apart from the legality of the purpose behind the acquisition of debt, the issue of child marriage was also focused on and its prohibition under legislation was also stressed. It was reiterated that since child marriage was prohibited under law, any conduct encouraging the same was also to be prohibited by the Court. Therefore, incurring a debt for the purpose of the marriage of minor children would not be considered to be lawful and thus, it would not be counted as a legal necessity. 

The concept of antecedent debt was also examined and it was observed that any alienation of a joint family property will bind the successors only when such alienation is made to pay an antecedent debt or a debt that is not immoral. It is comprehended from the facts of the case that Karta had incurred the debt for bearing the expenses of the marriage of his minor children. Therefore, the possibility of the debt being an antecedent debt is negated. Regarding another possibility of a moral debt, the Court pointed out that since child marriage is prohibited under the law, the same cannot be considered to be a lawful purpose behind acquiring a debt. As a result, the Court absolved the respondents of the liability to be bound by the sale deed, the sale deed being declared void as well.

Frequently Asked Questions (FAQs)

What is the Child Marriage Restraint Act, 1929 about?

In pre-independence India, child marriages were very common. The Child Marriage Restraint Act, 1929 was passed to prevent minor girls from getting married at a very young age. The object of the Act is to restrain the solemnisation of child marriages. It sets out a minimum age to marry for both males and females.

What is the penalty for contracting child marriage in India?

Under the Child Marriage Restraint Act, 1929, a person contracting a child marriage is considered to have committed an offence. This offence is punishable with simple imprisonment of a maximum of 15 days or a fine extending up to Rs. 1,000 or both, in case the person contracting the child marriage is in the age group of 18 – 21 years. If the person contracting the child marriage is over 21 years of age, then the punishment prescribed is simple imprisonment for a maximum term of 3 months along with a fine.

Does the Act of 1929 declare every child marriage to be void ab initio?

The Act of 1929 does not declare a child marriage to be void. The marriage is voidable at the option of the parties after they attain the age of majority. 

What are the two kinds of antecedent debts?

The two kinds of antecedent debts are as follows:

  1. Vyavaharika antecedent debts– These debts are lawful. They do not violate public policy or morality. Such debts are usually taken for the benefit of the family, its development, or expansion. The male descendants are liable to pay back these debts.
  2. Avyavaharika antecedent debts– These debts are unlawful or immoral. They are acquired for immoral or improper purposes and hence the descendants are not liable to repay them.

References 

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M.P. Special Police Establishment vs. State of M.P. (2004)

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This article is written by Vishwendra Prashant. It provides a detailed analysis of the Supreme Court’s judgement pronounced in M.P. Special Police Establishment vs. State of M.P. (2004). It deals with the extraordinary circumstances in which the governors may exercise their discretionary powers (under Article 163 of the Indian Constitution) in granting the sanctions to prosecute the ministers. Moreover, the article discusses the facts, issues raised, arguments, and various legal provisions involved in the case.

This article has been published by Shashwat Kaushik.

Introduction

As far as the Union Executive is concerned, the Constitution of India, 1950 establishes a parliamentary form of government. This type of government involves a constitutional head as the head of the State, with actual executive powers being held by the Council of Ministers. The head of the Council of Ministers is the Prime Minister. The Lok Sabha holds the Council of Ministers accountable. As per Article 52, there must be a President of India. Article 53 states that the President of India (the Head of the State) exercises the executive power of the Union directly or through subordinate officers as per the Constitution. Moreover, Article 73 says that the Union’s executive power covers subjects over which Parliament can legislate and the implementation of rights, authority, and jurisdiction that the government of India can exercise through any treaty or agreement.

As far as the state executive is concerned, the pattern of the state government is identical to that of the Union, i.e., a parliamentary system. Articles 153-167 and 213 of the Constitution deal with the state executive.

However, the state executive comprises of the chief ministers, the Council of Ministers, and the governors. The governors perform all the executive actions under the guidance of the Council of Ministers. Moreover, the governors appoint the chief ministers and the Council of Ministers.

The powers of the governors are similar to those of the President. These are as follows:

  1. Executive power [Articles 154 & 162];
  • The Constitution does not define the term “executive power”.
  • In the legal sense, it involves the authority to oversee administration and supervise various operations within the country.
  • However, Article 154 states that the governors hold the executive power of the states and can exercise it either directly or through subordinate officers.
  • The executive power of the states encompasses subjects over which the state legislatures have authority to enact laws.
  1. Financial power [Articles 207(1) & 203(3)];
  • Financial power means a legal authority that the President and the governors hold to make and formulate financial decisions.
  • Article 207(1) says that the Legislative Assemblies of the states can not introduce money bills without the governors’ recommendations.
  • The provisions that must be adhered to in the legislature regarding estimates are specified in Article 203. The financial proposals made by the government for the next financial year are reflected in the estimates. These estimates encompass revenue and expenditure forecasts, and the distribution of funds for various sectors and projects.
  • The power of the Legislative Assemblies in the event of the States proposing additional expenditure is explained in this Article. Any extra spending proposed by the States must be presented as “demands for grants” and then put to votes in the Legislative Assemblies.
  • Article 203(3) says that these grants cannot be demanded without the governors’ recommendations.
  1. Legislative power [Articles 174(1), 174(2), 200, & 171];
  • Article 174(1) states that the governors have the authority to convene the Houses or each House of the State Legislatures at the times and places of their choice. However, there must not be a gap of more than six months between the last sitting of one session and the first sitting of the next session. 
  • Article 174(2) states that the governors are empowered to adjourn the Houses or either House and dissolve the Legislative Assembly.
  • They are entitled to address the state legislatures. No Bills can be enacted into laws without the governors’ assent. The governors are also empowered to reserve certain bills for the approval of the President. (Article 200)
  • Additionally, they appoint 1/6th of the members of the Legislative Councils (Article 171).
  1. Pardoning power [Articles 161 & 162]; and
  • As per Article 161, the governors are authorised to pardon, delay or reduce punishment for individuals convicted of offences under any laws related to matters for which the executive powers of the States extend.
  • Moreover, Article 162 says that such powers cover matters that fall within the power of the state legislatures to legislate.
  1. Ordinance-making power [Article 213]
  • The governor’s authority to make ordinances under Article 213 mirrors that of the President under Article 123. An ordinance can be issued by the governor only under two circumstances:
  1. When the Legislative Assembly of a state is not in session, or when both Houses in a State are not in session.
  2. When immediate action is necessitated by circumstances. The validity of the ordinance issued by the governor cannot be questioned by the Court on the grounds of necessity or sufficient justification for its issuance. The existence of such a necessity is not subject to judicial review. The exercise of ordinance-making power is not discretionary, as the governor acts on the advice of the Cabinet.

Details of the case

Case Name: M.P. Special Police Establishment vs. State of Madhya Pradesh & Ors.

Case No.: Appeal (Civil) No. 7256-7257 of 2004.

Case Type: Civil case

Name of the Court: Supreme Court of India

Name of the Parties:-

  • Petitioner/Appellant: M.P. Special Police Establishment
  • Respondent: State of M.P.

Citation: (2004) 8 SCC 788.

Date of Judgment: 5th November 2004.

Bench: Justices N. Santosh Hegde, S.N. Variava, B.P. Sinha, H.K. Sema and S.B. Sinha.

Background of the case

This case was regarding the civil appeals filed by the appellants against the judgements of the Division Bench and the Single Judge of the M.P. High Court. 

In this case, the two Ministers of the M.P. Government were charged with offences under the Prevention of Corruption Act, 1983 (hereinafter referred to as PCA, 1983), and the Indian Penal Code, 1860 (hereinafter referred to as IPC, 1860). However, Article 163 of the Constitution states that the governors have to act under the guidance of the Council of Ministers. The governors may also act at their discretion as per the requirement. This case questions granting the sanction to the governor for prosecuting the said Ministers.

Facts of M.P. Special Police Establishment vs. State of M.P. (2004)

  • The M.P. Government had Rajendra Kumar Singh and Bisahu Ram Yadav serving as Ministers.
  • The Lokayukta registered a complaint against them. This complaint was related to wrongful possession of 7.5 acres of land by previous owners. However, the Indore Development Authority had purchased that land.
  • The Lokayukta presented a report after the investigation. The Ministers resigned before the submission of the report. However, the report contended that there were adequate grounds to prosecute them under Section 13(1)(d) read with Section 13(2) of the PCA, 1983, and also for the offence of criminal conspiracy under Section 120B, IPC.
  • A sanction was imposed before the Council of Ministers to prosecute the Ministers (accused). The Council of Ministers held that there was no evidence against them to show they were involved in a criminal conspiracy. Moreover, the Council of Ministers rejected the sanction, declaring that there was no prima facie case against the accused.
  • After that, the governor contemplated a grant of sanction following the Council of Ministers’ decision.
  • The governor submitted that there was ample evidence to prove the prima facie case against the Ministers.
  • The governor granted the sanction to prosecute under Section 197 of the Code of Criminal Procedure, 1973 (CrPC).
  • The accused filed separate writ petitions (i.e., Special Leave Petitions; SLP (C) Nos. 7697-7698 of 2003) under Articles 226 and 227 of the Constitution to challenge the governor’s order.
  • A single judge bench of the M.P. High Court held that the governor is not empowered to grant sanction for prosecuting the accused “in his discretion” as per Article 163. Moreover, the governor is not permitted to act against the “aid and advice” of the Council of Ministers.
  • This Court also ruled that the Rule against Bias does not apply to the entire Council of Ministers. Moreover, the doctrine of necessity does not justify the governor’s discretionary actions in such a situation.
  • The Madhya Pradesh Special Police Establishments (appellants) filed two Letters Patent Appeals before the Division Bench of the M.P. High Court. These appeals were filed to challenge the single judge’s decision. However, the remedies of Letters Patent Appeals are available to aggrieved parties who are dissatisfied with the courts’ decisions, permitting new trials in cases of factual or legal mistakes.
  • The Division Bench dismissed the appeals supporting the Single Judge’s decision.
  • The appellants filed the appeals before the Supreme Court.

Issues raised

  1. Whether a governor can act at his discretion while granting the sanction to prosecute the accused for the offences under PCA, 1983 and IPC, even if it goes against the advice of the Council of Ministers?
  2. Whether the governor’s order sanctioning the prosecution can be enforced?
  3. Whether the accused can be prosecuted under the above-mentioned laws?
  4. Whether a prima facie case was established?
  5. Whether the report presented by the Lokayukta was maintainable?
  6. Whether the writ petitions filed by the accused were maintainable?
  7. Whether the decisions of the Single Judge and the Division Bench were correct?
  8. Whether the Appeals filed by the appellants were maintainable?

Arguments of the parties

Petitioner

The counsel (Mr. Sorabjee) representing the petitioner contended that generally, the governors act under the guidance of the Council of Ministers but there may be certain circumstances where the governors, based on the Constitution, may need to act at their discretion. However, the Constitution renders some provisions under which they must act at their discretion. Articles 239(2), 371A(1)(b), 371A(2)(b), 371A(2)(f) and Clauses 9(2) and 18(3) of the Sixth Schedule are the provisions under which the governors may act at their discretion.

Mr. Sorabjee also contended that the Indian Constitution explicitly states that the governors may act at their discretion in exceptional circumstances. Does this mean they can only do so when the Constitution explicitly mentions it? Article 163(2) would be pointless if this were the situation. The issue of whether governors may act at their discretion only arises when the Constitution does not explicitly acknowledge it. In situations where the Constitution explicitly states that they can act at their discretion, this question does not arise. Therefore, Article 163(2) mandates that a governor must exercise discretion in certain matters, even if the Indian Constitution does not explicitly state so.

Mr. Sobarjee referred to Samsher Singh vs. State of Punjab (1974). A seven Judges panel of the Supreme Court held:

“The standard practice for the governors is to follow the guidance of the Council of Ministers and not act on their authority or against it. However, these are specific circumstances where the governors may act at their discretion:

  1. Where governors are appointed as the administrators for the Union Territories, they shall perform their duties as administrators separately from their Council of Ministers [Article 239(2)].
  2. Clauses 9(2) and 18(3) of the Sixth Schedule;
  3. Articles 371A(1)(b), 371A(1)(d), 371A(2)(b) and 371A(2)(f);
  4. If situations arise in which the state governments can not continue as per the provisions of the Indian Constitution, the governors may send reports to the President regarding the same [Article 356].
  5. During making reports under Article 356, the governors will have to exercise their discretion, even if it goes against the advice of their Council of Ministers. It would be valid because the Constitutional Machinery may fail due to the actions of the Council of Ministers.
  6. Bills are sent to the governors for their approval. They have the power to approve or set the Bills aside for the President’s review. In this regard, they have to act at their discretion only [Article 200].” 

These exceptions are not exhaustive. Moreover, the concept of the governors acting at their discretion is not unfamiliar to the Constitution. However, Article 163(2) says that their decisions will be conclusive at their discretion and cannot be contested in court.

Mr. Sorabjee also referred to the State of Maharashtra vs. Ramdas Shrinivas Nayak & Anr. (1982). In this case, the Bombay High Court ruled that while prosecuting the chief ministers, the governors would determine whether they should grant sanctions under Section 6 of the PCA, 1947. However, they must act at their discretion without the guidance of the Council of Ministers.

In Bhuri Nath and Others vs. State of Jammu & Kashmir and Others (1997), the Supreme Court stated that governors’ decisions would be based on their own satisfaction without the guidance of the Council of Ministers.

Respondent

The counsel (Mr. Tankha) representing the respondents argued that the chief minister’s case differs from the Ministers’ case. He further argued that the Council of Ministers had contemplated all the evidence. So, they concluded that there was no evidence to grant the sanction.

The governor had no authority to act as an appellate body and reverse the decision of the Council of Ministers. Such a decision can only be questioned in court.

Mr. Tankha contended that the rule against bias does not apply to the facts of this case. He supported his contention by relying on V.C. Shukla vs. State (Delhi Administration) (1980). In this case, the rule against bias could not be applied.

Mr. Tankha also relied on State of Punjab vs. V.K. Khanna (2001). In this case, the new chief minister of Punjab withdrew the sanction of prosecution against two senior IAS officers. Such a withdrawal of the sanction was challenged in the Supreme Court. The Court held that such withdrawal can not lead to the existence of bias or miscarriage of justice. There must be compelling evidence to prove the same.

Mr. Tankha also relied on Kumaon Mandal Vikas Nigam Ltd. vs. Girja Shankar Pant (2001). In this case, the Supreme Court gave the same decision as in the A.K. Kraipak case.

Mr. Tankha utilised the doctrine of necessity to show that the Council of Ministers has to decide such cases of necessity. However, the rule against bias has an exception that permits judges to decide cases even if they are biased or prejudiced in their actions.

Laws and concepts discussed in M.P. Special Police Establishment vs. State of M.P. (2004)

Constitution of India

Article 163 of the Constitution

According to Article 163(1), there shall be a Council of Ministers with a chief minister as the Head to guide the governor in performing his duties. According to Article 163(2), the governor has the discretion to act on certain matters even if the Indian Constitution has not explicitly stated so. Moreover, Article 163(3) states that any inquiries into the advice given by the Council of Ministers to the governor are prohibited in any court.

Article 226 of the Constitution

It is given in Part V of the Indian Constitution. It empowers the High Courts to issue writs for enforcing fundamental rights. Such writs can be granted to any person or any government.

These are the writs that can be issued under this Article:

  1. Writ of Habeas Corpus: 
  • It is a Latin term that means “you may have the body”.
  • It is given as a directive. 
  • Its object is to provide quick relief to detainees illegally held by others.
  • Any individual, such as friends or relatives, can request it for detainees.
  1. Writ of Mandamus:
  • The word ”mandamus” means “the order”.
  • The high courts have the authority to grant these writs where governments or public authorities have failed to exercise or wrongly exercised their public or statutory duties.
  1. Writ of Prohibition:
  • The word “prohibition” means “to stop”.
  • It is issued to prevent lower courts or administrative bodies from overstepping their authority or acting unfairly.
  • It is issued in situations of overstepping authority as well as a lack of authority.
  1. Writ of Quo Warranto:
  • The term ‘quo warranto’ means ‘what is your authority’.
  • By this writ, officeholders would demonstrate to the court, grounds on which they hold the position.
  • The purpose of this writ is to stop individuals from holding offices for which they don’t have legal entitlements.
  1. Writ of Certiorari:
  • It is a Latin phrase that means ‘to be informed’.
  • It is issued by superior courts (high courts and Supreme Court) before the trial to prevent excessive use of jurisdiction and transfer the cases for trial to higher courts.
  • It is also issued after a trial to quash an order made without jurisdiction or violating the rules of natural justice.

Article 227 of the Constitution

This Article empowers every high court to oversee all courts and tribunals within its jurisdictional territory. Such power conferred on the High Court is extensive, encompassing administrative and judicial oversight.

Prevention of Corruption Act, 1983

Section 13(1)(d) of Prevention of Corruption Act

It states that public servants are considered to have committed criminal misconduct if they:

  1. Obtain any valuable things or financial advantages for themselves or others through corrupt or illegal means; or
  2. obtain any valuable things or financial advantages for themselves or others by misusing their position as public servants; or
  3. obtain any valuable things or financial advantages for any person without any public interest while holding offices as public servants.

Section 13(2) of Prevention of Corruption Act

It states that public servants found guilty of criminal misconduct would face imprisonment ranging from one year to seven years, along with a fine.

Code of Criminal Procedure, 1973

Section 197 of CrPC

Judges and public servants may get immunity under Section 197 of the CrPC while exercising their official duties. However, all the persons listed under Section 21 of the IPC are protected under Section 197 of the CrPC. This Section provides immunity to persons who act in good faith, not those who act mala fide.

However, Section 197 provides that individuals such as judges, magistrates, or public servants cannot be removed from their positions without the approval of the competent government authority. Moreover, if they have committed any offences while performing their official duties, no court can address the matter without prior approval. 

Indian Penal Code, 1860

Section 120B of IPC

It provides the punishment for criminal conspiracy. This Section divides conspiracy into two categories based on the nature, gravity, and punishment of this offence.

  1. Section 120B(1) states that if the conspiracy is for committing a serious offence (i.e., offence whose punishment is death, life imprisonment, or rigorous imprisonment for at least 2 years or more, or the Code does not mention punishment for the offence committed), such person shall be treated as if he committed the offence himself.
  2. Section 120B(2) states that if the conspiracy is for committing an offence other than that mentioned under Section 120B(1), such person will face a maximum imprisonment of six months, a fine, or both.

Doctrine of necessity

It is an exception to the rule against bias. This principle allows the Judge to decide the case even though he would act biassed or prejudiced. The main reason behind this principle is that if no other person can make a decision, let the biassed person decide the case rather than no decision made at all. However, it does not mean that the Doctrine of Necessity can be used to decide every case. It can be used in case of absolute necessity.

In Tata Cellular v. the Union of India (1994), the Indian government invited all mobile operators to establish their networks in Chennai, Bombay, Calcutta, and Delhi. The Evaluation Committee was responsible for reviewing and assessing the tenders under the Telecom Regulatory Authority of India (TRAI), which included a Director General of Telecommunication. Following the evaluation process, the tender submitted by the Director General’s son was chosen. The Supreme Court, however, did not approve the violation of ‘Nemo judex in causa sua’ because without the Director General of Communication, no tender could be selected, and fair evaluation could not be conducted. Since there was no alternative course of action, the decision was deemed immune from being nullified. The doctrine of necessity was applied liberally by the Supreme Court in this instance.

Moreover, in Election Commission of India v. Dr. Subramaniam Swamy (1996), the Supreme Court held that if there is a potential for bias in the Chief Election Commission, their involvement is not required and the doctrine of necessity does not apply. They were advised to convene a meeting and then excuse themselves from it, allowing the remaining commission members to proceed with the decision-making process. The doctrine of necessity is applicable when there is a disagreement among the members. Thus, in this instance, the said doctrine was interpreted as the doctrine of absolute necessity, indicating that it can only be invoked in situations of absolute necessity.

Judgement in M.P. Special Police Establishment vs. State of M.P. (2004)

The Supreme Court observed that the conclusion becomes unavoidable if the facts and circumstances indicate bias. However, Mr. Tankha’s assertion that the governor would not oversee the decisions of the Council of Ministers was incorrect. The governors will not act at their discretion unless the Council of Ministers is unable to function or disqualifies itself. A Council of Ministers may not decide unprejudiced when its chief minister or other members are facing prosecution. 

After observing the facts and circumstances of the case, the five Judges’ Constitutional Bench of the Hon’ble Court held that the governors can grant sanctions to prosecute the Ministers for offences under the PCA and the IPC. He can do so under his discretionary power. Moreover, Article 163(2) states that there can be certain circumstances where the governors can act at their discretion, even though the Indian Constitution has not explicitly stated so. 

The Lokayukta made a detailed inquiry into a complaint and found a prima facie case against the Ministers. Given that a former judge held the office of Lokayukta, it’s unlikely that this authority would issue a report without any basis. 

The Supreme Court was fully satisfied with the report, leading to the dismissal of the Writ Petitions of the Ministers. The Council of Ministers’ decision to reject the sanction was unreasonable as it disregarded relevant facts. As a result, this court reversed the judgement of the single judge and the division bench of the High Court. 

Consequently, the Supreme Court directed that the governor’s Order granting prosecution sanction should be enforced. Hence, the Ministers were liable under the PCA, 1983, and the IPC. The Court allowed the appeals filed by the appellants due to the existence of a prima facie case against the Ministers. Moreover, the Court remanded the case for trial.

Relevant judgements referred in the case

Following were the cases referred by the Supreme Court to reach the present Judgement:

The Supreme Court relied on the judgement of A.K. Kraipak vs. Union of India, 1969 (2) SCC 262, in which this Court ruled that, as far as bias is concerned, mere suspicion of bias is insufficient. There must be a fair possibility of bias. However, this Court considered the question of bias.

In Kirti Deshmankar vs. Union of India, 1991 (1) SCC 104, the Supreme Court determined that the governors generally act under the guidance of the Council of Ministers for granting sanctions for prosecution. They cannot act at their discretion. However, some exceptions may arise while granting sanctions of prosecution to chief ministers or Ministers. As a matter of propriety, the governors may have to act at their discretion. Moreover, if the Council of Ministers disables or disentitles itself, the governors would act at their discretion.

Moreover, this Court also considered Mr. Sobarjee’s reliance on the case of Ramdas Shrinivas Nayak. In this case, a Member of the Legislative Assembly (MLA) lodged a complaint against the then chief minister of Maharashtra at the Court of Metropolitan Magistrate, 28th Court, Esplanade, Bombay. The complaint accused the chief minister of committing offences punishable under Sections 161 and 185 of the IPC and Section 5 of the PCA, 1947.

The Metropolitan Magistrate declined to consider the complaint without the necessary approval of the government under Section 6 of the PCA, 1947. In response to the Metropolitan Magistrate’s decision, R.S. Nayak submitted a Criminal Revision Application to the High Court of Bombay, naming the State of Maharashtra and Shri Antulay as respondents. During the pendency of this Criminal Revision Application, Shri Antulay resigned as the chief minister of the State of Maharashtra. A Division Bench of the Bombay High Court dismissed the revision application.

Rationale behind the judgement

The rationale behind the judgement was to prevent the violation of the rule of law. The Supreme Court said that if the governor can not act at his discretion based on these facts and circumstances, the Rule of Law would be violated. Moreover, the governments would reject sanctions openly, regardless of very strong evidence that proves the prima facie case. Democracy would be in danger due to such rejections. 

Such rejections of sanctions will create a scenario in which the people in power might violate the law, knowing that they are immune from prosecution.

However, according to the Supreme Court, the doctrine of necessity does not apply to the current situation. The Court said that the Council of Ministers must consider the sanction without any doubt. The Council of Ministers would normally act in good faith and as per the law. If the Council of Ministers’ decision is unjust and biassed, the governors are justified in acting at their discretion based on the facts of the case. He is also right if he grants sanctions.

Analysis of M.P. Special Police Establishment vs. State of M.P. (2004)

The Supreme Court has tried its best to prevent the Council of Ministers and other Ministers from acting mala fide and arbitrarily to the law.

The Council of Ministers ignored the important facts while rejecting the sanction granted by the governor. Such rejection of the sanction was biassed and completely against the law because there were enormous materials to prove the liability of the Ministers. In this situation, the governor is authorised to act at his discretion under Article 163(1), considering the facts and circumstances of the case.

As far as the Madhya Pradesh High Court is concerned, it did not consider the facts and circumstances of the case. Moreover, the consequences of rejecting the sanction were not considered by this Court.

However, the Supreme Court has explained some exceptions where the governors can exercise their discretionary power without the guidance of the Council of Ministers.

Conclusion

This case law concludes that the governors are empowered to act at their discretion in some special circumstances, as discussed in this article. But it does not mean that they do not need to seek aid and advice from the Council of Ministers. Normally, they need to act under the guidance of the Council of Ministers. The facts and circumstances of the case determine whether the governors can exercise the discretionary power under Article 163 of the Indian Constitution.

Frequently Asked Questions (FAQs)

Who is the Council of Ministers under the Constitution of India?

The Council of Ministers is the supreme executive organ of the government. It aids and advises the President [under Article 74(1)] and the governors [under Article 163(1)] in exercising their functions. 

What is the relationship between the governors and the Council of Ministers?

Generally, the relationship between the governors and their Ministers mirrors that of the President and his Ministers. The key distinction is that the Indian Constitution does not authorize the President to exercise any discretion in performing functions at his discretion, whereas it allows the governors some discretionary powers.

However, Article 163 provides that the governors have to act under the guidance of the Council of Ministers. They are allowed to use their discretion in some exceptional situations.

Which protection has been given to the governors?

Under Article 361, the governors have the same protection as the President of India. However, in State of Gujarat vs. Mr. Justice R.A. Mehta, AIR 2013 SC 693, the Supreme Court, interpreting Articles 154 and 361, held that-

Article 361(1) grants governors full immunity, preventing their actions from being contested due to their adherence to the guidance of the Council of Ministers. Consequently, their acts can not undergo judicial review. If it is not so, democracy itself would be in danger. Moreover, the governors are not accountable to either of the following:

  1. House of State,
  2. Parliament, and
  3. Council of Ministers.

What do you mean by the term “Lokayukta”?

The term “Lokayukta” originates from the combination of two Sanskrit terms: “Loka” (means people) and “Ayukta” (means appointee). It is an anti-corruption authority that investigates corruption and malpractice complaints made by the general public. Such complaints can be against public servants, including government officials. However, the state government appoints Lokayukta.

What is the rule against bias?

This is the principle of natural justice. According to this doctrine/rule, a judge must be free from any pecuniary interest or personal interest in a particular case. Moreover, his decision must not be biassed and prejudiced.

References

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Allotment of shares under Company Law

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Share company

This article was written by Gitika Jain and further updated by Sneha Saha. This article exhaustively deals with the allotment of shares, which means when a company accepts shares which are made by a person on a prescribed application. The article also explains in detail how the company distributes shares to its applicants. Further, the rationale behind raising the capital of the company and analysing the company’s paid-up capital has also been explained in the article, the general principles and structure of the companies allotting shares to the investors, the nature of shares and the rules and regulations that the subscribed investors have to follow are also discussed here.

Introduction

A share is defined under Section 2(84) of the Companies Act, 2013, and it includes the share capital and stock of the company. It is a portion into which the share capital is divided. A share is an interest held by a shareholder and is measured by a sum of money, primarily including the purpose of liability and, secondarily, a dividend. Allotment of shares is the process of bringing new opportunities to the market by opening an invitation to individuals and institutions to become a part of the organisation. Let us say you want to open a new organisation. You have created your base and gathered a group of people, and now you need funds to create the structure of your company. In order to raise funds, you need a process, which is known as the allotment of shares, where the company and investors come into play. The company opens an opportunity for potential investors to apply for shares and the company offers them the shares. This process followed to create a strong relationship and ownership that follows the same set of interests. Allotting shares is a way to transfer shares to the shareholders to build a promising future by placing the company’s future in good hands. An important factor in business is raising capital, which can either be borrowed or owned. The shares are of two types: equity and preference shares. There are times when the structure of the company has to be changed, which is done either by adding a new shareholder or by changing the current proportion of shares between shareholders. Allotment of shares is the formation and distribution of new shares by a company. New shares can be issued either to new or current shareholders. Offers for shares are made on application forms provided by the company. When the application is accepted, it is called an allotment. The company offering to take shares is the same as the term “allotment.” 

The allotment is initiated by an Initial Public Offering (IPO). This process is followed when the company sells its stock of shares to the public. Then the interested investors subscribe to the shares and make an application to the company to whom the shares are allotted. In simple words, an allotment of shares is the acceptance of a public offer made by the public company, where the investors make an application as an offer to take up the company’s shares. For an allotment to be valid it has to abide by the requirements and instructions of the Companies Act, 2013 and the principles of the law of contract under the Indian Contract Act, 1872 relating to the acceptance of offers. 

Now, the next heading will give an explanation of the concept of allotment of shares.

Concept of allotment of shares under Company Law

Before diving deep into the topic of allotment of shares, it is necessary to understand what allotment really means. The allotment is the allocation of a portion of shares to an underwriting participant during the Initial Public Offering (IPO). When the shares are allotted by the underwriting agreement, the remaining shares are allotted to other investors that participate in the same.

A contract between a company and its shareholder is made through a process when the company offers a prospectus to the public to subscribe to the shares through an application. When a company accepts an offer and allots shares, a binding relationship is created between them. Under Section 2(55) of the Companies Act, 2013, the process is followed by a written application for applying for shares and becoming a member of the company. Re-issuing forfeited shares is not considered an allotment, the reason being that ‘allotment’ means the issuance of original shares and not the re-issue of forfeited shares.

The Companies Act, 2013 incorporated therein forms allotment of shares that are listed on the National Stock Exchange(NSE) and Bombay Stock Exchange(BSE) or any other stock exchanges in India. Other regulations that are applicable for subsidiaries of listed companies include the provision of the Securities and Exchange Board of India  Act, 1992 and the Securities Contract Regulation Act, 1956.

Allotment of shares is basically creating and issuing a new number of shares by the company to the new or existing shareholders. The purpose of allotting new shares is to bring in new business partners. 

Meaning of allotment of shares

Allotment of shares means the company allots shares to the general public. The allotment is distributing the shares among the applicants. When a company issues the shares to the public, it indicates the invitation to the general public to subscribe to its shares. The general public apply for shares of the company, they are known as share applicants. And the final decision is given by the board of directors by passing a resolution.  The process of appropriation of a certain number of shares and distribution among those who have submitted the return applications of shares is known as the allotment of shares. Private companies allot shares after filing a Return of Allotment of Shares. Further, in the case of public companies shares can be allotted anytime but after filing the return within 14 days of allotment. The allotment is followed by a few processes such as by oral or written contract, followed by the provisions of the constitution of the company, and by the exchange for payment of dividend to a shareholder.

General principles for allotment of shares under Company Law

An allotment to be effective must comply with the requirements of the law of contract relating to the acceptance of an offer. 

Allotment by the proper authority

An allotment should be made by a resolution of the Board of directors. Allotment is the primary duty of the directors, and this duty cannot be delegated except in accordance with the provisions of the articles.

Within a reasonable time

Allotment should be made within a reasonable time; otherwise, the application fails. Reasonable time should remain a question of fact in each case. The interval of six months between application and allotment has been held unreasonably. If the reasonable time expires, Section 6 (Revocation how made) of the Indian Contract Act, 1870, applies and the application must be revoked.

Must be communicated

The allotment should be properly communicated to the applicant. Posting a properly addressed and stamped letter of allotment is sufficient communication, even though the letter is lost or held up.

Absolute and unconditional

Allotment should be absolute and according to the terms and conditions of the application, if any.

Allotment should be made only against the application

An allotment should be made in the form of writing and only be made by an application. No oral request can be accepted by any applicant. According to Section 2(55) of the Act, a person should write an application inorder to become a member. 

No contravention 

The process of allotment should not be in contravention of any other law. In cases where shares are allotted to a minor, the allotment can be considered void.

Nature of the shares under Company Law

According to Section 44 of the Companies Act, 2013, the shares of a company are immovable property and, according to the articles of the company, are transferable in the manner specified therein. In the case of Vishwanath vs. East India Distilleries,(1956), the Madras High Court stated that the nature of the share was incorporeal and had a bundle of rights and obligations. 

The Act states the principle by which shares, debentures, or any other interest of any member of the company will be transferred according to the discretion of the company through articles. This section holds the obligation that by any means, a company will not be held liable to set off any amount paid or payable on any shares against any amount that is due to the company from the shareholder. It also provides for the indemnity of the company against any liability arising from the issue of shares or debentures. 

Notice of allotment of shares 

An allotment is considered as a process of accepting an offer of shares by an applicant that needs to be communicated. The notice of allotment of shares is a formal communication given by a company to all shareholders who allocate the shares through the process of allotment. In this step, no binding contract is made except that the acceptance is made by a communication. Therefore the notice must be given to the allottee for the allotment. The main reason for giving this notice is to inform shareholders about the allotment and their allotted shares. After the allotment letter is given, it is addressed and stamped. A contract will arise even if the letter of allotment is delayed or gets lost and delayed during transit. The letter of allotment contains details such as the number of shares applied, the recipient details, the number of shares that need to be allotted, the price of shares allotted, the money that needs to be paid within a specified time to the bankers’ company unless any partial allotment is made and allotment is suitable out of the excess application money. The notice will also include the time when they will receive the share certificate, the rights and any obligation linked with allotted shares, the legal notice and disclosures required by specified laws and, the notice needs to be sealed by an authorised officer of the company.

Modes of allotment of shares under Company Law

Allotment of Shares is the relevance of certain shares to an application and giving the shares to the shareholders who have submitted the relevant application. It is governed by the Companies Act, 2013 with relevant acts and regulations providing certain guidelines for the mode of allotment. The mode of allotment also varies depending upon the various circumstances such as the need for any rules and regulations in a company to maintain capital investment, the demands of market conditions and the preferences of the company’s management and shareholders.

The mode of allotment of shares states the method by which shares are allocated to investors by a company. The allotment of shares is done by the types of the company through various means such as 

  • A public company allot shares to the public by public offer through private placement and through the right issue or a bonus issue.
  • A private company issues the shares by right issue or a bonus issue and also through private placement or preferential placement. 

Private placement

In the process of private placement, shares are allotted in the process of offering shares to certain investor groups. The investors who participate in the giving prospectus are mainly institutional investors; individuals with high net worth, accredited investors, and well-known venture capital firms identified by the company. In the private sector, there is less public involvement and public offering rather the company uses the process of raising capital without getting into complexities and more cost which can be an issue involving the public.

Initial Public Offering

In the process of Initial Public Offering (IPO), a company tries to offer the shares to the general public. The process happens when a private company gives shares in the stock exchange by which the interested investors apply for the shares through the process of application and then allotted shares are given based on certain conditions such as available market price, rising demand and also by following the regulatory compliance and scrutiny of the company.

Right issue

In this case of right issue, the existing shareholders are given the right to purchase any additional shares comparable to the current market price or to their existing shareholding. This process is followed by the company to raise the capital from the existing shareholdings, giving them an opportunity to work through the new shares at a certain price, as discussed. The right issue allows companies to raise capital from existing shareholder bases and allow them to maintain proportional ownership. 

Preferential allotment

Preferential allotment is a process where shares are allotted to specific investors such as promoters, directors, strategic investors, and institutional investors on a preferential basis with a certain price. This method is followed to raise the capital in a faster way so that more strategic investors can show interest in joining, which will bring great value to the business with a critical shareholder.

Secondary offering

A secondary offering is a process when a company is listed in the public and issues more shares additionally to raise more capital. The purpose lies in expansion, corporate purpose, or repaying debt. It can also dilute other existing shareholders present.

Procedure for allotment of shares under Company Law

In the process of business and corporate finance, shares play an important part. In raising the money or distributing the ownership, the most important thing is to allot the shares. To allot this, there are a few procedures that are required to be followed such as:

  • Details of the shareholders and shareholdings: The first and foremost step is to confirm the total number of existing shareholdings and the details of how many shares must be introduced. The final structure of shareholding to shareholders. Details of new shareholders such as their name, date of birth, nationality, residential address, ID proof, and relationship with other shareholders.
  • Appointment of the allotment committee: After the final structure of shareholding and the shareholders is completed the secretary informs the Board of Directors to make the final statement for allotment of shares. The allotment committee consists of the board and the secretary. The committee regulates the reason for the allotment and submits the report to the Board. Once the final preparation is completed the formula is made for allotment of shares.
  • Conduct of Board meeting: A board agreement is essential for allotting shares. The secretary, after confirming the list of shareholders, all the shareholdings, and the new structure of shares that is to be distributed, makes the necessary arrangements for the board meeting. The board meeting, which has to be confidential, includes all the new structure of shares, and how it will be distributed, detailed information about shareholders and the application, and allotment lists that are made. This list should contain the allottee’s names and also it must be signed by the chairman and secretary.
  • Passing Resolution for allotment to the Board: The board takes the decision regarding the allotment of shares, and hence the board meeting is conducted with regard to it. A resolution is passed in the board meeting which authorises the secretary to issue the letters of allotment.
  • Collection of allotment money: The allotment letter states the amount that needs to be paid by the applicant on the allocation of shares. The secretary should make the necessary arrangements with the company’s bank within a stipulated period for collecting the allotment money. The money must also be paid within the given period in the bank.
  • Issue new share certificates and prepare the register of members: The new share certificate needs to be shared in the companies, especially with the shareholders, with the details of the new structure of shares within the two months of allotment of shares. All previously issued share certificates will remain cancelled once the new certificate is provided. The secretary prepares the register of members according to the allotment lists and updates all the members who have paid the amount for the allotment of shares.

Difference between allotment of shares and issue of shares

  • The allotment of shares means the allocation of authorised shares of stock to investors in a company. The issuing of shares is a way of distributing the shares to potential shareholders by offering ownership.
  • The parties and the method used for share allotment will be according to the prior issue of shares. Also, the issue of share will be based on the criteria of allotment.
  • The allocation of shares is completed once the shares have been applied for. The issue of shares is complete through the process of offering shares for sale or by subscription.
  • The board of directors in the company decides how many shares need to be allotted to all shareholders. The management gives the final say in the terms and conditions that are followed in offering shares.
  • The allocation of shares is followed by the number of applications received.  The issue of shares is done by the process of making shares available to the market where the purchaser is required to purchase.

How are shares allocated during an IPO

Hearing the news of IPO launches by renowned companies, investors usually get excited. IPOs are an important financial tool for raising funds from the public for some companies that require them. It is raised by companies when they feel confident about their future performances.

From time to time, companies’ IPOs are announced among the public and investors who are waiting for this opportunity.

Companies, by issuing public share ownership, raise capital from the public through IPO. Although there are various risks associated with announcing an IPO, only when the company feels that it has reached a certain maturity stage, where it can benefit the targeted public, does it announce an IPO. 

The number of IPO defaults on a yearly basis depends entirely on the economy. For example, during the 2008 financial crisis, the IPO market was destroyed completely. 

Although the company announces an IPO to the public at large, it does not mean that everyone is qualified to receive an IPO. Only on the basis of the share volume of each investor does the company offer an IPO. The Securities and Exchange Board of India (SEBI) governs the rules of allotment of shares. 

Provisions of the Companies Act relating to the issue and allotment of shares [Section 39]

Section 39 of the Companies Act, 2013 ensures that during the process of issuing and alloting shares transparency and fairness are maintained. This provides a clear process of allotment and fundraising. Ensuring timely payments and imposing penalties on those who do not abide by the rules and regulations of the company. To uphold the principles of the company and the integrity of the capital market. These provisions ensure that a minimum subscription is required to allot shares. The application money should be payable on the basis of the nominal value provided by the company. To allot shares within a time frame and also file returns within the specified time period. Also, the Securities and Exchange Board of India(SEBI) and Registrar of Companies(Roc) needs to ensure that companies follow the guidelines provided by them. Some of the important points as per the aforementioned provision is mentioned as under;

  • A public company should file a prospectus or declaration in lieu of a prospectus inviting the public offers for the purchase of shares.
  • After reading the prospectus, the public applies for company shares in printed forms. The company can ask the issue price to be paid in full, together with the application money, or to be paid in instalments as share application money, share first call, second call, etc. The application money must be paid at least five per cent of the nominal value of the share. [Section 39(2)]
  • The allotment of shares cannot be made unless the minimum amount which is the minimum subscription stated in the prospectus, is subscribed or applied. The minimum subscription should be mentioned in the prospectus. [Section 39(1)]
  • The company must return and refund the entire subscription amount instantly if within 30 days the total sum is not received from the date of issue of the prospectus or such other date specified by the Securities Exchange Board. [Section 39(4)]

After allotment of shares, the company can call for the full amount or instalments which are due on shares from the shareholders according to the rules mentioned in the prospectus. Usually, the articles of the company include provisions regarding calls of the total amount of due shares is required to be distributed. If there are no such provisions, then these provisions are applicable:

  1. No call should be made for more than 25% of the nominal value of each share.
  2. The interval between two calls should not be less than one month.
  3. At least 14 days should be provided to each member for the call, mentioning the amount, date, and place of payment.
  4. Calls should be made on a uniform basis to the entire body of shareholders falling under the same class.

Rules of allotment of share

The general procedure that is accepted in the law of contract also applies to the allotment of shares. These are:

  • The resolution of the board of directors must be done prior to allotment. The directors cannot be delegated this duty, and it becomes very important that a valid resolution is passed by the board for allotment in a valid meeting.
  • According to Section 6 of the Indian Contract Act, 1872, it is important that the allotment of shares is done within a reasonable period of time, but this reasonable time varies from case to case. The refusal to accept the shares by the applicant is the choice if the allotment is made after a very long time to him. The same thing happened in the case of Ramsgate Victoria Hotel Company vs. Montefiore (1866), wherein the allotment of the share was made at an interval of six months between application and allotment, and it was held unreasonable.
  • Moreover, the allotment must be unconditional and absolute and must be allotted on the same terms upon which they were agreed upon during the acceptance of the application. 
  • Acceptance is the key to allotment and without acceptance of valid allotment cannot be made just on an oral request.

Statutory restrictions on the allotment of shares

Minimum subscription and application money[Section 39(4)]

The first essential requirement for a valid allotment is that of minimum subscription. The amount of the minimum subscription has to be declared in the prospectus at the time when shares are offered to the public. Shares cannot be allotted unless at least so many amounts have been subscribed and the application money, which must not be less than 5% SEBI may decide the various percentages of the nominal value of the share, has been received by cheque or other instruments. It has been established by various cases that it is a criterion to valid allotment that the entire application money should be paid to and received by the company by cheque or other instruments. If the shares allotments are made without application money being paid, it is invalid. If the minimum subscription has not been received within thirty days of the issue of the prospectus, or any such period as specified by SEBI, the amount has to be returned within such time and manner as prescribed. Application money can be appropriated towards allotment, or it has to be returned or refunded. [Section 39(4)]

  • Return of allotment [Section 39(4)] – A return of allotment has to be filed with the registrar in the prescribed manner whenever a company makes an allotment of shares having a share capital.
  • Penalty for default [Section 39 (5)] – In case of default, the company and its officer who is in default are liable to a penalty for each default of Rs 1000 for each day during which the default continues or Rs 1,00,000 whichever is less.

Shares to be dealt in on the stock exchange [Section 40] 

Every company, aiming to offer shares or debentures to the public by the issue of the prospectus, has to make an application before the issue of shares to anyone. Also, before accepting the stock exchange permission for the shares or debentures need to be dealt with during the exchange. The need is not merely to apply, but also to obtain permission. In the prospectus, the name or names of the stock exchanges to which the application is made must be stated. 

The aforementioned requirement is precedent for listing the shares and the application money needs to be deposited in a separate bank account before that which will be used only for adjustment against the allotment of shares. And in case the shares need permission to be dealt with in the specified manner in the prospectus. Hence, the money will be used for the repayment to applicants within the time specified by SEBI, if the company has not been able to allot shares for any other reasons. [Section 40 (3)]

The object of this section is that it will help shareholders to find a ready market so that they can convert their investments into cash whenever they like. In the Supreme Court case of Union of India vs. Allied International Products Ltd,(1970), this objective of the Section was explained.

Over-subscribed prospectus

In cases when stock exchanges give permission, the allotment is valid and the given prospectus gets oversubscribed, in such case the portion which is oversubscribed and the money which is received will be returned to the applicants within the given period of time 

Effect of Irregular Allotment

An allotment can be considered irregular if any allotment is made without complying with any conditions prescribed to regular allotment as contained under Section 39 of the Companies Act, 2013. The allotment can be considered irregular in certain cases, as mentioned below:

  1. In a case in which allotment is made before gaining the minimum subscription or before gaining the money, which is subject to a minimum of five per cent of the nominal value of the share, or without having filed a declaration or statement.
  2. In lieu of declaration with the Registrar of Companies, the allotment will be considered void at the point of the allottee’s or applicant’s submission.
  3. If the process of allotment is defective, for the reason that it was allotted before the expiry of the 5th day or after the publication of the declaration issued, the allotment shall remain valid, but the officers will be in default and will be liable to a fine.
  4. The allotment will be considered defective if no permission is obtained from the Stock Exchange by making any application and if the application was made but the Stock Exchange has not agreed to list the shares, then in such cases the allotment will remain void.

Return of allotment to be filed with the Register

Once the process of allotment of shares has been completed by the company, a return of allotment is required to be filed with the Registrar of Companies, by filing Form No. 2 within 30 days of the allotment. The Return should include specific details, such as

In case of shares are allotted for cash:

  1. Total number of shares allotted.
  2. Name, address and occupation of all allottees.
  3. The total amount paid or payable on each share.

In the case of shares, other than bonus shares, are allotted as fully or partly paid up, consideration for allotment of shares is paid by property, goods or services; in such case, the return must include:

  1. A contract which is a written format includes the title of the allottee to the shares.
  2. Contract of sale or any other services and consideration for which the allotment was initiated.
  3. A return includes numbers and shares that are allotments paid up and the consideration for which they were allotted.

Where a company puts forward to issue bonus shares by capitalising undistributed profits or free reserves, it must take permission from the Controller of Capital Issues before making that allotment and, after the allotment, prepare a return of allotment in the prescribed Form 2 and file it with the Registrar of Companies together with the filing fee and with a copy to be submitted of the resolution authorising the issue of such shares. If shares are issued at a discount, the Return in Form 2 with a copy of the resolution authorising the share issued and the order of the Tribunal authorising the issue must be filed with the Registrar. In the case of re-issuance of forfeited shares, no return is needed to be filed so that allotment is not performed. 

Reference case and other important case laws

The term allotment has not been defined in the Companies Act, 2013. The meaning can be interpreted from various cases that were decided in India, some of the cases are:

Shri Gopal Jalan and Company vs. Calcutta Stock Exchange Association Limited (1963)

Facts

In this case, Shri Gopal Jalan and Company v Calcutta Stock Exchange Association Limited, (1963), the Calcutta Stock Exchange Association Ltd issued capital of 277 fully paid shares of Rs 1000 each. 70 shares were forfeited by the Calcutta Stock Exchange Association, and those forfeited shares were reissued later on. 

Under Section 75(39) of the Companies Act, 1956, the Calcutta Stock Exchange Association did not file the return for such forfeited shares that were re-issued. This made Shri Gopal Jalan & Company approach the court requesting an order stating that the Calcutta Stock Exchange Association needs to file the return of the allotment with regard to the re-allotted shares.

Issue

  • Whether the company is obliged to file any return on the allotment of shares that were re-initiated after being forfeited by the respondent?
  • Under Section 75(1) of the Companies Act 1956, what does the term ‘allotment’ specify?

Judgement

The Supreme Court held that the appeal which has been filed by Shri Gopal Jalan company is dismissed because, for the Calcutta Stock Exchange, it is not compulsory to file returns under Section 75 of the Companies Act, 1956. As this section, read with Sub-section (5), upholds the principle of ‘ex abundanti cautela’ that is out of abundant caution which states to put a stop to an argument from being raised that if shares are forfeited on any non-payment of calls or re-issued, a return is required to be filed and at the same time held dismissed. 

The court also stated that Jalan’s argument was based on the doctrine ‘expressio unius est exclusion alterious’. The statement means when a thing is not expressly stated then the other things having the same meaning will not be included and, thus cannot be applied in the case. The court held that the term ‘allotment’ is primarily used to alert the process of forestalling any potential contention arising from the return of shares that have been forfeited due to the non-payment of calls. 

Khoday Distilleries vs. CIT (2008)

Facts

In this case Khoday Distilleries vs. CIT (2008), the Khoday Distilleries issued rights shares, but twenty out of twenty-seven shareholders did not subscribe to their rights. Khoday Distilleries then made the decision to share the remaining unclaimed shares with seven investment companies. The Assessing Officer (A.O) stated that the allotment of shares was to evade taxes, no consideration was made, and it was deemed a gift under Section 4(1) of the Gift-Tax Act, 1958, which was taxable. The Assessing Officer also explained the difference between the share value and face value.

Based on this decision, the Commission of Income Tax (CIT) made an appeal stating that the whole thing was to evade wealth tax and to claim that the entire tax liability would fall under existing shareholders who have renounced their rights and not the Khoday Distilleries and ought to have initiated gift tax proceedings to the existing shareholders. The CIT also stated that the Khoday Distilleries did the whole exercise in order to avoid paying wealth tax and held that the company is liable to pay gift tax for the transfer of the said shares to the seven investment companies.

The Tribunal, on the other hand, reversed the CIT decision, stating that there is no element of a gift present in this case based on Section 4(1)(a), as any kind of transfer of property was not made as stated under Section 2(xxiv) of the Gift-Tax Act, 1958, and allotted rights do not include transfer but consideration. Based on this decision, an appeal was made to the high court claiming that there is a taxable gift in allotted shares.

Issue

  • Whether under Section 2(xii) of the Gift Tax Act, 1958, that ‘gift’ qualifies as a taxable gift in the case of the allotted shares.
  • Did the bonus shares in the ratio 1:23 also include ‘gift’ under section 2(xii) of the Gift Tax Act?

Judgement

It was held that the contention that the allotment of right and bonus shares by the company in an inappropriate manner was done because it was a gift was outright rejected. The creation of shares by an appropriation to a particular person out of the appropriate share capital is known as the allotment. The court gave an explanation that issuance of the bonus shares does not mean treating it as a gift under the Gift Tax Act. The shares that the shareholder received were the company’s profit that is accumulated in the structure of additional share capital, not a gift. It was also held that according to Section 4(1)(a) of the Gift Tax Act, an allotment is not a transfer and it does not attract this section. The company which issued the bonus shares was nothing but the capitalisation of the profits of the company.

Importance of allotting shares in a company

  • To uphold the foundation of the company and meet the strong needs the process of allotment is required. 
  • It is considered a crucial step to raise capital and creates a better funding income. When a company offers new shares it means to raise capital. A company follows the process by offering stock for sale to the public through an Initial Public Offering(IPO).
  • It helps to build a financial structure and make the best decision for the company’s future. Allotting shares is not just to fund the company but to raise the capital but to give reward to shareholders in the company.
  • Allotment is important in a company to increase the value for which shareholders can increase their stake in the company. 

Conclusion

Hence, we can conclude that the allotment of shares is issuing new shares by the company to the public at large, who are original or existing shareholders. The main confusion among the public lies between the issue of shares and the allotment of shares. The process of allotment of shares plays a crucial role in raising capital growth, clear visibility, and credibility in the business sector. To ensure the company’s growth and development, it is important to raise capital and expand its operations through the process of allotment, which will benefit both the company and the shareholders. Shareholders gain a lot of benefits because they have more money to earn and because of the investment that they have made. Through this process, the company also achieves its maximum target of expansion and holds a strong position in the market. To sum up, we can see that the issue of shares is the process of offering shares to the shareholders, where the allotment of shares is the distribution of shares in the company where a company itself takes the decision of acceptance in this case. The most important procedure in the company is the allotment of shares, which mainly means the expansion of the business by offering shares to the public at large.

Frequently Asked Questions (FAQs)

What is meant by the allotment of shares?

After issuing new shares or Initial Public Offering (IPO), the process of allotting shares is done by the company where shares get distributed to the applicant, and they become a potential shareholder in the company.

How is the process of allotment of shares decided?

The allotment of shares is done based on the total number of shares available, the number of shares that are opted for, and the company’s allotment policy. It is the company’s duty to ensure that the allotment of shares will be followed by a fair and equitable process.

How does the allotment of shares benefit employees?

By the Employee Stock Ownership Plans (ESOPs), employees get share allotment benefits as it aligns employees’ interests with the company’s success.

What is the role of regulatory authorities in the allotment of shares?

Regulatory authorities ensure that the allotment of shares is followed in a smooth, fair, transparent, and compliance with security laws. Also, they check the documents, and investors’ interest, and approve the issuance of shares.

What is an IPO?

An Initial Public Offering (IPO) is when a private company’s shares are given to the public for the first time. The IPO assists the company raise share capital through the investment created by the public.

What happens if the issue of shares are oversubscribed?

If the shares that have been issued are oversubscribed, then the company needs to reduce the number of shares that have been distributed to every applicant. Moreover, the company tries to increase the number of shares issued.

References

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Maximising content distribution : platforms and strategies for wider reach

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Phantom Stock Options

This article has been written by Manasa Raghuvaran pursuing a Diploma in Business English Communication for International Professionals and Remote Workers course from Skill Arbitrage.

This article has been edited and published by Shashwat Kaushik.

How to maximise content distribution platforms

Content creation is only half of the battle. Effective content distribution is crucial to your audience and to reaching your goals. While many articles focus on traditional, paid and organic methods, there are various other channels and strategies that can enhance your distribution efforts.

This article will explore diverse content distribution platforms, helpful tips for creating impactful content, and strategies to ensure your content remains timeless.

Influencer collaborations

Extended Reach: Influencers have built-in, loyal/niche-specific or refined audiences that trust their recommendations. Collaborating with the influencers can help you tap into these audiences effectively.

Tip: Influencers add a layer of trust and credibility to your content, making it more engaging.

Here comes the question: How do you do that? Don’t worry I have got you covered.

Identify Relevant Influencers: Use tools like BuzzSumo, Upfluence, HypeAuditor etc, to find the influencers whose audiences align with your target demographic. It is also important to look for engagement rates, follower demographics and content relevance.

Offer the influencers something valuable, such as commissions or partnerships that benefits their audience.

Tip: If you are short on funds to offer to the influencer, then try to opt for a win-win situation. Devise content in such a way that you and your influencer can benefit from the audience.

Work together on blog posts, social media posts, and videos and ensure that the content feels authentic and more of the influencers style.

Content syndication networks

Generally, it is a different form of earned media distribution in which existing content is repurposed on third-party websites or platforms.

Syndication allows your content to be seen by a larger and more diverse audience.

Identify the platforms, like Medium, Taboola, LinkedIn Pulse, etc., where you can re-publish your content. It is ideal to tailor your content for each platform by tweaking headlines, formatting, CTA’s, etc.

Use analytics to track the performance of the content and placements and adjust your strategy accordingly.

Tip: Proper syndication can improve your SEO through backlinks, leading to improved Google rankings.

Email newsletters

The direct way to reach your audiences is through email newsletters. Subscribers who opt-in are generally more engaged and interested in your content/service or service, leading to a higher CTR%.

Build an email list: Offer free services/content or anything that benefits your audience for free as lead magnets to encourage sign-ups. Utilise tools like Mailchimp to manage the list.

Tip: Analyse the customer pain points and your business services, then create a lead magnet specific to your audience.

A lead magnet can be a trailer or teaser of your services or products, and at the same time, it should benefit the customer.

Craft engaging newsletters

Create value-packed newsletters that offer insights, case studies, offers, discounts, updates, etc. It is ideal to personalise the content based on subscriber preferences and behaviour.

Tip: Add easy-to-share elements such as social media buttons and encourage the customers to forward the email to friends and colleagues.

Podcasts and webinars

The most popular way to skyrocket your audience is through podcasts and webinars.

Audio and video content can be more engaging than text; we can capture the attention of users who prefer these formats.

  • Build authority: Regular appearances on podcasts and webinars can establish you as an authority in your area or they can be used for personal branding, which builds more credibility among your audiences.
  • Host your own: Use platforms like Anchor and Zoom to create and distribute your podcast or webinar. Remember to plan the content specifically for your audience.
  • Guest appearances: Leverage speaking opportunities at industry conferences and webinars.
  • Identify relevant events: Use platforms like Eventbrite, Meetup, YouTube, and event listings to find conferences and webinars that are specific to your niche.
  • Develop a compelling speaking proposal that highlights your expertise and the value that you bring to your audiences.
  • Deliver engaging presentations that offer practical takeaways. Make use of interactive elements like Q&A sessions to connect with people. These practices will provide opportunities to network with other industry leaders, collaborators and highly engaged audiences interested in your niche.
  • Tip: Live sessions provide immediate interaction with your audience and help to build credibility.
  • Reposting Your podcast: Reposting your podcast or webinar on all the platforms will attract users from different platforms.
  • Spotify podcast: post it to Apple Podcasts and Amazon Music.

Short video on TikTok; post it to YouTube and Instagram.

Community platforms and forums

These platforms help you reach highly targeted audiences interested in specific topics. These platforms enable direct connection with your audience, fostering relationships and trust.

Identify relevant communities: Use platforms like Reddit, Quora, etc. to find communities discussing topics related to your content. Join social media groups that align with your niche.

Participate in the discussions by providing insights, answering questions and sharing your expertise.

Tip: Avoid self-promotion and instead link to your content when it fits the conversation.

Content partnerships and guest blogging

Guest blogging content partnerships introduce your content to new audiences, driving traffic and increasing brand awareness.

Find suitable partners: Use tools like SEMrush and Ahref’s to identify websites and blogs with overlapping audiences. Reach out with personalised pitch proposals featuring mutually beneficial content exchanges.

Create high-quality guest posts: Write detailed, valuable articles for partner sites that include lines back to your content. Ensure the posts are well researched and relevant to partner audiences.

Promote your guest posts through your own channels and the same applies to your partner sites as well. Leverage the platform’s insights to reach your goal and devise a strategy accordingly.

Essential insights on how to choose a content platform

  • Research and identify your specific audience niche.
  • Identify where your audience will mostly hang out online and where they prefer   consuming content.
  • Tip: Analyse the demographics of website visitors.
  • Use analytics to analyse the historical data of your target audiences.
  • Identify the current trends in content patterns in your niche and align them with your targeted platform.
  • Research how you can reach your audience beyond paid or organic platforms.

How to develop a content plan for each channel

Creating goals for your strategy is very crucial. Think about your short-term and long-term goals. What are the success metrics that you want to achieve? How many new customers are you hoping to acquire?

  • Develop a content plan based on the insights gathered from the research. As the algorithms are different for every platform, it is recommended to personalise your content plan specific to each platform. This will help to reach more users.
  • Use a content calendar to track content and distribution.
  • Prioritise owned channels.
  • Content optimisation is key to reaching more customers and ranking on Google. Plan for SEO-optimised content and backlinks.
  • Leverage the analytics insights to make data-driven decisions and customise the content plan. Measure the platform success rate and switch the platforms from low performing to high performing content platforms.
  • Leverage the content collaborations for better reach.
  • Make tweaks to the old media posts and data you republish and repurpose them to engage with your audiences.
  •  Encourage user-generated content.
  • Always plan for enduring content that is highly effective and highly engaging, and content should connect to your audiences at any point in their lives.

How to measure the success of content distribution

We have many types of metrics to analyse the success rate of our content. Decide how you will determine success. Here comes the note that tracking the right ones for the right business goal is key to achieving success.

Website traffic : It shows how many people visit our site. We can determine the website’s popularity and content reach.

Social media engagement : It measures how much interaction our posts get, how well our content aligned with our audience. 

Conversion rates : They tell the percentage of visitors who have taken the desired action, like signing up, etc.

Cost per acquisition: It reveals how much it costs every time to gain a new customer or lead through our content efforts. It also helps in analysing market spend.

Attention metrics : They measure how much time users spend engaging with our content.

Bounce Rate: It gives the percentage of visitors who have left our site after viewing only one web page or the audience who has left the site within the first 5 seconds after visiting.

Understanding and tracking these metrics plays a crucial role in evaluating content distribution efforts. By focussing on these key indicators, we can refine our strategies and optimise our content to reach our goals. 

Tip: If the bounce rate is higher, that means we need to take a look into the content on the landing page. Analyse the entire content, include keywords and proper CTA’s wherever necessary, include high-quality imagery and make the changes in the content.

Dear Readers, now comes the interesting part!

What is ageless and enduring content

It is the content, which is always valuable to your audience, likely to be shared with decent Google rankings. Writing this type of content revolves around the topic, irrespective of trends, news, patterns, or age group.

Examples of ageless and enduring content ideas

  • Conduct original research and think from the customer’s perspective to create practical content.
  • Leverage and stay updated with trends that resonate with your audience and incorporate them into your content.
  • Highlight common mistakes that beginners make in your niche to help others avoid them.
  • Provide a list of five free and paid tools that benefit customers.
  • Make use of the most engaging content from the existing and convert it into a new format and republish it across different platforms.
  • Create a checklist for aspiring entrepreneurs who want to start a business.
  • Share best and worst practices to meet a specific goal.
  • Offer comprehensive information about a product/niche that readers need to know.
  • Present case studies in your niche. Remember to showcase successful case studies.
  • If your niche is the finance industry, then you can present, “5 platforms you need to stop investing immediately if you are in the finance industry.”
  • Outlining things to avoid in order to successfully reach your goals.  

Conclusion

Effective content distribution goes beyond just using paid and organic methods. By leveraging a variety of platforms and strategies and focussing on creating timeless content, you can maximise your reach and impact.

Remember, the goal is not to just have a wider reach but to engage and convert your audience. So, quality content matters! Continuously optimise your content and channels for a better conversion rate.

References

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The Indecent Representation of Women (Prohibition) Act, 1986 in time of social media

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Identity politics

This article has been written by Surabhi Singh pursuing a Diploma in Corporate Litigation course from LawSikho

This article has been edited and published by Shashwat Kaushik.

Introduction

Today, social media has given rise to the age of influencers, where everyone can be an influencer. Simultaneously, on social media platforms, the portrayal of women often lacks decency under the pretext of authenticity and other justifications. Numerous inquiries arise regarding the definition of indecent representation, its boundaries, and whether such behaviour extends to social media posts as part of the broader discourse. These are fundamental considerations in understanding acts of indecent portrayal of women. With the advent of AI and social media, the proliferation of fake avatars has become a disturbing trend, wherein fabricated images of women are created for the explicit purpose of indecent representation and subsequent online trolling.  

Key provisions of the IRWA

Section 3[1]: Prohibition of indecent advertisements

The Indecent Representation of Women (Prohibition) Act (IRWA) Section 3 plays a crucial role in safeguarding the dignity and respect of women in advertising. This section is designed to prevent the portrayal of women in a manner that is demeaning, objectifying, or exploitative. The law aims to create an environment where women are represented accurately and appropriately in all forms of advertising.

One of the key provisions of Section 3 is the prohibition against creating, sharing, or being involved in any advertisement that describes women in an obscene or offensive manner. This includes advertisements that depict women in a sexually suggestive or provocative way, as well as those that perpetuate harmful stereotypes or objectify women. By establishing these restrictions, the law aims to challenge and dismantle the objectification of women in advertising and promote a more inclusive and respectful portrayal.

Furthermore, Section 3 emphasises the importance of ensuring that women are represented in a diverse and authentic manner. Advertisements should reflect the full range of women’s experiences, backgrounds, and identities. This means avoiding portrayals that reinforce harmful stereotypes or limit women to narrow and unrealistic roles. Instead, advertisements should strive to present women as multifaceted individuals with diverse interests, abilities, and aspirations.

To enforce these provisions, Section 3 stipulates that publishing, causing, arranging, or taking part in the publication or exhibition of any advertisement that contains any indecent representation of women in any form by any person shall be punishable. This serves as a deterrent against violations of the law and underscores the seriousness with which such offences are treated.

The Indecent Representation of Women (Prohibition) Act (IRWA) Section 3 is a crucial piece of legislation that contributes to the broader effort to combat gender inequality and promote gender equality. By protecting the dignity and respect of women in advertising, this law helps to create a more equitable and inclusive society where women are valued and respected.

Section 4: Prohibition of Indecent Publications

Section 4 of the Indecent Representation of Women (Prohibition) Act (IRWA) deals with the prohibition of publication or sending by post of books, pamphlets, papers, slides, films, writings, drawings, paintings, and photographs that contain indecent representation of women in any form. However, there are exceptions when the publication is done in the interest of science, literature, art, learning, or other objects of general concern and is kept or used bona fide for religious purposes. This includes:

  1. Any ancient monument within the meaning of the Ancient Monuments and Archaeological Sites and Remains Act, 1958.
  2. Any temple, or kept or used for any religious purpose.
  3. Any film in respect of which the provisions of Part II of the Cinematograph Act, 1952, apply.

Section 6: Penalty

For contravention of Section 3 and Section 4, the first-time offence has two years imprisonment and a fine of Rs. 2000. Second-time minimum punishment shall be six months imprisonment and 10.000 rupees in fine, and a maximum of five years imprisonment and one lakh rupees in fine.

Relevant Indian Penal Code provisions

Section 292 IPC: Comparable provisions

In the provisions of the Indian Penal Code relating to women for safety regarding the indecent representation of women, but not specific sections. Section 292 of the IPC addresses the same issue as Section 4 of the IRWA. Indian Penal Code, Section 292 prohibits the sale, distribution, and circulation of obscene materials, which are defined as items that are sexually explicit or likely to corrupt viewers. Offenders can face imprisonment and fines, with harsher penalties for repeat offences. However, exceptions are made for materials used for public good, such as in science, art, or religion.

Limitations in addressing modern digital content

In IRWA, there is nothing about electronic forms of publications, social media, MMS, SMS, reels, shorts, etc. posting, or advertisements. The Information Technology Act, Section 67, punishes those who publish or transmit obscene material online. Sharing such content electronically is illegal. None of these define the indecent representation of women on social media and their punishment.

There must be amendments to the act to include electronic forms, social media advertisements and distribution across the world. The Information Technology Act and the Indian Penal Code should be amended to address social media and AI in IRWA.

Case laws and judicial interpretation

Hicklin Test: Regina v. Hicklin

We try to understand, with some case laws, indecent representation of a woman depicted in a way that depicts women, her form, body, or any part that is indecent, derogatory, and denigrating to women or deprave, corrupt, and injure public morality. For public morality, there was a Queen’s Bench in Regina v. Hicklin that laid down the Hicklin Test. This test examines whether the impugned matter tends to “deprave and corrupt those whose minds are open to such immoral influence, and into whose hands a publication of this sort may form a head.” The phrase means that certain content might lead people who are easily influenced by immoral material to have morally harmful thoughts or behaviours. It also suggests that anyone who encounters such content could be affected by it, potentially influencing their thoughts or actions. In simpler terms, it’s saying that certain material could make some people think or act immorally, and it could impact anyone who comes across it.

Ranjith D. Udeshi v. State of Maharashtra: Application of Hicklin Test

In the landmark case of Ranjith D. Udeshi v. State of Maharashtra (1965), the constitutionality of Section 292 of the Indian Penal Code (IPC), which addresses obscenity, faced a legal challenge. The judges presiding over the case recognized that the definition of obscenity is not static but rather evolves with the passage of time. What society deems obscene at one point may not necessarily be viewed as such in the future.

In this particular case, the court employed the Hicklin Test, a legal standard used to assess the obscenity of a work, to evaluate D.H. Lawrence’s controversial novel “Lady Chatterley’s Lover.” The Hicklin Test focuses on whether the material in question has the potential to corrupt or deprave individuals who are susceptible to immoral influences. After careful consideration, the court determined that “Lady Chatterley’s Lover” met the criteria of obscenity as defined by the Hicklin Test.

The court’s decision in Ranjith D. Udeshi v. State of Maharashtra sparked a significant debate surrounding the definition and regulation of obscenity in India. Critics argued that the Hicklin Test was too subjective and could lead to the censorship of works of artistic merit. They contended that obscenity should not be solely based on the potential for corrupting vulnerable individuals but should also consider factors such as the work’s literary or artistic value and its contribution to public discourse.

Furthermore, the application of the Hicklin Test in this case raised concerns about the freedom of expression guaranteed by Article 19(1)(a) of the Indian Constitution. Some legal scholars argued that the broad interpretation of obscenity under the Hicklin Test could stifle creative expression and impede the dissemination of important ideas and perspectives.

The Ranjith D. Udeshi case played a pivotal role in shaping India’s legal landscape regarding obscenity. It highlighted the need for a more nuanced and contextual approach to determining what constitutes obscene material. Subsequent court decisions and legislative amendments have sought to balance the interests of protecting public morals with safeguarding the fundamental right to freedom of expression.

Aveek Sarkar v. State of West Bengal: Adoption of Community Standards Test

In the case of Aveek Sarkar v. State of West Bengal (2014), the Supreme Court acquitted the appellant of charges under Section 292 of the IPC and Section 4 of the Indecent Representation of Women Act. The court emphasised that the context in which a photograph appears and the message it conveys are crucial in determining obscenity. It discarded the Hicklin test and adopted the community standard test, which assesses whether the dominant theme of the material violates contemporary community standards. Exceptions to publication exist for content serving the public good or interest, such as scientific, artistic, literary, and historical works, and films governed by Part II of the Cinematograph Act 1952. These tests apply in the social media age, necessitating consideration of community standards for content posted online. Any publication, arrangement, or involvement in the dissemination of indecent representations of women is prohibited, with penalties imposed for producing, circulating, or selling indecent material.

Amendments and updates to the Act

The Indecent Representation of Women (Prohibition) Amendment Bill, 2012, was introduced in the Rajya Sabha on December 13, 2012, by Smt. Krishna Tirath, the then Minister of State (Independent) for Women and Child Development. This bill aimed to expand the scope of the existing Indecent Representation of Women (Prohibition) Act, 1986, to include new forms of communication that had emerged since the enactment of the original act.

The 1986 Act primarily focused on prohibiting indecent representation of women through traditional print media such as advertisements, publications, writings, and paintings. However, with the rapid advancement of technology and the proliferation of new communication platforms, the need arose to address the portrayal of women in these emerging media.

The Amendment Bill sought to broaden the definition of “indecent representation of women” to encompass content disseminated through the Internet, satellite-based communication, cable television, and other electronic media. This expansion was crucial to tackle the increasing instances of online harassment, cyberbullying, and the spread of misogynistic and objectifying content targeting women.

The bill also recognised the importance of protecting artistic expression, scientific research, and religious practices. It included exceptions for material published in the interest of science, literature, or art, for bona fide religious purposes, and for sculptures in ancient monuments or temples. This exemption ensured that legitimate creative works and cultural heritage would not be stifled under the law.

The Amendment Bill underlined the government’s commitment to safeguarding women’s dignity and ensuring their portrayal in the media is respectful and free from objectification and exploitation. It aimed to create a comprehensive legal framework that kept pace with technological advancements and addressed the evolving challenges faced by women in the digital age.

While the bill was introduced in 2012, it did not progress beyond the introduction stage in the Rajya Sabha. However, the discussions and debates surrounding the bill highlighted the urgent need to address the issue of indecent representation of women in the media and the importance of adapting laws to address emerging forms of communication.

The Bill introduces fresh explanations for “indecent representation of women,” “electronic form,” and “publish.” “Indecent representation of women” refers to portraying a woman’s figure or form in a manner deemed indecent, derogatory, or potentially corrupting public morality. “Electronic form” encompasses information created, transmitted, or stored in media, magnetic, or optical forms, as outlined in the Information Technology Act, 2000. “Publish” includes activities such as printing, distributing, or broadcasting through audio-visual media. But withdrawn in Rajya Sabha, July 26, 2021.

Need for legislative updates

The Indecent Representation of Women (Prohibition) Act, 1986 (IRWA), while a landmark in addressing the portrayal of women in traditional media, falls short of effectively tackling the challenges posed by the digital age. With the advent of social media and advancements in AI, there is an urgent need for legislative amendments to encompass contemporary modes of communication and expression. The existing provisions under Sections 3 and 4 of IRWA, alongside relevant sections of the Indian Penal Code (IPC) and the Information Technology Act, 2000, provide a framework for combating indecent representation. However, they do not explicitly cover the rapidly evolving digital landscape, including social media platforms, AI-generated content, and other electronic forms of communication.

Ensuring legal protections evolve with technological advancements

Significant case law, such as Ranjith D. Udeshi v. State of Maharashtra and Aveek Sarkar v. State of West Bengal, highlights the judiciary’s evolving stance on obscenity and indecent representation. The transition from the Hicklin Test to the community standards test reflects a progressive approach, yet the application of these tests to digital content remains underdeveloped.

The introduction of the Indecent Representation of Women (Prohibition) Amendment Bill, 2012, was a step in the right direction, aiming to address these gaps by incorporating definitions of “electronic form” and expanding the scope of “publish.”

However, its withdrawal in 2021 indicates a missed opportunity to modernise the legal framework. It is imperative for lawmakers to revisit and amend the IRWA, along with the relevant sections of the IPC and the IT Act, to explicitly include and address the challenges posed by social media and AI-generated content. Such amendments should aim to provide clear definitions and robust mechanisms to safeguard the dignity of women in the digital era, ensuring that legal protections evolve in tandem with technological advancements. This approach will better equip the legal system to uphold public morality and protect individuals from indecent representation across all forms of media.

References

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Creating a smooth client onboarding experience with AI : tips and techniques

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Proliferation, Regulation and Implications

This article has been written by Akanksha pursuing a Training program on Using AI for Business Growth course from Skill Arbitrage.

This article has been edited and published by Shashwat Kaushik.

Introduction

Using AI in the onboarding process revolutionises how businesses welcome and guide users to their products or services. AI-driven onboarding doesn’t just create a smoother entry for users; it sets the stage for long-term engagement, satisfaction, and, ultimately, brand loyalty. The question arises: are we actually living in the era of artificial intelligence? Have you ever thought about how the introduction of AI will reshape the future of business, economics and lifestyle.

Firstly, let’s check out the importance of client onboarding. For every business, we need a customer/client. Client onboarding is the set of activities and steps involved in introducing a new client to your product. It is the process of educating the client and helping them see your product’s value and how it solves their problem.

Understanding AI in client onboarding

AI is a great tool to onboard customers with a variety of use cases and needs since it can analyse data, recognise patterns, and make predictions based on past experiences without being explicitly programmed to do so. AI has the opportunity to teach customers to use a product or service by showing them how something works, rather than just doing it for them. 

Building AI into your product or service allows customers to interact with it by giving instructions or prompts in natural language and then watching how the AI solves a problem or completes a task within the product or service. The key is to have the AI show the customer what the non-natural language input is in your product and how the problem is solved, rather than just doing it for them.

The first few times, a customer will take the time to type out the instructions and see how the AI solves the problem for them. Soon enough, they’ll be able to remove the AI training wheels and save time by working directly with your UI (User Interface).

Client onboarding with the company’s products and services, can be significantly enhanced using AI technologies. Here are some key AI technologies commonly used in client onboarding:

Natural Language Processing (NLP)

Natural Language Processing (NLP) is a revolutionary field of artificial intelligence that empowers machines to comprehend and interact with human language effectively. NLP plays a pivotal role in various applications, making it indispensable for several industries:

  1. Chatbots and virtual assistants:
    • NLP allows chatbots and virtual assistants to engage in natural language conversations with users.
    • These AI-powered assistants can handle initial customer inquiries, providing real-time support and resolving common issues efficiently.
    • NLP enables them to guide clients through the onboarding process, offering personalized assistance and answering questions.
    • Chatbots can operate 24/7, ensuring customers receive prompt support whenever needed, enhancing the overall user experience.
  2. NLP algorithms for data extraction:
    • NLP algorithms can read and extract relevant information from onboarding forms and documents, automating the process of data entry.
    • These algorithms identify key data points, such as names, addresses, phone numbers, and other relevant details, ensuring accurate and consistent data capture.
    • NLP helps reduce manual data entry tasks, saving time and minimizing errors, making the onboarding process more efficient and streamlined.
  3. Sentiment analysis:
    • NLP enables businesses to analyse the sentiment of customer feedback and social media conversations.
    • By identifying positive and negative sentiments, companies can gain valuable insights into customer satisfaction, product perception, and brand reputation.
    • Sentiment analysis helps businesses identify areas for improvement and make data-driven decisions to enhance customer experiences.
  4. Machine translation:
    • NLP powers machine translation tools, enabling real-time translation of text or spoken language across different languages.
    • This technology facilitates global communication, breaking down language barriers and allowing businesses to reach a wider audience.
    • Machine translation enables companies to cater to international customers, share multilingual content, and collaborate seamlessly with diverse teams.
  5. Personalized content and recommendations:
    • NLP algorithms analyse user behaviour, preferences, and interactions to deliver personalized content and recommendations.
    • By understanding the context and intent of user queries, NLP helps provide relevant information, products, or services that align with individual interests.
    • This enhances user engagement, increases customer satisfaction, and fosters long-term loyalty.
  6. NLP-powered search engines:
    • NLP plays a crucial role in enhancing the functionality of search engines.
    • NLP algorithms process and understand the meaning behind search queries, providing more accurate and relevant results to users.
    • This technology enables search engines to comprehend the context and intent behind user searches, improving the overall search experience.

Machine Learning (ML)

Machine learning (ML) algorithms possess the remarkable ability to learn from data and make predictions or decisions without being explicitly programmed for specific tasks. This characteristic makes them a valuable tool in various industries, including the financial sector, where they play a crucial role in enhancing the onboarding process.

One significant application of ML algorithms in onboarding is fraud detection. By analysing vast amounts of data, ML models can identify suspicious activities and flag potential fraud during the onboarding process. This helps financial institutions mitigate risks associated with fraudulent applications and protect their customers from financial losses. For example, an ML algorithm might use data points such as IP address, device type, and transaction history to assess the riskiness of an onboarding application. If the algorithm detects anomalies or inconsistencies in the data, it can flag the application for further investigation, allowing financial institutions to take the necessary action.

Another application of ML algorithms in onboarding is personalised recommendations. Based on the client’s data and behaviour, ML algorithms can recommend relevant products or services to enhance their onboarding experience. This helps financial institutions tailor their offerings to individual needs and preferences, making the onboarding process more efficient and engaging for customers. For instance, an ML algorithm might analyse a client’s financial history, spending patterns, and goals to recommend a suitable investment portfolio or credit card. By providing personalised recommendations, financial institutions can increase customer satisfaction and loyalty.

The use of ML algorithms in onboarding offers numerous benefits to financial institutions and their customers. These benefits include improved fraud detection, personalised recommendations, enhanced customer experiences, and increased operational efficiency. As ML algorithms continue to advance, their impact on the onboarding process is expected to grow even further, enabling financial institutions to provide more secure, convenient, and personalised onboarding experiences to their customers.

Computer version

  • AI-driven computer vision can verify client identities by analysing documents such as passports or driver’s licences and matching them with selfies.
  • Automating the extraction of data from physical documents through OCR (Optical Character Recognition)

AI techniques for enhancing onboarding

Usually, member onboarding has been a laborious and time-consuming task, often done manually. However, with the advent of artificial intelligence (AI), there is now a promising solution to streamline the process and boost efficiency.

By leveraging AI technology, organisations can automate various onboarding tasks, allowing for a smoother and more productive transition for new hires. This not only saves time but also enhances the overall onboarding experience.

Let’s take a look at some of the techniques to leverage AI and optimise your onboarding process, leading to improved retention, increased satisfaction, and enhanced client loyalty:

  • Automated data collection and analysis.
  • Personalised onboarding journey.
  • Chatbots and virtual assistant for instant support.
  • Predictive analysis for proactive engagement.

Whether it’s interactive videos, informative articles, or personalised emails, AI can deliver the right content at the right time, enhancing the overall onboarding experience.

Best practices for AI-driven onboarding

Define clear objectives

Clearly define the objectives and desired outcomes of implementing AI-driven onboarding in your organisation. This includes identifying the specific challenges you aim to address, such as reducing time-to-productivity, improving employee engagement, or enhancing the onboarding experience.

Align AI with your onboarding process

Ensure that the AI technologies and tools you choose align with your existing onboarding process. Consider how AI can enhance and streamline different stages of onboarding, such as pre-boarding, orientation, training, and ongoing support. By integrating AI completely into your existing process, you can create a balanced and effective onboarding experience.

Personalise the onboarding journey 

Leverage AI to create personalised onboarding journeys for each new client. Use AI algorithms and machine learning to understand individual preferences, learning styles, and skill gaps, and deliver tailored content and resources. Personalisation promotes engagement, accelerates learning, and increases new client’s satisfaction.

Provide real-time support

Implement AI-powered chatbots or virtual assistants to provide real-time support throughout the onboarding process. These AI-driven tools can answer common questions, offer guidance, and provide immediate assistance. By offering instant support, you enhance the efficiency and effectiveness of onboarding while reducing the need for manual intervention.

Continuously analyse and optimise

Leverage AI to gather data and insights on the effectiveness of your onboarding programme. Analyse metrics such as time-to-productivity, client satisfaction, and retention rates to identify areas for improvement. Use these insights to make data-driven decisions and continuously optimise your onboarding process for better outcomes.

Ensure data privacy and security

When implementing AI-driven onboarding, prioritise data privacy and security. Ensure compliance with relevant data protection regulations and establish robust data management practices. Safeguard sensitive employee information and communicate transparently about data usage and security measures to build trust and confidence among the clients.

Provide training and support

Offer comprehensive training and support to Clients involved in the AI-driven onboarding process. Ensure they are well-versed in using AI tools effectively, interpreting data insights, and providing necessary guidance. Ongoing training and support empower your teams to make the most of AI technology and drive successful onboarding experiences.

Case studies

AI in Banking Services Onboarding: State Bank of India

India’s largest lender, the State Bank of India (SBI), has revolutionised the banking experience with the introduction of an AI-based chatbot named SIA. This cutting-edge chatbot is available 24/7, offering customers a convenient and efficient way to resolve queries and handle standard banking tasks.

The integration of AI technology into SIA has transformed the onboarding process, making it seamless and effortless for clients. With its advanced algorithms, SIA can understand and respond to customer queries in natural language, eliminating the need for customers to navigate complex menus or wait on hold. This personalised and conversational interface has greatly improved customer satisfaction, as they can now access banking services quickly and easily.

In addition to providing real-time assistance, SIA also serves as a valuable tool for customers to complete standard banking tasks efficiently. From checking account balances and transaction histories to initiating fund transfers and bill payments, SIA can handle a wide range of requests with accuracy and speed. This not only saves customers time but also reduces the workload of banking staff, allowing them to focus on more complex tasks that require human intervention.

As customers become increasingly comfortable with SIA, the chatbot’s capabilities continue to expand. SBI is actively working on integrating additional features and services into SIA, such as personalised financial advice, investment recommendations, and loan applications. These enhancements will further enhance SIA’s role as a comprehensive banking assistant, empowering customers to manage their finances effectively and conveniently.

The success of SIA highlights SBI’s commitment to innovation and its dedication to providing customers with exceptional banking experiences. By leveraging the power of AI, SBI has set a new standard for customer service in the Indian banking sector and beyond.

E-commerce firm

Myntra, a prominent e-commerce company, leverages the power of artificial intelligence (AI) to revolutionise the onboarding process for its customers. Recognising the time-consuming nature of predicting fashion trends, Myntra introduced an innovative AI system called “MyFashionGPT” to identify emerging looks and styles.

MyFashionGPT operates by meticulously scanning the vast digital landscape, incorporating data from fashion portals, social media platforms, and Myntra’s own customer data. This comprehensive approach enables the AI to gain deep insights into customers’ preferences and desires. By analysing search patterns and behaviours, MyFashionGPT can accurately predict what customers want, allowing Myntra to bring out new collections much faster than before.

The AI-driven approach has significantly enhanced the customer experience, making it easier for users to choose and select products that align with their unique tastes and preferences. The seamless onboarding process reduces friction and ensures that customers can effortlessly find what they’re looking for, leading to increased satisfaction and loyalty.

Furthermore, MyFashionGPT’s ability to identify emerging trends empowers Myntra to stay ahead of the curve in the fashion industry. The AI system continuously monitors fashion shows, influencer content, and street style, enabling Myntra to adapt quickly to changing tastes and preferences. This agility allows Myntra to offer customers the latest and most sought-after styles, solidifying its position as a leading e-commerce platform for fashion enthusiasts.

In summary, Myntra’s use of AI in the onboarding process not only streamlines the customer experience but also enhances the overall fashion discovery journey. By leveraging MyFashionGPT’s capabilities, Myntra has transformed the way customers interact with its platform, making it easier, faster, and more enjoyable for users to find the perfect products that reflect their unique styles.

Railways transportation

Use of the chatbot name AskDisha2.0: The chatbot offers users a range of services, like booking tickets and getting refunds and it even provides necessary information. The chatbot supports Hindi and English and is available on both the mobile app and website. It facilitates several services, like booking tickets, checking PNR status, cancelling tickets and more, by using a simple command with AskDisha 2.0. This makes it an easy way to access the IRCTC site for passengers and it saves time without any trouble.

HDFC Bank

HDFC Bank, one of India’s most prominent private banks, has embraced the power of AI-driven chatbots to revolutionise the client onboarding experience. By seamlessly integrating chatbots into its mobile banking app and website, HDFC Bank has transformed the way it interacts with customers. These intelligent chatbots offer personalised assistance, guiding clients through every step of account setup, transaction, and inquiry.

At the helm of HDFC Bank’s AI chatbot initiative stands EVA, a powerful tool designed to handle a wide spectrum of customer queries. Powered by Natural Language Processing (NLP), EVA boasts the ability to understand and respond to customers in real-time, creating a conversational and intuitive banking experience.

The impact of EVA on HDFC Bank’s customer interactions has been nothing short of remarkable. By leveraging AI’s capabilities, EVA has significantly reduced the response time for customer queries, ensuring prompt and efficient resolution of issues. Operating 24 hours a day, 7 days a week, EVA provides round-the-clock support, catering to customers’ needs whenever they may arise.

The success of EVA is evident in the impressive numbers it has achieved. Over a million customers have interacted with EVA, seeking assistance with a multitude of queries. With a staggering 99% accuracy rate, EVA has demonstrated its ability to accurately understand and respond to customer requests, offering reliable and consistent support.

HDFC Bank’s integration of AI-powered chatbots, spearheaded by EVA, has not only enhanced customers’ banking experiences but has also optimised the bank’s operational efficiency. By automating routine tasks and providing immediate assistance, chatbots have freed up valuable resources, allowing human representatives to focus on more complex customer requirements.

Overall, HDFC Bank’s adoption of AI-powered chatbots, particularly EVA, exemplifies the bank’s commitment to innovation and customer-centricity. By leveraging cutting-edge technology, HDFC Bank has created a seamless, personalised, and efficient banking experience that sets a new standard for the industry.

TATA Capital

Tata Capital, a behemoth in the financial services industry and an integral part of the esteemed TATA Group, embarked on a transformative journey to revolutionise customer engagement and streamline the onboarding process for its diverse financial products. Recognising the potential of Artificial Intelligence (AI) to enhance customer experiences, Tata Capital conceptualised and launched TIA (Tata Intelligence Agent)—an AI-powered chatbot designed to assist customers with loan applications, product inquiries, and onboarding processes.

TIA was meticulously crafted to provide a seamless conversational experience and offer contextual assistance for all customer service requests. This innovative chatbot leveraged advanced natural language processing (NLP) algorithms to understand the intent behind customer queries, enabling it to respond accurately and provide relevant information.

The implementation of TIA yielded remarkable results. It significantly reduced the time required for loan applications and approvals, providing customers with a seamless and expedited onboarding experience. TIA’s efficiency and user-friendly interface not only simplified the onboarding process but also empowered customers to complete their applications quickly and conveniently.

Furthermore, TIA handled thousands of queries daily, demonstrating its scalability and ability to manage high volumes of customer interactions. This resulted in improved customer engagement and satisfaction, as customers appreciated the personalised assistance and prompt resolution of their inquiries.

Recognising the positive impact TIA had on its customers, Tata Capital witnessed a notable increase in successful loan applications. Customers raved about the efficient and user-friendly onboarding process, leading to overwhelmingly positive customer feedback.

In summary, Tata Capital’s strategic deployment of TIA transformed the customer onboarding experience, making it seamless, efficient, and delightful. The AI-powered chatbot not only enhanced customer engagement but also played a pivotal role in driving successful loan applications and boosting overall customer satisfaction. TIA’s success underscores the tremendous potential of AI in revolutionising the financial services industry and empowering organisations to deliver exceptional customer experiences.

Conclusion

Creating a smooth client onboarding experience with AI is pivotal to enhancing customer satisfaction and loyalty, which in turn drives business growth. AI technologies, such as chatbots, machine learning algorithms, and automated workflows, streamline the onboarding process by providing personalised, efficient, and responsive service. The case studies of the State Bank of India, Myntra, the IRCTC App, HDFC Bank and Tata Capital illustrate the tangible benefits of AI in onboarding. As technology continues to evolve, the integration of AI into client onboarding will become increasingly vital for staying competitive and meeting the ever-growing expectations of clients.

References

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Ashoka Kumar Thakur vs. Union Of India (2008) : excessive delegation

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Prisoners

This article is written by Tarun Dogne and further edited by Priyanka Jain. The article is an exhaustive analysis of the case of Ashoka Kumar Thakur vs. Union of India (2008). The facts of the case, its background, the arguments advanced by both parties, as well as the judgement and the rationale behind the same, have been discussed, while referring to the relevant legal provisions and precedents. This case dealt with the issue of reservation in educational institutions, with respect to the Constitution (Ninety-third) Amendment Act, 2005 and the Central Education Institutions (Reservation in Admissions) Act, 2006.

Table of Contents

Introduction

In India, there are many underprivileged people, particularly classes or groups of people who, in the past, were given the tag of an inferior caste or a low status. These groups do not hold equal status in society. Since independence, every government has committed to eradicating this social inequality from our society. India has a long history of being a caste-based society and with time, it seems to have become more rigid in nature. The founding father of our Constitution, B.R. Ambedkar wished for a casteless and classless society in India. Article 15  (prohibition of discrimination on grounds of religion, race, caste, sex or place of birth) and Article 46 of the Constitution (promotion of educational and economic interests of Scheduled Castes, Scheduled Tribes and other weaker sections)  are the main reflections of this particular idea. 

In India, there are separate departments in the state government to overlook the welfare policies for Scheduled Castes (SCs), Scheduled Tribes (STs), and Other Backward Classes (OBCs). There also exist several NGOs and Unions that voluntarily promote the welfare of the weaker sections of our society. The Government has also continuously been increasing its expenditure on welfare programs for the same. Our Constitution provides provisions for adequate representation of the weaker sections of the society in the legislature, as well as in services and education.

Reservation is one of the tools for the purpose of upliftment of the weaker section of the society. Initially in India, the benefit of reservation was only limited to the Scheduled Caste (SCs) and Scheduled Tribes (STs) but after the recommendations by the Mandal Commission Report, Other Backward Classes (OBCs) were also included in the scope of reservation. There are differing opinions on reservations in educational institutions and public employment. There have been many protests and various petitions in the Supreme Court as well as in High Courts, both against and in favour of the same. There are various arguments from both sides. Some say reservation may create reverse discrimination, while some argue that it is unfair to isolate certain sections of society from education or any other basic facilities and opportunities.

The case of Ashoka Kumar Thakur vs. Union of India (2008) primarily looked into this issue of whether reservations in educational institutions, for weaker sections of society, are constitutionally valid. This was discussed with respect to the Constitution (Ninety-Third) Amendment Act, 2005 and the Central Educational Institutions (Reservation in Admission) Act, 2006

To learn more about the 93rd Amendment Act, click here.

Background of the case

The Central Educational Institutions (Reservation in Admission) Act, 2006, was passed by the Parliament, post the 93rd Amendment Act. Section 3 of this Act, provides a reservation of 15% for Scheduled Castes, 7.5% for Scheduled Tribes, and 27% for Other Backward Classes in central educational institutions. This Act applies to all aided educational institutions, including minority institutions. The aim of this Act is to achieve social justice by enabling equal opportunities to access higher education. 

In India, state-maintained or aided educational institutions have very limited seats, compared to unaided educational institutions. The Parliament enacted the Constitution (Ninety-Third Amendment) Act, 2005, to bring private, unaided educational institutions under the ambit of the reservation policy of the state and promote the educational interests of the weaker sections of society. This amendment widened the scope of the state’s ability to make special provisions. Article 15(4), added by the  Constitution (First Amendment) Act, 1951, mentioned educational advancement, but the term “admission to the educational institutions” was not included. The 93rd Amendment Act added Article 15(5), which allows the government to make laws for the betterment of SEBCs, SC/STs and OBCs. Such laws shall be applicable to both aided and unaided educational institutions. However, these laws shall not apply to institutions set up by minorities. Under this Article, the term “admission to the educational institution” was mentioned. So by adding clause 5 to Article 15, the Parliament, as well as State Legislatures, were empowered to make appropriate laws regarding reservation.

In 1955, the Kalelkar Commission, also known as the National Commission for Backward Classes, was set up under Article 340 (appointment of a commission to investigate the conditions of backward classes) of the Constitution. One of the objectives of this Commission was to identify the criteria on which identification of OBCs would be possible, but it failed to come up with any satisfactory solution to the problem. 

In 1980, the Mandal Commission was set up and it prepared a list that included 3743 backward classes, after considering factors such as social, economic, and educational backwardness. The Mandal Commission also came up with the recommendation of a reservation. The Commission recommended a 27% reservation of seats in educational institutions and government jobs for OBCs. This recommendation was implemented by the then Prime Minister, V.P. Singh, in 1990. Following this implementation, India witnessed some major protests across the country. People felt that this was not reasonable for two main reasons- first, this implementation would be a step towards a caste-based society, and second, OBCs are not entirely a disadvantaged section of society anymore. 

Details of the case

Name of the case: Ashoka Kumar Thakur vs. Union of India

Petitioner: Ashoka Kumar Thakur 

Respondent : Union of India

Case type: Civil Writ Petition 

Court: Supreme Court of India

Bench: The then Chief Justice of India K. G. Balakrishnan, Justice Arijit Pasayat, Justice C.K. Thakkar, Justice R. V. Raveendran, Justice Dalveer Bhandari

Date of Judgement: 10th April, 2008

Citation: (2008) 6 SCC 1138 

Facts of Ashoka Kumar Thakur vs. Union Of India (2008)

After the passing of the Central Educational Institutions (Reservation in Admission) Act, 2006, many petitions were filed, challenging its provisions. The constitutionality of the 93rd Amendment Act of 2005 was also challenged on various grounds. Initially, a bench of two Judges was set up to hear these writ petitions, but after considering the importance of this matter, all concerned petitions were referred to a constitution bench, hence the present case.

Issues raised

Ashoka Kumar Thakur vs. Union of India (2008) revolved around the validity of the Central Education Institution Act and the 93rd Amendment Act’s incorporation of clause (5) in Article 15. The following were the issues discussed with regard to the same:

  • Whether the creamy layer should be excluded from the Reservation Act?
  • What are the  different parameters for creamy layer exclusion? 
  • Is creamy layer exclusion applicable to SC/STs?
  • Can the Fundamental Right under Article 21A be accomplished without great emphasis on primary education? 
  • Does the 93rd Amendment violate the basic structure of the Constitution?
  • Whether the use of caste to identify SEBCs is in violation of secularism? 
  • Whether Articles 15(4) and 15(5) are mutually contradictory, such that 15(5) is unconstitutional? 
  • Whether Article 15(5)’s exemption of minority institutions from the purview of reservation violates Article 14 of the Constitution? 
  • Whether the standards of review laid down by the U.S. Supreme Court are applicable to our review of affirmative action under Article 15(5) and similar provisions? 
  • With respect to OBC identification, was the Reservation Act’s delegation of power to the Union Government excessive? 
  • Whether the Central Educational Institutions (Reservation in Admission) Act, 2006, was invalid as it failed to set a time-limit for operation as well as a provision for periodical review? 
  • What are the educational standards to be prescribed to identify a class as educationally backward?
  • Would it be reasonable to balance OBC reservation with societal interests by instituting OBC cut-off marks that are slightly lower than those of the general category? 

Arguments of the parties

Here are the main arguments rendered by the parties to the dispute.

Petitioners’ arguments

  • The petitioners mainly challenged the constitutionality of the 93rd Amendment Act, 2005. They contended that this amendment took away the principle of equality, which was the aim of our Constitution makers. The balance and structure of the Golden Triangle, comprising Articles 14 (equality before law), 19 (protection of certain rights), and 21 (protection of life and personal liberty), had been altered by this Amendment Act
  • It was stated that Articles 15(4) and 15(5) are mutually exclusive and Article 15(5) excludes minority institutions, which is a clear deviance from the equality principle. The amendment created inconsistency between Articles 15(4) and 15(5) by taking away the power of the States to make reservations in minority educational institutions. Further, it is also against the goal of secularism, enshrined under the Preamble to the Constitution. Minority institutions are not severable from the purview of Article 15(5). Hence, the entire amendment must be declared invalid.
  • Counsel for one of the petitioners, Mr. Harish Salve, contended that admission to educational institutions should be based solely on merit. If any law allows the State to prefer students with lesser merit over those who were more qualified to secure admission, it is ex facie discriminatory. It was further argued that Article 15(5) does not validate the Central Educational Institutions (Reservation in Admission) Act, 2006. Preferential admission solely on the basis of caste violates Article 29(2) of the Constitution, as laid down in the State of Madras vs. Srimathi Champakam Dorairajan (1951). Though Article 15(5) is an exception to Article 15(1), an excessive reservation could turn into reverse discrimination. The learned counsel also asserted that the introduction of this Act was not carried out with the aim of social advancement but was intended for political gain. Provisions of the Act are prima facie violative of Article 14 and the onus is on the State, to prove the need for such a provision. 
  • Counsel for the petitioner contended that some members of designated backward classes are highly advanced in every aspect. They are at the top of that backward class. They are as socially, educationally, and financially forward as any other member of the forward class. They reap all the benefits of reservation for that backward class and hinder the progress of those who truly need such benefits. 
  • It was argued that if Article 15(5) is permitted to remain in force, then, instead of achieving the goal of a casteless and classless society, India would be converted into a caste-ridden society. The country would forever remain divided on the basis of caste. One of the major points highlighted was that to determine educational backwardness, the level of education attained is considered. If half of the members of any designated backward class have reached the standard level of matriculation, they cannot be considered educationally backward anymore. As this is the yardstick test, the reservation of seats for technical education, higher education or institutes of higher learning is not worthy. Further, it was argued that the Constitution guarantees primary or basic education under Article 21A. So a shift from basic education to higher education is a violation of the constitutional mandate guaranteed in the form of right to education.
  • The petitioners were of the view that the 93rd Amendment Act, being “suspect legislation,” should be subjected to “strict scrutiny” as laid down by the United States’ Supreme Court and only by passing this test of “strict scrutiny” could such legislation be put into practice. The legislative declarations of facts are not beyond judicial scrutiny. The Court can decide the real intent of the statute and determine the constitutional validity of the Act. It was argued that the Act is subject to judicial review on the ground that criteria have not been laid down to identify OBCs and there was no compelling necessity other than political reason for vote bank politics.
  • There is no rational basis for fixing the percentage of reservation for the Other Backward Classes. This percentage was decided on the basis of a survey that was conducted decades ago. It was pointed out by the petitioners that, in Indra Sawhney vs. Union of India (1992), the Hon’ble Court laid stress on appointment of a commission to identify and determine the criteria for determining social and educational backwardness.
  • They also argued that the non exclusion of “creamy layer” was illegal and contrary to what was laid down by this Court in Indra Sawhney vs. Union of India (1992).
  • Finally, the petitioners prayed that the 93rd Amendment Act and the Central Educational Institutions (Reservation in Admission) Act, 2006, be declared violative of the basic structure of the Constitution. The mandate of Article 368 (the power of Parliament to amend the Constitution and procedure thereof) was not complied with. Furthermore, the Central Educational Institutions (Reservation in Admission) Act, 2006, suffered from excessive delegation and was unguided.

Respondents’ arguments 

  • The respondents stated that the contentions of the petitioners, challenging the 93rd Amendment to the Constitution and the impugned Act, are baseless and without any merit. Affirmative action by the State should be executed to secure the interests of the weaker sections of society. It is important to interpret the constitutional provisions in such a way that all their aspects work together and do not violate any other part of the Constitution.
  • It was argued that the exclusion of the creamy layer was a bad policy. This would reduce the number of people who could use the reserved seats. Once the President of India determines the list of Scheduled Castes and Scheduled Tribes, they can be excluded only by any law made by Parliament. As far as OBCs are concerned, the principle of exclusion of creamy layers is applicable only to Article 16(4). It does not apply to Article 15(4) or 15(5), as education stands on a different pedestal.
  • It was further submitted that in each State, the identification of backward classes was done on the basis of criteria evolved by the State Commissions, on social, educational, and economic parameters. Each State adopted its own special criteria. 
  • The respondents asserted that building a casteless society was not the goal of the Constitution. Even carrying the caste name is a guaranteed right for citizens. The Constitution never tried to abolish the practice of caste and casteism. Every activity in Indian society, from cradle to grave, is carried out on the basis of one’s caste. For instance, every religion or caste has a different crematorium or graveyard for performance of last rites ceremony, etc. By ignoring castes, casteism would not subside. This idea is utopian.
  • The learned senior counsel further submitted that there was no excessive delegation because the backward classes of citizens had to be identified on the materials and evidence. Therefore, the Parliament had no option but to leave it to the Executive. 

Judgement in Ashoka Kumar Thakur vs. Union Of India (2008)

The Supreme Court dismissed the writ petitions. The reservation of 27% of the seats in aided educational institutions for Other Backward Classes (OBCs) was upheld. The Constitution (Ninety-Third) Amendment Act, 2005 and the Central Educational Institutions (Reservation in Admission) Act, 2006, were decided to be constitutionally valid.

Furthermore:

  • With respect to the reservation provisions, the creamy layer shall be excluded.
  • Once every 5 years, the need for continuation of the concerned provisions, shall be checked.
  • The Central Government shall determine the cut-offs for OBCs.
  • The Union of India shall issue a Notification, for the identification of backward classes. This Notification can be challenged for the exclusion or inclusion of any section of society. 

Rationale behind the judgement

Whether the creamy layer must be excluded from Socially and Educationally Backward Classes (SEBCs)

Determination of SEBCs is not solely based on caste but includes several criteria, such as social and educational backwardness. All castes that face such backwardness have been included under the ambit of SEBCs. Hence, this is not violative of Article 15(1).

Economic factors are crucial in deciding who the benefits of a reservation should apply to. The concept of creamy layer was introduced because in any backward class, there also exist people who are economically advanced and capable of competing with the general community, and hence, do not require reservation. Non-exclusion of the creamy layer would enable these advanced people to take undue advantage. Arguments against the exclusion of the creamy layer state that it would lead to a lack of candidates from SEBCs who would be eligible to occupy the reserved posts in educational institutions. States such as Karnataka, Tamil Nadu and Andhra Pradesh have implemented the categorisation of backward classes into further subgroups to strive for a fair distribution of the benefits of reservation.

The Court was of the view that the exclusion of the creamy layer is essential to upholding the constitutional principle of equality. The purpose of Articles 15(4) and 15(5) is to raise the social and educational levels of disadvantaged groups, and those who reach them will not require such benefits anymore. Hence, exclusion of the creamy layer is required to correctly identify SEBCs and give them the help they truly need.

The parameters for application of the creamy layer 

On the basis of the Supreme Court’s decision in the Indra Sawhney case as well as the recommendations of an Expert Committee, the Government of India issued an Office Memorandum dated 8th September, 1993, which broke down the application of the 27% reservation. The following are the primary provisions laid down by it:

  • 27% of the vacancies in civil posts and government services that would be occupied through direct recruitment are reserved for OBCs.
  • Certain sections of socially advanced people are excluded from such reservations.
  • Artisans or those carrying out hereditary occupations do not fall under the scope of these exclusion rules. 

The Court looked into the criteria behind exclusion of the creamy layer from the reservations for backward classes, as prescribed under Article 15(5). The stringent income-based standards that are utilised to identify the creamy layer do not have to be applied as strictly when dealing with reservations in central educational institutions, as per the Central Educational Institutions (Reservation in Admission) Act, 2006. If this income-based reservation is strictly applied, there could arise a lack of candidates from backward classes, who would be eligible to occupy the reserved seats in central educational institutions. To ensure this, the Union and State governments must establish the necessary guidelines to identify the creamy layer in such situations. “Backward class,”  as under Section 2(g) of the Central Educational Institutions (Reservation in Admission) Act, 2006, includes the principle of exclusion of the creamy layer. Therefore, backward classes must be identified with such an exclusion.

Whether the creamy layer principle is applicable to SC/STs

It was contended that the principle of creamy layer should also be applicable to Scheduled Castes and Scheduled Tribes. The K. C. Vasanth Kumar vs. State of Karnataka (1985) case observed that usually, both reserved and unreserved seats are occupied by the more advanced and fortunate members of a group. The concept of the creamy layer was established to identify the people of backward classes who truly need aid and to make sure that the benefits of reservation reach them. As established in the Indra Sawhney case, it does not apply to SC/STs. It is only applied to identify socially and economically backward classes. Other judgements, such as E.V. Chinnaiah vs. State of Andhra Pradesh and Others (2004), also reiterated the same. Hence, it was held by this Court that the principle of creamy layer would not apply to SC/STs.

Whether the fundamental right under Article 21A can be accomplished without great emphasis on primary education

This Hon’ble Court held that society must earnestly focus on the implementation of Article 21A, which provides for free and compulsory education, from day one. Only then would the dream of a casteless society be fulfilled. Justice Dalveer Bhandari wrote that the classroom is the first place where caste can be eradicated. If a student belongs to a lower-caste, but is well qualified, one would not care about his/her caste. 

He also observed that one of the main causes of social and educational backwardness is poverty. So, the focus should be on eradicating poverty rather than providing reservation. Children of the creamy layer have advantages such as studying in a school, affording coaches, etc., which is a luxury for OBCs of the non-creamy layer. So the students belonging to the creamy layer have a higher chance of out-performing the students belonging to the non-creamy layer. This would create cutthroat competition for non-creamy layers and, hence, violate the right to equality under Articles 14, 15 and 16.

Hence, the purpose of Article 21A cannot be achieved without emphasis on primary education.

Whether the 93rd Amendment Act violates the basic structure of the Constitution 

While deciding on this issue, the Court first specified that since private, unaided institutions were not mentioned in the petition, it would not decide on whether the amendment had any impact on them. The primary argument against this amendment is that it is in violation of the basic structure of the Constitution. The basic structure doctrine came into being in the case of Kesavananda Bharati vs. State of Kerala (1973), wherein it was observed that the Constitution, including the fundamental rights, can be amended, but some basic features, such as- supremacy of the Constitution, democratic form of government, secular character, separation of powers and federal nature, cannot be changed. With respect to the present case, it must be noted that though equality cannot be taken away as a whole, it is multi-faceted and some aspects of it can surely be altered.

On the basis of these observations, the Court decided that the 93rd Amendment Act, as far as aided educational institutions are concerned, did not violate the basic structure of the Constitution.

Whether the use of caste to identify SEBCs is a violation of secularism. 

With reference to the Indra Sawhney case, the Court was of the view that using caste as  a basis for reservation is currently valid. However, it must gradually shift towards an economic standard of classification. After another 10 years, the basis of the reservation must be solely based on financial conditions. 

Whether Articles 15(4) and 15(5) are mutually contradictory, such that 15(5) is unconstitutional

The Court stated that Articles 15(4) and 15(5) enable the State to make special provisions but do not make it mandatory to do so. The case of State of Madras vs. Champakam Dorairajan (1951) led to the introduction of Article 15(4) to permit reservations for SC/STs and SEBCs in aided minority institutions. Post the cases of T.M.A. Pai Foundation and others vs. State of Karnataka and others (2002) and P.A. Inamdar and Ors. vs. State of Maharashtra and Ors. (2005), which held that unaided institutions do not come under the control of the State, Article 15(5) was introduced in order to deal with the autonomy of unaided institutions. 

Articles 15(4) is concerned with aided minority institutions, while Article 15(5) deals with the unaided ones. This shows that they have different aims and do not contradict each other. With the phrase “nothing in this Article,” Article 15(5) acknowledges the prohibitions laid down under Article 15(1) and does not go against Article 15(4). Both of these Articles must be interpreted with reference to the special provisions made under them. The Court also observed that this amendment has not been challenged on these grounds by any educational institution. If the Parliament wished to make Article 15(4) exclusive, it would have deleted it completely.

Hence, the contention that Articles 15(4) and 15(5) are mutually exclusive and contradictory was rejected.

Whether Article 15(5)’s exemption of minority educational institutions from the purview of reservation violates Article 14 of the Constitution 

The Court was of the view that minority institutions receive special treatment under Article 30, which safeguards their right to set up and administer educational institutions. This is in line with the Constitution. The exclusion of minority institutions from Article 15(5) ensures that Article 30 is followed. This implies that the same is not a violation of Article 14.

Articles 15(4) and 15(5) can function together. The argument that the exclusion of minority educational institutions cannot be independent of the remainder of Article 15(5) does not stand. 

Whether the principles of affirmative action or reservation laid down by the U.S. Supreme Court are applicable to that under Article 15(5) of the Constitution of India 

The petitioner was of the opinion that the Central Educational Institutions (Reservation in Admission) Act, 2006, was “suspect legislation” and should be subjected to the “strict scrutiny” test, as seen in the United States, before being passed.

The Court first pointed out that the decisions of the US Supreme Court could not be applied in India since there exists a difference in the constitutional provisions and social conditions of both countries. For example, in Bhikaji Narain Dhakras & Ors. vs. The State of Madhya Pradesh & Anr. (1955) and A.S. Krishna vs. State of Madras (1957), this Court specifically held that the due process clause in the Constitution of the United States of America would not be relevant to India. Similarly, while dealing with the purview of Article 19(1)(g) of the Indian Constitution, the Court in Kameshwar Prasad and Ors. vs. State of Bihar and Anr. (1962) held that even though the US Constitution’s First Amendment prohibits the Congress from making any law that would go against the freedom of speech, it is implied that certain restrictions by the government’s police power are imposed on this freedom. With reference to these instances, this Court was of the view that though there exist similarities with respect to the idea of protection of fundamental rights, the legal and social backgrounds of India and the United States greatly differ, which hence calls for different legal interpretations.

Articles 14 and 18 of the Indian Constitution are structured differently than similar provisions in the US Constitution. These Articles include provisions aimed at the betterment of SEBCs, STs and SCs. Article 38 also calls for social, political and economic justice to reduce inequalities. Earlier, Articles 16(4) and 15(5) were seen as exceptions to the concept of non-discrimination. After multiple varying  judgements on the same, finally, in K. C. Vasanth Kumar vs. State of Karnataka (1985), it was held that the true essence of equality requires treating equals equally and unequals unequally, implying that Articles 16(4) and 15(5) are further explanations and not exceptions.

Article 15(5), which was introduced by the Central Educational Institutions (Reservation in Admission) Act, 2006, must be interpreted with respect to India’s constitutional structure. The Preamble, as well as the directive principles of state policy mandatorily require inequalities and backwardness to be eradicated from society by the State. Fundamental rights and directive principles of state policy, go hand-in-hand to achieve the goals of the Preamble. While fundamental rights were considered to be more important, cases such as the Re. Kerala Education Bill, 1957 and Minerva Mills Ltd. & Ors. vs. Union of India & Ors. (1980) established that the directive principles of state policy are equally necessary for a just society. The Minerva Mills case highlighted that, apart from political rights, a democracy needs social and economic justice as well. Through the directive principles, the State is bound to ensure socio-economic conditions that achieve justice and equality for everyone, and not just a select few sections of society. 

The U.S. has consistently faced the issue of racial discrimination. Their affirmative action programs involved the use of the “strict scrutiny” test. This test further requires “narrow tailoring,”  which encompasses serving specific groups without broadly impacting any other section. The programs are narrowly designed on this basis. The US Supreme Court in Grutter vs. Bollinger (2003), expressed that the Fourteenth Amendment provides protection to individual people and not groups. 

The Supreme Court of India stated that these principles applied in the US cannot be used in India since affirmative action here is completely backed by the Constitution. Laws in the US, which offer different treatment to people on the basis of their race, are strictly scrutinised, to ensure fairness. However, in India, every law is presumed to be valid unless proven otherwise. In Saurabh Chaudhari vs. Union of India (2003), the Supreme Court highlighted that the “strict scrutiny” test would not be applicable in India.

Hence, in the present case, this Court rejected the contention that the law on the classification of OBCs was not clear and that the legislation was questionable. There was no need for “strict scrutiny” and no urgency to challenge the Central Educational Institutions (Reservation in Admission) Act, 2006.

Whether the delegation of power to the Union Government regarding criteria for identification as backward class was constitutionally valid

The petitioners raised a concern about excessive delegation of power to the Union Government to determine the extent of the backward class, without any proper guidelines.

The Court held that “backward class” is not a new concept under the Constitution. For example, Article 340 authorises the President to form a commission to look into the conditions of the educationally and socially backward classes. Articles 15(4) and 16(4) deal with backward classes as well. The Court observed that under the Central Educational Institutions (Reservation in Admission) Act, 2006, the duty of identifying backward classes has been conferred on the Union since the Parliament would not be able to take care of this matter on its own. There are national as well as state commissions dealing with the affairs of backward classes. Guidelines for the same are already laid down, and if any undeserving section has been included under the ambit of backward classes, it can be challenged through judicial review. 

Therefore, the challenge to the Central Educational Institutions (Reservation in Admission) Act, 2006 on the ground that it gave the Union excessive powers of delegation, was dismissed by the Court. 

Whether the Central Educational Institutions (Reservation in Admission) Act, 2006, was invalid, as it failed to set a time-limit for operation as well as a provision for periodical review 

The petitioners argued that the 27% reservation allotted for backward classes had no time limit. This could lead to reverse discrimination, wherein those groups could receive an unfair advantage with the passage of time.

The Court observed that, while this was a valid issue, it was not feasible to set a time limit right from its inception. Over a period of time, depending upon the result of the measures taken and improvements in the status and educational advancement of the backward classes, the matter could always be reviewed. The Act cannot be struck down at its very commencement on the ground that no time limit for its operation has been fixed. 

Hence, it was decided that the Act was not invalid but should be reviewed at regular intervals.

Educational standards are to be prescribed to identify a class as educationally backward 

It was argued that the Central Educational Institutions (Reservation in Admission) Act, 2006, which provides for reservation in higher educational institutions, should not be applicable under Article 15(5). It was stated that the measure of educational backwardness must be limited to matriculation or 10 + 2.

The Court held that earlier, the aim was to improve primary and secondary education. However, in the present times, where there exist several arts, science and other professional colleges as well, this is not sufficient. Hence, on this basis, the petitioner’s contention that the measure of educational backwardness must be limited to matriculation or 10 + 2, was rejected.

Whether the quantum of reservation provided by the Central Educational Institutions (Reservation in Admission) Act, 2006, is valid

The petitioners argued that the Act must be held invalid on the ground that the socially and educationally backward classes do not require reservation.

With reference to the case of State of Rajasthan and Ors. vs. Union of India and Ors. (1977), the Court stated that legislation passed by the Parliament must only be challenged on constitutional grounds, such as whether the Parliament was authorised to pass such a law or if the law infringes upon any fundamental rights. The Court turned down the contention that this law was passed as a political motive and that it is also not an adequate reason to invalidate the law. The 27% reservation decided on by the Act was based on an analysis of detailed information. Several committees also looked into the matter before deciding which classes should be provided with reservation and to what extent. Furthermore, the petitioners failed to provide any evidence supporting their argument that a 27% reservation is not necessary. Therefore, the Court upheld this quantum of reservation and rejected a challenge to the Act on these grounds.

Whether it would be reasonable to balance OBC reservation with societal interests by instituting OBC cut-off marks that are slightly lower than that of the general category

The case of M.R. Balaji and Ors. vs. State of Mysore (1962) stressed that reservations must be reasonable. Institutions such as IITs and IIMs must set their own cut-offs to maintain their high standards. In other institutions, the cut-offs for OBCs must be halfway between those for SC/STs and the unreserved category. To avoid a large variation between the cut-offs for OBCs and the general category, the difference should not be more than 10 marks. Furthermore, it must be noted that if the non-creamy OBCs do not occupy the entirety of the 27% reservation, the remaining seats will go to the general category.

Whether the 93rd Constitutional Amendment followed the procedure laid down under Article 368 of the Constitution of India

Article 368 lays down the procedure for amending the Constitution and also points out that some amendments need a special process. The petitioners were of the view that the 93rd Constitutional Amendment was in violation of the procedure established by Article 368 and, hence, invalid. It was also stated that Article 15(5) intervenes in the executive powers of the State, under Article 162.

The Court pointed out that the powers of the Parliament and the State legislatures to make laws are laid down under Articles 245 to 255 of the Constitution. The Ninety-Third Amendment does not expressly or impliedly take away or interfere with the State’s executive powers. These powers are restricted under a provision of Article 162 by laws made by the Parliament, which is a common principle of the Constitution. Further, education, which was earlier on the State List, was shifted to the Concurrent List by the 42nd Amendment Act. 

On the basis of these observations, the Court decided that the 93rd Amendment does not violate any provision of Article 368.

Critical analysis of Ashoka Kumar Thakur vs. Union Of India (2008)

An important authority in the history of Indian jurisprudence is concerning affirmative action of the State and the right to equality in the most important aspects of education, which is the foundation of the progress of any State or country in the world. The success and development of any nation are the direct consequences of the educational standards of its population and the opportunities it creates. The Hon’ble Supreme Court upheld the constitutional validity of the Central Educational Institutions (Reservation in Admission) Act, 2006, which provided for 27% reservation for Other Backward Classes (OBCs) in educational institutions funded by the centre (“creamy layer” of OBCs was excluded). The creamy layer includes members of OBCs who have good financial and educational status. 

Reservation is nothing but a gentle push to the weaker sections of our society. If reservation is continued for a long period of time, it would create a permanent caste-based society. In our Constitution, there is no mention of the aim of abolishing the caste system from society. However, our Constitution does prohibit any kind of discrimination on the basis of caste (Article 15). The Constitution seeks equal status for all citizens in our country.

The Hon’ble Court focused on the principle that affirmative action by the State, is necessary to address socio-economic injustice towards any of the backward classes. Reservation are a tool to improve social participation in government functions and provide ambience and opportunities for backward families to grow and move ahead. The creamy layer doctrine was discussed to eradicate any sort of favoritism or bias towards any of the backward classes. The Court excluded the creamy layer from availing reservation benefits for OBCs. The creamy layer has achieved enough to cope with the challenges of backwardness. These members can compete equally with the other sections of our society. Reservation should only be granted to those who are disadvantaged.

The Court further highlighted the importance of merit over means. Reservation should not act as a barrier to meritorious students. One should not be disadvantaged because of reservation policies. There should be a balance between merit and backwardness. If merit is compromised, then equality will be violated. The Court struck a balance by excluding the creamy layer from receiving the benefits of reservation policies.

This decision had the consequence of providing exposure in terms of education to different strata of society, which may help in developing a good personality and life. Further, this judgement has fostered a sense of belongingness in the masses and has improved the prospect of achieving a society where every voice is heard and the right to education faces no barrier.

Conclusion

The Ashoka Kumar Thakur vs. Union of India (2008) judgement reiterates the need for balance between affirmative action and merit. The aim is to provide social and educational upliftment. However, caste must not be the primary criteria for the same. A multi-faceted approach must be adopted. Reservation policies must achieve their purposes without violating the basic structure of the Constitution. This is a notable case that clarifies the crucial issues arising out of the concept of reservation.

Frequently Asked Questions (FAQs)

What is the creamy layer?

Creamy layer is the analogy for the more affluent section of any class. Such persons are economically sound and educated. They possess the means to compete equally with the general category of society.

What is the main issue with this judgement?

The main issue was concerning the 27% reservation for Other Backward Classes (OBCs) in educational institutions.

What was challenged in this case?

The Central Education Institution Act and the Constitution (93 Amendments) Act’s incorporation of clause (5) in Article 15 was challenged in this case.

What was the Supreme Court’s verdict in this case?

The Hon’ble Supreme Court decided to reserve 27% of the seats in educational institutions for Other Backward classes, excluding the creamy layer.

Why did the Supreme Court exclude the creamy layer from reservation in educational institutions?

The Hon’ble Supreme Court held that the creamy layer or the economically advantaged section of society, can easily afford tuition fees and other amenities like coaching, etc., which the economically disadvantaged do not have access to.

References


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Bharat Kala Bhandar (P) Ltd. vs. Municipal Committee, Dhamangao, (1966)

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This article is written by Charu Kohli. The article deals with the case of Bharat Kala Bhandar (P) Ltd. vs. Municipal Committee, Dhamangao (1966), with reference to its facts, issues raised, arguments made, the judgement, as well as the concerned legal provisions of the Central Provinces and Berar Municipalities Act, 1922.

Introduction

Bharat Kala Bhandar (P) Ltd. vs. Municipal Committee, Dhamangao (1966) is a landmark judgement rendered by the Apex Court in the light of providing solutions to the local governmental bodies and maintainability of the rights regarding the property. The case tackles a handful of legal questions related to the tax regime and policy in the municipality, property rights, and municipal regulations. It sheds light on how complicated an issue can be, when the private entities and municipal authorities of the area come in for a dispute in regard to the property law as well as the taxation regime. Further, it made the notion clear that public interest is the foremost priority of the welfare State even when it comes to the matters of taking over land and imposing taxes on them. The judgement has also stressed the need and the importance of following all the proper legal procedures when it comes to levying of the taxes and assessing them. It’s a real eye-opener on the intricacies of these matters.

Significance of the case

The case of Dhamangaon (1966) is an important case in the field of municipal law and taxation policy in India. It has sowed views on the assessment of tax made by the Municipal Committee of Dhamangaon which was held to be illegal and ultra vires the provisions of the committee. The case had a major impact on the interpretation of the law of taxation and the municipal authority’s powers in functioning to the bottom level of the legislature i.e. the municipalities in the cities. It brought forth the limitations on which the Municipal Committee can extract taxes from the private enterprises and stressed on the procedural due diligence to be followed by the municipal authorities while levying taxes and the manner of imposition of such taxes. The decision taken in the case was followed as a precedent for the future cases which arose between the private company and the local government authority on the issue of taxation. It laid down the broad principles which are required for the extraction of taxes from the enterprising entities and delved into the subject matter of property law in order to understand trust and property rights.

Background of the case

In the year of 1961, the Bombay High Court gave a landmark judgement that has acted as a key component in highlighting the power and duty of municipal officials in order to levy taxes in the area under their lawful jurisdiction. The appellant in the case was the company named Bharat Kala Bhandar (P) Ltd. and the trust formulated by them whereas the defendant in the case was the Municipal Committee of Dhamangaon also known as the Dhamangaon Notified Area Committee. The Municipal Committee was a local body that was entrusted with the duty of managing the municipal affairs including taxation assessment of the particular area. The appellant had properties within the limits of that Municipal Committee. The Municipal Committee attempted to assess taxes on the properties of the appellant. This was the root of the dispute between the two parties. This case in Indian property law is important because of the decision which was passed on the principle of ‘prescriptive rights’ or the ‘adverse possession’. Therefore, in the case at hand, the business activities as well as property rights of the appellant were disturbed. 

Facts of Bharat Kala Bhandar (P) Ltd. vs. Municipal Committee, Dhamangao, (1966)

Bharat Kala Bhandar (Private Limited) was a limited liability company that possessed a cotton ginning and pressing facility in Dhamangaon, Maharashtra. The Dhamangaon Notified Area Committee (NAC) as per its duty, imposed a tax on the cotton ginning and pressing of the area, since they were regarded as commercial activities. These activities involved the mechanical processes of producing cotton as a product to be sold in the market. From the year 1936, the rate of tax was notified at 1 anna per bojha and 1 anna per bale under the ambit of 66(1)(b) of the Central Provinces Municipalities Act 1922. Anna which is officially written as ānna was a form of the currency unit which was formerly used in the subcontinent of British India and it is equal to one-sixteen the value of a present-day rupee. Whereas, the term bojha means a unit of measurement which is used to calculate the weight of cotton in the cotton industry. The general public including the commercial workers in the cotton industry were made aware of the notification by the authorities regarding the change in the taxation price. This was done on April 10, 1941, by the publishing of the same in the government’s official gazette.

Further, on July 30, 1941, the regulations regarding the same were officially released and these rules were now officially to be followed by all. Since the 1941 tax reform, the commercial industries in the cotton industry in the municipal area of Dhamangaon including the Bharat Kala Bhandar (P) Ltd. had been paying their taxes as per the updated tax slabs and were following the new tax regime by the NAC. But in 1951, the NAC proposed another hike from one rupee per bojha and one rupee per bale therefore, the companies started paying the same as per the rule. The rate of tax revised was now up to 4 annas per bojha and 4 annas per bale. Although, later the said proposal of the amendment was dropped by the Notified Area Committee itself and it never turned into a rule.

As a result, Bharat Kala Bhandar (P) Ltd. decided to take legal action to recover the excess taxes they had paid over a period of three years. The company had paid the taxes as per the new proposed amendment because it had its head office in the state of Calcutta and further, a branch office and the ginning factory were set up in Dhamangaon which fell within the NAC area of authorization and jurisdiction. Hence, the company was under due obligation to pay taxes. This was because it was undertaking a commercial activity and its ginning plant was situated in the area under NAC i.e. Dhamangaon, which was previously part of the Central Provinces & Berar (now known as the state of Maharashtra).

The main legal issue in the case as presented by the Bharat Kala Bhandar (P) Ltd. which they contested against was the undue assessments done by the NAC and the undue property tax enhancement which was committed by the committee for a period of 3 years both of which were felt to be not as per standard of law. The NAC had over the years proposed to enhance the taxes from four annas to one rupee per bojha and per bale in 1951, but this never turned into an official gazette rule. The suit was therefore filed by Bharat Kala Bhandar (P) Ltd. and other factory owners to recover the excess payment of taxes made by them within the time period of three years on the ground that the taxes were illegally demanded and were paid by mistake.

Under the case, the company had claimed a refund of Rs. 12,511.66, which included Rs. 6,905.146 for ginned cotton and Rs. 8,048.80 for pressed cotton, minus Rs. 3,738.96 legally due, and Rs. 1,295.96 as interest at 9%. They contended that the increased tax which was imposed on them exceeded the legal limits even after the due legislative changes in the regime of tax itself. Further, the property tax assessment of the company has also been disputed as they were of the view that the NAC had taken up an arbitrary way of assessing the property and therefore sought a re-evaluation based on proper legal criteria.

Another major part of the case was the dispute over ownership of a piece of land. The company argued that it had been in continuous and uninterrupted possession of the land for more than twelve years and had developed the land by putting up a temple and other auxiliary buildings therefore it belonged to them wholly. The company claimed its uninterrupted long-term possession over the property and development on the said property without any sort of municipal objection which guarantees its rightful possession over it.

However, the NAC contended that the registration of the trust’s ownership was not true, since the land was officially owned by the municipality and the title deed also belonged to the municipality since it was a government property. The committee was of the view that the land was part of a public street and therefore, not owned by the company and that the company had wilfully encroached upon the property and taken over the place. Further, they claimed that it was taken over by the company illegally by the formation of the trust and that the company had no legal ownership over it and was bound to return it back to the municipality.

Therefore, the company filed the case in the Trial Court which gave the judgement in favour of the appellants stating that the surplus tax should be reclaimed from the Municipal Committee within three years from the date of the suit. However, an appeal was filed in the High Court by the Dhamangaon Municipal Committee wherein the Court decreed the suit as bad since it did not comply with the prerequisites of Section 48 of the C.P. Berar Act, 1922. The Court here held that the notice was not served to the NAC which was to be sent two months prior to filing the suit. Also, the limitation period for sending the notice was six months from the date of the alleged cause of action which was also followed through by the company. This judgement of the High Court of Bombay made the appellants file a suit in the Supreme Court to recover the extra taxes paid by them. 

Issues raised

In this case, the interpretation of the law in force had become the basic matter in dispute and the need was for the Hon’ble Court to analyse the law and give out its interpretation in order to clear the air on the matter at hand. The question here was whether the excessive amount which was collected under the sales tax “an act done or proposed to be done by law” under Article 276 of the Constitution and Section 48(1) of the Central Provinces and Berar Municipality Act, 1922 (Act No. 11 of 1922) or not. Further, the issues presented for discussion before the Hon’ble Apex Court of the nation were:

  • Whether the tax assessment conducted by NAC on the property of the company Bharat Kala Bhandar (P) Ltd. is in accordance with the law and follows the procedure established by law or not?
  • Whether the property rights of the company were being infringed by the Municipal Committee?
  • Whether under Article 300A, the right to property of the Constitution of India is abridged by the act of the municipality?
  • What is the ambit and what are the limitations of Municipal regulations in terms of taxation, assessment of property and the administrative procedure?
  • Whether the Municipal Committee has the power and authorization to issue a demolition notice without following due process of law?
  • Whether the structure created by the company on the land of the municipality causes a public nuisance or is it a hazard to public safety?

There were various bones of contention in the case and one such point was whether the Municipality had the legal right to levy rates or taxes upon the property of Bharat Kala Bhandar (P) Ltd., having regard to their character and ownership. Further, the case also discussed the ambit and powers related to Tax Assessment and Property Rights. 

The issue of the amount of control the local government can exercise over the property of an individual and the rules regarding the same were also the point of keen interest in this case. It was so because according to the company, the assessment which was done by the Municipal Committee did not follow the established law. 

The question of whether acts done by the Municipal Committee, including tax collection, fell within their legal powers according to the law was being contested in these appeals. The interpretation given to Section 84(3) of the Act in question which prescribed limits upon the committee’s powers also formed part of bone contention here as well as its effect on the validity of any suit brought against them.       

In this matter different authorities involving jurisdictional issues, constitutional rights of citizens vis a vis state organs’ powers; principles of administrative law governing remedies available where such rights have been violated or threatened with violation through executive action taken in bad faith or under error mixed with were considered carefully within the context of property rights cases generally decided either by way precedents for future guidance or otherwise, it be overruled in appropriate circumstances which should now arise.

Arguments of the parties

The appellant argued that the suit for the recovery of an illegal tax fell outside the provisions of Section 48 of the Central Provinces and Berar Municipalities Act, as it was a claim for a refund of excess tax paid.

The respondent contended that the collection of a tax above the constitutional limit was not without jurisdiction but only illegal or irregular, making the suit fall under matters “purported to be done under the Act” and subject to Section 48 of the C.P. Berar Act,1922.

Appellant

In the case at hand, the legal conflict revolved around the matter of the tax which was levied by the Municipal Committee involving Bharat Kala Bhandar (P) Ltd. The company here came up with multiple contentions in order to support the position of having faced excessive tax as imposed by the NAC. This included the assertion by the company that the Committee’s actions have acted in a way that has infringed upon their basic rights, and therefore, such an act has led to the violation of their fundamental rights of the Indian Constitution. They stated that the activities of NAC were not only capricious and unlawful but it has also hindered their freedom to do commercial activities peacefully. The act of tax imposition by the NAC in a lawful manner was deemed to have been an unnecessary interference by the Bhandar. Moreover, the company had stated that the respondent municipality had no legal right to act in such a manner that overstepped its jurisdiction and ultimately caused prejudice to the appellant’s commercial enterprise.

More so, the appellants also objected to the various procedural irregularities in the conduct of the Committee while imposing the tax regulation and even while they assessed the property. They alleged that it did not follow due process nor did it observe the right to be heard which resulted in an unjust decision against them. Moreover, they also contended huge financial losses were occasioned by the actions taken by the Municipal Committee. The losses were, therefore, claimed to be unjustified and further aggravating the damage already caused by their acts on the business operations of the appellant. It was alleged that the illegality of the levy is due to the ceiling on the commercial and professional tax liability of an individual provided for under Section 142A of the Government of India Act, 1935 (the 1935 Act in short) and Article 276 of the Constitution. The ceiling provided by the Constitution was Rs. 250. Under the 1935 Act, it is Rs. 50. What was collected from the appellant is the tax levied on him whose amount when assessed exceeded the statutory limit and therefore, the amount was levied in excess of the statutory limit and is an illegal levy.

The Appellant argued, represented by Adv. S.G. Patwardhan, Adv. S Murthy, and Adv. BP Maheshwari challenged what had been done by contending that it was beyond its powers, therefore, ultra vires and that there could not be any recovery under laws prohibiting the collection of rates like taxes apart from this.

In view of these submissions, the appellant moved to the Hon’ble Court. They prayed to the Court to provide them with the compensation for their lost money and pleaded with the Court to declare as illegal all steps taken by the Municipal Committee. These were the reasons advanced by the appellants against the Municipal Committee at Dhamangaon highlighting diverse legal & procedural matters for which they sought the intervention of the courts.

Respondent 

On the contrary, Adv. Viswanatha Sastri, representing the respondent, supported the actions of the Municipal Committee. He argued that tax on professions, trades, and callings fell within the scope of the Provincial Legislature and transferred to the State Legislature therefore, the state had imposed the new tax regime. He stated that thereby it exceeded the limit prescribed by the Constitution of India but it was not without authority rather it be irregular or illegal and any recovery suit brought by a taxpayer for amounts paid over and above the constitutional mandate is to be regarded as a matter ‘purported to be done’ under the Act.

Adv. Sastri also cited various authorities based on tax assessment being done by competent officers as provided for in the Act and rules which were authorised to be made there under. He further argued that even though some rules might have been ultra vires and consequently illegal those were purportedly done by virtue of them having been made or confirmed under the act while acting under such purported authority; any recovery suit brought by a taxpayer for amounts paid in excess of this alleged maximum should therefore, fall within matters ‘purported to be done’ under that Act subject to terms laid down in relevant sections he referred.

Furthermore, they based their defence on Section 142A of the Government of India Act, 1935, and Article 276 of the Constitution of India, whereby they emphasised the legislative intent behind these statutes regarding the imposition of taxes on professions, trade, calling, and employment. They contended further that the enactment of laws had shed light on the powers which are granted to both the Central and the Provincial Legislatures in order to provide some sort of exemptions or even impose any necessary restrictions. This is done to ensure that there is preservation of freedom of trade, commerce, industry, and occupation, and in order to guarantee citizens’ rights during times of peace, public order, and morality in the society.

They put emphasis on the power of the Hon’ble Court and its jurisdiction in the matter to handle the issue. This question was argued by the NAC stating that the case should be dealt with under the control of another legal body and they further proceeded to legally state that the jurisdiction of the court is against the procedure and therefore, invalid. They were of the view that the jurisdiction of the court currently in session was inadequate and thereby it was denied by the municipality authorities. They also disputed the legality of the notice which was sent by the company as being flawed because of procedural mistakes and substantive flaws which they contended made it invalid.

The NAC claimed that the Bhandar did not meet the legal standards and there was a breach of their duties before starting legal proceedings as they had not supplied the municipality with any sort of notice regarding the tax refund before beginning the official trial proceedings of the same. They also pointed out that the company did not have the right to ask for certain relief as they did not have a strong enough legal interest or involvement in the case to continue with legal action since the property actually belonged to the municipality itself. 

Furthermore, the Respondent here had used estoppel as a defence in order to support the claims made by the Appellant, stating that the previous act, words, or behaviour should stop them from claiming their rights. Finally, the respondent emphasised that here the importance is of public interest and wider social consequences related to the case.

Legislative provisions involved in Bharat Kala Bhandar (P) Ltd. vs. Municipal Committee, Dhamangao, (1966)

Government of India Act, 1935

The Government of India Act, of 1935 was explored to address the ambit of the ownership dispute. Here, the Dhamangaon Municipal Committee claimed the land to rightfully belong to them as the property was a government property and they even had the title deed of the same. 

However, here the company stated that the land was rightfully theirs as a matter of adverse right. It was claimed so because the company had uninterrupted use of the land for more than 12 years and even created a trust over it. Further, they claimed this trust building to be tax exempted as per Section 43(1)(b) of the Government of India Act, 1935 as it was claimed to be a ‘deemed university’ as per the Section 3 of the University Grants Commission Act, 1956.

Central Provinces and Berar Municipalities Act, 1922

The central issue of the case revolves around the understanding and the application of the C.P. Berar Municipalities Act, 1922 as it came into force to establish the municipalities in the districts and to define the powers and responsibilities of the committee for the regulation and maintenance of the district. The power of taxation and regulation is well defined by the Act and therefore, its integration is necessary to understand the workings of NAC in this case.

The Act of 1922 in the ambit of Section 48 and Section 84(3) talked in detail about the scope of the suit which was filed for the refund of excess tax paid and further discussed the barring of such suit. The municipalities legal authority to levy the taxes which are increased and the taxes on the property also fall under the ambit of this section. The act helped the Hon’ble Court to determine the procedural law and discuss the legal requirements required for the imposition of taxes. Further, it stated that before filing a suit for excessive tax payback, the need is to send a notice to the required authorities.

Trial Court’s judgement

The Trial Court held the decision in favour of Bharat Kala Bhandar (P) Ltd. The decision regarding the municipal taxation conflict was delivered and the Hon’ble trial Court decided that the taxes imposed on the appellant company were excessive in nature and therefore, the Municipal Committee was not permitted to collect it legally. This act by the municipal authorities was seen to be one that was beyond the legal competence of the committee. 

According to the Municipal Committee, they imposed these taxes within the limits of the C.P. and Berar Municipalities Act, (1922), and that their actions were correct and as per the procedure established by the law. They stated that the taxes were correctly assessed with reference to rules and precedents applicable in the Act and therefore, they have no liability to repay.

However, the Trial Court held in its judgement, that the taxes levied by the NAC were quite beyond what is provided for under the statute and that while the municipality levies the tax, it is to be bound by the statute and its procedures. The Hon’ble Court also noticed the fact that: “Therefore if this be so, then it must follow that there can be no question but what has been done was clearly illegal and ultra vires but more so even if there had been no such provision made here at all.” Consequently, the Court ruled that the overcharged amount should be refunded back to the company within three years as it was a matter of their right to get the money back.

This decision gave relief to the company Bharat Kala Bhandar (P) Ltd. by directing a refund of extra tax realised from them but also was helpful in holding out the responsibility of the authorities to follow the process established by law. This breakthrough by the Trial Court not only reemphasizes on how essential it is for statutory limits to be followed strictly but also, deals with the arena of the procedural formalities which are to be followed to the word during the case of municipal taxation. In addition, this ruling helped underline the role of the legal principles like adverse right over property and also establish the rules which the local government should follow whenever they are dealing with revenue matters.

Furthermore, the Trial Court’s decision in favour of Bharat Kala Bhandar (P) Ltd implicated that the protection of the taxpayers from the arbitrary imposition of unlawful taxes is the duty of the law. It also helped lay down the duties of the authorities while at the same time ensuring fairness and justice are observed and delivered in such processes by the due process of law.

High Court’s judgement

The case when presented in the Bombay High Court brought about many legal problems covering the right of ownership to property and municipality laws.

Bharat Kala Bhandar (P) Ltd., a private company, had taken issue with the tax they had been charged by the Municipal Committee on grounds of being too high and against the law. They argued that these taxes did not fall under Section 48 of C.P. & Berar Municipalities Act, 1922. The taxes were disputed to be unlawful and therefore, they had a right over the refund money and it is the duty of the municipality to refund the same. At the same time, there was also a dispute over who had title deeds through the long use of pieces of land while this organisation opposed it, saying they belonged to them.

The Municipality Committee made a claim of ownership by adverse possession which is a legal concept where land can become yours if someone else owns it but doesn’t use it over a long period, namely 12 years. In this case, however, specific set statutory rules must be followed without relying on any formal conveyance being made.

In the course of its consideration, the High Court analysed in detail the contentions as well as pieces of evidence adduced by each party regarding their interpretation of Section 48, the compliance with legal formalities, and the validity of such proprietary claims based on prescription.

In the end, what came out from this historic judgement was two-fold; first, the recognition that the trust acquired title to these lands through adverse possession and has a possessory right over the land due to the uninterrupted possession. It was stated so because the company had control over the property for a period of 12 years and it was never taken up by the municipality in this period. 

The second upholding was that the company’s suit seeking recovery from rates charged by local authority failed because they had not complied with procedural requirements contained in section 48. This decision had wide-reaching effects as it laid down rules that must be followed when challenging assessments levied by municipalities for taxes. It further showed when rights may be acquired through prescription clarified duties played by courts vis a vis local self-government.

Judgement in Bharat Kala Bhandar (P) Ltd. vs. Municipal Committee, Dhamangao, (1966)

In this case of Dhamangao, the Supreme Court gave the ruling after carefully looking at the power given to local municipal authorities in order to impose the taxes on properties within their jurisdictional area. The decision was reached after weighing the fine line between property rights and local laws of the municipality. During the legal trial, both the sides presented their views which were supported by proof and legal reasoning. The Hon’ble Court thoroughly examined pertinent laws related to municipalities, previous cases of the legal domain, and legal theories to make a decision that effectively tackled the legal complexities brought up in the case. 

At the core of the legal conflict between the two entities, there was a major question of importance which stated whether the Municipal Committee had the legal authority and sanction to impose such taxes or not. This case of the Hon’ble Court has marked a significant evolution of Municipal law in the country in relation to the power of levying the taxes. Further, it offers a more comprehensive insight into the rights and the role which is demarcated for the Municipal Councils to follow by the statute. 

Here the Court took note of the fact that the primary dispute had emerged when the Dhamangaon Municipal Committee increased the tax imposed even beyond the legislative limit and Bharat Kala Bhandar filed a suit to recover the same. In response, the Municipal Committee contested the right over the property used as a trust by the company and this sparked a series of legal battles.

The main challenge for the Court here was to determine whether the property in dispute fell within the Municipal Committee’s legal purview or not. The Court judiciously reviewed the laws and regulations to demarcate the Municipal Councils in the vicinity around their role and functioning in order to establish the real ownership over the trust property. Ultimately, with the help of the official records and maps, the affirmation that the disputed land fell within the municipality limits was established. Thereby, the Hon’ble Court had jurisdiction and the claim by the NAC was perceived to be false as the property was directly under the authority of the Municipal Committee, following legal regulations and their interpretations. 

Also at the same time, it was scrutinised whether the Municipal Committee’s actions were consistent with their legal authority or was there a breach. The legal proceedings were conducted under the framework of the C.P. Berar Municipalities Act, 1922, which delineates the limits and areas of municipal jurisdiction and the procedure to be followed for filing a suit for an excess tax refund.

The Apex Court held that the Section 48 of the Municipalities Act, 1922, applies only when an act is constituted or purported within its ambit. The actions of the municipality in this case were concluded to not have been ‘purported to be done’ under the Act and it was held the public servant can only be said to have done or purported to act in order to discharge his/ her official duty if such official duty lies in the scope of the said act. 

The Court held that the violation of the provisions of the Municipal Act by the local authority was not affected by the provisions of Section 67 or Section 84(3). The Constitution prohibits the State Legislature from imposing taxes on professions, trades, occupations and callings exceeding Rs. 250 crore per annum. If the local authority levied taxes exceeding the permissible amount after the prescribed date or after the commencement of the Constitution, it was beyond its jurisdiction as was in this case. Therefore, the Court concluded that the assessment could not enjoy the protection under the legal ambit of Section 84(3) of the Act.

The Court also took into notice the precedent case of Firm & Illuri Subbayya Chetty & Sons vs. The State of Andhra Pradesh (1963). Here the appellant had sued the State of Andhra Pradesh for a decree for a certain amount that was illegally recovered under the Madras General Sales Tax Act, 1939 by them. The Hon’ble Court here ruled that the expression ‘any assessment made under this Act’ is wide enough to cover all assessments made by the appropriate authorities under the Act, regardless of their accuracy. 

However, the Hon’ble Court while stating the difference between acts within official duty and acts prohibited by law quoted that, “Now I can understand it being said that an act which is within the scope of an official duty cannot be taken out of that category simply because it is carelessly or negligently performed, but I cannot see how an act which is expressly prohibited by law can be said to lie there. If a magistrate directed to supervise a sentence of whipping duly imposed by a competent Court has the wrong man whipped by mistake or imposes more lashes than warranted, I can understand him being protected. He is there acting within the scope of his duty. But if, instead of having the man whipped. he has him branded with a hot iron he would not, in my opinion, be able to claim the protection.

Section 48 of the Act allows action to be taken against the Board or a person acting under it for anything done or to be purported under the Act. The next step is to assess the tax based on the tax liability of the individual. Section 71 of the Act here empowers the state government to make any rules that are required to regulate the tax assessment in their jurisdiction and prevent the offence of tax evasion far and wide. At the same time, the state government is empowered to make rules in order to regulate the collection of taxes in the state. In the case at hand however, the assessment of the taxes done by the NAC as well as the collection of taxes were deemed to not have been done in accordance with the 1949 Act as Section 73 of the Act requires notice to be given before commencing proceedings which were never delivered to the respondent.

Principles cited in the case

The case was based on various tenets of property law which have led to a concrete view of Indian property law regarding the principle of prescriptive rights and adverse possession over the property. This case therefore, renders a crucial source for conflicts when the land in question has two claimants of ownership in India. Further, the legal proceedings here have looked into the rules of law to be followed by the NAC on the subject of tax, land assessment, and administration. These rules provided the yardstick to measure the legality and procedural fairness of their actions.

The judgement passed in this suit had implications beyond those who were involved because it could be used as a reference point in future similar disputes. Therefore, the Court sought to set clear standards or guidelines through answering these legal questions with regard to the application of municipal laws and safeguarding property rights under such circumstances.

The fundamental principles of property law that govern prescriptive rights and adverse possession in India are:

Unbroken and continuous possession

The property’s possession must be of such a nature that it should not be interrupted and should be ongoing for a certain duration. The duration in India is deemed to be usually twelve years in order for one to secure prescriptive rights or adverse possession over the property. It basically means that the person should have control over the property for a long period of time, namely 12 years as per the property law of India  and that such control should not have been disrupted by anyone. 

Visible and public possession

There must be an apparent and conspicuous ownership claim over the property. Further, it must indicate that all parties are aware that someone is asserting their rights of ownership, enjoyment or possession over the disputed property. This means that the parties who are the real owner as well as the general public must have knowledge or awareness that the adverse owner is in possession of the property and utilising it for any use. 

No legal right or claim at the start

The occupant which means the one who is enjoying the property must not have any legitimate claim or title to the property from the very beginning of their occupation over the property. The property here must belong to another party legally and the person enjoying possession must not have any real or apparent title to the property. 

Desire to own the property

The one who is enjoying the property as his own must show a desire to own the property as its rightful owner. Further, this desire should be throughout the duration of their occupation over the property. The person utilising the property must have the desire to own the property and hold it as his own. 

Fulfilment of tax or financial obligations

In order for a person to showcase their right to ownership over a property there must be payment of taxes or any financial obligations related to the property during the time it is owned by someone as proof. So, if such an obligation is fulfilled by the person then the person can claim to have the right over the property as these legal documents showcase the valid ownership of a property apart from the title deeds. 

Enhancement or construction

The principle clearly lays down that if any sort of enhancements or constructions is done to the property by the person during their tenure then it will act as a claim over the property. Further, it will be seen by the court as a validation of their desire to claim it as their own. Therefore, if any such construction is done by the real owner then it will be seen as him still holding the property and its title. However, if it is done by the one enjoying and the owner does not intervene then it will be seen as the claim of the right is undisputed. 

No response from the actual owner

The lack of a response from the actual owner while the property is in the possession of someone else can be seen as proof that they have agreed to the new owner’s claim, known as acquiescence or condonation.

Certainty in property deals and ownership

Maintaining certainty in property deals and ownership is essential to avoid conflicts and ensure stability and predictability in the real estate market.

Validity of physical control

The principle lays down the notion that acknowledging any sort of physical control over the property is typically more significant.  When presented with both physical proof of ownership and a written proof like a title deed, it is the physical evidence which will be kept accountable in order to understand the genuine ownership, highlighting the importance of dependability and precision in matters of property. The Hon’ble Courts of India while deciding the matter of whether the real ownership exists in the matter or not, do not only look at the title deed but also keep in mind the fact as to who has had the physical control over the property for how long and whether it was disputed or not. 

In the case, the Hon’ble Court looked into the matter that the physical control over the property was with Bharat Kala Bhandar (P) Ltd. which acted as a determinant factor in them getting the apparent rights over the trust property. 

Principle of excess authority

The principle of exceeding authority refers to the act of an organisation which goes beyond what is possible and allowed legally in the state. Here, the Municipal Committee of the state of Dhamangaon by putting forth excessive taxes on the companies dealing in the cotton industry had exceeded its legal authority. 

This concept ensures that the rights laid down in the Constitution of India are not abridged merely because an authority took it upon itself to act in excess to the authority that is given to them by the law of the land. It helps in fundamentally limiting the powers of government and the authorities in such a way that they act only on the basis of the prescribed powers rather than forgoing the ambit and acting arbitrarily.  

The Apex Court of India while pondering upon the principle of excess authority had stated that the NAC is only empowered to act in a way that it performs the duties which are necessary for the welfare and functioning of the citizens and not conflict with the interest of the general public. In summary, if any power is given to a local government by the ambit of its authorising law then such power must be strictly used and conferred within its boundaries or as clearly implied from the authorising law. If this is not followed, then it will be deemed that the power be considered beyond its legal authority and therefore, it will stand invalid.

Legal compliance

The Hon’ble Supreme Court of India here examined if the Municipal Committee had adhered to all essential legal procedures and protocols while they were in the transit of the decision-making process in relation to the taxation. The rule of adhering to legal procedures holds the paramount amount of importance and it involves the factor which ensures that all necessary legal steps and regulations are followed in a particular legal matter or dispute. This includes the act of adhering to the relevant laws, regulations, and procedures established by the Court in order to ensure fairness and protect the rights of the citizens.

In this specific case at hand it was seen that adhering to legal procedures and compliance with legality is important as when the notice was not sent by the appellant to the respondent in the pre-trial stages of the proceeding, the Court held it to be a breach of their legal right. Moreover, the judicial decision held that there must be legal compliance in regard to the tax assessment and that it needs to be done according to the provision of law established in the statute. 

Principle of natural justice

The principle of natural justice means that there should be just and fair treatment and that the decision of the Hon’ble Courts should be achieved by keeping in mind the two cardinal principles of law. These two principles are-

  • no man shall be condemned unheard, whose legal maxim states, audi alteram partem in Latin;
  • to judge without bias, which is stated as, nemo iudex in causa sua in Latin.

The rule of fair hearing basically means that no one should be condemned unheard. The principle states that every individual is empowered with the right to be heard before their significant rights are taken away from them or before they have charges placed on them. They should be allowed to plead their own case and this hearing principle is deemed as a mandate in the principle of natural justice. 

In the context of this case, the duty of the Bharat Kala Kendra was to send a legal notice to the NAC before filing a suit against them in the court of law. However, since they never approached the municipal committee and directly took to the stand in order to plead their case, they did not present the municipality with the right to be heard. If they had delivered the notice to the committee then it would have been the duty of the committee to supply a reply within 2 weeks and that would have ensured that they were heard. 

Further, the second cardinal principle of no one to a judge in their own case, is present in the ambit of law to remove biasness. It practically bars the person who stands as accused or is affiliated with the commission of the offence or even if they have any interest in the judgement of the case to take over the trial as a judge. In other words, it puts a notion of impartiality into place which prohibits the person having any sort of self-interest from being the deciding authority in the matter. 

Analysis of Bharat Kala Bhandar (P) Ltd. vs. Municipal Committee, Dhamangao, (1966)

In the legal dispute of Dhamangaon, the appellants were involved in a dispute over payment of taxes under the Central Provincial and Municipal Governments Act, 1922. Initially, the appellants paid taxes at certain rates prescribed by law which was within the ambit of law. However, on a proposition by the NAC a higher rate of taxes were taken by the companies involved in commercial activities but this was done in excess of the power of the Municipal Committee. 

The Hon’ble Supreme Court here ruled in the favour of the appellants and declared that they were entitled to a refund on the taxes overpaid by them within three years of filing the suit as it was their right under the ambit of the law. The main issue at hand was whether the tax rate which exceeded the permissible limits charged from the companies made the tax collection entirely void or simply irregular for the period of 3 years. 

The tax that was charged for the period of 3 years was illegal in the very nature of it. The tax was already exceeding the limits that were set by the State and the Central authorities to a large extent. Further, the tax levied on the commercial actors in the cotton industry was deemed as unlawful since it was unconstitutionally collected. This case helped in establishing the due process of law and holding up that the power of the municipalities in the collection of taxes cannot be arbitrary in nature.

Further, on the issue of property law and adverse possession, the judgement clearly laid out the principles of adverse possession as uninterrupted and continuous possession of land whereby the occupant enjoys the property and has a motive to take over the property. Here the owner should be aware of the property being used by another but if he/she does not interfere nor put any claim for 12 years then, the Court after looking at the facts of the cases can ascertain whether it is a case of adverse possession or not. 

Conclusion

The issues of the case are complex in nature and deal with the ambits of tax imposition and jurisdictional matters between property owners and municipal authorities is well defined by the Bharat Kala Bhandar (P) Ltd. vs. Municipal Committee, Dhamangaon case. In this significant judicial pronouncement by the Supreme Court of India, the Hon’ble Court has sided with Bharat Kala Bhandar (P) Ltd. Hereby, the court had validated their ability to pursue the legal measures in order to reclaim any excessive tax payments if collected by the authorities and which has been caused due to unauthorised power use that exceeds the lawful boundaries.

The importance of this ruling primarily resides in its elucidation of the limits of power of the municipal corporations and in the ambit of safeguarding the fair taxation rights of the citizens. By setting a legal precedent in the matter of excessive taxation, the Court had fundamentally declared that if there is any exceeding imposition of taxes without the explicit permission of the authorities then it will be deemed as invalid and an act without jurisdiction. 

This decision has underscored the fundamental principle that the municipal entities should always operate within the boundaries that are already established by the statutory provisions and the Constitution of India. This will guarantee that the actions of the authorities are neither capricious nor illegal and that the citizen’s rights are not harmed in any way. In conclusion, the case is a judgement of paramount importance by the Supreme Court of India that has upheld the rights of property owners and taxation matters and strengthened the principle of legal liability and upheld the welfare of the citizens.

Frequently Asked Questions (FAQ)

Why is the judgement in the present case deemed to be an important precedent?

The judgement has helped uphold that the local authorities like the municipalities need to follow the legal limits that are laid out in the law to be followed while levying taxes. The ruling makes it fundamentally clear that if any sort of tax is levied beyond the permissible limits of law then such a tax is void and impermissible. This basically helps in protecting the rights of property owners and in this case, helps the commercial players by protecting them from the excessive taxes imposed on them.

What did the Supreme Court emphasise in the present judgement? 

The Hon’ble Court emphasised on the need and importance of interpreting the statutory provisions and following the procedure of tax assessment and levying as prescribed by the law. The Court held that the interpretation should be done in such a way that they remain consistent with the constitutional principles and the welfare of citizens is not done away with. This is to be done so as to not infringe on the fundamental rights of any individual or even the community at large. Further, emphasis was laid on following the due process of law and upholding the rule of law in all regards so as to ensure that there is no arbitrary use of power while levying taxes. 

What is the impact of the decision of the court on the rights of the other owners and their properties?

The Court’s decision was a landmark verdict as it gave way to the rights of the property owners. It not only allowed them the right to affirm their legal ownership over the property but also provided them with the opportunity of being able to challenge the arbitrariness against the NAC. This further empowered them with the right to seek redressal in cases where the amount of taxes being imposed on them was excessive.

Who constituted the bench in the present case?

The bench, comprising Justice Mudholkar, Justice Raghubar Dayal, Justice Subba Rao, Justice Bachawat, and Justice Ramaswami comprised the jury in the case of Bharat Kala Bhandar (P) Ltd. vs. Municipal Committee, Dhamangao, (1966).

References

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