The principles of contract allow parties to enter into a legal relationship in order to fulfil their rights and obligations. Along this way, various hurdles are presumed, which, by means of remedies, can be solved. However, when a party is prevented from performing their duties due to some external reasons and it becomes unavoidable, then the doctrine of frustration comes into play.
This Doctrine comes from the English Law concept. Frustration, in a literal sense, means purpose is defeated. When, in a contractual sense, any agreement loses its purpose and becomes impossible to perform. The doctrine fills the void in a contract regarding supervening events based on the principle of fairness and equity.
Meaning of doctrine of frustration
Any contract is said to be ‘frustrated’ when, due to the unforeseen circumstances arising after the contract is formed, the performance of that agreement becomes impossible. In this concept, the agreement becomes inoperative due to its incapability or impossibility of being performed. This is called the doctrine of frustration. The doctrine of frustration comes under Section 56 of the Indian Contract Act, 1872. This doctrine is based on the Latin maxim ‘Les Non Cogit Ad Impossibilia’, which means law cannot bind a person to perform a contract that has become impossible to perform due to unforeseen reasons.
In English law, the impossibility of the performance of a contract is termed the ‘Doctrine of Frustration’. The rationale behind it is that if performance becomes impossible as it cannot be performed or due to illegality of the act that was agreed to be done, it is imperative to absolve the parties from further performance of it as they never promised to perform an impossibility.
What is a contract
A contract is an agreement enforceable by law, as per Section 2(h) of the Indian Contract Act, 1872. It is simply an arrangement between consenting parties to bind each other to fulfil obligations in exchange for considerations for any lawful object. An agreement, when enforced by the law, becomes a valid contract.
How can we execute any contract
Any contract is created in order to fulfil the objects that parties are seeking. Thus, when the contract is operative it is valid and when it becomes inoperative by any means, it becomes void or impossible to perform. A contract can be discharged in the following manner-
By performance.
By mutual consent/agreement.
By breach.
By impossibility of performance.
The impossibility of performance is covered by Section 56 of the ICA; an agreement to do an act impossible is void.
Note: The doctrine of frustration concept is an English law concept; in India, it is popularly called the supervening impossibility.
Grounds of doctrine of frustration
The doctrine allows the contract to be discharged when an unforeseen event occurs, which makes it impossible to fulfil.
Cases that cover the scope of supervening impossibility are, as under-
Destruction of subject matter
This refers to a situation where the specific object/subject that is essential for the fulfilment of the contract is destroyed, making it impossible to perform.
Taylor vs. Caldwell (1863) In this case, the doctrine of impossibility through destruction of the subject matter was established. The Defendant, here, was discharged from performing, and his failure to perform was not a breach of the contract.
Failure of ultimate purpose
Also, called frustration of purpose, it occurs when the fundamental reason behind the contract does not exist anymore; in such a case, the sole purpose of the agreement is defeated.
In the case of Krell vs. Henry (1903), the Court of Appeal held that the contract was discharged. The objective circumstances made it clear that the parties saw viewing the coronation procession as the foundation of the contract, and this had been rendered impossible. The defendant did not have to pay the fee. The plaintiff was not entitled to recover the balance of the rent fixed by the contract.
Death or incapacity of party
This has a huge and significant impact on the validity of the contract. The death of a party leads to legal implications, such as the termination of a contract. If, in this case, it can be assigned to some legal heir, or the provisions of succession are applicable, the contract continues to be enforceable.
Under Section 11 of the ICA, the incapacitability of the party is a situation where one of the parties lacks legal capacity under the law. Like being mentally unfit, minor, or intoxicated at the time of entering into the contract, the legality of such an agreement stands void.
When the applicable laws of the agreement are changed after the formation of the contract, which affects the obligations of the agreement, it becomes impossible to perform such obligations. In such cases, parties may renegotiate the terms and legality under the existing laws and form new contracts.
Outbreak of war/civil unrest
In war-like situations, when any transaction or activity is under strict control, it is impossible to execute the agreement. In such a case, it becomes void. This concept is especially applicable in international contracts where one of the parties comes under the war, so it becomes impossible for them to perform their obligations.
Cases that do not cover the scope of supervening impossibility are, as under-
Difficulty in performance
Hardships
Impossibilities due to the default of third person
Strikes/lockouts
Failure of one of the objects
Note: Commercial hardships do not amount to the impossibility of performance or the doctrine of frustration.
Effect of doctrine and frustration
When agreements become frustrated, it is implied that the contract is discharged and thus it can be ‘terminated’. Which refers to the condition where the parties don’t bind each other anymore and are not bound to fulfil obligations. They cannot be held liable for non-performance. But parties may also seek restitution; they can recover any money or benefit they have provided to the other party.
Compensation
If the promisor who has knowledge of the agreement, if that is unlawful or required to perform, is an impossible act, then the agreement becomes void, and any loss incurred by the promisee shall be compensated by the promisor.
Section 65 of the ICA says whichever party receives the benefit due to the non-performance of the agreement becomes liable to restore it to the person from whom they have received it.
Stages of impossibility of performance
Section 56 can be observed in parts; thus, contracts become void in situations-
Initial impossibility
Paragraph 1 of Section 56 of the ICA states that when the act in itself is impossible to perform ab initio, the agreement is void. Simply put, an agreement that is impossible from the very beginning is called an initial impossibility.
Subsequent impossibility
Paragraph 2 of Section 56 of the ICA states that, by reason of some event, when the act becomes impossible/unlawful, after the contract is made, it is called a subsequent impossibility. A contract that becomes impossible subsequently due to the impossibility of execution of that factor of the agreement, which is the very basis of the contract.
Breach of contract vs. frustration of contract
Breach of contract
Breach of contract occurs when one party to a contract fails to fulfil their obligations as agreed upon in the contract. This can happen in a number of ways, such as:
Non-performance: This is when a party fails to perform their obligations at all. For example, if a contractor agrees to build a house but never starts construction, this would be a breach of contract.
Defective performance: This is when a party performs their obligations, but does so in a way that is not satisfactory. For example, if a contractor builds a house but does so in a shoddy manner, this would be a breach of contract.
Delay: This is when a party fails to perform their obligations on time. For example, if a contractor agrees to build a house by a certain date but does not finish on time, this would be a breach of contract.
Frustration of contract
Frustration of contract occurs when an event occurs that makes it impossible or impracticable for one party to fulfil their obligations under the contract. This can happen in a number of ways, such as:
Act of God: This is an event that is caused by nature, such as a flood, earthquake, or hurricane. For example, if a flood destroys a warehouse that is being used to store goods, this would be an act of God that could frustrate a contract for the sale of those goods.
Change in law: This is a change in the law that makes it impossible or impracticable for one party to fulfil their obligations under the contract. For example, if a new law is passed that makes it illegal to sell a certain product, this would be a change in law that could frustrate a contract for the sale of that product.
Impossibility of performance: This is when an event occurs that makes it impossible for one party to fulfil their obligations under the contract. For example, if a supplier of goods goes out of business, this would be an impossibility of performance that could frustrate a contract for the purchase of those goods.
Key differences between breach and frustration
The key differences between breach of contract and frustration of contract are:
Breach of contract is caused by the acts of the parties, while frustration of contract is caused by external factors.
Breach of contract focuses on the failure to fulfil obligations, while frustration of contract focuses on the impossibility or impracticability of fulfiling obligations.
Breach of contract can be remedied by damages, while frustration of contract can lead to the termination of the contract.
How is frustration different from force majeure
Force majeure is a french term that means ‘greater force’. It is a condition when, due to the intervention of some natural cause, any obligation cannot be further performed. These are unforeseen circumstances that have little to no control by human powers, usually termed as acts that are created by greater power, like events that come under ‘Act of God’ like natural disasters, floods, etc. If COVID-19 made it impossible for a party to perform its contractual obligations, then it qualified as force majeure.
The doctrine of frustration covers those situations that, due to some legalities, are now impossible to perform. Force majeure can be one of the conditions due to which contracts can be frustrated. Thus, we can understand doctrine as a legal concept covered by Section 56 of the ICA. But force majeure is a contractual concept.
In the landmark case of Energy Watchdog vs. CERC, (2017), the Supreme Court of India ruled that an abnormal rise or fall in fuel prices does not constitute a force majeure event in a contract for an electricity power purchase agreement (PPA). This decision has far-reaching implications for the interpretation of force majeure clauses in commercial contracts, particularly in the energy sector.
The court held that force majeure is an extraordinary event or circumstance beyond the control of the parties that prevents them from fulfilling their contractual obligations. A mere increase or decrease in fuel prices, standing alone, does not meet this high threshold. The court reasoned that fluctuations in fuel prices are an inherent risk of the energy business and that parties to a PPA should anticipate and account for such risks in their contractual arrangements.
The court also rejected the argument that the sharp rise in fuel prices had frustrated the contract, rendering it impossible to perform. The doctrine of frustration applies only in rare and exceptional circumstances where an unforeseen event completely transforms the nature of the contractual obligations, making it radically different from what the parties originally contemplated. The court found that the increase in fuel prices, while significant, did not fundamentally alter the nature of the PPA or render it impossible to perform.
This decision provides much-needed clarity on the scope of force majeure clauses in energy contracts. It sends a strong message that courts will not lightly excuse parties from their contractual obligations based on ordinary commercial risks, such as fluctuations in fuel prices. This decision is likely to encourage parties to negotiate more carefully drafted force majeure clauses that clearly identify the events that will be considered force majeure and the procedures for invoking such clauses.
Application of doctrine of frustration to lease deeds in India
The doctrine of frustration is a significant legal principle that finds application in lease deeds in India. It comes into play when an unforeseen event or a substantial change in circumstances renders the fulfilment of lease agreement terms impossible or impracticable. The underlying rationale behind this doctrine is the notion of fairness. It recognises that it is inequitable to bind parties to a contract when the circumstances that existed at the time of entering into the agreement have undergone a fundamental transformation.
The doctrine of frustration operates on the premise that an unforeseen event or change in circumstances must be beyond the control of the parties involved. This means that the event or change could not have been reasonably anticipated or prevented by either party at the time the lease agreement was entered into. Examples of such events could include natural disasters, wars, government regulations, or unforeseen economic downturns.
When the doctrine of frustration is successfully invoked, the lease agreement is deemed to be discharged, and the parties are released from their respective obligations. This means that neither party can enforce the terms of the agreement against the other. The court may also order the parties to make restitution to each other for any losses incurred as a result of the frustration.
The application of the doctrine of frustration in lease deeds in India is subject to certain conditions. Firstly, the event or change in circumstances must have occurred after the lease agreement was entered into. Secondly, the event or change must have rendered the performance of the lease agreement impossible or impracticable. Thirdly, the parties must not have provided for the event or change in circumstances in the lease agreement itself.
The doctrine of frustration serves as a valuable legal tool to address situations where unforeseen events or changes in circumstances disrupt the foundation of a lease agreement. It ensures that the parties are not held liable for circumstances beyond their control and promotes fairness and equity in contractual relationships.
Elements of frustration
In order for the doctrine of frustration to be successfully applied to a lease deed in India, the following elements must be present:
Unforeseen event or change in circumstances: There must be an unforeseen event or change in circumstances that could not have been reasonably anticipated by the parties at the time the lease deed was entered into.
Impossibility or impracticability of performance: The unforeseen event or change in circumstances must make it impossible or impracticable for one or both parties to fulfill the terms of the lease agreement.
Frustration must be total: The frustration must be total, meaning that it must make it impossible or impracticable to perform the entire lease agreement, not just a part of it.
No fault of the parties: The frustration must not be caused by the fault of either party to the lease deed.
Effects of frustration
If the doctrine of frustration is successfully applied to a lease deed in India, the following effects will occur:
The lease deed will be terminated: The lease deed will be automatically terminated, and the parties will be released from their obligations under the agreement.
Restitution: The parties may be entitled to restitution for any losses they have suffered as a result of the frustration.
Exceptions to the doctrine of frustration
There are a few exceptions to the doctrine of frustration. The doctrine will not apply if:
The lease deed contains a force majeure clause: A force majeure clause is a provision in a contract that excuses performance in the event of an unforeseen event or change in circumstances. This clause is designed to protect both parties from being held liable for damages if an event beyond their control prevents them from fulfilling their obligations under the lease. Force majeure events can include natural disasters, wars, strikes, and other events that are outside of the parties’ reasonable control.
The party seeking to rely on the doctrine of frustration has assumed the risk of the unforeseen event or change in circumstances: If a party has assumed the risk of an unforeseen event or change in circumstances, they will not be able to rely on the doctrine of frustration. This is because the party has agreed to take on the risk of the event occurring and, therefore, cannot claim that the event was unforeseen or beyond their control.
The party seeking to rely on the doctrine of frustration has contributed to the frustration: If a party has contributed to the frustration of the lease deed, they will not be able to rely on the doctrine of frustration. This is because the party’s own actions have made it impossible for the lease to be performed as originally intended. For example, if a party fails to pay rent on time or refuses to comply with the terms of the lease, they may be considered to have contributed to the frustration of the lease.
Case laws
InSatyabrata Ghosh vs. Mungneeram Bangur (1954) the Supreme Court interpreted the term ‘impossible’. The court held that Section 56 is not applicable on the ground that the restitution is of a temporary nature. The plea of frustration cannot be implied by the non performance of duties.
Paradine v. Jane, Aleyn, (1647), the first case on this concept. It was pointed out that subsequent happenings will not affect a contract already made. The court, in short, did not believe in the impossibility concept. But rather held to perform it anyhow or pay the compensations.
InEnergy Watchdog v. CERC, (2017), mere incidence of expense, delay or onerousness is not sufficient. There must be a break in identity between the contract as provided for and contemplated and its performance in the new circumstances.
Arti Sukhdev Kashyap Ors. vs. Daya Kishore Arora (1994) held that merely because the performance is delayed does not amount to frustration.
Har Prasad Chaubey vs. Union of India (1973) held that if the object becomes void as it is not in the same understanding with both parties, it is thus frustrated.
Conclusion
In conclusion, it is a fundamental principle of contract law that provides a mechanism to solve situations that face the impossibility of performance due to unforeseen circumstances. It allows parties to release themselves from obligations in the event of frustration. The doctrine of frustration paves the way for a just consequence of such an unfortunate event which has happened without any fault of the contracting parties. Based on the concepts of absolute liability, fairness and equity, this is taken to be an exception to the general rule, which provides the concept of paying damages to the party that has been breached.
Independent directors are the essential elements of good governance, having an impartial view that works in favour of shareholders’ and stakeholders’ interests. They are not the same as the management from the inside of the organisation. They are observers on the board and take part in strategic and ethical management. However, their role is not just about regulatory compliance; it also helps to enhance the board’s effectiveness as well as accountability. The integration of those in India strives to improve good governance, which is the principle of bringing transparency and fairness to corporate administration. This compliance with international standards promotes confidence and thus spurs economic development. They are the bolsters of the values of morality and professionalism in Indian companies, thus showing India as obtaining the increasing role of the leader in the world arena.
Historical background and evolution
The concept of independent directors, which is nowadays one of the foundations of corporate governance, has its roots in the board-level practices in Western countries, especially the U.S., first of all to fight conflicts of interest and secondly to increase the accountability of the boards of directors to their shareholders. By the end, the model that the agency follows became a global standard of shareholder protection, while the managers’ individuality came in second place.
The introduction of independent directors in Indian corporate governance was an eye-opening shift from usually dominating family or promoter controlled business firms to a more transparent, accountable and professionally managed scenario. The shift was largely initiated by the move towards liberalisation of the Indian economy in the early nineties, which led to the greater importance of the international governance standards to be followed by all investment coming into the country.
Through various legal and regulatory frameworks like the Companies Act of 2013 and the Securities and Exchange Board of India (SEBI) regulations, the approach to corporate governance practiced by Indian companies was changed by the inclusion of independent directors. These legal documents clearly defined the criteria for independence and commented on the role and responsibilities of the independent directors, which explained the need for more demanding governance in the future. This evolution reveals an Indian social response on how to deal with both external and internal pressures, which can lead to the need for corporate accountability and transparency. This mirrors the paradigm shift from the earlier inward-looking board designs, which were composed of individuals with close ties to the management or the company promoters, towards the current equity-based approach that is not biassed towards corporate interests. This amendment is designed on the notion of lifting the quality of board decision-making and protecting minority shareholders for the purpose of enhancing the confidence of the general public in Indian businesses both nationally and internationally.
Rise in demand for independent directors
Businesses in India are under pressure to renew their boards by the 2024 deadline for the ten years of the term limit, which has resulted in a rising demand for independent directors. This pattern of events, however, is not restricted to achieving compliance but also reflects a much clearer perception of the duties of the independent directors in an organisation.
Key drivers:
Regulatory reforms: SEBI and the Companies Act of 2013 have made a small number of independent directors mandatory for listed companies. This policy has been directly supporting the demand for independent directors.
Global standards: With the growth in businesses of Indian companies globally, the need for grid alignment of them with global governance norms is increasing and there is a call to appoint independent directors from abroad.
Business complexity: The business environment, which is continuously evolving and changing, requires the strategic advice received from independent directors, to overcome the challenges.
Investor confidence: Independent directors are today widely perceived as indicators of good governance that have a convincing influence on investors’ decisions.
The transformation where independent directors are perceived merely as formalities to their vital importance as one moves away from the old corporate governance paradigm to a new paradigm that stresses transparency, accountability, and strategic guidance is a significant one in the Indian corporate governance landscape.
Roles and responsibilities
These days, independent directors are a powerful tool in corporate governance because they do not only fulfil the formal requirements. They are so crucial in terms of strategic management, as they provide a wide-ranging outlook for the development of business policies and strategies. With an unbiased perspective on hard problems such as the CEO and corporate performance review, one can see the trend of being pro-stakeholder. This includes the risk management abilities of the candidates, which include financial, operational and reputational risk identification and mitigation. In the area of corporate governance and ethics, they ensure that they are in compliance with the laws and regulations, that governance is followed, and that entities are held accountable.
They do an audit of the audit committee that is responsible for supervising financial reporting and auditing functions to ensure that transparency and accuracy dominate the reports, which are important in bringing investors closer to the company. Furthermore, they perform the functions of an intermediary and a lobbyist for the company, defending the interests of shareholders and emanating the middle position between them, thus developing the social responsibility and reputation of the company. This kind of expansive role once again attests to the importance of independent directors in this era of complex business, maintaining the sustainable success and moral standing of companies.
Challenges and limitations
The complications and limitations that Indian independent directors face are multi-faceted due to their origins in the intricate nature of the issue and the extreme complexities of the Indian corporate governance structure. One of the significant pitfalls is the unmodified adoption of the concept of the independent director stage from the western corporate governance frameworks, which might need some refashioning to fit the national culture. They risk being under less pressure by going non – local which can cause them to fail to match the standard set before them or to be incompatible with performing the task given to them. We need to note that family owned and promoter driven businesses are more obvious in India but this can lead to their potential practical implementation being “affected.”
The other major issue is the conflict of interest that might arise since some independent directors may have existing or past relationships with the company management or key stakeholders. The board directors could already be biassed; they could be making underlining decisions and they tend to act in favour of some shareholders.
To solve these problems, India needs corporate governance for everyday use. The above could comprise the calibrating process of non-executive directors, taking into account the local industry context. The government will not be eluded by the obstacles that may hold it down. The regulation can be improved to make sure that the appointment is done with transparency and accountability. Independent directors can be put in place to prevent the risks.
The independent directors’ role in corporate governance in India can be dramatically improved with this medication and the repair of these gut abnormalities, which consequently will make the corporate governance process more robust and transparent.
Regulatory framework and legal aspects
The Indian legal and regulatory framework relating to the object of appointment of the independent directors was continuously amended with the intention of ensuring more transparency and enhancing their effectiveness. In India, the Securities and Exchange Board of India (SEBI) took up this duty.
In February 2023, SEBI directed some changes in the LODR regulation aimed at the ultimate transparency provided by listed entity disclosures. The amendments regarding accepting the movement of any information exchange or release as material if a quantitative threshold is necessary and for top listed firms to confirm, deny, or clarify market gossip. However, SEBI also wants to have some amendments so that this topic of unpublished price-sensitive information will be more clear to understand and there is unification for these companies.
Moreover, the Capital Market Regulatory Authority has revised the Guidelines on Independent Directors. The shareholders have the right to approve the latest person who was appointed to the board either at the next meeting or three months after his appointment. The reappointment of independent directors together with the special resolution will also be included, while the entire case of vacant positions will be filled within three months. This is what is meant by the amendments, which are aimed at resolving the practical issues in the process of appointing the directors and ensuring that the process is transparent and there is shareholder participation.
In addition, the proposal suggests that a mandatory separation period of three years be imposed for those directors who hold financial interests in the listed entity or its related parties to act as independent directors. The following constitutes a plan for directors, including officials and employees from Promoter Group and their relatives, with the definition of independence for directors. The dual vote system selection and reappointment, which is independent director appointment by a shareholder holding the minority position, and the extent of making the candidates as independent directors independent through this dual vote system.
The corporate reforms show SEBI’s commitment to the implementation of an independent director system in the Indian corporate sector, which, in turn, offers protection of the interests of all stakeholders.
Case studies and empirical evidence
The independent directors’ case studies on the Indian corporate governance system will prove its effectiveness, as will the case of Tata Group. The Tata Nano incident took place during Cyrus Mistry’s tenure and, therefore, shows the complexity and all of the problems and challenges that corporate boards have to deal with and how important the role of independent directors can be in the resolution of the problems.
Tata Nano, a “People’s Car,” made Tatan Tata want to develop a new mode of communication that will be safe and affordable for an Indian family. At first initiated with the purest of intentions, the project faced many obstacles, including land acquisition protests in Singur, West Bengal, which further caused a shift to Sanand, Gujarat, price and operational issues at time and an unpredicted decline in sales.
It can be extrapolated from the offerings of Tata Motors and Nano Project that the prospect of having independent directors is highlighted because they contribute the most to giving unbiased supervision and strategic insight, especially when emotions and historical legacy are guiding management’s decisions. Besides the independent directors, the difficult decisions are sometimes beyond them after all, such as stranding less-profitable ventures like the Nano, which is very important to the company’s leadership.
Furthermore, the board and the management’s influence on the independent directors’ shares in India makes a difference in their effectiveness in carrying out their duties since their role is hampered. In a way to give them greater independence, it has been suggested that, for example, a national level of an independent directors’ supervisory board could be designed. This would operate separately from the company’s board, thus maintaining the power balance in the system. This will be the board that determines those who will serve on it hence, it has the potential to fix some of the weaknesses where the remuneration and nomination committees that are appointed by the board would not necessarily ensure the directors independence.
The occurrence of these examples gives an insight into the pivotal role that independent directors play in corporate governance, highlighting the importance of proposed reforms that will build their independence and effectiveness in handling complex corporate situations.
The future landscape and recommendations:
It is expected that in the coming years, the future of independent directorship in India will be in line with global governance norms targeting a more transparent, diverse and accountable way. To improve the effectiveness of independent directors, we can follow the below points:
Enhanced selection: Implement rigorous and public selection methods, maybe by involving the third party, to guarantee the director`s professionalism and neutrality.
Board diversity: Consider board diversity in composition involving the issues of gender, expertise, and cultural background to contribute different perspectives into the decision-making process.
Focused training: Conduct a solid training programme on their roles, mandates, and current governance trends for the independent directors.
Performance evaluation: Introduce independent director structured performance evaluations, involving peer evaluations and external reviews to ensure board members accountability.
Updated regulations: Developing clear regulations that define freedom and requiring conflict-of-interest disclosures to safeguard the separation of directorships can improve independence.
Digital competency: Engage private directors to be abreast of digital trends and risks as well, which are fundamental standards in modern corporate governance.
This way of approaching the task is aimed at strengthening the role of the independent directors, who can guide the companies through complex governance spheres and to do that, these directors elevate the confidence of the investors and corporate integrity.
Effectiveness of independent directors
Enhanced corporate governance:
The presence of independent directors has significantly strengthened corporate governance practices in India, fostering a culture of transparency, accountability, and ethical decision-making.
Independent directors bring an objective perspective to the boardroom, challenging management decisions and ensuring the protection of minority shareholder interests.
Their contributions have led to improved board effectiveness, enhanced risk management practices, and greater compliance with regulatory requirements.
Improved financial performance:
Empirical studies have consistently demonstrated a positive correlation between the presence of independent directors and improved financial performance.
Independent directors contribute diverse skills, knowledge, and experience to the board, which enhances the strategic decision-making process and mitigates agency problems.
They also provide valuable oversight of the company’s financial reporting and internal control systems, reducing the risk of financial misconduct and enhancing investor confidence.
Increased investor confidence:
The presence of independent directors is a key factor in building investor confidence, both domestic and foreign.
Investors perceive companies with a strong independent board structure as being more transparent, accountable, and trustworthy.
This perception leads to increased investment and a higher valuation for the company, as investors are more willing to commit their capital to companies with effective corporate governance practices.
Mitigating agency problems:
Independent directors play a critical role in mitigating agency problems between managers and shareholders.
They ensure that management decisions are aligned with the long-term interests of the company and its shareholders, rather than the short-term interests of management.
Independent directors also provide oversight of executive compensation and monitor management performance, ensuring that managers are held accountable for their actions and that their compensation is appropriate.
Promoting sustainable business practices:
In recent years, independent directors have increasingly focused on promoting sustainable business practices and environmental, social, and governance (ESG) initiatives.
They recognise that long-term corporate success is inextricably linked to sustainability and responsible business conduct.
Independent directors can drive the adoption of sustainable practices, such as reducing carbon emissions, enhancing supply chain transparency, and promoting diversity and inclusion, by providing strategic guidance and oversight.
Challenges and opportunities:
Despite the significant progress made, there are still challenges to the effectiveness of independent directors.
These include ensuring true independence, addressing potential conflicts of interest, and enhancing the diversity of independent boards.
Opportunities for independent directors lie in leveraging technology to improve boardroom communication and decision-making, collaborating with stakeholders to drive positive change, and continuously enhancing their skills and knowledge to stay relevant in a rapidly changing business landscape.
Despite the progress made, there are still areas where the effectiveness of independent directors can be further enhanced. For example, there is a need to ensure that independent directors possess the necessary skills and expertise to contribute meaningfully to board discussions. Additionally, the independence of directors can be further strengthened by reducing the influence of promoters and dominant shareholders.
Conclusion
At this point, we couldn’t agree more that the voice of independent directors in leading the standards of corporate governance is undoubtedly important in our country. It is in the form of a chain that consists of transparency, accountability and ethical business practices. They are impartial, and their rational reasoning and intelligent opinion are really helpful when taking decisions. Taking into account the opinions of all the parties in the relationship (the shareholders, the employees, and the customers), they allow them to integrate into the process, considering the needs of all the parties in the relationship. Establishing and adhering strictly to those codes of ethics and conduct, independent directors will be the ones who hold the mirror and work as beacons, directing organisations to the path of sustainable growth and profitability. They eradicate the speculations in the minds of the investors and make the integrity of the Indian business sector shine on the world order. As corporate structures keep evolving, the relative efficiency and empowerment of independent directors will remain essential in guiding the companies through the intricacies of the modern business environment and ensuring that the companies not only exist but also thrive in a world that is very competitive and monitored.
This article is written by Sahil Arora. This article highlights a significant case under the Terrorist and Disruptive Activities (Prevention) Act (TADA Act) involving the assassination of a former Prime Minister Rajiv Gandhi of India by a human bomb who was an operative of the LTTE from Sri Lanka. It covers the facts of the case, arguments made by the parties, the judgement, and the case laws referred by the Supreme Court.
State of Tamil Nadu vs. Nalini (1999), also known as the Rajiv Gandhi Assassination Case, is a landmark judgement in Indian legal history that, apart from other issues, is infamously remembered as the country’s first instance of terrorism, which was dealt with by a special Terrorist and Disruptive Activities (Prevention) (TADA) Court. In this case, India’s former Prime Minister Rajiv Gandhi was assassinated on May 21, 1991, in Sriperumbuder through a suicide bomber, and along with him, 15 other people lost their lives standing nearby. The charges of conspiracy for assassination were levied on various individuals, but at last only four of them were held guilty and given a death sentence, which was later commuted to imprisonment for life by the Tamil Nadu government. And recently, in the year 2022, the Supreme Court of India ordered the premature release of all the convicts who were involved in the assassination.
On 29th July 1987, the India-Sri Lanka Peace Accord was signed between India and Sri Lanka, which is considered the main reason behind the assassination of PM Rajiv Gandhi.
A civil war was going on in Sri Lanka in 1983 between Sri Lankan Sinhalese and Tamils. At that time, around 70% of Sri Lanka’s population was Sinhalese, and 23% were Tamils. These Tamils were also of two categories, i.e., Sri Lankan Tamils and Indian Tamils. Actually, before Sri Lanka gained independence in 1948, some Tamils from India used to get migrated by Britishers to Sri Lanka for fieldwork purposes, and after attaining independence, some of the Indian Tamils decided to stay there only. With time, in Sri Lanka, many government posts were occupied by the Tamils, and the Sinhalese community had a fear that they might get overpowered by the Tamils. So to sideline the Tamils, many reforms were brought in Sri Lanka, such as declaring Sinhala as the official language of Sri Lanka, giving reservations in education to Sinhalese, and declaring Buddhism as the primary religion of Sri Lanka. Overall, efforts were made to create a hell-like situation for the Tamils.
In this harsh situation, a man named Velupillai Prabhakaran came in front, who is considered the mastermind behind the formation of the rebel group called “LTTE (Liberation Tigers of Tamil Eelam)”. This group was formed mainly for two reasons. First, to get protection from the unfair treatment of the Sinhalese community, and second, to create an independent country for the Tamil-speaking region separate from Sri Lanka.
So, overall, the whole clash at that moment was only between the LTTE group and the Sinhalese community, or the army of Sri Lanka, which represents the Sinhalese community.
Initially, it seemed that the problems were being solved, but as time passed, the situation became worse than before. Both communities keep attacking each other’s people, killing and harassing numerous common people. By that time, the war, which was only in Sri Lanka at that time, had started showing its effects in India as well. The Tamil community in India started pressuring the Indian government to take some steps to protect the Indian Tamils present in Sri Lanka. The government of that time was led by PM Rajiv Gandhi, who agreed to interfere in this matter by supplying essentials to Sri Lanka. At first, the Sri Lankan Government didn’t like this behaviour of the Indian Government, but after getting warnings to stop the atrocities against the Tamils, they agreed to show some leniency and made the Sri Lankan Tamils accept the Indian sending of essential supplies.
After this, the Sri Lankan government came forward to talk about this matter with the Indian government. Rajiv Gandhi accepted their proposal and went on a visit to Colombo, Sri Lanka. There, Sri Lankan President J.R. Jayawardene and Indian PM Rajiv Gandhi met, and the India-Sri Lanka Peace Accord was signed by them, which mainly dealt with two demands.
The first was that the Sri Lankan government provided all the basic rights and amenities to the Tamils present there, and
The second was that, in return, all the Tamil militants and rebel groups, including the LTTE, would surrender their weapons.
To ensure that everything went smoothly, PM Rajiv Gandhi decided to meet Velupillai Prabhakaran so that he could make him understand the importance of the peace accord for both sides. At that moment, Prabhakaran agreed, but on the date of the signing of the accord, numerous riots occurred in Colombo, which forced the Sri Lankan President J.R. Jayawardene to divert their army forces from Tamil regions to Colombo. But to tackle the current situation in the Tamil region, the Sri Lankan President requested PM Rajiv Gandhi for military support from India, to which they agreed. And in just 6 hours, the IPKF (Indian Peace Keeping Force) was called to Sri Lanka from India. This move of PM Rajiv Gandhi was criticised because this step made the Indian forces stand against the Indian Tamils of Sri Lanka.
After the IPKF was called to control the situation, initially the LTTE members started surrendering their weapons, but after some time, a war-like situation again emerged, this time between the LTTE members and the Indian forces.
On one hand, clashes were going on between the Indian forces and the LTTE, and on the other hand, in 1989, a new President of Sri Lanka was appointed, who was Ranasinghe Premdasa, and Premdasa joined hands with the LTTE. But LTTE proposed a condition that the IPKF be sent back to India, and the same was ordered by Premdasa.
In India also, elections were held in 1989, and Rajiv Gandhi lost the PM position, and V.P. Singh was chosen as the new PM of India. And they also agreed to call back the IPKF from Sri Lanka to India.
Time passed, and in 1991, elections were proposed to be held again as the V.P. Singh government lost the vote of no confidence. During the election campaigns, Rajiv Gandhi once said that if their party came into power, they would send the IPKF back to Sri Lanka. This news was heard by Prabhakaran, and he decided to assassinate Rajiv Gandhi before he won the elections and send back the IPKF to Sri Lanka. Following this, Prabhakaran and the intelligence team of the LTTE made a plan to assassinate Rajiv Gandhi, and their plan was successfully executed on 21st May 1991.
Facts of State of Tamil Nadu vs. Nalini (1999)
In order to prevent the intervention of the Indian government by the IKPF, the LTTE militant group decided to assassinate Rajiv Gandhi so that he couldn’t win the next elections in India and send back the forces to Sri Lanka.
The key members involved in this mission were Sivarasan, Subha, Nalini (A-1), Murugan (A-3), and Dhanu (DA). A few also supported them at many stages before and after their mission. The members were given training regarding the use of explosives. A Sri Lankan girl named Dhanu (DA), who was a member of the LTTE, was selected as the human bomb, and others were given several tasks to assist her during her act.
Nalini (A-1) was an ordinary Indian middle-class family girl who used to work for a private firm. She got involved with the LTTE and assassination conspiracy as she developed a fondness for Murugan (A-3) (an LTTE activist) and in fact, wanted to marry him. Thus, she kept helping the LTTE members in the mission by providing the required logistics.
The conspirators arrived in India using false identities and forged documents. Then they all spread to different locations to prepare for the assassination task.
Santhan (A-2), Murugan (A-3), Shankar (A-4), Vijayanandan (A-5), Ruban (A-6), Kanagasabapathy (A-7), Athirai (A-8), Robert Payas (A-9), Jayakumar (A-10), Shanthi (A-11), Vijayan (A-12), Selvaluxmi (A-13), Bhaskaran (A-14), Rangam (A-24), and Vicky (A-25), along with the deceased accused Sivarasan, Dhanu (DA), Subha, Nero, Gundu (Trichy) Santhan (A-2), Suresh Master, Dixon, Amman, Driver Anna, and Jamuna secretly entered into India from Sri Lanka and through other methods at different times during the specified period of criminal conspiracy.
They went to many election rallies to see the arrangements made for the politicians so as to get an idea of how much security would be around Rajiv Gandhi and in what manner they could approach him.
Sivarasan, along with his team, prepared the explosive device to assassinate Rajiv Gandhi.
Sivarasan (DA) brought Santhan (A-2), Shankar (A-4), Vijayanandan (A-5), and Ruban (A-6) along with the deceased accused Dhanu (DA), Subha, Nero, and Driver Anna to Kodikkarai and arranged accommodation for other accused at various locations in Tamil Nadu to helped in executing the object of the criminal conspiracy.
The conspirators remained in touch throughout their preparations with the LTTE leaders present in Sri Lanka through wireless communication to receive instructions and updates. The plan was finalised to assassinate Rajiv Gandhi at the Sriperumbudur campaign rally.
Arivu (A-18) visited Jaffna and other places in Sri Lanka along with Irumborai (A-19) clandestinely in June 1990 and on 4.5.1991 purchased a Kawasaki motorcycle at Madras so that movement could be done throughout swiftly of himself and one or the other of the co-conspirators arranged money for printing and publication of the compilation described as “The Satanic Force” and sent a copy of the same to Prabhakaran (absconding) through Sivarasan (DA). Another group through Murugan (A-3) purchased a battery for making the wireless apparatus work and the other two battery cells for detonating the belt bomb which would be used by Dhanu (DA) for the murder of Rajiv Gandhi.
Arivu (A-18) gave film roll to Haribabu (DA) for taking photographs of events, who also purchased a sandalwood garland from Poompuhar Handicrafts, Mount Road Madras, which was utilised by Dhanu (DA) for garlanding Rajiv Gandhi and to deceive and gain access under the VVIP portion under the guise of garlanding;
On 21st May 1991, Rajiv Gandhi arrived at Sriperumbudur to address an election rally, and as planned, Dhanu (DA), Nalini (A-1), Haribabu (DA), Sivarasan, Subha, and Murugan (A-3) held their positions.
The ground where Rajiv Gandhi would address the rally was divided into two halves, and on one side, a special area was made where some people were allowed to meet Rajiv Gandhi closely. Dhanu (DA), the human bomb, took advantage of the crowd and mingled with the participants who were standing in the special area to meet Rajiv Gandhi. Dhanu (DA) dressed herself in such a clothing that she could conceal a belt bomb and its detonator attached thereto under her clothing for activating the same when with Rajiv Gandhi reach near her.
After a few minutes, Rajiv Gandhi approached the rally ground and started meeting the people present there. When he approached Dhanu (DA), she first put a garland on him, and then, under the pretext of touching Rajiv Gandhi feet, she bent and detonated the bomb strapped to her body.
Immediately, the bomb blasted, resulting in the death of Rajiv Gandhi, along with 15 other people standing nearby. In this blast, Dhanu (DA) and Haribabu (DA) (a photographer involved in clicking the pictures of the incident) also died on the spot. Several others were injured there.
After the blast, Nalini (A-1) ran away from the place of the incident with the deceased accused Sivarasan and Subha, and reached at the residence of Jayakumar (A-10) and Shanthi (A-11), and took refuge in Jayakumar’s (A-10) residence.
Soon after the blast, emergency services rushed to the scene of the incident to provide aid, and the local police and agencies started their investigation into the matter. The case was taken over by the CBI (Central Bureau of Investigation) and SIT (Special Investigation Team), looking into the seriousness of the incident and its national significance.
During the investigation, several pieces of evidence were gathered, including forensic reports, photographs from the camera of Haribabu (DA) that survived the blast, communication records, and witness testimonies. On the basis of this evidence, several people were arrested, including Nalini (A-1), Murugan (A-3), and others. Sivarasan and Subha committed suicide when cornered by the police.
The CBI filed charges against 26 individuals under various laws, including the Indian Penal Code, TADA, Wireless Communication Act, Explosive Substances Act, and others.
Issues raised
Whether the accused, Nalini (A-1), is liable for assassination even though she did not commit the act?
Whether the accused, Nalini (A-1) and others, be held liable under the provisions of the TADA Act?
Whether the confession made by one accused is admissible as evidence against another co-accused?
Was the death penalty provided to the accused justified for the act?
Arguments of the parties
Arguments of the prosecution
The prosecution argued that there was no doubt Nalini (A-1) was not a member of the LTTE group at the beginning of the conspiracy, but she still helped the existing members of the group by providing them with logistics and a place to stay. It was only because of Nalini (A-1) that the other conspirators were able to gather information about the places. Moreover, Nalini (A-1) was also present at the place of the assassination to support Dhanu (DA). This shows her active involvement in the whole conspiracy, and thus, as per Section 120-B of the Indian Penal Code, being a part of the conspiracy to commit a crime makes her equally liable for the crime as other accused persons.
It was highlighted that the assassination was purely an act of terrorism. The LTTE, through this assassination, had not only killed a reputed national leader of the country, but this act has also instilled fear in the minds of people, disrupted the public order, and delayed the elections of the country. This clearly shows that their intent behind the assassination was to overthrow the government as established by law, and all this was done with the aid of explosive substances. Combining all these incidents clearly shows that the accused persons are liable to be charged under the relevant provisions of the TADA Act.
Also, because Nalini (A-1) had knowingly facilitated the commission of this assassination, which is a disruptive activity, it was contended that she should also be punished under the provisions of the TADA Act.
As per Section 15 of the TADA Act, a confession made by a person before a police officer, not below the rank of a Superintendent of Police is admissible as evidence for that person and can also be used against any co-accused who is charged and tried in the same case. Upon investigation, the CBI recorded various confessions, and many of them were corroborated with each other, such as the confession of Murugan (A-3), which stands corroborated with the confession of his co-accused Nalini (A-1), Santhan (A-2), Arivu, Bhagyanathan, and Padma. So, all the essentials of the required provision are fulfilled, and thus a confession by the accused can be used against the co-accused as well.
The prosecution demanded the death penalty for all the accused involved in the assassination, as their act was very heinous and extraordinarily disruptive to the whole nation. They all have a common intention to commit a crime, and thus all should be made equally liable. This case also falls under the ambit of the rarest of rare cases, as the object of the conspiracy was not fulfilled with the assassination of Rajiv Gandhi and the killing of several others, but it continued even after this incident. The LTTE planned to target various places and persons across the country as well.
Arguments of the defence
The defence put forth the argument that Nalini (A-1) was not fully aware of the final plan and its deadly consequences. She was only doing the peripheral activities, and that too at the request of Murugan (A-3) because she liked him. Thus, Nalini (A-1) lacked the mens rea, which is requisite to hold anyone guilty of a crime. Moreover, being present at the scene of the incident does not equate to her direct involvement in the assassination.
Also, it was argued that some people who joined the conspiracy after the motive of the conspiracy was achieved were all tried together, which resulted in great prejudice in the investigation.
The defence challenged the applicability of the provisions of the TADA Act, arguing that the evidence produced by the prosecution does not show if any offence under Section 3 or Section 4 of the TADA has been made. Neither the killing of Rajiv Gandhi could be considered a terrorist act under Section 3 of the TADA Act, nor is there any other disruptive activity as per Section 4 of the same Act. It was claimed that the incident was politically motivated, and not to terrorize the public or create instability in the country.
The defence further pleaded that because Sections 3 and 4 of the TADA Act are not applicable, thus all the confessions considered under Section 15 of the TADA Act should also not be considered valid. Moreover, the confession of Nalini (A-1) could not be relied on because she also later reversed her remarks, stating that it was made under duress. The defence also cited certain judicial precedents in which the courts have ruled against the admissibility of such confessions.
It was argued that the prosecution wrongly stated that the conspiracy was from a period of 1987 to 1992 because, in actual fact, no such signs were shown even before the day of the assassination, and thus, this case does not fall under the ambit of the rarest of the rare cases. It was pleaded that mitigating circumstances should be taken into consideration, and moreover, Nalini (A-1) and others have shown a potential for rehabilitation throughout the case, so a death sentence would be excessive. Also, there was no motive for the accused and other co-accused to overawe the Government or to create terror, as alleged by the prosecution. Section 3 of the TADA Act requires that the criminal act be done with the requisite intention or motive, and unfortunately, the prosecution fails to prove it. Thus, there is a lack of intention as to how the provisions of TADA are to be applied.
Legal aspects involved in State of Tamil Nadu vs. Nalini (1999)
TADA: Terrorist and Disruptive Activities) Act, 1987
TADA (Terrorist and Disruptive Activities) Act is the main Act around which this whole case revolves. While the case continued, this Act lapsed due to several irregularities. It was brought in the year 1985, and just a decade later, in the year 1995, it lapsed. This Act was introduced to bring special provisions for preventing and coping with terrorist and disruptive activities. From the time this Act was brought, it was getting criticism due to several reasons, for instance, it was said that the provisions of this Act were so stringent that they were overriding some of the provisions of the CrPC and Indian Constitution. This Act introduced several new criminal offences which were very open-ended, the police officials were given more powers that were being misused, and the rights of the arrested persons and their safeguards were reduced. The provision of confession was also criticized as the police through torture used to extract the confessions which were considered relevant to a great extent, unless it was proven that they were not voluntary. In just a decade, more than 75,000 people were arrested under this TADA Act, and 95% of those cases ended up in the release of the person, and only 2% was the conviction rate under this Act.
Section 3: Section 3 of the TADA Act discusses the punishment for terrorist acts aimed at intimidating the government or terrorising people. This Section imposes stringent punishments such as death penalty and life imprisonment, along with a fine. The punishment under this Section must involve acts that involve bombs, firearms, or any other hazardous substances that can cause death, injury or damage to the property and in this case, through investigation, it was found that the accused were the ones only who performed the conspiracy and prepared the explosives with their team.
Section 4 of the TADA Act provides punishment for anyone involved in disruptive activities. Disruptive activities include actions that disrupt the sovereignty of India and its territorial integrity or support the secession or succession of any part of India. This Section also punishes anyone who harbours or conceals or makes any such attempt any disruptionist. The maximum imprisonment under this provision is imprisonment for life, and the minimum punishment is five years imprisonment. Under this case, it was alleged that assassinating a former Prime Minister, Rajiv Gandhi, creates a disruptive environment in the country and hampers the sovereignty of the nation. Also, the TADA Court accepted the confessions as valid evidence under Section 4 which significantly influenced the convictions of the accused.
Section 5 of the TADA Act states that any person in possession of any arms or ammunition mentioned in the Arms Rules, 1962, or bombs or some other explosive substances without authorization, will be punished for maximum life imprisonment, and minimum imprisonment of five years. Dhanu, the suicide bomber, utilized an explosive device to execute the assassination of Rajiv Gandhi. Apart from this, the investigation revealed a range of items, including explosives, detonators and weapons, that were associated with the accused.
Section 15 of the TADA Act any confession made by a person before a police officer who is not below the rank of Superintendent of Police and which is recorded either in writing or on any mechanical device, can be later considered as evidence against that person in the court for any offence under this Act or related rules. A condition attached to this Section is that before recording the confession, the person making the confession shall be informed prior in hand that they are not under any obligation to give that confession. The police officer also shall record the statement after he is fully satisfied that the person making the confession is making it voluntarily after asking necessary questions from that individual. Under normal circumstances, the confessions made to a police officer will not be considered as evidence, but the provisions of TADA overrides this general principle and rules that the confessions of the accused Nalini, Murugan and others during the investigation are admissible under the Indian Evidence Act.
Section 120-A of the Indian Penal Code defines the term criminal conspiracy. As per this definition, an agreement between two or more persons to commit an illegal act, or achieve a legal act by illegal means, can be convicted under this offence. The agreement shall be accompanied by an act to qualify an offence of a criminal conspiracy. The illegal act under this can be either the main objective of the agreement, or can be just a part of the overall objective. The prosecution laid down evidence of meetings, planning sessions and communication between the accused and their connection with the LTTE through which they tried to establish that an agreement was made to assassinate Rahi Gandhi, and later on, the Court also applied Section 120-A and Section 120-B to convict the accused.
Section 120-B of the Indian Penal Code provides the punishment for the offence of criminal conspiracy. As per this provision, where a criminal conspiracy is made by any person for committing an offence which is punishable with death, imprisonment for life or rigorous imprisonment for two years or more, then those persons shall be punished in the same manner as if they had abetted that offence. Apart from this, the persons participating in the criminal conspiracy, but not including a conspiracy to commit an offence punishable as aforesaid, can be punishable with imprisonment up to six months, or fine, or both.
To know more about conspiracy under IPC, click here.
Trial procedure
Immediately next day, 22nd May 1991, at 1:15 A.M., the F.I.R. was lodged under Sections 307, 302, and 326 of the Indian Penal Code and Sections 3, 4, and 5 of the Indian Explosives Act, 1872. The trial of the case, however, began in 1994 and lasted under various courts for many years.
During the course of the investigation, several accused persons were arrested, and a few confessions were also extracted under Section 15 of the TADA Act. As proof, the camera of Haribabu (DA) was recovered from the scene of the incident, which contains several photographs before the blast, and some of them contain the presence of the accused, Sivarasan, Dhanu (DA), Subha, and Nalini (A-1) at the scene.
From the confession of Bhagyanathan (A-20) it was revealed that Sivarasan was guiding all the accused at the scene of the incident. He was the one who took Dhanu (DA) with him, and by giving the woman constable present there Rs. 500, they moved to go into the front row where Rajiv Gandhi would come and meet some of the common people. He was the one who prepared the plan of escape after the blast. Also, it was Sivarasan alone who asked Arivu (A-18) to bring batteries, clips, wire, and other material for the preparation of the bomb, as well as a wireless set for contacting LTTE Headquarters in Sri Lanka.
Other evidence, such as fake identification documents, wireless communication devices, and notes, was displayed to establish the involvement of the accused in the conspiracy. Wireless stations used by Sivarasan and Pottu Amman were also found, through which they communicated with each other.
The CBI filed a charge sheet in the designated TADA Court against 26 accused under the above-described Acts. The trial was initiated in the special court designated under the TADA, which handles cases related to terrorism and disruptive activities. The prosecution presented the confessions of 17 accused and many pieces of evidence. Around 288 witnesses and 1449 documents were examined and placed before the Court.
In total, 251 charges were framed by the Designated Court, out of which charge no. 1 was common to all the accused, and the rest 250 charges were charged separately under different heads for various accused. These charges can be divided into three main categories-
Under Section 120-B read with Section 302 Indian Penal Code;
Under Sections 3, 4 and 15 of the TADA Act; and
(i) Under several provisions of the Indian Penal Code
(ii) Under Sections 3, 4 and 5 of the Explosive Substances Act, 1908
(iii) Section 25 of the Arms Act, 1959
(iv) Section 12 of the Passport Act, 1967
(v) Section 14 of the Foreigners Act, 1946
(vi) Section 6 (1A) of the Wireless Telegraphy Act, 1933.
Under Section 313 of the Code of Criminal Procedure (CrPC), the statements of the accused were recorded.
All these procedural rules led to prolonged delays in the trial procedure. This happened mainly due to the admission of irrelevant evidence which ended in a protracted legal process that could have been more efficient and focused otherwise. Several factors were responsible for this delay discussed in detail below.
The first and foremost factor is the complexity of the case itself. There were numerous accused and defendants in this case and multiple charges which led to prolonged proceedings. Our justice system ensures that every person is given a fair chance and all legal requirements are met which involves coordinating schedules and managing the volume of evidence, and this results in unintentional delay.
Secondly, in this case, many pieces of evidence that were not directly relevant to the case were applied against the accused, which further complicated the proceedings. As all this confuses the judges, it makes the task of delivering the verdict difficult.
In addition to these specific issues, there were some general factors also responsible for the delay of the trial such as overcrowded court dockets, shortage of judges, and administrative inefficiencies.
Judgement in State of Tamil Nadu vs. Nalini (1999)
After this incident of assassination and blast, on 23rd June 1991, the state of Tamil Nadu was notified under TADA, and on 14th May 1992, the LTTE was declared an unlawful association under the provisions of the TADA Act of 1957.
After examination of all the evidence and considering all the materials placed, the Designated Court found all the 26 accused guilty of all the charges framed against them.
The Court specially brought into notice the fact during declaring the judgement that along with Rajiv Gandhi, 15 other common people also lost their lives, many of whom were policemen on duty, namely: (i) P.K. Gupta, Personal Security Officer to Rajiv Gandhi, (ii) Latha Kannan, (iii) Kokilavani, (iv) Iqbal, Superintendent of Police, (v) Rajaguru, Inspector of Police, (vi) Edward Joseph, Inspector of Police, (vii) Ethiraj, Sub Inspector of Police, (viii) Sundararaju Pillai, Police constable, (ix) Ravi, Commando Police constable, (x) Dharman, Police constable, (xi) Chandra, woman police constable, (xii) Santhani Begum, (xiii) Darryl Peter, (xiv) Kumari Saroja Devi and (xv) Munuswamy. Apart from them, many others suffered grievous and simple injuries in that incident.
At the initial stage, the Designated Court, formed under the TADA Act, found all 26 accused guilty of various offences, including murder, conspiracy, and terrorism. The Court awarded the death sentence to all the accused.
For the confirmation of these death sentences, the case was transferred to the Madras High Court, where various punishments were prescribed to various accused. Some were just awarded the punishment of fines of varying amounts, some were awarded rigorous imprisonment for different periods, and some were affirmed the death sentence which was given by the trial court, but only for the four accused, namely Nalini (A-1), Santhan (A-2), Murugan (A-3) and Arivu (A-18). For the rest of the accused, their punishments were commuted to imprisonment for various years, depending on their involvement in the offence.
The Court observed that they didn’t find any strict proof for bringing any offence under Section 3 or 4 of the TADA Act. According to them, neither any terrorist act nor any other disruptive activity has occurred under Sections 3 and 4 of the TADA. Thus, charges under this Act fail against all the accused.
The Court pronounced the sentence of the death penalty to the four main accused of the incident, namely, Nalini (A-1), Santhan (A-2), Murugan (A-3), and Arivu (A-18), for their grievous acts under various provisions of law, including Section 109, 120-B, 302, 324, 326, along with Section 34 of the Indian Penal Code.
Four other accused, Dhanasekaran (A-23), N. Rajasuriya (A-24), Vicky (A-25), and Ranganath (A-26), were given rigorous imprisonment for a term of two years for the offences under Section 212 of the Indian Penal Code. Ranganath (A-26) was also sentenced to rigorous imprisonment for two years under Section 216 of the Indian Penal Code.
Rangam (A-24) and Vicky (A-25) entered India through illicit channels without possessing any valid travel documents, and they also unauthorizedly stayed in India. So, being foreign nationals, they have also been convicted and sentenced for an offence under Section 14 of the Foreigners Act. Conviction of a sentence under these charges was not challenged.
Some of the accused, namely Shanthi (A-11), Selvaluxmi (A-13), and Shanmugavadivelu (A-15), were initially awarded imprisonment, but later, due to a lack of sufficient evidence against them, they were released from all the charges, and their conviction was also set aside.
Nalini (A-1) and some other accused filed an appeal to the Supreme Court of India against their death penalty sentence. The Supreme Court upheld the death sentence of Nalini (A-1) and the other three accused as awarded by the trial court and confirmed by the Madras High Court. Other accused were acquitted by the Supreme Court on the grounds of insufficient evidence of their direct involvement in the assassination.
Following this, Nalini (A-1) and the other accused approached the President of India, requesting pardon for their death sentence. But the President denied their request, and no pardon was given to them.
However, the Supreme Court of India, after this decision of the President, determined that the decision of the President is not final and that the Court has the power to review their decision. This time the Court again examines the evidence, taking into consideration the mitigating circumstances of the case, such as the cooperation of the accused during the investigation, their good behaviour during the time they were in jail, and also that by that time, Nalini (A-1) had delivered a daughter. Thus, the Court finds that giving the death penalty at this stage would be an extreme step. Moreover, she had already spent a lot of time behind bars during the course of the investigation; thus, some relief could be provided on these grounds.
Thus, in 1999-2000, the Supreme Court of India upheld Nalini (A-1)’s and other accused’s convictions but remitted their punishment of death sentence to life imprisonment.
Coming down the line, in the timeline of more than 2 decades, several other petitions and mercy pleas were made to the President and Governor of Tamil Nadu. In 2018, some were released on parole, and some were released completely.
Finally, on 11th November 2022, the Supreme Court of India ordered the immediate release of all the remaining six convicts, namely, Nalini (A-1), Santhan (A-2), Murugan (A-3), Robert Pius (A-9), Jayakumar (A-10), and Ravichandran (A-16) who all were serving life sentences for more than 3 decades. However, Nalini (A-1) and Ravichandran were already on parole from 27th December 2021 until that date, as sanctioned by the Tamil Nadu government as per their State Suspension and Sentence Rules.
Case laws
Kartar Singh vs. State of Punjab (1994)
This case was referred as it upheld the constitutional validity of the confessions of the accused recorded by the police officers. The court in this case considered that if the provisions of Section 164 of the Code of Criminal Procedure (Section 183 of the Bharatiya Nagarik Suraksha Sanhita, 2023 (BNSS)) are complied with, then such confessions would not be considered a breach of Article 20(3) and Article 21 of the Indian Constitution. The court also laid down some guidelines to be followed while recording the confessions under Section 15 of the TADA Act, and it was asserted that these guidelines were followed in this case as well, so the confessions as per Section 15 of the TADA Act shall be considered admissible as they were laid down along with procedural safeguards that must be ensured to protect the rights of the accused. The guidelines for the admissibility of such confessions are as follows-
Rank of the officer: The police officer taking the confessions should not be lower than the rank of a Superintendent of Police.
Recording of confession: The confessions shall only be recorded in the manner mentioned in the Section, which includes writing down the confession.
Voluntariness: Before taking the confession, the person making the confession shall be informed that he is not bound to make any confession, and if he still prefers to make it, then that confession can be used as evidence against him. This ensures that the confessions taken from the person are voluntary in nature, and not taken by any force.
Reason to believe: Unless the police officer is confident or has reason to believe that the confession is being made voluntarily, the police officer shall not record the confession. If needed, necessary questions be asked if the person becomes confident that the confession is made voluntarily.
Admissibility of trial: The confession made under this section can be considered admissible under the trial of the person who made the confession, along with the co-accused, abettors, or conspirators, provided that all those are charged and tried in the same case together with the accused.
Compliance with constitutional safeguards: The provision to record confessions under this section is designed to be aligned with Article 20(3) of the Indian Constitution which protects individuals against self-incrimination.
Abdul Razak Shaikh vs. State of Maharashtra (1987), Nazir Ahmad vs. King-Emperor (1936) and Neharoo Mangtu Satnami vs. Emperor (1937)
These cases provided that the signature of the accused must be taken after recording his confession by the Magistrate. This is a mandatory and salutary provision and has been provided to ensure that the interests of the accused are safeguarded. And if the signatures of the accused are not obtained, that confession would be considered inadmissible.
In all these cases the issues are mainly the same which revolves around the rules to be followed while recording the confessions, and the court under all cases stressed that as per Section 164 of the Criminal Procedure Code (Section 183 of the BNSS), it is compulsory to obtain the signature of the accused on the confession which is to be recorded by a Magistrate. In case, there is a failure to obtain the signature of the accused, then it would be considered a significant irregularity that could not be rectified through Section 463 of the CrPC (Section 509 of the BNSS) as well.
Sardar Singh Caveeshar vs. State of Maharashtra (1964) and Kehar Singh & others vs. State (Delhi Administration) (1988)
These cases were referred to clarify the essence of conspiracy. These cases show that there shall be an agreement to do one or the other acts as described in Section 120-A of the Indian Penal Code (Section 61(1) of the Bharatiya Nyaya Sanhita, 2023 (BNS)) by two or more persons. Their agreement could be proved either by direct evidence or may be inferred from the conduct and/or acts of the parties, and the very agreement would be considered an offence and be punishable if proved.
These cases highlight that the acts, statements, and writing of the co-conspirators, even those made after the formation of the conspiracy, as per Section 10 of the Indian Evidence Act, 1872 (Section 8 of the Bharatiya Sakshya Adhiniyam, 2023 (BSA)), would be considered admissible against the other co-conspirators. Such admissibility is found in the fact that such evidence plays a significant role in proving the existence and scope of the conspiracy.
Bachan Singh vs. State of Punjab (1980)
This case was referred to consider the aggravating and mitigating circumstances while imposing the sentence of the death penalty and to ascertain that whether this case falles under rarest of rare case or not. Sections 354(3) and Section 235(2) of the CrPC (Section 393(3) and Section 258(2) of the BNSS) were also observed to ensure the constitutional validity of Section 302 of the Indian Penal Code (Section 103 of the BNS). Section 354 of the CrPC says that where the court convicts any person for an offence for which punishment prescribed is either death or life imprisonment or imprisonment for a term of years, then the court shall tell the reasons while pronouncing the sentence. Section 235 of the CrPC talks about the judgement of acquittal or conviction by the judge, and where the judge convicts a person, he shall allow the accused to be heard on the matter of the sentence before deciding and then pass the sentence according to the law.
This case delivered a landmark judgement introducing the “rarest of the rare” doctrine, emphasising the importance of the careful and circumspect application of the death penalty. This case helped in enhancing the jurisprudence surrounding capital punishment in India ensuring that careful consideration be made while declaring the death penalty cases.
Critical analysis of State of Tamil Nadu vs. Nalini
This case of the State of Tamil Nadu vs. Nalini, which is also popularly known as the Rajiv Gandhi Assassination case, was criticised at various stages during the trial as well as even after its conclusion.
The delay of the court was criticised as more than three decades were spent by our Indian judiciary on such a sensitive case. And even after all this, in the end, all the accused/convicts were released by the Court. This order of release is declared by many political parties as unacceptable, as they believe that it would set a wrong precedent for the future.
The provisions of the TADA Act were also questioned in this case on the grounds that this Act orders the detention of a person without trial, the rights of the accused also get compromised and limited, which affects their chances of a fair defence, and many more, which eventually led to declaring the Act unconstitutional. Although the Act is repealed now.
This case also brings to light the point that a country’s diplomatic decisions should be taken with the utmost care. Some believed that the decision of Rajiv Gandhi to send IPKF to Sri Lanka was a wrong decision, which eventually led to all this.
Conclusion
In conclusion, it can be said that this case reflects a complex interplay of justice, legal principles, and human rights considerations. This case brings to light the need for reforms in both legal and non-legal aspects of our country. This underscored the need to maintain a balance between the demands of justice and the protection of human rights while ensuring due process of law. The security and defence of the country need to be improved, and diplomatic relations need to be taken in a more sensitive manner because this case clearly shows how a small decision can take the lives of so many innocent people.
Frequently asked questions (FAQs)
What are the main charges brought against the accused Nalini and other accused in this case?
Nalini and the 25 other accused were charged with several offences under various criminal laws, including murder, conspiracy to murder, making and using forged documents, illegally entering in territories of India through illicit channels, and violation of the Terrorist and Disruptive Activities (Prevention) Act (TADA). These all charges were founded on alleged engagement in the planning and successful completion of Rajiv Gandhi’s assassination.
What role did international connections play in this case?
During the investigation of this case, it was found that the Liberation Tigers of Tamil Eelam (LTTE) were involved in the assassination of Rajiv Gandhi. The LTTE is an international terrorist organisation based in Sri Lanka. During the speech of Rajiv Gandhi in their election campaigns, they said that if they won the next elections, they would send the Indian force, IPKF, back to Sri Lanka. This speech triggered the members of LTTE and they plotted to assassinate Rajiv Gandhi. This involvement of LTTE operatives in planning the attack clearly showed that it was an international issue and its impact on national security.
What was the significance of this judgement delivered on 11 May 1999?
The judgement delivered on 11th May 1999 had a significant impact on Indian history as it resulted in the successful conviction of several accused, including Nalini, for their involvement and completion of the conspiracy and assassination of the former Prime Minister of India, Rajiv Gandhi. The decision of the court was based on several pieces of evidence and confessions submitted keeping in mind the severity of the charges. It emphasised the critical role of maintaining justice in matters concerning national security and terrorism.
This article is written by Harshita Agrawal. The article includes a detailed examination of the landmark judgement of South India Corporation (P) Ltd. vs. Board of Revenue, (1964) highlighting the significance of the assessment year and the resulting tax enhancement. It delves into the scope outlined in this case within the Indian Constitution along with the implications for the savings of taxes, duties, cesses, and fees, as well as its broader applications. The judgement of the case is analysed using examples from several precedent cases to support the decision.
The case of South India Corporation (P) Ltd vs. Board of Revenue, (1964), highlights the constitutionality of tax assessments related to “work contracts”. The validity of agreements between the President of India and the Rajpramukh of the State of Travancore-Cochin was also reviewed by the honourable Supreme Court and the court held that the expression “subject to” expresses the idea that one provision must yield to another provision or the subordinated provision. An agreement was made on 25th February 1950 between the President of India and the Rajpramukh of the State of Travancore-Cochin which limited the authority of the State to levy taxes on “work contracts” for a period of ten years as specified in the agreement. The four petitions were filed by the appellant in Kerala High Court under Articles 226 and 227 of the Constitution of India and were rejected by the court. The court dismissed the petition and ordered costs. Since the argument of the petitioners was rejected by the court they opted to file an appeal. The judgement of the Supreme Court aimed to nullify the previous order of the High Court as the case discussed a pre-constitutional law along with several previous precedents and constitutional amendments and ruled that the state could not impose such taxes during the specified period. ..
The article discusses the facts of the case, its historical background, the issues involved, and the judgement and analysis of the case.
Details of the case
Name of the case:South India Corporation (P) Ltd vs. Board of Revenue
Name of the court: Supreme Court of India
Date of judgement: 13th August, 1963
Citation: 1964 AIR 207, 1964 SCR (4) 280
Bench: Justice S. K. Das, Justice Subba Roy, Justice Raghubar Dayal, Justice N. Rajagopala Ayyangar, Justice Justice R. Mudholkar
Authored by: Justice Subba Roy
Name of the parties:
Petitioner: South India Corporation (P) Ltd.
Respondent: The Secretary, Board of Revenue
Background of the case
The petition of the case of South India Corporation (P) Ltd. vs. Board of Revenue, 1964 was filed under Article 226 of the Indian Constitution. The four linked appeals arose out of a ruling by the Kerala High Court where all the petitions were dismissed seeking to declare that the provisions of the General Sales Tax Act, 1125 (Act XI of 1126), stating that tax was imposed on “work contracts” and should not be enforceable in any part of Kerala State with effect from 26th January 1960. A writ of certiorari was issued along with other appropriate writs to annul orders for the tax imposed on sales on “work contracts” for the assessment years 1960-61 and 1961-62 was also requested by the appellant. A revised petition was filed by the company before the first respondent and was dismissed. The sales tax assessment was issued by the second respondent against the company for the assessment years 1956-57, 1957-58 and 1958-59 in respect of “work contracts”. The initial argument before the High Court of Kerala which was put forward on behalf of the appellant was that the pertinent Sales Tax Acts enforce the collection of sales tax on “work contracts”. It was considered as unconstitutional and therefore void after the enactment of the Indian Constitution. The petition was dismissed and rejected, with costs imposed, leading to file an appeal.
Facts of South India Corp. (P) Ltd. vs. Board of Revenue (1964)
The appellant of the case is an incorporated private limited company under the Companies Act, 2013. The headquarters is located in Mattancherry. The company engages in a variety of sectors including iron, hardware, electrical goods, timber, coir and engineering contracts. The company also served as an engineering contractor for state and central government departments as well as private entities. On 17th March 1959, the Sales Tax Officer, Special Circle, Ernakulam, levied sales tax on the company under the Travancore Cochin General Sales Tax Act, 1125 M.E for the assessment year 1952-53 in respect of “work contracts”. The assessment for the year 1952-53 was conducted solely under the Travancore-Cochin General Sales Tax Act (11 of 1125 M.E). Hence, the subsequently increased tax did not impact the assessment of that year. However, assessments for the years 1956-57, 1957-58 and 1958-59 were made under the Travancore-Cochin General Sales Tax (Amendment) Act, 1957. Therefore, the provision increasing the rate under this Act would impact those assessments. The enhancements made under the Kerala Act, 1957 would only apply to the assessment year 1957-58 and would not apply to the assessment year 1956-57.
Historical background of the Sales Tax legislation in Kerala
Initially, Travancore and Cochin were two separate sovereign states with complete taxation authority. Cochin implemented the Cochin General Sales Tax Act 15 of 1121 M.E, while Travancore enforced the Travancore General Sales Tax Act 18 of 1124 M.E, both Acts imposing taxes on “work contracts”. Following the merger of these states, the United States of Travancore-Cochin was established with a unified legislature. The legislature enacted the Travancore-Cochin General Sales Tax Act 11 of 1125 M.E hereafter referred to as ‘the Act’. The legislature imposed a Sales Tax on “work contracts” with full taxation authority.
On 17th January 1950, the Act was officially published in the Gazette. Provided thereof in Section 1(3) that it would become effective on a date specified by the government through the notification which was issued on 30th May 1950. As per Section 24 of the above specified Act, the rules were framed describing procedures and for ascertaining sales amounts related to “work contracts”. According to rule 4(3) sub-rule (1), the value of goods sold by a dealer in connection with “work contracts” were deemed to be the payment made for the completion of the contract, less a certain percentage fixed by the Board of Revenue for different regions. This percentage represents the usual proportion of labour costs to material costs in those areas with a specified maximum percentage.
However, the Revenue Board did not specify the deduction percentage for executing a work contract. Since the stated fact was accepted in the High Court, evidence from the Travancore-Cochin Gazette was presented before the court confirming the establishment of such a percentage.
Issues raised
Can a valid agreement be made under Article 278 of the Constitution regarding taxes levied by the State and those levied by the Indian Government until the Parliament enacts a suitable legislation?
Was there an agreement wherein the State relinquished its authority to levy the aforementioned tax as part of an arrangement made with the union?
Whether Article 372 of the Constitution is subject to Article 278 thereof?
Arguments of the parties
Petitioners
The primary argument of the petitioner is that Article 227 of the Constitution of India can only preserve the taxes lawfully enforced by a state prior to the commencement of the Constitution and as the Act was enacted after the Constitution, the imposition of tax under it does not meet the criteria set by the Article.
If it was assumed that Article 227 upheld the taxation imposed by the Act, the petitioner further contended that an agreement was made on 25th February 1950 between the President of India and the Rajpramukh of the State of Travancore-Cochin regarding federal financial integration in the State.
As per this agreement, the union committed to compensate the State for the revenue shortfall resulting from the constitutional transfer of taxation powers concerning specific items to the union List and after that, the State lost its authority to levy tax on the transferred subjects.
The petitioner also argued that Article 372 is subservient to other constitutional provisions and that a power granting a State authority to impose taxes on a federal subject contradicts the federal framework of the Constitution and is deemed invalid.
Respondent
The respondent in his arguments suggested that the Travancore-Cochin General Sales Tax Act of 1125 M.E remained operative post-Constitution under the explicit provisions of Article 372 and continued until the said law was modified, repealed or amended by the appropriate authority. Therefore, any agreement between the union and the State mentioned would not diminish the State’s authority to levy taxes under the said law.
The respondent argued that Article 278(2) gave permission to the union and a Part B state to enter into an agreement solely concerning tax levied by the government of India within that State and when a State incurred revenue loss due to its loss of power to levy and collect the tax under the Constitution.
In the case of South India Corporation (P) Ltd. vs. Board of Revenue, (1964), it was established that the State retained the authority to levy taxes on “work contracts” until the Parliament enacted appropriate legislation as permitted by Article 277. However, it did not suffer any revenue loss concerning this tax rendering any agreement between the state government and the union invalid.
Article 278 came into play only when the government of India acquired the authority to levy a special tax saved by Article 277 through parliamentary action as an agreement to compensate for the loss of revenue invalidated when there is no such loss.
Laws discussed in South India Corp. (P) Ltd. vs. Board of Revenue (1964)
Section 2(68) of the Companies Act, 2013
As per Section 2(68) of the Companies Act, 2013, a private company is the one with minimum prescribed paid-up share capital and which by its articles:
Restricts the right to transfer its shares,
Except in the case of One Person Company, limits the number of members to two hundred.
Provided that where two or more persons jointly hold shares in a company, they shall be treated as a single member for this provision.
Provided further that:
Persons who are in the employment of the company, and
Persons who, having been previously employed by the company, were members of the company while employed and have remained members after the employment ceased, shall not be counted among the members, and
A private company prohibits any invitation to the public to subscribe to its securities.
This provision deals with a private company and South India Corporation (P) Ltd. would be classified under the definition of private company to make it relevant in the context of legal principles.
Article 12 of the Indian Constitution
With a few exceptions, all the fundamental rights are applicable against the State. According to Article 12, unless the context requires otherwise, “the State” encompasses-
The Government and Parliament of India,
The Government and the Legislature of each State, and
All local or other authorities,
Within the territory of India, or
Under the control of the Government of India.
The term ‘local authorities’ pertains to bodies such as Municipalities, District Boards, and Panchayats. The Supreme Court has ruled that ‘other authorities’ encompasses all authorities created by the Constitution or statute to which powers are conferred by law without necessitating engagement in governmental functions.
In Ajay Hasia vs. Khalid Mujib, (1981),the Supreme Court has enunciated the following test for determining whether an entity is an instrumentality or agency of the State:
The extent to which the State provides financial assistance particularly if it covers a significant portion of the corporation’s expenses may suggest the corporation’s association with the government.
If the corporation holds a monopoly status granted or safeguarded by the State, indicating a government connection.
The presence of extensive State control can suggest that the corporation functions as an agency or instrumentality of the government.
If the activities of the corporation are of significant public importance and closely aligned with government functions, it strengthens the case for classifying it as a government agency or instrumentality.
If a department of government is transferred to a corporation, it would be a strong factor supporting the inference that the corporation acts as a government agency or instrumentality.
When the entire share capital of the corporation is owned by the government.
The Article in the case clarified the authority of the Board of Revenue being a State’s authority and subjected to the enforcement of the constitutional provisions.
Article 226 of the Indian Constitution
Under the Constitution, by virtue of Article 226, every High Court has the power to issue directions or orders or writs including writs in the nature of Habeas Corpus, Mandamus, Prohibition, Quo Warranto and Certiorari. The jurisdiction to issue writs is conferred upon the High Courts under Article 226 and the Supreme Court under Article 32 of the Constitution of India.
The writ of certiorari transfers proceedings from a lower body to the High Court in order to annul a decision that exceeds its jurisdiction. If a lower court has accepted a case beyond its jurisdiction and authority then the High Court under Article 226 or Supreme Court under Article 32 can issue a writ or order known as Prohibition by which the lower court will be prohibited from adjudging the case but if it has already passed a judgement then they shall issue certiorari order by which judgement of the lower court will be quashed.
In Veerappa Pillai vs. Raman and Raman Limited, (1952), it was held that the writs mentioned in Article 226 were intended to allow the High Court to intervene when subordinate bodies or officers act beyond their jurisdiction, violate natural justice, fail to exercise their jurisdiction, or commit clear errors that lead to injustice. No matter how extensive its jurisdiction, the High Court is not authorised to act as a court of appeal or to evaluate the correctness of disputed decisions and determine the appropriate position or order to be issued.
In the above-mentioned case, the petitioner filed the petition under Article 226 to relief from the actions of the respondent mentioning that the imposition of certain taxes were unconstitutional.
Article 227 of the Indian Constitution
Article 227 of the Constitution of India concerns the authority of High Courts to supervise all courts. In pursuance of this Article, every High Court possesses supervisory jurisdiction over all courts and tribunals across the territories within its jurisdiction. Without prejudicing the general scope of the above position, the High Court may:
Request the return of documents from these courts.
Make and issue general rules and establish forms to govern the practice and procedures of these courts.
Determine the formats for maintaining books, entries and accounts by the officers of these courts.
The High Court has the authority to establish fees for the sheriff and all clerks and officers of these courts, as well as for attorneys, advocates and pleaders practising therein.
Provided that any rules made, forms prescribed or fee schedules set under clauses (2) or (3) must align with the existing laws and require the prior approval of the governor.
The Article does not confer upon the High Court any authority of superintendence over any court or tribunal established by or under laws concerning the Armed Forces.
The Supreme Court referred to various precedents that delineated the scope, authority and distinctions between Articles 226 and 227. After reviewing its prior judgement in Surya Devi Rai vs. Ram Chander Rai, (2003), the Hon’ble Supreme Court clarified that Article 226 empowers the High Court to issue directions, orders and writs to any person, government or authority, while Article 227 grants the High Court supervisory authority over all courts and tribunals within its jurisdiction. The actions under Article 226 fall within the High Court’s original jurisdiction and the procedures under Article 227 are purely supervisory in nature. The writ of certiorari falls under the High Court’s original jurisdiction (Article 226) and supervisory jurisdiction (Article 227) is not original jurisdiction and is more akin to appellate revision. The authority under Article 226 can be exercised by a plea from the aggrieved party or on their behalf and the supervisory jurisdiction can also be exercised suo moto under Article 227.
The provision for this case ensured High Courts supervise lower courts or tribunals dealing with tax disputes, ensuring they operate within their jurisdiction and adhere to due process.
Article 277 of the Indian Constitution
Article 277 of the Constitution of India deals with savings. It stipulates that any taxes, duties, cesses or fees lawfully imposed by the government of any state or by the municipality or other local authority before the commencement of the Constitution shall persist and continue to be utilised for the same purposes until the Parliament enacts legislation to the contrary.
In the landmark judgement of Town Municipal Committee vs Ramchandra Vasudeo Chimote, (1964), the actions of the Municipality of Amravati were held illegal by the Supreme Court as it was considered incompetent to make alterations in the pre-constitutional taxes, duties or fees. The municipality previously imposed a terminal tax on goods, with the exception of gold and silver as per a specific pre-constitutional law. After the Constitution came into force, the power lay under List 1 of the Seventh Schedule. However, the municipality amended the notification including gold and silver within the scope of terminal tax following the commencement of the Constitution of India.
The relevancy of this Article for this case was to determine whether the taxes imposed pre-constitution could still be validly imposed by the state government.
Article 372 of the Indian Constitution
Article 372 in the Constitution of India addresses the continuity and adaptations of existing laws. Despite the repeal of the enactments mentioned in Article 395 subject to the other provisions of this Constitution all laws in force in the territory of India immediately before its commencement shall remain effective until they are altered, repealed or amended by a competent legislature or authority.
To align the existing laws in accordance with the provisions of this Constitution, the President may issue orders for necessary adaptations and modifications, including repeal or amendment. Provided that the law shall take effect from the date specified in the order and shall not be questioned in any court of law.
However, clause (2) does not authorise the President to make any adaptations or modifications of any law after three years from the commencement of this Constitution. It also prohibits any competent legislature or other competent authority from repealing or amending any law adopted or modified by the President under this clause.
Since Article 372 deals with the continuance of existing laws until repealed by a competent authority, the case here discussed whether pre-constitutional tax laws continued to be valid post-constitution.
Judgement in South India Corp. (P) Ltd. vs. Board of Revenue (1964)
It was admitted by the counsel of the respondent that the tax assessments for 1956-57, 1957-58 and 1958-59 were invalid under the Travancore-Cochin General Sales Tax (Amendment) Act, 1957 and the Kerala Surcharge on Taxes Act (Act 11 of 1957). However, he requested permission for the State to reassess the appellant for those years under the Act. The Supreme Court after hearing the appeals and arguments held that the decision of assessment of the orders should not be enforceable and no costs to be awarded here or in the High Court. However, a single set of hearing fees was allowed and the appeals were permitted.
Issue wise judgement
Can a valid agreement be made under Article 278 of the Constitution regarding taxes levied by the State and those levied by the Indian government until the Parliament enacts a suitable legislation?
The court held that the conjunction of Articles 277 and 278 read with the agreement confers the authority to impose and collect the duty on the union of India. Therefore, the court concluded that following the enactment of the Constitution, the excise duty in question could only be imposed by the government of India. Despite the temporary reservation in support of the State of Rajasthan until Parliament enacted an appropriate law, the court ruled that an agreement under the Act could still be made concerning such a levy.
The court also highlighted the sole difference between the case of State of Rajasthan vs. G. Chawla, (1959) and the current one is that when the agreement between the union and the State was made, the Parliament had not yet passed the necessary legislation to deprive the State of its power to levy taxes on “work contracts”. However, this difference does not alter the principle as the previous decision pertained to the validity of the agreement concerning arrears leviable by the State before the enactment of the relevant law. The provision in Article 278 effectively overrides the authority of the state government to continue levying taxes under Article 277.
Was there an agreement wherein the State relinquished its authority to levy the aforementioned tax as a part of an arrangement made with the union?
In accordance with the Constitution of India, the agreement between the President of India and the Rajpramukh of the State of Travancore-Cochin unless specified otherwise by the context of the Committee’s report and this agreement remained in effect for a period of ten years from the commencement of the Constitution. It incorporated recommendations of the Indian States Finance Enquiry Committee with certain alterations. Under this agreement, the Union of India consented to provide compensation to the State for the incurred loss due to federal financial integration as described therein.
It was not a partial agreement limited to specific items, but rather aimed to offset the entirety of the revenue deficit experienced by the State due to the loss of certain revenue sources to the union or otherwise. Key recommendations of the Indian States Finance Enquiry Committee incorporated in the agreement highlight the thoroughness of the agreement.
The committee examined and reported on various aspects including the gradual integration of federal finance in Indian states and the manner in which it should be carried out, specifying that it entailed transferring all “federal” revenues to the centre but also the undertaking of all expenses in states associated with “federal” departments and services.
Chapter 11 of Part II detailed the transfer of “federal” revenues and expenditures in States to the centre along with the admiration of the relevant departments. It also assumed all the outstanding liabilities, claims and assets associated with these departments by the centre.
Whether Article 372 of the Constitution is subject to Article 277 thereof?
Article 372 is a broad provision while Article 277 is specific in nature. As per legal principles, a special provision should be given effect within its defined scope, leaving the general principles to apply to cases where the special provision could not be applicable. The preceding conversation made it clear that the subject of finance is treated separately by the Constitution. Article 277 safeguards the existing taxes, duties, cesses or fees levied by States provided the mentioned conditions are met. On the other hand, Article 372 preserves all the valid pre-constitutional laws. Article 372 cannot be interpreted to broaden the scope of tax-saving issues. To state it differently, Article 372 must be understood within the framework of Article 277.
Whether Article 372 of the Constitution is subject to Article 278 thereof?
Article 278 functions independently in spite of the continued force of pre-constitution taxation laws under Article 372. A pact between the union and the state government under Article 278 can override state laws in Part B states. During the agreement period, in view of Article 277 excluding Article 372 operation or as an agreement overriding Article 278 the result remained consistent and the State lost their authority to impose taxes on “work contracts”.
Rationale behind this judgement
The court concluded from the agreement read with the report which indicates that the provisions were made to compensate the State for the loss on account of the federal financial integration that seemed to cover the State’s revenue loss due to the transfer of specific revenue sources to the union under the Constitution. It would be unreasonable to interpret the agreement to exclude certain temporarily authorised taxes. The savings clauses were contingent upon an agreement and the effective adjustments were made through the agreement to offset any losses which the State would have incurred, rendering the savings clause unnecessary thereafter.
The court also stated that the question of whether the State’s authority was revived after the expiry of ten years from the commencement of the Constitution is not relevant in this case as all contested assessments fall within that time frame. The argument that Article 278 was omitted by the Constitution (Seventh Amendment) Act, 1956 terminated the agreement and subsequently, the State regained the authority to impose the tax. The validity of an agreement depends on the presence of authority at the time of its formation and the duration is specified by its terms or the conditions of the granted authority. Article 278 empowered the union and the Part B states to enter into an agreement lasting up to ten years from the commencement of the Constitution. The agreement in consideration fell within the purview and the Seventh Amendment being prospective did not invalidate it. Therefore, the court concluded that the contested assessment orders were not validly issued by the sales tax authorities as they exceeded the authority granted under Article 277 of the Indian Constitution.
The Supreme Court in its view stated after the decision made by the United States of America in the case ofVilas vs. City of Manila, (1911), that they were not focusing solely on the explicit provisions of Article 372 of the Constitution rather than delving into the general principles outlined by American law. Apart from this, it might be also inappropriate to draw parallels between the legal outcomes of a State’s cessation under American law and the interpretation of Article 372 in the Indian Constitution. The court therefore confined their attention to the specific provisions of the Constitution.
Analysis of South India Corp. (P) Ltd. vs. Board of Revenue (1964)
The previous laws of Travancore and Cochin were revoked with effect from 30th May 1950 until sales tax on “work contracts” was previously imposed under the respective Acts and rules framed thereunder leading to the imposition of tax under the new Act and its accompanying rules. The State Reorganisation Act, 1956 came into force on 1st November 1956 and the new state of Kerala was formed. The area previously covered by the Travancore-Cochin State (excluding a small part) and the Malabar District of the Madras State comprises this new state. Subsequently, the Kerala Legislature enacted the Travancore-Cochin General Sales Tax (Amendment) Act, 1957 which modified the Act to encompass the entire territory of Kerala. The said Act came into force on 1st October 1957 and contained the provisions of the earlier Act. The State of Kerala denied any increment in tax on electrical goods or that any tax was levied on cement involved in “work contracts”. The sales tax imposed under the Act was further enhanced by the Kerala Surcharge on Taxes Act, 1957 and again by the Kerala Surcharge on Taxes Act, 1960.
According to Article 372 of the Indian Constitution, the provisions of the Travancore-Cochin Act of 1125 would not persist as they were incompatible with the constitutional framework and the provisions of Part XII.
The respondent cannot rely upon Article 227 of the Constitution of India as it is applicable only if:
The specific tax was lawfully imposed by the state government immediately before the commencement of the Constitution and is explicitly listed in the Union List.
The pre-requisites for a direct alignment between the tax enforced by the State before the Constitution and the tax upheld thereafter concerning the rate, jurisdiction, state and purpose are not fulfilled.
The applicability of Article 277 could not be relied upon by the appellant as an agreement between the Rajpramukh of Travancore and the union government as per Article 278 of the Indian Constitution, intervened.
The Act in question, with its taxation on “work contracts” violates Article 14 of the Constitution of India by unevenly applying its provisions, resulting in this consistency in discriminatory treatment particularly by excluding those outside the Travancore-Cochin States.
The Board of Revenue failed to specify the deduction percentage under Rule 4(3) of the Act, which made the assessment illegal for the assessment year 1952-53.
The phrase “subject to the other provisions of the Constitution” indicates that if there is an irreconcilable conflict between pre-existing laws and constitutional provisions, the latter shall prevail within that scope. A constitutional article may conflict with a pre-constitutional law either entirely or partially. The cumulative effect of a series of articles may render pre-existing laws inappropriate in certain contexts. Any inconsistency must be spelt out from the explicit provisions of the Constitution and not from the presumed political philosophy underlying the Constitution.
Conclusion
The above-mentioned reasonings and factors concluded the importance of the case in respect of the Constitution and the matters related therein. The article aimed to maintain the continuity of pre-existing laws after the Constitution came into effect until repealed, altered or amended by a competent authority. Without this provision, legal confusion would arise. The Constitution assumes that state laws may or may not fall within the legislative competence of the appropriate authority. If pre-commencement laws were required to align strictly with the legislative framework of the Constitution of India, the article would become ineffective and purposeless.
Frequently Asked Questions (FAQs)
What do you mean by cess on income tax?
A cess is a form of income tax and additional levy imposed by the central government to raise funds for a specific purpose. Cesses are utilised only when there is a requirement to address particular public welfare expenditures.
What do you mean by a surcharge in Income Tax?
A surcharge on income tax is an additional tax imposed by the government on taxpayers earning a higher income beyond a certain limit set by the government. It is calculated as a percentage of a taxpayer’s taxable income.
What is a “work contract”?
A contract of service may involve the supply of goods in its execution of the said contract, representing a composite supply of both services and goods with the service component being predominant in the agreement between the parties.
A work contract, incorporating elements of both the provision of services and the sale of goods, was consequently taxable under both laws.
What is existing law and law in force?
Existing law refers to the law currently in operation and law in force encompasses not only law actually in force but also law potentially in force to be extended through notification and by other means.
What is a Part B state?
Part B states consisted of nine erstwhile princely states with legislatures. Rajpramukh was appointed by the President of India and served as the ruler of a constituent state with an elected legislature. Part B states included Patiala and East Punjab States Union, Hyderabad, Jammu and Kashmir, Travancore-Cochin, Madhya Bharat, Mysore, Rajasthan and Saurashtra.
Imagine you meet your potential clients with a business proposal that has the power to win them over and get the business deal.
If you are an experienced entrepreneur or a newbie in the world of business, making an effective pitch is essential to driving business growth and building a strong customer relationship. Writing persuasive business proposals is a skill that can open doors to success and growth for your business. And a well-written proposal can lead to better decisions about what to offer each prospect, better results for your customers, and a secure future for your business.
In this article, we will explore the key elements of writing a persuasive business proposal.
What is a proposal
A proposal is a sales document that is sent to a prospective client in order to win a business project. It can be either printed or digital, which highlights the service offerings and value proposition. In other words, a compelling business proposal proclaim how a company can fathom a client’s issue and help businesses win a new client
Types of business proposals
There are two types of business proposals : Solicited and unsolicited
A solicited proposal is one that a customer asks for and an unsolicited proposal is sent out to the potential client when they have not asked for it. A lot of research is needed to understand a customer’s pain point and how the company’s offerings help a prospective client write an unsolicited proposal. Solicited proposals mostly are written in response to requirements, which can be Request for proposals (RFP), Request for quotations (RFQ), Invitation for bids (IFB) and Request food information (RFI)
What does a remote proposal writer do
Remote proposal writers work remotely and write proposals for businesses and non profit organisations. Broadly,there are two types of proposals – business proposal and grant proposals. A Proposal helps persuade the client to work with them by highlighting the value proposition and the suggested plan or offer.
Sometimes, a non profit organisation also requires proposal writers who are in need of government grants.
Remote proposal writers can work full-time or part-time. Freelance writers also work remotely but not all remote writers are freelancers. Remotely writing a proposal can be a challenging task for the writers
Challenges faced by a remote proposal writer
It is not a child’s play to write a proposal remotely. Primarily, there are three steps in writing a proposal
Research- A lot is research is needed by the writers to understand the requirement of the client and highlight the value proposition for a compelling offer
Communication- Writers don’t have a deep understanding of the subject; therefore a lot of communication with the proposal team is needed to comprehend the clients perspective
After getting all the information, a proposal writer should start writing a proposal on the given template
Apart from the ones mentioned above, proposal writers have to meet the deadline. A remote writer may not have access to the technical resources of the company. Since the work depends on the inputs given by the proposal team, a proactive approach will help to meet the timeline.
Techniques to writer a great proposal
Tone of voice
Sometimes, how something is communicated is more than what we say. Writing in a tone of voice clients can relate to helps a writer to engage with them emotionally. Once a connection is established, a persuasive tone can be used to win the client over. Considering the target audience and writing in a tone that addresses them is crucial. Is the tone of voice conversational, empathic, informative, or irrelevant? Treating clients with respect and acknowledge their position is important without sounding condescending to them
Answering the “WHY” question
Business proposals should try to answer why instead of what. A well crafted proposal should answer the question with compelling answers. Some of the questions to be answered in the proposal are why is the client looking for a solution? Why should they choose us? Why are we the subject matter experts? Etc.
Use of persuasive language
Instead of writing the facts, a proposal should convince the client why we are the right choice. A copywriting technique known as PAS (problem-agitate- solution) is the ideal approach for writing a proposal
Problem- While writing a proposal, you must first demonstrate that you understand the roadblocks the client is facing. It must be indicated in the proposal that we understand the company, their clients, the industry specific problems, and the hardships they are going through.
Agitate- After understanding the problem the client is facing, the proposal writer should slightly aggravate the issue and draw a painful picture. The proposal should depict a scenario in which the client’s business may suffer if the problem persists.
Solution-The final step is to offer a solution. You need to show the client that you can help them come out of their painful situation with your brilliant solution.
By answering a few questions like why this solution is going to work in a given situation and highlighting your competency in this field, you can provide the anticipated results.
No technical jargon
A proposal should be written in plain english. A clear and concise language helps readers grasp what is being expressed. Vague, ambiguous language does not communicate the offer clearly. By reading a proposal, the client should be able to understand the offerings clearly and the processes to be followed to get the intended results.
Tips for writing in plain language are below-
Vocabulary- Simple vocabulary should be used instead of an abstract one. A few examples are people instead of human resources; reports are not instruments for communication. At times, sales leads are not subject matter experts; therefore, using industry specific terms may be unfamiliar to them.
Positive-
Use of positive words instead of negative ones, like what we can do instead of what we can`t. Words like possible (instead of not impossible), clear (in place of not clear)
Positive words help to create a positive impact and help to establish clarity.
‘While reading the sentence “we can’t miss to do this project” client may focus only on the word “not” and miss the other words assuming that it is a negative response. A better sentence to replace this will be “ we need to do this project”
Use of active voice
The use of active voice is preferred over passive voice when writing a proposal. For example- words like “ we value your effort” instead of “ Your efforts are valued”
Active voice highlights the doer of the action; hence, it sounds natural and there is less chance for misunderstanding. We can highlight the difference by two different sentences here. If we draft a proposal and highlight the achievement of our agency in bringing in more subscribers, which statement is more powerful?
The use of active voice is preferred over passive voice when writing a proposal. For example- words like “ we value your effort” instead of “ Your efforts are valued”
Active voice highlights the doer of the action; hence, it sounds natural, and there is less score for misunderstanding. We can highlight the difference in two different sentences here. If we draft a proposal and highlight the achievements of our agency in bringing in more subscribers, which statement is more powerful?
An online campaign was developed that resulted in bringing in 400 new monthly subscribers.
Or,
Our team of digital experts developed an online campaign that brought in 400 new monthly subscribers.
The focus on the completion of the action is emphasised in the second statement. There is less scope for ambiguity, especially when we are defining roles and responsibilities.
Use of verbs
Proposal writers should use simple verbs. Verbs are action words; hence, using simple verbs will add value and clarity. Which of these sentences should be used?
Our proposal app will make an improvement on your close rate.
Or,
Our proposal app will improve your close rate?
Writers should use everyday words instead of complicated ones. Using complex words may give the client the impression that you are trying to talk over them. Clients want to work with people they like, trust, and understand.
Using short sentences
Use short sentences to explain the main idea. Sometimes it is difficult to avoid long sentences but writers should try to use simple sentences as much as they can. Complex language can’t persuade the client.
Be yourself
Don’t strive to be someone you’re not. Even though your writing needs to appeal to the client, it’s obvious to others when you’re not authentic.
Make it obvious in your proposal if your store is a quirky creative space that pushes the boundaries of what’s considered normal. Don’t feel compelled to project an air of exuberance if your organisation is doing more analytically oriented tasks.
Proving that you’re a good fit is the aim of your proposal. If you don’t stay loyal to your brand, all you’ll end up disappointing the customer is yourself.
Conclusion
To conclude, the writer should reiterate the advantages of your solution in their conclusion. Express gratitude to the customer for their time and thought. Invite the customer to get in touch with you if they have any questions. This gives room for more discussion in this area.
A strong ending sentence could restate the key benefits of your suggested course of action and reassure the customer of the possible gains from using your services.
Reiterate your dedication to the customer and their needs at the end. A heartfelt thank you note may make a favourable first impression and strengthen ties with others.
Take caution that the conclusion does not contain any new information. This is where the proposal should be summarised and closed; thus, adding more details now might confuse the customer and detract from the primary ideas.
The direct proportionality and positive correlation between economic freedom and growth is well established in economic literature. Businesses generate goods and services, thereby stimulating consumer spending, regulating demand and supply, creating employment opportunities, and fostering innovations in technology. The result is an increase in economic output and Gross Domestic Product (“GDP”) for the country. Therefore, establishing an optimal external environment for businesses to flourish is a sine-qua-non for all economies. The legal framework within which businesses function plays a crucial role in determining their success. In particular, businesses need freedom at three stages, namely,
Freedom of entry (no restrictions on entry to the market, i.e., to start a new business),
Freedom of competition (ability to sustain and grow business operations under the aegis of free market), and lastly,
Freedom of exit (no barriers to exit from the market, i.e., to wind-up the business).
Freedom of exit is perhaps the most significant as it facilitates the exit of unproductive or insolvent firms, liberating limited resources for more efficient market users, thereby bolstering market efficiency. A sound bankruptcy law enhances freedom of exit by providing a time-bound, transparent, and cost-effective mechanism for resolving distressed assets. The Insolvency and Bankruptcy Code, 2016 (“IBC/Code”) which came into force on May 28, 2016, is a comprehensive piece of legislation enacted to consolidate and amend the legal charter for insolvency and bankruptcy in India.
The enactment of the Code marked a watershed moment in Indian corporate legislative history by providing for reorganisation and insolvency resolution of corporate persons, partnership firms and individuals in a time bound manner for maximisation of the value of the assets of such persons, to promote entrepreneurship, availability of credit and balance the interests of all the stakeholders, including alteration in the order of priority of payment of government dues and to establish an Insolvency and Bankruptcy Board of India. In upholding the constitutionality of the IBC in the landmark case of Swiss Ribbons Private Limited and Another vs. Union of India and Others (2019), the Supreme Court observed that the primary objective of the IBC is the reorganisation and insolvency resolution of the corporate debtor in a time-bound manner. In Binani Industries Ltd. vs. Bank of Baroda & Another [CA (AT) (Ins) 82/2018 & Others], the NCLAT emphasised the order of objectives of the IBC as follows, first order objective of the IBC is resolution; the second order objective is maximisation of the value of the assets of the firm; and the third order objectives are promoting entrepreneurship, availability of credit, and balancing the interests of stakeholders. This order is given sacrosanct value under the Code.
The legal milieu
Prior to the enactment of the IBC, Indian insolvency and bankruptcy laws were multiple and fragmented. The winding-up of companies was regulated by the Companies Act, 1956 and thereafter by the amended Companies Act, 2013. However, their provisions were quickly found to be inadequate. Winding-up proceedings could only be initiated after the company had defaulted on repayment of its debts, leaving no scope for rehabilitation or reorganisation of the company while in distress. The liquidation process was also long and cumbersome for the creditors. The Sick Industrial Companies (Special Provisions) Act, 1985 (“SICA”), prescribed for the determination and implementation of remedial measures for the revival of “sick” companies. However, the SICA was applicable only to industrial enterprises, led to considerable misuse of the prescribed moratorium to the detriment of creditors and was otherwise unable to fulfil its legislative intent. Among the debt recovery and security enforcement mechanisms available to financial institutions are the Recovery of Debts due to Banks and Financial Institutions Act, 1993 (“DRT Act”) and the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (“SARFAESI Act”), which sometimes took decades to enforce Non-Performing Asset (“NPA”) recoveries.
The sub-par bankruptcy laws of the country were ensnared in debtor-in-control modus- operandi, affording loopholes misused by defaulters to exploit credit institutions and destabilise the credit market. Moreover, the multiplicity of insolvency laws and enforcement authorities and the complexity of implementation mechanisms caused arbitrary delays. Prolonged litigation, exacting both time and money, further discouraged long term lending and stifled investor confidence in the market. In addition, the ballooning NPA portfolio of banks since the 2000s has been eroding bank profits and capital and constricting their ability to lend. This led to a credit crunch, limiting access to credit for businesses and individuals, thereby dampening investment and consumption, both key drivers of economic growth. The urgent need of the hour was progressive legislation balancing both creditor and debtor interests while establishing formal rules to enhance efficiency ex-ante, interim and ex-post. Born out of this necessity, under the guidance of the Bankruptcy Law Reforms Committee (“BLRC”), was the IBC, which introduced the necessary shift to a creditor-in-control insolvency regime aimed at reducing the cost of debt, improving credit supply, and encouraging long term loans.
Decoding the code
The IBC provides a two-pronged strategy for corporate debtors (“CDs”) facing insolvency, namely, the Corporate Insolvency Resolution Process (“CIRP”) and Liquidation. On the occurrence of default by a CD, a financial creditor, operational creditor, or the CD itself may initiate CIRP before the adjudicating authority, which is the National Company Law Tribunal (“NCLT”) having jurisdiction. Upon commencement of the resolution process, the powers of the board of directors of the CD were suspended and vested in an Insolvency Professional (“IP”). The IP functions under the overall control and supervision of the Committee of Creditors (“CoC”), which generally comprises the financial creditors of the CD. The CoC proposes the resolution plan for the CD. The objective of the CIRP is to preserve and increase the pool of assets of the CD for the collective benefit of the creditors and other stakeholders. Hence, a moratorium or “calm period,” is provided against individual or collective legal actions against the CD for the duration of the CIRP. If the CIRP fails, liquidation proceedings for the CD will commence.
A deterrence to defaults
The IBC has played a vital role in overhauling India’s archaic insolvency laws. In the first year of its commencement, IBC enabled banks to recover 49.60% of bad loans through either resolution or liquidation. The table below signifies the recovery rate of banks through various channels over the years.
Since the provisions of CIRP came into force in 2016, a total of 4946 CIRPs have commenced by the end of December 2021. 2527 CIRPs were initiated by operational creditors, 2111 by financial creditors and 304 by CDs. Out of the total cases that have been closed, around 47% (1514 cases) have been ordered for liquidation. While the data indicates a high percentage of closures under liquidation, on deeper analysis, it is observed that out of the total liquidation cases, 76% were referred from the erstwhile BIFR regime, with most of such cases being default accounts for over a decade and mostly defunct for years. Refer the table below for further details.
The IBC has accelerated asset enforcement through liquidation. Besides, it can be readily seen that the remaining 53% of cases are those that are either successfully resolved through resolution plan approval or by way of withdrawal or settlement, which indicates a healthy level of performance by the Code. Further, till December 2021, 19,803 applications for initiation of CIRPs with a total underlying default of ₹ 6.1 lakh crore were resolved before admission. Gone are the days when defaulters would misuse and manipulate the ambiguities in the law to delay repayment to creditors. The IBC fosters a credit environment that dissuades promoters from operating below an optimum level of proficiency.
Third pillar of economic freedom
A cornerstone of a competitive and dynamic market is the ease of entry and exit afforded to firms. Barriers to exit weaken market discipline as economic resources such as labour, capital, and assets continue to stagnate in unproductive firms, impeding entry of efficient firms into the market. The IBC provides an integrated “one-stop-shop” insolvency resolution mechanism, giving impetus to the process of ‘creative destruction’. The theory of creative destruction, formulated by economist Joseph Schumpeter, postulates the departure of obsolete or non-competitive businesses as necessary for reallocation of the scarce factors of production to more innovative and efficient firms. Productivity and economic growth are augmented by the utilitarian allocation of resources to successful ventures. By establishing itself as the third pillar of economic freedom (i.e., freedom of exit), the IBC strengthens the market selection process, facilitating the timely exit of non-viable firms and the restructuring of viable firms to preserve value.
Early detection and prevention
To cure the information asymmetry plaguing the Indian credit market, the IBC proposed a regulated information industry in the guise of Information Utility (“IU”). A major milestone towards that end was the establishment of the National E-Governance Services Limited (“NeSL”) in 2017 as India’s first IU. The IUs act as repositories of authenticated financial information on debts and debtors. The information is disseminated for use by institutional creditors in the form of Credit Facility Report (“CFR”). When a default in loan repayment occurs, it is reported to the IU, which then presents the information for verification of the debtor. The debtor is provided three opportunities to repay the debt and cure the default, failing which information about the default is circulated among other creditors.
Needless to say, the IU has reduced the bank’s dependency on debtors for information. The availability of timely financial information improves credit appraisal, i.e., assessment of the creditworthiness of borrowers prior to the grant of credit facilities, as well as monitoring of the repayment behaviour of existing borrowers. Special Mention Accounts (“SMAs”), which are a classification used by banks to identify loan accounts displaying signs of initial stress but have not been classified as NPAs as per Reserve Bank of India (“RBI”) Prudential Norms, can be meticulously monitored to provide opportunity for stress resolution. This ensures minimal value erosion of the underlying assets of the enterprise due to mismanagement or default of the CD. Timely remedial actions can prevent potential slippages into NPAs. Thus, the integration of IUs within the insolvency resolution ecosystem enhances early warning mechanisms for creditors, enabling them to tackle financial distress proactively and facilitating the appropriate resolution or restructuring strategy of the CD as a going concern.
A creditor-centric approach
The IBC represents a paradigm shift from debtor-in-possession to creditor-in-control insolvency resolution mechanism, which has been instrumental in shaping the credit culture of the country. The erstwhile bankruptcy laws promoted a debtor-friendly regime, allowing the defaulting CD to secure a moratorium order and force write-downs on debt repayment. Retaining management in the hands of the defaulting CD led to protracted legal battles and frustrating efforts by creditors including banks, to realise payment of dues. The Code provides for the takeover of control of the management of the CD by its creditors. The creditors, represented by the CoC, and the IP, wield enormous powers of reorganisation, restructuring, and liquidation of the CD. This ensures the revival and continuation of the CD by protecting it from its own mismanagement and liquidation. The supremacy of the creditor-centric approach of IBC was emphasised by the Supreme Court in the case of Innovative Industries Ltd. vs. ICICI Bank (2017), wherein the Court rejected a challenge to the insolvency proceedings on grounds of limitation mounted by the corporate debtor and ruled in favour of the financial creditor. In K. Sashidhar vs. Indian Overseas Bank & Ors. (2019), the Supreme Court acknowledged the commercial wisdom of the CoC, which has been given paramount importance under the IBC for ensuring completion of the resolution process within the timelines prescribed under the IBC. In Essar Steel India Limited vs. Satish Kumar Gupta & Ors. (2020), the Supreme Court held that the NCLT and NCLAT must not trespass upon a commercial decision of the CoC. The decision of how much and what to pay the creditors lies with the CoC, which must reflect three parameters of maximising value of the assets of the CD, balancing the interests of all stakeholders, and ensuring that the CD is kept as a going concern during CIRP. As such, the decision of the CoC in approving or rejecting a resolution plan has been granted primacy by making it non-justiciable.
One of the cardinal principles of commercial law and the bedrock of commercial transactions is the sanctity of legal contracts. This implies legal protection and a framework for the execution of binding contracts. The sacredness of contractual obligations imparts stability to the economic system and dictates that inter-se contractual rights of secured financial creditors must be accorded priority in the event of insolvency. Further, unless the value of securities and collateral held by secured creditors is conserved during CIRP, institutional lenders would be disincentivised from offering low-cost loans, impacting availability of credit in the market. The circulation of low-cost credit promotes entrepreneurship ex-ante, necessitating protection of the contractual integrity of pre-insolvency rights and collaterals of secured creditors. This creditor-tilted approach towards insolvency resolution and liquidation generates revenue through rehabilitation of the sick CD, improves quality and access to credit, and instills enhanced fiscal and credit discipline ex-post.
Credit culture and investor confidence
Credit culture encompasses a set of policies, principles, management behaviours, and philosophies within an organisation or society governing the extension of credit, in particular relating to borrowing, lending, risk assessment, and debt management. A robust credit culture ensures a steady stream of affordable credit to business enterprises, timely servicing of loans by debtors as per agreed interest rates and committed resources for sound risk management. If corporate sickness and NPAs are not addressed in a timely manner, the ability of lenders to effectively allocate resources for businesses will be hindered. Lending will contract, the cost of credit will surge, and aggregate output and employment will plumet, leading to an economic slump.
A multitude of studies have indicated strong causal relations between high creditor protection and a higher recovery rate, a higher credit supply and lower interest rates. By establishing a clear and predictable framework for insolvency resolution, the IBC improves debtor-creditor relations and promotes a healthy credit culture. It encourages borrowers to honour their debt obligations and discourages strategic defaults by imposing consequences for non-compliance (such as loss of control of the company). This fosters a more disciplined approach to borrowing and lending, thereby improving the overall quality of credit in the market. As observed by the Supreme Court in the case of Swiss Ribbons Private Limited, once the resolution plan commences, the CD can repay its debts, which promotes the credit market. As the CD benefits from the resolution, the interests of all stakeholders are looked after.
Transparency, accountability, predictability, and legal and institutional mechanisms are fundamental to investment decisions. As a corollary to the development of a sound credit culture, the IBC enhances investor confidence by promoting the above qualities. This confidence is particularly important for attracting investment, both foreign and domestic and fostering the growth of corporate bond markets, as investors are reassured by the existence of an effective mechanism for debt recovery and resolution.
Resolution of non-performing assets (“npas”)
The IBC has been instrumental in addressing the issue of increasing NPAs in the Indian banking system. By facilitating the timely resolution of stressed assets, the IBC helps banks and financial institutions clean up their balance sheets and allocate capital more efficiently. This, in turn, enables lenders to recycle funds into productive lending activities, thereby stimulating credit growth. The banking sector NPAs in 2015-16 increased from ₹6,119 billion to ₹10,397. By the end of September 2021, the NPAs reduced to 6.90%, as can be observed from the table below.
Further, the table below shows that the amount recovered has been much higher than under any other method in 2019-20 and even for the period 2020-21 where there were restrictions on initiation of proceedings under IBC (due to the COVID pandemic), it accounted for almost 43% of the amount recovered, showing its success. The amount recovered as a percentage of the amount involved was 46.3% under IBC, higher by a very large margin as compared to other methods in 2019-20. In comparison, it was 17.4% under the SARFAESI Act, which had the second highest recovery rate. The same trend was true for the previous two years as well (2017-18 and 2018-19), although this was not so in 2020-21 largely due to the suspension of proceedings on account of the COVID-19 pandemic. This is a noteworthy achievement considering it has been less than eight years since the inception of the Code.
Personal guarantors
Legislative amendments and judicial reforms have played a significant role over the course of the past eight years in evolving the jurisprudential body of the IBC. Among the important ones is the enactment of the provisions in IBC relating to personal guarantors (“PGs”) to CDs in November 2019. The validity of this enactment was upheld by the apex court in the case of Lalit Kumar Jain vs. Union of India (2021). In this case, the Supreme Court held that to achieve the Code’s larger goal of reviving corporate entities, the PG’s right to recover the guarantee from the CD ceases to exist when the guarantee is invoked by a creditor. This was a major departure that greatly enhanced the rights of the creditors against guarantors and promoters, allowing creditors to initiate and maintain proceedings against both CD and its guarantors before the NCLT.
The path forward
As with any new legislation, the IBC also faces implementational challenges, especially regarding delay in admission of insolvency applications as well as the CIRP, greater recourse to liquidation over resolution, vacancy of NCLT and NCLAT benches, inadequate provisions for cross-border bankruptcy and group resolution procedures. Yet, it cannot be denied that over the eight years of its operation, the IBC has achieved several milestones in the form of improved loan recovery, increased out of court settlements, and debt restructuring of listed firms, compared to erstwhile modes of recovery. Being led by market driven and creditor-centric forces, the IBC has infused greater transparency in the resolution process and improved investor confidence, bringing about a perceptible transformation in the prevailing credit culture of the country.
The success of IBC has positively contributed, inter-alia, to remarkable improvement in India’s “Ease of Business” parameters. As per the World Bank’s latest “Doing Business” Report 2020, India’s overall ranking in the ease of doing business had jumped to 63 from its earlier rank of 142 in the year 2015. Additionally, through the consistent interpretation and application of the IBC, the judiciary stood as a bulwark against erosion of creditor’s rights, positively impacting debtor-creditor relationships and ensuring implementation of the spirit of the Code.
In the long run, it is crucial to analyse the IBC through the lens of its legislative intent, being, ex-ante efficient business and resource management through the incentivisation of low-cost credit and proactive monitoring of firm performance; interim efficiency by minimising insolvency costs and timelines; and ex-post efficiency by preserving the going concern value of the business & facilitating asset reallocation for the maximum welfare of stakeholders. To ensure optimum realisation of these objectives, the existing chinks in the system caused by disparity between the letter of law and practice ought to be resolved through periodic review and correctional measures. Further, to meet the challenges of changing market conditions, the IBC must pragmatically strengthen the existing insolvency framework to yield higher economic efficiency and growth.
Patent offices play a very important role in management of IP rights, which include patents, trademarks, registered designs, etc. Worldwide, patent offices promote innovation, protect IP rights, and drive economic growth for businesses and innovators. IP registration at patent offices gives SME’s the ability to succeed in innovation and survive in a competitive business environment. AI is continuing to evolve as an “assistive technology” rather than a replacement technology.
Functions of patent offices
There are various functions of a patent office, some of which are:
Patent offices spread information about IP to the general public.
They maintain IP ownership records and ensure accurate documentation.
Patent offices oversee patent applications, grants, and maintenance.
They play a role in enforcing IP rights and combating unauthorised use by addressing infringement and piracy.
Patent offices help companies protect their confidential information, following Non-Disclosure policies.
They assist businesses in staying updated on competitors’ IP awards, infringements, and claims.
Role of AI in patent processes
The role of AI in patent processes can be:
AI algorithms analyse vast amounts of data (Patents/Trademarks, scientific papers) to identify prior art efficiently.
AI assists in speeding up the drafting of patent applications.
AI categorises patents / trademarks based on content to improve searchability.
AI predicts patent trends to assist strategic decision-making for patent acquisition or portfolio management.
Predictive analytics by AI tools assess patent value and licencing opportunities.
AI identifies potential infringements by analysing existing patents/ trademarks.
AI streamlines patent examination within offices.
AI analyses legal texts, case law, and patent disputes to predict litigation outcomes.
AI monitors online platforms for trademark infringement and copyright violations. Automated takedown requests and brand protection become more effective.
AI analyses scientific literature, research papers, and industry trends. Companies can identify emerging technologies and potential collaborators.
AI-powered platforms connect inventors, startups, and corporations to find solutions and foster collaboration across borders.
AI-driven educational tools enhance IP literacy, which empowers inventors, entrepreneurs, and students with knowledge.
Evolution of patent processes
According to a study conducted by the Japan Patent Office in 2018, examiners without outsourcing at the JPO Patent Office usually spend:
40% of their time is spent understanding the claimed inventions.
30% in prior art search,
10% in understanding the prior art documents found by the examiner, and
20% in evaluation of patentability and drafting first office action.
The necessary skills to execute the first three tasks require higher technical experience. The administrative action of the last task (fourth) and/or issuing a second examination report that contains another notification or a decision for grant or refusal must necessarily be issued by a public servant. Some national laws require an applicant to submit prior art documents known at the time of filing a patent application to assist the examiners of the patent office in conducting a substantive examination.
The substantive examination of the patentability requirements and the decision to grant or refuse a patent application should remain under the authority of the examiner. The success of the outsourcing programme will depend on the maintenance of the quality of service. In Brazil, both searches and examinations are made almost simultaneously by the same examiner. In EPO, the examination will also be done by the same examiner who made the search under the BEST programme (Bringing Examination and Search Together). The search report is transmitted to the applicant before publication.
Challenges faced due to traditional patent examination
There are various challenges faced due to the traditional patent examination, which are:
Prior art can include previously patented inventions, published articles, academic papers, technical documentation, product manuals, and even publicly available information on the internet. The sheer volume and diversity of prior art make the patent examination process complex and time-consuming.
Patent examiners in different places and legal systems might assess patent applications differently. This happens because they each have their own understanding of patent laws. Additionally, they have varying levels of resources and different levels of expertise in different fields.
Manual review methods used by patent offices cause delays in approving patents, which slows down product development and investment.
Traditional methods of checking patents have trouble understanding all the tricky technical details in really complicated applications. This makes it tough to examine patents properly.
AI automates administrative tasks in processing patent applications, which facilitates managing paperwork and organising documents efficiently. It reduces the workload for patent clerks and lawyers. So, it allows them to focus on strategic aspects like claim construction and strategy development. It is important to make sure all the information in a patent application is correct. It helps prevent delays or rejections. This means double-checking details like applicant names and inventor information to keep the process accurate and reliable.
Challenges faced in managing large volumes of patent applications
In 2022, around USD 2.476 trillion was estimated to be invested in research and development (R&D) worldwide. This made many people apply for patents. Because of this, patent offices got very busy and couldn’t process patents quickly. This made inventors unhappy because it took too long to get their patents approved. Also, prior art searches take a lot of time and require special knowledge.
Slow patent processing causes legal uncertainties and stops innovation. It also makes companies not want to spend money on research and development (R&D), which reduces a country’s economic competitiveness.
Innovation and technological advancement in patent procedures
AI can compare information in patent applications with existing patents and other documents. It finds similarities that examiners can check when looking for earlier inventions. Using AI tools helps examiners go through applications faster for more than 70% of them.
Searching for earlier inventions, called “prior art search,” is hard and takes a lot of time. A study by the European Patent Office found that going through about 1.3 billion technical records across 179 databases gives about 600 million documents every month.
The Canadian Intellectual Property Office (CIPO) uses AI search engines to see connections between references, applications, and the latest technology. The Japan Patent Office (JPO) also uses AI to organise files. It gives relevant patent categories and words and ranks earlier inventions based on their importance. The United States Patent and Trademark Office (USPTO) uses AI to help decide if something can get a patent and to look at the history of patents.
INPI (National Institute of Industrial Property), the Brazilian patent office, uses AI tools and has made it quicker to examine and search for patents. It has reduced the time needed by up to 50%, or 75%, for some applications. This has also helped cut down the overall number of pending patents by 80%.
Role of artificial intelligence in patent offices
AI-assisted workflow integration leads to easy access and analysis of supporting documents. It tracks certain reference documents that are returned and how results are generated. These are useful for patent prosecution and internal quality reviews. AI is revolutionising patent workflows by automating tasks that accelerate patent filing and improve the accuracy of assessing existing patents and literature.
The “out-of-the-box” property of many AI models and techniques, when combined with large data, cloud computing, 5G, or the Internet of Things (IoT), enables AI to solve technical problems in almost any domain. It will also play a major role in identifying protein structures, drug interactions, and analysing RNA and DNA structures. AI predictive models are capable of forecasting patent trends, gauging application success, and even anticipating litigation probabilities. Additionally, AI aids in IP by spotting potential patent infringements
Google Cloud’s white paper introduces a methodology to train a BERT (bidirectional encoder representation from transformers) model on over 100 million patent publications, enabling various use cases. These include prior art searching, generating classification codes, and autocomplete features. It was released by Google in 2018. Its widespread adoption across domains like search and chatbots makes it a powerful tool. Patents pose unique challenges due to their large, complex, and context-dependent nature, making them ideal candidates for BERT’s capabilities to assist patent examination and spur innovation in the patent research community.
IP Australia uses the TMICS (Trade Mark International Classification Service) API for searching the Madrid Goods and Service (MGS) database, improving the quality of trademark applications when filed overseas. The Trade Mark Precedent Identification (TMPI) tool for Trade Mark Examiners uses various NLP techniques to enhance search quality and consistency. TM Checker is a free AI-assisted trademark availability check tool useful for educating small to medium enterprises about eligibility and potential distinctiveness issues for proposed trademarks.
Patsnap is a commercially available AI tool used for providing insights into markets, competitors, and partnership opportunities by analysing patents, scientific journals, and litigation. Questel, STN, and Clarivate Analytics are commercially available semantic AI search engines that assist patent offices in conducting searches for prior art and citations using machine learning algorithms.
PQAI (Patent Quality Artificial Intelligence), Ambercite, IPRally, Patseer, and InnovationQ Plus are a few examples of the AI-powered patent search databases.
Automation of patent search and examination
The European Patent Office formed a dedicated data science team with the goal of applying AI and ML technologies to increase the efficiency and quality of the patent grant process in 2019. These projects, focused on natural language processing, computer vision, and machine translation, are useful to the patent grant process in the areas of search, classification, and machine translation.
The five largest IP offices (the EPO, JPO, KIPO, CNIPA, and USPTO) receive over 80% of all patent applications in the world. These five offices are collectively known as the IP5. They cooperate on a variety of projects to improve and harmonise the patent system around the world. In 2019, the IP5 offices decided to advance their cooperation in the area of new emerging technologies and AI by setting up a special task force.
The IP5 partner offices and WIPO are currently exploring the impact on legal, technical, and policy aspects of new technologies and AI. The aim is to pinpoint areas such as joint IP5 responses by employing AI tools and systems support for patent examiners. They are also focusing on improving the patent grant process to apply the patentability requirements to inventions in the field of AI and AI-generated inventions.
Enhancing efficiency in patent prosecution
AI tools assist patent attorneys in drafting comprehensive responses to office actions by quickly analysing reference patents, which reduces the time and costs associated with prosecution. These tools can also generate first drafts based on similar rejections and responses. It helps applicants plan patent allowance applications by predicting success or advising on the likelihood of appeal.
AI initiatives in the European Patent Office (EPO)
Image search (trademark, design): EPO utilises ML and AI for patent searches, including automatic figure and image searches for patent drawings.EUIPO (European Union Intellectual Property Office) has created an in-house image search system integrated into eSearch Plus, enabling users to search for trademarks and designs using images.
Patent prior art search: The EPO employs AI for patent searches, including automatic prior art search and query generation, using both in-house and commercial solutions.
Patent/Trademark classification: EPO employs AI for patent classification: pre-classification of incoming applications, document classification according to CPC, and re-classification for CPC updates.
EUIPO (European Union Intellectual Property Office) utilises AI-based semantic search in Easy Filing to assist users in finding appropriate protection for their trademarks by enhancing the accuracy of goods and services searches.
EUIPO has created AI-based tools to extract key information from letters and make decisions based on this data. These tools are used to analyse classification, formalities, and AG deficiencies in trademark applications, as well as to assess deficiency rates and grounds in design applications.
Patent examination management: The EPO employs ML and AI for patent file management, enhancing processes like annotation and problem detection through the Patent Document Model (PDM) in the Knowledge and Information Management Environment (KIME) for data enrichment.EUIPO has developed an algorithm to predict the outcomes of comparisons between pairs of goods and/or services using historical data and identifying semantically relevant matches. Currently, the tool is accessible only to examiners.
Machine translation: The EPO employs Patent Translate and is developing its own machine-learned translation tool for patent documents. This resource is accessible to the public via EPO patent databases and is utilised by trained examiners at other patent offices as well.EUIPO employs machine translation for Case Law documents via eSearch Case Law, offering automatic translations on its website for EUIPO decisions to help users understand the main content.
Data analysis: The EPO Data Science team uses open-source software and examiner knowledge to make AI systems. These systems look at trends in computer-implemented invention technology.
Helpdesk services: The EU Intellectual Property Office (EUIPO) now has its first chatbot, which is part of easy filing. It assists users with trademark questions by giving standard answers and can connect with a human agent if needed.
The US Patent and Trademark Office (USPTO) made an AI tool that automatically classifies patent applications using the CPC system. This saves the USPTO money in getting CPC data, and it also saves time and money for patent applicants.
Implications for patent office personnel
AI has made patent searches easier and quicker. Before AI, examiners had difficulty finding old patents because of the different words used. But now, AI looks at similar words and how they’re used to find patents better. It helps examiners quickly find old patents during reviews. AI also lets examiners focus on harder tasks.
People who work in patent offices need to learn about AI and how it works. Training should be easy to access and affordable for everyone. We need clear rules to decide who owns the results that AI finds. It’s important to protect patent information and make sure AI is fair for everyone. These changes help make sure the patent system works well. AI builds trust with people when it’s honest about how it works.
Challenges and limitations of AI in patent processes
There are various challenges due to the usage of AI in patent processes, some of them are:
Patent documents use special words and cover many years, which makes it hard to have all the information and keep it consistent.
It is very difficult to get all the necessary information because people are concerned about their privacy. We must gather data in an ethical manner to properly train AI models, and collaborate closely with patent offices.
Teaching AI models to draft patents well requires understanding legal and technical terms, as well as expertise in particular areas.
AI programmes might have biases based on the data they’re trained on, like gender or race biases. Since AI learns from provided data, it’s crucial to check that it’s fair and unbiased in its analysis.
AI-created inventions bring up legal questions about who owns and invents them. Some countries accept AI-made inventions, but others demand humans be involved in making them.
Due to the unique combination of legal and technical language present in patent documents, AI models require specialised training to accurately draft patents.
Assessing patent validity and infringement using AI may require more resources.
AI encounters challenges with technical and legal terminology, particularly when operating across different languages. There is a risk of AI misinterpreting patent information, which leads to errors in assessing patent validity, infringement, and licencing.
AI models sometimes lack transparency, operating as “black boxes,” which can make it difficult to understand the rationale behind their decisions.
Small patent offices in some areas struggle to use advanced AI systems because they don’t have enough patent data. Sharing data is the solution for this problem.
AI systems might accidentally share private information and have biases, so we need to be careful. Laws like GDPR make sure that people’s privacy is protected.
Importance of human oversight and quality control
AI systems are good at tasks like recognising patterns and analysing data, but they can’t understand or make judgements like human experts can, especially when dealing with complex inventions or unusual prior art. So, it is important to see AI tools as supplements, but not as replacements for patent examiners.
Human expertise is needed to guide AI systems and make sense of their results, which ensures that final patent decisions follow legal and ethical rules. Patent professionals provide important legal and contextual knowledge for AI-based patent analysis. Human intervention ensures AI decisions match human values. A mix of AI’s efficiency and human understanding is required to keep patent quality high.
Future directions and opportunities
Potential future developments and innovations for patent offices
EPO has launched the “Master the Prior Art” programme to improve classification procedures earlier in examinations. It increases search accuracy and retrieves relevant documents. The digital patent granting process integrates artificial intelligence, machine learning, and other technologies systematically.
In the digital patent granting process, AI-assisted solutions provide different functions. These include assigning patent classifications, tools to convert documents, APIs for easy document delivery, and online tools for reviewing and analysing patents.
Advanced neural networks are improving the accuracy of extracting information from patent documents. AI-assisted patent searches might soon include text, images, and voice for a better search experience. Blockchain technology could ensure secure and transparent patent searches. Advanced AI algorithms can predict potential prior art, which helps spot issues early in the patent process.
AI algorithms could help with valuing patents and negotiating licences. The future of AI in finding patents seems bright. Quantum computing is bringing big changes to how patents are analysed. AI platforms help inventors, lawyers, and experts work together to speed up patent applications. Patent offices use AI to make reviews better and patents of higher quality. Patent searches benefit from AI’s improved language understanding, which leads to greater accuracy.
AI needs to get better at understanding images and diagrams in patents, which means we need to keep improving computer vision and deep learning. Tools that use AI to find patents should be transparent so that people trust them.
Opportunities for collaboration between patent offices, technology developers, and research institutions
Below are several promising opportunities for collaboration among patent offices, technology developers, and research institutions.
Patent offices and research institutions can team up to share patent data for trend analysis. This data helps technology developers create AI models for predicting patent outcomes. It could be useful to identify infringements and assess patent quality.
Patent offices and institutions can collaborate on research projects to develop AI algorithms for better prior art searches and to improve patent classification systems. They can also work on automating patent translation and document processing to enhance patent examination processes.
Technology developers and research institutions can offer training programmes for patent examiners and office staff. These programmes include workshops, webinars, and knowledge-sharing sessions. The focus is on AI, data analytics, and emerging technologies.
Patent offices can encourage jointly organised hackathons for technology developers. These events aim to create solutions for specific patent-related problems. They foster creativity and lead to novel tools for patent offices.
Online platforms serve as a collaborative effort for patent offices, AI system developers, and AI researchers to share ideas and propose patent-related solutions.
Guidelines for AI usage in patent offices can be collectively formulated to address concerns regarding bias, transparency, and fairness in AI algorithms.
Technology incubators and accelerators can collaborate with patent offices to provide support for startups. They also offer mentorship, access to patent databases, and legal guidance.
Conclusion
AI can help patent offices handle more patent applications faster and more accurately. This means better management of intellectual property and more innovation. Patent-related AI systems face challenges including incomplete data, privacy concerns, and biases in AI algorithms. AI-driven systems improve patent search work and examination, streamline workflow, and help reduce backlog. It can also enhance patent quality, which leads to innovation and economic growth.
This article is written by Shafaq Gupta. This article provides a comprehensive overview of the judgement delivered by the Hon’ble Supreme Court of India in R. Lakshmi Narayan v. Santhi. It deals with insanity as a ground for declaring a marriage null and void as per Hindu Marriage Act, 1955 and the degree of burden of proof upon the person who files a petition for the same. The article delves into the various conditions necessary for the fulfilment of marriage and on what grounds they can be considered voidable.
Table of Contents
Introduction
Marriage can be defined as a union between a man and a woman. In earlier times, the main purpose behind marriage was the procreation of children, but the perception has changed nowadays. Rather than a sacrament, it has become more of a social contract that affects all the spheres of life of two individuals, whether social, personal or psychological. Hindu marriages are governed by the Hindu Marriage Act, 1955 (herein referred to as HMA). It provides for the various conditions of marriage which must be fulfilled for a valid marriage and also the grounds on which the marriage can be nullified.
The case of R Lakshmi Narayan v. Santhi (2001) deals with insanity as a ground to nullify a marriage solemnised under the HMA, 1955. According to the law, one of the parties to a marriage must be suffering from a mental disorder. It should be to such an extent that he/she becomes unfit for marriage and procreation. These conditions must be met in order to claim insanity as a ground for annulment of marriage. In this article, we will deal with this issue in detail and also analyse the judgement.
Marriage between R. Lakshmi Narayan and Santhi was solemnised on 01-11-1987 as per the Hindu rites and customs. Only after meeting each other and having a conversation, the decision of marriage was made. They lived together after the marriage for around 25 days. After that, they separated, and the husband (appellant) filed a petition before the trial Court to declare their marriage null and void under Section 5(ii)(b) and Section 12(1)(b) of HMA, 1955.
The appellant alleged that his wife (respondent) had an incurable mental condition, and he came to know about the same after their marriage. He had inquired about the same from her parents, and they had also revealed that their daughter had been suffering from a mental condition since her childhood. He contended that he had made enough efforts to cure her disease, but no results were seen. He also said that her wife had no interest in continuing a marital relationship with him. The respondent refused to accept any of the allegations and told the Court that she did not have any mental illness and wanted to continue her marriage with the petitioner.
The Trial Court assessed the situation based on the evidence produced and held that the respondent was not suffering from any incurable mental illness as required under Section 5(ii)(b) of the Act. The burden of proof was on the petitioner, and he could not prove his contentions beyond reasonable doubt. The behaviour of the respondent was also observed while questioning in the court, and she was able to understand the nature of questions asked from her and answered each of them very clearly. The Court opined that she was good enough to continue her marital relationship and even cohabited with the petitioner. The petition filed by the petitioner was not found to be sustainable as it was filed within one year of marriage. The Trial Court ruled in favour of the respondent and did not declare the marriage null and void. It dismissed the petition.
Aggrieved by the judgement of the Trial Court, the petitioner filed an appeal before the Hon’ble High Court. The High Court overturned the judgement pronounced by the Trial Court and allowed the petition. It ruled that the trial Court made an error by not considering the documentary evidence of the prescription issued by Dr. Papa Kumari of Chennai, which showed that the respondent was mentally ill. There had been no cohabitation between the parties as the parties had separated shortly after the marriage. The Court considered all the evidence produced by the respondent in which she herself admitted that she had some mental condition since childhood and used to take injections once a month. Based on these factors, the High Court declared their marriage null and void.
Aggrieved by the judgement of the appellate Court, the respondent filed a second appeal in the High Court, which was allowed. In the second appeal, the High Court overturned the judgement pronounced in the first appeal and restored the judgement pronounced by the Trial Court. The reason stated behind such a decision was that the appellant had sufficient time as well as the opportunity to meet the respondent and gain knowledge about her mental condition. No fraud or misrepresentation had been committed by the respondent, as both of them had met each other before marriage. The Court rejected all the allegations made by the appellant and did not declare their marriage to be void.
The appellant felt very discontented and filed a special leave to appeal under Article 136 of the Constitution of India.
Issues raised
Whether the special leave to appeal filed by the appellant with regards to declaring his marriage null and void under Sections 5(ii) (b) and Section 12(1)(b) of HMA, 1955, is admissible?
Does the burden of proof lie on the appellant to prove his allegations beyond reasonable doubt for marriage to be declared void?
Arguments of the parties
The following arguments were made by the petitioner and the respondent to substantiate their allegations:
Petitioner
The appellant husband in the present case argued that his wife was suffering from an incurable and chronic mental disorder and was unfit to continue the marital relationship with him.
He alleged that the respondent was found to be drowsy on the night of the marriage and refused to cohabit with him on the pretext of suffering from some mental condition.
The appellant contended that the respondent herself admitted that she married due to the pressure of her parents and did not want to continue the marital relationship.
On being asked, the father of the respondent told the appellant that his daughter had been suffering from a mental disorder since childhood and was undergoing treatment for the same.
The father of the respondent said that he tried to cure the ailment of his daughter but had not been successful yet.
The prescription issued by Dr. Papa Kumari of Chennai was given to the appellant by the respondent’s father, which showed that Santhi used to take injections once a month and also consumed drugs in case of severe headaches.
The appellant finally argued that based on the above facts and circumstances, he wouldn’t be able to continue living with his wife and that their marriage should be declared null and void on the grounds of insanity of the respondent and his petition be declared admissible in the Court.
Respondent
The respondent in the present case denied all the allegations the petitioner made and said they were untrue.
The respondent alleged that she was not suffering from any kind of mental disorder and was fit to continue the marital relationship.
She also contended that she cohabited with the appellant and never showed any disinterest in continuing a marital relationship with him.
The respondent told the Court that they both were living a happy married life and also went to various temples. She expressed her will to continue marriage in a peaceful manner.
The respondent argued that it was the appellant who was interested in a second marriage so that he could get more dowry. Due to this reason, he filed a petition to declare the marriage null and void.
The respondent finally contended that it was due to the denial by the appellant to continue marriage that she was not able to live a normal married life.
Involved legal aspects
The relevant provisions of HMA,1955 dealt in this case are as follows:
Section 5: Conditions to be fulfilled for a Hindu marriage
For the solemnisation of marriage between two Hindus, the following conditions must be met-
Neither of them must be having a spouse living at the time of marriage.
They should be capable of giving valid consent and must not be of unsound mind.
Even though they are capable of giving valid consent, they must not be suffering from a mental disorder to such an extent as to be unfit for marriage and unable to procreate.
He/she must not suffer from continuous attacks of insanity.
At the time of marriage, the age of the bride must not be less than 18 years, and that of the bridegroom must not be below 21 years of age.
The parties to a marriage must not be within the degrees of prohibited relationship unless their custom allows so.
The parties to a marriage must not be sapindas of each other unless their custom allows so.
Section 12: Voidable marriages
A voidable marriage can be nullified on the following grounds-
The marriage has not been consummated because the respondent is impotent.
Any marriage which has been solemnised in breach of conditions specified under clause (ii) of Section 5.
The consent of the petitioner to the marriage was obtained by force
The respondent was already pregnant before the marriage by someone other than the petitioner.
Judgement in R. Lakshmi Narayan vs. Santhi (2001)
The Hon’ble Supreme Court of India dismissed the appeal filed by the appellant with no order as to costs. Based on the facts and circumstances of the case, the Court did not find it appropriate to interfere with the judgement of the High Court by exercising its jurisdiction under Article 136 of the Constitution of India. The Court denied the request made by the appellant to remit the case to the High Court for fresh disposal. However, the judgement delivered by the High Court was not found to be satisfactory as it failed to frame any questions of law as per Section 100 (second appeal) of the Code of Civil Procedure, 1908.
Rationale behind this judgement
The rationale behind the present judgement was that for the declaration of the marriage as null and void as per Sections 5(ii)(b) and Section 12(1)(b) of HMA, 1955, the case must be proved beyond reasonable doubt. It had to be proved that one of the parties to the marriage had been suffering from a mental disorder to such an extent that he/she became unfit for marriage and could not procreate. The fact that the respondent was suffering from some mental disorder and they did not cohabit together was not sufficient to come to a conclusion that the respondent was unfit for marriage. The burden of proof lies on the person who files the appeal for the same. It must be an established fact that the wife cannot continue to live a normal married life. It was concluded that the decision cannot be made on the basis of mere possibilities. The degree of defect must be taken into consideration along with all other relevant factors.
The judgement of the High Court was found to be unsatisfactory by the Hon’ble Supreme Court. The Court did not find it reasonable to declare the marriage null and void, as the High Court overlooked many relevant aspects other than the fraud and misrepresentation about the mental condition of the respondent by her parents. It just focused on the allegations of fraud and misrepresentation done by the parents of the respondent. The High Court did not comply with the mandatory requisites given under section 100 of the Civil Procedure Code as it did not frame any relevant questions of law in the judgement. Therefore, The marriage could not be declared void as per the provisions of the Hindu Marriage Act, 1955.
Conclusion
In conclusion, we can say that the Supreme Court was justified in dismissing the appeal as the degree of defect of mental disorder should be such, which renders the person unfit for marriage and procreation. The nature and trend of marriages have changed in recent times. Not having cohabitation for a month and suffering from a mental disorder does not render the person unfit for marriage. The marriage, which is the holy union of a man and a woman and carries societal as well as family obligations, cannot be annulled on the basis of mere possibilities. The petitioner needs to prove his allegations beyond reasonable doubt for it to be successful.
Frequently Asked Questions (FAQs)
What do you mean by the word ‘voidable’?
Voidable basically means it is not void per se but is capable of being nullified or invalidated. It can be invalidated on the grounds provided in Section 12 of HMA,1955.
What are the three parameters of insanity as provided in HMA, 1955?
The three parameters of insanity are provided under Section 5 of HMA, 1955. These are:
For a valid Hindu marriage, the person must not be of unsound mind and should be capable of giving consent to marriage.
Though capable of giving consent, he/she must not suffer from any mental illness which renders him/her unfit for marriage and procreation.
He must not suffer from recurrent attacks of insanity.
What is the difference between void and voidable marriages?
Void marriages have been defined under Section 11 and voidable marriages under Section 12 of HMA,1955. Void marriage basically refers to a marriage that is void ab initio i.e. invalid from the very beginning. The child conceived out of a void marriage is considered to be legitimate, but maintenance cannot be claimed by the wife. Voidable marriages refer to a marriage which can be declared void by a decree of the Court, and maintenance can be claimed out of such marriages.
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This article is written by Shubham Choube. This article provides a comprehensive analysis of the case of Jayantilal Amrit Lal Shodhan vs. F. N. Rana (1963). In this article, the author has delved into the details of the case, along with the arguments presented by both the parties, constitutional aspects involved and a critical analysis of the judgement.
Table of Contents
Introduction
The Supreme Court, in the case Jayantilal Amrit Lal Shodhan vs. F. N. Ranaand Others 1963, dealt with a question which went against the very basic principles of Indian Constitution and the rights enshrined in it. The question was to determine the extent to which the state might use its authority, powers, and discretion to handle the situation without jeopardising citizens’ civil liberties.
It is a question that lies at the very heart of any democratic state, that has to determine how much it is willing to sacrifice for the principles of rule of law when the liberties are at stake. This involves more understanding of the Constitutional provisions governing India with a special focus on the provisions on property, due process and equality clauses. This case was a classic example of the balance, which has to be maintained between the executive branch’s sovereignty and personal freedom.
On one hand the state has a legal right to pass or enforce laws that will be useful and helpful in regulating the welfare of the people, development of trade, commerce and what can be called social justice. On the other hand, such actions should not deny or infringe on the rights and freedoms given by the Constitution to each and every person. It was, therefore, a great task for the Supreme Court to not only provide the plain meaning of the laws but at the same time the spirit of the laws. It defined the nature and the scope of legal norms governing such matters as property rights, legal procedures, and this issue of state intervention.
The case reflects the core values of justice and democracy as well as the place of individual citizens in the political process and the role organised into the state at the same time it is necessary to remember that the decisions made in that case are still relevant because the ruling given by the Supreme Court in this case serves as a benchmark and an enshrinement of key principles of justice, liberty, and equality as instituted in the Constitution of India.
Details of the case
Name of the case: Jayantilal Amrit Lal Shodhan v. F.N. Rana and Ors.
Name of the appellant: Jayantilal Amrit Lal Shodhan
Name of the respondents: F.N. Rana and Ors.
Date of the judgement: 5 November, 1963
Facts of the case
On 1st May 1960, as a result of the reorganisation of the State of Bombay under the Bombay Reorganisation Act 1960, out of the territory of the State of Bombay, two states were formed – the State of Maharastra and the State of Gujarat. The President of India on 24 July, 1959 issued a notification regarding land acquisition under Article 258 of the Constitution of India. The Commissioner of Baroda Division, State of Gujarat, exercised the powers entrusted on him by the said notification and published a notice under Section 4(1) of the Land Acquisition Act I of 1894 (for brevity ‘Act’) and on 01 September 1950, notifying that a piece of land Part of Plot No. 686, Ellis Bridge Town, which was owned by the appellant was needed for a public purpose i.e, constructing of a Telephone Exchange Building in Ahmedabad. Also the Commissioner authorised an Additional Special Land Acquisition Officer to carry out the functions as Collector under the Act. The appellant filed objections to the proposed acquisition of the land under Section 5A of the Act. After considering the objections raised by the appellant, the Collector delivered his report to the commissioner and another notification on 11 January 1961 under Section 6(1) of the Act was issued, in which he declared the acquisition of the notified land. Thereafter the appellant approached the High Court of Gujarat to challenge the notification and to seek a writ of mandamus under Articles 226 and 227 of the Constitution. However, the petition was dismissed by the High Court. Therefore, accompanied by a fitness certificate under Articles 132(1) and 133(c)(1) of the Indian Constitution, this appeal has been preferred.
Whether this appointment constituted an improper sub-delegation of authority or was a legitimate exercise of the powers entrusted by the President?
Whether the Presidential notification issued on July 24, 1959, under Article 258 of the Constitution, retained its force and effect after the Bombay Reorganisation Act, 1960 came into force?
Whether the Commissioner of the newly formed State of Gujarat had power under the Land Acquisition act in terms of the Presidential notification?
Arguments of the parties
Petitioners
The following were the contentions of the appellants:
That the Commissioner had no authority in operation of the events that had happened that is to issue the notifications under Sections 4 and 6 of the Land Acquisition Act of 1894 in exercise of the authority purported to have been derived from the notification issued by the President on July 24, 1959 under Article 258(1) of the Constitution whereby the authorities of the Union Government in so far as the matters relating to the acquisition
Proceedings under Section 5A of the Land Acquisition Act is quasi-judicial in nature, the Commissioner is not authorised to assign authority for reporting under that Section, and the Commissioner is not even permitted to consider the report submitted by the Collector.
That the power exercisable by the President under Article 258(1) of the Constitution relates to an executive power. It empowers the President to delegate functions to a State Government or any of its officers. The appellant claimed that this practice of entrusting the executive powers does not fall under the meaning of the word “law” under the Section 87 of Bombay Reorganisation Act. Hence, the Commissioners of the new State of Gujarat were not legally equipped to act on behalf of the Union Government of India under the provisions of the Land Acquisition Act as per the Presidential notification after May 1, 1960.
The appellant supported this plea by highlighting the split of Part XI of the Constitution into two chapters: In Chapter I, numbered Articles 245 to 255 which covers the subject of division of legislative authority and Chapter II, Articles 256 to 261 which contains provisions concerning the administrative relations between the States. Article 258 falls in the second chapter, making it clear that it is not a legislative provision but rather an administrative or executive one. The argument was further supported by the background of Articles 256 and 257 which seems to deal with exercise of the use of the executive authority to compel obedience to the parliamentary laws and extinguish obstruction of the Union executive authority. Thus, the appellant argued that the functions entrusted by a Presidential notification under Article 258 cannot be regarded as law under Section 87 of the Bombay Reorganisation Act.
Respondent
The following were the contentions of respondent:
According to the respondents, only the Presidential notification under Article 258 issued on 24 July, 1959 had the force of law. In their view, this meant that the notification was subject to the Bombay Recognition Act of 1960 (Act No. XI of1960) but was not forwarded by that Act. Referring to Section 82 and 87 of this Act it was argued that the legal instruments including the Presidential notification were still existing and valid. Thus, the Commissioner had legal right to execute the functions, the Union Government of India vested him under the provisions of the Land Acquisition Act.
The respondents argued that the notification made under Article 258(1) of the Constitution, the Commissioner had the authority to appoint a Collector as defined under Section 3(c) of the Land Acquisition Act. They pointed out that this appointment did not amount to any type of improper sub-delegation of authority.
According to the respondents, the tasks that were carried out under Section 5A of the Land Acquisition Act were administrative in nature even though they may have been quasi-judicial in the eyes of law. They asserted that these functions can be exercised by the Collector or any other officer that may be appointed by the proper government for the purpose of performing the functions of the Collector mentioned in the Act. They explained that this was precisely what the Commissioner had done through the said Presidential notification. Therefore, the Commissioner could lawfully appoint the Collector to execute these functions even though they were partly quasi-judicial and partly administrative.
Laws involved in Jayantilal Amrit Lal Shodhan vs. F. N. Rana and Others (1963)
Constitution of India
Article 73(1) of the Constitution
India being a federal nation there is definitely a division of powers between the central and state government which has its own benefits and drawbacks. The executive power of the Union is to be exercised by the President, with reference to the Constitution of India. However, it cannot be exercised unless one knows what is meant by the term executive and what these executive powers entail. In accordance with the Constitution of India the Union Executive is stated in Part V under Article 72 to 78 and the State Executive in the Part VI under Article 153 to 167.
It is imperative to note that the actual meaning of the term “executive functions ” is not articulated in the Constitution since they are the residue of the function after legislative and judicial functions have been stripped out. In its literal sense, it refers to the enforcement of the law; however, in the broader sense, it includes “preservation of law and order, administration of Government property and state owned enterprises and services, formulation and direction of foreign policy conduct of warfare and the supply or control of such services such as education, health, transport and financial assistance and insurance by the state.” The vagueness of this definition raises the question of how much of the executive authority can be vested in the Union. However, Article 73 serves as a shell and aids in establishing the extent of executive power.
The Article 73(1) states that subject to the provisions of this Constitution, the executive power of the Union will encompass the subjects over which Parliament has authority to enact legislation; and to the exercise of such rights are exercisable by the Indian Government by virtue of any treaty on agreement subject to the provisions of this Article, the executive power of a State shall not, where the State Legislature has also authority to enact legislation, extend in any State to matters with respect to which the Legislature of the State has power to make laws.
Article 256 of the Constitution
According to Article 256 of the Indian Constitution, every state’s executive power must be applied in a way that ensures compliance with Parliament’s laws as well as any existing laws that apply to the state. This provision authorises the Union government to issue directives to states as needed for this purpose. Essentially, Article 256 requires state governments to follow and implement legislation made by the central government, ensuring legal uniformity and coherence throughout the country. If a state fails to comply with these directives, it may be interpreted as a breakdown in constitutional machinery, potentially leading to President’s Rule under Article 356. The Article also grants the union government legislative authority to direct states to adopt parliament-enacted laws in order to avoid a conflict between the centre and the states.
Article 258 of the Constitution
According to Article 258 of the Indian Constitution, the President of the country has the power to entrust the implementation of the Union function to any State Government or its officers if required. This provision is important to allow the central government to discharge its responsibilities by relying on the administrative apparatus of state governments.
Article 258(1) gives the President power to delegate either conditionally or unconditionally to the State Government or any of its officials any of the executive powers of the Union, if the State Government gives its consent to the delegation. This delegation can be done in respect of any matter to which the executive power of the Union extends. This provision promotes the integration of the Union with the state governments in the conduct of their affairs by enhancing the co-ordination and effective implementation of most of the Union policies within the states.
The Article 258(2) enables the Parliament to make laws that enable the central government to delegate powers and set duties on the state authorities. This means that, consequent to legislation enacted with its approval, Parliament can delegate powers to state officials to discharge functions incidental to the Union. Such laws give legal backing that enables state authorities to legally and efficiently undertake such delegated functions.
In this regard, Article 258(3) has elaborated that any act done by state authorities under powers entrusted by an order of the President under clause (1) of this Article shall not be regarded as an act of the State Government. This provision affirms that while the implementation of the functions of the Union is vested in state officers, it is the Union Government that is charged with responsibility and accountability.
Thus, Article 258 of the Indian Constitution advances administrative rationality and co-operative federalism since it allows the Union government to assign its executive powers to the State Government effectively resulting in harnessing local administrative resources for optimal governance.
Article 372 of the Constitution
Article 372 of the Indian Constitution is vital in legal evolution during the transition from British rule to post British India. It states that the law of the land at the time of adoption of the Constitution shall remain in force until it is changed, abolished, or amended in accordance with legal procedures. This Article fills this gap by avoiding the possibility of a void that would occur if all the laws that were in force during the British era become unconstitutional after the enactment of the new Constitution.
It is therefore apparent that for the purpose of preserving the legal order and authority, the provision in Article 372 is significant. Thus at the time of independence, India had the monumental task of evolving a new legal order without interrupting the normal working of the administration or the Justice delivery system. The framers of the Constitution also made clear that many of the previously existing laws would remain in force, which allows the government to function without interruption, and people would always know what is legal and what is prohibited.
Moreover, through Article 372, the country can work towards changing the laws with much more care and precision. It recognizes the fact that although the new Constitution greatly reforms the government system, it is politically unwise and may cause instability to change the entire legal framework at once. It empowers the legislature to review the colonial laws and replace them with the post-independent desired laws of the nation.
Consequently, Article 372 can be hailed as the wisdom of the framers of the Constitution. It also emphasises the significance of maintaining legal continuity, especially when transitioning from colonial rule to a sovereign democratic republic, so that the newly established government could begin its operation efficiently and also prepare for the progressive legal changes that are envisioned.
Land Acquisition Act (I of 1894)
The first Indian Land Acquisition Act was passed in the year 1894 with the purpose of bringing legal structure in order to acquire private property for public utility including transportation, town planning, industrialization and other public purposes. The Act sought to provide a structural and equitable means of attaining land, while at the same time providing for the rights of the land owners relative to the process of public development. It provided for the manner of giving notices to the land owners, for affording consideration to their objections, for assessing the compensation and for entering upon the land acquired. It intended to allow for the development of public projects while at the same time ensuring that the process of land acquisition was fair, just and transparent.
Section 4(1) of Land Acquisition Act
Section 4(1) states that when it appears to the appropriate government that land in any locality is needed or is likely to be needed for any public purpose, a notification to that effect shall be published in the Official Gazette and in two daily newspapers circulating in that locality, of which at least one shall be in the regional language, and the Collector shall cause public notice of the substance of such notification to be given at convenient places in the said locality (the last of the
Section 5A (2) of Land Acquisition Act
Sub-Section (2) of Section 5A gives the owners of the land an option for raising an objection to the intended acquisition. This means that once a notice under Section 4(1) is published, the appropriate government or any other authority to whom power is delegated has to consider these objections. The land owners have the chance to state their issues and explain why they are against the acquisition. This subsection makes the acquisition procedure as similar to a legal process as possible in order to assure legal justice and accountability.
Section 6 of Land Acquisition Act
Section 6 relates to the acquisition of the land by the appropriate government for public interest. After the government is done with the consideration of the objection if any then the government delivers the declaration in the official gazette. This declaration enables the acquisition to continue and it is an important legal step that transfers the ownership of the land to the government so that it can take physical possession of the land.
Clause 3(ee) of Land Acquisition Act
This clause also establishes the meaning of the term “ Collector ” in the context of the Act. The Collector is an official of the government who works in the area of land acquisition; who is also involved in the activities such as measurement of the land, assessing the compensation, and ensuring the whole process is lawful. It is thus evident that the Collector has an important position when it comes to implementing the land acquisition process.
Section 87 of the Bombay Reorganisation Act
In this context, the legal provisions have been traced out in Section 87 of the Bombay Reorganisation Act 1960 dealing with the aspect of laws and notifications in the States emerged after the Reorganisation of the erstwhile Bombay State. This Section also allows for the application of any law, rule, regulation, order, or notification in force in the former State of Bombay to the new State of Maharashtra and Gujarat unless repealed, amended or replaced by an appropriate authority. In other words, Section 87 is a provision that ensures that law prevails after restructuring without any legal or administrative loophole.
It provides for the interpretation of all the provisions of the existing laws referring to the State of Bombay or any of its authorities as referring to the corresponding authorities of the new States. This provision is essential to avoid any legal complexities and organisational disruptions that may arise after reorganisation. It enables the respective State Governments to enforce and implement these laws and notifications as if the reorganisation had never occurred, which helps in maintaining administrative continuity.
Section 87 also permits the alteration and amendment of the laws to accommodate the needs of the new States. This flexibility is necessary when it comes to response to local needs and to maintain relevancy and efficiency of the legal system in the new administrative conditions.
Judgement of Jayantilal Amrit Lal Shodhan vs. F. N. Rana and Others (1963)
The judgement was decided with the ratio of 5:1. The dissenting opinion was given by Justice K.N. Wanchoo. Justice Wanchoo dissented making his primary concern the principle of Separation of Powers whereby he opined that the Articles 258(1) executive actions could not create the continual authority in the Commissioners after the reorganisation without further authorization by the Article 258. However, issue-wise judgement is as follows:
Whether the notification issued by the President is law within the meaning of Section 87 read with Section 2(d) of the Bombay Reorganisation Act, 11 of 1960.
The Supreme Court observed that on 24th July 1959, while enjoying the authority vested under Article 258 of the Constitution, the President through a notification exercised and delegated by the agreement with the State Government of Bombay, to the Commissioners of Divisions in the State of Bombay all the functions of the Union Government in relation to the Land Acquisition Act I of 1894. As to acquisition of land within the boundaries of the aforementioned Commissioners’ territorial jurisdiction for the benefit of the Union, in the same manner as may be provided by the Government of Bombay as from time to time may exercise control over the acquisition of land for the purpose of the State. At the time when the aforesaid notification was given the area which now constitutes the State of Gujarat and in which the said land is situated was included in the State of Bombay but by May 1, 1960 known as the appointed day under the Bombay Reorganisation Act, 1960 out of the territory of that State. Two States have been created vide Section 3 of the Act being the State of Maharashtra and the State of Gujarat.
Certain stipulations have been made about the law’s territorial restrictions and the officers’ ability to remain in their positions that they held prior to the designated day of appointment. Continuation and deemed appointment under Section 82 of the Bombay Reorganisation Act 1960 it was provided that every person who immediately before the appointed day was holding or discharging the duties of any post or office in connection with the affairs of the State of Bombay in any area which as from the said day falls within the State of Maharashtra or Gujarat shall, subject to an order of the competent authority, continue to hold the same post or office that in Section 87 specific provisions were made for extending the territorial operation of the laws even after the appointed day. It was further provided that provisions of Part II i.e. provisions relating to the reorganisation of Bombay State into two States shall take effect as if the said new State was already in existence and the provisions of Section 3 won’t be considered to have changed the areas that any legislation that was in effect just before the designated day applies to or extends to, and any geographical references in such laws to the State of Bombay shall, unless otherwise specified by the Act. According to Section 2 (d) of the Bombay Reorganisation Act, 1960 meaning of law shall include any enactment, ordinance, regulation, order, byelaw, rule, scheme, notification or other instrument which had the force of law in the whole or in any part of the State of Bombay immediately before the appointed day.
Using this rationale, the Supreme Court was able to come to the conclusion that the Presidential notification that granted Land acquisition powers to the Commissioner under the Land Acquisition Act was equally the force of law. Thus, the actions of the Commissioner were legal, as those orders in the Edward Mills Case.
Whether this appointment constituted an improper sub-delegation of authority or was a legitimate exercise of the powers entrusted by the President.
The Supreme Court observed that under Section 55 of the Land Acquisition Act, the Commissioner has been delegated the power to frame rules under the Act exercisable by the appropriate Government. Whether such a function can be entrusted does not require consideration in this particular case. An argument which was raised, pointing to an erroneous assumption as to the sphere of the operation of Art 258(1) can, however be noted. That clause enables the President to entrust to the State the functions which are vested in the Union, and which are exercisable by the President on behalf of the Union : this does not mean that it empowers the President to delegate to any other individual or authority the powers and duties which the Constitution mandates the President to exercise and perform. The Article 123, Articles 268 to 279, Article 356, Article 360, Article 309 – to mention some – are not the powers of the Central Government; these are the powers conferred on the President under the Constitution and are beyond delegation or can be exercised by any other body or authority under Article 258(1). Such powers cannot be delegated under Article 258(1) because they are not the powers of the Union, and not because of the special character of the mentioned powers. There is a vast array of other powers exercisable by the President, for instance Articles 124 & 217, Article 344, Article 340, Article 338, etc.
According to Article 258(1) the power to make rules vests in the President as the head of the Union and this power is in relation to any matter in which the executive power of the Union is vested and it may be delegated to any State Government or officer of that Government. These are indeed the functions of the Union and not of the President. It might be beyond doubt that the delegation of power or authority to the President is enshrined in the Constitution and of necessity, would carry the force of law. Thus the character of the exercise of the function so entrusted must derive from the field in which that function is to be exercised and the effect which that exercise will have on the citizen’s rights. Thus, the Supreme Court is directly concerned with the nature of the power exercised by the President under Article 258(1) when it attributes certain functions to the State or its officers. It is, of course, true that the President is the recognised executive head of the Union and it would be inconceivable that power being wielded by him under Article 258(1) cannot have the character of law within the meaning of Section 87 of the Bombay Reorganisation Act. Thus, by the notification dated July 24, 1959 by the President, power was delegated to the Commissioner, Baroda Division, in the case of matters connected with the acquisition of land under the Land Acquisition Act 1894.
According to item 42, List III, the subject of property acquisition is in the Concurrent List of the Constitution. The Parliament has the authority to legislate on the acquisition of property for the purpose of the Union, and Article 73(1)(a) extends the Union’s executive power to the acquisition of property for the Union. According to Article 298 of the Constitution, the Union has the exclusive right to conduct any trade or activity, as well as to acquire, hold, sell, and engage into contracts for any purpose. According to Article 73(1) of the Constitution, the Parliament may purchase property for the Union. As a result, the Supreme Court ruled that the Union’s executive jurisdiction over the forced acquisition of property remains intact, even in circumstances when the State has the authority to acquire land.
Whether the Presidential notification set out on July 24, 1959, under Article 258 of Indian Constitution, retained its force and effect after the Bombay Reorganisation Act, 1960 came into force.
The Supreme Court ruled in this case that it was open to the Legislature to delegate functions of the Central Government under Article 258(2), thereby conferring powers and imposing duties on Commissioners of State Divisions under Sections 4, 5A, 7, 9, and 11 and related Sections. The exercise of such entrustment of power could not be questioned on the basis that it was unauthorised. In the event of being entrusted through enactment, it would have the force of law. By an appropriate legislation contained or otherwise in the Land Acquisition Act, it was open to the Parliament to provide the authority to set out notifications as per Sections 4 and 6 of the Land Acquisition Act and the authority to designate the Collector is to be enjoyed by the officer selected by the proper Government. Thus, if the appropriate government issued a notification naming the officer to exercise the power, it would undoubtedly amount to exercise of the power in connection with the carrying on by the existing government of the said functions in the said manner and thus would come within the ambit of Section 2(d) read with Section 2(c). The President may assign duties to the State Government or its officers, as authorised by the Constitution, rather than listing all of the provisions and categorising the functions granted to the authorities of the State through the exercise of legislative power. The result of Article 258(1) is only to convert an open ended provision which the Legislature could exercise through legislative for the purpose of entrusting functions to the officers to be described by the President from time to time and under the conditions the said notification provides. The notification merely empowers the State or an officer of the State under the statute in the given circumstances and up to the extent to perform the aforesaid functions. The said notification of the President has the following consequences: Where in the Act, the words ‘appropriate government’ occur in connection with provisions for acquisition of land for the purpose of the Union, the said expression will carry the meaning that wherever the words ‘appropriate government or the Commissioner of the Division having territorial jurisdiction over the area in which the land is situated. ’ In other words, the Presidential notification, if issued, must be deemed to partially amend the Land Acquisition Act.
Whether the Commissioner of the newly formed State of Gujarat had power under the Land Acquisition act in terms of the Presidential notification.
The Supreme Court referred to the term ‘Collector’ used in the Act refers to the Collector of any district or some other officer who may be declared as such by the appropriate government, for exercise of all or some of the powers of a Collector under the Act. The statute itself empowers the appropriate government to designate the Collector in accordance with the Act and the Commissioner with vested authority under Article 258(1) of the Constitution appointed Additional Special Land Acquisition Officer, Ahmedabad as Collector under Section 5A of the Act. Thus, in appointing the Additional Special Land Acquisition Officer the Commissioner was invoking the authority through which he was endowed by the appropriate government under the provisions of the Act. It was noted that the appellant enclosed no documents which may support the argument which at one stage was vaguely made that the Collector’s proceeding was tainted with illegality or irregularity. The Collector according to provisions of Section 5A conducted an inquiry and submitted his report to the Commissioner who acts as the authority under the appropriate government and as per the recommendation of the report, the notification under Section 6 of the Land Acquisition Act was issued. Section 5A(2) states that any objection to the acquisition of the land notified or of any land of the locality must be made by the objector in writing to the collector. Moreover, the collector has to provide the objector with an opportunity of hearing either in person or through a pleader and to compile all the objections that have been heard. If any further inquiry is required then the collector may present a report outlining recommendations regarding the objections. The report required by Section 5A does not need to be completed before the notification under Section 6 is issued.
The proper government in accordance with Section 17 may acquire the land without any encumbrances and order under Section 17(4) that with respect to any land to which the appropriate government determines the provisions mentioned in Section 5A(1),(2) shall not apply where the following provisions of this Act are applicable: Once again the Collector is not obligated to make any decision. He has to forward the case to the appropriate government for determination with the record of the proceedings conducted by him and a report that includes his recommendations on the objection Section. At first glance, such a report would be an administrative report and based on it the Government decides under Section 6 whether or not to notify the land for acquisition. The notion that any particular land is required for the public use is an administrative decision and it is with a view of making the decision that the Act compels those inquiries to be made. However, it is a fact that the Collector has to follow the procedure prescribed and to afford an opportunity to the person who objects to being heard either in person or through a pleader. This provision, however, is open as under Section 5A it is provided to the Collector to make an independent inquiry other than the inquiry regarding the objections submitted. It cannot in the circumstances be said that the inquiry is a judicial or a quasi-judicial inquiry for the purpose of the statute. In the present case there was no delegation of any of the judicial power which is by law vested in the Central Government. The power to hold an inquiry is statutorily vested in the Collector and the Collector has performed his statutory duty. The Commissioner functioning as such officer was only appointed on behalf of the Central Government the Additional Land Acquisition Officer as the Collector the impugned order also takes into consideration the report in exercise of the powers given to the Commissioner in terms of the powers entrusted on him under the notification issued by the President. In doing so he didn’t act in any way inconsistent with the authority vested in him or that the law could in certain circumstances vest in him. Therefore the appeal failed and costs were incurred with the majority.
Relevant judgments referred to in the case
Judgements relied on for the majority view
Rai Sahib Ram Jawaya Kapur vs. The State of Punjab (1955)
The Supreme Court in this case held that there may be a problem in defining precisely what is meant by ‘executive function’ and what it encompasses. Normally the executive power implies that part of government responsibility which is left over after legislative or judicial responsibility has been exercised. The heads of state exercise executive authority, engaging in the enforcement of laws, management and implementation of policies, and the managing of state affairs on a daily basis. This includes decision making, policy making as well as the directions and coordination of public services for the running of governmental activities. This power lies in the hands of the executive part of the government headed by the President and/or the Prime Minister and the governmental departments and agencies. It is defined by its administrative, regulatory, and managerial roles that help enforce laws, and effect and implement legislation and judgements.
The case established that executive function is difficult to define precisely, but generally includes the enforcement of laws, policy implementation, and daily management of state affairs, which are carried out by the executive branch, led by the President or Prime Minister, in collaboration with government departments. This view of executive power influenced the decision in Jayantilal Amrit Lal Shodhan vs. F. N. Rana and Others (1963), which clarified the scope of executive authority, particularly in relation to land acquisition. The court used this approach to interpret the Union’s power under Article 73(1) and ensure that the Union’s forced acquisition of property stays within its executive scope, even when states also have the competence to
Harinagar Sugar Mills Ltd. vs. Shyamsundar (1961)
In this case the court said that it cannot however be assumed that the legislative functions are being done only by the Legislature, the executive functions by the executive and the judicial functions by the judiciary. The Constitution has not provided clear or strict separation of powers between the three branches of the State. It characteristically conveys exercise of functions legislative or judicial to the executive. For example, exercising the authority to make rules, regulations, and notifications, which are essentially of a legislative nature, is often delegated to the executive. In the same way judicial authority is also delegated by legislation to the executive authority.
The Edward Mills Company Ltd. Beawar vs. State of Ajmer (1954)
It was held in the Edward Mills case, that the main issue in dispute was whether an order made under Section 94(3) of the Government of India Act, 1935, remained enforceable under Article 395 of the Constitution. In particular, with reference to Section 94(3) of the Government of India Act, a Notification was issued by the Central Government in 1949 according to which the functions under the Minimum Wages Act were exercised by the Chief Commissioner in the Chief Commissioner’s Province. Following the adoption of the Indian Constitution, the Chief Commissioner of Ajmer was the relevant government in connection to the Minimum Wage Act and issued employment notifications for textile factories.
It was claimed on this basis that the validity of these notifications was inadmissible after the Constitution because the Chief Commissioner did not have such power inasmuch as the Governor-General’s Order under Section 94(3) was not ‘law in force’ within Article 372 of the Constitution. The petitioners argued that new delegation of power under Article 239 by the President was necessary to enable the Chief Commissioner to legally operate under the Minimum Wages Act.
In the case of Edward Mills, the Supreme Court pointed out that ‘existing law’ as envisaged in Article 366(1) of the Constitution is synonymous with ‘law in force’ as envisaged in Article 372. Interpreting the phrase “law in force”, it stated that it includes regulations or orders having the force of law and when the Governor-General makes an order under Section 94(3) it is similar to a legislative provision regarding the rights and powers of the Chief Commissioner. Thus, such orders legally remained in force under Article 372.
This interpretation was critical in Jayantilal’s case, as the court dealt with the continuity and legality of governmental activities after the Constitution. We affirmed that orders and actions performed under prior legal frameworks, whether they were inside the purview of ‘existing law’ or ‘law in effect’, remained lawful and enforceable under the new constitutional provisions, based on the precedent established in Edward Mills. This helped to clarify that the Union’s executive jurisdiction over forcible purchase of property remained intact, ensuring the continuity and legitimacy of such measures during the transition period from the Government of India Act, 1935 to the Indian Constitution.
Chanabasappa Shivappa vs. Gurupadappa Murigappa (1965)
Specifically in Chanabasappa Shivappa vs. Gurupadappa Murigappa (1976), the Mysore High Court decision under the provisions of Section 119 of the State Reorganisation Act, 1956, which in terms is not very different from Section 87 of the Bombay Reorganisation Act, 1960; and given that the definition of ‘law’ in Section 2(h) of that Act is couched in terms identical to the definition given in Section 2(b) of the Bombay Reorganisation Act , the High Court uphold the operation of a notification issued by the Government of Bombay Conferring powers to try election petitions under the Bombay District Municipal Act 1901 on the reorganisation of the State of Bombay under the States Reorganisation.
Rulings relied upon while giving the dissenting opinion
The Public Prosecutor vs. Illur Thippayya, (1949)
In this case the orders were issued under the Essential Supplies (Temporary Powers) Act, 24 of 1946, which were considered to have statutory effect. Those orders appear to have established a code of conduct for those dealing with the issues addressed in those orders, and so form secondary law. This case aided Jayantilal Amrit Lal Shodhan vs. F. N. Rana and Others (1963) by setting a precedent for the scope and interpretation of executive power. In Illur Thippayya, the court enlarged the scope of executive authority, emphasising the importance of state acts being consistent with legislative mandates and constitutional stipulations. This view bolstered the argument in Jayantilal that state activities, particularly those involving property acquisition, must be consistent with central laws and directions under Article 256, ensuring uniformity and respect to the constitutional framework in carrying out such functions.
State of Bombay vs. F.N. Balsara (1951)
This was a case of subordinate legislation because, the order that passed there, was under Section 139 of the Bombay Prohibition Act No. 25 of 1949 which empowered the Government to exempt any intoxicant or class of intoxicants from the application of any of the provisions of that Act by general or special order. That was the position in that case where such an order would clearly have been held to be having the force of law as it was subordinate legislation.
King Emperor vs. Abdul Hamid and Ramendrachandra Ray vs. Emperor (1922)
In this case, the Superintendent of Police issued an order restraining processions under Section 30 of the Police Act, and the issue was whether the order was legal. The Patna High Court has held that it is law. It was made by the Superintendent of Police as empowered by the Police Act to make an order which laid down the standard of conduct expected of inhabitants within his police district and any failure was punishable. It could also be imposed by courts and would be as legal in effect as any legal provision. The other case concerns a prohibition order made under Section 35 of the Calcutta Police Act and would have the force of law for the same reason.
Analysis of Jayantilal Amrit Lal Shodhan vs. F. N. Rana and Others (1963)
The Supreme Court interpreted Article 258(1) of the Constitution that provides for the delegation of functions to state governments or officers. The fact is highlighted that it is possible for this kind of entrusting of authority despite the fact that they are of an executive complexion; provided the delegation is on matters of an executive authority which in this case are part of the legislative regime. The Supreme Court turned focus on Sections 82 and 87 of the Bombay Reorganisation Act which were the legal provisions that sought to preserve laws/orders that existed prior to the reorganisation. The Supreme Court held that the Presidential notification under Article 258(1) was issued prior to the reorganisation as a legal document properly enacted that remained in force after the reorganisation to thereby pass on functions to the state authorities. Following established milestones especially the Edward Mills case the Supreme Court ruled that for an executive order to be considered as the ‘law in force’ it has to have a characteristic of a regulation or legislation. At this, the Supreme Court noted that the notice that had been issued by the President was not an administrative act but had some legislative nature. The Supreme Court also in a way pointed to Article 372 by which the provisions of the Constitution shall not affect existing laws on the date of the commencement of the Constitution. It held that the notification under Article 258(1) came within the purview of the above classification and as such its legal character and efficacy were saved as was the case with departures through legislation. According to the Supreme Court, the given executive notification was properly characterised in relation to the purpose of the Act to address the legislative intent concerning the continuity of work and business functioning of state entities. The Supreme Court’s decision shows that any disruption of such processes requires clear statutory provisions and adherence to the principles of contract law. Thus, it emphasises the need for a strong framework that enables one to achieve the objective of ensuring that executive orders and notifications, regardless of the reorganisation, can be fairly easily incorporated into the legal system aimed at preserving the functionality and authorities of the state mechanisms excluding those that threaten the legislative integrity. This case also demonstrates the Supreme Court’s understanding that when the executive gives notice under the Constitutional and under the legislative measures, the notice is as legal as it would be given directly by parliament. It emphasises that constant administrative practice, maintaining the efficiency of the government functions, regulating relations, and recognising notifications as binding legal texts are essential during periods of major administrative reorganisation.
Conclusion
The case of Jayantilal Amrit Lal Shodhan vs. F. N. Rana and Others (1963), offers valuable insights into the decisions of the legislative bodies which entrust certain executive functions and the judicial acknowledgement of their continuance even after reorganisation of states. This test for validating the legislative competence that transferred the subjects pertaining to the reorganised State of Gujarat to the new legislative list from the old legislative lists of the dissolved State of Bombay is found in the majority judgement of the Supreme Court reinforcing that the Presidential notification under Article 258(1) remained legal following the reorganisation of Bombay and therefore made it perfectly legal for the new Commissioners of the State of Gujarat to discharge the functions offered under it.
More generally, it serves as an example of how crucial it is for a Constitution to spell out the optimum way in which the task or functions of a government may be delegated and performed or continued. It also demonstrates how the judiciary facilitates the integration of the executive branch’s actions with legislative aims and objectives for smooth running of the governance systems. The decision made is not as limited to this concrete situation alone, offering an insight into hierarchical subordination and interaction of branches of power, the stability of legal tools within the framework of administrative shifts.
Ultimately, Jayantilal Amrit Lal Shodhan vs. F.N. Rana and Ors. highlights how the judiciary is charged with the duty of interpreting the Constitutional values and assuring that advancement is not a means of violating other people’s rights.
Frequently Asked Questions (FAQs)
Which provision of the Indian Constitution governs the separation of power between the executive and the legislature?
Article 258(1) of Indian Constitution relates to the executive powers, the delegation of functions under it can be included into the legislations framework, thus providing legal continuity and operational effectiveness in the process of reorganisation.
What was the minority view in the present judgement?
Justice K. N. Wanchoo dissented regarding this proposition stating that the executive functions under Article 258(1) cannot be taken to mean ‘law in force’ as per Section 87 of the Bombay Reorganisation Act. He was of the view that the Commissioners cannot proceed under the Land Acquisition Act since Parliament does not empower them to do so.
What did the Court mean by the term “law in force” in regard to this case?
In its turn, the Court explained the term “law in force” to encompass not only legislative acts but also executive orders and notifications that have precedential legal authority. This broad interpretation supported the assertion that the Presidential notification under Article 258(1) retained its legal viability following reorganisation.
What role did the Court play in relation to quasi-judicial functions in the case?
The Court responded to this issue by deciding whether the functions vested under Section 5A of the Land Acquisition Act consisting of objections to the land acquisition were quasi-judicial or administrative in nature. The decision also involved determining whether these functions could be lawfully delegated to state officers.
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Role of personal branding for a freelance content writer
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YouTube and Instagram can be the major channels to showcase your brand image. Posting content about your writing skills and case studies will not only attract fellow writers but also create an image for potential clients.
Interviewing other writers, setting up profiles on freelance platforms, and discussing the role of SEO in content writing—such content will highlight your expertise in the “content writing” niche. Considering live Q&A is trending in everyone’s life, your Q&A sessions can help you connect with the audience and get an understanding of their expectations.
LinkedIn is a unique platform that not only lets you publish content (with audio-visual content compared to video-exclusive YouTube) but also connect directly with potential clients. Optimising your profile and content using SEO can help you find the right people looking for assistance in their content creation. To start with, it can help you find and connect with alma maters, subject matter experts (SMEs), and job providers. Consistently posting about a certain topic will gradually attract an audience, and some of them would like to “follow” you, so that they do not miss out on your posts from the daily feed.
Creating a personal service website: The website acts as a digital business card and investing effort and time in curating the website will create the highest return for you in the long term. Some of the key line items on the website include a portfolio and a contact page. Portfolio pages can include samples of your previous projects (with consent from the client) and the types of writing services that you intend to offer. Your unique style of writing and innovative presentation of the services can allow you to stand out among the tens of websites visited by your potential clients.
Embracing your unique writing style : a path to authenticity
Authenticity is important for building trust with clients. Being transparent and truthful with yourself will let your writing style shine among millions. Currently, the online writing community is highly vibrant, with a large number of freelance writers running their own brands in specific niches. A birthday cake recipe may be found on thousands of blog pages; however, your voice will stand out when it is authentic and connects right with the audience.
Putting on a mask to pretend to fit in can be a costly affair. Once your writing output lacks the vigor to attract an audience, you probably risk losing the client! Also, you are putting yourself in a strenuous situation every day as you struggle to pretend to be someone else. In the long term, this can be highly taxing, and you might lose your passion to write. The key lies in staying authentic with your values while adapting your writing style based on the project’s needs.
First, understand the client’s requirements. This can be achieved by leveraging your personal experiences and doing a deep dive into their requirements. Being authentic is not only about having good research techniques but also requires you to keep the conversation flowing. After all, the client is not dealing with a robot but with a writer who is intrigued to understand the requirement, ask questions, seek feedback, and ensure that all parties are on the same page. Such a kind of collaboration makes you shine above all other freelancers that the client is currently engaged with.
Networking in the digital age : making connections in a remote world
Networking is about forming genuine connections and collaborating on projects. It is your gateway to potential clients and job opportunities through referrals and recommendations. Finding potential partners in your niche is highly important. But how do you find such partners in the whole wide world? Networking is not about virtually connecting with thousands of writers within a month; rather, the focus should be on being authentic and building individual relationships with like-minded writers.
Feel free to search for and join online communities, which are avenues for extending your reach as a writer. Connecting with fellow freelancers in the local community will be the next step when stepping into a real world full of networking events. Once you have identified the potential partners, the next step is to reach out to these connections by introducing yourself and sharing your story. Such initiatives will be your baby steps to building a valuable connection.
Now that you have found potential partners or clients, it is time to solidify these relationships and broaden your horizons. Look out for key events such as webinars, seminars, exhibitions, conventions, workshops, business summits, and retreats. Such events can help you strengthen existing relationships and potentially build new ones.
At first, networking seems sceptical, as though collaborating would lead to the sharing of someone’s work with other unknown remote freelancers. However, there really isn’t much competition, as there are plenty of projects across the world. Being a digital freelancer opens a world of opportunities for content writers, as there are several types of writing projects ranging from three to thousands of dollars in all 150+ countries.
Clients often evolve in their businesses, expanding their product / service portfolio. As such, they would require their existing freelance writers to broaden their bandwidth. This is when these writers would desire to bag this opportunity and look out for partners who are willing to collaborate on such projects. They not only reach out to fellow partners but also post their requirements in community groups on Facebook, LinkedIn, and freelance platforms. In essence, collaboration isn’t just a strategy for success; it’s the heartbeat of a thriving freelance community.
Showcasing client success stories : building trust through reviews
Your experience and skill sets enable you to execute a project flawlessly. Now what? It’s time to get feedback and a testimonial from the client. Although money matters and your invoices will be cleared on time, getting testimonials, ratings, and feedback is equally important. This conversation with your client will help you establish a strong connection over the long term. Online reviews help potential clients have a better understanding of your persona.
An appealing website and a highly optimised LinkedIn profile might bring in new customers. However, the reviews allow a positive closure to your recently completed project and open a pathway to a new one with your existing client. From the client’s end, representatives change departments often. And sometimes the newly hired representative provides different styled feedback compared to previous ones. For example, Japanese in general have a stringent nature towards giving high ratings; as such, he/she might rate your deliverable a 7 out of 10, while a similar project brought you a 9/10 from a US company.
Firstly, approach satisfied clients professionally and request honest feedback. As a next step, display these testimonials on your website or portfolio. This strategy lets you establish yourself as a trusted and reliable content writer. Testimonials act as powerful marketing tools in the highly competitive freelance industry.
Apart from displaying testimonials on social media networks, acknowledging the client’s feedback is equally important. Some clients may provide a low rating on freelance platforms, thereby jeopardising potential collaborations and conversions in the future. It should not discourage you from your daily work routine. Managing negative reviews is also part of the freelance job.
Some more strategies to effectively build your personal brand as a content writer
Building a personal brand as a content writer is crucial for recognition, credibility, and career growth. By establishing a strong personal brand, you can differentiate yourself from other writers, attract potential clients, and create lasting relationships with your audience. Here are some more strategies to effectively build your personal brand as a content writer:
Define your niche:
Identify your unique strengths, interests, and areas of expertise.
Specialise in a specific niche, such as technology, healthcare, fashion, or travel.
Focus on creating content that resonates with your target audience.
Create high-quality content:
Consistently produce well-written, informative, and engaging content.
Use storytelling techniques to make your content relatable and memorable.
Incorporate multimedia elements, such as images, videos, and infographics, to enhance visual appeal.
Develop a unique voice and tone:
Cultivate a distinct writing style that reflects your personality and perspective.
Use humour, wit, or a conversational tone to make your content more engaging.
Ensure consistency in your voice and tone across all platforms.
Build a content portfolio:
Create a portfolio showcasing your best work.
Include a variety of content formats, such as blog posts, articles, whitepapers, and case studies.
Regularly update your portfolio to demonstrate your growth and skills.
Establish an online presence:
Create a professional website or blog as a central hub for your content.
Use social media platforms to connect with your audience and share your work.
Engage with your followers through comments, likes, and shares.
Network with industry peers:
Attend industry events, workshops, and conferences to meet other content writers.
Connect with peers on social media and join online communities.
Collaborate on projects to expand your network and showcase your skills.
Offer guest posting opportunities:
Reach out to other websites and publications to contribute guest posts.
Guest posting helps expand your reach and introduces your work to new audiences.
Include a link to your website or blog in your author bio.
Engage in thought leadership:
Share your insights and expertise through blog posts, articles, and social media posts.
Position yourself as a thought leader in your niche by offering valuable information.
Host webinars and workshops to further establish your authority.
Use SEO techniques:
Optimise your content for search engines to increase visibility and drive organic traffic.
Use relevant keywords and phrases in your titles, headings, and meta descriptions.
Create backlinks to your content from high-quality websites.
Track your progress:
Set specific goals for your personal brand, such as increasing website traffic, social media followers, or client conversions.
Regularly track your progress using analytics tools to measure your success.
Make adjustments to your strategies based on your results.
By implementing these strategies and continuously refining your approach, you can build a strong personal brand as a content writer and position yourself for success in the digital landscape.
Conclusion
All in all, personal branding plays a key role in seeking success in today’s highly competitive market. It not only allows you to differentiate yourself from the crowd but also lets you command higher rates. Building your personal brand is an ongoing journey, not an overnight deal.
Assessing your brand image regularly can help you sustain your success over the long term. Staying on top of industry trends is important, and so is socialising your brand. Identify your USP and fully embrace your writing style. Being authentic keeps you on their radar so they think about your personal qualities and writing skills.
Personal branding is the powerhouse of the most successful freelancers. Treat it like an investment, and watch the seeds of success reap in your freelancing garden. Consistently putting effort into building your own brand lets you showcase your unique skills, both hard and soft. Establishing your brand can significantly influence your career trajectory, as it sets you on the path to becoming the most sought-after freelancer in today’s world.
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