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UNCITRAL Model Law on cross-border insolvency 

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This article is written by Jyotika Saroha. It deals with the UNCITRAL Model Law on Cross Border Insolvency. It elaborates on the meaning of Cross Border Insolvency, its evolution, major principles and provisions. It also deals with the laws of India that deal with the matters of insolvency. 

Table of Contents

Introduction 

India is a developing country and has a vast economic structure. There are various large corporate tycoons and firms that become bankrupt due to many reasons, and it eventually impacts the economic system of the country. Such companies and firms not only affect the members within it, but have a major impact on the economy of the country. Thus, in order to solve the issue of insolvency, the Insolvency and Bankruptcy Code (IBC) was enacted in 2016 with an objective to resolve claims of companies who become insolvent. The Code is an efficient solution for resolving the matters regarding insolvencies, which was earlier a long and hefty procedure. However, the Code is still unable to fulfil the aim to promote fair and efficient resolution of Cross Border Insolvencies that could protect the interest of debtors as well as of the creditors. Whereas, at the International level UNCITRAL Model Law on Cross Border Insolvency, 1997 came into being in order to help the Nations to deal with the Cross Border Insolvency conflicts that arise outside borders of a Nation.

Meaning of cross border insolvency

Insolvency generally means when a company, organisation, or a firm is unable to repay its loan which is due to the lender. Cross Border Insolvency is also termed as “International Insolvency” and it occurs when the creditors of the said company from whom the company took loan are situated in more than one country. For the management and proper resolution of Cross Border Insolvency cases, it takes long procedural methods which are very challenging and difficult. However, with a robust legal mechanism it would not be that difficult to resolve such matters. The key issues in Cross Border Insolvency include the jurisdiction, coordination & cooperation, recognition of foreign proceedings etc.

Evolution of Model Law on cross-border insolvency

The subsidiary body of the General Assembly of the United Nations namely, United Nation Commission on International Trade Law (UNCITRAL) came into being in 1966 in the arena of International Trade Law. It helps in developing and maintaining the cross border legal system for the promotion and facilitation of international trade. UNCITRAL makes new model laws and conventions in order to facilitate the commercial transactions between different countries. Like other conventions, the UNCITRAL Model Law on Cross Border Insolvency came into being, after it got the approval of the United Nations General Assembly through a resolution on 30th May, 1997. The main objective behind the implementation of this Model law was to resolve the issues relating to Cross Border Insolvency or the international insolvency.

The reason for it being a Model law and not a Convention is so that nations can exclude or alter the provisions in their local laws in the way they want, so either they can make changes in the existing framework or they can implement a new legislation regarding Cross Border Insolvency. As of now, around 59 countries have adopted it and implemented it in their legal frameworks which includes the United States of America, United Kingdom, Japan and South Korea etc. India has also adopted the Model law Cross Border Insolvency on May 17, 2022. The UNCITRAL Model Law on Cross Border Insolvency came into being in order to provide for effective measures to deal with the conflicts that arise from it. It helps the Nations to endow fair, new or modern legal framework for their insolvency laws. The World Bank has also acknowledged the implementation of UNCITRAL Model Law on Cross Border Insolvency at an International level and after it, International Monetary Fund (IMF) is another organ which has shown its support for the adoption and implementation of Model Law on Cross Border Insolvency disputes. 

Purpose of UNCITRAL Model Law on cross border insolvency

The purpose of the UNCITRAL Model Law on Cross Border Insolvency is provided within its preamble which states that it is the objective of this Model Law to provide for effective mechanisms in order to resolve the Cross Border conflicts and to promote principle of cooperation amongst Courts, competent authorities of the states who are involved in the said conflict, to promote fair and efficient administration of the matters regarding Cross Border Insolvency by protecting the interest of the creditor and debtor as well as of the other interested persons. Further it deals with the protection of the assets of debtors and maximisation of their value and preservation of employment. Apart from the preamble following are some other objectives of the Model Law.

  1. It was implemented with an objective to resolve the issues regarding Cross Border Insolvency, and it was designed in a manner to help the countries so that they can endow and make necessary changes into their existing legislative frameworks the law relating to Cross Border Insolvency.
  2. The UNCITRAL Model Law on Cross Border Insolvency was created in order to provide for an effective mechanism to solve the disputes relating to Cross Border Insolvency. There are various circumstances where an insolvent debtor takes loans or assets from foreign companies and firms from different countries, which makes it difficult to conduct the insolvency proceedings. 
  3. The UNCITRAL Model Law on Cross Border Insolvency provides for effective solutions rather than criticising the procedural irregularities of a particular country, it provides modern and fair solutions like acknowledging the rights of the creditor and the debtor as well to take part in proceedings.
  4. It also takes care of the rights of foreign creditors so that they can take part in the proceedings irrespective of the issue of jurisdiction. It provides for a transparent system to the parties, irrespective of the jurisdiction of different countries.
  5. It allows the judicial system of Nations to cooperate with the foreign courts in order to solve the matters regarding insolvency.
  6. With the implementation of UNCITRAL Model Law on Cross Border Insolvency, a guide related to enactment of the Model Law was also released by the Secretariat of the United Nations Commission on International Trade Law with an objective to assist the nations in order to prepare effective laws regarding insolvency. 

Principles of UNCITRAL Model law on cross-border insolvency

The UNCITRAL Model Law on Cross Border Insolvency focuses upon four major principles, which are as follows:

Access 

Chapter II, Articles 9-14 of UNCITRAL Model Law on Cross Border Insolvency, deals with the ‘Access’ of foreign representatives and creditors to courts in the enacting state. This principle basically provides the access to foreign creditors and the persons who represent the foreign creditors to take part in any domestic Court where the insolvency proceedings are taking place. 

Article 9 of  UNCITRAL Model Law on Cross Border Insolvency

This Article provides for a right of direct access to a foreign representative to apply in a Court in the enacting state.

Article 10 of UNCITRAL Model Law on Cross Border Insolvency

It deals with the provision for limited jurisdiction wherein the application made to the Court by the foreign representative does not subject the representative to the jurisdiction of the Courts of the enacting state.

Article 11 of UNCITRAL Model Law on Cross Border Insolvency

This Article deals with the application given by a foreign representative in order to commence a proceeding under the laws of the enacting state regarding insolvency if all the conditions for starting or commencing the proceeding are fulfilled. 

Article 12 of UNCITRAL Model Law on Cross Border Insolvency

It deals with the participation of a foreign representative in the insolvency proceedings relating with the debtor under the enacting laws of the state. 

Article 13 of UNCITRAL Model Law on Cross Border Insolvency

It states that the foreign creditors have the same rights as that of the creditors of an enacting state during the Insolvency proceedings. 

Article 14 of UNCITRAL Model Law on Cross Border Insolvency

It deals with the notification of a proceeding to the foreign creditors wherein as per the orders of Court necessary steps may be taken in order to inform the creditor whose address is not known. 

Recognition

Chapter III, Articles 15-17 read with Article 6 of UNCITRAL Model Law on Cross Border Insolvency, deals with the provisions regarding recognition of a foreign proceeding. Recognition is a process wherein the court of a country gives acknowledgment to the proceedings regarding insolvency started in another country.

Article 15 of UNCITRAL Model Law on Cross Border Insolvency

It provides that a foreign representative may apply for the purposes of recognition of a foreign proceeding in a court wherein he was appointed. It further provides that it shall contain necessary documents laid down in the clauses of Article 15 like certified copy of the decision, certificate regarding the foreign proceeding and the appointment of foreign representative.

Article 16 of UNCITRAL Model Law on Cross Border Insolvency

It states that the Court shall presume that the documents submitted by the foreign representative and the proceedings that were being held are bonafide.

Article 17 of UNCITRAL Model Law on Cross Border Insolvency

It is to be read with Article 6 which provides that the recognition that is being sought can be refused on the ground if it is contrary to the public policy. Whereas, Article 17 provides for the conditions that are to be met in order to recognize a foreign proceeding. So, in order to get recognized, a foreign proceeding should be a proceeding within the meaning of Article 2(a) which provides for the definition of a Foreign Proceeding. It refers to a collective judicial or administrative proceeding in a foreign state, and it also includes an interim proceeding under the law relating to insolvency in relation to the assets and affairs of the debtor which are under the control and supervision of the foreign Court for the purposes of reorganisation and liquidation. And for a foreign representative, he should be a person within the meaning of the same. It further provides that the foreign proceeding must be decided at an earliest time.

Relief

Article 19 & 22 provides for the provisions for relief. There are two kinds of reliefs given. First is the relief granted upon the application for recognition of a foreign proceeding. 

Article 19 of UNCITRAL Model Law on Cross Border Insolvency

This Article of Model Law deals with the urgent relief and on an application of recognition the Court may on its discretion grant such urgent relief. This kind of relief is narrow in nature as compared to the other relief granted during the recognition of a foreign proceeding. After the Court took a decision of granting recognition to a foreign proceeding then in that case Article 19 shall be terminated.

Article 21 of UNCITRAL Model Law on Cross Border Insolvency

Second one is the relief that may be granted upon recognition of a foreign proceeding which is being provided under Article 21. Now the relief granted of a foreign proceeding is recognised can be divided into two further categories i.e. the mandatory relief which immediately applies after a foreign proceeding gets recognition and the discretionary relief which may be provided either to a foreign main proceeding or foreign non-main proceeding after it gets recognition.

Article 22 of UNCITRAL Model Law on Cross Border Insolvency

It states that the Court while granting or refusing to provide relief under Article 19 or 21 must be satisfied that the interests of persons involved are protected. At the request of a foreign representative or a person affected by such relief that is being given under Article 19 or 21, the Court on its own motion may terminate or make modifications in such relief.

Cooperation and coordination

Chapter IV, Article 25-27 deals with the cooperation with foreign Courts and foreign representatives. 

Article 25 of UNCITRAL Model Law on Cross Border Insolvency

It states that subject to Article 1, the Court shall work in cooperation with the foreign courts or the foreign representatives whether directly or through any administering body as per the laws of enacting state.

Article 26 of UNCITRAL Model Law on Cross Border Insolvency

This Article states that the Court shall exercise its functions in order to cooperate with the foreign Courts and representatives as it is the mandate of UNCITRAL Model Law on Cross Border Insolvency to harmonise the laws and to follow a fair procedure to deal with the matters regarding insolvency.

Article 27 of UNCITRAL Model Law on Cross Border Insolvency

It deals with the different forms of cooperation that are referred to in Articles 25 & 26. It can be implemented by following means:

  • Appointing a person or a body that can act as per the directions given by the Court.
  • There shall be the communication of information by the means as the Court deems fit.
  • There shall be coordination supervision and administration of the assets of the debtor.
  • Courts shall approve or implement the agreements concerning coordination.
  • Coordination regarding the concurrent proceedings of the same debtor which implies that there shall be coordination between the jurisdictions of countries rather than opting for uniform laws of their respective states.
  • Additional forms of cooperation may be added by the enacting state.

Provision of UNCITRAL Model Law on cross-border insolvency 

Applicability 

Article 1 of UNCITRAL Model Law on Cross Border Insolvency deals with the applicability of the model law. It states that this law will apply wherein the foreign Court or a foreign representative has sought assistance in the enacting state in regard with a foreign proceeding. Further, it states that it is applicable wherein in relation with the proceeding under the domestic laws of the enacting state regarding insolvency the assistance is sought by a foreign Court. It is also applicable wherein, under the domestic laws of an enacting state, the foreign proceeding is taking place in respect of a same debtor concurrently.

It also applies upon the persons like the creditors and others who are interested in requesting for the commencement of the proceeding or taking part in the said proceeding. However, there is an exception to this provision that does not apply to banks, insurance companies as they are covered under different insolvency laws.

Important definitions

Article 2 provides for various definitions under the UNCITRAL Model Law on Cross Border Insolvency.

Foreign proceeding

It refers to an administrative or a judicial proceeding taking place in a Foreign state. It also includes an Interim proceeding related to a law of insolvency wherein the assets and affairs of a debtor are main issues for the purposes of reorganisation and liquidation.

Foreign main proceeding

It refers to a proceeding wherein the debtor has the main interests in a Foreign State.

Foreign non-main proceeding

It means a proceeding not similar or other than the Main-proceeding wherein the debtor has an establishment as per the meaning given in sub paragraph (f).

Foreign representative

It means the following person or a body:

i) who is appointed on an interim basis,

ii) a person authorised to administer reorganisation,

iii) a person authorised to administer liquidation,

iv) a person to act in a foreign proceeding as a representative.

Foreign Court

It is a judicial or other authority who is competent enough to control or supervise the Foreign Proceeding.

Establishment

It is a place where the debtor carries out its economic activities by means of human, goods and services.

Concurrent proceedings

Chapter V, Articles 28–32 deals with the provisions regarding the concurrent proceedings.

Article 28 of UNCITRAL Model Law on Cross Border Insolvency

It states that after a Foreign Main Proceeding gets recognition, a proceeding related with the domestic laws of the enacting state can be initiated when the debtor has its assets located in the said state and those proceedings shall be restricted to the assets of the debtor.

Article 29 of UNCITRAL Model Law on Cross Border Insolvency

It provides for the principle of coordination and cooperation when the foreign proceeding or a proceeding under the laws of enacting are taking place concurrently. The Model Law empowers the Courts to cooperate and directly communicate with the foreign counterparts in order to make the proceeding fair and efficient.

Article 32 of UNCITRAL Model Law on Cross Border Insolvency

This Article deals with the provisions regarding the rule of payment in concurrent proceedings and it provides that if during the proceedings in a Foreign state the creditor has received a part payment then, he will not get the payment for the same claim in the laws of the enacting state with regard to the same debtor.

Indian scenario

The UNCITRAL Model Law on Cross Border Insolvency has been adopted widely in order to resolve their conflicts in an efficient manner. The issues regarding Cross Border Insolvency are increasing steadily and for the purpose of resolving the said conflicts a robust mechanism should be there. 

Prevailing laws on cross border insolvency

Reports and discussions

The Ministry of Corporate Affairs in the year of 2017 constituted a committee namely ‘The Insolvency Law Committee’ under the chairmanship of Shri Injeti Srinivas, the then Secretary of Ministry of Corporate Affairs with a main objective to recommend amendments in the Insolvency and Bankruptcy Code, 2016. With respect to the matter regarding ‘Cross Border Insolvency’, the Committee decided to take this issue separately as the issue of Cross Border Insolvency is a complex one in order to provide recommendations and the committee wanted to examine the UNCITRAL Model Law on Cross Border Insolvency in depth. Later, the Committee submitted its report regarding the Cross Border Insolvency and recommended that the UNCITRAL Model Law on Cross Border Insolvency should be adopted. 

Cross Border Insolvency and IBC

Nowadays, there has been a lot of surge in Cross Border Insolvency cases as a result of developing economic connections amongst different countries. In India, the issue of domestic insolvency has been dealt with effectively in the Insolvency and Bankruptcy Code (IBC), 2016. However, on the issue of Cross Border Insolvency the IBC has included few provisions for the same which are Section 234 and 235 that specifically talks about Cross Border Insolvency. 

Section 234

This Section deals with the agreements with the foreign countries, and it empowers the Central Government to enter into bilateral agreement with the foreign countries in order to manage the aftermath of cross border. The Central Government may also direct the Code to be applicable when the assets of a debtor or its personal guarantor at any place in the country with whom the reciprocal arrangement has been signed.

Section 235

It deals with the doctrine of reciprocity and states that during the insolvency proceedings the resolution professional or the liquidator may make an application to the National Company Law Tribunal (NCLT) in order to receive any evidence or action taken in such regard and if the Tribunal is satisfied then as per Section 235(2), the Adjudicating Authority may issue the letters of request to the Courts of the country where the parties have entered into an bilateral agreement as given under Section 234 with a purpose to decide upon the issue of assets of the debtors situated outside India.

Draft Z

In the report of the Insolvency Law Committee, a draft chapter has been recommended which contains the issues regarding the Cross Border Insolvency and such provisions are based upon the UNCITRAL Model Law on Cross Border Insolvency. It includes the rights and claims of foreign creditors, the recognition of foreign proceedings and the scope of powers of insolvency professionals. The Draft Z provides for the same rights to foreign creditors as that of domestic creditors. 

Judicial pronouncements

Rajah of Vizianagaram vs. Official Receiver, Vizianagaram (1962)

This is a landmark case in the history of Cross Border Insolvency in India wherein the Company in the present case namely Vizianagaram Mining Co. Ltd. was incorporated in England. The company took a certain piece of land on lease from the Raja of Vizianangaram who is the appellant in the present case. The company’s official receiver was appointed as the official liquidator. Some foreign creditors filed their claims before the official liquidator. The appellant opposed the claims made by the foreign creditors and stated that these claims in the liquidation proceedings can only be filed by the Indian creditors. However, the official liquidator rejected these contentions of the appellant and allowed the claims filed by the foreign creditors and held that as per the general as well as specific provisions of the Indian Companies Act, 1913, the foreign creditors may prove their claims in the process of winding up of an unregistered company. There are no reasons as to why foreign creditors should be excluded from filing their claims, the order for winding up of a company goes in favour of all contributors. Aggrieved by the said decision an application was filed by the appellant in the Court of District Judge, Vizagapatam wherein the application was dismissed. After this the appellant approached the High Court of Madras by way of filing an appeal, the High Court also dismissed the appeal by stating that the foreign creditors can prove their claims. Later, on the application of appellant under Article 133 of Indian Constitution, the High granted certificate to the appellant and hence he came before the Supreme Court by filing a civil appeal.

The Supreme Court observed that all the persons or contributors who have lent or contributed to the company can ask for their claims. The Court held that they can ask for their claims as the winding up proceedings of an unregistered company makes no difference between Indian and Foreign creditors and in their debts with respect to business, hence their claims are correctly filed. 

Jet Airways (India) Ltd. vs. State Bank of India & Anr. (2019)

This is the first instance of Cross Border Insolvency in India. In this case, Jet Airways (India) Ltd. was declared as a bankrupt company in the Netherlands. Although, the Corporate insolvency Resolution Process (CIRP) of Jet Airways was already initiated in India as per the provisions of Section 7 & 9 of the Insolvency and Bankruptcy (IBC), 2016 but the NCLAT gave recognition to both the proceedings and termed them as ‘parallel proceedings’. 

The tribunal also termed the proceedings held in India as ‘Foreign Main Proceedings’ as mostly the corporate debtors are located in India. The Court also suggested using the ‘Cross Border Insolvency Protocol’ that has been agreed by the administrator of Dutch and the insolvency professional of insolvency. Lastly, the Corporate debtor’s corporate insolvency resolution process was resumed, and the Dutch administrator was provided with the right to take part in the proceedings of the Committee of Creditors in order to provide relief to the creditors of both countries, India and Netherlands respectively. The present case plays a significant role and helps in establishing the urgent requirement to adopt the provisions of UNCITRAL Model Law on Cross Border Insolvency, 1997 by making changes in the present provisions regarding the issue. 

Conclusion 

It can be concluded by saying that one of the reasons for less development of economies of the country is their business failures, and it impacts a lot on the development and advancement of the country, but in order to minimise such losses that have been occurred a robust framework for resolving the insolvency matters has become a necessity, and it is one of the most important factors therein. 

Now, as the agreements are taking place globally and the risk of Cross Border Insolvency is not new so in order to resolve that the structure of  UNCITRAL Model Law on Cross Border Insolvency is there to resolve the issues of Cross Border Insolvency, however certain limitations are there as not every Country has adopted the Model Law and those like India who have adopted it has not become fully capable to implement it in an effective manner. 

Frequently Asked Questions (FAQs)

How the UNCITRAL Model Law on Cross Border Insolvency came into being?

UNCITRAL Model Law on Cross Border Insolvency came into being after it received the approval from the United Nations General Assembly through a resolution in the year of 1997. 

Who is a foreign Representative under the UNCITRAL Model Law on Cross Border Insolvency?

A foreign Representative is appointed under Article 2 (d) of the Model Law, and he is a person appointed on an interim basis or authorised to administer reorganisation and liquidation and mainly to act as a representative in a foreign proceeding as defined under Article 2(a) of the Model Law. 

How the UNCITRAL Model Law on Cross Border Insolvency was adopted in India?

The Ministry of Corporate Affairs in the year of 2017 constituted a committee namely ‘The Insolvency Law Committee’ under the chairmanship of Injeti Srnivasa, Secretary of Corporate Affairs for a purpose to recommend amendments in the Insolvency and Bankruptcy Code, 2016. Hence, the recommendations were made by the committee to adopt the UNCITRAL Model Law on Cross Border Insolvency in the Indian context. 

Which was the first case in India regarding the issue of Cross Border Insolvency?

The first case in India which deals with the issue of Cross Border Insolvency was Jet Airways (India) ltd. vs. State Bank of India & Anr. (2019)

Reference


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Dr. Surajmani Stella Kujur vs. Durga Charan Hansdah and Anr. (2001)

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This article has been written by Shreya Saxena. This article provides an insight into the judgement rendered by the Supreme Court in Dr. Surajmani Stella Kujur v. Durga Charan Hansdah. It comprehensively analyses the facts, issues involved, arguments advanced and the observations of the Court in detail.

Introduction

Marriage, as a social institution, has held great significance as a means to advance and strengthen human society since time immemorial. In India, marriage, divorce, succession, guardianship, etc. are governed by the personal laws of each community. Marriage among Hindus is recognized as a ‘sacrament’ and is governed by the Hindu Marriage Act, 1955. Being a Hindu by religion is a sine qua non for the Act to apply.

The present case pertains to a discourse on “who is a Hindu?” for application of the Hindu Marriage Act, 1955 and lends clarity on the status of Scheduled Tribes under the Hindu personal law. The judgement also addresses the essentials of a valid custom having the force of law.

Details of the case

Name of the case: Dr. Surajmani Stella Kujur v. Durga Charan Hansdah and Anr

Citation: AIR 2001 SC 938

Bench: Justice K.T. Thomas, Justice R.P. Sethi

Court: Hon’ble Supreme Court of India

Date of Judgement: February 14, 2001

Statute involved: Hindu Marriage Act, 1955

Important provisions dealt in the case: Constitution of India: Article 20, Article 44, Article 342 and Article 366

Hindu Marriage Act, 1955: Section 2, Section 3, Section 5, Section 11 and Section 29 

Indian Penal Code, 1860: Section 494

Petitioner: Dr. Surajmani Stella Kujur

Respondent(s): Durga Charan Hansdah and Another

Background of the case

The dominance of Hinduism over decades led to hinduization of the tribal community in India. These communities adapted to Hindu customs and rituals while undermining their own cultural identities and ways of life. In recognition of their vulnerable position, the Tribal community was excluded from the application of Hindu personal laws in an effort to preserve their culture, traditions and customs. Article 342 pertains to the Scheduled Tribes in India. It is pertinent to note that if the tribe does not find mention in any order or notification under Article 342 of the Constitution of India, members of such tribes would be deemed to be Hindus.  Additionally, a tribe may still be deemed Hindu despite mention in such an order, upon further notification by the Central Government as per Section 2(2) of the Hindu Marriage Act, 1956. The case of Dr. Surajmani Stella Kujur v. Durga Charan Hansdah and Anr. (2001) is a landmark judgement highlighting the scope of ‘Hindu’ in the Hindu Marriage Act, 1955.

Facts of Dr. Surajmani Stella Kujur vs. Durga Charan Hansdah and Anr. (2001)

The appellant and respondent no. 1 in the present case were both tribals, as per their own admission. While the Appellant was an Oraon, the Respondent belonged to the Santhal tribe. Both tribes are mentioned in Part XII of the Constitution (Scheduled Tribes) Order, 1950.

A complaint was filed by the appellant-wife before the Court of Chief Metropolitan Magistrate, New Delhi, stating that her marriage was solemnised with Respondent No. 1 as per ‘Hindu rites and customs’. She further alleged that Respondent No. 1 had married Respondent No. 2 without seeking divorce from the Appellant, and hence the second marriage was void under the Hindu Marriage Act, 1955 and the husband was liable for bigamy under Section 494 of the Indian Penal Code for marrying again during the subsistence of the first marriage.

However, the Court of Chief Metropolitan Magistrate, New Delhi, observed that:

  • The parties admittedly belonged to a tribal community and were governed by their own customs and usages. 
  • There was no evidence supporting the existence of such a custom prohibiting second marriage.

In view of the above circumstances, it was held that the husband could not be held liable. In appeal before the Hon’ble High Court, the decision of the Chief Metropolitan Magistrate, Delhi, was confirmed. The Delhi High Court held that in the absence of any notification under Section 2(2) of the Hindu Marriage Act 1955, the second marriage of the respondent could not be rendered void, either under Hindu law or as per established custom having the force of law. Finally, the case came up in appeal before the Hon’ble Supreme Court.

Issues raised in Dr. Surajmani Stella Kujur vs. Durga Charan Hansdah and Anr. (2001)

  • Who is a ‘Hindu’ under the Hindu Marriage Act, 1955?
  • When can a custom be deemed to have obtained the force of law?

Arguments of parties

Petitioner

The Appellant had deposed before the Trial Court that she was a Hindu by religion; she later conceded that since both parties were tribals, even though they professed Hinduism, their marriage continued to be governed by Santhal customs and usage. However, she further submitted that even in that case, according to the prevalent customs of the Santhal tribe, which mandated monogamy, the respondent husband could not have solemnised a second marriage during the subsistence of his previous marriage with the appellant. She alleged that the second marriage solemnised was void and the respondent was liable under Section 494 IPC for commission of bigamy.

Respondent

The respondent argued that the second marriage solemnised by him was in consonance with the Santhal tribe’s customs and usages. There was nothing in law that prevented him from doing so, even during the lifetime of the appellant.

Important laws dealt in the case

The Indian Penal Code, 1860

Section 494: Marrying again during lifetime of husband or wife

Anyone who marries while their spouse is still alive, knowing that such a marriage is invalid because it occurred during the spouse’s lifetime, shall face imprisonment for up to seven years and may also be fined.

(Exception): This section does not apply to individuals whose marriage to the spouse has been legally declared void by a competent court. It also does not apply to individuals who marry during the lifetime of a former spouse if the former spouse has been absent for seven continuous years and has not been heard from, provided that the individual intending to marry again informs their prospective spouse about these facts before the marriage.

The Hindu Marriage Act, 1955

Section 2: Application of the Act

This legislation is applicable to individuals of the Hindu faith, including variations like Virashaiva, Lingayat, or followers of Brahmo, Prarthana, or Arya Samaj. Individuals practising Buddhism, Jainism, or Sikhism or Any other individual domiciled in the territories covered by this Act who is not Muslim, Christian, Parsi, or Jewish, unless it’s proven that such individuals would not have been governed by Hindu law or its customs if this Act hadn’t been enacted.

Explanation: The following individuals are considered Hindus, Buddhists, Jainas, or Sikhs: 

a) Children, legitimate or illegitimate, born to parents who are Hindus, Buddhists, Jainas, or Sikhs. 

b) Children, legitimate or illegitimate, with one parent who is a Hindu, Buddhist, Jaina, or Sikh and who is raised within the cultural or religious community of that parent. 

c) Persons who convert or reconvert to Hinduism, Buddhism, Jainism, or Sikhism.

However, this Act doesn’t apply to members of Scheduled Tribes unless otherwise directed by the Central Government through official notification. The term “Hindu” in this Act includes individuals to whom the Act applies under this section, even if they aren’t Hindu by religion.

Section 3(a): Definition of “custom & usage”

The terms “custom” and “usage” refer to any established rule that has been consistently and uniformly followed for a considerable period, thereby acquiring legal force among Hindus within a specific locality, tribe, community, group, or family. However, this rule must meet certain criteria: it must be definite, reasonable, and not contrary to public policy. Additionally, in the case of a rule specific to a family, it must not have been abandoned by that family.

Section 5: Conditions for a Hindu marriage

A marriage between two Hindus can take place if the following conditions are met:

(i) Neither party is currently married.

(ii) At the time of marriage, neither party:

  1. is incapable of giving valid consent due to unsoundness of mind,
  2. is capable of giving consent but has a mental disorder that makes them unfit for marriage and childbearing, or 
  3. has experienced recurrent episodes of insanity.

(iii) The groom is at least twenty-one years old, and the bride is at least eighteen years old at the time of marriage.

(iv) The parties are not within the prohibited degrees of relationship, unless their customs or traditions allow such a marriage.

(v) The parties are not sapindas (closely related by blood), unless their customs or traditions permit such a union.

Section 11: Void marriages

Any marriage conducted after the enactment of this Act will be deemed null and void upon petition by either party against the other, if it violates any of the conditions outlined in clauses (i), (iv), and (v) of section 5.

Section 29: Savings

(1) A marriage between Hindus conducted before this Act’s enactment, which is otherwise valid, will not be considered invalid solely because the parties belonged to the same gotra or pravara, or to different religions, castes, or subdivisions of the same caste.

(2) This Act does not impact any right, whether arising from custom or conferred by specific legislation, to seek the dissolution of a Hindu marriage, regardless of whether it was solemnised before or after this Act came into effect.

(3) This Act does not affect ongoing proceedings under existing laws at the time of its commencement for declaring a marriage null and void, or for annulment, dissolution, or judicial separation. Such proceedings may continue and be resolved as if this Act had not been enacted.

(4) The provisions of the Special Marriage Act, 1954 (43 of 1954), concerning marriages between Hindus conducted under that Act, whether before or after the commencement of this Act, remain unaffected by this Act.

The Constitution of India

Article 44: Uniform Civil Code

It provides that it shall be an endeavour by the State to ensure application of a Uniform Civil Code throughout India.

Article 342: Scheduled Tribes

(1) The President, in regard to any State or Union territory, and if it’s a State, after consulting its Governor, can publicly specify through notification the tribes, tribal communities, or specific groups within them that will be recognized as Scheduled Tribes for the purposes of this Constitution in relation to that State or Union territory.

(2) Parliament holds the authority to enact laws to include or exclude any tribe, tribal community, or subgroup from the list of Scheduled Tribes mentioned in a notification issued under clause (1). However, apart from this provision, any notification issued under clause (1) cannot be altered by any subsequent notification.

Article 366(25): Definitions

“Scheduled Tribes” refers to tribes, tribal communities, or specific parts or groups within those tribes or tribal communities, as determined under Article 342 of the Constitution, and recognized as Scheduled Tribes for the purposes outlined in this Constitution.

Judgement in Dr. Surajmani Stella Kujur vs. Durga Charan Hansdah and Anr. (2001)

A division bench of the Supreme Court, comprising Justice K.T. Thomas and Justice R.P. Sethi, was seized of an appeal where an Oraon tribal woman sought relief under the Hindu Marriage Act, 1955, against her estranged husband, who had solemnised a second marriage during her lifetime. The question of law that came up for consideration was “Who is a Hindu?” for application of the Hindu Marriage Act, 1955. The Supreme Court held that Scheduled Tribes were excluded from the purview of the Act.

Thereafter, another line of argument was advanced by the Appellant that the customary laws of the Santhal community only permitted monogamy. However, the Appellant was unable to prove the existence of such a custom. Accordingly, the Court observed that in the absence of material evidence on record regarding the existence of a custom and the exclusion of the tribes from the purview of the Hindu Marriage Act, 1955. The second marriage solemnised by the respondent husband could not be declared void, and hence he was not guilty of bigamy under Section 494 IPC. An issue wise detailed analysis of the landmark judgement is provided below.

Rationale behind the judgement

Who is a ‘Hindu’ under the Hindu Marriage Act, 1955?

Being a Hindu is a sine qua non for the application of the Hindu Marriage Act, 1955. Hinduism harbours within its folds an eclectic mix of practices, traditions and cultures that are impossible to define, given their magnitude. Therefore, in order to answer the above question, the judgement delves into Section 2 of the Act: which provides an exclusionary definition describing who is not a ‘Hindu’. The definition under Section 2(1) recognizes that the Act shall only apply to individuals who are Hindu by religion, in all its forms and manifestations, including the followers of Arya, Bramho and Prarthna Samaj, Lingayat and Veerashaiva sects, Buddhists, Sikhs, Jains, and persons not practising Zoroastrianism, Islam, Christianity or Judaism, while Section 2(2)  of the Hindu Marriage Act excludes members of Scheduled Tribes under Article 366(25) from the definition unless directed by the Central Government through notification in the Official Gazette. The Apex Court relied upon the above interpretation to hold that the Appellant and Respondent, who were members of the Oraon and Santhal tribes, respectively, were governed by Santhal customs and usages, to the exclusion of the Hindu Marriage Act. Therefore, the second marriage contracted by the respondent- husband could not be declared void under Section 11 read with Section 5(i) on the ground that it was contracted during the complainant’s lifetime. 

When can a custom be deemed to have obtained the force of law?

Customs generally relate to the civil rights of individuals, a violation of which shall not constitute a criminal offence. According to Article 20 of the Constitution, nobody can be convicted for an offence except if it is in violation of the ‘law in force’ at the time the offence was committed. Hence, customs can only be used to prove violations of civil rights, which may in turn constitute ingredients for a criminal offence.

“Custom and Usage,” defined in Section 3(a) of the Hindu Marriage Act, denotes any rule that has been observed continuously and uniformly since time immemorial and has obtained the force of law in some local area, group, family or within a tribe. Additionally, a proviso to the section provides that such custom or usage must not be unreasonable or opposed to public policy. 

The Apex Court observed that for a custom to have the force of law, three conditions must be fulfilled. It must be ancient, uniform and reasonable. The court relied on the case of Ramalakshmi Ammal v. Sivananatha Perumal Sethurayar (1872) to hold that special usages that modify ordinary law must be ancient, invariable and established by clear and unequivocal evidence. The same position in law was reiterated in the case of Mirza Raja Pushpavati Vijayaram Gajapathi Raj & Ors. v. Sri Pushpavathi Visweswar Gajapathiraj Rajkumar of Vizianagram & Ors. (1964). The Courts shall recognize the existence of a custom only upon ascertaining that it is certain, antique and capable of being established by cogent evidence. Once a custom is recognized, Section 29 of the 1955 Act acts as a savings clause and provides that if any right is recognized by a custom, nothing contained in the Act shall affect such rights, thereby recognizing the significance a valid custom holds.

In the present case, an analysis of the pleadings revealed that no such custom which prohibited the husband from contracting a second marriage during his wife’s lifetime could be made out, and hence the marriage so contracted could not be declared void. The Bench also recorded that no such reference to an existing custom prohibiting polygamy was initially made by the appellant in her complaint before the Court of Chief Metropolitan Magistrate, Delhi. It was only an afterthought at a later stage. Since, a void marriage is a prerequisite to attaching liability under Section 494 IPC, it was held that the respondent husband could not be held guilty of committing bigamy. The court further emphasised that mere statements about the existence of a custom shall not suffice and have to be substantiated by evidence establishing its existence from time immemorial. 

Analysis of Dr. Surajmani Stella Kujur vs. Durga Charan Hansdah and Anr. (2001)

Section 494 of the Indian Penal Code provides that when a person marries again, despite having their spouse living at the time of contracting such marriage- such a marriage shall be rendered void and the contemnor shall be punished with imprisonment up to seven years and a fine.

A void marriage is one of the qualifying criteria set forth under section 494 IPC. In the present case, by virtue of not being governed by the Hindu Marriage Act and her inability to prove any custom among the Santhals mandating monogamy, the appellant wife was unable to seek any effective legal remedy. This is the story of many other women who have been discriminated against under the garb of religion, culture, and traditions. While the relevance of this landmark judgement is limited to defining the scope of application of the Hindu Marriage Act, 1955 in hindsight, another issue that reveals itself is the need for a Uniform Civil Code (UCC).

There is no denying the fact that subordination of women, often justified by some divine purpose, has long been the underlying theme of many cultural and religious practices alike. Practices such as Sati, the exclusion of daughters in succession to ancestral property, triple talaq and the flawed Mehr system, which were abolished later, are all glaring examples of the same. However, such piecemeal attempts by the courts at bridging the gap between personal laws’ and Constitutional tenets are insufficient and have paved the way for a dialogue on the UCC.

A study carried out by the Committee on the Status of Women in 1974 – evaluated polygamous marriages solemnised after the introduction of the Hindu Marriage Act and recorded a sharp decline among  Hindus. On the other hand, tribal polygamous marriages, which were still unregulated, doubled to a whopping 17.98%. Neither any efforts were made to codify tribal customs nor were any reforms brought about, leading to long- standing stagnancy. Concurrently, polygamous marriages among Muslims also saw a gradual rise. However, religion has always been a contentious issue in the Indian subcontinent, more so after the bloodied 1947 partition. Therefore, in order to reassure minorities who may have harboured doubts about the intentions of the majority community, the personal laws of each community were retained and given legal recognition. Additionally, a provision for a Uniform Civil Code was included only as a non- binding policy directive under Article 44 of the Constitution for future governance. 

Now, several years later, when India has assumed the role of a modern welfare state that is signatory to various international conventions, including the Convention on the Elimination of All Forms of Discrimination against Women (CEDAW) and the International Covenant on Civil and Political Rights (ICCPR), it becomes essential to do away with regressive practices continuing under the garb of religion and/or customs. In this background, a Uniform Civil Code that addresses matrimony, maintenance, succession and guardianship and applies universally to all citizens becomes imperative.  

Conclusion

India is a nation of diverse ethnicities, religions and cultures bound together by the Constitution. While public law, including the Constitution, dictates the relationship of citizens with the State, the private sphere continues to be governed by personal laws. Speaking of personal laws, it is pertinent to observe that in the present case, the appellant remained unsuccessful in her attempt to prove the respondent- husband guilty of bigamy even upon solemnization of another marriage during the lifetime of the Appellant because she belonged to the Oraon Tribe. In the name of preserving tribal customs, tradition and cultures, the Scheduled Tribes are excluded from the purview of the Hindu Marriage Act, 1955. However, in reality, under the garb of such preservation, the law leaves the woman open to exploitation and oppression by not recognizing the acts of the husband as an offence.

Cultural and customary practices that are regressive, denigrating to the status of women, and deeply rooted in patriarchal notions of religion or culture have no place in contemporary India and should be eradicated. The Constitution of India upholds the spirit of secularism and directs under Article 44 that the State shall endeavour to bring about a Uniform Civil Code extending throughout India’s landscape.

Therefore, introducing a Uniform Civil Code that is equally applicable to all sections of society, irrespective of their culture, customs or religion- covering various aspects of personal life, shall help maintain equilibrium between the citizen’s constitutional rights while safeguarding India’s diverse religious demography.

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Iqbal Bano vs. State of U.P. (2007) 

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This article is written by Ambar Chaurasia. This article discusses in detail the background of Iqbal Bano v. State of U.P. (2007), vis a vis Muslim women’s right to proceed under Section 125 of CrPC, despite having a way under the Muslim Women (Protection of Rights on Divorce) Act, 1986, the facts of the case, issues raised, arguments of the parties, the laws involved, and the judgement and analysis of the case.

Introduction 

A seminal decision in Indian jurisprudence, “Iqbal Bano v. State of U.P. (2007)” (hereinafter referred to as this case)’ is a significant precedent that explains the response to the legal question of the relationship between the rights of Muslim women using the personal laws and the state legal system in the secular legal system of the CrPC.  

There are many other things that come up related to the topic; the rights of a Muslim woman and her children’s maintenance, how to communicate Talaq and how important it is.  

This case was significant because it examined whether a Muslim woman is eligible to file for maintenance from her husband under Section 125 of the CrPC, which provides for support to any person unable to make provisions for themselves and who may become destitute by reason of a lack of support. 

Therefore, one of the fundamental values that the Supreme Court was highlighting in its ruling, which maintained that Muslim women are entitled to legal safeguards that are just as fundamental to women in other faith-societies, is equality and non-discrimination. This decision fostered further advancement of gender justice in relation to family law and showed once again how much commitment the judiciary has to the performance of their duty of ensuring that everyone enjoys his/her rights within the law despite their religious backgrounds.

Details of the case

Name: Iqbal Bano V. State of Uttar Pradesh & Anr.

Citation: (2007), 6 SCC 785

Date of Judgement: 05.06.2007

Bench: Honourable Mr. Justice DR. Arijit Pasayat and D.K. Jain, JJ.

Background of Iqbal Bano vs. State of U.P. (2007) 

The whole controversy related to the right of maintenance of a Muslim woman started from the enactment of The Muslim Women (Protection of Rights On Divorce) Act, 1986 (hereinafter referred to as the 1986 Act), which was enacted by the legislation and by then ruling government due to pressurisation of Islamist group after Mohd. Ahmed Khan v. Shah Bano Begum and Ors (1985) (hereinafter referred to as the Shah Bano case) in which the Hon’ble Supreme Court for the first time held that Section 125 Criminal Procedure Code, 1973 (hereinafter referred to as CrPC) is a secular law and it applies to women of all religion and if a conflict is found to be there between Section 125 CrPC and Muslim personal law, the provision of CrPC will prevail. 

The Apex Court held that the aim of enacting Section 125 CrPC is to provide quick and summary remedies to a class of persons who are unable to maintain themselves. Section 125 is truly secular in nature; the liability imposed by Section 125 CrPC is founded upon the individual obligation to society to prevent vagrancy and destitution of woman

The Apex Court also observed that Section 125(1), explanation B, states that the term wife includes a divorced wife too, who has not remarried, irrespective of the religion professed by her. Therefore, the term wife includes a Muslim divorced woman as long as she has not remarried. 

The interpretation of the Honourable Supreme Court backfired and was not welcomed by many sections of Muslims and it became a centre of controversy. Many sections of Muslims believed it was an attack on their religious freedom, so the protest was taken to the streets and the Judgement was considered an encroachment on Muslim personal Law.

In this case, Shah Bano, a 62-year-old Muslim woman, approached the court to grant her maintenance from her divorced husband, Mohammed Ahmad Khan. They both got married in 1932 and got divorced by irrevocable Talaq in November 1977.

The Petitioner approached the court to grant her and her children maintenance under Section 125 CrPC and contended that the provision puts a legal obligation on a man to provide maintenance to his wife even after divorce if she is not able to maintain herself.

On the other hand, the respondent took his stand via Muslim Personal Law and contended that it is an express principle under Muslim law that a man is only obliged to maintain her wife for the Iddat period after granting her divorce. This contention was also supported by the All India Muslim Personal Law Board, which contended that the courts are bound in the matter of maintenance, divorce, and other family issues to give decisions as per Shariat and any interference will amount to  a violation of The Muslim Personal Law (Shariat) Application Act, 1937. 

The decision of the Apex Court sparked controversy and the government elected in 1984 passed the 1986 Act  with a view to nullifying the Supreme Court’s Judgement in the Shah Bano Case. The “statement, objects and reasons” part of the act stated that “the Shah Bano decision had led to some controversy as to the obligation of the Muslim husband to pay maintenance to the divorced wife and hence an opportunity was therefore taken to specify the rights which a Muslim divorced woman is entitled to at the time of divorce and to protect her interests.”

As per the new enactment, a woman who is unable to maintain herself after the expiry of the Iddat period cannot ask for maintenance from her husband; instead, the magistrate can direct the Waqf Board to provide the aggrieved woman with maintenance for her and her children. The validity of the 1986 Act was challenged by the lawyer, i.e., Daniel Latifi.

In Daniel Latifi v. Union of India (2001) (hereinafter referred to as Daniel Latifi case), a five-judge bench of the Supreme Court upheld the 1986 Act’s constitutionality and noted that, despite the act’s apparent intent to grant Muslim husbands the freedom to withhold maintenance payments from their divorced wives following their separation and Iddat period.

A close examination of the 1986 Act’s provisions reveals that divorced women are entitled to a fair and reasonable maintenance allowance. under Section 3(1)(a) of the 1986 Act. 

The parliament seems to intend that the divorced woman get sufficient means of livelihood after divorce. Now, after upholding the validity of the Muslim Women (Protection of Rights on Divorce) Act, 1986, many questions arise, like when a Muslim woman can file a petition under Section 125 CrPC and when it is to be filed under Section 3 of the 1986 Act. A few of them were answered by the apex court in this case.

Facts of Iqbal Bano vs. State of U.P. (2007) 

  • The appellant filed a petition under Section 125 CrPC on February 21, 1992, claiming a maintenance amount of Rs 500 per month from respondent no. 2. The appellant and respondent no. 2 were married in the year 1959 and a son was born out of wedlock who died in the year 1991. The appellant and the respondent were already living separately and after the death of their son, respondent no. 2 stopped visiting the appellant and stopped paying any money for her sustenance; hence, the appellant approached the Court of Judicial Magistrate. 
  • The Respondent stated in his written statement that he had already divorced the appellant a long time ago by uttering the word “Talaq” three times, and he had also paid her Mehr. He also contended that, as per Muslim personal law, a husband is not obliged to maintain his wife after the expiry of the Iddat period; hence, the appellant’s claim is not maintainable. 
  • However, the contention of respondent no. 2 was rejected by the trial court and the appellant was granted Rs 450 per month as maintenance. The said order was challenged in revision before the learned Additional Sessions Judge, and the revision petition was allowed. 
  • The first revisional court further added that the Mehr having been paid and the Iddat period being over, the appellant’s and respondent’s marriages stand annulled and the appellant will be considered divorced. The appellant approached the Allahabad High Court against the revisional order and the writ petition was dismissed summarily; hence, the appellant went to the Hon’ble Supreme Court.

Issues raised 

  • Whether a married Muslim woman is entitled to file a petition under Section 125 of CrPC for maintenance?
  • Whether a mere plea in a written statement by the husband and the communication about the same through supplying a copy of such written statement be upheld as talaq?
  • Whether a magistrate is empowered to treat an application under Section 125 CrPc as an application under Section 3(2) of the 1986 Act?
  • Whether the liability of a Muslim husband to his divorced wife arising under Section 3(1)(a) of the Muslim Women (Protection of Rights on Divorce) Act, 1986, to pay maintenance is confined to the iddat period?

Arguments of the parties

Petitioners 

The petitioner, Iqbal Bano’s counsel, argued that the revisional court was erroneous in stating that a petition by a married Muslim woman is not maintainable under Section 125 CrPC and a married Muslim woman is supposed to file for maintenance under the 1986 Act and not under the provisions of CrPC. As the 1986 Act was enacted for Muslim divorce women and not married Muslim women, and the provision of CrPC being a secular law, it is not barred for a Muslim married woman to file for maintenance under the provision of CrPC.

The petitioner further contended that the observation of the revisional court that the mention of divorce given by pronouncement 30 years ago in the written statement will amount to divorce is also erroneous.

The petitioner further contended that mere mentioning in the written statement about pronouncing talaq that was pronounced 30 years ago cannot amount to divorce. 

The petitioner also challenged the manner in which the High Court dismissed the revision petition.

Mr. S.W.A. Qadri, learned counsel for the state of Uttar Pradesh, also mentioned several decisions that strengthened the contentions of the appellant.

Respondent  

However, the counsel for the respondent supported the decision of the High Court and called for no interference.

Judgement of Iqbal Bano vs. State of U.P. (2007)

  • Trial Court’s verdict

The trial court, while granting maintenance of Rs 450 to the petitioner, rejected the contentions of respondent no. 2 and stated that there was no evidence to substantiate the plea of divorce; hence, the marriage between the appellant and respondent no. 2 cannot be held to be annulled and respondent no. 2 is liable to maintain the appellant.

  • Session courts verdict

The learned Additional District and Session Judge allowed the petition by the respondent and held that a maintenance petition under Section 125 CrPC is not maintainable after the enactment of the 1986 Act and a Muslim woman must file an application under Section 3 of the 1986 Act.

The Session Court further opined that the divorce by way of pronouncement 30 years ago and mention of the same in the written statement would amount to a valid divorce. The order of the Magistrate was set aside by the Session Court.

  • High court’s verdict

The High Court dismissed the writ petition filed by the appellant summarily, upheld the order passed by the Session Court, and held that there is no illegality in the Sessions Court order, hence it is not liable to be set aside and dismissed the petition.

  • Supreme Court’s verdict

The Hon’ble Supreme Court categorically rejected the view of the additional session judge, i.e., the first revisional court, that a married Muslim woman cannot file a petition under Section 125 CrPC.

Further, while citing a judgement in Shamim Ara v. State of U.P. & ANR (2002) of the Apex Court, in which the Court rejected the view of the Session Court that mentioning the pronouncement of talaq 30 years ago in the written statement will amount to divorce. 

As it was held by the Apex Court in the case of Shamim Ara, for a Talaq to be effective, it has to be pronounced properly, and by “pronounced properly,” the court meant that it must be uttered formally and rhetorically, and a mere mention in the written statement of pronouncing talaq sometime in the past cannot validate the talaq, and the pronouncement must be proved, and a plea of talaq being pronounced on a previous date and delivery of the same to the wife by such a plea cannot validate talaq.

The Apex Court also found the conclusion regarding payment of Mehr till the expiry of the Iddat period irrelevant while citing the Daniel Latifi case), in which the validity of the 1986 Act was challenged. In this case, the Apex Court held the following points :

  • According to the Court, the 1986 Act was created with the intention that the divorced woman would have a sufficient means of subsistence after the divorce. The word “Provision” in Section 3(1)(a) denotes that something is provided in advance for meeting needs at the time of divorce, and taking the two together will imply that the husband is required to take the wife’s future needs into consideration. These needs may include housing, food, clothing, and other necessities.
  • The Supreme Court also opined that the expression “within” in Section 3(1)(a) of the 1986 Act should be read as “on or before” and not as “during or for.”. Therefore, it would imply that the husband must make and give the wife maintenance by the end of the Iddat term or before. 
  • Nonetheless, the parliament has made no mention of the reasonable and equitable clause being restricted to the Iddat term and not beyond. If the divorced wife doesn’t get married again, it will apply to her in its entirety. 
  • Section 3 focuses on the deadline for concluding an arrangement for payment of such provision and maintenance, i.e., during the Iddat period, rather than the length of time that any such provision or maintenance should last.

The Apex Court further opined that the proceedings under Section 125 CrPC are civil in nature and that it is open to the Court to treat a petition under Section 125 as a petition under the 1986 Act, considering the beneficial nature of legislation and cited Vijay Kumar Prasad v. State of Bihar (2004).

After considering all the facts and previous cases cited, the Honourable Supreme Court set aside the order of the High Court, remanded the matter for fresh consideration, and directed the High Court to dispose of the matter within six months. 

Rationale behind the judgement 

The principles of equality and non-discrimination firmly established in the Indian Constitution provide the rationale for the ruling in this case. In its decision, the Supreme Court emphasised that these principles must take precedence over customs or regulations that may violate the rights of individuals, especially marginalised groups like women and children.

The Court acknowledged that it would be a breach of Muslim women’s fundamental rights to deny them the ability to claim maintenance under Section 125 of the CrPC based solely on their religious identification. The Court ensured that Muslim women were not denied the same legal safeguards as women from other faith communities by upholding Section 125 CrPC’s applicability to them.

In addition, the ruling sought to address the structural injustices and patriarchal frameworks that were embedded in personal laws, frequently depriving women of their rights and marginalising them. The Court affirmed the concepts of gender equity and equality before the law and contributed to developing a more equitable legal framework by defending the rights of Muslim women to seek maintenance.

Overall, the rationale behind the judgement was grounded in the principles of constitutionalism, gender equality, and social justice, with the aim of ensuring that all individuals, regardless of their religious background, have equal access to legal remedies and protections.

Issue-wise judgement

  1. Whether a married Muslim woman is entitled to file a petition under Section 125 of CrPC for maintenance?

The Honourable Supreme Court expressly conferred that the Revisional Court was erroneous in upholding that a Muslim woman is not entitled to file a petition under Section 125 CrPC. 

It categorically opined that the applicability of the 1986 Act is limited to a divorced Muslim woman only and not on a married Muslim woman.

Hence, the issue was decided in the affirmative and it was held that a married Muslim woman is entitled to file a maintenance petition under the provision of CrPC

  1. Whether a mere plea in a written statement by the husband and the communication about the same through supplying a copy of such written sufficient can be upheld as talaq?

To answer this issue, the Apex Court referred to the judgement in Shamim Ara Case In this case, the Supreme Court rejected the contention of the respondent that the pronouncement of talaq in 1987 and the communication of the same through his written statement in 1990 would amount to divorce and such a self-serving statement of the respondent cannot be read in evidence as relevant and of any value.

The Apex Court held that the term “Pronounce” means to proclaim, to utter formally, or to utter rhetorically, i.e., the pronouncement must be formal and in such a manner that its immediate communication can be established. 

  1. Whether a magistrate is empowered to treat an application under Section 125 CrPc as an application under Section 3(2) of the 1986 Act?

While referring to Vijay Kumar Prasad v. State of Bihar  (2004), the Honourable Supreme Court discussed that the proceedings under Section 125 CrPC are civil in nature, and moreover, a proceeding under this section and an application under the 1986 Act are triable by the same court.

Hence, even if a divorced Muslim woman files an application under Section 125 CrPC, it is open to the Court of Judicial Magistrate to treat such an application under Section 3(2) of the 1986 Act.

  1. Whether the liability of a Muslim husband to his divorced wife arising under Section 3(1)(a) of the Act to pay maintenance is confined to the iddat period?

The Supreme Court referred to the case of Daniel Latifi, in which it was held that the expression “within” in Section 3(1)(a) should be read as “on or before” and not as “during or for”; therefore, it would mean that the husband is bound to make and pay maintenance to the wife on or before the expiration of the Iddat period.

However, the parliament has nowhere provided that reasonable and fair provision is limited only to the Iddat period and not beyond it. It would extend to the whole of the divorced wife unless she is remarried.

The emphasis of Section 3 is not on the nature of the duration of any such provision or maintenance but on the time by which an arrangement for payment of such provision and maintenance should be concluded, i.e., within the Iddat period.

Hence, it can be construed that the payment of maintenance by a Muslim man to his wife must be made before the expiry of the Iddat period, but the accumulation of such an amount must be enough for the Muslim woman to sustain herself till such woman remarries or does not, as the case may be.

Analysis of Iqbal Bano vs. State of U.P. (2007) 

  1. Background and context 

The central issue, in this case, was whether a divorced Muslim woman could avail themselves of this provision and seek suitable maintenance despite the introduction of the 1986 Act, which is based on four explicit provisions specifying maintenance for a divorced Muslim woman. This was a landmark case in which an interpretation of the provision of Section 125 of the CrPC was made to clarify Muslim women’s rights. Section 125 CrPC does not recognize caste, even though it avowedly seeks to promote secularism by providing maintenance to women, children, and parents who cannot support themselves.

  1. Legal Issues

Section 125 of CrPC and it was clear whether the Muslim women could claim to be entitled to maintenance under this section, which is a general law applicable to all the citizens of India or whether they would have to seek it exclusively under their personal laws.

The discussion on the post-divorce or the right of maintenance of a Muslim woman: whether such Muslim women who have rights to maintain as specified under the 1986 Act will be barred from claiming their maintenance under Section 125 CrPC.

Whether denying Muslim women the right before a court of law to claim maintenance under Section 125 CrPC would be a violation of their constitutional rights of equality and anti-discrimination.

  1. Supreme Court’s Rationale

The Supreme Court interpreted Section 125 CrPC as non-religious legislation that aimed to prevent desertion and ensure the right to a basic source of sustenance for anyone who needed it, with religious considerations being irrelevant. The Court consequently explained that the section should be interpreted broadly so as to provide help to other people and that its intention was to serve social justice.

The Court also understands the fact that personal laws may be applicable in some areas of family life but no personal law should take precedence at the expense of constitutional rights. The Court stated that it is paramount to ensure that the constitutional principle of equality and non-discrimination supersedes the right to follow personal laws. 

The decision made a very good point that it is critical to advocate for fair and just legal interpretations of the law. The Court asserted that rights should not be infringed just because of the religion that is followed by a woman. Even though the Court upheld that it is a matter that subsisted within personal law and these people cannot be given benefits of Section 125 CrPC, it also made clear that the fundamental right of equal protection of the law, which was guaranteed to each citizen of India, has been vindicated by allowing Muslim women to seek maintenance under Section 125 CrPC.

  1. Impact of the Judgment

This case is particularly important as it is one of the first decisions in which Indian courts discuss the reconcilability of Section 125 CrPC with the personal laws of Muslim women, and, as such, it confirms that Section 125 CrPC can indeed be applied to Muslim women. 

The judgement was a progressive move that aimed to encourage gender equality and justice. It emphasised how the judiciary champions the rights of society members based on their backgrounds, for example, women. 

It helped to achieve a balance between the application of Islamic and secular laws and ensured that the Islamic laws did not negate the concepts of equality and non-discrimination as envisaged in the constitution.

Conclusion 

The Supreme Court’s judgement in this case was a landmark decision that reinforced the constitutional principles of equality and non-discrimination. By allowing Muslim women to claim maintenance under Section 125 CrPC, the Court ensured that they were not left destitute due to restrictive interpretations of personal laws. 

This case exemplifies the judiciary’s commitment to upholding the rights of all citizens and promoting a more equitable legal framework for women in India, irrespective of their religion. The judgement answered many other issues and categorically interpreted the law in a manner that served the purpose better. 

This particular case is a very good example of how to construe different laws harmoniously even when there seems to be a light conflict between them and every law of the land should be construed in a manner that serves the ultimate purpose of the grundnorm of the land, i.e., The Constitution of India.  

Frequently Asked Questions (FAQs)

What is the Iddat Period and how is it calculated?

Under Muslim personal law, after the pronouncement of divorce, a Muslim woman has to follow a divorce Iddat period to make the divorce final and effective. Divorce iddat has been defined under Section 2(b) of the 1986 Act. The divorce iddat needs to be followed if the marriage has been consummated, and if the marriage has not been consummated, the wife need not observe the divorce iddat.

As per Section 2(b), the divorce iddat is :

  • 3 menstrual courses after the divorce, if the woman is subject to such a cycle.
  • 3 lunar months (calculated as per the Hijri calendar, one lunar month equals 29.53 days and 3 lunar months equals 88.5 days ) after the divorce if the woman is not subject to such a cycle.
  • If the woman is pregnant, then the period between divorce and birth of the child or termination of pregnancy, whichever is earlier.

What if an application under Section 125 CrPC is filed before the Family Court? Can the Family Court still treat such an application as an application under Section 3 of the 1986 Act?

The said issue was recently discussed by the Honourable Supreme Court in Rana Nahid v. Sahidul Haq Chisti  (2020). The main issue in this case was that even though the validity of the 1986 Act has been upheld, there is no authoritative pronouncement as to whether the family Court would have jurisdiction to entertain an application filed by a Muslim divorced woman under the 1986 Act.

The said case was a 2 Judges Bench and there was a difference of opinion.

As per Justice Bhanumathi’s judgement.

It was held that Section 3 of the 1986 Act is a non-obstante clause with respect to a divorced Muslim woman who shall be entitled to rights enumerated in clauses (a) to (d) of Section 3(1) of the 1986 Act. Section 3 of the 1986 Act starts with the word “Notwithstanding anything contained under any other law.”. Hence, as per Honourable Mr. Justice Bhanumathi, such a non-obstante clause has to be understood reasonably and fairly, and it should not be allowed to demolish or extinguish existing rights unless the legislature’s intention is clear, manifest, and unambiguous.

It was further opined that the Family Court does not have jurisdiction under Section 7 of the Family Courts Act 1984 to entertain an application under Section 3 of the 1986 Act; therefore, the Family Court cannot entertain such an application.

As per Justice Banrjee’s judgement 

According to Justice Banerjee, the Family Courts Act was passed in order to establish the Family Courts and facilitate the resolution of marriage-related conflicts. The Family Courts Act’s statement of purposes and reasons states that many women’s associations have called for the establishment of family courts in order to facilitate conflict resolution and provide socially acceptable outcomes.

The Court also observed that on reading of Section 7(1) read with explanation (f) In accordance with Section 3 of the Act, the Family Courts Act grants the family court the authority and jurisdiction that a District Court or any Subordinate Court may exercise under any current statute to consider and rule on any lawsuit or maintenance proceeding, including an application made in accordance with Section 3 of the Muslim Women (Protection of Rights on Divorce) Act, 1986.

Due to a difference of opinion,. The judgement has been referred to a larger bench and is currently pending before the Honourable Supreme Court.

What is Section 3(1)(a) of the 1986 Act? 

Section 3 clause 1 subclause (a) provides that a Muslim woman is entitled to a reasonable and fair provision and maintenance within the iddat period from her former husband. The word “Provision” under this Section indicates something that is provided in advance for meeting some needs at the time of divorce by the former husbands. In other words, he is required to contemplate future needs and make preparatory arrangements in advance for meeting those needs. Such provisions may include provisions for her residence, food, clothes, etc. 

The Court also observed that Section 3(1) clause (a) provides for reasonable and fair provision and maintenance for his divorced wife within the Iddat period. The emphasis of this section is not on the nature of the duration of any such provision or maintenance but on the time by which an arrangement for payment of provision and maintenance should be concluded, namely within the iddat period.   

What does Section 3(2) of the 1986 Act provide for?

Section 3(2) provides for the remedy in cases where the amount of mahr or dower is due and has not been made or paid or where the property that was supposed to be delivered has not been delivered to a woman on her divorce. That woman or anyone duly authorised on her behalf can file an application before a magistrate to grant her such relief or order for payment of such provision and maintenance, mahr or dower or the delivery of properties, as the case may be.

References

  1. https://www.livelaw.in/pdf_upload/pdf_upload-376665.pdf
  2. https://islamqa.org/hanafi/askimam/28865/iddahiddat-period-of-waiting/
  3. https://www.scconline.com/blog/post/2022/05/20/if-divorce-is-declared-in-one-go-and-fatwa-is-issued-is-muslim-wife-entitled-to-maintenance-under-s-125-crpc-all-hc-answers/

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Moti Singh vs. State of UP (1963)

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This article is written by Mehak. This article seeks to provide a case brief on Moti Singh vs. State of U.P. This article revolves around the admissibility of a dying declaration when there is insufficient evidence proving the cause of one’s death. Further, this article includes all the facts, details, issues, arguments advanced, and judgement passed by the Bench. 

Introduction

Moti Singh vs. State of UP (1963) is a judgement addressing a question pertaining to the admissibility of a dying declaration when the cause of death became uncertain. This case extensively talks about the evidentiary value of statements recorded under Section 32(1) of the Indian Evidence Act, 1872, where the actual death of the person takes place some days after making the dying declaration. In this case, the Supreme Court addressed the appeal filed by Moti Singh and Jagdamba Prasad (accused/appellants) against the orders of the Allahabad High Court, which convicted the accused by relying on the dying declaration made by Gaya Charan. The Supreme Court in the appeal acquitted the appellants of the charges, stating that the statement of the person who died is only relevant when such a statement relates to the cause of his death or circumstances that resulted in his death, and in this case, the cause of his death is uncertain. Therefore, the Supreme Court held that appellants come under the ambit of the benefit of doubt, too. 

Details of the case

  • Case name: Moti Singh vs. State of UP 
  • Appeal No.: 146 and 147 of 1962
  • Equivalent citation: 1964 AIR 900, 1964 SCR (1) 688
  • Court: Supreme Court 
  • Bench: Raghubar Dayal, Syed Jaffer Imam, Subbarao, and J.R. Mudholkar 
  • Petitioner: Moti Singh
  • Respondents: State of UP
  • Type of case: criminal 
  • Act involved: Indian Evidence Act, 1872
  • Important provision: Section 32(1) of the Indian Evidence Act, 1872
  • Date of the Judgement: January 23, 1963

Facts of Moti Singh vs. State of UP (1963) 

Moti Singh, Jagdamba Prasad, and five others were accused and convicted by the Sessions Judge of Unnao for the murder of Gaya Charan under Section 148, Section 302 read with Section 149, and Section 307 read with Section 149 of the Indian Penal Code. Each accused was sentenced to life imprisonment as per Section 302, read with Section 149 of the IPC. Thereafter, the appellants preferred an appeal to the Allahabad High Court, where the court acquitted the appellants, namely Sheo Darshan Singh and Avadh Behari. The Court acquitted them on the basis that their names were not mentioned in the dying declaration made by Gaya Charan under Ex. Kha 75. Also, in Ex. Kha 75, four assailants were mentioned, which made it factually doubtful that the number of assailants was more than four. Moreover, the High Court felt doubtful of the deposition made by the eyewitnesses that the accused fired gunshots from the seori (cattle shed) when the victim passed along the passage. However, the High Court strongly believed the prosecution version of shots being fired from the room and the platform because such a deposition was made by prosecution witnesses. Also, exhibits Kha 5, 8, and 75 mentioned the same, which was recorded by a Magistrate at the hospital. Therefore, the Court consequently acquitted Sheo Shankar, Jagjiwan, and Shankar Dayal of the charges. The High Court fully relied on the Ex. Kha 75 (dying declaration of Gaya Charn) and considered his statement as a complete account of the occurrence. So, the Court considered that the number of assailants could not be more than four in number since, as per the statements recorded in Ex. Kha 75, the number of assailants was only four. And so the Court viewed that Section 149 does not apply to the current scenario, and hence, no offence is committed under Section 148 of the IPC. 

The Court also, while relying on the dying declaration, convicted Jagdamba Prasad while also considering the fact that he remained absconded until his arrest on September 30, 1960, from the day of the occurrence of the incident that took place on February 9, 1960. The Court, relying on Ex. Kha 75, convicted Moti Singh and Jagdamba Prasad since their names were expressly mentioned. The Court distinguished these two appellants from others on the basis that these two appellants were expressly mentioned by Gaya Charan under his dying declaration. Thereafter, Moti Singh and Jagdamba Prasad obtained special leave from the court and preferred the appeal to the Supreme Court. It follows that if the alleged dying declaration is considered as inadmissible evidence, then the appeal has to be allowed and the conviction of the appellants will be set aside.

Issues raised 

On the basis of the facts and arguments advanced by the parties, the Court framed the following questions of law for its consideration: 

  1. Whether the dying declaration made by Gaya Charan is admissible or not?
  2. Whether Moti Singh and Jagdamba Prasad should get the benefit of doubt?

Arguments of the parties

Appellant

The Appellant, i.e., Moti Singh, appealed to the Honourable Supreme Court against the decision passed by the Allahabad High Court. The Appellant mainly argued on the admissibility of the statement made by Gaya Charan under Section 32(1) of the Indian Evidence Act, 1872, as Ex. Kha 75. The counsel pointed out that the statements under Section 32(1) can only become relevant and admissible in the eyes of the law if they show the cause of his death or the circumstances of the transaction that resulted in his death. Whereas, in the present scenario, Gaya Charan died after 20 days of making the statements, and after his death, before any postmortem or examination could be done, his body was cremated. Due to non-examination, there is no evidence on record of the cause of his actual death, since his death took place several days after the incident. 

The counsel further contended that mere deposition made by the doctor that the injuries were in depth and to be dangerous to life cannot hold guilty of the offences charged. In connection with this fact, the counsel brought up the fact that Ram Shankar, who was also injured by the gunshots he received, considered them to be dangerous to life, but that did not lead to his death. Therefore, mere deposition by the doctor shows that such injuries were dangerous to life, and so the injuries must be the cause of Gaya Charan’s death, and so we can rely on his dying declaration as well. The Court, on the basis of such findings of fact, argued that to rely on a dying declaration, one must prove the cause of his death, which in this case is uncertain, and this uncertainty must not be overlooked. Therefore, we cannot hold Moti Singh and Jagdamba Prasad accountable for the cause of Gaya Charan’s death and should get the benefit of doubt.       

Respondent

The Respondent here was the State of UP. The respondent mainly focused on Ex. Kha 75 Gaya Charan’s statement proving that gunshots were fired on him, out of which he recognised some assailants, namely Jagdamba, Phunnar, Moti, and one man whom he knew by face. Moreover, the eyewitnesses who made the deposition in court allege that the accused fired them with guns and pistols inside and outside of the room from one side and also from the cattle shed, which was on another side of the passage. Moreover, the statements made under Ex. Kha 5 and Kha 8 stated the same. Also, the doctor opined that the gunshot injuries on the body of Gaya Charan were deep enough to be dangerous to life. 

The counsel for the respondent further stated that the admissibility of the dying declaration made by Gaya Charan should not be put into question, as the statements made by Gaya Charan show the circumstances of the transactions that resulted in his death. Therefore, the statements recorded under Ex. Kha 75 should be considered for the conviction of the accused under the offences charged. 

Laws discussed in Moti Singh vs. State of UP (1963)

Section 32(1) of the Indian Evidence Act, 1872 

Section 32(1) of the Indian Evidence Act, 1872, considers those statements as relevant, where a statement made by a person shows the cause of his death or circumstances of transactions that resulted in his death. The statements made by the person before his death are covered under Section 32(1) of the Indian Evidence Act, 1872, and are described as “dying declaration”. A dying declaration can be considered relevant in any form, whether written, verbal, or in gesture form. Therefore, this section applies whenever any statement made by a person before his death raises questions about the cause of his death. 

Khushal Rao vs. State of Bombay, (1957), is one of the landmark cases when it talks about the reliability and admissibility of the dying declaration. In this case, the Supreme Court laid down certain principles while considering dying declaration-

  • There is no absolute law stating that a dying declaration cannot be the sole basis for conviction unless corroborated.
  • Determination shall be made on the facts of the case as to in what circumstances the dying declaration has been made.
  • The dying declaration holds the same amount of weightage as other pieces of evidence.
  • A dying declaration cannot be measured with confession or evidence of approver.
  • The corroboration is necessitated if the Court, with sufficient reasons, comes to the conclusion that the dying declaration is not free from infirmities.
  • The court has to observe the opportunity the deceased person had in order to test the reliability of the dying declaration. 
  • A dying declaration recorded by the magistrate in proper form holds more weightage than an oral dying declaration holding infirmities.
  • If the court is convinced that the declaration made is true, then it can be the sole basis for the conviction. 

This case acts as a precedent for determining the reliability of dying declarations. As follows, in the Moti Singh vs. UP case, the Supreme Court did not rely on the dying declaration made by Gaya Charan and acquitted the appellants. Gaya Charan died several days after making a dying declaration, and before knowing the cause of the death, his body was cremated, and the reason behind it became uncertain. This uncertainty left the aforesaid conditions unfulfilled since the circumstances under which the declaration was made became debatable. Also, as per Section 32(1), only those statements are relevant that state the cause of the death, which in this case is doubtful. Therefore, the Supreme Court relieved the charges imposed upon appellants on the basis of doubt.  

Section 148 of the Indian Penal Code, 1860

Section 148 of the Indian Penal Code, 1860, states that every person who is guilty of rioting, if armed with deadly weapons or anything that, if used as a weapon, can likely cause death of a person, shall be liable for imprisonment not exceeding three years, a fine, or both.

Rioting has been defined under Section 146 of the Indian Penal Code, 1860, which states that when any unlawful assembly or any member of such unlawful assembly uses force or violence in furtherance of the common object, then every member shall be liable for the offence of rioting. The punishment for rioting has been prescribed under Section 147 of the Indian Penal Code, 1860, for a term not exceeding two years, a fine, or both. 

Section 149 of the Indian Penal Code, 1860

Section 149 of the Indian Penal Code, 1860, states that if any member of the unlawful assembly has committed an offence in furtherance of a common object, then each member of such unlawful assembly shall be punishable under this provision of the act. The contribution of each member to the commission of the act shall not affect the quantum of punishment. Every member of an unlawful assembly shall be equally liable for the offence committed.

Unlawful assembly has been defined under Section 141 of the Indian Penal Code, 1860, which states that any assembly of five or more persons shall be designated as unlawful assembly if the common object of such assembly is:

  • To show criminal force to the Central government of any State government or Parliament or Legislature of any State, or any public servant. 
  • To restrain the execution of any law or any legal process.
  • To commit any mischief, criminal trespass, or any other offence. 
  • To obtain any possession of property or deprive someone of their incorporeal rights by means of criminal force.
  • To compel any person to do any act which he is not legally bound to do or to omit to do which he is legally bound to do, by means of criminal force. 

Sections 302 and 307 of the Indian Penal Code, 1860

Section 300 of the Indian Penal Code, 1860, states that every culpable homicide shall be murder if any person commits any act:

  • with the intention of causing the death of the person or 
  • with the intention of causing bodily injury to the person, knowing that such harm is likely to the cause death of such person or is sufficient in the ordinary course of nature to cause death,
  • have sufficient knowledge that such an act is so dangerous that it must cause death or cause bodily injuries that can likely cause the death of such a person.

Therefore, whoever commits any act with such intention or knowledge shall amount to murder as per Section 300 of the Indian Penal Code, 1860. 

Section 302 of the Indian Penal Code, 1860, specifies the punishment for murder. It states that whoever commits murder shall be punished with the death penalty or imprisonment for life and shall also be liable for a fine.

Section 307 of the Indian Penal Code, 1860, explains that whoever does any act with an intention or knowledge and under those circumstances, if by such an act the death of such person is caused, he would be guilty of the murder charges, then such person shall be liable with imprisonment for a period not exceeding 10 years and shall also be liable to a fine. But if such an act causes hurt, then he can also be liable for imprisonment for life. Moreover, if such a person is already liable for life imprisonment and any hurt is caused, then he shall be liable for the death penalty.

Judgement in Moti Singh vs. State of UP (1963)

The Hon’ble Court found that the incident occurred on February 9, 1960, and he was admitted to the hospital the same day, where he was examined by Dr. Bhatnagar. Upon examination, it was found that he had two gunshot injuries of entry ¼ x ¼ up to the depth of the abdomen, which, as per the opinion of the doctor, was dangerous to life. Following that, he either discharged or left the hospital before the injuries healed up; there is no record showing the circumstances in which he left the hospital, and subsequently, he died on March 1, 1960, in Kanpur. It was further learned that the body was cremated before any postmortem examination could be done on his body to determine the actual cause of his death. Due to non-examination, there was no explicit evidence showing the cause of the death of Gaya Charan. 

The mere fact that the two gunshot injuries were dangerous to life cannot hold appellants guilty of the death of Gaya Charan, which took place about three weeks after such an incident. Since, in connection with the fact that Ram Shankar, who was injured too in the incident, received a gunshot wound of 1×1/4 up to the death of his abdomen above the right end of the upper border of Symphysis pubes, it was also contemplated as dangerous to life, but he did not die of such an injury. Therefore, relying only on such evidence cannot charge appellants for the death of Gyan Charan. Thereupon, the effect of this finding specifies that the dying declaration made by Gaya Charan, Ex. Kh 75, is inadmissible. Because, as per Section 32(1) of the Indian Evidence Act, 1872, the statement of the person who died is only relevant when such a statement relates to the cause of his death or the circumstances that resulted in his death. And in the present scenario, there is no sufficient evidence establishing that the injuries made at the incident resulted in Gaya Charan’s death, so the statements made by Gaya Charan at the hospital become irrelevant and cannot be considered admissible evidence as the statement does not relate to the cause of his death. Hence, the statement made by Gaya Charan as Ex. Kha 75 is inadmissible in nature. The Court therefore allowed the appeal and set aside the order of the High Court by acquitting Moti Singh and Jagdamba Prasad of the charges. The Court added that these two appellants too deserve the benefit of doubt and that they would have gotten the benefit of doubt earlier if the High Court had not totally relied on the Ex. Kha 75 made by Gaya Charan. 

Rationale behind this judgement

This case proved to be one of the most influential due to the fact that it tries to elucidate the admissibility of a dying declaration when the cause of the death is uncertain. The Hon’ble Court in the present case clearly outlined that if the person whose statement was recorded under Section 32(1) of the Indian Evidence Act, 1872, died some days later and there is no evidence on record showing the actual cause or reason of his death as to why his death took place several days after the occurrence of the incident,. Such uncertainty about the death made the dying declaration irrelevant because it does not satisfy the ingredients of Section 32(1), which states that only such statements shall be considered relevant if they state the cause of his death or the circumstances that resulted in his death. Here, the cause of the death is uncertain, and there are no findings as to what resulted in his death; therefore, the statement recorded as a dying declaration seems irrelevant while convicting the accused of the offences. Hence, one must get the benefit of uncertainty if there is a lack of evidence showing the cause of the death.   

Analysis of Moti Singh vs. State of UP (1963) 

This case is among those that analyse the admissibility and applicability of statements recorded under Section 32(1) of the Indian Evidence Act, 1872. The Bench in this case focused on the admissibility of a dying declaration when the cause of the death of a person is doubtful. The Bench alludes to the ingredients of Section 32(1), which clearly states that a dying declaration recorded under this section shall only be considered relevant if it relates to the cause of his death or states the circumstances of transactions that resulted in his death. Further, it was stated that in this case, Gaya Charan, whose statement was recorded on the day he was admitted to the hospital under expectation of death, was considered relevant and admissible. But, as per the facts on record, Gaya Charan left the hospital and died 20 days after he left the hospital. 

The condition in which he left the hospital is not on record. To know the actual cause of his death, a postmortem was necessary, which, due to the cremation of the body, failed to happen, and the cause that resulted in his death remains uncertain. The Bench cannot convict the accused solely on the basis that the injuries Gaya Charan had were dangerous to life on the basis of a finding that Ram Shankar, who too had injuries in that incident that were dangerous to death as per the doctor but that did not result in his death. Therefore, the cause of the death of Gaya Charan becomes uncertain, and one cannot rely on the Ex. Kha 75 (dying declaration) to convict assailants of the charges made by the Session Judge of Unnao. 

The Court hence held that, just like other assailants get the benefit of doubt since their names were not expressly mentioned in Ex. Kha 75, Moti Singh and Jagdamba Prasad too shall get the benefit of such uncertainty. The reason being that the dying declaration made by Gaya Charan is irrelevant and inadmissible, and hence they cannot be convicted on such uncertainty. The Court therefore acquitted the accused and cleared them of the charges that were made against them.

Conclusion 

The decision by the Hon’ble Court in Moti Singh vs. State of UP mainly emphasised the admissibility of the dying declaration. The Court in this case elucidated the application of Section 32(1) of the Indian Evidence Act, 1872. To summarise, the Court herein held that where the deceased statement has been recorded as a dying declaration but the death took place some days later and there is no evidence showing the cause of his death due to non-examination or any reason, then such statements shall be considered inadmissible. Therefore, the Supreme Court set aside the order of the Allahabad High Court and acquitted the appellants of all the charges. The reason being the non-examination of Gaya Charan’s body, which raises uncertainty as to the cause of his death. The dying declaration can only be relevant when it specifies the cause of the death or the circumstances that resulted in it. Hence, the uncertainty of the death of Gaya Charan cannot make the dying declaration relevant and admissible. So, under such uncertainty, appellants cannot be convicted for the murder of Gaya Charan, and they must be acquitted by getting the benefit of doubt. 

Frequently Asked Questions (FAQs)

What is the evidentiary value of the dying declaration?

The dying declaration is admissible under Section 32(1) of the Indian Evidence Act, 1872, and is based on the legal maxim ‘nemomoriturus prae-sumitur mentire’ which means that a man will not meet his maker with a lie in his mouth. The Apex Court in K.R. Reddy vs. Public Prosecutor (1976) and Kushal Rao vs. State of Bombay (1957) observed the evidentiary value of dying declarations, stating that dying declarations are admissible under Section 32 because there is a belief that great solemnity and sanctity are attached to the words of a dying man and are not likely to lie out of his mouth. A dying declaration can act as the sole basis for the conviction of an accused without any corroboration if the court is satisfied that the dying declaration is true and voluntary and if such a statement isn’t tutoring, prompting, or a product of his imagination. The Court also ascertains if the deceased was in a fit state of mind to make the statement and that he was making the statement without any influence or threat. Hence, this adds to the evidentiary value of a dying declaration.

Who may record the dying declaration?

Section 164(1) of the CrPC empowers the magistrate to record the dying declaration of the person, which adds up to strong and reliable evidence. But if there is no time to call the magistrate because of the deteriorated condition of the declarant, the statement can be recorded by the doctor or a police officer. But a statement must be recorded in the presence of one or two witnesses for it to be reliable. Moreover, the dying declaration can also be recorded by any person who is not a magistrate, doctor, or police officer and is admissible in court. But the person who records the statement must show that the person, at the time of making the statement, was in a fit state of mind.

When is the dying declaration considered inadmissible?

The statement made by the dying person is not considered as admissible evidence when the statement is of such a nature that it does not relate to the cause of his death, or it suffices that the dying declaration was made under undue influence, threat, etc. Dying declarations have no evidentiary value if a person making a statement is unsound. If the statements are contradictory or incomplete in nature, then they also cannot be considered as reliable evidence for the conviction of the accused. 

What are the forms of the dying declaration?

Dying declarations can be made in the form of a question-answer, which is considered the best form of dying declarations. However, precaution must be taken while asking the questions, and the answers to such questions must be written. The person can also make dying declarations in the form of gestures and signs when he is unable to speak and can make gestures in the form of yes or no that are admissible under law. Oral evidence is also one of the forms of dying declaration where a person makes his last statement to his wife, father, or any relative, friend, or acquaintance in a conscious state. 

References


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Machine learning in predicting natural disasters : an insight

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Proliferation, Regulation and Implications

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

This article has been edited and published by Shashwat Kaushik.

Introduction

Predicting weather and disasters has always been part of the human race. Mountaineers, guides, and sailors observed natural occurrences and predicted the weather rather accurately.

The vast sky has been the screen from which these predictions popped up. Changes in the colour of clouds, their density, etc., were signs of storms, rains, and tornadoes. The moon, too, has its signals that, if studied properly, give a fair indication of the weather to follow. Our ancestors used these natural elements to forecast the weather, which helped them in their travels, vocations, and even in the process of farming and other agricultural activities.

Animals, too, are sensitive and have a sense of impending disasters, which, if observed from their behaviour, could be signs of tornadoes, earthquakes, or a harsh winter.

However, as technology has become a big force in steering our lives on Earth, machines have become an integral part of our lives. Just as it has touched every action of our lives, machines have been equipped with tools, software, and intelligence for predicting natural disasters. The advantages are plenty as compared to the skills of a human.  The speed at which they analyse data, identify patterns, and devise solutions is way above what the human mind, hands, and brain can do. Ironic indeed, created by these very (human) minds, but they surpass them in every way.

Tools that assist for better accuracy

Data collection and preprocessing

Machines are, after all, not humans, and they need accurate data to give effective outputs. Data collected from images transmitted by satellite, sensors built for weather, and data based on seismic history are analysed for the machines to give accurate output 

Feature selection and engineering

Machines analyse what they are fed with. The variables provided have to match the type of disaster. Also, raw data has to be aligned so that it is synchronised with the understanding of the machine

Model selection

The selection of the model and technology has to be accurate, as every disaster is different and so is the specific machine/technology/software. 

Real-time monitoring

Timing is most important to predict disasters in advance. Hence, real-time data is crucial. If not tracked in real time, all other processes involved in this go haywire, besides the damage natural disasters bring with them. 

Improving accuracy

Having a mix of techniques with regards to technology, software and models also helps with error reduction. Because if one fails, the other makes up 

Uncertainty estimation

Naturally, the disasters caused by nature are complicated because of the environment.  Machines are better equipped to analyse these uncertainties, helping humans take action on time. 

Integration with Geographic Information Systems (GIS)

Integration with supported platforms help widen the spectrum of detection and timely prevention. 

Challenges

As we all know, machines are not humans, and they come with their own shortfalls. If you input poor quality data, the output will be wrong too. It’s great to assist humans but not replace them. 

Today, AI is growing and improving efficiency. The best way forward is to use machines and AI as complementary tools. 

Machine Learning will work only with the right tools, research, and modernization. Modern, up-to-date analytics are imperative for the process to work. Climate change has made us vulnerable and, at times, underprepared. Also, since the world is growing at a rapid pace, infrastructure and people’s lives depend on timely detection to reduce losses. 

The natural disasters dataset consists of predominantly four classes:

  • Cyclone/hurricane
  • Earthquake
  • Flood
  • Wildfire

Natural disasters are inevitable and cannot be prevented but they can certainly be detected, especially today with modern technology. When detected and predicted, preparedness also goes a level higher and human lives and infrastructure can be reduced.

Sensors all around the world are the main tool that monitors natural disasters. Seismic sensors (seismometers) and vibration sensors (seismoscopes) are used to monitor earthquakes and downstream tsunamis.

  • Radar maps with “hook echo” for a tornado 
  • Flood sensors with capability to measure moisture levels and water levels
  • Wildfire sensors are still being improved; hence, we have to wait for a better process to be in place.  

All of these sensors are equipped to detect natural disasters and give people enough time to be alerted and get to a safe zone well in time.

Using computer vision is another great way to increase accuracy and reduce losses. 

Humans and machines can do only that much, and the uncertainties and complex variables make predicting natural disasters very challenging.  

The advancement of AI has given us the strength of accuracy and evacuation. Hurricane paths, wildfire detection and earthquake movements can be averted with help from AI. Again, data, analytics, etc., with the knowledge of experts in the field, need to be integrated into the system for optimum advantage. 

Using AI to predict natural disasters

AI is the technology of the future and is incorporated into every aspect of our lives today. Using AI to benefit the population with advanced warning of impending natural disasters can save lives by enabling evacuation, improving preparedness, and mobilising emergency responders.  AI technology today offers many opportunities to improve forecasting accuracy for most natural disasters.

AI and natural disaster prediction are areas being developed and tested for a wide range of natural hazards.

  • Hurricanes: Tracking hurricanes with a mix of top of the line tools certainly improves forecasts and updates. ClimaCell’s Hurricane Guidance brings us expert updates. 
  • Wildfires: Monitoring satellite images with computer vision algorithms helps identify wildfires before humans can. 
  • Floods: The AI tool helps with gauging data alongside HYCOM models for predicting floods and reducing damages.
  •  Volcanic eruptions: Sensors provide rich datasets and indications on pre-eruptions, ground deformation, and gas emissions. Early alerts help with preparedness.   This is an area where ongoing research is in progress.
  • Earthquakes: Earthquake predictions are difficult due to random natural fault dynamics. AI shows and helps generate real-time alerts using seismic and SPS for predicting earthquakes.
  • Fires: Fires are an area where firefighters find it difficult to reach at times. Mountainous terrain and remote areas. Technology helps with identifying flames faster and more accurately.

AI again comes to the rescue by way of sensors that are strategically placed in target areas and transmit temperature data. Analysed data is updated on maps and alerts with co-ordinated are sent to the locations where responders are located. 

Algorithms are designed to examine sensor signals to distinguish between smoke from domestic, need based sources such as residential chimneys or fires and smoke from hazardous fires. Using multiple sensors just helps with alerts on spreading fires. 

Natural disasters have been striking us forever and will be around, taking us into the future. A constant threat that is highly unpredictable. It affects millions of people worldwide annually, creating havoc in regions, populations, and societies.

In the recent past, we have faced plenty of disasters and the need to use machine learning has increased, understandably so. Machines assist in all fields, with medicine, finance, and natural disasters being some of the most important where they need the assistance of machines and AI. Natural disaster prediction using machine learning benefits society and the human race as a whole by improving the effectiveness of emergency communication and increasing the accuracy of predictions.

Limitations of using ML for natural disaster prediction 

  • Data availability and quality: Since historical and real-time are imperative yet difficult to procure, the challenge continues to be at times off the mark and biassed. 
  • Complexity of natural systems: Natural disasters and their occurrences are complex.   The environment, weather and human carelessness play a big part. A complex relationship is hard to capture. 
  • Feature selection and engineering: Choosing the right tool, equipment, software and machines is difficult. Also, the data to be integrated with the machine is never on the dot.
  • Generalisation: Our beautiful earth is unique and so is its every corner.   A 
  • generic machine may not work in all places and conditions due to the specifics of the environment. 
  • Prediction lead time:  Early predictions, especially for earthquakes and tornadoes, is a big challenge
  • Resource constraints: Resources , expertise and financial constraints are major challenges, especially in developing countries that are heavily populated. 
  • Ethical and social implications: Ethical and social nuances while predicting disasters through machines may not be taken in the right spirit in some societies.  

Conclusion

Machine learning in this area was certainly a blessing and now with AI, it just got stronger. However, there will be challenges and limitations in integrating social factors and translating technology into an operational reality. AI is a double blessing only if it is developed responsibly through a synergy between academic, industry and government collaboration.

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Role of data protection officers in enforcing privacy laws

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This article has been written by Shobhit Kapoor pursuing a course on How to Use AI to Grow Your Legal Practice from LawSikho.

This article has been edited and published by Shashwat Kaushik.

Introduction

A Data Protection Officer (DPO) can be thought of as a watchdog who can guard the interests of data subjects and also enable compliance for organisations, which could be a data controller or a data processor. He also forms a bridge between these organisations and the supervising authority. In other words, he ensures the duties and obligations of data controllers and data processors are intact and in compliance with GDPR and also that the rights and freedoms of data subjects are protected as per GDPR. Further, the DPO works to smooth the process to be followed in times of data breaches. Additionally, he will need to train the employees of DC/DP as well as the highest management of the organisation on GDPR. A DPO, in his day to day duties, oversees compliance with GDPR for new projects in order to ensure that the new services/products are seamlessly aligned with the data protection principles laid down by the applicable laws. It is noteworthy that the DPO in data Controller/Processor organisations, which do not need to conform to GDPR, will need to align with the applicable law of the land or region, as the case may be.

The DPO-GDPR connection

A Data Protection Officer (DPO) is a specific role outlined in GDPR. He guards the interests and rights of the data subject (DS) and ensures the fulfilment of the obligations of data controllers (DC) and data processors (DP).

Articles 37, 38, and 39 are key to the role of a DPO.

Article 37 of GDPR lays down the need for appointing a DPO by some companies. This article clearly states that both the DC and DP shall designate a DPO under the following scenarios: 

  1. the processing is done by a public authority or body, EXCEPT for courts acting in their judicial capacity 
  2. the core activities of the DC or DP consist of processing operations for large scale systematic monitoring of DS owing to their nature/scope and/or purposes 
  3. the core activities of the DC or DP are those of large scale processing of special categories of data pursuant to Article 9 OR personal data relating to criminal convictions and offences referred to in Article 10

There can be a single DPO for a cluster of undertakings but with the condition that the DPO can be conveniently accessed from each such undertaking and the DS of the undertakings. Such an undertaking could also be a public authority or body. The DPO can be an employee of a DC or DP, or on a service contract and the DC or DP shall need to publish and socialise the contact details of the DPO and communicate them to the supervisory authority. The appointing of a DPO on a contract basis is, as per me, the most suitable approach, keeping in mind the fact that the DPO, if he is an employee of DC or DP, could run into the risk of safeguarding the organisation’s interests even at the expense of compliance with GDPR and the rights of the DS. 

GDPR Article 38 outlines the DPO position by stating: “The controller and the processor shall ensure that the data protection officer is involved, properly and in a timely manner, in all issues which relate to the protection of personal data”. The DPO is not bound to receive any instructions regarding the exercise of these tasks (listed in Article 39) and shall not be dismissed or penalised by the DC or DP for performing his tasks. DPO shall directly report to the highest management level of the DC or DP, as the case may be. This means a DPO can be seen as accountable to the supervisory authority and the CEO/CIO/CTO

For all the issues and challenges of processing of personal data and to exercise their rights under GDPR, the Data Subjects may contact the DPO. Hence, the DC or DP shall need to publish and socialise the contact details of the DPO and communicate them to the supervisory authority as well as to the DS. The DPO is bound by secrecy or confidentiality with respect to his tasks, in accordance with Union or Member State law. He can, however, fulfil other tasks and duties, provided such tasks do not pose a  conflict of interest.

Qualifications of a DPO

At the moment, there is no single answer to this. We do not have any documented qualification requirements for the role of a DPO. It is widely believed and declared in various forums that a DPO does not need to know the technology of the controller and processor. Nor does he need to be a lawyer. 

However, I beg to differ. In my opinion, the best suited person for the role must have at least some knowledge of how the data (from the DS) is being captured and for what purposes. Of course, he does not need to get into the code to see how a particular data set is being handled. But the fact that a certain set of data is being captured is something that the DPO must know in order to succeed in his role. 

I would also go a step further to say that a successful DPO must either be a technology lawyer or have sufficient knowledge of technology laws and regulations of the geography he operates in. Such knowledge has its own merits and the DPO is able to think from various angles, exercise his powers and conduct his role much more effectively. 

For the sake of certification, a CIPPE certification lends a lot of credibility.

Responsibilities of a DPO

Article 39 lays down the tasks of a DPO that are to be fulfilled and hence the DPO needs to be chosen on the basis of professional prowess and particularly knowledge of data protection laws. 

A DPO guides and advises the DC/DP/employees of the organisation in processing of their obligations pursuant to GDPR and other Union or Member State data protection provisions. Monitoring compliance with GDPR or other Union/Member State data protection provisions and also with the policies of the DC or DP related to personal data protection. He can assign responsibilities, direct the awareness training for staff involved in processing operations. He also assists in audits. 

DPO supervises and provides advice on Data Protection Impact Assessment pursuant to Article 35.

DPO shall act as a cooperative single point of contact for the supervisory authority on matters of processing, prior consultation as provided in Article 36

So far, the above description has been according to what the GDPR mandates or allows. However, a bit of a detailed dive-into the tasks of a DPO based on experience could be as follows:

Research on local and international laws

DPO needs to keep an eye on changing local as well as international laws around data protection and data privacy. Doing this will enable him to ensure compliance and perform a health check by way of internal audits. 

Engage with legal department

Legal regulations can be very complex at times. Interpretation of the intertwined provisions and making meaning out of it in a collective manner might be a gruelling task and even if accomplished, one may not be sure footed. Especially when amendments happen or a new statute repeals another one, this could be a challenging task for the DPO. Therefore, it is much needed that the DPO has an open thread of communication with the legal department of the organisation of the DC or DP, as the case may be. 

Perform DPIA

Each time a new product or a new service is designed by the DC or DP organisation, there is a need to assess the data collection and processing as against the GDPR principles. This involves consultations with the IT team (development team), R&D team, legal team, IT infrastructure team and operations team. For example, when the organisation intends to collect additional customer/user data through a campaign, the DPO, along with the others mentioned above, needs to deliberate on the additional attributes of customer/user data that will be needed to be collected and ensure that they are mapped to the legitimate business purpose(s), as well as ensure that a proper consent mechanism is in place for the DS to provide their ascent. Other principles of GDPR, such as data minimisation, purpose limitation, etc., need to be looked at to ensure compliance.  

Such an exercise is neither a one day task nor is it a one-man show. It is the DPO who puts all the stakeholders in a room and triggers a discussion on all these aspects. The sole aim is to stay compliant, protect personal data and DS rights and at the same time let the organisation further its business plans for the campaign. This DPIA is described in Article 35 of the GDPR. 

Policy, procedures, compliance

The DPO would be responsible for overseeing and even drafting and publishing a policy around data protection, which includes data collection, processing, transfer, etc. 

The business process of the organisation that needs such personal data must be mapped to legitimate purposes. Further, the data attributes of the DS being so collected and processed need to be mapped to the above business processes. This exercise enables the traceability of legitimate purposes to the business process as well as the data elements of the DS being captured. With the help of this mapping, it can be easily inferred what data element, e.g., name, address, ID, etc., is being collected for a particular legitimate purpose. The policy could state that this mapping is an essential exercise to be done each time a new product/service is being designed or an existing product/service is being updated. 

The same policy can also lay down the contours of when and how to perform DPIA, DTIA, etc. It shall be compulsory for the design and development teams to consider and include design elements pursuant to this “data protection policy.”

There must also be provision for audits, which need to be followed in the organisation in order to ensure uniformity. 

As the organisation evolves and grows in size, there could be ancillary policies, all having which are played by the DPO. 

Data breach management

Articles 33 and 34 outline the process to be followed in the event of a data breach. 

Once a data breach occurs and comes to the knowledge of the DC, it is advisable that the DPO of the DC organisation must, without any unreasonable delay and within 72 hours after having the knowledge of the breach, inform of the breach. 

An exception to this would be a data breach, which may not pose a risk to the rights and freedoms of natural persons (DS). If the data breach has occurred in the systems of the DP, then the DP needs to inform the DC, who had assigned the processing to the DP.

Liaison with supervising authority

It is a prime expectation of the DPO to be the single point of contact for the supervising authority. The DPO engages with the authority on behalf of the DC or DP at various times, including when there is a data breach. For the engagement between the DPO and the authority to be effective and successful, the former needs to have a sufficient paper trail to substantiate his conversation. In other words, DPO needs to ensure that there is evidence recorded for all the decision making in the organisation (DC or DP) when he gets involved in reporting a data breach to the supervising authority. The evidence could be email and message records which prove – what decision was taken with respect to personal data, why was such a decision taken, what are the risks which were evaluated, whether the supervising authority was taken into account or not, etc. 

Even policy decisions need to be recorded, even if it means preserving the minutes of a meeting where any such decision, having impact on personal data, was taken.

Ensuring fulfilment of DS rights related to personal data

GDPR confers some rights to the DS, who are users of the product/services of DC or DP organisations. Rights such as providing and withdrawing consent to processing personal data, requesting personal data sets, being allowed to update the personal data, etc. are to be safeguarded by the DC or DP organisation. It is the DPO of the organisation who must be the point of contact for the DS. The contact details of the DPO needs to be published by the organisation for the DS to make note of. 

Record keeping

DPO must make sure that the records of processing activities (ROPA) exist at all times. It is an exhaustive list of all the processing activities that are undertaken by the DP on behalf of DC.

Conclusion

The role of a DPO is a very significant one as regards data protection. As we can see from the above paragraphs, a DPO has a multi-pronged personality that strikes a precarious balance between the rights of data subjects and the data controller or data processor organisation that he serves. 

This article on the DPO role is a blend of GDPR mandates and my own opinion and idea about how the DPO role can be extended to bring more value to the organisation as well as to the rights of the data subjects. This is because typically in the IT sector, any employee or contractor in a specific role ends up doing more than what his job description looks like. In such a culture, I have thought it useful to extend the responsibilities of a DPO, as in this article so that the readers, who could even be the ones looking to hire a DPO, are guided in this role. Stay safe and data-safe.

References

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Romesh Chander vs. Smt. Savitri (1995) 

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This article is written by Jaanvi Jolly. It seeks to analyse the judgement of Romesh Chander vs. Smt. Savitri (1995) SC, which dealt with cruelty as a ground for divorce along with the applicability and acceptance of irretrievable breakdown as a ground to dissolve marriages. It discusses the case law based progression of the acceptance of the ground of irretrievable breakdown in India, along with similar provisions in the laws of other nations. There is also a brief discussion on how to improve the pendency of matrimonial cases and how alternative dispute resolution mechanisms like mediation can help in achieving amicable and quicker resolutions.

Introduction 

Marriages are believed to be made in heaven but have to be carried on in society. The concept of marriage as a sacrament was a cornerstone of ancient Hindu law, wherein divorce was an unheard societal norm that, once performed, had to be persevered with till death. 

With the ushering in of the era of independence for our nation, various laws were enacted that provided for the liberty and autonomy of the citizens. The Hindu Marriage Act 1955 (hereinafter HMA 1955) was a watershed piece of legislation that transformed the law relating to marriage in line with the constitutional principles of right to life and human dignity, justice, equality, etc. One of the many reformative changes that were phased in was providing the parties to the marriage the option of dissolving their marriage by divorce, where both or one of the spouses felt that they were caged in a marital bond and it was better to quit than suffer. Statutorily, only fault based grounds are recognised in India, however, in the present case, the Apex Court analysed the application of the theory of irretrievable breakdown to grant dissolution of marriage, in this article, we will delve into the peculiar facts of the case that compelled the court to dissolve the marriage and compare them with other cases where the court refused to apply the doctrine of irretrievable breakdown. is 

Details of the case

  • Case name – Romesh Chander vs. Savitri
  • Type of case – Civil appeal preferred by a Special leave petition 
  • Appellant – Romesh Chander
  • Respondent – Smt. Savitri
  • Name of the court – Supreme Court 
  • Bench – Hon’ble Justice R. M Sahai and Hon’ble Justice S. B Majmudar
  • Date of judgement – 13 January 1995
  • Equivalent citations – 1995 SCC (2) 7

Background of Romesh Chander vs. Smt. Savitri (1995) 

The appellant husband sought a divorce decree from his wife on the grounds of mental cruelty meted out to him by the respondent wife. He based his claim first on the written statement dated 04.11.1976 which was filed by the respondent-wife in an earlier divorce proceeding between the couple, which was commenced by the appellant-husband on the ground of desertion. That proceeding, during its course, reached the Apex Court via a Special Leave Petition but ended in a dismissal. Secondly, he relies on several complaints by one Ramesh Gupta and publication in the newspaper of defamatory material by Sh. D.R. Gupta, which the appellant husband alleged was done on the instructions of the respondent-wife to harass him. The trial court, as mandated by the Hindu Marriage Act 1955 and Section 9 of the Family Courts Act, made an attempt at reconciliation, wherein it was discovered that while the respondent wife was ready to cohabit, the appellant husband was vehemently opposed to the proposition. After the evidence was presented, the petition was dismissed by the trial court.

The appeal as per Section 28 HMA 1955 was preferred before the Single Judge Bench of the High Court, which also made an attempt at reconciliation but that too failed due to the fault of the appellant husband. The trial court’s findings were upheld and the appeal was dismissed.

Subsequently, a Letters Patent appeal was preferred against the judgement  of the single judge dismissing the appeal. The Court examined the impugned judgement, which was appealed against on 3 major grounds- 

  1. The findings of the Single Bench are erroneous, as the findings were not recorded issue-wise and resulted in a failure of justice.
  2. Failed to examine evidence on record that clearly established ground under Section 13(1)(i-a) HMA 1955.
  3. Marriage has irretrievably broken down and must be dissolved on that ground.

The division bench recorded the following findings on the issues raised-:

  • The findings of the Single Judge dealt with all the objections in light of the material on record and passed a reasoned judgement.
  • The ground of cruelty was not sufficiently proved to merit a divorce decree.
  • It is not a fit case for a divorce decree to be passed on the ground of irretrievable breakdown.

Consequently, the appeal was dismissed, being devoid of any merit.

Finally, the appellant husband filed a special leave petition under Article 136, resulting in a civil appeal in the Apex Court.

Facts of Romesh Chander vs. Smt. Savitri (1995) 

The parties were married in the late 1960s and had been living separately since 1969, i.e., about a year after they were blessed with a child. The appellant-husband who is a sanitary inspector and the wife, who is a teacher, were married for 25 years and this proceeding was the second round of litigation initiated by the husband to seek a divorce. The ground of appeal was cruelty, which was disbelieved by the lower courts; additionally, the husband also attempted to seek divorce on the ground of irretrievable breakdown.

Issues raised

The Court raised two issues- 

  1. Whether the respondent-wife is guilty of meting out cruelty to the husband to justify the grant divorce decree as per Section 13(1)(i-a)?
  2. A sentinel question that where a marriage is otherwise dead, both emotionally and practically, should it be continued for name sake where the exhaustive list of grounds under Section 13 is not satisfied?

Arguments of the parties

Petitioners 

In the prior divorce proceeding, the respondent wife, in her written statement, made allegations regarding the character and integrity of his superiors in service and friends, along with stating that he was in the habit of mixing with other females. He also alleged that the respondent wife got a false complaint filed against him by one Mr. Ramesh Chander and to discredit him, he got a news item published defaming the appellant husband. These acts have caused a great deal of agony and mental cruelty.

Respondent  

She contends that she did not deliberately get the accusation recorded in the written statement of the first proceeding and must have gotten it recorded involuntarily. No allegations have been leveled in the written statement of the current case, nor have any statements been made in that regard in court. If the accusations in the first written statement had caused mental cruelty to the appellant-husband, he could have  added this to his earlier petition by amendment of pleadings and claimed a divorce on the additional ground of mental cruelty. Further, the respondent-wife during the attempts at reconciliation, has expressed her willingness to join the appellant husband.

Legal provisions involved in the case

Section 13 of the Hindu Marriage Act, 1955

This provision has introduced an option for the parties to seek dissolution of their marriage, whether contracted prior to or after the commencement of the HMA 1955, if the grounds mentioned under the Section are satisfied. The concept of seeking dissolution of marriage by divorce was not recognised under traditional Hindu law.

Section 13 (1)(i-a) of the Hindu Marriage Act, 1955

This provision allows the petitioner to seek dissolution of the marriage on the ground of cruelty. Where the petitioner, anytime after solemnization of the marriage, has been treated with cruelty, whether physical or mental, it is a valid ground to seek dissolution.

Section 13 (1)(i-b) of the Hindu Marriage Act, 1955

This provision allows the petitioner to seek dissolution of the marriage where the other spouse has deserted the petitioner, which means withdrawal from the society of the petitioner for a continued period of 2 years without a reasonable cause. It recognises the importance of marital companionship in the successful continuation of matrimony and its absence is grounds to seek divorce.

Section 28(1) of the Hindu Marriage Act, 1955

This Section provides the period of limitation to be 90 days for appeals, which may be preferred from any decree passed as per the Act. 

Article 142 of the Constitution 

It provides the Supreme Court with tremendous powers to pass any decree or order in any matter pending in order to complete justice in the case. This gives enormous powers to the Apex Court to provide solutions in situations where the legislation might be insufficient or absent.

Judgement in Romesh Chander vs. Smt. Savitri (1995)

As to Issue 1

The Court upheld the findings of both courts below and stated that, as no evidence was led to prove the accusation that the respondent-husband was in a habit of mixing with other women in the presence of the respondent-wife, which was made in the prior proceedings nor any such allegations were a part of the written statement in the present case, the divorce cannot be granted on the ground of cruelty. 

The court distinguished the facts of the case at hand from the case of Mr. Jordan Diengdeh vs. S.S. Chopra (1985) SC, wherein elaborate reference was made to the written statement filed by the respondent-wife, in which she alleged that the petitioner husband was a mental patient and required psychological treatment to restore mental health along with suffering from paranoid disorder and mental hallucinations. Additionally, she alleged that all the members of his family are a bunch of lunatics, and in an additional written statement filed, she asserted her right to state so. 

The Court considered these as positive assertions of mental imbalance and not mere protestations of an injured wife. In contrast, in the prior proceedings between the parties, these accusations were considered mere unnecessary assertions in reply to the accusation of desertion. The conduct of the respondent wife in the present case is absolutely different and non-confrontational. Furthermore, she has expressed her willingness to reconcile the marriage. Thus, the Court refused to grant divorce on the grounds of cruelty.

As to Issue 2 

The Court considered the fact that twenty-five years had elapsed since the parties enjoyed the conjugal bliss of each other’s company and that this was the second round of litigation for seeking a divorce decree, wherein the grounds of desertion as well as cruelty were both held to be not proved and thus not warranting a divorce decree. 

It was observed that the husband has been the one at fault  and has not been dutiful towards his wife and son nor did he contribute to the upbringing of the child; nevertheless, he is now remorseful, willing to compensate for his past misdeeds and has offered to transfer the only house in his name to the respondent-wife. 

In light of these circumstances, the court believed that if a marriage was dead with no prospects of reconciliation, it’d be better to put an end to it. When the relationships end de facto, they must also cease to exist de jure. It serves no purpose to keep a man and woman in a bond tied together as husband and wife when, for a long time, they have ceased to occupy those positions. The aim is not to focus on the bitter phase but rather to provide a better future. Thus, the Apex Court, by exercising its powers under Article 142, dissolved the marriage, subject to the appellant husband transferring the house to the respondent-wife.

Rationale behind this judgement 

There are two major theories of divorce first being the fault theory and the breakdown theory. Section 13 of the Hindu Marriage Act recognizes the fault-based therein, divorce can be sought against the party at fault by the other spouse; some fault-based grounds include desertion, adultery, cruelty, et cetera. 

However, the breakdown theory is not statutorily recognised; a slight reflection can be seen in Section 13B, which deals with divorce by mutual consent. As per the breakdown theory, divorce is seen as an escape from an unhealthy and difficult situation. It is not concerned with the mistakes of the past but rather focuses on a better future for the parties as well as the children. The Court should inevitably attempt at reconciliation but on its failure, the divorce should not be withheld 

The matters of matrimony gone sour are further worsened by the confrontational and accusatorial aspects, which require the proving of the fault of the other party to get a divorce, which ends up widening the rift. 

Further, the law of divorce only based upon faults is not adequate to deal with broken marriages. Where there is, either no fault or the parties do not want to divulge the fault. Where marriage is merely a shell out of which the substance is gone, it serves no purpose to make them continue the facade of marriage.

Analysis of Romesh Chander vs. Smt. Savitri (1995) 

On mental cruelty 

In the era of a lot of awareness and discussion about people’s mental health and wellness, the grounds for seeking divorce on the basis of mental cruelty have substantially increased.

Prior to the 1976 amendment, cruelty was not a ground to claim divorce under Section 13 but rather only a ground of separation under Section 10 of the Hindu Marriage Act. Section 13(1)(i-a) postulates that a marriage may be dissolved by a divorce decree if, after solemnisation of the marriage, the respondent has treated the petitioner with cruelty. 

Cruelty as a term has not been defined in the Act but has been defined and explained by the court in numerous judgments. In the landmark case of N.G. Dastane vs. S. Dastane (1975) SC, the Court noted that for conduct to qualify as cruelty, it must be such that it causes a reasonable apprehension in the mind of the petitioner that it would be harmful or injurious for him to live with the respondent. 

In another case, Siraj Mohammed Khan vs. Harizunnisa Yasin Khan (1981) SC the Supreme Court acknowledged that the concept of cruelty is dynamic in nature and changes with changes in society and the standard of living; cruelty is subjective and depends from case to case; however, it must be distinguished from the ordinary wear and tear of life. The Court further noted that continued ill treatment, cessation of marital intercourse, studied neglect, allegations of unchastity, et cetera also form part of cruelty. 

In the landmark case of V. Bhagat vs. D. Bhagat (1997), the Supreme Court examined the concept of mental cruelty, any conduct that makes it difficult to cohabit with the other spouse due  to mental torture and suffering. Such wrongful conduct, which the other party cannot be expected to condone or forget, has to be seen with regard to the social status, education, society they live in, et cetera.

Mental cruelty is caused when one spouse alleges that the other is a mental patient, requires treatment or belongs to a family of lunatics. It’s a matter of inferences to be drawn from the circumstances. While dealing with cruelty, the court has to be cognizant that it is related to the most intimate and delicate part of an individual’s life. The allegations must not be insignificant or trifling and must have a degree of severity.

In the case of Samar Ghosh vs. Jaya Ghosh (2007), the Supreme Court examined numerous opinions on the concept of “Mental cruelty” from around the world and culled out an illustrative list of instances which may guide in dealing with such cases- 

  • On consideration of complete matrimonial life, acute mental pain, agony and suffering make cohabitation impossible.
  • On the facts, it becomes clear that wronged party cannot be asked to put up with the conduct of the other spouse.
  • Sustained abusive and humiliating treatment renders marital life miserable. 
  • Unilateral decision to cease marital intercourse or not to have children.
  • Prolonged, unjustified conduct actually affects the physical and mental health of the other spouse. 
  • If the husband undergoes sterilisation or if the wife undergoes vasectomy or abortion without the knowledge or consent of the other spouse.
  • The circumstances have to be viewed as a whole and a few isolated acts over the years would not amount to cruelty; ill treatment must persist for a substantial period and must be of such a severe degree as to make cohabitation extremely difficult.
  • Trivial arguments and day- to- day wear and tear of married life will not qualify as cruelty.

Court’s views on irretrievable breakdown 

Life is an unpredictable journey. Circumstances may arise where marriages undergo an irretrievable breakdown; a marriage may be broken beyond repair, wherein ending the relationship remains the only resort. By no fault of either party, as specified in Section 13(1), the spouses are unable to live together and no prospect of reconciliation remains, making it only a de-jure marriage and not a de-facto one. In the landmark case of Naveen Kohli vs. Neetu Kohli (2006), the Apex Court, being cognisant of the 71st Law Commission Report 1978, recommended the Parliament bring about such a ground by an amendment in the Hindu Marriage Act. 

In the absence of such a provision, the Supreme Court, using its powers under Article 142 of the Constitution, has demonstrated a case by case approach in granting divorce on the ground of irretrievable breakdown. No rigid or straitjacket formula can be set, keeping in view the nuanced and dynamic nature of matrimonial matters and it remains a matter of judicial discretion.

In the Indian landscape, the question of irretrievable breakdown kept rising with such regularity that the Apex Court, in a 3-Judge Bench decision in Samar Ghosh vs. Jaya Ghosh (2007), dealt with the issue extensively. As per the facts of the case, there were allegations of adultery made against the wife but they were not proved. The divorce petition had been pending for a long time and a large part of the lives of the parties was consumed in litigation. 

There was no chance of reconciliation, so the Court granted the divorce by stating that it had only done so to clear up the insolvable mess. It cautioned that mere allegations and counter-allegations or delay in the proceeding are not sufficient grounds for the grant of divorce. Some extraordinary circumstances need to be proven. The Court observed that where the ties are broken beyond repair, refusal to sever that tie does not serve the sanctity of marriage but rather shows disregard for the emotions of the parties.

In the landmark case of Shilpa Sailesh vs. Varun Sreenivasan (2023), a Constitutional Bench elucidated the ambit of the powers under Article 142 in matters of granting divorce on the grounds of irretrievable breakdown. It is not a matter of right for the parties but rather a prerogative of the court where the marriage seems to be emotionally dead and beyond salvation and the prolonged continuance would only result in cruelty upon the parties, such powers may be exercised. 

Some illustrative factors were laid down which were to be considered in dealing with the question of irretrievable breakdown, for instance- duration of separation, nature of allegations, the pendency of proceedings between the parties, the result of mediation, etc. In the case of Rajib Roy vs. Sushmita Saha (2023), factors such as a long period of separation and sourness in a relationship were considered and the divorce was granted. In the case of Nirmal Singh vs. Paramjit Kaur (2011), the divorce was refused as the respondent wife was willing to resume the conjugal obligations and the Court believed that the marriage could still be salvaged. 

In another case of Delma Coelho vs. Edmond Fernandes (2023), where the parties only lived together for 40 days, the Court refused the relief by stating that the initial years of marriage often seem tumultuous and require adjustment and patience and considered the case unfit for the use of powers under Article 142.

In the recent case of Dr. Nirmal Singh Panesar vs. Mrs. Paramjit Kaur @ Ajinder Kaur (2023), the question that arose before the Court was whether irretrievable breakdown ‘must’ result in dissolution of marriage via exercise of powers under Article 142, even though it is not a ground for divorce under the HMA. 

The Court, while relying on the Constitutional Bench judgement  of Shilpa Shailesh vs. Varun Sreenivasan (2023), stated that powers conferred under Article 142 do allow the court to deviate from the procedural as well as the substantive law; however, the ultimate aim of such departure must be to do ‘complete justice’ to the parties to balance out the equities. 

Such discretionary powers must be exercised with great circumspection and must, in no case, cause injustice to any party. The parties in this case were both octogenarians and the husband sought divorce on the grounds of irretrievable breakdown, whereas the wife was willing to stay together and take care of him. The Court observed that the respondent had spent all of her life dedicated to the marriage and thus it would be unjust if the divorce was granted at this stage of their lives.

Conclusion 

The Supreme Court for the first time in this case, raised the question of whether a marriage that is otherwise emotionally and practically dead should continue to exist, recognising that the consequence of keeping parties tied in an unworkable marital knot is bound to be a source of misery. However, the ground of breakdown must not be taken as a licence by any spouse to walk into court seeking divorce, claiming that his marriage has broken down irretrievably. 

The court must apply a strict scrutiny test where it is satisfied that the chances of reconciliation are nil. The institution of marriage is still considered to be a pious, spiritual, and invaluable emotional life-net between the husband and the wife and is not merely governed by the statutes but also by societal social norms. 

So many other intertwined bonds thrive and emerge out of matrimony, thus making it undesirable to accept the formula of irretrievable breakdown as a straitjacket formula for the grant of divorce via the extraordinary powers of the Supreme Court under Article 142 of the Constitution.

Frequently Asked Questions (FAQs)

How helpful is meditation in the disposal of matrimonial matters?

Mediation runs on the principle of no victor, no vanquished. It encourages closure as it does not provide for further proceedings like appeals, revisions, etc. It assists in mending and rebuilding relationships in an amicable and non-confrontational way. It is a more participatory way that allows parties to convey their points, explain perspectives, vent emotions and express their thoughts. The mediator can ask questions to help the parties understand each other better. The mediator may also hold separate sessions to understand the concerns of the parties, which they may not want to disclose in front of the other party, which may help him provide a balanced suggestion. Further, it also helps deal with other interrelated and collateral matters like maintenance, etc.

Where was the ground of Irretrievable breakdown of marriage initially recognised?

In 1920, New Zealand became one of the first Commonwealth countries to recognise the grounds of irretrievable breakdown for the grant of divorce, wherein if a separation agreement for three years or more was made, it was considered sufficient prima facie evidence of breakdown and became a ground to seek divorce. However, the court retained its discretion.

In 1969, the General Assembly of the Church of Scotland accepted a report that substituted the breakdown of marriage in place of matrimonial offences as a ground for divorce. They rightly recognised that it is often matrimonial offences or a result of deteriorated marriages, which means that effectively the breakdown occurs prior to committing a fault or rather due to it. They accepted the period of separation of two years as evidence of breakdown.

How can delay be avoided in the disposal of matrimonial cases?

Firstly, speedy disposal can be obtained by resorting to mediation as an alternative to litigation proceedings.

Secondly, where mediation fails and the case is returned to the court, there must be no or minimal adjournments once the proceedings begin.

Thirdly, a time frame must be set for the disposal of the case. The Karnataka High Court in 2023 directed that courts should make every effort to dispose of divorce cases maximum within a period of 1 year.

References

  1. https://www.researchgate.net/publication/360784490_Mediation_In_Matrimonial_Disputes_A_Judicial_Perspective
  2. https://www.menwelfare.in/judgements/court-should-dispose-the-divorce-case-within-time-limit-of-one-year-karnatka-hc/#:~:text=year%20%3A%20Karnatka%20HC-,Court%20should%20dispose%20the%20Divorce%20case%20within,of%20One%20year%20%3A%20Karnatka%20HC&text=The%20Karnataka%20High%20Court%20recently,time%20limit%20of%20one%20year.
  3. https://jajharkhand.in/wp/wp-content/uploads/2020/05/response_pdjs.pdf
  4. https://www.advocatekhoj.com/library/lawreports/breakdownofmarriage

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Ajoy Kumar Banerjee vs. Union of India (1984)

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The article is written by Soumya Lenka. The article concerns itself with the background of the Ajoy Kumar Banerjee vs. Union of India case, the pertinent facts of the case, the arguments on behalf of petitioners and respondents and the court’s reasoning while delivering the verdict.

Introduction

The landmark case of Ajoy Kumar Banerjee vs. Union of India (1984) concerns itself with the concept of excessive delegation. Delegated legislation is a peculiar concept of constitutional and administrative law. The impugned verdict removed several ambiguities with regard to the concept and hence served as a watershed case in Indian constitutional law jurisprudence. The case is set in the post-nationalisation era. After the passing of the General Insurance Business (Nationalisation) Act, 1972, the general insurance business in India was nationalised. The case revolves around Section 16 of the General Insurance Business (Nationalisation Act)1972. 

The article sheds light on the allegations of the employees of the newly merged insurance company against the unilateral exercise of power by the Central government.  It was alleged that using Section 16 of the General Insurance Business Nationalisation Act, the central government tried to change the terms and conditions of the service of the employees going beyond the scope of its powers, which constitutes a clear case of excessive delegation.  The article also deals with the contentions of the state and the court’s reasoning in delivering the verdict.

Background of the case 

Prior to 1972,106 insurance companies, both Indian and foreign, existed in the Indian market, and it was a very cluttered ecosystem. The General Insurance Business Nationalisation Act was passed in the year 1972 in furtherance of the General Business (Emergency Provisions Act), 1971.

The legislation was intended to facilitate the objective of nationalisation. By the Nationalisation Act, it was intended that the cluttered market of the insurance business in India be decluttered. By decluttering the emerging insurance market, the concentration of the wealth in the few hands will be restrained and this will vindicate the principle of equal distribution of wealth and income. 

Hence, the Act provided for the acquisition and transfer of shares of private Indian insurance companies and undertakings for the benefit of the common good r to facilitate proper regulation of the insurance sector of India. Further, the Act was intended to implement the constitutional principle as enshrined under Article 39(c) of the Indian Constitution. 

Section 16 of the General Business Nationalisation Act of 1972 provided that the Central Government may pass any notification or frame one or more schemes for the merger of companies and the associated legal incidents for more efficient carrying on of general insurance business. 

This may include a scheme for change of the Memorandum of Association as well as the Articles of Association of the acquired company. In pursuance of the power conferred to the Central government in Section 16(1) of the Act, the Central government passed four merger schemes in 1973, and four insurance giants, namely Oriental Fire and General Insurance Company Ltd., National Insurance Company Ltd., New India Assurance Company Ltd., and United India Insurance Company Ltd were merged into one general insurance company and were allowed to carry on their business as a single entity. 

The Merger scheme was titled New India Assurance Company Limited (Merger) Scheme, 1973. It was framed as the then Central government was of the opinion that such a scheme would ensure the efficient functioning of the national insurance companies and bringing them under the umbrella of one entity, namely New India Assurance Company Limited, would facilitate the purpose of decluttering of the insurance market that the parent legislation vindicated for. 

Facts of Ajoy Kumar Banerjee vs. Union of India (1984)

In the year 1974, the Central government yet again came up with a ‘scheme’ called the General Insurance (Nationalisation and Revision of Pay Scales and other Conditions of Service of Supervisory, Clerical and Subordinate Staff) Scheme 1974.  The passing of the said scheme can be marked as the friction point and can be called the initiation of the dispute. 

The New scheme envisaged to govern and regulate the terms and conditions of service of the general insurance employees and the pay scales relating thereto. The scheme provided that the new pay scale would remain in continuance till the 31st of December 1976 unless and until expressly modified by any notification, regulation, or scheme of the Central government. 

The employees of the newly emerged insurance company were not happy with the pay scales, dearness allowance and several other terms and conditions as per the new scheme. They submitted their grievances to the authorities through their associations to the General Insurance Corporation of India. 

They demanded vehemently for a revision of the pay scales, dearness allowances and alterations in other terms and conditions of the scheme. Several negotiations were held between the Unions, Associations, and the authorities, but no outcome was obtained.  

The Labour Ministry of the government of India envisaged a conciliation mechanism under the Industrial Disputes Act, 1947 to solve the burning dispute between the management and the employees, stating that there was a failure in the amicable settlement of the employer-employee tussle. But here also, no settlement was reached, and a failure report was forwarded to the Ministry of Labour.

The backstory stretches a bit further. Following the tussle and no amicable solution being reached between the employers and the employees, the Board of Directors of the New Assurance India Limited approved a new promotion policy. 

The new promotion policy put forth several changes to the pay scales as well as the terms and conditions of service and was again detested by the employees. Negotiations again took place between the employees and the management, and it was alleged by the employees that the central government is only vested with the power to change or alter or put forth any modifications to the pay scales and terms and conditions of the service of the employees under the General Insurance Act and the company has no authority to do the same. 

The employee associations alleged that the company has operated beyond its permissible limits and has transgressed its powers, and hence, the promotion policy is to be struck down. Yet again, negotiations took place and no such significant outcome was achieved. 

In 1978, the General Insurance company revised the promotion policy after several rounds of negotiations between the unions and the management. The employees were not satisfied with the revised scheme, and this promotion policy became the locus of the petition.

The revised scheme exacerbated the tussle a bit further. The scheme reduced the age of retirement. The employees who joined the company on or after the 1st of January 1979 would retire at 58 years, and those who had joined before would retire at 60 years of age. 

The employee unions were highly unsatisfied with this condition of the revised scheme. Hence, the petitioners, being highly aggrieved by the said notification, moved to the Supreme Court under Article 32 of the Indian Constitution, challenging the notification to be unconstitutional.

Further, the petitioners challenged that the impugned notification is illegal as the Central Government has no power to issue it under Section 16 of the General Insurance Business Nationalisation Act and such as the notification framing the contentious promotion policy scheme is ultra vires Section 16(1) of the General Insurance Business (Nationalisation) Act 1972 and is patently arbitrary and is to be set aside.

Issues raised in Ajoy Kumar Banerjee vs. Union of India (1984)

The main issues with regard to the petition were:

  1. Whether the Government and the respondents within the contours of law to introduce the 1980 scheme?
  2. If they have that power, have they exercised it in any arbitrary and whimsical manner to deny to the petitioners any fundamental rights and whether they have been discriminated against?
  3. Was there any violation of Article 14 and Article 19 of the employees concerning the new alterations to the terms and conditions of the service of the employees?
  4. Whether the Legislature has the undoubted right to alter a law already promulgated through subsequent legislation or not?
  5. Whether a special law may be altered, abrogated or repealed by a later general law by an express provision or not?

Arguments of the parties

Petitioners 

The petitioners’ contentions can be summarised in a threefold manner- 

Firstly, the petitioners contended that once the merger of the insurance companies took place as a consequence of the four merger schemes (forming the New Assurance Company Limited), there could be no further schemes related to alterations in pay scales and other terms and conditions of service of the employees of the newly merged company are concerned. 

Such a scheme was not within the powers of the central government as per the General Insurance Business Nationalisation  Act, 1972. It was contended that as per Section 16 of the Act, the Central government is only authorised to bring forth schemes which can only concern itself with any reorganisation of the insurance business or any merger or acquisition and nothing more. 

But the General Insurance (Nationalisation and Revision of Pay Scales and other Conditions of Service of Supervisory, Clerical and Subordinate Staff) Scheme, 1974 did not deal with any reorganisation, merger or acquisition but rather tried to interfere with other facets which the central government is not empowered under the said Section to deal with. The petitioners contended that the only legally valid scheme under the parent legislation of 1972 is the four merger schemes, as evident from the preamble of the Act.

Secondly, coming to the question of delegated authority, the petitioners contended that under the Banking Regulation Act, 1949 and the Life Insurance Act,1956, there were powers to frame regulations independently of reorganisation, but there were no such powers conferred by the General Insurance Business Nationalisation Act, 1972. 

Hence, the 1974 notification from which the whole dispute arises is without the authority of law. Further, the petitioners contended that the scheme under Section 16 or any of its clauses provides for merger acquisition or reorganisation and no other change. 

The Central government is nevertheless authorised to change the terms and conditions of service of the employees, but only by giving prior notice to the employees regarding the same under Section 9A of the Industrial Disputes Act, 1947

The procedure is that after the notice has been served before the employees, there would be negotiations between the employees and the authorities and only after an amicable settlement and after the arrival of a consensus between the employees and the employers can a notification with the proposed negotiated revisions be passed. 

So it was contended that the entire procedure has been sidelined, and hence, the central government has erred in passing such a notification, which is patently arbitrary. Further, it was violative of Article 14 of the Indian Constitution as there was no intelligible differentia and reasonable nexus with the proposed change as there seems no plausible reason for altering the age of retirement of the employees . 

Further, it was contended that in doing so the state does not even pay heed to the plausible repercussions that the new employees would have to face due to this erroneous and arbitrary notification and hence the change was prima facie discriminatory.

Thirdly, It was further contended that the revised scheme of promotion of the company is patently arbitrary as the same stems from the illegal notification of the government, which is arbitrary. Hence, something that stems from arbitrariness is not sustainable in the eyes of law. 

Further, the promotion policy, which changed the retirement age of the similarly situated members without any reason from 60 years to 58 years, is violative of the fundamental principle of equality as envisaged and guaranteed under Article 14 of the Indian Constitution. 

It was further contended and argued by the petitioners that the terms and conditions of service, including the pay scales and the dearness allowances, were a result of a bilateral agreement between the employees and the authorities and could not be changed unilaterally by the central government. Article 19(1)(g) of the Indian Constitution professes for freedom of profession, occupation, trade or business and as the employees have not been consulted or their opinion was not taken into consideration before the notification, hence the same stands violative of Article 19(1)(g) of the Indian Constitution.

Respondent

It was contended by the state that the state was well within the contours of law in issuing the 1974 notifications revising the pay scales and the terms and conditions of the service of the employees. 

Further, it was contended that the revision of pay scales and the alterations that were made to the terms and conditions of the service of the employees provided some additional benefits to the employees and was to facilitate the employees’ rights.

The respondents, namely, the Union of India as well as the General Insurance Company, contended that in comparison with other employees in governmental sectors, the employees of the general insurance companies get a lucrative salary, and hence, it was quite necessary to put a check on the perks and emoluments of the employees. 

Such a reduction in pay scales was in furtherance of the Nationalisation policy. It was contended by the respondents that the employees of these general insurance companies were high-income holders, and it was imperative for the central government to put a check on their lucrative pay scales so as to facilitate a better functioning of the Insurance industry.

Judgment in Ajoy Kumar Banerjee vs. Union of India (1984)

The court, while interpreting Section 16 of the General Insurance Business Act, said that Clause (g) of Section 16 is to be evaluated as it gives powers to the central government to promulgate or pass any scheme for the rationalisation or revision of pay scales or other terms and conditions of the service. 

The court carefully went into the intricacies of the interpretative scope of clause (g) of Section 16 of the Act to find out the true scope of the provision. Further, the court went into the interpretative scope of clause (g) of Section 16. Section 16(j) provides powers to the central government to frame a scheme for such incidental, consequential and supplemental matters necessary to give full effect and facilitate the true purpose of the Scheme. 

Here, the court exercised judicial powers by interpreting the above two provisions, i.e. section 16 (g) and section 16 (j), in conjunction with section 16 (6) of the Act. Section 16 (6) authorises the central government to, by notification, add, amend or vary any scheme framed under Section 16. 

The court, while interpreting the said provision in consonance with the other two, held that the main issue over here is whether the Central government is authorised to frame a scheme like that of 1980 whenever it feels that there is a need for rationalisation and revision of pay scales to facilitate efficiency and change in other terms and conditions of service so as to smoothen the functioning of the government-controlled nationalised insurance business. 

Here, the court also took into consideration the fact that Section 16 (1)(g) and Section 16 (1)(j) read with Section 16 (6) nowhere authorises central government to come up with a scheme other than one connected with the merger and acquisition of one insurance company with the other insurance company or formation of one single insurance company by an amalgamation of two or more small insurance entities.  

But the central government scheme of 1980 deals with the revision of pay scales, and the alterations that were made in the scheme to the terms and conditions of service had nothing to do with the merger, acquisition, or amalgamation of two or more insurance businesses to facilitate the purpose of nationalisation. Hence, the central government is not authorised to pass such a notification as that of 1980 because that would be beyond the contours of law and would be an abuse of the process of law.

The court held that any particular provision is to be interpreted in a particular way concerning the events that led to its inclusion in the statutes and the backdrop behind its inculcation into the statutory framework in general. The court was of the view that a statute has to be read as a whole and not separately. 

Each provision has to be construed in light of the adjoining and associated provisions. The court held that if, on a combined reading of the provisions of a statute, the words are intelligible enough and give a clear and full meaning devoid of irregularity and ambiguity, the judiciary or the legislature is not empowered to interpret the same or cut down its amplitude which would be beyond the scope and objective  of the legislation.  

The court held that the Preamble and Section 16 have to be read into consonance, and on serious reading, it becomes evident that Section 16 and the powers contained therein are an exercise of the delegated authority by the central government. 

The court held that on a combined reading of the Preamble, Section 16, and the power of delegated authority conferred to the central government through the General Insurance Business Nationalisation Act, 1972, the powers of the central government are limited to pass schemes only for the merger or amalgamation of one or more insurance companies with one another to facilitate the purpose of nationalisation and that the power of the delegated authority has a bar on it. 

It cannot be exercised by the central government in a manner other than for the purpose of merger or amalgamation of two or more insurance companies, facilitating the purpose of nationalisation. But in the impugned case, the Central government has acted in an erroneous manner outside the scope of the act by passing the 1974 notification as well as the 1980 circular which does not in any way vindicate the purpose of nationalisation and rather tries to alter the pay scales and other terms and conditions of service of the employees. 

Hence, the same is devoid of the sanction of law, and hence, the notifications of 1974 and 1980 are legally not valid. Using the delegated authority or power in the manner which led to the 1974 scheme and the 1980 notification would be beyond the state’s authority.

The court held that delegated authority is a peculiar concert of administrative as well as constitutional law. The scheme of 1980, as well as that of 1974, are glaring examples of the use of delegated authority by the legislature. But the interesting part to note is whether the legislature has exceeded its authority or not. 

The court held that the unlimited right of delegation is not inherent in the legislature itself. The court held that as there is no unlimited right of delegation on the central government, the government in the impugned case has transgressed the limits of its authority because the scheme of the 1972 Act read as a whole does not confer any power on the government to come up with a scheme for the revision of pay scales or alterations of the terms and conditions of the service of the employees. 

The court reiterated that Section 16 of the Act and the provisions provide for the revision of pay scales and the alterations in perks, emoluments and terms and conditions of the service, but when read with the preamble of the act, the whole scheme becomes quite evident that indeed a scheme can be passed for such purpose but only when there has been a merger or amalgamation of two or more insurance companies for the purpose of nationalisation. 

So, a scheme for revision of pay scales and other alterations can nevertheless be formulated but subject to the condition that the same can only be passed if the main motive behind such revisions and alterations is to facilitate smooth merger and amalgamation of the companies. 

As in the impugned case, there has been no merger and amalgamation, and the central government is not authorised to pass any notification or scheme to give effect to the same. Hence, the 1974 notification as well as the 1980 notification are bad laws and lack legal sanction.

The court asserted the contention of the petitioners that the scheme of the Act of 1972 is not similar to the scheme of the Banking Regulations Act or the Life Insurance Act. The court held that the enactments provided the authority to the central government to frame legislations or regulations independent of the reorganisations. 

However, there is no power conferred on the central government by Section 16 of the General Insurance Business (Nationalisation) Act 1972. The scheme to be followed if at all there is a necessity to come up with a scheme or notification for the revision of pay scale or alteration in the terms and conditions of the service conditions of the employees is by taking the procedure envisaged under Section 9 A of the Industrial Disputes Act, 1947. 

Section 9 A of the Industrial Disputes Act, 1947 states that if such a scheme is thought of or considered by the legislature, it needs to be communicated to the employees and the unions by a notice, and not only that will suffice. Negotiations have to be carried out between the employee organisations and the authorities, and the employee organisations have to arrive at a consensus with the authorities, and then a revised scheme, bill or notification is to be passed, taking into consideration the negotiated terms and conditions. Then only such a scheme for revision of pay scales and alterations of the terms and conditions of service, emoluments and perks will have legal validity.

Coming to the point of Article 14, Article 19 and the scheme being constitutionally invalid, the court held that it is prima facie unnecessary to delve into the constitutional validity of the scheme of 1980. It held that Article 14 is not absolute, and there are reasonable restrictions to the same. 

Hence, the legislature can make a law conferring certain benefits to a few persons or individuals and excluding others, but such a classification needs to be reasonable and not arbitrary and must fulfil a reasonable purpose.

To summarise, the court held that the scheme of 1980 and the 1974 scheme were bad in law as the legislature did not have the legal competence to enact them considering the overall scheme of the 1972 Act and hence are not to be held valid and are to be struck down.

Conclusion 

Delegated authority and its powers are limited and have to be interpreted considering the provision of the statute from which such powers get conferred, excessive delegation is not an inherent power of the legislature and also that the legislature that frames a law is in itself bound by the limits that it has set in the law and is barred from going beyond the limits.

The case is a landmark case regarding bringing new insights into the concept of delegated legislation. The case makes a clear statement to the legislature that it has a limit and cannot go beyond the limit of its authority, and gives a great example of the concrete and solid separation of powers that Indian democracy stands on. It makes it evident that an act or a piece of legislation is to be understood and studied considering the background which led to its enactment, and each of its provisions has to be construed in consonance with the other provisions of the statute. 

Frequently Asked Questions (FAQs)

The case of Ajoy Kumar Banerjee vs. Union of India concerns itself with which concept of administrative law?

The case revolves around the concept of delegated legislation.

The case is set in the aftermath of which significant event in the Indian Economy?

The case follows the aftermath of Nationalisation.

Which Section of the General Insurance Business Nationalisation Act, 1972, is in question in the impugned case?

Section 16 of the Act, which deals with the powers of the Central government with regard to revision in pay scales and alteration in terms and conditions of the service, has been dealt with in the impugned case.

References


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Doctrine of subrogation

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This article is written by Shreya Patel. This article emphasises the meaning, importance, and some of the exceptions to the doctrine of subrogation. The article also discusses the doctrine of subrogation under different Acts such as the Transfer of Property Act, 1882; the Indian Contract Act, 1872; the Insolvency and Bankruptcy Code, 2016; and the Insurance Laws, along with various landmark case laws that will help you understand the doctrine of subrogation in detail. A clear difference between the doctrines of subrogation and assignment is also explained in this article.

Table of Contents

Introduction

Did you know the doctrine of subrogation is quietly at work when any property is caused loss or damage by any third party? What is this doctrine of subrogation? To explain simply, when someone else takes your place and demands reimbursement from the party behind the cause of damage or loss, this is subrogation. In subrogation, the rights to seek claims are transferred to another party. This doctrine helps ensure that the person behind the loss or damage is held liable and pays for the financial burden that the party has caused by the loss or damage to the property. The integral players in the doctrine of subrogation are the policyholders, the insurer, and the liable party. As the other party is putting themselves in someone else’s position, the rights and duties are also now in their ownership, similar to those of the owner.

What is subrogation and the doctrine of subrogation

Subrogation is a legal principle where the third party assumes the responsibility of the other party in relation to debt collection or damages. A right of subrogation can arise by agreement, operation of law, or statute. The doctrine of subrogation is commonly seen in countries that inherit the common law system. The legal doctrine entitles one person to enforce the rights that are revised or substituted for the other party’s benefit.

There is a long history behind the doctrine of subrogation. The case of John Edwards and Co. v. Motor Union Insurance Co. Ltd. (1922) 2 KB 249 (CA) is said to have shaped the origin of the doctrine of subrogation. The doctrine of subrogation was credited to natural justice, a creature of equity, by several historians in the past. The doctrine can be seen commonly in insurance law, but it can also be seen and applied in various other types of legislation, such as insolvency laws, contract law, etc. The word subrogation has a Roman origin, which means to replace one party in the place of another or when someone is substituted for another concerning a legal claim or a legal right. The rational basis for the doctrine of subrogation evolved in the case of Lord Hardwick’s chancellorship.

The doctrine of subrogation has roots in Roman and French law. It evolved from the Roman law principle cessio actionum, which allows another party to sue on someone’s behalf and keep the trial winnings. The doctrine was further developed under Lord Hardwick’s chancellorship in the case of Randal v. Cockran [Ves. Sen. 98, 27 Eng. Rep. 916 (1748)]. There are two ways by which the right of subrogation arises: one is by operation of law, and the other is by the presence of any written agreement or any part of a contract.

In the case of Krishna Pillai Rajasekharan Nair v. Padmanabha Pillai and Ors (2004) , the Supreme Court gave the judgement that the right of subrogation depends on the natural justice principle along with the equity of doctrine. It does not rest upon the privity of contract.

When a substitution takes place of one thing or person for another, it results in changes relating to the obligations and rights that were originally applied to the person who is the real owner of those obligations and rights. Now all the rights and obligations are with the substituted person or thing. The doctrine of subrogation, in simple words, means stepping into another person’s shoes. This is a legally recognised principle. The doctrine of subrogation is generally applied in the circumstances of suretyship, mortgages, and insurance.

The parties under this doctrine are ‘subrogee’ and ‘subrogor’. Subrogation occurs when one entity (the ‘subrogee’) assumes the rights and duties of another (the ‘subrogor’). To understand the doctrine of subrogation better, we can start with the principles and essentials behind it, which were laid down in the landmark judgement of the Economic Transport Organisation v. Charan Spinning Milla (P) Ltd. and Ors. (2010). The Supreme Court has laid down principles in this case. The principles of subrogation are as follows:

  1. The insurer can take legal action against any third party under the name of the insured.
  2. When a letter of subrogation is present and it limits the terms of the subrogation amongst the parties (insurer and insured), the rights of the two parties are governed by the letter of subrogation.
  3. The right of equitable subrogation arises when the insurer settles the claim. The insurer allows the claimant to claim compensation from the third party.
  4. The right to take legal action against the insured does not terminate with the end of the doctrine.

Importance of the doctrine of subrogation

The doctrine of subrogation plays a crucial role in India’s legal system due to its various benefits:

  • One of the key reasons for implementing the doctrine of subrogation is for cost recovery. The doctrine of subrogation allows insured parties to recover costs and claim damages, reducing their financial burden.
  • With the doctrine of subrogation in play, the concept of fairness is also present. The doctrine promotes fairness by ensuring that the party causing the loss or damage bears the financial consequences.
  • The subrogation principle also aids in reducing and mitigating risks. In the doctrine of subrogation, the responsible party is held accountable for their actions, which also discourages negligence. 
  • The insured parties are entirely protected under the doctrine of subrogation. The doctrine provides comprehensive protection for insured parties, helping to maintain their financial security.
  • For the insurance sector, subrogation provides stability by promoting effective cost management, balancing risk exposure, and fostering viable business models.

Doctrine of subrogation under the Transfer of Property Act, 1882 

Meaning 

The Transfer of Property Act of 1882 (TPA Act, 1882) in India governs all property-related transactions, including gifts, sales, leases, and mortgages. One key concept in this Act is the doctrine of subrogation, which allows for substituting one party for another in a mortgage agreement. This doctrine is based on justice, equity, and good conscience principles.

Essentials of a valid claim of subrogation

The following are the essentials of a valid claim of subrogation:

  1. A claim can only be made by a co-mortgagor if they repay the other mortgagor on the property. On the other hand, a mortgagor cannot claim the subrogation because repaying the debt is his duty in the first place, and making a payment will only fulfil that duty.
  2. For a claim to be valid, it must be fulfilled in whole. A partial subrogation is not considered valid. The redemption must be done as a whole.
  3. To demand subrogation, the presence of a legitimate interest is very important.
  4. The redemption of the property must be confirmed in writing, stating that the debt has been repaid and the rights will be subrogated.

Relevant sections

The doctrine of subrogation, added to the TPA Act of 1882 in 1929, is outlined in Section 92. This section, rooted in Roman law, applies the principles of equitable subrogation, which existed in India before the amendment. According to Section 92, anyone other than the mortgagor or co-mortgagor who redeems a mortgaged property will have the same rights as the mortgagor or co-mortgagor, including rights related to the sale, redemption, and foreclosure of the property.

There are two types, as per Section 92 of the TPA Act of 1882. The two types of subrogation are:

Legal subrogation 

Legal subrogation, commonly resulting from the operation of the law, is based on the principle of reimbursement. It applies when one party makes a payment on behalf of another party who is legally bound to make that payment. The party making the payment is then entitled to reimbursement. The following parties can claim legal subrogation: a co-mortgagor, surety, purchaser of equity of redemption, and puisne mortgagee.

SuretyThe purchaser of equity in redemptionCo-mortgagorPuisne mortgagee
Under Section 91 of the TPA Act of 1882, a surety who repays a loan on a property is entitled to that property. The surety is then subrogated to the position of the creditor, assuming all their rights and liabilities.A purchaser of equity in redemption becomes the owner of the property.If a co-mortgagor pays both their share and the share of another mortgagor, they obtain the right to subrogation in place of the other mortgagor.The prior mortgagee has the right to sue for redemption of an earlier mortgage if they win a prior decree without suing the prior mortgagee.

Conventional subrogation 

If the person who is repaying the debt has no direct interest in the property, conventional subrogation arises when the parties enter into a contract. The contract can be written as well as registered, expressed, or inferred in nature.

Case laws

In the case of Bisseswar Prasad v. Lala Sarnam Singh [(1910) 6 Cal. LJ 134], the Calcutta High Court elaborated on the doctrine of subrogation, a principle of equity jurisprudence. This principle, which can be either implied or expressed, does not depend on the privity of the contract. It applies except when equity is imported into a transaction, thereby implying a contract. The concept of natural justice is used in conjunction with the circumstances and facts of each case.”

Subrogation does not apply if the mortgagor redeems the condition. If the mortgagor discharges the prior debt, it will not be entitled to subrogation or its associated remedies and rights. This was demonstrated in the case of Narain v. Narain, (1930), where the mortgagor discharged their obligation by settling the claim on the property they had created.

The Madras High Court ruled that when a subsequent mortgagee redeems the prior mortgage, the reason for the redemption is irrelevant; it can be for the benefit of the mortgagor or any other reason. The applicability of Section 92 of the Transfer of Property Act, 1882, is crucial only for proving the payment and demonstrating that the mortgagee made the payment, as established in the case of Nagayya v. Govindayuyar [AIR 1923 Mad 349]. 

Doctrine of subrogation under insurance 

Meaning 

Globalisation has opened new opportunities and increased market demand, influencing the growth of the doctrine of subrogation. This doctrine, seen under various statutes like contract, tort, and insurance, creates a liability to compensate if a breach occurs. Subrogation rights are divided into several categories, including the rights of the surety, business creditors, indemnity insurance, bankers, lenders, and trustees.

  • Indemnity Insurance Subrogation Rights: The infringer can be sued by the insurance company for the sum of damages, which is to be repaid to the insured. 
  • Surety’s Subrogation Rights: All the prior remedies and claims against the debtor will now be subrogated to the surety if the debt is paid by the surety to another party for recovery of the sum.
  • Trustee’s Subrogation Rights: The trustee in the transaction for the beneficiaries has the right to compensation from the beneficiaries if any personal loss occurs. They can also use the beneficiary’s property as a guarantee to assure compensation.
  • Lenders Subrogation Rights: When the lender pays the debt of someone else to the third party, they are now themselves in the place of the borrower and have the same rights for recovering the money.
  • Bankers Subrogation Rights: The bank will be subrogated to the third party’s rights and remedies when they help in discharging the liability. 

The insurance policies have the concept of subrogation present in them. This legal principle permits the companies (insurance companies) to recover the sum paid in the form of compensation from the party that is responsible for the loss that was insured. For instance, when we purchase insurance for a car, the third party is held liable for any damage taking place in the car, and the insurer can reclaim the sum from the insurance company of the third party or straight from the responsible party. The subrogation concept ensures no advantage is taken by the insured from the claims of the insurance.

Types of subrogations under insurance

The three types of subrogation under insurance are:

  1. Equitable Subrogation
  2. Contractual Subrogation
  3. Statutory Subrogation
Equitable SubrogationContractual SubrogationStatutory Subrogation
Frequently seen in insurance policies, this type of subrogation allows the insurance company to recover the claimed amount from the third-party responsible for the vehicle damage.Also known as conventional subrogation, this occurs when the insurer, standing in the shoes of the insured, sues the responsible party after the insured’s authority has been forfeited to the insurer. If the insured does not want to proceed with the subrogation, the insurer can file a lawsuit against the responsible party for the loss.In statutory subrogation, the insurance company is not included in covering the loss, as seen in the other two types of subrogation, when a loss occurs to the vehicle that is insured. In statutory subrogation, the parties themselves agree to compensate the amount for the loss that has been incurred. This type of subrogation is more simple than conventional and equitable subrogation.

Relevant sections 

Section 79 of the Marine Insurance Act, 1963, talks about the right of subrogation. The sub-clause (1) states that when the insurer is paying for a loss, either in part or completely, then in that case the insurer will only be entitled to the part for which they have paid. The rights that are subrogated will only be for that particular subject matter. The insurer will have all the rights and obligations as soon as the damage is caused.

The sub-clause (2) states that the insurer will only be liable for the part that is lost or damaged, not the thing that is still insured. They have all the rights and obligations relating to the part that is damaged or lost. According to the Marine Insurance Act, 1963, the rights of the insured are subrogated only when the claim is paid. The claim has to be paid first by insurers as a precondition. The subrogation of the rights is then subrogated to insurers. 

Exceptions to the principle of subrogation in insurance

There are some exceptions to the principle of subrogation in insurance in India. The exceptions are as follows:

Accident and life insurance

The doctrine of subrogation does not apply to accident and life insurance, as they cannot be reimbursed in the same form. The indemnity in these policies is independent, meaning the main aim is not monetary compensation and is not dependent on recovering damages and losses.

Pre-agreed agreements

If the two parties, i.e., the insurer and insured have any kind of pre-agreed agreement, the subrogation rules are then adjusted as per the agreement.

Abandonment and salvage

When an insured abandons the damaged property, the ownership of salvage (the taking over of the damaged property to reduce the losses) becomes non-recoverable. 

Filling a lawsuit

A legal proceeding can be initiated by the insurer on behalf of the insured, but they are not the real plaintiff. Therefore, it is the insurer’s responsibility to file a lawsuit if it is required to recover damages.

Rights of an insurer in subrogation of insurance

Insurers have several rights under the principle of subrogation in insurance, which assist them in recovering funds paid out for claims. These rights include:

Right to seek legal action

The insurer has the right to take the party that is at fault to court and sue the party that is responsible for causing loss to the insurer. The insurer can pursue legal action to recover the sum of money paid as a claim.

Right to gather evidence and investigate

When a loss is caused, the insurer has the right to investigate it. They can gather evidence such as statements from the witness, estimates of repairs, police reports, etc. to build a compelling case against the party at fault. 

Right to recover reimbursement

The insurer has the right to be reimbursed for all the damages for which he has paid. This can include expenses related to repairs, medical bills, etc. Expenses incurred during the claim process can also be reimbursed in some situations.

Right to take over your legal rights 

When the claim payment is made, the insurer gets the right of subrogation. The insurer gets the right to claim against the third party.

Right to negotiate settlements

The method of negotiation can also be used by the insurer to settle the matter instead of approaching the court. Settling the dispute through negotiation is a more cost-effective and faster way of recovering the funds. 

Doctrine of subrogation under the Indian Contract Act, 1872 

Meaning 

The interests of the surety are protected by the principle of subrogation. It ensures that no drawback is faced by the surety after they have paid the debt that was guaranteed. It also makes certain that all the obligations are fulfilled by the principal debtor, and in case of default by the debtor, the creditor is not left with any remedy. Subrogation by agreement is commonly seen in insurance contracts, where rights are subrogated when a claim is paid out by the insurance company.

Relevant sections

Section 140 and Section 141 of the Indian Contract Act (1872) talk about subrogation. Section 140 is about the rights of the surety to performance or payment. The Section states that if the debt guaranteed by a surety is due or if there is any non-fulfilment from the side of the principal debtor, then all the rights that the creditor had against the principal debtor are vested in the surety.

Once the guaranteed debt is paid, the rights are subrogated, which means all creditor’s rights against the principal debtor can now be exercised. Section 141 states the surety’s right to benefit the creditor’s securities. The surety is entitled to all the benefits of all the securities that the creditor has against the principal debtor at the time of entering the contract. All the security, whether known or not by the surety, is applicable. If the security is lost or given away, then the obligation is also discharged to the value of the security. 

Case laws

In the case of State Bank of India v. Fravina Dyes Intermediate (1988), the Bombay High Court held that a temporary injunction can be applied by the guarantor against the debtor, utilising the doctrine of subrogation. This can be done before paying the creditor in case the guarantor fears that the property will be deliberately disposed of to defraud the creditor. The Quia Timet injunction (a type of injunction where the rights of the party are protected even before the violation of the rights has taken place) can be granted to the guarantor in some circumstances against the principal debtor. 

The Supreme Court in the case of Amrit Lai Goverdhan Lalan v. State Bank of Travancore (1968) held that all the surety is eligible for all the remedies which the creditor possessed concerning the principal debtor, which included enforcing all means of payment as well as every security and the usage of those securities. The surety’s right is based on the principle of natural justice and is not just founded on a contractual basis. 

In the case of the State of M.P. v. Kaluram (1966), the Supreme Court held that the word “security” under Section 141 of the Indian Contract Act, 1872, encompasses all the creditor’s rights against the principal debtor’s property on the date of the contract.

Doctrine of subrogation under the Insolvency and Bankruptcy Code, 2016 

Meaning

The Insolvency and Bankruptcy Code, 2016 (IBC) is a comprehensive Indian bankruptcy law that includes all major rules and regulations for bankruptcy and insolvency. It is considered one of the biggest insolvency reforms in India’s history. The doctrine of subrogation under the IBC pertains to the rights of guarantors in India. A November 15, 2019 notification made guarantors liable, sparking debates about liabilities and rights across several legal platforms. 

Essentials 

The IBC has been a debtor-centric framework since its establishment, with the prime objective of preventing companies from reaching the insolvency stage. This is a very shortsighted approach used by the legislation when it relates to personal guarantors. In the effort to maximise the debtors’ assets, the courts appear to have obliterated that the CIRP (Corporate Insolvency Resolution Process) also needs to balance stakeholders’ interests.

Section 238 of the IBC protects the difference between the liabilities and rights of the guarantor. This section states that the IBC will prevail over other inconsistent laws in force. The notion of unjust enrichment states that no person should take advantage at the expense of another, which underpins the guarantor’s right to subrogation. In simple words, if the corporate debtor is not allowed to use his assets to pay off the debts, how will the problems related to insolvency be solved? This undermines the main objective of the IBC.

Case law

In the case of Vikas Aggarwal v. Asian Colour Coated Ispat Limited & Ors, the key point that is talked about is the doctrine of subrogation. The right of the guarantor is related to this doctrine. Both concepts become entangled when mixed with the IBC. The IBC’s main aim is to resolve companies with debt, not personal guarantors. The personal guarantors are the target of the creditors; hence, their rights in resolving the debt change. The definite right given by the subrogation principle is affected due to the existence of the IBC. Both the Indian Contract Act of 1872 and the IBC have different personal guarantor rights.

These subrogation rights might not continue after insolvency proceedings. The IBC is an extremely vital code connected with the treatment of personal guarantors. When there are certain rights against the personal guarantor for financial creditors, the right to sue under the TPA Act of 1882 will not be considered applicable. The landmark judgement highlights how the responsibilities and rights of the creditors and guarantors can change. The right of subrogation is also among them.

Exceptions to the doctrine of subrogation

The doctrine of subrogation, a key principle in insurance law, has a few exceptions. The exceptions are as follows:

Contractual limits

There can be limitations to the subrogation rights. The terms in the contract can exclude or restrict the right of subrogation in certain situations, such as when a specific type of damage is not covered. These types of contractual limitations constrain the right to subrogation. 

Equity consideration

Equity principles can override subrogation rights if their enforcement leads to extreme hardship or unjust enrichment.

Contractual waiver

Parties can waive subrogation rights through contract clauses. This kind of contractual waiver is seen in agreements related to insurance, where a party is prevented from pursuing the claim even when the loss has been compensated, such as in waivers of subrogation clauses in property leases. 

Anti-subrogation laws

Some regulations and laws in some jurisdictions act as anti-subrogation laws. Rules on compensation for workers may restrict or limit subrogation rights to protect injured workers, such as those who are injured. 

Voluntary payments

In subrogation, the party makes the payment because they are legally obligated to do so. In some circumstances, parties can make voluntary payments. These voluntary payments are not considered legal obligations and do not activate subrogation rights.

Differences between subrogation and assignment

The doctrines of subrogation and assignment are key principles in insurance law, each with distinct characteristics. The key differences between them are as follows:

SubrogationAssignment 
MeaningThe legal right is where the insurer pursues the third party that has caused the loss or damage to the party that is insured.Assignment is the transfer of rights from one party to another. 
Right to damagesIn subrogation, only the damages that are insured for or claimed are recovered, nothing more than that. Only the entitled claim can be reclaimed.The assignment of rights means the complete transfer of the rights. All the rights are in the interest of the insurer. The party that is assigned the rights can claim all the damages, regardless of the amount settled.
Right to sueIn subrogation, the insured can initiate a legal action against the third party, and the insured can assist a party to the suit. In an assignment, the insured party’s entire rights are transferred. The right to sue is also among the rights that are transferred. 
Transfer of interestsIn the doctrine of subrogation, rights cannot be transferred due to the subrogation resulting from the operation of the law. In subrogation cum assignment, the rights can be transferred. All the rights that are vested in the insured can be transferred. 
Agreement requirements Subrogation of rights is statutory enforcement.The assignment of rights is normally the result of an express agreement.
Parties InvolvedThere are mainly three parties involved in subrogation. The insured, the insurer, and the third party that has caused the loss.In the assignment, there are only two parties. The assignor and the assignee. 

Conclusion

The doctrine of subrogation helps in making sure that there is efficiency and fairness in the matter. The subrogation principle acts as a powerful tool for recovery. The right use of the doctrine of subrogation helps in adhering to the rules and regulations. With this doctrine in use, the insurer can step into the shoes of the insured and seek recovery from the party that is responsible for the damage or loss caused. The doctrine of subrogation will ensure that the real party responsible for causing the loss bears the financial burden for the same, which also prevents unjust enrichment. In conclusion, both subrogation and assignment play vital roles in matters of insurance; they differ significantly in terms of their meaning, rights, transfer of interests, agreement requirements, and the parties involved.

Frequently Asked Questions (FAQs)

What are the limitations of the doctrine of subrogation under insurance?

The doctrine of subrogation is only applicable to marine, fire, and non-life policies. The doctrine of subrogation does not apply to any type of accident policy or life insurance. 

What is the purpose of subrogation?

The main purpose of subrogation is to recover the sum that is claimed. 

How is the doctrine of subrogation beneficial?

With the existence of the doctrine of subrogation, both parties in question can make up for their losses, regain, or recover. 

Can a right of subrogation arise from an agreement?

Yes, the right of subrogation can arise from an agreement; usually, it arises from the operation of law. But when it is expressly mentioned in some agreement about the right of subrogation, then it is valid.

What is the difference between subrogation and indemnity?

Indemnity is prior protection against any type of financial damage or loss. Subrogation is when the right to repay is substituted by someone else.

Can the right of subrogation be waived in India?

Yes, the right of subrogation can be waived in India.

Is the doctrine of subrogation used in the health insurance sector?

Yes, the health insurance sector in India uses the doctrine of subrogation. The health insurance company has the right to recover the amount that was provided for medical care if the loss or damage was caused by a third party. For instance, if an insured person is injured due to someone else’s negligence and the health insurance company pays for the medical expenses, the company can then seek to recover those costs from the party at fault.

Under which statutory provisions is the doctrine of subrogation protected in India?

The doctrine of subrogation is present in the Insolvency and Bankruptcy Code of 2016, the Indian Contract Act of 1872, the Transfer of Property Act of 1882, and in insurance laws.

What does it mean to be subrogated to rights?

Being subrogated to rights means that one party assumes the legal rights of another. For instance, in an insurance context, if an insurance company pays a claim for an insured loss, the company is then subrogated to the rights of the insured and can seek recovery from the party responsible for the loss.

What is the difference between subrogation and assignment of rights?

Subrogation is vested in the operation of law, whereas assignment requires a written agreement. For instance, if an insurance company pays a claim for an insured loss, it is automatically subrogated to the rights of the insured. On the other hand, the assignment of rights would occur if the insured explicitly transferred their right to claim from the party at fault to the insurance company.

What are the parties involved in subrogation?

The three parties involved in subrogation are the insured, the insurer, and the party responsible for causing loss and damage.

What is the most common type of subrogation?

The most common type of subrogation is when a party claims for property damage.

Who can claim subrogation?

The subrogation is usually claimed by the insured individual. The right of subrogation can also be waived if the insured wants to.

Why is subrogation necessary?

Subrogation is necessary as it aids in recovering the loss or damage caused to the property.

References


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The impact of corporate governance on firm valuation

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This article has been written by Ahmad Bala Jibrin pursuing a Diploma in Advanced Contract Drafting, Negotiation and Dispute Resolution from LawSikho.

This article has been edited and published by Shashwat Kaushik.

Introduction

In the business world, where business entities are in competition with one another, it becomes essential for a business entity to be well aware of its position and to conduct continuous evaluation of its performance in order to identify the areas where it requires improvement for the purpose of reaching its desired goals and increasing the firm’s value. This is where governance comes into the picture for the proper regulation of firm affairs.

Governance can be referred to as the set of rules, regulations, policies and strategies that are used to regulate the affairs of a system, an authority or a group of people. Governance, when applied to a company or corporate body, is known as corporate governance. Corporate governance is the system in which companies are directed and controlled; it is the major determining factor of firm valuation in the dynamic business world. Having an effective corporate governance practice in place ensures that the company operates efficiently and effectively, which contributes to long term sustainability and value creation for shareholders and also instills great confidence in the investor. This article will explore the background and origin of corporate governance, firm valuation and its methods of valuation, the relationship between corporate governance and firm valuation, and the influence of corporate governance on firm valuation. 

Meaning of corporate governance

The most famous definition of corporate governance was given in 1992 by Sir Adrian Cadbury in his Report on Financial Aspects of Corporate Governance in the United Kingdom, “Corporate governance is the system by which companies are directed and controlled”. In other words, corporate governance is defined as the set of rules, regulations, processes, ethical codes and organisational structures that regulate the conduct of stakeholders in the company or any corporate body. The responsibility of regulating the conduct of the stakeholders and managing the internal and external affairs of the company is usually placed upon the board of directors of the company. The role and responsibility of the board of directors are regulated by the constitutional documents of the company, specifically the article of association, which is also known as the bye laws. Shareholders play the crucial role of appointing the members of the board of directors, which is considered to be an important contribution to the corporate governance of a company. The board of directors of a company is the primary force influencing corporate governance.

Corporate governance is mostly about what the board of directors of the company does and how it sets the values of the company. Having the right fundamental values such as transparency, accountability, fairness, and responsibility in place helps a company build strong and sustainable confidence in investors, stakeholders, and society at large.

In addition to that, effective corporate governance ensures that companies have the appropriate decision-making processes and control. Corporate governance is fundamentally concerned with the balance of stakeholder interests, including shareholders, directors, employees, customers, suppliers and governments.  Corporate governance is an important aspect because it helps companies achieve their goals, control risks, and assist with formal decision-making in order to avoid risks.

Origin of corporate governance

Corporate governance can be said to be a fairly recent issue; however, the concept has been in existence since the corporation itself. The United States of America is the country where corporate governance originated. Back in the 1970’s, the term “corporate governance” was added for the first time to the official journal of the federal government called the Federal Register in 1976. The idea of regulating the affairs of the company has been developed since the 1920’s, after a high number of well performing United States companies went bankrupt, which led to economic crises that happened due to the stock market crash. 

In order to prevent further damage, the United States government passed two legislations. The two legislations are the Security Act of 1933 and the Security Exchange Act of 1934. Both the legislations provided governance procedures for transactions of security for the company. The Security Exchange Act, 1934, led to the establishment of the Security Exchange Commission (SEC). The SEC is a regulatory body that performs the function of enforcing federal security laws and regulating the security industry, which includes the nation’s stock and option exchange. The primary objectives of the SEC are enforcing securities laws, facilitating capital formation, protecting investors, and maintaining fair, orderly and efficient markets. 

In the early 1990’s, the concept of corporate governance became a point of discussion in the United Kingdom. Many executives of companies were engaged in unfair practices, which led to various issues. The London Stock Exchange and Financial Reporting Council formed a committee in 1991 to address financial aspects of corporate governance. This committee is known as the Cadbury Committee. 

The Cadbury committee, led by Sir Adrian Cadbury, provided a report and suggested adapting major principles such as accountability and responsibility of directors, disclosure of information to the right authority, equitable distribution of shares with respect to the shareholders, e.t.c., and also made a code that was added to the London Stock Exchange list for companies. 

Corporate governance in India

The concept of corporate governance in India can be traced back to the pre-independence period, when India was under the colonial rule of the British. The colonial rulers introduced corporate structures such as joint-stock companies. The governance practices during that period were primarily influenced by British legal frameworks and lacked indigenous governance principles. After India’s independence in 1947, it embarked on a journey of economic development. The government of India played a dominant role in economic growth by creating multiple state-owned enterprises. However, corporate governance during that period was in place for both public owned and state owned enterprises under government supervision with limited regulatory control.

In 1999, the Ministry of Corporate Affairs and the Stock Exchange Board of India (SEBI) worked together to bring principles of high value to corporate governance. The two government bodies formed the Kumar Mangalam Committee under the leadership of Mr. Kumar Mangalam, who was the then chairman of SEBI. The committee was established to address the increasing concerns relating to corporate governance practices in India. The committee, in its report, stated a comprehensive set of recommendations aimed at strengthening corporate standards in India by enhancing transparency, accountability and integrity in the functioning of the companies. The committee also aimed to form an audit and appoint independent directors and supervisors for the management of the internal affairs of the company. 

Meaning of firm valuation 

Firm valuation can be simply defined as the process of determining the economic value of a company or a corporate entity. The process involves assessing the total worth of the company based on some important factors that are related to the company, such as its total assets, position in the market, growth potential and financial standard. Firm value is an important aspect that stakeholders in a company must pay attention to because the value of the company is a reflection of the economic and financial condition of the company. It is the determining factor as to whether or not the company is in good financial condition and whether the company can generate a good profit for the shareholders.

In addition to that, a firm valuation report is more than just mere figures and words; it is a powerful asset that gives an insight into the internal affairs of the company. In a situation where the firm’s value is high, potential investors would be able to trust the company and would not hesitate to invest their capital in it. 

Methods of firm valuation

In order to accurately evaluate a firm or company, one must possess good knowledge of the different approaches and methods of valuation as well as industry specific knowledge. However, it is possible for regular individuals to become acquainted with the fundamental approach used by valuation experts in some cases to make basic estimates of the company’s or firm’s value through simple calculations.

There are three basic approaches on which most valuation methods are based; these approaches include the income-based approach, the market-based approach and Assets- based approach. 

Income-based approach

An income-based approach is an approach that is used to estimate the value of a company or firm based on the anticipated future income generating potential of the company or firm.

Market-based approach

A market-based approach is an approach that is used to estimate the value of a company or firm by comparing that particular company to similar publicly traded companies or firms.

Assets-based approach

The asset-based approach is another approach that is used to determine the value of a company or firm by way of subtracting its liabilities from its total assets. 

The most common methods of firm valuation are Discounted Cash Flow (DCF) Analysis, Comparable Company Analysis (CCA) and Book Value Analysis (BVA). Each of these methods has its own strengths, weakness and applicability, depending on company specific industry and valuation required.

Discounted Cash Flow (DCF) Analysis 

Discounted cash flow is widely recognised, and it is a valuation method that is used to determine the present value of a firm’s future cash flow by discounting them back to the present value using the discount rate. DCF analysis requires the prediction of future cash flows, which can be challenging. It also requires assumptions about the discount rate, terminal value, and other necessary factors. The DCF process typically involves the following steps:

  1. Projecting future cash flows:
    • Estimating the firm’s future cash flows over a specified time horizon, usually several years.
    • These cash flows include operating cash flows, capital expenditures, and any other relevant cash inflows and outflows.
  2. Selecting the discount rate:
    • Determining the appropriate discount rate, typically the WACC, based on the firm’s specific circumstances and industry.
  3. Discounting future cash flows:
    • Applying the discount rate to each projected future cash flow to calculate its present value.
  4. Summing the present values:
    • Adding up the present values of all future cash flows will arrive at the total present value of the firm or asset.

DCF is widely used for various purposes, including business valuations, investment decisions, project appraisals, and mergers and acquisitions. It provides a quantitative framework for assessing the value of a company or project based on its expected future cash flows and risk.

However, it’s important to note that DCF is not without limitations. The accuracy of the valuation depends heavily on the reliability and accuracy of the projected cash flows and the chosen discount rate. Additionally, DCF does not consider factors like qualitative aspects, market sentiment, or competitive dynamics, which can also influence a firm’s value.

Comparable Company Analysis (CCA)

As the name suggests, Comparable Company Analysis is a valuation method that involves comparing the financial metrics of a particular company or firm with those of similar publicly traded companies in the same industry. This method is commonly used by private companies; it is a method that helps in determining whether the company or firm has the anticipated value compared to the company in the same industry. The process of CCA typically begins with identifying a set of comparable companies. These companies should be similar to the subject company in terms of industry, size, growth stage, and financial profile. Once the comparable companies have been identified, the next step is to gather financial data for each company. This data can be obtained from publicly available sources such as company websites, SEC filings, and financial databases.

The financial data that is typically used in CCA includes revenue, earnings, cash flow, and debt. Once the financial data has been gathered, the next step is to calculate the relevant multiples and ratios. These multiples and ratios can then be used to compare the subject company to its peers.

Some of the most common multiples and ratios used in CCA include:

  • Price-to-earnings (P/E) ratio
  • Price-to-sales (P/S) ratio
  • Price-to-book (P/B) ratio
  • Enterprise value-to-revenue (EV/R) ratio
  • Enterprise value-to-EBITDA (EV/EBITDA) ratio

By comparing the subject company’s multiples and ratios to those of its peers, analysts can gain insights into the company’s relative valuation. If the subject company’s multiples are higher than those of its peers, this may indicate that the company is overvalued. Conversely, if the subject company’s multiples are lower than those of its peers, this may indicate that the company is undervalued.

Book value method

The book value method is a valuation method that determines the value of a company or firm by subtracting the total liabilities of the company from its total assets as recorded in the books of the company. This is a method that provides a simple measure of the total value of a company; however, it is quite impossible to get an accurate value, particularly with respect to intangible assets. 

Relationship between corporate governance and firm value 

The relationship between corporate governance and firm value is heavily influenced by the board of directors of the company. The board of directors is the key to the well-functioning of corporate governance practices in the company. The practices and conduct of the board of directors, which are mandated by corporate governance principles, ensure accountability, fairness and transparency in the company’s relationship with stakeholders. The monitoring role of the board of directors is an important component of corporate governance and that results in a significant positive impact on the overall performance of the company.

In a company, corporate governance deals with mechanisms through which the stakeholders exercise control over the management of the internal and external affairs of the company such that their interests are protected. Stakeholders in this context include shareholders, investors, employees, consumers, suppliers, the government and society at large. Having an effective corporate government system in place enhances investor confidence, enables the company to achieve its long term objectives and ultimately increases its value. 

Influence of corporate governance on firm valuation

There are several factors in the realm of corporate governance that influence the firm’s valuation and performance.

Board composition

Board composition involves the size and structure of the board. When composing a board, it is important to consider diversity in experience, skills and backgrounds. A board composed of a diversity of thoughts tends to build good rapport, share valuable ideas while dealing with issues and make better decisions.  The composition of the board tends to have an influence on board independence; the more independent a board is, the more effective it becomes and that improves the performance of the company.

Presence of independence directors

An independent director is a member of the board who does not hold any stake in the company and does not represent any shareholder. According to the Cadbury Report 1992, independent directors protect the shareholders interests by playing their role as independent and impartial members of the board.  The independent directors act as mediators in the event that conflict arises between shareholders and executives. The presence of independent directors improves the standard and performance of the company, as independent directors have no private interest and are also free from board influence; therefore, this enables the independent directors to provide efficient and high quality monitoring.

Board meetings

A board meeting is any official meeting of the directors of a company. Board meetings are the meetings at the highest level. Board activities are usually presented during the board meetings in order to enhance the monitoring activity and also reflect on the performance of the company. Frequent board meetings have a positive impact on the performance of the company, high frequency of board meetings improves the overall performance of the company through continuous monitoring, which helps resolve issues more quickly.

Board committee

The board committee is subordinate to the board of directors and is usually comprised of a small subsection of the board of directors. Having an effective board committee is an integral part of good corporate governance. An effective board committee plays a crucial role in enabling the board to achieve greater efficiency in the activities of the company and also increase its value. Basically, a board committee is tasked with specialised operations by the board or provides expert advice or reports to the board.

Conclusion

Corporate governance has a deep impact on the overall aspects of a company. The existence of good corporate governance practices in a company ensures transparency, accountability, fairness and also protects the interests of the stakeholders of the particular company. In turn, by promoting and upholding effective corporate governance practices, a company can widen its awareness of its day to day operations, enhance its decision making ability, increase profitability, comply with all legal requirements, improve financial stability, reduce risks and ultimately increase the value of the company on a large scale in the capital market. 

On the other hand, poor corporate governance practices may lead to undesirable outcomes such as poor stakeholder relations, ineffective internal control, conflict of interest, inadequate risk management, a weak board of directors and a lack of transparency and accountability. Therefore, it is necessary for any company willing to grow to ensure efficient corporate governance practices and conduct in order to grow and improve its operations and ultimately increase the value of the company.

References

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