This article is written by Aarchie Chaturvedi, a first-year student pursuing BA-LLB from the National University of Study and Research in Law, Ranchi with the help of inputs provided by Mayur Sachdeva, University Growth Consultant at LawSikho. This article provides an answer to the question of whether self-publishing your book is a good idea or not?

Introduction

A good thought should not be left unacknowledged, and similarly a good book. A good thought might come in the mind of someone instantly and is not a work of great deliberation. However, a good book is a result of the determination, tireless striving, continuous efforts, and deliberation of the author. And so after completing a book, every author deserves a platform with the help of which people can read his book, share his perception, and provide him/her with valuable suggestions.

A way of providing a platform is publishing a book. Publishing of a book is making information available to the public at large by the distribution of literature, information through both digital and non-digital media. There are several ways of publishing a book like publishing through international and national publishers, publishing through agents of publishers and self-publishing. In this article, we will be discussing in detail what is self-publishing, what are the laws governing it, a brief description of the other ways of publication and through this article, readers can also explore and analyze whether it is a good idea to self publish a book.

What is Self-Publishing?

This is the case where the original creator or the author self-publishes his book without any sort of aid and assistance from any agent or third party. However, publishing a book is not an easy task. One needs to have efficient marketing skills along with core writing skills, money and time. He must be capable enough to carry out both pre-production activities and post-production activities. An example of a successful author who self-published his book is Amish Tripathi, the author of best-seller books like Sita, Raavan, The Immortals of Melluha and many others. 

In this process of publishing his book, he moved from just being an author to also be an institution. Now let’s discuss the procedure as to how after writing a  book one can go on with self-publishing it.

Procedure for Self-Publishing

Writing a book is a hard task, however, to publish and distribute is even tougher. People dream of getting their books published by Harvard, Oxford Press, University of Chicago Press, etc. But one must know that even if you are a well-known author, you might be having proficient writing skills, then too there is a high chance of these publishing houses rejecting your piece of work. And if you are an amateur writer then these are some places where the probability of getting your work recognized is very less. You can write some small part or some chapters of some books or journals and get them published by these presses. This would at least help you in earning credits and get your name gets listed in their books. But if you want to publish a whole new thesis of ideas which can be a book or a novel then there are some other options that you must look up to.

So what should you do if your book cannot be published through a prestigious publication house? Should you opt for a lesser-known publishing house or should you yourself publish your book? 

One of the options between the two can be self-publishing because when you try to publish your book in an already existing publishing house, then finding a publisher and convincing them is going to be hard. You will find an answer for yourself after going through the article but for now, let’s just look at the features of self-publishing a book that can keep you at an advantage.

• Self-publishing makes you the captain of your own ship. You don’t have to take orders from someone. It is just like starting your own startup.
• You get to decide what is essential for your book and what is not so important.
• It requires a lot of constant collaboration and action.

Moving forward to the procedure for self-publishing. The process is quite elaborate and involves the following steps:

• Editing;
• Designing;
• Marketing;
• Distribution

1.Editing

The process of editing cannot be done at once. It requires multiple rounds of reviewing again and again. A book or a piece of writing is reviewed and edited, till the time one feels satisfied that there would be no scope for errors or corrections left.

Editing is basically of two types:

1. Developmental editing;
2. Copy editing. 

Under this, the editor sees the design, style of writing, the accuracy of facts & plausible in reading. 

Developmental Editing

Under this, the editor sees the design, style of writing, the accuracy of facts & plausible in reading. 

Copy editing

Once your piece of writing is completed, polished and conceptually correct, the next step that comes is copy editing. Under this step, the copy editors look for grammatical and typographical errors and correct them.

In this kind of editing, editing is done by a third person and not by the author himself. So the burden of finding a good editor is on the author in the case of self-publishing.

Before designing, you should know that you as an author cannot send your rough draft for publication. You need to prepare a manuscript before you go forward with self-publication. The procedure for preparing a manuscript from a rough draft can be as follows:

1. Prepare figures and tables: Figures and tables are the most efficient way to present results. They help in understanding the data in a more clear way;
2. Write the results;
3. Tell about the discussions;
4. Write a compelling introduction;
5. Write an Abstract;
6. Compose a concise and descriptive title;
7. Select keywords for indexing;
8. Write Acknowledgements;
9. Write up the References;
10. Write conclusions.

While submitting one should not submit the rough draft. After properly formatting, and editing the rough draft, the rough draft is printed, binded and turned into a book. This book would now be used by the author for all future purposes.

2. Designing

People are usually influenced by the cover of the book as cover is the first appearance of the book to any layman. Many times they are encouraged or discouraged to read a book just by looking at its cover. As a self-publishing author, one has the power to decide what their cover page should look like. This is something on which traditional authors don’t have much say.

A cover page can be of many types. It can be customized to fit the genre and the text of the book. It can be in the form of some graphics, pictures, etc. Graphic Artists can perform this task. 

So a self-publisher can hire a good graphic artist. However, it must be kept in mind that the cover page should not look kiddish or something prepared by an amateur person. It should be elegant and aesthetically likeable.

Page Makeup is yet another aspect of a book that can not be overlooked. There are style guides that can be followed by one. A style guide is a set of standards for writing that creates or forms a channel of communication and consistency between the author and the reader. The same category of books follow a similar style guide and different kinds of books follow different style guides.  The one style guide being extensively used these days is the Chicago Manual of Style from the University of Chicago Press.  A self-publisher can design his books according to this form or can hire for professional formatting services. 

3. Marketing

Marketing and selling a book is the most laborious task in the whole process. When one chooses to self publish his book he is not the author alone, he is the publicist and marketer also. In short, he is an authorpreneur (an author who goes further from writing to promoting and selling his book). There are many books published throughout the year but how to attract the readers to your book is a question that requires to be pondered over upon. The author’s work actually ends when he finds his books among the bestsellers and that is why a marketing plan is important. Marketing is group work and not work done solely by the author. So a self-publisher needs to find like-minded individuals with the help of whom the author can reach out to a large audience. A self-publisher should come up with ideas from the very time he starts writing a book. The first step under this can be giving your book a publicity plan. Every book has its own target audience. So, a self-publisher should make efforts to reach out to that audience. The steps are as mentioned below:

• Firstly identify a target market and primary audience for your book ( the author’s  book) and;
• Then the second step would be to understand the working of the target group and placing the book written by you (the author) accordingly.

All this is collectively known as the SDG techniques (Segmentation, Targeting, and Positioning) in the field of marketing. So after doing all the basic things, you (the author) should try creating a buzz about your book on the digital platform also. This means a self-publisher also needs to have a digital marketing plan.

Some steps that can be kept in mind by the author while formulating a digital market plan are: 

• Create a website for his book and himself.
• Publicize his book on media sharing platforms like Twitter, Facebook, Instagram, Whatsapp, LinkedIn, etc. because this is the place where the authors targeted audience may be spending too much time.
• An Author can also make a book trailer for publicizing the book.

This being said there are some things that can also be done for marketing your book:

• Organizing book giveaways,
• Planning contests,
• Organize seminars,
• Make bloggers, friends reviewers review your book,
• Make your brand visible; Give free gifts bookmarks and other promotional items related to the book.

But after all this advice also one must try to keep in mind that marketing is a very hard process, for all big brands also; the one requiring minimum budget can be the marketing on the online platforms but otherwise, the author should seek the help of experienced marketing consultants who will be able to provide better insights to the author for publishing his book.

4. Distribution

Distributing the book is not an easy task for a self-publisher. Traditional publishing houses have an enormous number of distribution channels that only a few publishers have cracked by now. A dedicated sales force, having good terms with the retailers can make possible, forming a great distribution channel. However, today in the era of digitization much of the task has become easier. The development of these platforms is like a blessing for self-publishers as the coverage of these platforms is far and wide and it is comparatively easier to crack.  Some examples are Flipkart, Amazon Kindle, etc. This article provides the procedure to self publish books on some famous and good platforms that can be useful for the readers anytime they want to self publish their book.

How to self-publish your book on Kindle?

On Kindle, it is free to self-publish books. Your book would be published in less than five minutes and it appears on Kindle e-book stores within 24 to 48 hours. Using Kindle you can self publish both ebooks and paperbacks. More than 1300 authors have made their Kindle debuts in 2013 and are now earning $10,000 or more from writing annually which shows that there is definitely an opportunity for talented writers to cash in. The process involved in publishing a book on Kindle is as follows:

• You need an Amazon account which is very easy to create. 
• Then using your Amazon account you have to log in to Kindle Direct Publishing (KDP) (if you don’t have a KDP account you can create one easily).
• Now go to KDP Bookshelf and in ‘Create a new title option’ click on e-book or Paperback as per your need.

EPUB is a common ebook format around the web, but Kindle can not read it natively so one would need to convert .epub files to Mobi files for the Kindle to read.

• Then you would be required to enter some information like your book’s details, content, and pricing.
• After this, the last step is clicking on Publish Your ebook or clicking on Publish Paperback.

So, in a matter of a few minutes, sitting in your home you will be able to self-publish your book.  And apart from this, you will get added advantages that:

• You can edit anything in your book whenever you want,
• You get the rights to your book,
• You can get up to 70 percent royalty.

However, if someone is planning to self-publish a book, he must also be aware of the certain hardships that he might have to face and also the other routes he can take if he feels he is not ready or well equipped to self-publish his books.

Demerits of self-publishing

• Less Editorial Support

One of the disadvantages of self-publishing your book is you lack a strong editorial team. Traditional Publishers have a strong, qualified & experienced team who has been working with the organization for quite a long time.  However, in the case of self-publishing, you have to search for a team consisting of people with refined qualities whom you can trust. In the team, you would be required to hire an editor and a designer. The goal is to make as good and as error-free, a book as would have been made by the publishing houses.

• Less Marketing Support

Not only publishers have the platform to publish your books but they also arrange for media coverage for your book. When you publish your book with the help of some publishing house then it is done through specialization of labour i.e handing over to them the work which they are best at.

Publishers can also send your books to other authors for third party reviews and testimonials. But if you are self-publishing your book you will have to seek out your own testimonials by sending copies of your book to the other authors. For that, you need to build contacts with people in this industry.

• Less Acclaim

It is a known fact that self-publishing has proved to be a bad decision in many cases. Though earlier the chances of failure were more than what happens today. The reason being, people had faith in certain publishers or in a certain brand name. So, they refuse to read books that are not produced by those publishers.

• High Market Risks

As all the above factors make it clear that when a person goes to self publish his book the costs involved in it would be great. Be it for hiring an editor or hiring a designer or for the printing costs involved, all of these would cost more to the self-publisher. Because a publishing house who has been doing this for ages and who publishes 100’s of books in a year, this cost is not too much, as it gets covered during the business cycle. But a self-publisher who publishes his book once or twice a year and is also not sure of his reader base, this decision can prove to be very hazardous for him.  Thus, we can say that this decision by the author is full of market risks.

Conclusion

After dwelling deep into the topic that how can one self-publish a book, we get the glimpse that: 

• Whether you should self publish your book or not, that totally depends upon you, your situation, your book, your tastes, etc. 
• If you like controlling all the things related to your profession have the time, the marketing skills, money, and the patience to wait till your self-publication becomes a brand name then you should definitely go for it. 
• This kind of publication will make you independent in the course of time and you as an author won’t be dependent upon the external factors.   

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This article is written by Gurkaran Babrah a first-year law student at Symbiosis Law School Noida. This article provides an overview to death, marriage and insolvency of parties under the CPC.

Introduction

Death, marriage and insolvency of parties, these are three different concepts. These are mentioned and discussed under the Civil Procedure Code, 1908. What happens in cases of death, marriage and insolvency of parties all this is discussed under their relevant headers. There are different provisions for each of these three cases. One general rule in cases of death says that the suit shall not be gone with the death of any one party. In a similar way in this article, all the provisions are discussed according to the Code of Civil Procedure and relevant case laws are cited.

Death of party

During the proceeding if one of the parties dies or what will happen when the contingencies of suit like death, marriage or insolvency of parties occur? 

What is the standard procedure or standard practice under the law for these kind of situations? It naturally leads us to the concept of pendency of suit because now it has somehow been struck between the step which is the institution and passing of judgement.

Such a situation calls for something which helps to solve the problem of pendency of the suit and the same can be dealt with by the creation of assignment or by the devolution of the interests of the parties.

The procedure for creating an assignment and devolution of interests is very exhaustive and it is defined under the Order XXII of the Code of Civil Procedure, 1908. The procedure prescribed under Order XXII of this code shall be applied and considered to meet the ends of justice. 

What will happen in case of death of one of the parties? Or what procedure should be followed in this type of situation? The answers to all these kind of questions are resolved under order XXII of the Code of Civil Procedure, 1908. In that kind of situation, the fundamental question which is considered is as the test for creation of any interest thereof is the survival of right to sue. The suit should not be gone with the death of any of the party. If the suit will be continued the matter will further have no legs to stand. These provisions are explicitly provided under Rule 1-6, 9 and 10-A of the order XXII of the code.

The first one talks about the cases in which there are co-plaintiff or co-defendants and the right to sue has survived. A situation where one of the several plaintiffs has died and the right to sue has survived in favour of the surviving plaintiff or plaintiffs in such a case the court shall record such fact and shall proceed with the suit.

On the other hand, a situation where one of the several defendant or defendants has died and the right to sue has survived in favour of the surviving defendant or defendants in such as case the court shall record the fact and shall proceed with the suit.

On the contrary, a situation where the right to sue does not survive or where one of the several plaintiffs dies and the right to sue does not survive to the surviving plaintiff or plaintiffs alone or even a situation where the sole surviving plaintiff dies and the right to sue survives in such case, on an application being made by the legal representative, the court shall make the legal representatives of the deceased party to proceed with the suit.

And, if there is no application made within the prescribed period, the suit shall abate so far as the deceased plaintiff is concerned. If an application is made by the defendant, the court shall award him the costs which he/she may have incurred in defending the suit from the estate of the deceased plaintiff.

In a similar situation, if one of the several defendants dies and the right to sue does not survive against the surviving defendant or defendants alone or where a sole surviving defendant dies and the right to die survives, in such a case on an application being made by the legal representatives, the court shall make the legal representative of the deceased defendant party to proceed or go ahead with the suit.

But there is also a condition in it that if no application is made within the specified time period, the suit shall abate against the deceased defendant and also the discretion of the court to exempt the plaintiff from substituting the legal representatives’ of a non-contesting or Pro-forma defendant and pronounce the judgement notwithstanding the death of such defendant. 

A case in which the plaintiff had no knowledge or if he was ignorant of the death of the defendant and as a consequence of that he/she could not make an application within the prescribed period and the suit is abated, then the plaintiff can thereby may make an application for such abatement within the prescribed period and considering the said application, the court shall have due regard to the fact of such ignorance of the plaintiff since it is the court who has to determine the interests of a deceased person. 

A situation where either party dies during the process of hearing and the pronouncement of judgement, that situation is one of the most confusing one. The solution to this kind of situation has been provided under Rule 6 Order XXII of the Code of Civil Procedure, 1908. In such type of situation, the suit shall not abate regardless of the survival of the right to sue and cause of action. But if a situation in which where a suit is instituted against the person who is already deceased, it will be considered as null and void and it will have no legal effect.

Death of plaintiff

Order XXII of the Code of Civil Procedure, 1908 talks about the provision that what happens when there is a death of plaintiff. Rule 2 of Order XXII of the CPC says that “ Procedure where one of several plaintiffs or defendants dies and right to sue survives- Where there are more plaintiffs or defendants than one, and any of them dies, and where the right to sue survives to the surviving plaintiff or plaintiffs alone, or against the surviving defendant or defendants alone, the Court shall cause an entry to the effect to be made on the record, and the suit shall proceed at the instance of the surviving plaintiff or plaintiffs, or against the surviving defendant or defendants.” 

Radhu Napit v. Tarapdo Napit

In the landmark case of Radhu Napit v. Tarapdo Napit, the Hon’ble High Court of Jharkhand in a single Judge bench of Justice Shree Chandrashekhar, he dismissed a writ petition which was filed against the order of the trial judge, whereby petitioner’s application seeking abatement of partition suit on the ground of death of one of the defendants was rejected.

Issue

The fundamental question or say issue which arose before the court, in this case, was whether the suit can be abated in case of death of either party or not?

Held

The honourable high court in its judgement observed the Rule I of Order XXII of the Code of Civil Procedure, 1908. Rule of 1 of CPC explicitly says that the suit can not be abated on the mere ground of death of either party if the right to sue still survives. Rules 1, 2, and 4 of Order 22 of CPC provides different procedures. These rules talks about different situations like the death of a party, the death of one of several plaintiffs or defendants but survival of right to sue and death of one of several defendants or sole defendant only.

The court in its judgement held that according to the provisions mentioned under the Order XXII of the Code of Civil Procedure, 1908 it can be reasonably observed that cases or situations in which either of the party or parties dies and their right to sue survives there shall be no abatement of the suit. Further, the court held that this case is not any exception and the petitioner falls within the ambit of Order XXII rule 1 and said that the application of the petitioner for the abatement of suit is rejected.

Death of defendant

Order XXII of the Code of Civil Procedure, 1908 talks about the provision that what happens when there is a death of defendant. Rule 4 of Order XXII of the CPC says that “Procedure in case of death of one of several defendants or of sole defendant- Where one of two or more defendants dies and the right to sue does not survive against the surviving defendant or defendants alone, or a sole defendant or sole surviving defendant dies and the right to sue survives, the Court, on an application made in that behalf, shall cause the legal representative of the deceased defendant to be made a party and shall proceed with the suit.”

Further, it says that when no application is made within the prescribed time limit of ninety days, the suit shall abate as against the deceased defendant the court can exempt the plaintiff from substituting the legal representative of a non-contesting and may pronounce the judgment notwithstanding the death of such defendant.

There can be a situation where the plaintiff is not aware or if he/she is ignorant of the death of the defendant and is unable to make the application for the substitution of legal representative of the deceased defendant within the period of limitation, and the suit stands abated, he/she in that situation can make an application to set aside such abatement within the period of limitation, stating that due to ignorance of the death of the defendant he could not make application within time. The court shall consider the application, having its due regard to the fact of such circumstances.

Elliott v. Cline was one of the landmark judgement in legal history. In this case, the court observed that a cause of action for an injunction survives the death of either party, where if the acts are completely of personal nature, the right of action abates upon the death of the defendant. However, a situation in which if a suit is for damages and injunction, then the right to damages will survive the death of the defendant.

Further, it was also discussed that where the defendant dies after hearing but before pronouncement of judgement, the suit shall not abate. The suit shall also not abate on account of the death of an unimportant party. 

Jitendra Ballav Burdhan vs Dhirendranath Burdan

This is another landmark case, in which the plaintiff filed a suit for partition of land and claimed I/5th share in the property. This suit was successfully contested and a decree was declared saying I/5 share of the plaintiff by a preliminary decree. This was challenged in court but it was withdrawn. Then the final decree proceedings were initiated and the decree was made final.

During the final decree proceedings, the defendant no.4 died. Therefore, an application for substitution was filed in the said decree proceeding with a prayer to substitute the legal heirs of the deceased defendant no.4. Notices were issued to the proposed legal heirs of the deceased defendant no.4.

The defendant who died i.e. defendant no.4, he did not contest the suit and I/5th share was granted in favour of defendant no.1 to defendant no.5 jointly as they all hailed from a common ancestor that was Jagat ballav. The order was passed by the honourable High Court of Odisha in the final decree proceedings.

Actio personalis moritur cum persona

The literal meaning of this maxim is that a personal right of action of a person dies with the death of that person. This maxim was quoted for the first time in 1496. There was a case in which a woman against whom a defamation judgment was issued died before paying the damages to the tortfeasor. After this In the Uk, the kings’ bench used this maxim for the first time in Cleymond v. Vincent (1523). Some academicians contended that this is the principle of early law that the death of either party to a personal duty takes away all remedy and destroys the duty.

In some legal situations, the cause of action can survive the death of the plaintiff, for example, actions or situations under the Contract Law. There are some actions which are considered personal to the plaintiff for example defamation. Therefore, a situation where an action which somehow relates to the private character of the plaintiff, comes to a death on his or her death but such an action for publication of a false, derogatory or malicious statement which causes damage to the plaintiff’s personal estate will survive to the benefit of his or her personal representatives. This principle also protects the executor and the estate from liability for strictly personal acts of the deceased for example charges for fraud. 

Illustration

If A commits battery on C and if either party dies, the right which C got by the reason but if A commits battery on C, or does other injury to C, then any right of action which accrues to third person will not be affected by the death of C. 

Further, in the landmark case of Nurani Jamal and others vs. Naram Srinivasa Rao the learned judge agreed that this maxim “actio personalis moritur cum persona” is applicable in respect of all personal wrongs but with that, he also recognised an exception to it he said “where a tort-feasor is benefitted by the wrong done, an action would lie against the representatives of a wrong-doer.” therefore, this decision did not help the third respondent. 

Right to sue

The right to sue is similar to that maxim “Actio personalis moritur cum persona”. A personal right of action dies with the death of that person, is a deviation which derived from this Latin maxim. 

To check that when and how a right to sue survives regardless of the death of either party there is a simple experiment for that. There are certain cases where the plaintiff mostly sues with regard to a claim which is associated with or which vests in their individuality. A suit for damages is one such category for that. If in a case where the plaintiff died during the pendency of suit for damages, the right to sue, which in other words can also be termed as a right to seek relief, will not survive but if the plaintiff succeeds in getting, a decree for damages and dies during the pendency of his opponent’s appeal, the right will survive to his or her legal representatives.

A case in which the survival of the right to sue is there, the suit does not abate on the death of a party but the substitution to his or her legal heirs becomes necessary within a period of 90 days. This is because the surviving right is now vested in the legal heirs so long as a right an individual has, it does not survive at the death of that person. The common or say the general rule is that all causes of action and all demands which are existing in favour or against a person at the time of his or her death survive to or against his or her legal representatives. This principle is also mentioned under the succession act as well, but in that, there is only one exception to it which says that rights intimately connected with the individuality of the deceased will not survive based on this maxim Actio personalis moritur cum personal- a right of action dies with the death of the person.

Abatement

Abatement refers to a situation in which when any of the party in a civil suit dies and if their right to sue survives then the suit can be continued by the legal representative or legal heirs of the deceased party. But if in a situation or a case where the right to sue does not survive then the suit will automatically come to an end. The fundamental part of an important part which the effects the abatement is the right to sue after the death of either party because after the death of the party if the right to sue survives then the suit can be continued.

The general rule in this is that an action or suit can be prosecuted by and against only living parties. If in a situation where the person against whom a personal action is brought and dies before suit papers naming that person as the defendant, then in such a situation the suit papers can be changed by substituting the deceased’s personal representative or legal representative.

Enactments which set up legal procedure for revival seeks to prevent the arbitrary cessation of a proceeding where the cause of action survives and provide for substitution of the personal representative or other proper party and the continuation of the matter in that party’s name. A situation where there is a death of an important party, the action is abated till the deceased party’s state or legal representative has been substituted.

A deceased party is not eligible to be a party to a legal proceeding and on the death of either party, its effect is to suspend the action as to the decedent until his or her legal represented is substituted.as a party. A deceased person cannot be a party to any legal proceeding.” while the death of a party does not abate a pending action but cases where the cause of action survives, though the effect of death is to suspend the action as to the decedent until someone is substituted for the decedent as a party to a legal proceedings. Till a person is properly substituted as a party after the action is suspended, any further proceedings in that particular case are void as to the decedent. 

Understanding the matter of abatement of an action by the death of a party, as well as the survival and revival of the action, there is a complete difference between the cause of action and an action. A cause of action may survive though a particular action is based on whether it is abated by the death of a party or not.

In legal terminology, abatement means elimination, cessation or discontinuation. This is used widely in several different contexts. Abatement is nothing but it is discontinuation of a judicial proceeding due to some fact not affecting the merits of the controversy. The most common grounds for abatement are the death of either party or the pendency of another suit. There are also other grounds for abatement of suits. These grounds are defects of the parties like incapacity or misnomer, invalid jurisdiction of the court, premature commencement of an action, dissolution of a corporation, and transfer of a party’s interest in the lawsuit.

As we all know there are always two parties involved i.e plaintiff and defendant. The party which files a suit or initiates a lawsuit is known as plaintiff and the party against whom the action is brought is known as the defendant. Laws relating the concept of abatement differs from state to state but the plaintiff generally claims for recovery against the defendant and monetary relief.

The ending before the actual time or say premature ending of a suit is called abatement. If the reason for abatement are not clear on the pleading filed by the plaintiff, then the defendant can move to abate the case. But if the defendant fails to claim for abatement, the defence will be waived. Court considers a plea for abatement of an action before proclaiming a judgement as the judgment on the plea will affect the final decision of the court.

Marriage of party

A marriage of a party does not have any substantial effect on the suit but there is an exception to it. A case or a situation in which a decree has been executed against a female who is married, the decree shall be executed against her only. It has been mentioned under Rule 7 of Order XXII of CPC that a decree which is in favour or against a wife, where the husband is legally entitled to the subject matter of the decree or if he is liable for the debt of his wife may, with the explicit permission of the court, it should be executed by or against him.

Insolvency of party

Insolvency of the party is defined and discussed under Rule XXII of the Code of Civil Procedure, 1908. Rule 8 of Order XXII says:

• Where a plaintiff becomes insolvent and a receiver or assignee may want to maintain the suit for the benefit of the creditors of the plaintiff, the suit should not abate except in cases where the assignee or the receiver declines to continue the suit, or in certain cases in which the court itself directs the assignee or receiver to pay the security for costs and the assignee or receiver declines to neglects to pay the same.
• Where the receiver or the assignee wishes to proceed with the suit or fails to pay the security for the costs within the time limit, the defendant then may make an application to the court and may claim in that for dismissal of the suit.
• Further, the court can order that costs be paid to the defendant and the same should be deemed to be a debt against the estate of the plaintiff.
• This rule is not at all applicable to the insolvency of the defendant. In these type of cases, the court may put a stay on the proceedings or suit against such defendant.
• Rule 9 of the same Order says that where a suit is abated, the receiver or assignee in cases where the plaintiff becomes insolvent he or she may make application to the court to set aside the abatement,
• The receiver or assignee will have to show that there was reasonable cause for not continuing with the suit and if the court is satisfied with the same then it may pass an order in this regard.
• The application to the court should be filed within the time limit as prescribed under Section 5 of the Limitation Act.

Conclusion

Earlier under the common law system, a lawsuit was used to automatically abate on the death of a party. However, whether the cause of action is abated or not depends on whether or not the lawsuit was considered personal to the parties or not. For example, property and contract cases were thought to involve separate issue from the parties themselves and did not necessarily abate on the death of a party. On the other hand, personal injury cases including those injuries to the person as well as cases of libel, slander, and malicious prosecution were considered personal and did abate at death of the party.

Today, there are a number of states which have their statues which permits the revival of an action that was pending when a party died. But in the usual course of action, an administrator or executor is substituted for the deceased party and the lawsuit continues. There can be a situation where the lawsuit may not be revived unless the underlying cause of action continues to have its legal existence. Every state has its own revival statutes and they vary from state to state, but today many lawsuits do not abate due to the death of either party.

In a situation if two or more persons bring an action to the court and if in that course one of them dies then the action will not abate if the cause of action survives. The action will continue in the name of the surviving party, or by the representatives of decedent. After the death of a party, if the right to be enforced survives against or in favour of the surviving party, then the action will not abate but will continue against and for the surviving parties. In common law, if the defendant dies, it will not abate an action against the other defendants entirely either in tort actions or in contract law. If the rights of the deceased party, or of his/her successors remain in the cause of action then the matter is either suspended or abated until the action is properly revived and a successor is named. A judgment is not entered against the decedent’s successors in interest or against her/his former rights until these steps are taken. 

If one of the two co-parties is a necessary party, and if the judgement will not have any meaning without him/her as party, then the action will abate upon the party’s death and cannot be revived. However, if a valid judgment is given against the remaining defendants, the death of a party for whom no substitution can be made abates the action only as to the decedent, without possibility of reviver. 

References

1. https://www.legalbites.in/death-marriage-insolvency-parties/
2. https://lawtimesjournal.in/consequences-death-marriage-insolvency-parties/

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This Article is written by Shruti Singh, 2nd year Law student from Hidayatullah National Law University, Raipur. This article explains the Principle of Res Sub-Judice and various case laws associated with it.

Meaning

Res means every object of right that forms the subject matter in a particular case. In Latin, the term Sub-judice means ‘under a judge’ or in other words, a matter ‘under consideration’. It means a cause that is under trial or pending before a court or judge. The doctrine of res-judicata prevents the trial of a suit which is already pending in a court of competent jurisdiction. When the same parties file two or three cases in the same matter, the competent court has the power to stay proceedings of another court. The primary aim is to prohibit the courts of concurrent jurisdiction from simultaneously entertaining two parallel litigations.

Nature, Scope and Objective

The principle of res sub-judice prevents the court from proceeding with the trial of any suit in which the matter in issue is directly or substantially the same with the previously instituted suit between the same parties and the court where the issue is previously instituted is pending has the power to grant the relief sought.

This rule is applicable to the trial of the suit and not the institution. It does not restrict the court from passing interim orders like injunction or stay. However, it applies to revisions and appeals.

The purpose behind this rule is to prevent multiplicity of cases in courts. It is also sought to prevent the plaintiff from getting two separate decisions from different courts in his favour or two contradictory judgements. It also ensures to protect the litigant from unnecessary harassment. The policy of law is to restrict the plaintiff to one legislation, thus obviating the possibility of two conflicting verdicts by one and the same court in respect of the same relief.

Meaning of suit

The word suit has not been defined anywhere in the Code, but it is a proceeding which is commenced by presentation of a plaint. In Hansraj Gupta and Ors. vs. Official Liquidators of the Dehra Dun-Mussoorie Electric Tramway Co.Ltd., the Privy Council has defined the expression “suit” as a civil proceeding instituted by presentation of a suit.

In Pandurang Ramchandra vs. Shantibai Ramchandra, the Supreme Court has stated suit is to be understood to apply on any proceeding in a court of justice by which an individual pursues that remedy which the law affords.

Conditions

Section 10 of the Civil Procedural Code, 1908 deals with the conditions required to apply the principle of res sub judice. The conditions in the process of application of res sub-judice are:

• Where the matter in issue is same

Section 10 clearly states that the matter in issue in both the suits must be directly or substantially be the same.In other words there must be two suits one that is previously instituted and another that is subsequently substituted. The issues of both the suits should be same to get the benefit of this principle, it is not sufficient if only one or two issues are common. In the circumstances were the entire issues are not the same, the court may exercise its power under Section 151 and stay the trial in a subsequent suit or the trial of the suit may be consolidated. The power of courts to stay the trial under Section 151 is discretionary in nature and can be exercised only when there is an abuse of process of court and if it defeats the ends of justice.

According to Indian Evidence Act, 1872 “matter in issue” are of two kinds:

Matter directly and substantially in issue– Here “directly” means immediately i.e. without any intervention. The word “substantially” implies essentially or materially.

Matter collaterally and incidentally in issue– It is just contrary to the matter directly or substantially in issue.

• Where the parties in suits are same

The two suits should have the same parties or their representatives.

• Where the title of the suit is same

The title of both the suits for which the parties are litigating should also be same.

• Where the suit must be pending

The former suit must be pending in the court while the latter suit is instituted. The word pending is for the previously instituted suit, where the final decision has not been arrived at.

• In a competent court

Section 10 also specifies that the former suit must be pending before a court which is competent to carry out the trial. If the former suit is pending before an incompetent court, no legal effects can flow from it.

Illustrations:

• ‘X’ and ‘Y’ decide to enter into a contract for the sale of machine. ‘X’ is the seller and ‘Y’ is the purchaser. Y defaulted in paying the amount of the sale to X. X first filed a suit for recovery of the entire amount in Bangalore. Subsequent to this, X filed another suit at Bombay High Court demanding Rs. 20,000 as outstanding balance. In X’s suit Y took the defence that X’s suit should be stayed since both the suits are on similar issue. However court of Bombay held that since X’s first suit and the second suit have similar issues similar to the first suit, the subsequent suit is liable to be stayed. 
• ‘P’ was an agent in Patna who agreed to sell goods in Odisha to ‘M’. ‘P’ the agent then filed a suit for balance of accounts in Patna. ‘M’ sues the agent ‘P’ for accounts and his negligence in Odisha; while the case was pending in Patna. In this case, Patna court is precluded from conducting trial and can petition Odisha Court to direct a stay of proceedings in Patna Court.

The moment the above conditions are satisfied, a court cannot proceed with the subsequently instituted suit since the provisions contained in Section 10 are mandatory and the court cannot exercise its discretion. The order of stay can be made at any stage of the proceedings.

However, Section 10 takes away the power of the court to examine the merits of the case thoroughly. If the court is satisfied with the fact that the subsequent suit can be decided purely on legal point, it is open for the court to decide in such a suit.

In Neeta vs. Shiv Dayal Kapoor & Others it was held the subsequent matter can not be stayed if the conditions mentioned in Section 10 are not fulfilled. In the apparent case, the two courts which tried the same issues were not the courts having concurrent jurisdiction. Therefore, the proceedings in the subsequent court were not stayed.

Test

The test of applicability for Section 10 is whether the decision in a former given suit would operate as res judicata(decided case) in the subsequent suit. It this happens, then the latter suit must be stayed. This can also be inferred from S.P.A Annamalay Chetty vs. B.A Thornbill.

Suit pending in foreign court

The explanation clause of Section 10 clearly provides that there is no limitation on the power of an Indian court to try a subsequent instituted suit if the previously instituted suit is pending in a foreign suit. This also means that the cases can be carried on simultaneously in two courts.

Inherent power to stay

The word inherent has very wide meaning which includes an inseparable part of something or an attribute or quality which is permanent and essential. It is something which is intrinsic and attached to a person or object. Therefore, inherent powers are the powers of the courts which are inalienable i.e., something which can be separated or taken away from the courts and they exercise it in order to provide complete justice to the parties.

Even where the provisions of Section 10 do not strictly apply, a civil court has inherent power under Section 151 to stay a suit to achieve justice. Additionally courts can also consolidate different suits between the same parties in which the matter of issue is substantially the same. In Bokaro and Ramgur Ltd. vs. State of Bihar and Another(1962) the matter in issue was regarding the ownership of a property. The court in this case used its power and consolidated different issues having same matter.

Consolidation of suits

The objective behind Section 10 is to avoid two contradictory decisions in the same matter by different courts. To overcome this the courts can pass an order of consolidation of both the suits. In the case of Anurag and Co. and Anr. vs. Additional District Judge and Others, it was explained that consolidation of suits is ordered under Section 151 for meeting the ends of justice as it saves the party from a multiplicity of cases, delays and expenses. The parties are also relieved from producing the same evidence at two different places.

Effect of contravention

Any decree passed in contravention of Section 10 is not null and therefore cannot be disregarded completely. It is to be clearly understood here that it is only the trial and not the institution of the subsequent suit which is barred under this section. But this right which is given in favour of parties can be waived by them. Hence, if the parties in a suit decides to waive their rights and ask the court to proceed with the subsequent suit, they cannot afterwards challenge the validity of the subsequent proceedings.

Interim orders

Interim orders are the temporary orders which are passed for a limited duration just before the final order. An order of stay under Section 10 does not take away the power of the court to pass interim orders. Therefore, the courts can pass such interim orders as it thinks fit like attachment of property, injunction etc.

Difference between Res Judicata and Res Sub Judice

Conclusion

Res sub judice as a doctrine has the main purpose of reducing the burden of courts from abundance cases. In other way it also reduces the burden of parties to adduce oral or written evidence twice in different courts. It also avoids conflicting decisions and makes sure to minimise the waste of resources of courts. The court can exercise this power and put a stay on the subsequent suit. The people who try to misuse their right in order to get double benefits are looked after through this principle. Anyways the Indian judiciary is overburdened with many cases and if parties will start instituting cases twice then one can’t even imagine the situation of the courts in giving decision in all such cases.

References

• The Code of Civil Procedure, 1908
• https://blog.ipleaders.in/res-judicata-res-sub-judice/
• https://www.casemine.com/judgement/in/56b49623607dba348f016e44

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This article is written by Kashish Kundlani, a third-year student of (BBA.LL.B) Ramaiah Institute of Legal Studies, Bangalore. In this article, we’ll discuss the offences relating to wrongful restraint and wrongful confinement.

Introduction

Wrongful restraint and wrongful confinement are offences related to the human body. Committing these two offences would mean that it is violative of the right of a person given in Article 19 and 21 of the Indian constitution.

Both the offences of wrongful restraint and wrongful confinement may appear to be the same but are not. A proper understanding of these two offences become a lot more necessary because the punishments for wrongful restraint is comparatively less to the punishment of wrongful confinement.

Wrongful Restraint

First, let us understand the meaning of restraint.

Restraint means- the action of keeping someone or something under control or, restricting someone’s personal liberty or freedom of movement. Wrongful restraint is defined in Section 339 of the Indian Penal Code. It states that whoever on purpose obstructs any person with the intent to prevent him from moving in any direction in which he has a right to move or to proceed is said to wrongfully restrain that person.

In a more simpler language- it means intentionally blocking someone’s right to move from one place to another. It is important to note that restraining someone’s right physically is not the only factor which constitutes restraint. Threats to restrain someone’s right of way to proceed will also constitute wrongful restrainment.

Wrongful restraint is a partial restraint because only a particular direction is restricted and not all the directions of a person to move is restricted. 

Exception

It is not an offence under this section when a person in good faith believes himself to have a lawful right to prevent another person’s private way over land or water.

Punishment

Punishment for wrongful restraint is defined under Section 341 of the Indian Penal Code as whoever wrongfully restraints someone’s right will be sentenced with either simple imprisonment which may extend to one month, a fine which may extend to ₹500, or with both.

Ingredients

• Purposefully or voluntarily obstructing a person.
• To prevent him to move in any direction.
• Where the person has a right to move or proceed.
• An obstruction was in bad faith.

The objective of Section 339

The object is to protect the right of a person to move freely wherever he wants to and also to protect his life and personal liberty. The obstruction of a person’s right in a bad faith is an offence and punishable under this Section.

As soon as the freedom or a right of a person to proceed in a way is obstructed, wrongful restraint takes place.

Illustrations

• ‘A’ intentionally builds a wall across a path in bad faith where he knows that ‘Z’ has a right to pass. As a result, ‘Z’ is prevented from passing the path. Here ‘A’ has wrongfully restrained ‘Z’s’ right to proceed.

• ‘P’ has a right to proceed in a path but is threatened by ‘M’ to proceed. If he proceeds, ‘M’ will place a wild dog in ‘P’ path. By doing this, ‘M’ has wrongfully restrained ‘P’s’ path. If ‘P’ pretends that the dog is ferocious when he is actually not and thus obstructs ‘M’s’ path, it will constitute wrongful restrainment.

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Case Laws

Case Where there is wrongful restrainment

Lalloo Pd. vs Kedarnath Shukla And Anr. on 4 December 1962

Facts of the case

Lallu Prasad, son of deceased Mahadeo Prasad filed an appeal to the court.

Mahadeo Prasad, the complainant alleged that Dr Shukla entered the shop and told him to vacate it due to non-payment of the rent. He refused to vacate the shop and as a result, Shukla took away the key to the lock of the door of the shop. After that, the complainant locked the door of the shop and went away to file a complaint.

On his return, he found out Shukla putting another lock at the shop. He objected to this action but Shukla did not pay any attention to it.

So the next day when the complainant came to open the shop he found Shukla standing with his two or three associates in front of the door and Shukla threatened him with serious consequences if he attempts to open the shop.

The defence argued that Shukla went into the shop to ask for the dues and he found out that the complainant was not in a state to pay the rent so he willingly handed over the key of the shop to him. And on seeing the situation of the complainant, Shukla told him to vacate.

The court decided that telling a tenant to vacate for the non-payment of the dues is a lawful act and thus, he cannot be held guilty for trespass.

The court also found out that Shukla did put his lock on the door of the shop.

It was held that Shukla, by locking the door, has wrongfully restrained the complainant to enter into the shop and found him guilty under Section 341 of the Indian Penal Code. He was charged with ₹20 fine.

The case where there is no wrongful restrainment

Shankarlal Sarma (Bhatra) vs State Of Assam And Anr. on 4 March 1975

Facts 

Among the brothers, there is one common Ejmali passage where their vehicles come and go. In the inner side, they have their garage where their vehicles are parked. The complainant parked his Fiat car inside the garage.

The complainant’s elder brother Shankarlal Sharma who is the petitioner parked his car in front by blocking the passage. Due to which the complainant was obstructed to take out his car from there.

Issue

Whether any offence under Section 339 of the Indian Penal Code has been committed by the petitioner in this case.

Judgment

It was held by the court that the Ejmali passage was a common passage to be used by them and not a private passage.

Therefore, the petitioner in parking his vehicle in the passage believing it to be done in good faith and had a lawful right to do. Thus, they have not obstructed anyone’s private way.

This is explained under the exceptions of Section 339. Thus, he cannot be held guilty. 

Wrongful Confinement

Confinement means the action of restraining or restricting someone in a place or within boundaries. Wrongful confinement is defined in Section 340 of the Indian Penal Code.

It states that whoever wrongfully restrains a person so as to prevent that person to move beyond a certain restricted limit, is said to have committed the offence of wrongful confinement.

In simpler language, it means restricting a person’s right to move within restricted limits in which he has a right to move.

Wrongful confinement is full restrainment because a person is restricted within a defined space or area.

Punishment

Punishment for wrongful confinement is defined under Section 342 of the Indian Penal Code as whoever confines any person shall be sentenced to imprisonment which may either extend to one year, a fine which may extend to ₹1,000, or both.

Ingredients

• Without any lawful justification restraining a persons right to proceed wrongfully and completely.
• Such a restrainment should prevent a person to move beyond defined limits.

Illustration

• ‘A’ deceived ‘T’ to move into a walled space. The moment ‘T’ entered, ‘A’ locks up the door in bad faith in order to confine him. Here ‘A’ has committed an offence of wrongfully confining ‘T’ within a defined wall. This is because he cannot move anywhere else beyond that place. 
• ‘D’ in bad faith and with an intention to confine ‘Z’, places few men with firearms out of the building where ‘Z’ resides. He threatens him that if he attempts to move out from the building then the men will fire. Here ‘D’ has committed an offence of wrongful confinement
• ‘P’ was travelling from Delhi to Amritsar. ‘R’ asked him for a ride to a town, Sonepat which comes in between the two cities where ‘P’ was travelling. ‘P’ agreed to give him a lift to drop him in Sonepat but when they reached there ‘P’ did not stop until he reached Amritsar. Here, ‘P’ has wrongfully confined ‘R’ as he did not stop where he agreed to and also kept him within the boundary limits where he can’t move out. He committed an offence of wrongful confinement.

Important points

• Without any desire to proceed or to move, there cannot be any wrongful confinement in that case.
• If there is a consent by the person for the confinement, it cannot be said that it is wrongful confinement.
• Proof of actual physical obstruction is not essential in wrongful confinement
• In this section, the period of confinement is immaterial. The period of confinement only becomes material while giving punishments as at that time it might vary.

Case Law

Emperor vs Bandu Ebrahim And Anr. on 11 September 1917

Facts of the case

Accused No.1 is a pimp in the brothel and accused No. 2 is a brothel keeper in Bombay.

The complainant, Vithibai was brought in this brothel and was confined by the accused. She was not allowed to move out or go anywhere. She was always supposed to be there only. There were also guards at the door to prevent her and other females to move out.

The defence argued that she had voluntarily submitted herself into prostitution and also voluntarily came to Bombay with him.

After considering the facts and evidence of the case, it was held by the court that both the accused were guilty under Section 343 of the Indian Penal Code for wrongful confinement. And will be sentenced for one-year rigorous imprisonment

Aggravated forms of Wrongful Confinement

Under this, the punishment of the crime is enhanced according to the period of confinement.

• Section 343 states that whoever wrongfully confines any person for a period of three days or more shall be punished with either imprisonment which may extend to two years, a fine, or both. 
• Section 344 states that wrongful confinement for ten years or more shall be punished with imprisonment which may extend to three years and shall be liable to pay fine.
• Section 345 states that whoever keeps any person in wrongful confinement knowingly and the writ to set him free has been duly issued, then they will be punished with imprisonment which may extend to two years in addition to the imprisonment in which he may be liable for such wrongful confinement.
• Section 346  states that whoever wrongfully confines a person and keeps it a secret from others or prevent them from knowing that the person is confined will be punished with imprisonment which may extend to two years in addition to any other punishment to which he may be liable for such wrongful confine­ment.
• Section 347 states that whoever wrongfully confines any person with an intention to extort from that person or from any person interested in that person confined, any property, or valuable security or compelling the person or any person interested in that person confined to do some illegal act will be punished with imprisonment which may extend to three years and shall also be liable to pay fine. 
• Section 348 states that whoever wrongfully confines any person for the purpose of extorting any confession or any informa­tion which may lead to the detection of an offence or misconduct or for the purpose of compelling the confined person to restore any property or valuable security or giving any information which may lead to the restoration of any property or valuable security will be punished with imprisonment which may extend to three years and will also be liable to pay fine. 

Difference between Wrongful Restraint and Wrongful Confinement

Conclusion

A comprehensive analysis of the two offences is that wrongful restraint is preventing a person to move in a direction. This does not mean or includes all the direction, it means only a particular direction. For example, you are walking on a street and someone comes and blocks your way to proceed in the direction you wanted to go here you have an option to move in any other direction apart from the restrained one.

Wrongful Confinement is the blocking of all the ways of a person where he has a right to go. The objective of these offences is to protect personal liberty and their right to move freely throughout the territory of India. But if anyone in good faith and with a lawful justification obstructs a path, that will not fall under this offence.

References

• https://www.ipemgzb.ac.in/blog/wrongful-restraint-vs-wrongful-confinement
• http://www.shareyouressays.com/knowledge/punishment-for-wrongful-confinement-section-342-of-ipc/119070
• https://www.pathlegal.in/Wrongful-Restraint-And-Wrongful-Confinement-In-IPC-blog-2382735
• http://www.shareyouressays.com/knowledge/wrongful-restraint-section-339-of-ipc/119066

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

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This article is written by Ayesha Zaidi, a third-year student currently pursuing B.A.LL.B (Hons) from Dr Ram Manohar Lohiya National Law University, Lucknow. This is an exhaustive article which deals with the Law of Defamation as existent under Indian Law and a thorough analysis of its provisions and scope and extent of the law in general. 

Introduction

Defamation refers to a wide term encompassing a legal claim which involves an injury to one’s reputation which is a result of a false statement of fact. This not only includes libel, which is defamation in written form, but also slander, defamation by spoken word.

Defamation is considered to be a civil wrong or tort. If this false statement leads to damage to the reputation of one about whom it is made, there shall be legal consequences against the person making such false statements. 

The main purpose of the law is to eliminate false statements. If the statement is true and it harms the reputation of someone, the same will not create liability. 

General Discussion

The Black’s Law Dictionary defines defamation as “the offence of injuring a person’s character, fame, or reputation by false and malicious statements”. When an attack is made to the reputation of a person by means of false publication tending to bring the person against whom such publication is made into disrepute and the same is communicated to a third party, the offence of defamation takes place.

Generally, this false publication is made without the consent of the allegedly defamed person. If the statement made is true, no such case shall be made against the person making the statement. There are other defences available with respect to this offence. Further, mere injury to the feelings of a person doesn’t constitute the offence of defamation. There must be a loss of reputation. 

Hence, defamation is any publication of such a statement which, in the minds of right-thinking members, lowers the reputation of a person in society, leading to people avoiding or shunning him.

The main dilemma that the offence of defamation deals with, is between the rights protected under freedom of speech and expression and the right of a person against defamation. If we look at the two carefully, we can see that on one hand, a reasonably prudent person has the fundamental right to speak his mind and narrate his experiences in a truthful manner without the fear of being held liable by the other party. 

However, it is also important to note, that such right to freedom of speech and expression doesn’t come without its restrictions. There is a reasonable restriction on the right to freely express their opinions. Hence, while it may be okay to say hurtful or mean things about someone as long as they may be true, on the other hand, it is not justified when the same is done in a way that leads to damage to the reputation of the person about whom the statement is made. 

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Analysis of the offence of Defamation

Elements of defamation under Indian Law

It is important to understand why defamation is an offence under the Indian Penal Code. This is because, next to his life, what a reasonable and prudent man cares most about, is his reputation. 

Under the IPC, Section 499 and 500 lay down the offence of defamation. 

Section 499: “Whoever, by words either spoken or intended to be read, or by signs or by visible representations, makes or publishes any imputation concerning any person intending to harm, or knowing or having reason to believe that such imputation will harm, the reputation of such person, is said, except in the cases hereinafter expected, to defame that person.” The definition in this section is subject to four explanations and ten exceptions which shall be discussed further. 

Section 500 lays down the punishment to the person who commits the offence of defamation. It reads, “Punishment for defamation.—Whoever defames another shall be punished with simple imprisonment for a term which may extend to two years, or with fine, or with both.”

Hence, as per Section 499, there are certain elements of the offence of defamation. All of these must be fulfilled for an accused to be charged and convicted of this offence. 

The statement made must be defamatory in nature

It is necessary that the statement that is made by the accused must be of a defamatory nature. This essentially means that it must lead to a lower reputation of the person about whom the statement refers to. Whether a statement lowers the reputation of a person or not will be dependant on how right-thinking members of society perceive the person post them coming in contact with such defamatory material. 

Further, it is not a valid defence that there was no intention on the part of the person making the statement. For example, in the famous case of American actress Katie Holmes, a magazine published that she was a drug addict. Subsequently, she filed a defamation suit as it was contrary to her reputation and was also a false claim. 

Recently, a suit for criminal defamation was filed against Javed Akhtar for allegedly making defamatory statements against BJP candidate from Bhopal Lok Sabha seat Pragya Singh Thakur at a press conference. The petition spelt out the complaint that Akhtar had intentionally made references against Thakur to provoke voters against her. 

It is to be noted here that mere insult or statements that hurt the feelings of the person to whom they are addressed would not constitute defamation. Thus, if a teacher calls a student lazy or an employer admonishes an employee for coming late, the same would not fall under the offence as envisaged under Section 499.

The statement must concern the person filing the suit for defamation, i.e. the plaintiff

If on publication of the statement, a reasonably prudent man can infer that such statement is about the plaintiff, then the accused shall be liable for the offence. 

In the landmark case of Jones v. Hulton, where a defamatory article was published about one Artemis Jones while describing a motor festival. A barrister named Artemis Jones alleged that this was defamatory to him as right-thinking individuals, as well as his friends, believed that the article referred to him even though it was contended by the defendant that the same was an imaginary name used for the purpose of this article. House of Lords upheld the decision that the same is defamation, even if there was no knowledge or intention on the part of the accused.

The defamatory statement must be published

It is essential that the statement which defames a person is published, i.e. that it comes within the knowledge of a third person who is not the subject of the defamatory statement. Under this offence, a prerequisite is to indicate that the person alleged intended that his words be published or be seen/ heard by someone other than the one who they refer to. If such proof is absent, the publication of the defamatory statement would not hold the alleged person liable. 

In the case of Mahendra Ram v. Harnandan Prasad, the defendant was held liable for sending a defamatory letter to plaintiff written in Urdu knowing that the plaintiff did not know Urdu and the letter will very likely be read over by another person.

The statement made must be false

It is necessary that the statements made are in fact false and not true. A truthful statement made by a person will not fall under the definition of defamation. Further,  inherently because of their nature, statements which reflect the opinion of the person cannot be true or false as they are subjective and hence cannot be said to constitute defamation. 

Elements of defamation under the tort law

There are different elements for it to constitute the tort of defamation which have to be proved by the plaintiff or the aggrieved party:

1. the published words must be defamatory; 
2. the alleged defamatory words must refer to the plaintiff and
3. there was a malicious intention while publishing these words.

It is not essential for defamation to be published in such a way that most of the people understand who was referred to. What is essential is that a substantial number of people understand who the article refers to.

Under Indian Penal Code, Section 499 and 500 lay down the substance of the offence of defamation is punishable under Indian Law. The following elements are essential to constitute the offence:

Reputation 

Under Section 499, it is necessary that the statement resulted in considerable harm to the person’s reputation or that it lowered the reputation of the complainant. The harm to reputation can cause mental as well as financial problems to the plaintiff. 

For example, If a false statement is made that XYZ bank commits fraud to its customers, then it will cause harm to the reputation of the bank and also cause subsequent financial loss to the bank as people will not be willing to use the bank for its services. 

In the case of  D.P. Choudhary v. Kumari Manjulata, a local daily Dainik Navjyoti published an article that the plaintiff, a girl of about 17 years of age, had run away with a boy named Kamlesh. This was a false news item as she had gone to attend night classes for her B.A. degree. This news item was negligently published by the newspaper and caused a lot of ridicule at the girl. Hence, she filed a suit for defamation and was entitled to damages. 

Publication 

Publication entails making the matter that is defamatory known to third persons, i.e. someone other than the one about whom the statement is intended to be. Unless this requirement is fulfilled, the said statement cannot be said to constitute defamation. Publication here does not literally mean printed in a book or newspaper.

Publication, as per Section 499, can be through words, signs or even representation. Hence, it can be by a speech, on the radio, in newspapers and even on social media. If a reasonably prudent person can understand the context and meaning of the statement, it shall be presumed to be published.

The distinction between English Law and Indian Law 

There is a distinction in the form of publication between English and Indian Law. English Law treats libel, which is defamation through publication in written form as a crime but not slander, which entails defamation through publication in spoken words. 

Under criminal law in the UK, only libel is a crime and under the law of torts, slander will be actionable only if:

1. There is an imputation of a criminal offence to the plaintiff filing the suit. 
2. There is a statement that the complainant had an infectious disease which further leads to society avoiding him.
3. There is a defamatory statement regarding the incompetence of a person to the office, profession, trade or business carried on by him, or
4. If a statement refers to a girl/ woman’s adultery or character.

Under the law followed in India, however, unlike English Law does not differentiate between libel and slander, and hence, both are included in Section 499 and constitute the offence of defamation.

Forms of Publication 

Under Section 499, the imputation could be by:

1. words (either spoken or written), or, 
2. making signs, or visible representations. 

There can be various forms of publication of the defamatory material. The defamatory imputation could be either made or published. There is a difference between ‘making’ and ‘publishing’ an imputation. This can be understood by way of an illustration. For example, if A tells B that A is a thief, then A makes an imputation. But if A tells B that C is a thief, then A publishes the imputation.

Hence, a publication under Section 499 essentially entails that communication of the defamatory statement or imputation to third persons, i.e persons other than the one against whom such imputation is made. 

Direct Communication to the Defamed 

There can be direct communication to the defamed which would fall within the offence of defamation. If A tells B that he is a dishonest man and he is having an extra-marital affair with someone, then it would constitute direct communication to the defamed. Here, it is essential to prove that the person making the statement had knowledge or reason to believe that such a statement would harm the reputation of the complainant.

Publication by Repetition 

Under Section 499, the word “makes” does not refer only to the creator who made the imputation but is also applicable to all those who subsequently repeats, writes or copies the imputation, even though he is not the author. Generally, the person who first makes a defamatory statement is not liable if the statement is republished by another person even though he expressly states that he is reproducing what he has heard from some source. However, no person has the right to repeat a slanderous statement without any justification. If a person who is aware that a defamatory statement is false and still repeats or communicates it further, then he can also be held liable for defamation.

There are two different offences, firstly, under Section 501 where printing or engraving materials that are defamatory is punishable, and secondly, under Section 502 if a person offers for sale any defamatory material which is printed and engraved, the same is also punishable.

Hence, for example, if Times of India publishes a news item which it knows to be defamatory or having a good reason to believe that it is defamatory, then it would be punishable under Section 500, 501 as well as 502.

Means of Publication 

The publication can be through different means like newspapers, social media, magazines, radio and all other modes of communication. Essentially, the gist of the offence under Section 499 is a publication, which refers to making the defamatory material known to someone other than to whom it is addressed and therefore, the mere making of imputation is not enough to constitute an offence under Section 500.

Hence, if a defamatory letter is sent directly to the person defamed or if the statements are made over a telephonic conversation which wasn’t heard by others, there will be no offence under Section 499 as there is no publication of it.

Similarly, if a person writes a letter which contains defamatory material and keeps the same within his possession, no offence is made out. 

Publication of a defamatory statement leads to not only the publisher but also the maker being held liable under this section. 

The High Court of Bombay has held that a notice that is defamatory in nature which an individual gets issued through his advocate will not constitute the offence of defamation as all communication between a client and an attorney is private, confidential and privileged and as such is only addressed to the person defamed. Similarly, the Bombay High Court in the case of Sukhdeo Vithal Pansare vs Prabhakar Sukhdeo, also held that the typist of the lawyer who typed such defamatory notice shall also not be liable.

With respect to a petition filed before a court of law containing defamatory matter, the same would amount to publication under Section 499, as was held in the case of Thangavelu Chettiar vs Ponnammal.

Intention to Injure

For a person to be held liable under Section 500, merely making an imputation about a particular person will not be enough. It is necessary to show the mens rea of the accused and point to the fact that he had the intention to make the imputation that such shall be read by a person other than to whom it is addressed. Thus, there is a necessary requirement that the person making the imputation intended the same to be published.

If the defamatory statement is disseminated, propagated or distributed, this leads to its publication. Hence, this is the main crux of the offence of defamation lies in the dissemination, propagation, distribution and circulation of the harmful imputation. It is important to understand that there needs to be an intention to communicate the imputation to a third person, so as to ensure that it arouses the hostility of others and society at large. 

If a postman, in the ordinary course of business, delivers a letter, the same being done with good faith and without knowledge of the defamation, shall not be held liable. He can take the defence that the same was done without any intention, which is a necessary requirement under Section 499. 

Analysis of Provisions of Sections 499 and 500

The provisions of Section 499 contain various explanations and exceptions which need to be read along with the substantive part of the section so as to ensure a coherent understanding with respect to the offence of defamation and to also see if the accused can take certain defences and take the benefit of the exceptions to see if the case falls within them. 

Whether the exceptions can be availed by the accused is a matter of trial and does not have to be looked into at the stage of enquiry under Section 202 of the Code of Criminal Procedure, 1973 as was held in the case of Balraj Khanna v Moti Lal.

Explanations to Section 499

Explanation 1: Defamation of the Dead 

As per Section 499 (Explanation 1), it may amount to defamation to impute anything to a deceased person, if the imputation would harm the reputation of that person if living, and is intended to be hurtful to the feelings of his family or other near relatives.

Under Indian law, liability is not imposed for defaming the dead. Justice R Basant in the landmark case of Raju v. Chacko held that even if an offence cannot be made out against the dead but if the statement leads to hurting the feelings of the family and relatives of the deceased, the same is actionable in a court of law. For this same purpose, the definition of defamation has been expanded to include Explanation 1 which deals with the same.

Therefore, the statement that is alleged to be defamatory must not only be hurtful to the deceased but also to the feelings of the family and relatives. However, it is to be noted that this does not extend to every lineal descendant. This was further elucidated upon in Vasant Kumar Birla & Ors v. Prakash Jha & Ors where it was held that “There was no action in defamation lies against any libel or slander against dead persons. So the cause of action is of the present members of the family, who are the plaintiffs.”

Explanation 2: Defamation of a Company or a Collection of Persons 

Under Section 499, vide Explanation 2 states that even if the statement refers to a company or an association of person, it can be considered defamation.

It is important to note that even though a corporation has no ‘mind’ or ‘body’, thus it cannot suffer damages in that, however, it still has a ‘business reputation’, which if harmed by defamatory statements can lead to the tortious liability for the offence of defamation. 

Under criminal law, Section 11 of the Indian Penal Code defines ‘person’ as “ any Company or Association or body of persons, whether incorporated or not.” Thus, under criminal law, it is an inclusive definition. 

Scope of Explanation 2—The Class or Community Must Be Clearly Identifiable

The imputation, for it to be defamatory must attack the method of conducting the affairs of the company, of fraud, mismanagement or its financial position. The Supreme Court in the case of G. Narsimhan v TV Chokappa has held that the collection of persons must be an identifiable body so that one can ascertain and differentiate a group of particular persons from the rest of society.

Defaming a Community in General—Nature of Liability

If a defamatory statement is made with respect to a community in general, then unless the person alleging the defamation can prove that the statement could reasonably be considered to refer to him, he cannot bring forth a claim for damages. For example, if a person makes a statement that all doctors are thieves, a doctor cannot bring forth a claim unless he can prove that it is intended to defame him individually. But if a person wrote that all AIIMS doctors are thieves, then a doctor from that hospital can maintain a claim for damages. 

Defamation Cases—Only Aggrieved Party Can File Complaint

It is essential to note that as per Section 199(1) of the Code of Criminal Procedure, 1973 unless a person is under the age of 18, any person who is not of sound mind or is suffering from any disease, making it impossible for him to render a complaint, can take the help of another person to file a complaint if he is aggrieved. In cases other than this, the same complaint would be held void and illegal.

Explanation 3: Defamation by Innuendo

It is often the case that prima facie a statement may not appear to be defamatory but because of some hidden/latent or secondary meaning, the statement may be considered to be defamatory. It is on the plaintiff alleging the latent meaning that such statement constitutes the offence of defamation. This can be easily understood through an example:

If a newspaper publishes a false news item on an actress that she is pregnant, and currently she is unmarried, such can be interpreted to be defamatory. 

Explanation 4: What is Harming Reputation?

Under Section 499, it is not essential that proof of actual harm is shown for it to constitute the offence of defamation. What is essential is merely an intention to cause harm on the part of the accused. The meaning of ‘harm’ is clarified under Explanation 4 of Section 499 which reads as follows: “lowering the moral, intellectual character or credit of a person with respect to his or her caste or calling, or stating that a person’s body is loathsome or disgraceful.”

Exceptions Provided in Section 499

First Exception: Truth for Public Good

If a statement is true concerning any person and it is for the public good that such imputation must be published, then such a statement would not fall within the definition of the offence of defamation under Section 499. A public good is a question of fact that has to be determined. Further, it is important to note that the ‘truth’ must extend to the entire statement. 

For example, if a newspaper publishes that a man is an alcoholic or that he is in an extramarital affair, can rarely prove to be for the public good. Hence, such statements shall be defamation. 

Second Exception: Fair Criticism of Public Servants

This exception does not protect mere assertions by a person, but his opinions. Every citizen of the country has a legal right to make true and fair statements on the public servants in the interest of the public. However, it must be ensured that the same is not made merely to malign the public servant and wrongly exercising freedom of speech and expression under Article 19. This is essential as men holding public positions are not immune to fair criticism.  

The element of Good Faith—Importance

It is important to note that this exception cannot be taken by the accused if the imputation which is alleged to be defamatory is made in good faith. The words ‘good faith’ is defined in Section 52 of Indian Penal Code which states that “ nothing is done or believed to be in good faith is it is done or believed without due care and attention”

The Opinion must be Fair and Honest

The person taking the benefit of this defence must ensure that the statement he made is fair and honest and he has the onus to prove that the said imputation was true or that there existed circumstances which made him believe that the information was true.

Third Exception: Fair Comment on Public Conduct of Public Men Other Than Public Servants

The third exception to Section 499 states that a fair, honest and true criticism of servants of the public will not create the offence of defamation and in fact succeed the test of fair comment.

Fourth Exception: Report of Proceedings of Courts of Justice

In India, the judicial proceedings are a matter of public interest. It is thus essential that accurate reports of these proceedings are made and excluded from the domain of the offence of defamation. The maker of the report must ensure that the information it contains is free from malafide, dishonest and incorrect information. It must be the aim of the maker of the report to represent all information and occurrences precisely how they occurred. The entirety of the proceedings need not be reproduced verbatim. However, in essence, it must be true and fair.

Fifth Exception: Comment on Cases

Protection is provided to case comments of the decisions that have been adjudicated upon confidently. Justice Fitzgerald said that citizens can show the error that was committed on the part of the judges as long as the discussion is fair and made without malice. 

Sixth Exception: Literary Criticism

The society at large must have the opportunity to freely criticising the performances or literary work that is submitted to its judgement. A fair and honest discussion is essential for these performances to ascertain what is liked or disliked by the public at large ad how it responds to a work of art. Certain ingredients need to be fulfilled for this exception to be applied:

1. There needs to be an invitation by the author for such criticism by the public. It is not necessary however to distribute the same for review. 
2. The criticisms must be pertinent to the standard of the performance and not as such whether the person has the ability to do the same or not. 
3. The statement or imputation must be made in good faith.  

Seventh Exception: Censure by One in Authority

It is important to note that a person in authority has the power to censure those subordinate to him. This privilege, however, cannot be justified if the said imputation which is alleged to be defamatory is done in excess of the purpose for which it is issued. For example, if an employer censures an employee in his office, the same is not defamation. But if he publishes the same in a newspaper, the statement shall not be able to take the benefit of this exception. 

The following ingredients need to be fulfilled however for this exception to apply:

1. The person making the statement must be in a position of authority over whom the statement is made.
2. The statement needs to be made in good faith.

Eighth Exception: Complaint to Authority

If a complaint is made to a person in authority, the same cannot fall under the definition of defamation as provided for in section 499. Indian Penal Code lays down that “a person is allowed to prefer an accusation against others, in good faith, to any person who has lawful authority to punish the accused”. Under this exception, similar to the seventh exception, the following conditions must be complied with:

1. The statement must be made to a person in authority
2. The statement must be made in good faith.

Ninth Exception: Imputation for Protection of Interests 

This exception, like the first exception, deals with the public good. It states that protection needs to be provided to communications between parties that are acting in good faith, in due course of business. The Supreme Court in the case of Harbhajan Singh v State of Punjab has held that a rigid test cannot be applied to determine whether good faith exists or not. This has to be done keeping in mind the facts and circumstances of the case which includes, the alleged malice, due care and attention where defamation is alleged. 

Determining whether an accused can take the plea of good faith is a question of fact and it has to be kept in mind that there must be honesty of purpose on the part of the accused. Under Section 52 of the IPC, due care and attention are the prerequisites to invoking good faith. Under the ninth exception, the presence of the same is required and it is not enough on the part of the accused that he believed the statement to be true. It is necessary to show the rational basis for such belief. If it appears that no prior reasonable or proper enquiry is conducted by the accused, he cannot avail the benefit of this defence. 

Under this exception, even if good faith has to be established, the imputation must be made for the protection of interest of the person making it.  

1. Privileges of Judges and Lawyers 

Professionals like accountants, doctors, counsels, judges and lawyers enjoy the privileges provided for in exception 9, but it is not an absolute one and is attached with certain restrictions. 

1. Exceptions 8 and 9 of Section 499, Indian Penal Code, 1860 

In the landmark case of Chaman Lal v State of Punjab, the Supreme Court held that to prove good faith under exception 8 & 9, certain questions can  be looked at: 

• What constitutes the offence of defamation with respect to the alleged defamatory statement?
• What were the facts and circumstances of the case?
• Who made the imputation and what is his position in society?
• Did the accused intend to make the imputation?
• Did he conduct any due diligence before making the alleged imputation?
• If yes, what are the reasons to believe that he did undertake due care and circumspection?
• Did the accused satisfy the court that he believed the statement to be true?

Tenth Exception: Caution in Good Faith

Under this exception, a person is required to establish that the imputations were a result of ‘good faith’  and was meant for ‘public good’. It is not essential to prove the same beyond reasonable doubt and the mere probability that he did not commit the offence is sufficient. 

Distinction Between Libel of Court and Contempt of Court

The Supreme Court held in the landmark case of Brahma Prakash Sharma and Ors. v. The State of Uttar Pradesh, that if a statement attacks the judge, it may be libel if he chooses to proceed against the person making the statement. However, if the publication of such a statement leads to obstruction in the administration of justice or interferes with due course of justice, then the same shall be summarily punished as contempt of court. The former is an attack on the judge in his personal capacity, while the other leads to a public wrong. 

Hence, often at times, these two concepts coincide and thus, proceedings can be initiated for both the offences of criminal defamation and criminal contempt of court when they overlap. 

Whether Accurate and True Report of Assembly Proceedings Published in Newspapers Would Amount to Defamation 

In the United Kingdom in Wason v. Walter in 1868, it was established that: “a faithful and accurate newspaper report of debates in the Legislature, however injurious to the character of individuals, is not treated as a breach of privilege or contempt by the Legislature. Such a report, as between the publisher and the person defamed, is treated as a qualified privilege”.

The principle established in Wason v. Walter was not applicable in India which was inconsistent and conflicting until the year 1956. If a publisher published a faithful and accurate report containing defamatory statements, it amounted to breach of privilege or contempt of legislature in India.

In 1956, the Parliamentary Proceedings (Protection of Publication) Act, 1956 (Act 24 of 1956) adopted the principle established in Wason v. Walter applying it “only to the publication in a newspaper of a report of the proceedings of either House of Parliament. It grants immunity from civil and criminal action to such a publication if it is without malice and for the public good and if the report is substantially true.” In Matters Personally Defaming the Governor, His Personal Authorisation is a must.

The Supreme Court in the case of Gour Chandra Rout & Another vs The Public Prosecutor, Cuttack, held that authorization is required on the part of the secretary by the governor to file a complaint alleging defamation. 

It is necessary that the sanctioning authority applies its mind and does not merely complete a formality. There is a requirement for a specific complaint, and not one of a general nature. 

Who Should, in a Newspaper, be Prosecuted for Making Defamatory Imputations 

The following persons shall be held liable when a defamatory statement is published in a newspaper, book, magazine, pamphlet etc.:

1. The author of the defamatory material
2. The publisher of the book, magazine etc
3. The printer of the book, newspaper etc. 

It is important to note that the proprietor of the newspaper can also be held liable by the principle of vicarious liability. Normally, the editor of the newspaper is responsible for publishing defamatory material but if he, for a bonafide purpose, is absent from duty, he will not be liable. 

There is no requirement of malice or ill will on the part of the writer or publisher that has to be proved. Further, there isn’t a necessity to prove damages as well. What is sufficient is that there existed circumstances which can lead to the conclusion that the accused was aware that this particular statement would lead to the offence of defamation as it harms the reputation of the complainant.

Is Communication Between Wife and Husband Privileged?

Under Indian law, husband and wife constitute one person and therefore any communication between them does not amount to publication and will not fall within the definition of defamation as provided for in Section 499. Under Section 122 of the Indian Evidence Act 1872, privileged communications between husband and wife and these communications fall outside the purview of section 499, unless this communication is between matrimonial suits or suits which deal with offences against either married party. 

Constitutional Validity 

The constitutional validity of Section 499 was challenged in Subramanian Swamy v Union of India. A number of petitions were filed by various politicians like Rahul Gandhi, Arvind Kejriwal etc. who were charged under this offence. The petitioners argued for their right to freedom of expressions and proceedings against them were stayed pending the result of the constitutional challenge proceedings.

The court pointed out the importance of freedom of expression in a democracy but also recognized that it comes with certain restrictions, and this right must be exercised within those restrictions of public order, health, security etc. It further held that a balance must be achieved between the right to freedom of expression and the public interest sought to be protected. 

Hence, as of today, criminal defamation is constitutionally valid under Section 499 and 500 of IPC.

Proposal to reform

Although there are various reforms which need to be introduced, there has been much debate revolving on the need to decriminalize defamation but since the Supreme Court has adjudged on the constitutionality of criminal defamation, we shall be focusing on other reforms. 

1. The new legislation is needed for decriminalizing defamation, but one which also reforms civil defamation to make it fairer and clearer. 
2. For there to constitute an offence of civil defamation, the requirements under the law must include not just a substantial proof but also substantial loss to the reputation. It is required to show that the latter was a direct result of the statement made. Further, other defences like truth, opinion and reasonable inference must also be included as valid. Lastly, if any person institutes suit for frivolous purposes, the court shall be empowered to punish the same through exemplary costs.
3. Legal notices must be sent by the complainant which must include the factual background of the alleged offence, how such a statement is not true in nature, the harm to the reputation as well as the damages that are being sought. This will ensure that only the cases of serious nature are brought to court and the burden on the judiciary is reduced by eliminating groundless accusations.
4. The law must differentiate between authors, publishers, editors and other intermediaries. Intermediaries like social media platforms or search engines should not be held responsible for the defamatory content published on their website as they don’t enjoy any creative control over this content. 

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

The post Defamation: A Comparative Study of its Blend under Civil & Criminal Laws appeared first on iPleaders.

This article is written by Shubhangi Upmanya, a 1st-year student of Vivekananda Institute of Professional Studies, Indraprastha University. In this article, she has discussed the regulations related to insider trading in detail.

Introduction

It is important to have certain rules and regulations governing the securities market, in order to ensure that no person gets profited from trading on some ‘insider’ or on information that is not yet published for the public. According to Section 11 of the SEBI Act, 2011, the SEBI (Insider Trading) Regulations, 1992 were introduced to curb the peril of insider trading in India. The motive behind is to provide a fair playing field and accessibility to information regarding the market to all the participants.

Many countries have applied strict rules regarding insider trading. This is to ensure that the information is shared with all the participants of the market and not one person alone gets the benefits from the information. Such rules and regulations are generally enforced to ensure liquidity and efficiency in the market. Also, to ensure that the growth of the market happens in a steady and fast manner.

Need for insider trading regulations

The Indian securities market has witnessed a lot of contortion, non-compliance, and encroachment of the general laws and rules governing their own organizations. For example manipulation of the price, formation of an unnatural or false market, grave misconduct and insider trading.

The history relating to the stock exchanges in India is 145 years old but regulations concerning insider trading are just 28 years old. It was in the early 1970s, that the need to bring laws regulating the securities market and the insider trading was felt after it was realized that there has to be a scenario of perfect competition in the market and uniformity and symmetry in the information which each member of the market should hold. This resulted in different committees calling for a need for regulations and subsequently, the SEBI (Insider Trading) Regulations were introduced in the year 1992 and this need was fulfilled with its establishment and breach related to insider trading was alleviated to a great extent.

The Securities and Exchange Board of India Regulations in the year 1992, created a set of rules and regulations with respect to the particular market and the securities market as a whole. It was introduced with the aim to suppress practices that violated the market. The need for regulations for insider trading was felt.

General terms related to insider trading

What is insider trading?

Insider trading has not been defined in the SEBI Regulations, 1992 and SEBI Regulations 2015, but to accustom you with this term let me introduce you to Section 195 of the Companies Act, 2013.

This Section says, “Insider trading is an act that includes subscribing or agreeing to subscribe, buying or selling or agreeing to buy or sell, dealing or agreeing to deal with the information which is not published to the public and is sensitive. This act should be done by the director or key managerial personnel or any other officer of a company who should have access to such non-public and sensitive information.”

This Section also includes the act of insider trading, the occupation and communication of such information which is directly or indirectly related to any other person. 

Who is an insider?

Section 2(e) of the SEBI(Insider Trading) Regulations, 1992 provides for the definition of an “insider”.

According to it, an insider is a person:

• Who ‘is’ connected to the company,
• Who ‘was’ connected to the company,
• Who is deemed to be connected with the company,
• Who is expected to have access to such price-sensitive and non-public information regarding the securities of the company,
• Who has received or has had access to the above-mentioned information.

Who is a connected person?

According to Section 2(h) of the SEBI(Insider Trading) Regulations, 1992, a connected person can be;

• “a company whose meaning is defined in sub-section (1B) of section 370 of the Companies Act, or sub-section (11) of section 372 of the Companies Act, 1956”;
• “a company whose meaning is defined in sub-clause (g) of Section 2 of the Monopolies and Restrictive Trade Practices Act, 1969”;
• “an intermediary as given in Section 12 of SEBI Act, 1992”;
• “a merchant banker, share transfer agent, registrar to an issue, debenture trustee, broker, portfolio manager, Investment Advisor, sub-broker, Investment Company or an employee”;
• “is a member of the Board of Trustees of a mutual fund or a member of the Board of Directors of the Asset Management Company of a mutual fund or an employee thereof who has a fiduciary relationship with the company;
• “is a member of the Board of Directors or an employee of a public financial institution that is specified in section 4A of the Companies Act, 1956”;
• “is an official or an employee of an organization which is self-regulatory and is recognized or authorized by any board of the regulatory body;
• “any relative of the above-mentioned, connected person”;
• “is a concern, firm, trust, Hindu undivided family, company or association of persons wherein any of the connected person has more than 10 percent of the holding or interest”.

Which information is considered as price-sensitive information?

The trading of price-sensitive information is illegal. The explanation of the term in Section 2(ha), was inserted by the SEBI (Insider Trading) (Amendment) Regulations, 2002.

According to Section 2(ha), price-sensitive information means, The information which is related to the company either in a direct or indirect way and if published will affect the securities of the company. The following will come under the term “price-sensitive information”-

• “periodical financial results of the company”,
• “declaration of dividends (both interim and final) done intentionally”,
• “issue of securities or buy-back of securities”,
• “any major expansion plans or execution of new projects”,
• “amalgamation, mergers or takeovers”,
• “disposal of the whole or substantial part of the undertaking”,
• “significant changes in policies, plans or operations of the company”.

SEBI (Insider Trading) Regulations, 1992

Evolution

The Bombay Stock Exchange, which was established in 1875 was the first stock exchange. With its establishment, the securities market in India came into play. After the independence of India, there were two Acts governing it, the Capital Issues (Control) Act, 1947, (CICA) and the Securities Contracts (Regulation) Act, 1956.

CICA decided on the type and price of the issues concerning insider trading. The SCRA was introduced in order to resist unwanted transactions and to regulate the matters of dealings regarding insider trading. 

Afterwards, the CICA was repealed with the introduction of the SEBI (Insider Trading) (Amendment) Regulations, 1992, leaving only the SEBI Regulations and SCRA working together in the market area. The functions of SCRA was performed by the Government of India.

Later on, it was decided that only one body should exercise in order to ensure efficiency. Therefore, the functions under the SCRA which the Government of India used to carry out, were transferred to the SEBI.

Prohibition on dealing, communicating or counseling on matters relating to insider trading

Section 3 of the SEBI (Insider Trading) Regulations, 1992 provides that: 

The insider shall not,

• When having any unpublished price sensitive information, deal with the securities of the company which is listed on any stock exchange either on his behalf or someone else’s; 
• Communicate, provide or receive, directly or indirectly any unpublished price sensitive information to any person who during the possession of such unpublished price sensitive information shall not deal in securities.
• While having any unpublished price sensitive information, no company shall deal in the securities of another company or any associate of that other company. 

Breach of provisions related to insider trading

Any insider who trades in the securities market in violation of the provisions given in Section 3 of the SEBI (Insider Trading) Regulations, 1992, (which we have discussed above) will be held liable for insider trading. 

This has been mentioned in Section 4 of the SEBI (Insider Trading) Regulations, 1992.

Authority provided to make inquiries and inspections

SEBI will set up a board that will have the authority to check the regulations governing insider trading, under Section 5 of the SEBI (Insider Trading)Regulations, 1992.

It mentions that the Board,

• If it suspects that any person has violated certain provisions of these regulations, then it may inquire such person, in order to form a prima facie opinion about the matter.
• May appoint one or more officers to inspect the books and records of insider or insiders.

Directions by the Board

The board has been given the full right to take steps to prevent non-compliance with the regulations which govern the securities market. This is to preserve the interest of the directors, managers of the organization and the securities market at large.

Under Section 11 of the SEBI (Insider Trading) Regulations, 1992, the board of SEBI has been provided with the authority to give orders and directions on the following matters:

• Directing the insider to not deal in securities in any particular manner; 
• To forbid the insider from disposing of any of the securities acquired in violation of these regulations; 
• Restraining the insider to communicate or counsel any person in dealing with securities; 
• Proclaiming any particular transaction or transactions in securities as null and void; 
• Giving an order to the person who dealt in securities violating the regulation related to it, to give back the securities;
• Directing the person who is incapable of giving the securities back, to pay the market amount which was prevailing at the time when the transaction was made or when the order was passed (whichever price is higher in value);
• Ordering a person who has violated the regulations governing the securities law of the organization to pay or transfer an amount. As a method of payment, it can also be the giving of proceeds, equivalent to the cost price or market price of securities (whichever is higher) to the investor protection fund of a recognized stock exchange.

The Board may provide a summon or issue a notice regarding the regulations discussed above. It should be in the manner prescribed in regulation 22 of the Securities and Exchange Board of India (Procedure for Holding Enquiry by Enquiry Officer and Imposing Penalty) Regulations, 2002.

Insider trading regulations by Self Regulatory Organisations (SROs) 

What is self-regulation?

Self-regulation is a process by which some companies or organizations apply some framework on their own members or sometimes on the whole community. This framework consists of rules and regulations. Self-regulatory organizations are quasi-governmental bodies that enforce the external regulations with their own internal regulations. 

In organizations that are owned by brokers, the brokers elect their representatives amongst themselves to manage activities related to misconduct, illegal professional behavior, and insider trading. The success herein, lies in the question that to what extent the self-regulatory organizations are able to control the practice of insider trading among their own members.

Some conflicts arise concerning fairness. The board of members possesses sensitive information and there could be instances of conflict of interest regarding the ownership and governance of the organization.

Therefore, the self-regulatory organizations are not totally a success.

The SEBI (Insider Trading) Act,1992 also provides for the promotion and directive for self-regulatory organizations. Also, the International Organisation of Securities Commissions (IOSCO) provides two principles of direction to SROs for the regulation of the securities.

Those two principles are-

1. The authority that regulates the SROs should make use of the SROs to the extent of their size and with respect to the complication of the market.
2. The regulator will provide complete supervision to the SROs and will ensure complete impartiality and the confidentiality of the transactions.

Let us look into the functions that SROs should perform:

• Give proper directive for the requirements of the disclosure;
• Imposing restrictions regarding insider trading;
• Provide such knowledge through education in order to limit the probability of trading by insiders;
• Impose procedures to manage inside information.

The SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2009

In order to ensure the compliance of insider trading, there have to be disclosure requirements to order disclosure of the capitals and other factors that lead to trading by the insider. To ensure the same, the SEBI (Issue of Capital and Disclosure Requirements) Regulations were introduced in the year 2009. It has 6 Schedules and 11 chapters in total that deal with the procedures of issuing capita. For example, the appointment of merchant bankers and other intermediaries, filling of the official document, documents to be submitted before the opening of the issue, fast track issues, draft orders which are to be made to the public and what all have to be disclosed.

In this article to give you an overview of this Act, we will only be discussing the general conditions to issue the disclosure and instructions for it.

General conditions provided in Section:

• “Any issuer who is offering specified securities through a public issue or rights issue shall satisfy the conditions of this chapter. These conditions have to be fulfilled while filling the draft document or at the time of registering or filing the final offer document with either the Registrar of Companies or designated stock exchange”.

In this Section, there are some specified securities under which the issuer cannot make any public issue or rights issue.

• If anyone of these is disbarred from accessing the capital market by the Board; anyone here refers to-

the issuer, any of its promoters, promoter group or directors or persons in control of the issuer;

• if any of the promoters, directors or persons in control of the issuer was or also is the same in any other company and that company is disbarred from accessing the capital market by the Board;
• if the issuer of convertible debt instruments is in the list of wilful defaulters published by RBI;
• If the issuer has not paid the interest or repaid the principal amount for a period of more than six months. This has to be in respect of debt instruments issued by it to the public;
• If he has not sent an application regarding the listing of that specified securities, to one or more recognized stock exchange(s) and has chosen one of them as the designated stock exchange;
• If it has not entered into an agreement with a depository for dematerialization of securities are issued or are already proposed to be issued;
• If every existing partly paid-up equity shares of the issuer have either been paid up completely or are forfeited;
• If the firm’s arrangement of the finance is verified to be seventy percent.

Now, let us talk about disclosures that are provided in Part A, Section 1.

It reads as, 

• “Only relevant and updated information and statistics shall be disclosed in the offer document”.
• “The source and basis of all statements or claims made shall be disclosed”. 
• “Terms such as “market leader”, “leading player”, etc. shall not be used unless they can be substantiated by a proper source of information which has to be disclosed”.

For example, in the case of risk factors, the following has to be disclosed,

1. The criminal charges which are provided under the Indian Penal Code and violations of securities law; 
2. The non-identification of acquisition targets, where any object of the issue is to finance acquisitions. This has to be disclosed along with the details of interim use of funds and the date( according to the probability) of completing the acquisitions; 
3. The industry segment for which the issue is proposed by the issuer provided. It should state that it has contributed to less than twenty-five percent of the revenues of the issuer in the last three fiscal years, etc.

Now we will move on to the discussion of SEBI (Prohibition of Insider Trading) Regulations, 2015.

The SEBI (Prohibition of Insider Trading) Regulations, 2015

On 15th January 2015, the Securities and Exchange Board of India introduced a new regulation, namely, the SEBI (Prohibition of Insider Trading) Regulations, 2015. It exercised its powers which were conferred by Section 30 of the Securities and Exchange Board of India Act, 1992 read with Section 11(2)(g), Section 12(A)(d) and Section 12(A)(e) of the Securities and Exchange Board of India Act, 1992.

SEBI (Prohibition of Insider Trading) Regulations, 2015 replaced the Securities and Exchange Board of India Act, 1992, two-decade-old regulations. Some definitions were amended and few were introduced. We will deal with it in detail now.

In order to check the compliance of the regulations by the members of the securities market, the following clauses need to be followed. 

Timely information

In Section 2(b), these regulations provide for the supplying of information timely,

• There has to be sufficient information provided timely. This information will include the matters concerning the time, the motive of the general meetings and the issues to be discussed at the general meeting.
• Capital structures and arrangements that allow some shareholders to obtain a degree of control. This control should be disproportionate to their equity ownership. 
• Rights attached to all the series and classes of shares should be disclosed to investors before the shares are acquired by them. 

Equitable treatment

Equitable treatment has to be ensured by all the listed entities towards all the shareholders (foreign shareholders and minority shareholders included). Section 2(c) provides for the manner the equitable treatment has to be made.

• The treatment to all shareholders belonging to the same series of a class will be done equally. 
• There has to be effective participation of shareholders in relation to the key corporate governance decisions, such as the nomination and election of members of the board of directors. 
• Foreign shareholders shall exercise their voting rights. 
• The listed entity will have to devise a framework with the aim to avoid insider trading and abusive self-dealing. 
• Processes and procedures in regard to the general shareholder meetings shall allow for equitable treatment of all shareholders. 
• Procedures which the listed entity will make, will not cause any kind of difficulty or will make it expensive to cast votes.

Disclosure and transparency

As mentioned earlier, the more there is transparency and disclosure, more compliance is possible.

Section 2(e) of this Act provides for the provisions for timely and accurate disclosure. 

Let us have a look at them.

• The information will be prepared and disclosed according to the standards of accounting, financial and non-financial disclosure, prescribed. 
• Channels will be provided for disseminating information to ensure equal, timely and cost-efficient access to information that is relevant, by users. 
• Every minute of the meeting should be recorded, including the explicit dissenting opinions (if any). 

Disclosure of events or information

• Every listed entity will have to disclose any event or information which according to the Board of members is material.
• The events specified in Part A of the Schedule III are material and shall be disclosed. 

Procedures to comply with Insider trading

General obligation of compliance

Section 5 of SEBI (Prohibition of Insider Trading) Regulations, 2015 says-

• The entities which are listed shall make certain that the following people comply with responsibilities or obligations( if any, assigned to them under these regulations).

1. key managerial personnel,
2. directors,
3. promoters, or
4. any other person dealing with the listed entity. 

Compliance Officer and his Obligations

Section 6 of the SEBI (Prohibition of Insider Trading) Regulations, 2015 says-

• The entity which is listed will appoint a company secretary for the post of the compliance officer.
• The compliance officer of the listed entity shall be liable for- 

1. Ensuring adherence to the regulatory provisions applicable to the listed entity, both in letter and spirit. 
2. Ensuring coordination with the Board.
3. Ensuring reporting to the Board, recognized stock exchange(s) and depositories with respect to compliance with rules, regulations and other directives of these authorities. This should be done in a manner that will be prescribed from time to time. 
4. Ensuring that the correct procedures have been followed that would lead to the correctness, authenticity, and comprehensiveness of the information, statements, and reports filed by the listed entity with respect to these regulations. 
5. Ensuring that the email address of grievance redressal division ( designated by the listed entity) is monitored for the purpose of registering complaints by investors. 

Annual report

To check that the listed legal entities have complied with the rules specified in the SEBI (Prohibition of Insider Trading) Regulations, 2015, Section 34 of the regulations prove for submission of the annual report. It says-

The entities listed will have to submit an annual financial report within twenty-one working days of it being approved and adopted in the annual general meeting, with respect to the provisions laid down in the Companies Act, 2013. 

Penalties for not complying with the regulations

Some penalties are to be imposed if any person does not comply with the regulation of the SEBI (Prohibition of Insider Trading) Regulations, 2015, let us discuss them now.

• Section 15G and Section 11(C)(6) of the SEBI(Prohibition of Insider Trading) Regulations, 2015, says that if any person refuses to cooperate in any kind of investigation which is instructed by SEBI for the violation of insider trading without any justified reason, he shall be punished with imprisonment for a term which can extend up to one year or fine which can be increased to 1 crore.
• Section 11(4)(B) of the SEBI Act authorizes the SEBI to pass such orders which prohibit the insider to deal in the particular securities in the manner specified, declaring the concerned one or more transaction of the securities a null and void.
• According to Section 195 of the Companies Act, 2013, if an insider does not comply with the provisions of this Section of the companies Act, then he/she shall be liable for imprisonment with a term which could be extended to as much as 5 years. He can also be punished with a minimum fine of 5 Lakhs rupees which can be extended up to twenty-five crore rupees or the fine of an amount thrice the amount of the profit made by the insider(whichever is more).

Some cases related to insider trading

TISCO Case 

This case was decided in the year of 1992. The profit calculated in the first half of the year (1992-93) was ₹50.22 crore. This was less compared to the profit in the years 1991-92 and 1990-91 which were ₹278.16 crores and ₹238.13 crores respectively). This large difference in price clearly indicated that insiders( who have the knowledge of the company) made large profits.

Afterward, an investigation was initiated which was taken back as there were no regulations regarding it. Bombay stock exchange contended the same.

Reliance Industries Ltd. (RIL) vs. SEBI (2001)

The Reliance Group is India’s largest private-sector enterprise with an overall revenue of US$ 27 billion. In this case, the stake of Reliance Industries Ltd (RIL) in Larsen & Toubro was 5.32%. After which RIL appointed Mr. Anil Ambani and Mr. Mukesh Ambani to the board of directors. RIL started purchasing the shares from L&T, which raised its shares to 10.25%. 

These shares were further sold by RIL to Grasim Industries Ltd, at a rate of ₹306.60 per share which was more than the market rate of ₹208.50 per share.

For this reason, RIL was directed to withdraw from the dealing and was further prohibited to deal with L&T in the future. Aso, RIL was directed to make certain disclosures to the Stock exchanges and L&T.

Conclusion 

The Bombay Stock Exchange established in 1875, is the oldest and the biggest stock exchange in the market in today’s times. But the laws governing the securities market is not that old. Since the establishment of the SEBI (Insider Trading) (Amendment) Regulations, 1992, the world of the stock market is changing rapidly. With the introduction of new regulations and fresh amendments in the laws related to the securities market, the insider trading regulations have been improved and are working well in the field to curb the menace of insider trading and ensuring a perfect competition, market liquidity and cost of equity. 

References 

1. https://blog.ipleaders.in/rights-of-insiders/
2. https://www.sebi.gov.in/acts/insideregu.pdf
3. https://www.sebi.gov.in/sebi_data/attachdocs/1441284401427.pdf
4. https://www.sebi.gov.in/sebi_data/attachdocs/jul-2018/1532429292500.pdf
5. https://blog.ipleaders.in/sebi-insider-trading-offences/

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

The post How to comply with insider trading regulations appeared first on iPleaders.

This article is written by Srishti Kaushal, a first-year student of Rajiv Gandhi National University of Law, Punjab, pursuing B.A. LLB. (Hons.). In this article, she discussed the essential clauses that the Articles of Association of a company must have.

Introduction

Have you ever wondered what governs the internal working and management of a company? How are the rights of the members of a company towards each other are determined? How is a change in the internal regulation of a company regulated?

Well, it is the company’s Articles of Association which provides for all this. Articles of Association refers to a document that defines the purpose of the company and specifies the regulations for its operations. It also contains the company’s by-laws and rules and regulations governing the management. 

It is essential for a company to have the articles of association as Section 7(1) of the Companies Act, 2013 states that at the time of incorporation of the company, the articles of association must be filed with the registrar in whose jurisdiction the registered office of the company will be. 

In this article, we will understand the importance of the Articles of Association and the essential clauses it must contain.

Essentials of Articles of Association

Section 5 of Companies Act, 2013 lays down certain essential elements that must be present in the Articles of Association and also provides rules for its drafting. 

This section, clearly specifies that nothing in this section prevents a company to include additional matters which are necessary for the company’s management. 

Let’s look at the essential clauses which the Articles of Association of a company must have.

Company’s Name

• The company’s name must include the word “limited liability company” or the abbreviation “ltd.” 
• If the company intends to use its name in more languages than 1, this clause must contain the name in other languages as well.

Issue of shares and the rights of Shareholders

• This clause must contain the amount of capital to be raised as shares, as well as the number of shares the company proposes to issue. 
• The specific class of shares must also be mentioned, along with the value for which each is being issued. 
• The number of different kinds of share capital like preference share capital and equity share capital etc must be mentioned, along with the value.
• The rights that a shareholder acquires must also be mentioned in this clause.

Lien of Shares

This clause defines the company’s right to retain the shares of any member of the company, in case he/she defaults and fails to pay the debt amount to the company. 

Transfer and Transmission of shares

This clause explains the procedure for the transfer of shares between the transferee and the shareholders, in situations of death, insolvency, succession etc.

Forfeiture and Surrender of shares

This clause in the Articles of Association provides the rules for forfeiture of shares by the company in case a shareholder fails to make the purchase payments for shares. For instance, in case he/she fails to pay the allotment money (money to be paid on the allocation of shares) or call money (money to be paid by shareholders holding partly paid shares when the company demands) on shares etc. 

Conversion of shares into stock

Stock refers to the collection of the shares of a member. These shares are fully paid up. Section 61 of the Companies Act, 2013 allows a company to allow conversion of fully paid-up shares into stock and vice-versa. This clause explains the management and the resolution process through which the shareholders can convert their shares into stock. 

Alteration of capital

The company may be required to increase, decrease or rearrange the capital in the duration of its operations. This clause in the Articles of Association provides the rules and procedures for altering capital as per the company’s interest.

Issue of Debentures

This clause must explain how the debentures can be issued. Whether they can be issued at a premium, discount or otherwise must be mentioned here. It should also tell whether and how the issued debentures can be converted into shares.

Dividend and Reserves

This clause in the Articles of Association of the company explains when and how the dividends would be distributed amongst the shareholders of the company.

Common Seal

Common Seal is a metallic seal of the company which can be affixed only with the approval of the board of directors. It acts as the signature of the company and once signed on a document, it binds the company with all obligations under that document. This clause explains the use and custody rules of the common seal.

Appointment and retirement of the directors

• The Articles of association must contain a clause regarding the appointment of directors. This should mention the qualification they must have and should define the process of appointing directors. For instance, it can be provided in this clause that any person permitted by law can be appointed as a director by special resolution.
• The provisions regarding the retirement of the directors must be mentioned in this clause. It should also provide if the retiring director is eligible for reappointment, and if yes, the procedure for the same must be mentioned.
• This clause should also mention the terms for termination of the appointment of a director.

Powers and responsibilities of the directors

This clause provides different powers and responsibilities given to a director of the company. For instance, it can define and limit the decision making authority of directors. It should also define the borrowing powers of the directors.

Director’s Meetings

This clause must define the powers of the directors with respect to calling a director meeting. It should also state the quorum of the meeting and define the chairing of these meetings.

This clause must talk about the voting power of the directors as well. It should also specify how the meeting would be adjourned.

General Meetings

This clause must define the place of general meeting, the procedure for calling a general meeting and what all would be addressed in the general meeting. 

For instance, this clause may say that the general meeting would be held in the company’s registered office in New Delhi, and it shall be notified through an announcement on the company’s website and an email to the members. 

Remuneration of the directors

The remuneration and expenses of the directors are to be mentioned in this clause. For instance, this clause can say that the company will pay for the traveling and accommodation of a director traveling to attend a meeting for the purpose of business.

Director’s indemnity and insurance

This clause provides the directors with indemnity and insurance. It protects them from personal losses which they might face if they are sued as a result of an act done by virtue of being the director of the company. It may also cover all the costs like legal fees in this regard.

Voting Rights

This clause defines all the matters which are required to be voted upon in the company. It also explains the procedure of voting- through a poll or through proxies.

Audit and Accounting

This provision explains in detail all the guidelines for auditing and accounting of the company. For instance, It can provide for the number of auditors to be appointed, qualifications to be appointed as an auditor, remuneration to be paid to the auditor etc.

However, it must be remembered that this clause in the Articles of Association supplement, but does not replace the statutory requirements in relation to auditing and accounting.

Entrenchment Clause

Section 5 of the Companies Act, 2013 allows a company to provide an entrenchment clause in its Articles of Association. This clause put some restrictions on alteration and amendment of certain clauses. It allows alteration in these specified clauses only when certain conditions or procedures (which are more restrictive compared to the conditions provided for special resolution) are met with.

Winding Up

This clause is an absolute essential in the Articles of Association of the company. Winding up is the process through which all the assets of the company are liquidated and all debts are cleared off and paid. After the debt is paid and expenses are covered, the remaining money is distributed amongst the shareholders, in accordance with the number of shares they own. This procedure and provisions related to it need to be provided in this clause. 

Importance of Articles of Association 

Drafting the Articles of Association is like laying down the foundation stone of the company. Thus, it is among the earliest steps that need to be followed in the formulation of a company. The significance of the articles of association cannot be undermined. Let’s understand why.

• They play an important role in ensuring the smooth and efficient working of the company by laying down the responsibilities of the managers and the purpose of the company.
• They are binding upon the members of the company. This means that the members must ensure that they are following the articles. Thus, the articles keep them on track of achieving the purpose of the company. While at the same time, they are binding upon the company as well.
• The articles go a long way in helping the Company to make decisions. For instance, in terms of audit, the Articles of Associations clearly lay down the procedure of appointing and remunerating accountants, making it easy for the company to keep a check on its accounts. 
• It provides the procedure for appointing the managers and Board of Directors which helps in avoiding unnecessary disputes.
• By providing for exact procedure to call for a general meeting and the purpose of the general meeting, it helps in ensuring ease in carrying out the large meeting. 
• It ensures that there is no confusion in regards to the shareholder’s rights and responsibilities, by expressly mentioning and explaining them. 
• By providing the procedure for winding up and handling expenses and remaining money, the Articles ensure efficiency in the process of winding-up.

Do’s and Don’ts to remember while drafting the Articles of Association

While drafting the Articles of Association, it is essential to keep in mind certain things. These are discussed further.

Do’s

• The articles must be printed.
• They must be divided into paragraphs and numbered consecutively.
• They must be signed by all the subscribers to the memorandum of association of the company. Subscribers of a company are the first shareholders of the company.
• The Articles of Association must be in the form specified in Table F, G, H, I or J as given in Schedule 1 of the Act. All these are for different types of companies.

• They must be filed along with the memorandum of association, with the registrar of companies.
• The articles must be made bona fide, for the benefit of the company as a whole.

Dont’s

• They must not contain anything illegal.
• They must not contain anything which is ultra vires to the memorandum of association.
• They must not contain anything which is contrary to the provisions of the Companies Act 2013.

Conclusion

The Articles of Association of a company is a crucial document, particularly in the sphere of corporate governance. Along with the Memorandum of Association, the Articles basically form the constitution of the company. It holds a position of high importance in the company and deals with all important aspects of its management.

It binds the Company to its members and the members to the company, and thereby it becomes a contract between the company and members and protects their rights. The Articles of Association acts as a rule book that defines the powers and responsibilities of the directors, the way shareholders are managed, how an audit is to be carried out, how winding up is carried out etc. Clearly, their importance cannot be undermined and they must be drafted with utmost care and consideration.

References

1. https://www.elanders.com/about-elanders/corporate-governance/articles-of-association/
2. https://www.investopedia.com/terms/a/articles-of-association.asp
3. https://www.techmahindra.com/sites/ResourceCenter/Financial%20Reports/Draft-Articles-of-Association.PDF
4. https://swaritadvisors.com/learning/articles-of-association-aoa-and-its-importance/

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

The post Essentials of Articles of Association: resolve all your queries at one place quickly appeared first on iPleaders.

This article has been written by Avinash Kumar, a 3rd-year law student from School of law, UPES Dehradun. In this article, he has discussed the different forums available in India to settle tax disputes.  

Introduction

Tax disputes arise in every country. It depends on how administrative authorities settle the tax disputes between the taxpayer and tax authority. It is the responsibility of the government to settle the tax dispute. It is also the responsibility of the government to establish a different forum to decrease the burden of tax cases on the judiciary. As there is already a huge burden of pending cases on the Indian judiciary. 

You will be shocked to know that as per the economic survey in India, the Income Tax Department is the biggest litigant but they lose 85% of their cases. Day by day the number of tax litigants is increasing.

The reason behind the increase in tax litigants in India is a mismatch between government intent and interpretation of the law. It is difficult to deny the fact that a lack of transparency between the administration and the taxpayer is a big reason behind the increase in tax litigation cases. In India, settling tax disputes is a time-consuming exercise. However, the government has come up with many platforms to settle tax disputes with the tax authorities. 

How can tax disputes be brought before the courts?

If any dispute arises regarding tax, then a notice issued by the tax authority has been served upon the taxpayer. A taxpayer can appeal against the order of the tax authority before the first appellate authority.

If the first appellate authority passes any order, then an appeal can be filed by the taxpayer before the Income Tax Appellate Tribunal (ITAT). If any substantial question of law arises against the order of the Income Tax Appellate Tribunal, then an appeal can be filed before the High Court. The judgment of the High Court is appealable before the Supreme Court. 

If a taxpayer is filing an appeal to the tribunal, the taxpayer has to file an appeal in the prescribed format.

Against the order of the tribunal, the taxpayer can file an appeal in the High Court of their jurisdiction within 180 days from the date of the receipt of the order of the tribunal. If you can not file an appeal within the time period, you will have to give a valid reason to the High Court.

When the High Court says that case is fit for filing an appeal in the Supreme Court, then the taxpayer can file an appeal in the Supreme Court against the judgment of the High Court. A taxpayer can also file a special leave petition to the Supreme Court when the High Court refuses to issue a certificate.

If the action of the tax authority is malafide, illegal or arbitrary, then in such a situation the High Court or Supreme Court can issue a writ against the tax authority to quash the decision.

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Forums available to settle tax disputes

These following forums are available which settle the dispute between the taxpayer and the tax authority. 

Dispute Resolution Panel (DRP)

The international business started to come into the Indian market and that’s why the collection of revenue increased. When revenues increases, the number of disputes related to the tax litigants will also increase. 

Keeping this in mind, The Finance Bill came up in 2009 with a new objective to resolve the tax disputes which are related to the transfer pricing matters. In the year 2009, the government established the new mechanism that is Dispute Resolution Panel to settle the disputes which is related to the transfer pricing in international transactions.   

The main objective of the dispute resolution panel is to provide speedy disposal of cases. The body of the Dispute Resolution Panel is constituted by the Central Board of Direct Taxes (CBDT) and its body constitutes three commissioners from the Income Tax Department. The panel of Dispute Resolution Panel is situated in Delhi, Mumbai, and Bengaluru. The Dispute Resolution Panel has the power to make any inquiries.

They can also direct the Income-tax authority to do an inquiry and submit the inquiry results. If a transfer pricing officer passes an order against foreign companies that is unfavourable, these companies can directly approach the Directive Resolution Panel.

If an assessee has any issue related to the tax assessment, then they can approach the Dispute Resolution Panel. After hearing both sides, the Dispute Resolution Panel will give direction to the tax authority. The tax officer is bound to follow the direction of the Dispute Resolution Panel.

Income Tax Settlement Commission

The Income-tax settlement commission works under the Ministry of Finance. It is a quasi-judicial body. The settlement commission gives the opportunity to the assessee to disclose the income which he has not disclosed before the Income Tax Department and settles the tax dispute. If the case of an assessee is pending before the tax authority, then he can directly approach the Income-tax Settlement Commission.

When your case is pending before the tax officer, you can file a settlement application to the Income-tax Settlement Commission. This is different from when an assessee can file an appeal only after the end of the proceeding against an order of the assessment. The settlement order passed by the settlement commission is final and binding. But, an appeal against the order of the settlement commission can be filed to the High Court through a writ petition.

Advance Pricing Agreements

The Ministry of Finance started the advance pricing scheme. Advance pricing provides a framework in which the taxpayer can make an agreement with the Central Board of Direct Taxes. Taxpayers and tax authorities enter into agreements to avoid future transfer pricing disputes. Advance pricing agreements reduce the possibilities of double taxation. 

There are four phases of advance pricing agreements:

1. Pre-filing meetings
2. APA application
3. Preliminary processing of the APA applications 
4. Negotiation
5. Finalization

However, Indian tax laws allow only three types of APAs. These are unilateral, bilateral and multilateral. The agreements between the taxpayer and tax authorities are binding upon both of them.

Authority for Advance Ruling (AAR)

Section 245N(a) of the Income Tax Act, 1961 defines the advance ruling. Authority for the advance ruling was introduced by the Finance Act in the year 1993. Chapter XIX-B of the Income Tax Act, 1961 deals with the Advance Ruling Authority. Under the advance ruling, power has been given to independent adjudicatory who has the power to make a binding decision. A retired judge of the Supreme Court is the head of the advance ruling body. The time limit of the pronouncement of the advance ruling is within six months of the receipt of an application. The taxpayer and tax authorities will be bound by the decision of the advance ruling of the authority.

A resident taxpayer can also approach the Advance Ruling Authority. The question raised by the applicant must not be pending before any tax authority, tribunal or any other court. The decision of the Advance Ruling Authority will be binding on the taxpayer and tax authority. The decision of the authority will be non-appealable. However, in certain circumstances, taxpayers can appeal to the High Court through the writ petition and the Supreme Court through the Special leave petition.   

Who can be the applicant?

• A non-resident.
• Any resident who does a transaction with non-resident can obtain an advance ruling in respect of any question of law or fact arise. 
• A resident who has undertaken or proposes to undertake one or more transactions of value Rs.100 crore or more in total. 
• A public sector company.
• Any person being a resident or non- resident can obtain an advance ruling to decide whether an arrangement proposed to be undertaken by him is an impermissible avoidance.
• An applicant as defined in Section 23A(c) of the Central Excise Act, 1944. 
• An applicant as defined in Section 28E(c) of the Customs Act, 1962, which means if a non-resident setting a joint venture in India in co-partnership with non-resident or resident.
• An applicant as defined in Section 96A(b) of the Finance Act, 1994.

Mutual Agreement Procedure (MAP)

India has entered agreements of double taxation avoidance with many countries. If any disputes arise regarding double taxation avoidance, then competent authority consults the Mutual Agreement Procedure (MAP) to resolve the dispute.

Mutual agreement procedure helps the competent authority to resolve the dispute of international taxation. Double taxation comes under the disputes of international taxation where the same profits have been taxed in two countries. So, if any application of mutual agreement procedure is made by the taxpayer then the competent authority of the country take-up matter and discuss the matter with the competent authority and give the solutions. 

Income Tax Appellate Tribunal (ITAT) (Section 255)

Income tax appellate tribunal is a quasi-judicial body. It specializes in dealing with direct tax matters and the order passed by the Income-tax appellate tribunal is final. However, an assessee can file an appeal in jurisdictional High Court only if a substantial question of law arises. Article 227 of the Indian Constitution says that the Income-tax appellate tribunal will be subordinate to the High Court and is bound to follow the judgment of the High Court.

Income tax appellate tribunal is a second appeal, the first appeal lies under the Commissioner of Income Tax. Against the order of the commissioner of the income tax, you can file an appeal in the income tax appellate tribunal. The time limit of filing an appeal before the Income-tax appellate tribunal is within 60 days from the date on which the order sought to be appealed against is communicated to the taxpayer or the Principal Commissioner of Income Tax or Commissioner of Income Tax.

However, if you cross the time limit of filing an appeal then tribunal may admit your appeal but you will have to give the valid reason for not filing an appeal within the time period. 

Appeals to the tribunals mainly relate to: 

• Excessive assessment
• Search and seizure
• Disallowances and additions
• Interest 
• Levying of penalties under chapter VIA of Income Tax Act, 1961 

Appeal to High Court 

If a case involves a substantial question of law, the assessee can file an appeal against the order of the appellate tribunal under Section 260A of the Income Tax Act, 1961. An assessee can file an appeal against the appellate tribunal within 120 days from the order to the High Court. 

The High Court shall formulate the question of law. If the appellate tribunal has wrongly determined the case then High Court has the power to determine any issue which has not been determined or wrongly determined by the appellate tribunal.

Section 260B of the Income Tax Act, 1961 says that if an appeal is filed in the High Court under Section 260A then such appeal shall be heard by a bench of not less than two judges of the High Court and shall be decided in accordance with the opinion of such Judges or the majority if any.

Appeal to the Supreme Court (Section 261)

Under Section 261 of the Income Tax Act, 1961, an aggrieved party can file an appeal in the Supreme Court against the judgment of the High Court. The High Court could certify the case as fit for an appeal if a substantial question of law is involved. The case will also be fit for an appeal if the question is likely to come up in a successive year or if the question is otherwise of great public or private importance. 

An aggrieved party can file an appeal in the Supreme Court within 60 days from the High Court’s judgment. While filing the appeal in the Supreme Court, the aggrieved party will exclude the time period for taking a certified copy of the High Court’s judgment.

However, if the High Court refuses to certify the case to be fit for appeal, then they can file a special leave petition in the Supreme Court under Article 136 of the Indian Constitution. If the Supreme Court reverses the judgment of the High Court under Article 141 of the Indian Constitution, the judgment of the Supreme Court will be binding on all the Courts.          

Conclusion 

There are many forums available in India where a taxpayer can settle the disputes with the tax authority. A taxpayer can file an appeal in Income Tax Appellate Tribunal and if he is not satisfied with the order then he has a right to appeal in the High Court. A taxpayer can settle the dispute by filing the special leave petition in the Supreme Court as well. The court can also issue the writ petition when the intention of the tax authority is malafide or arbitrary in nature. Still, there is a need for reforms in Indian tax administration and adjudication. 

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This article is written by Shubhangi Upmanya, a first-year student, pursuing BBA.LLB. from Vivekananda Institute of professional studies, Indraprastha University. She has discussed all the procedures related to filing an appeal before the SAT.

Introduction

Have you heard of stock markets? Well, the exchange of shares takes place here. In total, there are 23 stock exchanges in India but the question is who regulates such a big market? So, the answer is the Securities and Exchange Board of India. It is the principal regulator of the stock exchanges in India.

It is a statutory body, established by the SEBI Act, 1992. It basically discharges three functions to carry out its mandate, quasi-legislative, quasi-judicial, quasi-executive functions. These functions include drafting rules and regulations, prosecuting if someone violates the procedures related to it and investigating and executing the procedures and actions concerned with it, respectively. 

To carry out its judicial functions, there is a body that could hear the appeals related to the judicial proceedings. The provisions to establish such a body were provided in Section 15K of the Securities and Exchange Board Act, 1992. Under this provision, the Securities Appellate Tribunal was established in the year 1995.

We will now be discussing, when, where and how, the appeal can be placed before the Securities Appellate Tribunal.

Securities Appellate Tribunal

In 1992 the first Securities Appellate Tribunal(SAT) was established, under Section 15K in The Securities and Exchange Board of India Act, 1992 by a notification issued by the Central government. If there is a need for more SATs, then the Union Government has a right to issue notification regarding it.

This body sees to the answerability and accountability and further ensures it.

Let us now look at Section 15K of the Securities and Exchange Board of India Act, 1992.

Section 15K of the Securities and Exchange Board of India Act, 1992

• One or more Appellate Tribunals will be established by the Central Government through notification. These Tribunals will be known as the Securities Appellate Trib­unal and will exercise the jurisdiction, powers, and authority con­ferred under this Act or any other law for the time being in force.
• The Central Government in that notification will also refer to the matters and places in regards to which the Securities Appellate Tribunal may exercise jurisdiction.

Composition

Section 15L of the Securities and Exchange Board of India Act, 1992

Section 15L of the Securities and Exchange Board of India Act, 1992 says that,

There will be, 

• One presiding officer, and
• Two other members

It is further provided that if there is a Securities Appellate Tribunal that was established before the commencement of the Securities and Exchange Board of India (Amendment) Act, 2002 and if it consists of only one person then, it will continue to exercise the jurisdiction, powers, and authority conferred on it by or under this Act or any other law for the time being in force. It will be continued till the other two members of the tribunal are appointed under the provisions of this section.

Among the two members, there should be one judicial member and one technical member.

Appointment and Tenure

Section 15K of the Securities and Exchange Board of India Act, 1992

They will be appointed by the notification, issued by the Central Government. The Central Government will make these appointments in consultation with the Chief Justice of India or any person who is nominated by the CJI.

Section 15N of the Securities and Exchange Board of India Act, 1992

The Presiding Officer and each of the judicial or technical members of the Securities Appellate Tribunal will hold the office for a term of five years from the date on which he enters upon his office.

They can be reappointed for another term, for not more than five years.

It is further provided that no officer will hold the office after he attains the age of seventy years.

Qualifications

Members of the Securities Appellate Tribunal should have the following qualifications:

• in order to be eligible to be a Presiding Officer, he should have been or should be a Judge of the Supreme Court or a Chief Justice of the High Court or a Judge of High Court for at least seven years, 
• in order to be eligible to be a Judicial Member, he should have been a Judge of High Court for at least five years, 
• in order to be eligible to become a Technical Member.

1. The person should be or have been a Secretary or an Additional Secretary in the Ministry or Department of the Central Government or any equivalent post in the Central Government or a State Government; or
2. The person should be of proven ability, integrity and standing to have a special kind of knowledge and professional experience of fifteen years or more. This knowledge should be regarding the financial sector, which should include securities market or pension funds or commodity derivatives or insurance.

Powers of SAT

For the following matters, Securities Appellate Tribunal will have the same powers that the Civil Court is vested with, under the Code of Civil Procedures, 1908.

• to summon and to enforce the attendance of any person; or 
• to examine him on oath; or
• to order the discovery and production of documents; or
• to procure evidence on affidavits; or
• to issue commissions for the examination of witnesses or documents; or
• to review decisions passed by the Tribunal itself; or
• to dismiss an application for default; or
• to decide an application as ex-parte; or
• set any order aside or dismiss any application for default or any order passed by it ex-parte, or
• any other matter which may be prescribed.

Appeal to SAT

Section 15T of the Securities and Exchange Board of India Act, 1992

Under this Section, an appeal can be preferred to a Securities Appellate Tribunal having jurisdiction in the matter,

• by an order or rules and regulations of the Board made under this Act which was made on and after the commencement of the Securities Laws (Second Amendment) Act, 1999;

or

• by an order made under this Act, by an adjudicating officer; or
• by an order of the Insurance Regulatory and Development Authority or the Pension Fund Regulatory and Development Authority.

Now we will be dealing with the Securities Appellate Tribunal (Procedures) Rules, 2000.

Securities Appellate Tribunal (Procedure) Rules, 2000 

The Central Government issued the following guidelines, by exercising the powers conferred to it by Section 29 read with Sections 15T and 15U of the Securities and Exchange Board of India, 1992. 

Let us discuss all the Sections contained in Securities Appellate Tribunal (Procedure) Rules, 2000 and the procedures to file an appeal in the Securities Appellate Tribunal.

Limitation for filing the appeal 

• The appeal should be filed before the Tribunal within a period of 45 days.
• The 45 days will start from the day when the appellant receives a copy of the order against which the appeal is filed.
• It is further provided that if the appeal is not filed within 45 days then the Appellate Tribunal may if it thinks that there exists a justified reason for not filing the appeal within 45 days, allow that appeal.

Form and procedure of appeal 

• Any aggrieved person in the registry of the Appellate Tribunal can present a memorandum of appeal which shall be presented in the Form. 
• This memorandum of appeal has to be presented in the Appellate Tribunal within whose jurisdiction the concerned case falls or shall be sent by registered post addressed to the Registrar.
• In case, the memorandum of appeal is sent through the post by the aggrieved, then it shall be deemed to have been presented in the registry on the day it was received in the registry. 

Sittings of Appellate Tribunal 

• The Appellate Tribunal will sit either at a place where its office is situated or at any other place where the jurisdiction of the Appellate Tribunal falls(whichever place the Appellate Tribunal finds suitable).
• When the Presiding Officer is temporarily absent, Government of India can authorize either of the two other members to preside over the sitting of the Tribunal either at a place where its office is situated or at such other place where the jurisdiction of the Appellate Tribunal falls. 

Language of Appellate Tribunal 

• All the proceedings in the Appellate Tribunal are to be conducted in either English or Hindi.
• Any appeal, application, representation, document or other matters contained in any language other than English or Hindi, will not be accepted by the Appellate Tribunal unless the same is accompanied by a true copy of the translation of the following matter, which will be in English or Hindi. 

Appeal to be in writing 

• Every appeal, application, reply, representation or any document filed before the Appellate Tribunal should be typewritten, cyclostyled or printed neatly and legibly.
• It should be typewritten on the side of a good quality paper of foolscap size in double space and separate sheets should be stitched together. Also, every page should be consecutively numbered and filed in the manner provided in sub-rule (2).
• The appeal under sub-rule (1) shall be presented in 5 sets in a paper book along with an empty file size envelope. This envelope should bear the full address of the particular respondent whereas the full address of each respondent, in case the respondents are more than one. It should be provided along with a sufficient number of extra paper books together with an empty file size envelope.

Presentation and scrutiny of the memorandum of appeal 

• The Registrar will endorse the date on every appeal and will sign the endorsement. The date mentioned will be the one on which the appeal was presented under rule 4 or deemed to have been presented under that rule. 
• The appeal will be duly registered and a serial number will be given provided that on scrutiny, the appeal is found to be in order.
• The Registrar may allow the appellant to rectify the defect in his presence if on scrutiny, the appeal is found to be defective and the concerned defect is formal in nature, but if the said defect is not formal in nature, the Registrar may give the appellant some time to rectify the defect as he may deem fit. 
• If the appeal has been sent by post and found to be defective, the Registrar may communicate the defects to the appellant and give the appellant some time to rectify the defect as he may deem suitable. 
• If the appellant fails to rectify the defect within the time allotted by the Registrar (in sub-rule (3)), the Registrar will pass an order which will provide for reasons to be recorded in writing and may decline to register such memorandum of appeal and communicate the order to the appellant within seven days from declining. 
• An appeal against the order of the Registrar under sub-rule (4) can be made within 15 days of receiving such order which declined the appeal. The appeal will be made to the Presiding Officer or in his temporary absence, to the Member authorized under sub-rule (2) of rule 5, whose decision will be considered as final. 

The fee to be paid

• Each memorandum of appeal shall be accompanied by a fee. The details of fee to be paid is provided in sub-rule (2).
• This fee has to be remitted in the form of crossed demand draft, drawn on any nationalized bank It should be drawn in favor of “the Registrar, Securities Appellate Tribunal” payable at the station where the registry is located. 
• The amount of fee payable regarding the appeal against adjudication orders made under Chapter VIA of the Act shall be as follows: 

• The amount of fee payable regarding any other appeal against the order passed by the Board under the Act will be rupees five thousand only. 

Contents of the memorandum of appeal 

• Each memorandum of appeal filed under rule 4 will be put down concisely under distinct heads.
• The grounds of such appeal will be passed without any argument or narrative. 
• The concerned ground shall be numbered consecutively and shall be in the manner provided in sub-rule (1) of rule 7. 
• It will not be required to present a separate memorandum of appeal to get an interim order or direction if the above-mentioned ground is prayed for in the memorandum of appeal. 

Documents to accompany memorandum of appeal 

• The memorandum of appeal will be provided along with five copies and will be accompanied by copies of the order. Out of those copies, at least one of it will be a certified copy, against which the appeal is filed.
• If the party is represented by an authorized representative, then the following should be added to the end of the appeal:

1. a copy of the authorization to act as the authorized representative and, 
2. a written consent thereto by such authorized representative. 

Plural remedies 

A memorandum of appeal shall not seek relief or reliefs against more than one order unless the reliefs which are prayed for are consequential. 

Notice of appeal to the respondent 

A copy of the memorandum of appeal and the paper book should be given by the Registrar to the respondent after they are registered in the registry. The copy can be served by hand delivery, or by Registered Post or Speed Post. 

Filing of reply to the appeal and other documents by the respondent 

• The reply to the appeal has to be filed by the respondent in five complete sets. The reply to appeal has to be accompanied by documents in a paper book form. This has to be filed with the registry within one month of the providing of the notice on him regarding the filing of the memorandum of appeal. 
• Every reply, application or written representation filed before the Appellate Tribunal has to be verified in the manner provided for, in the Form. 
• A copy of all the applications, replies, documents and other written materials filed by the respondent before the Appellate Tribunal shall be right away served on the appellant, by the respondent.
• The Appellate Tribunal can allow the filing of reply referred to in sub-rule (1) after the expiry of the period mentioned in that. This may be done after an application by the respondent is received. It will be done at the complete discretion of the Appellate Tribunal. 

Date of hearing to be notified 

• The Appellate Tribunal will send a notification to the parties regarding the date when the appeal will be heard.
• It will be done in a particular manner which will be provided by the Presiding Officer. 
• The Presiding Officer will direct the manner by passing a general or special order. 

Hearing of appeal 

• The appellant will be heard in support of the appeal filed, on the day fixed or on any other day to which the hearing may be adjourned.
• After this, the Securities Appellate Tribunal will, then, if it thinks necessary, hear the Board or representative authorized by the Board, against the appeal.
• During, hearing the Board or its authorized representative presenting arguments against the appeal, the appellant will be entitled to reply. 
• The written arguments could be supplemented by time-bound oral arguments, during the proceedings of the hearing of the appeal.

[Provided that in the case when the Presiding Officer or of the Member authorized by the Government under sub-rule (2) of rule 5 is temporarily absent, then the Presiding Officer can authorize the other Member present on that day to hear Board or authorized representative by the appellant, against the appeal.] 

• In case the appellant is not present in person or through an authorized representative when the appeal is set for hearing, the Securities Appellate Tribunal may dispose of the appeal on the merits.

[Provided that where an appeal has been disposed of as provided above and the appellant presents himself afterwards and is able to satisfy the Securities Appellate Tribunal that there were sufficient and justified reasons for his nonappearance when the appeal was called for hearing, the Securities Appellate Tribunal can pass an order setting aside the ex parte order and restore the appeal.] 

Order to be signed and dated 

• The Presiding Officer and the two other members will sign and date each and every order of the Appellate Tribunal. 
• The Presiding Officer will possess the authority and power to pass interim orders or injunctions. 
• The interim orders or injunctions will be subject to reasons, to be recorded in writing, which it considers necessary in the interest of justice.
• The interim orders or injunctions will be pronounced during the sitting of the Appellate Tribunal, presided by the Presiding Officer or by the Member authorized under sub-rule (2) of rule 5 (in the case of the temporary absence of the Presiding Officer).

Publication of orders 

• The orders of the Appellate Tribunal will be released for publication if the Appellate Tribunal thinks that it is fit for publication in any authoritative report or the press. 
• It will be released for such publication on some terms and conditions which the Presiding Officer will lay down. 

Communication of orders 

A certified copy of each and every order passed by the Appellate Tribunal shall be communicated to the following members(according to what the case is):

• to the Board, 
• to the Adjudicating Officer, and 
• to the parties. 

Orders and directions in certain cases 

The Appellate Tribunal may make such orders or give such directions which it thinks are necessary or expedient to give effect to the orders passed by it previously or to prevent exploitation of its process, or to make it certain that justice is provided. 

Fee for inspection of records and obtaining copies 

• A fee for every hour or every part of that inspection will be charged; 
• It will amount to rupees twenty;
• It will be subjected to a minimum of rupees one hundred charged for inspecting the records of a pending appeal by a party;
• A fee of rupees five will be charged, for a folio or part of that which do not involve typing;
• A fee of rupees ten will be charged for a folio or part of that which do not involve typing of statement;
• Figures shall be charged for providing copies of the records of an appeal, to a party in the concerned case. 

Functions of the Registrar

Let us look at some important functions of the Registrar:

• The Registrar will discharge his functions under the supervision of the Presiding Officer. 
• If the Presiding Officer is absent temporarily, then the Registrar will be supervised by the member authorized under sub-rule (2) of rule 5.
• He shall discharge other functions which are assigned to him under these rules, by the Presiding Officer or by the Member authorized under sub-rule (2) of rule 5(when the Presiding Officer is absent for a temporary period). This has to be performed when a separate order in writing is provided.
• He shall have the custody of all the records in the possession of the Appellate Tribunal.
• The official seal of the Appellate Tribunal will be kept in the custody of the Registrar.
• The official seal of the Appellate Tribunal will be affixed to any order, summons or other processes save under the authority in writing from the Registrar.
• It is subject to any general order or special direction by the Presiding Officer, or by the Member authorized under sub-rule (2) of rule 5(when the Presiding Officer is absent for a temporary period).
• The official seal of the Appellate Tribunal shall not be affixed to any certified copy issued by the Appellate Tribunal until the Registrar under his authority provides for it in writing. 

Additional functions and duties of the Registrar 

In addition to the functions and duties assigned in the rules, the Registrar will also have some other functions and duties to perform. Such functions and duties will be subject to any general order or special directive passed by the Presiding Officer or the Member authorized under sub-rule (2) of rule 5(when the Presiding Officer is absent for a temporary period).

Let us look at them:

• The Registrar will receive all appeals, replies and other documents;
• The Registrar will decide all questions which will arise out of the scrutiny of the appeal before the appeal are registered; 
• The Registrar can order to have any appeal (presented to the Appellate Tribunal) amended in accordance with the rule; 
• Subject to the directions of the Presiding Officer, or the member authorized under sub-rule (2) of rule 5(when the Presiding Officer is absent for a temporary period), the Registrar can order to fix the date of hearing of the appeal or other proceedings and issue notices from that point; 
• The Registrar can pass an order to direct any formal amendment of records; 
• The Registrar can pass an order to be presented with copies of documents to parties to proceedings; 
• The Registrar can ask to be granted leave so that he can inspect the record of the Appellate Tribunal; 
• The Registrar can issue an order regarding:

1. All matters relating to the serving of notices or other processes,
2. application for the issue of new or fresh notice, or 
3. for extending the time for the notice or ordering a particular method by which the notice will be served on the respondent. 

It also includes a substituted serving of the notice by the publication of the notice through the way of advertisement in the newspapers.

• The Registrar can also call for the records from the custody of any court or other authority concerned.

Cases concerning the Securities Appellate Tribunal

Satyam scandal of 2009

In this case, in September 2019, the Securities Appellate Tribunal (SAT) turned down the ban which SEBI put on PwC for the global audit firm’s role in the decade-old Satyam scandal.

Let us first quickly look at the facts of the Satyam Scandal:

On 7th January 2009, the then Chairman of Satyam Computer Service, resigned confessing that he had manipulated the various accounts in different forms.

The global corporate company was also part of the scandal. The auditor of Satyam Computer Service, PricewaterhouseCoopers(PWC) was also served as an independent auditor when the news of this scandal spread. The Indian arm of PWC in US was also sanctioned with a fine of $6 million by the US Securities and Exchange Commission for not obeying the Code of Conduct.

Now, what happened was that the SEBI put a ban on PWC as it provided a helping hand in this scandal. But the Securities Appellate Tribunal ordered SEBI to remove it because it had no authority or jurisdiction to ban Pwc from practicing and the authority regarding it rests with the ICAI.

SEBI v. Sahara India Real estate

In this case, in July 2015, SEBI canceled Sahara MF’s registration with the reasoning that it was not “fit and proper” to carry out the business. Further SEBI ordered the operations to be transferred to another fund house. It also directed to cancel the registration of Sahara MF’s when the six-month period had expired.

Sebi had also canceled the portfolio management license of a Sahara, sometime before.

In pursuance of the following order issued by SEBI, Sahara MF approached the Securities Appellate Tribunal. The appellants were, the Sahara Asset Management Co, Sahara Mutual Fund and Sahara India Financial Corporation.

SAT granted six weeks to the appellants to approach the Supreme Court. 

After this, the Sahara MF filed an appeal in the Supreme Court which was dismissed in October 2017 by the apex court. Thereafter, Sebi directed Sahara MF to strictly obey the timelines specified in the order passed in July 2015. But the SAT allowed Sahara to withdraw its appeal and to file a fresh appeal as it has the liberty to do so.

Conclusion 

SEBI is the prime regulator of the Securities market. And through its regulations, if it fails to satisfy the company or organization then the person can file an appeal in the Securities Appellate Tribunal. SAT works to mitigate the problems arising out of the orders of SEBI since 1995. And in many cases such as the cases which are mentioned above, SAT has proved to check for the accountability and answerability of the SEBI.

References

1. https://indiacode.nic.in/show-data?actid=AC_CEN_2_11_00014_199215_1517807319932&orderno=41
2. https://indiacode.nic.in/show-data?actid=AC_CEN_2_11_00014_199215_1517807319932&orderno=42
3. https://indiacode.nic.in/handle/123456789/1890?view_type=browse&sam_handle=123456789/1362
4. https://taxguru.in/sebi/securities-appellate-tribunal-sat-overview.html
5. https://www.sebi.gov.in/sebi_data/attachdocs/apr-2017/1492086931711.pdf
6. https://www.gktoday.in/gk/securities-appellate-tribunal/

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This article is written by Sachi Ashok Bhiwgade, B.A.LLB (Hons.) student of Hidayatullah National Law University, Raipur. This article discusses the relevant provisions and procedure to file and draft Proof of Claim before a Liquidator under the Insolvency and Bankruptcy Code, 2016 and the IBBI (Liquidation Process) Regulation, 2016.

Introduction

Prior to the enactment of the Insolvency and Bankruptcy Code 2016, the insolvency recovery system was in a very poor state. The IBC ensures efficiency in the liquidation process and for the fast recovery of debt. It applies to the companies, LLPs, Partnership Firms, Personal Guarantor to corporate debtors, etc. The provisions under IBC can be triggered only if the matter relates to a default of a minimum of 1 lakh rupees as per Section 4 of the Code. A company is liquidated when it is unable to pay its creditors and therefore has to sell off its assets in order to pay them. Section 33 of the Code lays down the circumstances under which the liquidation process is initiated. Under IBC, the liquidation process is different from the corporate insolvency resolution process and proof of claim has to be submitted separately for both. At the time of the liquidation, the claims submitted are for determining the total amount of the dues of the corporate debtor and for the priority of payments out of the liquidation estate. It is required for the claimants submitting their claims to adhere to the provision of the Code and Liquidation Regulation which provides for the procedure and time limit for submission of proof of the claim. The Insolvency and Bankruptcy Board of India (Liquidation Process) Regulation 2016 has been recently amended on 7th January 2020.

What is a Proof of Claim

A proof of claim is a document filed by a Creditor for seeking payments from the corporate debtor. It contains details regarding the debt owed, details of the total amount of claim and any documents supporting the claim of the creditor.

At what stage of the liquidation process is it required to file/submit proof of claims?

Once the process of liquidation is initiated, a liquidator is appointed. The liquidator then makes a public announcement inviting claims from stakeholders as contained in Form B of Schedule II of the IBBI (Liquidation Process) Regulation, 2016.

Regulation 12 requires a liquidator to make a public announcement, within 5 days of his appointment, regarding: 

1. To call upon the shareholders to submit their claims on the liquidation, commencement date.
2. Providing the last date of submission.

Regulation 16 requires a person claiming to be a stakeholder to submit its claim, including interest, on or before the last date as mentioned in the public announcement.

Who can Submit claims?

A creditor who wants to get the payment from the corporate debtor submits proof of claims to the liquidator. There are different procedures for submitting proof of claims for each type of creditor. The Code acknowledges three types of creditors: Operational, Financial and Other Creditors. 

As per Section 38 of IBC;

• For submission of claims, a financial creditor has to provide a record of such a claim along with an information utility.
• An operational creditor has to submit a claim in the form and manner and with such supporting documents specified by the Board.
• A creditor who is partly financial and partly operational has to submit claims in such manner and to the extent of his financial debt and operational debt. 

If a creditor wants to withdraw or vary his claim, he may do so within 14 days of the submission of the claim.

The liquidator on receiving the claims may direct the creditor to provide evidence or document of such a claim. 

Time limit for submitting claims

Section 38 (1) read with Regulation 12(2)(b) requires that the claims are to be submitted within 30 days from the liquidation commencement date. Any claims submitted after the prescribed last date will not be entertained by the liquidator. However, if a creditor is unable to file a claim on or before the last date for submitting claims he has to file an appeal to the NCLT i.e, the Adjudicating Authority against the decision of the liquidator as per Section 42 of the Code. Hence, a liquidator will admit a late submission of the claim, when he is directed by the NCLT to do so. It is to be noted that the late submitted claim also has to be submitted before the distribution of assets. Hence, In the case of a claim submitted after the distribution of assets, the NCLT will not allow such a claim. 

The Adjudicating Authority intervenes only when there is a delay in filing of claims. A person who has not filed a claim during the resolution process will not be barred from filing a claim during the liquidation process.

Documents required for proving claims for the existence of a debt 

Regulation 17, 18, 19 and 20 mentions the documents necessary to support the claim of creditors. The documents required to prove the claim of debt for different types of creditors are mentioned below.

Operational Creditors: Regulation 17

All or any of: 

1. The records available with the information utility;
2. A contract with the corporate debtor for the supply of goods and services; 
3. Invoices of the payment for supplying goods and services to the corporate debtor;
4. Order of the Court or Tribunals that adjudicated upon the non-payment of debt;
5. Financial accounts.

Financial Creditors: Regulation 18

All or any of:

1. The records available with the information utility;
2. A financial contract stating the financial statement; 
3. Evidence of a record stating the amounts committed to the corporate debtor by a financial creditor for a facility that has been drawn up by the corporate debtor;
4. Financial statement of the unpaid debt;
5. Order of the Court or Tribunals that adjudicated upon the non-payment of debt. 

Workman/Employee: Regulation 19

 All or any of:

1. Records available with the information utility;
2. Proof of employment;
3. Evidence of (a) notice demanding payment of the unpaid amount and (b) document or any other proof of non-payment;
4. Order of the Court or Tribunals that adjudicated upon the non-payment of dues. 

Creditor’s other than Financial Creditor, Operational Creditor, Workmen/Employee: Regulation 20

1. Records available with the information utility;
2. Documentary Evidence of (a) notice demanding payment of the unpaid amount/bank statement showing that claims are unpaid;
3. Documentary evidence or electronic evidence of shareholding;
4. Order of the Court or Tribunals that adjudicated upon the non-payment of a claim.

Admission and Rejection of Claims

Section 40 provides that after the claims are verified by the liquidator he may either wholly or partly, admit or reject the claims as the case may be. 

If a liquidator rejects a claim he has to record his reasons for the same in writing. Further, he has to, within 7 days of admitting or rejecting the claims, communicate the same to the concerned Creditor and the Corporate debtor. If the claims are rejected by the liquidator the creditor can appeal to the Adjudicating Officer, within 14 days of the rejection of claims, against the decision of the liquidator. If the claim is admitted then distribution will take place according to Section 53 of the Code. Before the finalization of the proceeds, claims of the applicant can be adjudicated and admitted.

Appeal

An appeal against the order of the liquidator lies to the Adjudicating Authority. The National Company Law Tribunal is referred to as the Adjudicating Authority under IBC. Section 42 states that a Creditor may appeal, within 14 days, against the decision of the Liquidator to the Adjudicating Authority. The Supreme Court in the case of Swiss Ribbons Pvt Ltd v. Union of India observed that determination of the value of claims by the liquidator under Section 40 is a decision that is quasi-judicial in nature. Hence, the decision of the liquidator is appealable to the Adjudicating Authority as per Section 42 of the Code.

In the case of Natwarlal Shamaldas and Co Ltd v Yog Industries Ltd before the National Company Law Tribunal, Mumbai Bench, a claim was rejected by the liquidator for not filing it within the prescribed due date for filing of claims. The question before the Adjudicating Authority was whether such delay can be condoned. The application, in this case, was allowed by the NCLT and the liquidator was directed to admit the claim and determine the same.

The National Company Law Tribunal, Kolkata Bench in the case of Uco Bank v. Nicco Corporation Limited condoned the delay for the late submission of the claim by the financial creditor and directed the liquidator to reconsider the claim, in accordance with the provisions of the Code and Regulation. In this case, the financial creditor (the bank) failed to submit the claim before the liquidator within the prescribed time and therefore, it was rejected by the liquidator for not filing it within the due date for filing of claims. The Creditor explained that because of the renovation and repair work that was going on in the premises of the Bank it could not file the claim within time. The question before the Adjudicating Authority was whether such delay can be condoned. The application, in this case, was allowed by the NCLT on the ground that the Bank has satisfactorily explained the reason behind the delay. 

Drafting of Claims 

IBBI (Liquidation Process) Regulation, 2016 contains the forms required for filing/submitting claims, along with affidavit and verification for each type of Creditor. 

Forms for submitting claims

The form for submitting claims for Creditors contained in Schedule II are:

• Form B: For inviting stakeholders to submit claims;
• Form C: For Operational Creditors except for workman and employees; 
• Form D: For Financial Creditors;
• Form E: For claims by the workmen and/or employee;
• Form F: For claims by authorized representatives of workmen and/or employee;
• Form G: For other stakeholders; 

Only the Financial Creditor has to submit proof of claim to the liquidator by electronic means. Other Creditors (Operational Creditor, Workman, Employee, Other Stakeholder) have to submit proof of claim to the liquidator in person or by post or by electronic means. 

Where are the forms for claims available?

The forms for claims are available on the website of the Insolvency and Bankruptcy Board of India and can be downloaded via https://ibbi.gov.in. 

Duties of a Liquidator

• A liquidator has to receive and collect Creditor’s claims within 30 days from the date of commencement of the liquidation process;
• He has to invite and settle the claims of the creditor as well as the claimants;
• To distribute the proceeds in accordance with the provisions of the Code; 
• The Board specifies the time within which a claim is to be verified by the liquidator;
• The liquidator determines the value of the claims;
• The liquidator as per Regulation 44 has to liquidate the corporate debtor within one year from the date of commencement of liquidation date.

Steps taken with regard to claims

1. Claims submitted by the creditors are received by the liquidator.
2. Verification of all claims by the liquidator.
3. Admission or rejection of claims.
4. Determination of the value of claims.
5. Records are examined.
6. Distribution of liquidation proceeds. 

Waterfall mechanism for liquidation

Section 53 of the Code provides for the distribution of assets as per following priority order:

1. Workmen’s due and the debts owed to the secured creditor where such secured creditor has relinquished his security;
2. Wages and unpaid dues owed to employees (other than workmen);
3. Financial debts owed to unsecured creditors;
4. Amount due to the Central and State Government and debts owed to secured creditors;
5. Remaining debts and dues;
6. Preference shareholders;
7. Equity shareholders/Partners.

Conclusion

From the above article, it can be inferred that filing a proof of claim is an essential part of the liquidation process. The creditors have to submit the claims within the stipulated time to the liquidator otherwise it will not be entertained. However, in certain cases, if satisfactory reasons are provided with, the delay can be condoned. Also, the claims which do not fulfill the requirements of the Code and the Liquidation Regulations will not be admitted. 

References

• https://www.ibbi.gov.in
• The Insolvency and Bankruptcy Code, 2016
• https://www.ibbi.gov.in/webadmin/pdf/whatsnew/2019/Jun/190609_UnderstandingtheIBC_Final_2019-06-09%2018:20:22.pdf 
• https://ibbi.gov.in//uploads/legalframwork/8e241a378e16b2821da63658bad6f0a4.pdf
• http://vinodkothari.com/wp-content/uploads/2018/09/FAQs-on-submission-of-claims.pdf 

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

The post How to File and Draft Proof of Claim before the Liquidator appeared first on iPleaders.

This article is written by Kashish Kundlani, a third-year student of (BBA.LL.B) Ramaiah Institute of Legal Studies, Bangalore. In this article, we’ll discuss the interpretation of good faith under the Indian Penal Code.

Introduction

Have you ever given a thought to define ‘good faith’? It is very difficult to define ‘good faith’. Even on a daily basis, we define it as what is not evil or what is not bad but nobody explains what is good, we often define it in a negative way. Even in the Indian Penal Code, it is defined in a negative way and not to the point. Throughout the Indian Penal Code, a lot of importance is given to good faith because in any case it is very important to decide the intention of a person, whether he/she has done an act in a bonafide manner i.e. good faith or with evil intent.

Good faith under IPC

Section 52 of the Indian Penal Code defines good faith. Without due care and attention, nothing is said to be done or believed to be done in good faith.

The expression ‘with due care and attention’ is only used in this Section and not defined anywhere else.

The Courts on the basis of their judgments and interpretation have tried to explain it.

Based on the logic and reason, a good intention, with due care and expertise is an important factor while determining an act done in good faith.

The prevailing circumstances, capacity and intellect of a person should be kept in mind to analyse the act done by him.

Essentials

• Logic and a reason;
• A good intention with;
• Due or reasonable care; and
• With expertise or a skill.

Are the key points for determining the act done.

An act not intending to cause death done by consent in good faith for a person’s benefit

Section 88 of the Indian Penal Code defines that where the intention is not to cause death but by any such reason it may cause harm, or it may be intentionally caused by the doer, or the doer knows that it is likely to cause harm, to any person for whose benefit it is done in good faith and also expressly or impliedly the person has given the consent to suffer that harm or to take the risk of that harm will not be considered as an offence.

Illustration

‘C’, a surgeon, knows that a particular operation may result in the death of ‘W’ who is suffering from throat cancer, but there is no intention to cause his death and he does performs the operation in good faith and for W’s benefit that too with his consent. Here ‘C’ has committed no offence.

An act is done in good faith for the benefit of a child, or insane person, or by consent of a guardian

Section 89 of the Indian Penal Code states that any act done in good faith and for the benefit of the person who is below the age of twelve years, or who is of unsound mind by the guardian himself or by any other person who is lawful in charge of that person, either expressly or impliedly then it is not an offence even though it is likely to cause harm to the person.

Exception

• If the doer will intentionally cause death or intentionally attempts to cause death then the doer cannot defend himself under this Section.
• If the doer knows that by his actions it is likely to cause death, any grievous disease or infirmity then the doer cannot defend himself.
• If the doer voluntary causes grievous hurt, or attempts to cause grievous hurt then he cannot defend himself under this provision.
• If the doer abets someone to make him commit any offence then he can’t be protected under this. For example, ‘T’  for the benefit of his child who has an infection on his hand gave the consent to the doctor to cut his hand, being aware of the fact that such an operation might or has a probability to cause the death of his child but he does not intend to cause his child’s death. ‘T’ will not be held guilty because of this exception as his intention is to cure his child.

Section 92: An act done in good faith without the consent

Section 92 defines as not even a single act or thing is a crime if such reasons are present:

• If any harm caused to a person for whose benefit it is done in good faith, even without the person’s consent, and
• Even when the circumstances were such that it was impossible for that person to signify the consent, or
• That the person was incapable of giving consent, and
• Also the person has no guardian or any other person in lawful charge of him from whom it is possible to obtain consent in time for the thing to be in benefit.

Exception

• The doer cannot take advantage of this Section if he does the act intentionally to cause death or intentionally attempts to cause death.
• If the doer knows that such an act if done then the result is likely to cause death then he cannot be benefited under this Section.
• The doer should not extend the act to voluntarily causing hurt or even attempting to cause hurt.
• The doer should not enhance his act in order to instigate or abet any person to make him commit an offence.

Illustration

• ‘R’ was driving at night and suddenly his car crashed and he became unconscious. ‘S’, a surgeon, finds that surgery has to be done. So ‘S’ without the consent of ‘R’ but in good faith and for his benefit performs surgery before ‘R’ gains the power to judge. 

Here ‘S’ has not committed any offence. 

• ‘Y’ was carried off by a tiger. ‘D ‘saw this and then fires at the tiger knowing that firing at the tiger can also kill ‘Y’ but he does it in good faith in order to save him. The bullet fired injured ‘Y’. Here ‘D’ has not committed any offence.  
• Priyanka is in a house which is on fire with her child, Parth. There are few people standing outside holding out a blanket to save both of them. From the top of the house Priyanka drops her child knowing that this action is likely to cause death but not intending to kill and in good faith to save him. 

Here Priyanka has not committed any offence and even if the child gets killed by the fall she will still not be held guilty under this offence.     

Essentials of Section 92

• An act done for the benefit of a person who suffers harm.
• The act done must be in good faith.
• There was no time to obtain the consent of the person.
• Where it is impossible to signify the consent of that person.
• There was no guardian or lawful in charge of that person to obtain the consent.

Communication made in good faith

Section 93 of the Indian Penal Code defines the communication made in good faith.

It states that if anything is communicated to someone else in a good faith and for the benefit of that person then it is not an offence even if by the communication the person suffers any harm.

Illustration 

Sia, a surgeon, communicates to her patient that he cannot live much longer because of his incurable disease. The patient dies in consequence of the shock. Here Sia has not committed any offence even though she knew that the information might affect him.

Case laws

Doraswami Pillai v. The King-Emperor on 3 March,1903

In this case, the police constable under the suspicious character of the accused visited his premises at midnight with another constable and knocked on his door in order to check his presence in the house.

The constable wanted to watch his movements though it does not authorise the complainant to enter and watch the movements of the accused appearance in the house or knocking at his door at midnight to cause him annoyance and inconvenience. 

If any police constable wants to enter the premises to watch the movements or presence of a suspected person then it requires the public order from the concerned Magistrate.

Even after acquiring the public order it should be done with a lawful means and not by trespassing upon his premises or by opting any other unlawful means to do that.

It was found out that the accused after knocking by the constable he came out and abused and pushed the complainant and also afterwards brought a stick and lift it up in order to threaten him.

The accused will be held guilty under this act of assault done by him unless he proves it to be in the exercise of private defence of the property.

It was held that the police constable will be held liable for house-trespass under Section 442 of the Indian Penal Code because of the course adopted by the police was not appropriate and also insulting to the accused and held the actions of accused justified under Section 104 as a result acquitted him from the charges and also did not gave any defence to the police constable under Section 52 for acting in good faith.

Sukaroo Kobiraj v. The Empress on 30 April, 1887

In this case, the appellant was held guilty by the Sessions Court under Section 304A of the Indian Penal Code on the grounds that he caused the death of the patient by performing a very dangerous operation which resulted in unstoppable bleeding and in consequence he died.

He filed an appeal in the Calcutta High Court.

It was argued before the court that the appellant should not be held guilty under Section 304A as before also he has performed dangerous operation in which it was shown that it did not cause the death of any patient and even though he caused death then also he should be given the benefit under Section 88 as the act was done in good faith, without any intention to cause death and was done for the benefit of the patient who accepted the risk.

It was argued by the respondent that even if the intention to cause death is not there but it is difficult to establish the essentials of Section 52 which is ‘with due care and attention’ and he should not be given the relief or any benefit under Section 88 as he does not have any proper knowledge of how to perform surgery.

It was held by the court that he should be held guilty but should not be given a very harsh punishment as the patient’s approval for the operation was also there. So the court charged him a fine of ₹100 and if he fails to pay the fine then he has to undergo three months of rigorous imprisonment.

Plea of good faith as a defence

Apart from Section 88, 89, 92 and 93, the few other Sections of the Indian Penal Code where good faith is used as a defence are:

• Section 76 states that an act done by reason of a mistake of fact in good faith by the person who believes himself to be bound by law to do it is not an offence.
• Section 77 states that it is not an offence if any judge acts in the exercise of his judicial power given by law in which he believes it to be done in good faith.
• Section 78  if an act done in accordance with the law or any order of a court while such judgement or order was operative and even though the judge does not have any jurisdiction to pass such judgement or order but on the condition that such act was done in good faith believing that the court had such jurisdiction will not be said as an offence.
• Section 79  state that an act done in good faith by a person, by reason of a mistake of fact and therefore he believes that he is justified by the law in doing so is not an offence.
• Exception 3 of Section 300 states that culpable homicide is not murder where the offender in any way is a public servant, aiding a public servant or acting for the development of public justice, exceeds his power given by law in good faith or believes himself to be a lawful and necessary person to discharge by his duty and if in result causes death of the other person, is said to have not committed any offence.
• An exception of Section 339 states that it is not an offence where a person in good faith believes himself to have a lawful right to obstruct another person private way over any land or water. 
• It is an exception of Section 499 which states that any opinion expressed in good faith respecting the conduct or character of a public servant or respecting the merits of any case decided by a court or respecting the merits of any performance of an author or any charge made in good faith by a person to protect his and other interests is not an offence.

Conclusion

The expression ‘good faith’ is distant from being absolute and obvious, as we often consider it as the standard of behaviour of a person. Whatever according to us is reasonable and apt and also done with due care and attention we think it as if it is done in good faith.

The interpretation of good faith for our own understanding is easy while we compare it with behaviour but it becomes difficult to define it in words as we have a tendency to say that what is not morally wrong or bad is good but nowhere the term good faith is particularly and in a simple language defined.

But good faith if proved in any case can save a person where the trial against him is going on.

Apart from having the relevance of good faith in the Indian Penal Code, it has also been seen it’s significance in the Contract law. 

References

• http://www.shareyouressays.com/knowledge/good-faith-section-52-indian-penal-code-1860-summary/111713
• https://www.legiscompare.fr/web/IMG/pdf/13._CH_5_Good_faith.pdf
• http://www.shareyouressays.com/knowledge/section-52-of-indian-penal-code-1860-explained/118538

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

The post Interpretation of ‘Good Faith’ under IPC appeared first on iPleaders.

This article is written by Devansh Sharma, a first-year student at Law School, Banaras Hindu University. In this article, the author discusses Piracy and ways to avoid piracy. The writer also provides for Strategies and steps to follow in order to tackle losses created by Pirated contents.

Introduction

Due to technological advancements and an increase in the field of broadcast and entertainment, the threat of piracy of content has increased manifold. The producers and developers of such contents are always under a constant fear of their content being pirated. 

In recent years, the world has acknowledged many incidents of content piracy, most famous of these cases are the leak of HBO’s Juggernaut and episodes of the well-known Game of Thrones. Though there are certain ways through which the leading producers have figured out how to protect their content against piracy. It still baffles many when it comes to dealing with piracy when it is committed and the strenuous task of handling. Mitigating the losses after the commission of piracy is even more perplexing. 

So, in this article, we will look at some of the techniques that can be used in the process of dealing with losses caused by piracy.

What is Piracy and how does it affect?

Piracy in simple terms can be understood as the illegal copying of copyrighted content and releasing it in the public domain, at no or lower price than the original, in a grey or black market. These kinds of piracy activities have become so rampant that it leads to a huge loss being incurred on the part of the producer. The act of piracy is executed in many ways like video piracy, cable piracy and, CD/DVD piracy.

There are certain laws formulated to prevent piracy but their implementation and enforcement in developing countries like India do not get national-level attention due to certain other issues at hand. Today sites like pirate bay, torrentz2, Bolly4U, etc. act as great internet sources for pirated content in India and all over the globe.

So, if I ask how much money do you (the Producer) stand to lose if your feature film lands on Pirate Bay or any other such site? 

1. None;
2. Nearly 20% of the total revenue;
3. Nearly 40% of the total revenue.

If you choose to go with the first option then you are likely under the false impression that piracy brings good publicity, and that is not how the internet works. In most of the piracy cases, the estimated loss is up to 20% of the total revenues. But in severe cases of piracy, it may range up to 40% or more. Movies like Udta Punjab, Tera Kya Hoga Johnny, Mohalla Assi, Paanch, have faced the fate of being pirated even before their release.

It was more cruelly ironic in the case of Mohalla Assi and Paanch, as these movies got released commercially years after they were available to download from the internet. Now, when you understand how drastic can the effect of piracy be, let us discuss some steps that could be followed to prevent piracy from happening.

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Steps to avoid Piracy

Piracy gains nourishment from the users who are looking for free and easily available content on the internet. So, in order to break the chain of transfer of pirated content, the producer must target the receivers of such information. The receivers of the content on the internet can be categorised into the following three types:

• The Hardcore Fans: This is the audience that prefers legal and original work of the producer. They are generally admirers of the producer’s work, who at all costs will access to the content in a legitimate way. Thus, producers can be sure of such an audience’s support. 
• The Pirate Pigeons: These individuals will never be willing to buy a legal copy of the producer’s work. These can include weird hackers considering themselves to be lofty ideals or just college students or less privileged individuals, who just do not have cash available to subscribe to a genuine source, but are real fans of your work or it could even be people from countries where there are no legal copies available. So, bothering these two extremes could be just a waste of time for the producer in the hefty hour of an instant solution. Hence, you (the producer) must focus on the middle of the spectrum i.e., the third category. 
• The Easy Goers: This is the kind of audience that would prefer to choose between paying for your content or pirating it depending on the availability and pricing of your product. Piracy can be difficult to annihilate, but there are obviously other ways to deal with piracy. 

Awareness and Education

In the present scenario, what appears to be one of the major factors supporting piracy is the lack of consciousness among the common mass, of it being a crime. It becomes utmost necessary to break this casual attitude of people towards such kind of piracy activities. To the one working in the industry, piracy is a well-known form of crime but to those outside the industry, it becomes a casual act being performed at a regular basis by a varied group of people. 

These acts include password sharing, sharing downloaded media and content on social sites, uploading file of content on various public platforms and downloading pirated files from unauthorized domains. There were even public reports announcing that upto 42% of GenZ viewers were sharing their login credentials. These kinds of activities prevail as it takes the form of a normative crime (an act performed by ‘everyone’ and thus no longer appears illegal because the behaviour is considered normal)  in the eyes of the users subscribing to such kind of acts.

The technique of reminding the viewers that piracy is morally wrong and a crime, has proven efficient in many cases. It has helped many producers to bring down the number of pirated subscriptions. The effect of campaigns highlighting the role of organised crimes in pirate activities, exposure to malware and inappropriate material, and the danger to advertisers of negative brand association with pirate sites have made a huge effect on the masses preferring pirated content. 

Barriers to Entries

On one hand, while you want to make the legal alternative easily available to the users, on the other, you want to make it harder for the pirates. The era of unprotected content is long gone. The content owners and producers try to protect their investments and intellectual property at all cost. In order to achieve such protection, they should try striking licencing deals with operators who can demonstrate that they take such threats to revenue streams seriously in turn.

The strategies to guard against the acts of piracy have evolved with time. Where once card-based Conditional Access Systems were as sophisticated as operators could get, the move towards IP and OTT delivery has brought the necessary transition to the software-based Digital Rights Management.

Even if there is no single technology that can guarantee security, but still, the best practice can be the use of a multi-disciplinary approach, encompassing both preventive anti-piracy measures and the two criteria governing detection and enforcement.

Technology and operation

As it is clear that one cannot fight a ghost or an invisible being, it becomes extremely essential to locate the enemy in conflict. The producer needs to know what content is being pirated and where. This includes the ability to identify the content which a live pirate is streaming from the producer’s own video ecosystem. It requires technical intervention at the pre-transmission stage.

The key to success here is monitoring, whether automated (there have been some interesting developments in Artificial Intelligence monitoring of both deployed and under development video streams) or human-led. In today’s world, at least a hybrid solution is typically deployable.

Once the producer is able to detect a breach, he must proceed with swift actions necessary to deal with it. Its importance has increased in recent years as piracy has pivoted towards real-time streaming. The most lucrative being the illegal revenue streams associated with the live sport in particular ( the premium prices set for accessing sports contents is making it a prime target). In such conditions, high-level agreements with search engines and social networks consumers use to locate pirated content act as the key to rapid and real-time actions.

Legal & enforcements 

There are a variety of counter-measures that can be taken by the TV service providers to interrupt and remove pirated content. These measures range from the traditional take-down notices to increasingly sophisticated real-time messages. With the help of anti-piracy services, operators can identify consumers involved in illegal streaming of content and incentivize them in order to make them switch to legitimate sources of service. These actions can scale from soft to hard, or even harder counter measures can be taken that involve the introduction of law enforcement authorities.

As it is clear to everyone that the process of prosecution is comparatively slower and happens after the event of piracy, thus, speed is the key. Removing content from the internet as soon as possible is the best way to deter pirates and drive consumers towards legal alternatives.

Cooperation

Companies remain conscious of the competition at all levels of the broadcast chain. Thus, losses to content piracy are too great for them to not to shift their focus and concerted effort at. All the above methods, discussed in this article, start to drizzle out even if there is a single bad link in the chain. The bad link can even be the producer who is lenient with his content being pirated or doesn’t know about the extent of piracy. Therefore, it becomes essential to keep checks at each level of the industry and at all steps of the process, from production and on-set content security to transmission.

The concept of herd immunity, that is also a crucial aspect of global vaccination programs, holds importance here as well. The efficiency of the overall solution increases with a better number of organisations and companies involved in the process. So, if all of the above methods are executed systematically and efficiently by all relevant producers at once, then it can be one of the biggest deterrents to pirates.

Step to mitigate losses due to pirated content

Even after subscribing to one or multiple techniques stated above, complete restriction on piracy can not be achieved. As long as the owners are producing content and are charging for providing it, there would always be pirates looking for chances to exploit the demand and supply chain and use it to their own advantage. 

So, what should be the strategy on the part of the producer if such a case of piracy pops up? There is always a need for a quick solution or strategy in such situations. So, let us have a look at all the available tactics to tackle such problems. 

Detection of piracy

If the legal copy is the only available copy on the internet then it’s great but if there is a pirated copy available online, then you (the producer) need to fight back. Getting to identify the pirated content at the very initial point can help to a very large extent. The use of software (like 

ScreenerCopy and Synamedia) can help the producer to get early alerts, warning them of their content being leaked online or pirated, even before it lands on popular pirate sites. This gives producers the time to act and formulate strategies to protect their well-earned profits. At these hours of need, Google can be the owner’s best friend.

The owner of the content must be sure to use advanced filters to adjust the time period, cross-check titles with similar wording, and add his own name or the names of the characters of his content. Alternatively,  he can also go directly to pirate sites and search there. The owner must set up a Google Alert for his content title on major piracy sites like Pirate Bay, etc.

DMCA notice

The source has been detected the procedure of sending takedown notices must initiate at once. Takedown notices also known as the DMCA letters have a set format of framing which is easily available on the internet. The most difficult part of such a procedure is getting all of the administration in order, and then locating the distinctly elusive contact details on the shady pirated sites.

The person assigned by the producer for sending DMCA notice needs to send the notice in writing to the Web hosting company, which he can learn through a WHOIS lookup. The person needs to provide at a minimum: 

• A physical or electronic signature (i.e., /s/NAME) of the person authorized to act on behalf of the owner of the allegedly infringed copyright.
• The identification of the copyrighted work that is claimed to have been infringed. 
• The identification of the material which is claimed to be infringing the copyright and any information that is reasonably sufficient to allow the service provider to locate the material. 
• Any information that is reasonably sufficient to allow the service provider to contact the complaining party, such information can be an address, a telephone number, and, if possible, an electronic mail address through which the complaining party can be contacted. 
• Any statement claiming that the complaining party has good faith/belief that use of the material in the manner complained of, is not authorized by the copyright owner. 
• A statement claiming that the information in the notification is accurate, and under penalty of perjury, and the complaining party is authorized to act on behalf of the owner of the allegedly infringed. 

It may happen that the site may not act on the DMCA notice to take down the pirated content in the first go. So, the owner needs to send some repeated copies of the notice to the infringing party. As we already know, there exists nothing like “International Copyright Law” but just some treaties and agreement among organisations to deal with piracy. Hence, these legal procedures seem to fail after a certain extent. Therefore certain strategies are needed to tackle the situation efficiently.

Strategic moves to counter losses against piracy

Once you (the producer) are able to identify the content at the initial stage of piracy, then the anti-piracy strategy that the producer undertakes needs to be two-pronged:

Pushing Forward the release date

The first and foremost thing that an owner needs to ensure at such a crucial time, is that if someone is willing to pay for the owner’s content then he/she should have that option available to him/her. Thus, pushing forward the release date can create a massive difference. This may sound dramatic but it can obviously get you (the owner) good results by doing something as simple as selling your movie on VOD platforms in territories where your distribution deals are not servicing yet. As it is possible that the biggest fan of your work may be sitting idle and complete unserved.

Make the legal copy easily accessible

After the dates have been pushed forward, the second part of the strategy needs to be implemented with the utmost efficiency. The users searching for content on the internet are by nature lazy and prefer an easily accessible option (like when was the time you clicked on the second link on the google search to find your result?).

So, if someone searches the name of your content on Google, for example, movie name( producer’s content) watch online, what they find as a result of the search (link of legal content or a pirated link) matters the most. The producer needs to make sure that the first two pages of any search, made with respect to his/her content, are flooded with links to legal means of accessing producer’s content.

This can be achieved through the technique called the Search Engine Optimization technique.

Search Engine Optimization Technique

The Search Engine Optimization techniques also known as SEO help to publicize your content to avoid pirate contents to take over. The SEO technique involves the following steps:

Creating a pitch list of 10–20 relevant industry publications and/or influencers and reaching them about a feature

Try to figure out around 10 to 20 relevant industry publications or influencers and ask them to review your content. This can prove to be a good as these influencers and publications have a wide social following and are well-known connoisseurs of their particular fields, hence people tend to pay greater heed to their views.  Provide each of the contacts of your pitch list of publications and influencers with snippets of copy, videos and graphics which you feel will interest the viewers who follow them on social media. Remember to use a secure content distribution platform to give potential reviewers the exclusive opportunity to view and review (imperceptibly watermarked and blockchain-protected) copies of your content.

Writing SEO’d blog posts and posting attractive content to social media, on the regular

Not only the publications or the influencers but you need to also figure out the members of your crew who are quite famous on social media. Ask them to start posting SEO’d blogs and other spicy and interesting stories regarding your content on social media on a regular basis. 

The key is consistent posting. Always remember that the ultimate goal of the SEO effort is to serve the need of whoever might be searching for your content online, here the keyword research comes in handy. The producer must understand the essential keywords that are used in searches related to his content and must try incorporating them in the SEO’d posts.

One of the main things to remember is that search engine ranking factors are complex and mysterious beasts. Therefore, whoever is given the ownership of creating the promotional content that the producer wants to rank on Google must try to keep the following complex factors in mind:

• Domain-Level Factors
• Page-Level Factors
• Site-Level Factors
• Backlink Factors
• User Interactions
• Special Google Algorithm Rules
• Brand Signals 
• On- and Off-Site Webspam Factors

Get proactive to create a content system built on word of mouth referrals

This can be done in the following ways:

• Asking the publications and the influencers to publicize your content by posting the reviews of your content along with small trailers and links of posted articles which helps to create a good fan base for your content.  
• If the content is available on a streaming network like Netflix, Amazon Prime, or any other Digital Distribution Platforms, then try contacting their content team and persuade them into writing blog posts and social media punts to promote your content. 
• On top of pushing your content to any and all existing social channels for your work, post anything you produce to your own /your company/brand’s Google+ profile.

Removing the Incentive

Pricing is the first and the biggest problem when it comes to piracy, and you can be sure that you cannot beat the free pirated content. So, what else can be done? One of the most effective ways of dealing with piracy is by removing the incentive for consumers to look for pirated content.

Removing the incentive basically refers to providing good quality content and good user experience to the users at an incentivized price. Disney applied the same tactics by providing its SVOD service at a minimized rate of 6.99 U.S. Dollars, as compared to Netflix’s 12.99 U.S. Dollars, to the viewers in order to minimize its losses from piracy.

In this technique, the price is not the only differentiator. Another important instrument that plays a key role is user experience. Viewers are generally attracted to sympathetic interfaces that contain sophisticated notification systems and alerts such as personal recommendations. The viewers crave for excellent video quality with no buffering and/or latency.

The more the producer/owner is able to provide at a realistic cost, the less the people will be driven towards the pirate claws. Using this technique, the producer/owner may not be able to stop everyone from watching pirated content but he/she can surely remove a considerable number of the casual illegal content consumers.

Disruption of Streaming 

Even after complying with the above procedure there will always be users who would subscribe to the pirated content. But it’s not a point to be disheartened, as there are still ways to lower the number of these users by the use of Disruption Techniques. This technique basically focuses on causing disruption by the ways of pop up messages and warning alerts.

These kinds of disruptions result in lowering the confidence of the viewers of pirated content. Imagine a situation where you stream a pirated video or a game and the video/ game gets disrupted at frequent intervals causing inconvenience in the experience of the viewer. It certainly becomes annoying to viewers and ultimately makes the viewers lose confidence in the pirated contents. This technique helps the owner reduce the number of illegal viewers to a greater extent.

Contact anti-piracy authorities

Once all the above measures are taken, the only step left to proceed with is contacting the Anti-Piracy Authorities regarding the activity of piracy. Some of the anti-piracy authority to be contacted in such (in Indian context) cases are:

• International Intellectual Property Alliance 

• Motion Pictures Association

• Indian Music Industry

• Business Software Alliance

• Industry Enforcers

Conclusion

We have discussed nearly every possible way to avoid and deal with losses due to piracy. The situation of pirated content streaming on the internet can be extremely frustrating and panicking for the producer/owner. But at this time, it is important to notice that panic on the owner’s side could create a bigger mess and complicate the situation.

So, it is advisable, to whoever dealing with such pirated activities, to keep calm and focus their attention towards executing the above process in an efficient way as the above tactics need a lot of delicate handling and any kind of complexity or mistake can lead to even greater losses to the owner. 

Try handling your team and your allies, working on this anti-piracy move along with you, with utmost confidence and attentiveness. The method of cooperation stated above is also applicable in case of anti-piracy dealing, the better the bond in cooperation the better it works. So, as an owner, you must strive to root out every possibility of a bad link in the chain of this anti-piracy move, while your team works to deter the pirates.

To know more about laws relating to piracy, please Click Here.

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

The post Steps & Strategies to Deal with Menace of Piracy & Online Leaks appeared first on iPleaders.

This article is written by Srishti Kaushal, a first-year student of Rajiv Gandhi National University of Law, Patiala, Punjab, pursuing B.A. LL.B. (Hons.). In this article, she discusses the requirements and procedure for incorporating a company under Section 8 of the Companies Act 2013, and its advantages and disadvantages.

Introduction

Have you ever wondered how can you establish a school? Or form a company to give your passion to take care of animals a professional flight? Or fulfill your dream of providing a platform for students to learn sports by opening a sports academy?

Well, to do all of this you need to establish a company under Section 8 of the Companies Act 2013.

In this article, we will understand what all companies can be formulated under Section 8 of the Companies Act. It talks about the formation of companies with charitable objects, etc, how are such companies incorporated and the advantages and disadvantages of incorporating a company under this section.

What type of company can be incorporated in Section 8 of the Act?

Not every company is formulated with the purpose of making profits. At times companies are formulated for purely charitable and non-profit purposes. Such companies are given recognition under Section 8 of the Companies Act, 2013. This section deals with the formulation of companies with charitable purposes. For this reason, these companies are often referred to as Section 8 Companies. 

This section defines such a company as a company whose primary objective is to promote art, commerce, science, sports, research, social welfare, religion, charity or protection of the environment, or any other such purpose. Such companies use all profits and income earned towards furthering their objectives and do not pay any dividend to its members. Hence, the basic purpose of the Section 8 companies is to promote welfare in society and encourage its development.

Let’s look at some examples of companies established under Section 8:

• Federation of Indian Chambers of Commerce and Industry, 
• Reliance research institute,
• Reliance Foundation,
• A deemed University like Christ University,
• Over the Counter Exchange of India (OCE), etc.

Requirements to incorporate a company under Section 8 of the Act

Before we move on to discuss the procedure for incorporating a company under Section 8 of the Companies Act, you must know about the basic documents and requirements needed for incorporating such a company. These are as follows:

• There must be at least two directors.
• At least one of the directors must be an Indian resident.
• In case the directors and promoters are Indian nationals, income tax- PAN of all of the directors is necessary. Other identity proofs which may be given along with this are Voter ID/Aadhar Card/Driving License.
• In case the director is a foreign national, passport is required as an identity proof. 
• Any proof of residence. This can include electricity bill or telephone bill etc. This document must not be older than two months.
• Latest passport-sized photo of all directors and promoters.
• Address proof of the registered office of the company. This can be the rent agreement and receipt. In case this is owned by the director, any document establishing such ownership, such as the sale deed, is required.
• Director identification number, if any.
• Digital certificate, if any.
• Memorandum of Association.
• Articles of Association.

Procedure of incorporation under Section 8 of the Act

Now that we know what all is required to incorporate the Section 8 company, let us look at what all you need to do to get it incorporated.

Step 1- Obtaining documents and arranging them

First and foremost thing you need to do if you wish to incorporate a company under this section is to collect all the essential documents, which are mentioned above.

• As prescribed in Section 153 of the Act, if any person wants to be appointed as a director of a company, he/she must apply for allotment of a director identification number (DIN) to the Central Government. Section 8 companies are no exception to this rule. The proposed directors must apply to get DIN along with incorporation in SPICe (Simplified Proforma for incorporating a company) INC 32 Form.
• Apart from DIN, Digital Signature Certificate (DSC) is also required. DSC acts as authorisation proof for online transactions and filing forms. This can be obtained from any DSC vendor (BE-Mudra, TCS etc.).

Step 2- Get the name of the company registered

This is where the process of incorporation actually begins. To get the name of your company registered you must make and log into your account on the MCA website (https://www.mca.gov.in/MinistryV2/homepage.html). 

Here, you need to open an online form by clicking on the icon ‘RUN’ (Reserve Unique Name). This form is to be filled online, and cannot be downloaded. Information that is to be given in this form includes the type of entity (Section 8 company, in our case); proposed name; comment; and also need to upload the required files if asked for. Along with the form, you are also required to pay the fees. 

A section 8 company must have a name ending with words like foundation, association, forum, federation, confederation, council, etc. 

The name approval process can take 24 to 72 hours.

Step 3- Drafting the Memorandum of Association and Articles of Association 

Once the name has been approved, you are required to draft the ‘Memorandum of Association’ (MOA) and ‘Articles of Association’ (AOA). These documents contain the objectives of the company. Before understanding this process in detail, let’s understand what these documents are.

The ‘Articles of Association’ basically contains the rules for the internal regulation and management of the company. The Memorandum of Association, on the other hand, describes the scope, objectives, and powers of the company.

The format for MOA is given in Form INC-13 and contains 13 clauses.

Step 4- Obtaining a license

Once the MOA and AOA have been drafted, you must obtain a license from the central government. For this e-form SPICe INC- 32 has to be filed along with the prescribed fees. 

It is also mandatory to mention the details of PAN & TAN in the Form INC-32. It is also compulsory to fill in the details of GST in the form. SPICe is filed along with the following documents:

• Memorandum of Association.
• Articles of Association.
• Affidavit given by the first subscriber of the company in form INC-9.
• PAN card of directors and subscribers.
• Proof of registered office.
• No Objection Certificate of owner/ director if the registered office is owned by him/her.

Step 5- Obtaining a certificate of incorporation

Once all the requisite forms are filed with the Registrar of Companies, he needs to get satisfied with the content of the documents filed. Once he is completely satisfied, a certificate of incorporation would be issued to the Section 8 company in electronic form in form INC 11. It will also be mailed to the Company (to its registered email id). 

The forms can be downloaded from the following link: http://www.mca.gov.in/MinistryV2/companyformsdownload.html

Features of a company incorporated under Section 8 of the Act

Section 8 have certain peculiar features. Let’s look at them in detail.

• A company incorporated under this section would not be treated as a small company.
• A Section 8 company would be treated as a limited company. It would enjoy all such benefits and have all such obligations as a limited company.
• There is no limitation of a certain amount of minimum capital for a Section 8 company.
• Though the company is treated as a limited company, the words ‘Private Limited’ or ‘limited’ are not affixed with it.
• The Central Government can delegate its powers to the ‘Registrar of Companies’ (CRC). This means that the application for registering the company is to be made to the CRC having jurisdiction in the area where the registered Company is to be situated.
• A firm can also become a member of a company incorporated under Section 8. However, if the firm dissolves while the company is still existing, the membership will cease. Though, individually, partners of the firm can retain their membership.
• A Section 8 company can convert itself into any other kind of company by meeting the prescribed conditions.
• A section 8 company can amalgamate only with a company with a similar objective. 

Advantages of incorporating a company 

Section 8 Companies work purely for public welfare. For this reason, they are given certain benefits. Let us look at the advantages of incorporating a company under Section 8 of the Companies Act, 2013.

• Unlink other entities, there is no prescribed minimum capital required for a Section 8 company. Their capital structure can be altered as and when required.
• A section 8 company is not required to pay stamp duty which is otherwise required to be paid at the time of registration. 
• Any of the registered partnership firms can be a member of a Section 8 company, in its individual capacity.
• There are many tax exemptions provided to companies registered under Section 8 of the Companies Act 2013. For instance, the donors of a Section 8 company, get tax deduction benefits under Section 12AA and 80G of the Income Tax Act.
• A company registered under Section 8 of the Companies Act 2013 is considered to be more credible than any other Not for Profit Organisation (NPO), like a trust. This is because, under this section, the company gets licensed by the Central Government which may put strict regulations on. This creates a more reliable image for the company.
• The duration of registering a Section 8 Company is not very long. In fact, It generally takes only around 30-45 working days (sometimes even less) to register a Section 8 company.
• A Section 8 company, just like any other company, is considered a separate legal entity. It has its own legal standing, separate from its members. Thus, it can be sued and sue in its own name. It also has a perpetual existence.
• There is a lot of flexibility in Section 8 companies since the process for transferring ownership/ title is much easier in these.
• A Section 8 company is free to not add any suffix, like limited, to its name.

Disadvantages of incorporating a company 

There are certain disadvantages to incorporating a Section 8 company. These are:

• Such a company is not allowed to alter the provisions of its ‘Memorandum of Association’ or ‘Articles of Association’ without getting approval from the Central Government.
• It cannot use its profits for any other purpose except furthering its own objectives. Moreover, it is barred from distributing its profits among the members as a dividend.
• The Central Government is allowed to place certain restrictions on the Section 8 companies. If such restriction is placed, then such a company is required to include them in their ‘Memorandum’ and ‘Articles of Association’.
• No member related to a Section 8 company is allowed to be appointed as a remunerating officer.
• The members of these companies do not really enjoy benefits. They can only be reimbursed for the pocket expenses they have incurred in the course of operations.
• Though there some tax exemptions provided on these companies incorporated under Section 8 of the Act, they are not given 100% exemption and thus, they do have to pay tax.

Conclusion

India still lacks behind in many areas in regard to education, healthcare, sports training etc. These aspects are provided by many nonprofit organisations. These NPO’s are the driving force behind the development of the society. The companies incorporated under Section 8 of the Companies Act,  2013 go a long way betterment of the society. 

To motivate more people to help society, and award those who already do so, Incorporation of a company under Section 8 is a very convenient process. It does not take too much time and comes with a lot of advantages, and relaxed norms. All you need to ensure is that you fill the correct forms and carry the right documents you can get a Section 8 company incorporated easily.

References

1. https://taxguru.in/company-law/incorporation-section-8-company-company-law.html
2. https://taxguru.in/company-law/simplification-process-incorporation-section-8-companies.html
3. https://legaldocs.co.in/section-8-company
4. https://www.icsi.edu/media/webmodules/publications/FAQs_on_Section_8_Companies.pdf

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

The post Incorporation of a Company under Section 8 of the Companies Act, 2013 appeared first on iPleaders.

This article is written by Aniket Tiwari, a first-year student at Law School, BHU. This article answers the question of how to deal with the offences committed through fake accounts & profiles on various social sites and also provides various solutions to protect a person from the fake profile.    

Introduction

For the convenience of the people, the technologies have been developed in such a way that the people can do most of the things by just a single tap on their phones. Once upon a time, people used to stand in a queue for hours just to pay the electricity bill. Now they can do all this stuff from their home through the mode of online payment. However, with the advancement in technology, there are several people who have started to misuse them. 

One of the problems that have arisen in recent times, is related to fake accounts on various social sites. The people, nowadays, make fake accounts in order to use it for various wrong purposes. Most of them are not aware of the fact that they are committing a crime by performing such activities. In this article, we will discuss how to deal with the problems related to these fake accounts and what can be done with respect to the field of law.   

Offences occurring due to fake profiles in various Social Sites

The whole world is suffering from the arduous problem of the use of fake accounts on various social sites. You all must have heard of the incidents where these fake accounts were used by various social groups in order to affect the election procedures of various countries. We all know about the incident which took place in the year 2016 where the elections in the USA were being affected by the use of fake accounts that were alleged to be made by a Russia based company. Here, it was alleged that the Russian Company tried to manipulate the people of the USA by posting messages against one of the candidates named Hilary Clinton. 

Russia was alleged to be affecting the result of the Presidential election of the USA. This matter soon became the headlines of all the newspapers around the world because these two superpowers are arch-rival of each other and if either of these countries affects the election process of another then it would be seen as an act of dominance. Also by doing such acts the country/group is also affecting the sovereignty of other nations and ultimately affecting the democratic structure of another country.

This is one of the major side effects of fake profiles. As it is the case related to the two most powerful countries in the world so it became a hot topic to discuss worldwide. However, it should be kept in mind that there are several other misuses related to a fake profile. In recent years, we have heard many incidents related to the inappropriate usage of a profile that is not real.

So often we hear about the fraud taking place by use of fake profiles in social sites or someone using a fake profile for the purpose of harassing a girl. These days cases of misrepresentation through a fake profile on social sites have become very common. The cases related to cheating through the fake profile have also increased. The cases of forgery and impersonation through a fake account have also been raised. Through this article, we will try to understand what are the offences one commits through some of the popular social networking sites.             

Click Here

Facebook

The social networking site which was used by us since our childhood is no safer nowadays. It is one of the largest social networking sites and in recent times its users have also increased drastically. It has a great population attached/ addicted to it, which can be seen from the fact that it has 2.45 billion monthly active users. But wait a minute are all these users real. In the past years, it was found that this social networking site has the largest number of fake accounts.

And the disturbance (incident about the election in the USA) about which I was talking at the beginning of this article was also because of this social networking site. Firstly, we need to understand that as it is a big platform, its impact on the people around the world is at a higher level. And secondly, it also has some major drawbacks or loopholes which are used by various anti-social groups to disturb society.

In recent times in our country too, the ambit of Facebook has increased in a very peculiar way. However, Facebook is being used for wrong purposes like making fake accounts and using those accounts for bullying someone, misrepresenting someone and for the purpose of defaming someone. There are various incidents to support these allegations on Facebook.

The incident which took place recently in the district of Sundargarh where the incident of cyber fraud took place is no different from one of misuse of a fake profile. Here the fake account of the Collector of Sundargarh was created by someone to dupe the gullible users. The miscreant used to send the friend request through his fake profile in order to trap the people, who would easily accept the request, believing that it was from the Collector. 

Once the request gets accepted the miscreant would then ask for costly gifts and financial favours by representing himself/ herself as the Collector. Here, we can see that there are many offences for which the wrongdoer can be held liable. He/She not only misrepresented himself/herself but also would be held liable for the offence of cheating (all the elements of cheating would be fulfilled once the property is delivered). Here the miscreant would be liable for cheating by impersonation given under Section 420 of the Indian Penal Code.

The creation of a fake profile on Facebook and then using it for harassing women has become very common these days. These fake accounts are mainly created by males. I remember an incident that took place two to three years back where a woman was being harassed by the fake Facebook profile. This incident took place in Gurugram where someone created the fake profile of the woman on Facebook and started harassing her.

The wrongdoer uploaded her mobile number and posted vulgar and intimate photos of her. Soon the woman started getting calls on her mobile from unknown men. Here we can understand how the fake profile created on Facebook can be used for creating mischief. It makes one’s life miserable and it affects the peace of one’s life. This small act of wrongdoer can be at a time so heinous that due to frustration one can even commit suicide.  We can not neglect these types of cases because the result of them can be grave.

You must be knowing of fake accounts with the username ‘Angel Priya’ on Facebook. There are many fake accounts of this name on Facebook. I am not saying that all these accounts of this name are fake but most of them are fake which are made by the boys in order to create a nuisance. These types of fake profiles are created and then friend requests are being sent to a no. of boys and who accept the request, believing that the profile is of a girl. Many boys get deceived by these fake profiles and some of them even end up with a monetary loss.       

WhatsApp

WhatsApp, which was created five years after the formation of Facebook and whose parent company is also Facebook, is not lacking behind in any respect. This messaging app has more than a billion users. An interesting fact related to it which should be kept in mind is that every sixth person in this world is using this messaging service.

Due to this, it becomes vulnerable to scammers. One just needs to con a tiny fraction of these users to make a serious profit. The cases of making fake profiles in WhatsApp and then using it for illegal purposes has increased in recent times. The people even use these fake profiles to spread fake news and this often leads to waging war against the nation.

The incidents of fraud through the fake profiles in WhatsApp are also increasing in our country. There are scammers who also use fake accounts in order to spread malicious software. This software could be further used for spying on someone and collecting the information which could be used for sinister purposes.

There are many incidents which took place in recent years through the fake accounts and where fake profiles in WhatsApp have been used for fallacious purposes. The ‘Asda Whatsapp Scam’ which took place in the year 2017 is the very famous incident of misusing a fake profile in WhatsApp. Asda is a very famous British supermarket retailer.

Here, in this case, the scammers used to create a fake profile in WhatsApp and then send a message that conveys the fake news related to the voucher of the Asda. The scammers then used this message to collect the personal details of the receiver of the message. The retail market of Asda refused about such voucher.

India has the largest number of social media users across social sites like Facebook, Whatsapp, Youtube, etc. The year 2019 can be regarded as the year of fake news. The spread of fake news through various social sites has increased in the year 2019.

There are many major incidents which took place in India in that year, from the general election and Pulwama attacks to the scrapping of Article 370 there is the extensive distribution of fake news in the social messaging site like WhatsApp. The anti-social elements in the society make a fake profile in WhatsApp and generate a false message in such a way that it manipulates the person reading such a message.

The main motive of the culprit is to create a disbalance in society as these kinds of messages disturb the inner peace of the nation. Fake stories, hate speeches, and rumours spread through the WhatsApp have been directly connected with the various incidents of mob attacks and lynching in the country. There are many incidents where fake news about the ongoing government was being spread through fake profiles in WhatsApp.

These are the direct examples of waging war against the nation. There are many incidents where these fake news resulted in the agitation against the government. Thus, the one who is creating such a fake profile and then using it for spreading fake news against the government can be held liable for committing the offence of sedition or waging war against the nation.       

Instagram

Instagram is among the most famous social media sites and nowadays it is widely used by the youth of every country. The trend of online shopping is increasing among youth. Also, the cases related to fraud during online shopping increased. There are various pages/fake accounts on Instagram which are used for the purpose of selling certain products like watches, mobiles, footwear, clothes, etc. These fake accounts on Instagram give lucrative offers to the customer. Here most people get trapped by seeing the massive discounts on the products which seem to be genuine. 

For example, a person can not stop himself/herself from buying the product whose selling price in other sites seems to be 3x more than the price which is shown on the fake Instagram profiles. However, it ultimately leads to monetary loss. One of my friends was also trapped by one of the fake profiles on Instagram. He ordered a headphone that cost much higher in other genuine shopping sites. But at last, he was not at all satisfied with the quality of the product that he received.

There are incidents where the fake accounts on Instagram have been used for cheating by personation. Recently the Delhi Police arrested a man for creating the fake profile of a woman.  This man created fake Instagram accounts pretending to be a woman and using those accounts for the purpose of brand promotions. The man used these accounts for luring men and extorting money from those men. The accused was found to contact genuine companies in order to do brand promotion.

The matter came to light when the woman complained to the police that someone had created a fake account in her name and using the photos of her downloaded from the original account. The woman alleged that her photographs were also used promoting escort and also in prostitution sites in order to defame her. The accused was arrested under the charges of cheating and personation which are given in Sections 420 and 419 respectively of the Indian Penal Code.

Also, most of the people using Instagram are concerned about the number of followers. There are many fake profiles made on Instagram for the purpose of increasing the number of followers of Instagram users. The celebrity in India has huge dummy profiles following them. As the normal users of Instagram do not know about this concept of the fake profile so often they become disheartened by seeing the less number of followers on their profile. It is also one of the major concerns regarding the fake profiles in India.           

Matrimonial sites

Marriage is the process by which two people make their relationship public, official and permanent. With the advancement in technology, there are several ways that are available in front of people to select their marriage partner. The concept of dating or searching for the right life partner has also developed in a significant way by the involvement of matrimonial sites in this process. 

However, nowadays due to the greed of some people these matrimonial sites are also not safe. Often we hear about the incidents of fraud through the matrimonial sites. The matrimonial sites like Shaadi.Com, Jeevansathi are among the two most famous matrimonial sites in our country. Although these sites claim the use of extensive screening processes during registration. They verify the account both via email and phone number, then also it has tonnes of fake profiles. According to some reports, these matrimonial sites have more than 50% of the fake accounts.

There are many cases where one has posted incorrect information on age, marital status or religion in his account on the matrimonial site. These are the most common problems which arise in matrimonial sites. There are some people who also lie about their salary on these matrimonial sites. That’s why even if the couple got married (where one of the partners was lying through his/her fake profile), then also the marriage will not work out when the other gets to know about the lie.

In 2015, a man was found to have nine fake profiles in the matrimonial site and through those fake profiles he used to deceive the girls. There were allegations that this person manipulated more than a hundred girls. He used to make a very impressive fake profile and after establishing contact as a bridegroom, he used to befriend the girls through chats and calls.

After gaining the confidence of these girls, he used to demand money from the girls and tell them to deposit the money in the form of cash in a bank account. After collecting the money from these girls he used to disconnect all communication from them and further create a new profile to attract new victims. He also used to blackmail the victims through semi- nudes photographs which he used to take during the video calls.

There are cases where people realize that they are victims of cybercrime once they get married to fraudsters ( when they find that the online matrimonial profile of spouse had fake details). However, these fraudsters can be held liable under Section 66-D of Information Technology Act,2000 which provides punishment for cheating by personation by using a computer resource. Here the victim can be awarded the fine of up to 1 lakh rupees.  

The online matrimonial sites can also be held liable as they are working as ‘intermediaries’ and there are certain liabilities which are associated with the ‘ Intermediaries’ under the Information Technology Act,2000. These matrimonial sites can be held under Section 79 (3)(a) of the Information Technology Act,2000. 

Along with this, if the person feels cheated he/she can file under an FIR under Sections 415,416,417,418,419, 420 of the Indian Penal Code. These sections deal with cheating and cheating with personation.                

Twitter, LinkedIn, etc.

The social networking sites where all the famous personalities are active is Twitter. Here all people come to share their opinions regarding a certain issue. There are many incidents that show how effectively this social networking site can be used for the betterment of society. But in recent times Twitter was flooded with fake accounts. Most of these fake accounts were created to increase the number of followers. 

There are other purposes for which these fake accounts are used by the miscreants. One can misuse it for defaming any famous personality. This usually happens when the opinions of two people do not match with each other. The problem of spreading fake news is also very common these days. These fake news are generally generated from fake accounts and then this news is forwarded through retweets.

There is also news related to the defamation of the President of the USA through fake accounts on Twitter. The cases of fake accounts on Twitter have increased in a very drastic way. In India also, some social media users created fake Twitter accounts in the name of ISRO and its chief Dr. K Sivan. It was done when ISRO lost its touch with Chandrayaan 2 lunar lander Vikram.

After using LinkedIn for the first time I found the site very authentic. But after going through an article, recently I found out that there are many fake accounts on LinkedIn also. It should be noted that it is very easy to make a fake profile on LinkedIn. It does not ask for any proof or confirmation of anything.

The verification process of LinkedIn is also not up to the mark. One can easily say that he/she works for a large company and gives oneself an impressive job title. LinkedIn does not notify companies about the new employee profile. Most of the miscreants use these loopholes on LinkedIn to create fake accounts. Some are using the fake photo of the person who does not even exist. 

They do it through sites like thispersondoesnotexist.com. Then they randomly start to connect to the company employee and they connect to as many employees as they can. They find it difficult to connect to the first employee of the company which they mentioned. Once they are connected with the first person then the process becomes easier.

After seeing such profiles of these fake users many companies get trapped in the illusion created by the miscreant. The users can get employment using this fake resume on LinkedIn. Further, it is easy to get paid connections in LinkedIn and it is obvious that after seeing the large strength of connection many companies also approach these fake profiles to endorse their brands.

From all of this, we can easily conclude that LinkedIn provides an illusion of trustworthiness. There are many problems with LinkedIn. Anyone can list themselves as an employee of any particular company. But LinkedIn does not provide the companies, an easy way to look after its employee roster. A person buys connections and due to these connections, many people/companies start to believe that the profile is real. Thus, LinkedIn helps to make the resume padding and makes scamming easier.          

How to identify that it is a fake profile?

We have discussed almost all the offences which one could do through various social sites. For every problem, there is a solution and we will now discuss the solution related to fake accounts. So, one of the instruments of getting rid of the problem created by various fake accounts is by identifying these fake profiles. It is a precautionary step that will prevent you from being misled through fake profiles.

Every social media site has a different structure but there are some similarities due to which one can follow the same method to identify the fake profiles. Some of the common characteristics which a fake profile has and which needed to be checked are given below:

Name: Name is the identity of the person. People generally ask the name of another person when both of them meet for the first time. In any social media account, we must look after the name of the person and very often we will get some hint that whether an account is fake or not. Names that are characteristics of a real profile. These names are generally less popular. The real profile names are pseudonyms, shortened forms of names and nicknames. Some of the characteristics of fake account names are as follow:

• Names may be the combination of the most popular names and surnames. For example – Ram, Shyam, Priya(names) + Tiwari, Dwivedi (surnames) { this is also applicable for the names in other languages}.
• Names of famous persons or politicians. For example – Narendra Modi, Virat Kohli, Rahul Gandhi (the same concept can be applied for other countries also).
• Names using the term related to the social site itself. For example – Khiladi of Facebook, Facebook Tom.
• Name that are gaudy in nature.

Profile Picture and Cover Photo: After checking the name of any person in any account we must then check the Profile Photo and Cover Photo. These photos in any profile help to identify whether the account is real or fake. Following are the characteristics of profile photo in any fake account:

• Photos of models, pictures of a healthy individual, pictures of dynamic personalities. It is done for the obvious reason of attracting others.
• Photos of a single person in the whole account. It is one of the characteristics of the fake account.
• Photos that are very well taken from a technical standpoint. (Most real people will have a bad photo which must be taken by a generic camera. These photos are supposed to be taken at some family party and it must of the time not be a professional photo shoot).
• Pictures in which people are wearing extremely luxurious tuxedos/suits etc. It is usually done to pretend to be a businessman and deceive other people in order to steal money from them.
• The photos do not give the impression that they are taken casually during the course of life or holiday trip.

Through the content shared: The next step to identify whether the account is real or fake is by checking the content shared. Typical characteristics of the fake accounts when it comes to content which the users shared through these accounts are as follows:

• Date of creation of the account. Most of the fake accounts would not show the date of the creation of the account. These accounts normally hide the creation date of the account.
• They almost share no content.
• The shared content in the account seems to be fake. They are supposed to make it look more believable.
• The profile that shows the owner to be a businessman will have a post related to their scams. The typical example of this is the post related to loan offers, sometimes fake stories of losing both legs and needing money for treatment.

Mutual contacts/ friends/ followers: The step which would help to distinguish between a fake account and real account would include the checking of mutual connections which one has with the guy who sends him/ her request. So it’s important to check the number of mutual connections/ friends/ followers. Fake accounts will usually have less number of mutuals. However, it may not be 100 per cent accurate.

However, it is important to note that these above-mentioned features may be present or absent on both the fake and real accounts. You can never neglect the possibility that there is a real user behind the names of ‘Angel Priya’ or ‘ Rajeev Gandhi’. Also, it is up to one’s own choice which profile photo he/ she will have in his/ her account. We can not say that every account with a profile photo of ‘Virat Kohli’ is fake. Maybe this is the account of one of the fans of Virat.

The same possibility arises in the case of content shared. There are also high chances where one makes the new profile so this profile will obviously have less number of mutual connections/ friends/ followers. Also, it is important to keep in mind that the presence of one or more of these characteristics which are mentioned above does not mean that someone’s account is fake.    

Section 66D of the IT Act, 2000 

It is very evident from the prima facie appearance of these types of cases are related to cybercrime. It is important to note that there is no specific definition of cybercrime in any legislature. The concept of cybercrime can be understood as a combination of crime and computer.

The cases related to offences committed through the fake profile in various social sites come under Section 66D of the Information Technology Act, 2000. Section 66D of the Information Technology Act, 2000 deals with the cases related to cheating by personation by using computer resources. Section 66 D of the IT Act, 2000 can be read under:

“Whoever, by means of any communication device or computer resource cheats by personating, shall be punished with imprisonment of either description for a term which may extend to three years and shall also be liable to fine which may extend to one lakh rupees.” 

This section provides that if a person represents himself/herself which is not real or represents himself/ herself as another person with fraudulent intent, then the victim can file a report before the Adjudicating Officer (appointed under this section). This section also says that the victim can be awarded a fine up to 1 lakh Rupees. There are rules under the Information Technology Act, 2000 which makes it compulsory for the Adjudicating Officer to hear and to decide an application in four months, and the matter needs to be decided within six months.    

If one is a victim of cybercrime then there is a legal remedy under the Information Technology Act, 2000 against the wrongdoer/ miscreant and intermediary. The victim can directly file a complaint before the Adjudicating Officer, Ministry of Information Technology. The victim can file a complaint on its own without involving a lawyer but it is advisable to take the help of a lawyer in the later stage (at the trial stage).

The format of such complaint is given below and this complaint needs to be registered in plain paper and certain fees are also required to be given (the number of payable fees is calculated on the basis of damages claimed by way of compensation).

Complaint Format

THE GAZETTE OF INDIA

EXTRAORDINARY

Part II

Section 3, Sub-Section (i)

MINISTRY OF COMMUNICATIONS AND INFORMATION

TECHNOLOGY

(Department of Information Technology)

NOTIFICATION

New Delhi, 17th March 2003

APPENDIX

PROFORMA FOR COMPLAINT TO ADJUDICATING OFFICER

UNDER INFORMATION TECHNOLOGY ACT 2000

I Complainant Particulars

1. Name of the Complainant 
2. E-mail address
3. Telephone No.
4. Address for correspondence
5. Digital Signature Certificate, if any

II Respondent Particulars

1. Name of the Respondent
2. E-mail address
3. Telephone No.
4. Address for correspondence
5. Digital Signature Certificate, if any

III  Damages claimed

Fee deposited

Demand Draft No.____________dated __________Branch_______

IV  Complaint under Section/Rule/Direction/Order etc.

V  Time of Contravention

VI Place of Contravention

VII Cause of action

VIII Brief facts of the case

 (Signature of the Complainant)

Solutions to offences committed by fake profiles

As mentioned in this article the offences through the fake accounts which are made in various social networking sites have increased in our country in quite an extraordinary way. The government of our country along with these social sites is taking various steps to cope up with these fake profiles. The government is in direct touch with these social networking sites to reduce cybercrime. 

The Ministry of Electronics and Information Technology is running a program known as “Information Security Education & Awareness” (ISEA) for the same purpose. The main motive of this five-year plan launched in 2015 is to highlight the importance of ethics while using the internet and advice related to sharing fake news. “Cyber Shikshaa” is also launched by the Govt. to reduce Cyber Crime.

However, it should be kept in mind that the Government does not regulate the content which appears on various social networking sites. After the multiple incidents of mob lynching in the year 2018, the government had given two notices to WhatsApp, with second one warning that if this incident happens due to spread of fake news continues, then the government will treat WhatsApp as “abettor” of rumour propagation and it will be followed up with legal consequences.

The Ministry of Electronics and Information Technology has drafted the Information Technology [ Intermediaries Guidelines (Amendment) Rules] 2018 to prevent the spreading of fake news, to curb obscene information on the internet, prevent misuse of social networking sites and to provide security to the users of these platforms. The new Intermediaries Guidelines will bind social media platforms like Twitter, WhatsApp, Youtube, and Facebook to respond to complaints regarding the content in a few hours against the old norms of 36 hours. 

The new guidelines under Section 79 of the IT Act will also require social networking sites to respond to reports from not only courts and government entities, but they have to respond to the reports of the general public. There is a rule which says that it requires ”disable access” within 24 hours to the content that is found to be defamatory or against the national security and other matters under Article 19(2) of the Constitution of India.

Facebook/ Whatsapp

These are the two most widely used social networking sites in the world. So if we really want to deal with the problem created by the fake accounts then we must put such restrictions on these social networking sites. Both of them have different problems and have different laws related to fake accounts. But we all know that the root cause of these problems is the same i.e. fake accounts. So, we will look at the steps taken by these social networking sites to deal with this problem of fake accounts.

The first step which one should take is to report the fake account to the service provider. Here service providers are Facebook and WhatsApp so we should report them. The steps to report a fake account on Facebook are as follows:

• Go to the fake account profile.
• Click on the cover photo and then select Report Profile.
• Then follow instructions regarding reporting a fake profile.

We can also report someone as spam in WhatsApp if we recognize the account as a fake account. Here are the steps regarding the same:

• Go to the conversation with a fake account.
• Then tap on “:” symbol that is located in the top right of the conversation.
• Now tap the “more options”.
• At last click the “click on the report”.

Last year when fake news was spreading through WhatsApp, then WhatsApp came up with certain restrictions on users to stop this spreading of fake news. One such restriction was put by limiting the number of times a WhatsApp message that can be forwarded to other people. There was a restriction that limits the number of forward to five only. This method reduces the spread of fake news in India. 

There is data which shows that Facebook has removed 2.2 billion fake accounts in the first quarter of 2019. In this report, Facebook revealed that it has removed as many fake accounts as there are real ones in the first three months of 2019.           

Matrimonial sites

The consequence and misuse of fake profiles on matrimonial sites have been discussed in this article. It becomes very important to remove these fake profiles from the matrimonial sites. These sites also follow a certain procedure to report these profiles and ultimately the matrimonial site will remove these profiles if they found the allegations correct. Here are the steps one should take to report such accounts:

• Open the profile.
• Select “Report Profile” and proceed. 
• Reporting a profile will ultimately block the fake member in the site.  

Instagram

The two major problems which are created by fake Instagram accounts are related to cheating by personation and related to defamation. Both of them are covered under Section 499 (which covers the crime of defamation and under Section 420 (which covers the crime of Cheating) of the Indian Penal Code. There are several steps which are taken by Instagram to curb these fake accounts.

If one finds a fake account where he/ she is pretending to be someone else. Then one can make a report to Instagram about the fake profile. One requires you to verify oneself while reporting any fake profile. He/she would require government id for this purpose. It can be done by the user of Instagram as well as by the non-user of Instagram.

Also, there is a rule of Instagram which prohibits exposing the private information of someone. One can report to Instagram if he/ she finds that his/her private information is being exposed. Here private information also includes posts that include your photos and videos. In these cases, Instagram will remove such posts that include your photos and videos. 

Also in November 2019, there was an announcement made by Instagram. In order to make the social networking site authentic Instagram has started deleting fake accounts. For this purpose, Instagram has unleashed machine learning tools to identify fake accounts.        

Twitter/LinkedIn

To address the problem of increasing fake accounts/ spam accounts, Twitter has come up with much tougher policies that will lead to removing these fake accounts. In May 2017, Twitter has identified and challenged more than 9.9 million fake/ spam accounts.

One can also report a fake/ impersonated profile on Twitter by following the steps given below:

• First, click on the help centre.
• Then go to Twitter rules and policy.
• Then go to Report Violations.
• At last, go to the impersonation of an individual or brand and file the report there.

Although there are many loopholes in LinkedIn and a fake profile can be easily made on this site, there are also certain rules and regulations in LinkedIn which prohibits the creation of fake accounts. One can report a fake profile on LinkedIn by following the given steps:

• First, click on the fake profile and then tap on the More option given in it.
• Then click Report/Block.
• Select Report This Profile in the “What do you want to do?”
• Give the appropriate reason for blocking the account in the “Tell us a little more” option.
• Click submit to proceed at last.  

Suggestions to the Companies to further tackle this situation

• They must follow a more rigorous step to verify any account.
• They must regularly see the working/ content in the profile that seems to be suspicious.
• They can verify the owner of the profile at the formation of the account. They can use the Government ID as proof.
• The government should be given the power to look after the content related to these social sites.
• Whenever an order is issued by the government agencies seeking information or assistance concerning cybersecurity, then the intermediaries must provide them with the same as soon as possible. 

There must be a separate department of these sites to stop fake news.

Conclusion

At last, I would like to conclude this article by putting my opinions regarding the issue of fake profiles. It’s not a crime to make a fake profile but it becomes a crime if we misuse these fake profiles. Although the government and these social sites are putting their best to cope up with these fake profiles. But ultimately we should understand the fact that these fake profiles are created by the people to satisfy their greed so it puts a moral obligation on the citizens of our country to stop making such kinds of profiles and misusing it.

References

1. https://blog.ipleaders.in/cyber-law-fake-profiles-social-media/
2. https://www.msn.com/en-in/money/news/5-dangerous-whatsapp-scams-you-need-to-know-about/ar-AAzsxDP
3. https://www.indiatoday.in/fyi/story/gurgaon-man-who-created-fake-insta-profile-of-woman-arrested-1221971-2018-04-27
4. https://www.firstpost.com/tech/news-analysis/twitter-addressing-fake-accounts-taking-tougher-action-on-abuse-4612161.html
5. https://www.newindianexpress.com/states/odisha/2019/oct/13/fraudster-creates-facebook-profile-of-sundargh-collector-seeks-mobile-phone–2046782.html

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

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This article is written by Dhruv Vatsyayan of Law School, Banaras Hindu University who is pursuing his 1st year of B.A.LL.B and is a sports enthusiast by passion. In this article, he deals with the Practice of ADR in Sports in Court of Arbitration for Sports.

Introduction

In the latter half of the last century, Sports, rather than just being a leisure activity, emerged as a growing industry. Its growth as an industry can be attributed to commercialization. 

With commercial stakes increased in this industry, an increase in various kinds of disputes was inevitable.

Conventionally, the dispute resolutions were done in Courts of Law. But, with an increase in the number of disputes, the concept of Alternative Dispute Resolution emerged.

In this article, we’ll be discussing the scope of Alternative Dispute Resolution in Sports and different aspects of it.

What is ADR?

Alternative Dispute Resolution, famously known as ADR, is a mechanism that helps in resolving disputes without courtroom litigation. Alternative Dispute Resolution primarily includes:

• Arbitration
• Mediation
• Negotiation

In other words, Alternative Dispute Resolution is a term used for the procedures, by which parties can resolve or negotiate their disputes with the help of a neutral third party.

Despite prolonged resistance to ADR, it has gained wide popularity, especially in commercial cases. This rising popularity of ADR can be attributed to an increased burden of work on the traditional courtrooms.

Thus, the means of Alternative Dispute Resolution proves to be a feasible and easy way for dispute resolution. 

Now, let’s inquire into why the need for ADR in sports disputes arose.

Need for ADR in Sports Disputes

With the emergence of sports as a multi-billion industry, the vulnerability of stakeholders involved in it also intensified. And consequently, the number of commercial disputes started to rise.

However, the cases related to disciplinary actions and anti-doping can not be resolved through this means of dispute resolution. The sports dispute or other disputes of civil nature increases the burden of the courts. There is a need to lessen the burden. So, sports disputes settled through ADR facilitates the same.

Another reason which seems practical is that most of the cases which are decided in the courtrooms take a much longer time than those resolved by means of ADR. Most of the players and clubs want their disputes to be resolved quickly as their career span is short. Thus, ADR is a viable way to resolve disputes pertaining to sports.

Click Here

Applicability of ADR in Sports 

The usefulness of ADR in Sports disputes can be understood in the words of Simon Gardiner, who writes, “The sports world is a small one, everyone seems to know the other people. Thus, relationships and reputations are worth preserving. So, by means of ADR, the disputes can be resolved within the family of sports itself”.

The usage of ADR in sports can be traced back to the decade of the 1980s, which saw a regular increase in the number of sports-related disputes having international importance.

In the year 1982, at the session of the International Olympic Committee in Rome, it was decided to constitute a Court of Arbitration for Sports, or CAS, to deal with Mediation and Arbitration in Sports. And, in the year 1984, IOC officially ratified about the formation of CAS and started its operations.

Now let’s understand what is Mediation and Arbitration, and how it works in instances of sports disputes.

Generally, Mediation as a means of dispute resolution is followed wherever the parties share a close relationship. As defined by Black’s Law Dictionary, Mediation is a method of non-binding dispute resolution involving a neutral third-party who tries to help the disputing parties reach a neutrally agreeable solution.

There are some basic principles of Mediation, which are needed to be taken care of: 

• Voluntary Participation of the Parties: To be able to successfully enter the process of mediation, it is necessary that the participation of the parties is unforced and voluntarily. It is upon the parties to choose whether they want to go to the courts or are participating in the mediation process. Also, when people are knowing that they are free to abandon the whole process, they will be cooperating more freely and wholeheartedly. For example, a player and a club are involved in a dispute and they want to get it resolved. To make the whole process more effective, any of both must not have an undue influence on the other. 
• The process should remain Confidential: All the information shared during the mediation must be kept confidential and the mediator is expected to not disclose it anywhere else.
• Mediators should be neutral and impartial: The third party, i.e. mediator is expected to remain neutral and impartial. He/she should first observe all the facts and issues involved and should refrain from giving advice or commenting on anything. 
• The settlement must be done with the satisfaction of parties concerned: The satisfaction of the parties in dispute must be taken care of by the mediator. However, the responsibility of defining the problem, setting the agenda and agreeing to the solution provided by the mediator lies with the parties themselves. Also, if at point of time during the mediation, if the mediator feels that parties are being more opposed to each other and the dispute is being intensified, then he can interrupt the mediation. 

Illustration

Let’s suppose, there are two football clubs named FC Tottenham and Athletico Roma. These teams are involved in Open Window Transfer of players for next season. There is some payment dispute, which arose in the transfer of a player, Timothy Morgan. 

So, instead of going to the court, both the parties would prefer to settle down with mediation as it will take less time and that would facilitate with fast disposal of the dispute before the next season.

Now, let’s talk about Arbitration.

Arbitration is just another form of Alternative Dispute Resolution. Arbitration is the private, judicial resolving of a dispute, by a neutral third party. An arbitration hearing may involve the use of an individual arbitrator or a tribunal.

There are some principles of arbitration too:

• The objective of Arbitration is to resolve the dispute by an impartial third party without unnecessary expenses or delay.
• The parties are solely responsible for how their dispute should be resolved.
• Judicial Courts must not interfere in the arbitration process.

Like mediation, the matters subject to arbitration are also mostly the commercial disputes involved in sports deals.

Now, let’s discuss the international body responsible for ADR in sports, i.e. CAS and it’s functioning.

Court of Arbitration for Sports (CAS)

Court of Arbitration for Sports is the apex body for the resolution of sports disputes. It was established under IOC (in the year 1984). So, such an arbitral institution was formed with a motive of speedy resolution of international disputes through a flexible, quick and inexpensive procedure.

Since its inception, this institution has also gone through various reforms. One of the major reform came in the year 1992 in the case of Gundel v. La Fédération Equestre Internationale. 

In this case, an appeal was filed against the order of CAS in the Federal Supreme Court of Switzerland. It challenged the impartiality of CAS. The question raised was that since the CAS is working as a body under IOC, it’s natural that in cases related to IOC there are chances that CAS would be biased.

The court obviously held that Court of Arbitration in Sports is a true court of Arbitration, but it also questioned about various links between CAS and International Olympic Committee.

This judgment led to various radical reforms in the functioning and structure of CAS. Most important among them is the formation of the International Council of Arbitration for Sports, i.e. ICAS.

Now the administration and funding of CAS were to be looked after by ICAS instead of IOC.

Other significant changes include the introduction of the Code of Sports-related Arbitration which governs the procedural aspect of CAS and other related organizations.

These changes also included the formation of two separate divisions for arbitration, i.e. Ordinary Arbitration Division and Appeal Arbitration Division.

Code of Sports-Related Arbitration

This code of 1994 lays down the procedure through which arbitration and other forms of ADR to be done. This code establishes rules and procedures for the following:

1. For ordinary Arbitration Procedure;
2. For Appeal Arbitration Procedure;
3. For Advisory Procedure, which provides for sporting federations to seek advisory opinions from CAS;
4. For Mediation Procedure.

Let’s discuss the code in detail.

Statutes for CAS & ICAS

Sections 1-26 of the code talks about the functioning and composition of both the bodies. 

Establishment

Section 1 establishes the formation of two sports dispute resolving bodies, i.e. CAS and ICAS and seats of both these bodies would be in Lausanne, Switzerland.

Section 2 of the code defines the purpose of the establishment of ICAS. It says that the purpose of the establishment of ICAS is to facilitate the functioning of the Court of Arbitration in Sports and ensure its independence.

Section 3 explains a little bit about the working of the CAS. It says that CAS would be maintaining a list of the arbitrators and would provide the redressal of disputes through a panel of 3 arbitrators. It also lays down that CAS would comprise 3 divisions, i.e. Ordinary Arbitration Division, Appeals Arbitration Division, and Anti-Doping Division.

Composition & Operation

Sections 4-11 talks about the composition and operation of the International Council of Arbitration for Sports. The Council would be having 20 members including experienced jurists and sports experts. The Council would comprise of 4 members from each of the following:

• 3 members from the Association of Summer Olympic International Federations and 1 member from Association of Winter Olympic International Federations.
• 4 members from the Association of National Olympic Committees.
• 4 members from the International Olympic Committee.
• Other 4 members would be chosen by the members elected above.
• And the next 4 members would be chosen by the 16 members of ICAS listed above and these members would be independent of the bodies listed above.

These members are appointed for a tenure of 4 years which may be renewed once or several times. Section 5 of the code talks about the title of Honorary Member of ICAS, for those who have contributed immensely towards the growth of CAS or ICAS.

Section 6 deals with the functions of ICAS which includes, adoption and amendment of the Code, elect the president and vice-presidents of the council, to maintain the list of arbitrators among other functions.

This code ensures that the members of ICAS would meet for at least once in a year or whenever the activity of CAS is required. The quorum required for meetings to be conducted is at least half of the total members. The voting is done in a matter of making a decision by secret ballot and the president would have the final vote cast in event of a tie.

Section 9 of the code establishes that the president of the International Council for Arbitration in Sports would also serve as the president of the Court of Arbitration for Sports.

Procedure for CAS Proceedings

The next segment of the code, i.e. Section 12-22 of the code, discusses the provisions and procedures regarding the Court for Arbitration in Sports.

Section 12 of the code discusses the responsibilities of the panel of Arbitrators appointed by CAS which are as follows:

• The foremost responsibility of the panel is to resolve the dispute through ordinary arbitration.
• To resolve the matters related to Anti-Doping as a first-instance authority.
• To resolve the disputes through appeals arbitration.
• To resolve the disputes, which are referred to them through mediation.

Section 13 of the Code provides the list of Arbitrators and Mediators and ensures that there should be not less than 50 Mediators and 150 Arbitrators in the list provided by CAS.

Section 17 of the code, establishes the provision for replacement of an arbitrator if he/she:

• Resigns;
• Die;
• Or, unable to carry out his/her functions due to any other cause.

The composition of CAS is discussed in section 20 of the code. It comprises of three divisions, i.e. Ordinary Arbitration Division, Appeals Arbitration Division, and the Anti-Doping Division.

Section 22 of the code provides for the establishment of Court Office, which would be composed of Secretary-General and other Counsels and the Court Office would function according to the code.

To read about the procedural rules in detail, please Click Here 

Procedural Rules

These procedural rules would be applied in those cases only, wherever the parties have agreed about referring the dispute to the Court of Arbitration for Sports.

Seat and Language

The seat of CAS and other panels is decided to be in Lausanne, Switzerland. However, if the president allows, the panel may hold the hearing at other places too.

The language of the CAS has been decided to either French or English, as the parties may decide. But, in case the parties are unable to decide upon the same, the panel may allow any one of these languages after taking account of all relevant circumstances.

Notifications and Communications

CAS Court Office would be making all the notifications and communications on behalf of the panels and CAS itself.

The request for arbitration and other written submissions would be made through the printed or digital medium. By means of Email, it can be communicated to the following Email address- procedures@tas-cas.org.

Independence and Qualification of the Arbitrators

The most important requirement is that the arbitrator must remain impartial and neutral. He/she shall have good command over the language of Arbitration and must be available whenever he/she is needed to resolve the dispute expeditiously.

Challenging the Arbitrator

One can challenge the impartiality of an arbitrator if legitimate doubt arises regarding his/her impartiality or independence Such challenges shall be dealt with by the Challenge Commission. The challenge shall be filed by the party raising it, in the form of a petition and shall be sent to CAS Court Office henceforth.

Removal and Replacement

After an arbitrator is challenged upon the allegations that he/she can’t carry out their duties, the challenge commission after considering all the facts can remove the arbitrator. The parties can not have a say in the removal of the arbitrators. However, the commission may invite the parties to comment on the removal.

The replacement of an arbitrator may happen in the following situations:

• Resignation of the arbitrator;
• Death of the arbitrator;
• Removal of the arbitrator or successful challenge of the arbitrator.

Provisions Applicable to Ordinary Arbitration Procedure

To initiate an Ordinary Arbitration, the following information is to be submitted in the CAS Court Office:

• Name and address of the claimant;
• Statement of facts and arguments;
• Request for relief;
• Any other relevant information.

Formation of Panel

Generally, the panel is composed of one or three arbitrators. Unless the arbitration agreement doesn’t carry any specified number, the president should decide upon the number of the arbitrators after considering the dispute.

Hearing

The hearing dates shall always be decided by the president of the panel. According to section 44.2 of the code, there will be one hearing in which the panel hears the parties, witnesses and any experts where the respondent is heard last. The number of appearances of witnesses or experts can be limited or disallowed by the panel or any part of the evidence on the ground of irrelevance.

Award

The award given to the parties is decided by the majority of the panel or the president himself in case of the absence of the majority. The reasons for the award should be mentioned in the written order unless the parties are satisfied otherwise. Dissenting opinions are not taken into account and thus, are not notified by CAS.

Provisions Applicable to the Appeal Arbitration Procedure

In CAS, an appeal may be filed against the decision of a federation, association or any other sports-related bodies. An appeal may also be filed against any award given by CAS as a first-instance authority.

Statement of Appeal

The statement of appeal must contain the following information:

• The name and the address of the appellant;
• The copy of the decision against which the appeal is filed;
• Request for relief;
• Application to stay the decision which is appealed against.

Number of Arbitrators

The appeal must be submitted to the panel of three arbitrators unless the parties have agreed upon any other composition for the panel of arbitrators. In the absence of any sort of arbitration agreement between the parties regarding the number of arbitrators, the President of the Division would decide upon the number of arbitrators for resolving the dispute. This also includes whether or not the Respondent pays its share of the advance of costs within the time limit fixed by the CAS Court Office.

The nomination of Arbitrator by the Respondent

The arbitrators may also be nominated by the respondent or the party. The respondent can nominate the arbitrator within 10 days after the receipt of the statement of appeal. In absence of above, the president of the division shall make a decision regarding this.

Scope of Panel’s review

The panel of arbitrators has full authority to review the facts of the dispute and appeal. After taking account of the circumstances and fact, the panel in consultation with the parties may also decide not to hold a hearing.

In case, if any of the parties, or witnesses, after being summoned, fails to appear, the Panel may proceed with the hearing and can render an award ex parte. 

Award

Award in cases of appeal shall be given according to the provisions as laid down under provisions applicable to Ordinary Arbitration Procedure.

Conclusion

These days when everyone wants a speedy dispute resolution, the means of Alternative Dispute Resolution becomes important. In cases of sports-related disputes too, the role of ADR becomes important as the teams and parties want speedy disposal of the cases.

To invoke the means of ADR, it is necessary to have a written agreement between the parties. While drafting the arbitration agreement, one needs to be mindful of all the possibilities of dispute and should draft the clauses after taking all the permutations and the combinations into account. In case of ambiguity in the arbitration clauses, the execution time may delay, the court can grant award to another party in case of absence of such clauses or the award given in favour of the party can easily be challenged.

References

• https://www.lawinsport.com/topics/features/item/dispute-resolution-in-sport-athletes-law-and-arbitration-2015
• https://www.lexology.com/library/detail.aspx?g=141bfc07-26b5-4fd7-968a-ee7faa6a0e86
• http://mediationblog.kluwerarbitration.com/2012/06/09/everyone-wants-to-win-mediation-in-sports-disputes/
• https://www.tas-cas.org/en/arbitration/code-procedural-rules.html
• https://scholarship.law.marquette.edu/cgi/viewcontent.cgi?article=1609&context=sportslaw

To know more about Sports Arbitration in India, please Click Here.

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

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This article is written by Pearl Narang, pursuing a Diploma in Advanced Contract Drafting, Negotiation and Dispute Resolution from Lawsikho.com. Here she discusses “Regulation of Encrypted Online Communication Services Around the World”. 

Introduction

In 2016, the Federal Bureau of Investigation and Apple.inc got into a public fight once Apple refused to permit the bureau to access its system through a backdoor to the iOS. In 2019, US, UK, and Australia conjointly requested Facebook to stop its end-to-end encryption plans. Governments all over the world have tried time and again to limit encryption in order to gain access to information.

What is Encrypted Online Communication?

For most of us, communicating online has become a habit. From our personal photos to our credit card numbers, everything is online.  We have a tendency to upload heaps of information on the internet without considering the consequences of our data ending up in the hands of government officials, hackers, or service providers. This is why we need encryption.

Encryption is a way of encoding information so that only an authorized person can access it. All of us have seen the yellow bubble which appears in every WhatsApp chat window that states “Messages to this chat are secured with end-to-end encryption”. The message in the bubble means that only you and the intended receiver can read the message. No third party, not even WhatsApp can have any access to it. This kind of communication is known an Encrypted Online Communication.

Say, for example, you send a message to your friend:

Hey! Let’s meet up.

To your friend the message will look like this: 

Hey! Let’s meet up.

To any unauthorized person, the message will look like this:

wUwDPglyJu9LOnkBAf4vxSpQgQZltcz7LWwEquhdm5kSQIkQlZtfxtSTsmaw

Ways of Regulating Encryption 

Governments all over the world try to regulate encryption for reasons of national security, law enforcement and foreign policy. There are a number of ways governments regulate encryption. 

1. Backdoors

Backdoor is a method through which encrypted data can be accessed undetectably. Governments repeatedly try to pass laws that require communication providers to install backdoors in their systems so that, they can get access to information and spy on terrorists. 

2. Encryption Standards

Quality of encryption is judged by how easy it is for a third party to determine the original content of an encrypted message. To regulate encryption in their countries, governments have set encryption standards. Data Encryption Standards or DES was an early encryption standard endorsed by the United States National Institute of Standards and Technology. It was replaced by Advanced Encryption Standard (AES) which is said to be more secure with its key size of 128, 192 or 256 bits.

3. Key Escrows

Key escrow is a method in which a “key” is kept with a third party i. e. an escrow, so that, if the intended user loses the information it can be retrieved by the third party. 

How is Encryption Regulated Around the World?

India

Encryption is a hot topic of debate in India. There is no single legislation that governs encryption. Rules that regulate encryption are fragmented across a number of legislations of various sectors. These laws either regulate encryption or allow access to encrypted information to the government. These are: 

1. The Indian Telegraph Act, 1885

The Indian Telegraph Act is the principal legislation which regulates communication India. Section 4(1) of the Act empowers the Central Government to establish, maintain and work telegraphs within India. Section 3(1) of the Act, defines the term ‘telegraph’. The definition includes,

“… any appliance, instrument, material or apparatus used or capable of use for transmission or reception of signs, signals, writing, images, and sounds or intelligence of any nature by wire, visual, or other electro-magnetic emissions, Radio waves or Hertzian waves, galvanic, electric or magnetic means.”

This definition gives the government exclusive monopoly over all electronic communication and also includes the power to regulate telecommunication and internet services in the country.

2. National Telecom Policy, 1999

Under the policy, the government allowed the private players to provide these telecommunication and internet services by entering into licensing agreements with them. The version of the agreement depends on the type of technology provided by the private party.

The encryption limitations in two such agreements which have been made publicly available by the government include:

License Agreement for the Provision of Internet Services

Clause 2.1(vii) “The Licensee shall ensure that Bulk Encryption is not deployed by ISPs. Further, Individuals/ Groups/ Organizations are permitted to use encryption up to 40 bit key length in the symmetric key algorithms or its equivalent in other algorithms without obtaining permission from the Licensor. However, if encryption equipment higher than this limit are to be deployed, individuals/groups/organizations shall obtain prior written permission of the Licensor and deposit the decryption key, split into two parts, with the Licensor.”

This clause prohibits bulk encryption by the internet service providers and also places a limit on entities to use encryption up to 40 bits. The entitles can increase encryption only after taking permission from the licensor i.e. the government. 

License Agreement for Cellular Mobile Telephone Service

Clause 42.1 “The Licensee shall not employ bulk encryption equipment in its network. Any encryption equipment connected to the LICENSEE’s network for specific requirements has to have prior evaluation and approval of the LICENSOR or officer specially designated for the purpose.”

This clause also puts a limit to the use of encryption and mandates government permission if the encryption limit exceeds 40 bits.

3. The Information Technology Act, 2000

The Information Technology Act, 2000 is the Act that regulates all electronic and wireless modes of communication. The Act does not have any provision or policy on encryption. However, Section 84A of the Act empowers the Central Government the authority to frame any rules on the use and regulation of encryption. The government, however, has not made any laws to regulate encryption so far. 

The terms of the Unified Service License Agreement also explicitly prohibit bulk encryption (Clause 37.1), they do not prescribe to a 40-bit standard. Rather, they state that the permissible encryption standard under this Agreement will be governed by the policies made under the Information Technology Act, 2000(Clause 37.5). 

Section 69 of the Information Technology (Amendment) Act, 2008 gives power to the central and state government to direct any agency to intercept, monitor or decrypt any information stored on computer sources. This access is granted only if the information is related to:

1. Interest of the sovereignty or integrity of India,
2. Defence of India, 
3. Security of the State, 
4. Friendly relations with foreign States,
5.  Maintenance of public order,
6. Preventing incitement to the commission of any cognizable offence relating to above or,
7. Investigation of any offence.

4. Other Sector Specific Regulations

In addition to the above regulations, there are other sector specific regulations which prescribe a length of more than 40 bit for encrypting data. These regulations are:

Securities and Exchange Board of India (SEBI) Guidelines on Internet based Trading and Services

SEBI has prescribed a 64/128 bit encryption standard to secure transactions and online tradings. It strongly recommended in its report that “128 bit encryption should be allowed to be freely used”. 

Reserve Bank of India (RBI)

RBI released its Report on Internet Banking in 2001. In its report, RBI set a minimum security standard of using Secure Sockets Layer for server authentication and the use of client side certificates. Key length of 128-bit is the standard for encryption for communication between browsers and the server.

5. The Information Technology Procedures and Safeguards for Interception, Monitoring and Decryption of Information Rules, 2009

According to the rules, the Government can issue a decryption order for investigation of any offence. The rules also mandate that the orders for decryption must be examined by the review committee. The committee is set up under Rule 419A of the Indian Telegraph Rules. 

The review committee has to convene once every two months for the purpose of investigation.

Europe

The European Union states no requirement that law enforcement authorities get access to encrypted materials. It does not require any agency to decrypt communications in response to a government request. Member States of the EU have their own laws that regulate encryption.

United States of America 

The US does not have any general right to encryption. However, it has certain legislations that regulate encryption across various sectors. 

1. Gramm-Leach-Bliley Act: The Act is applicable to, 

1. Financial institutions and organizations within the United States (such as banks, securities firms, insurance companies, and other financial service providers). 
2. Institutions which are involved in providing financial products or services to consumers.

The law secures consumer’s data by penalizing companies that violate the provisions of the Act. 

2. Communication Assistance for Law Enforcement Act, 1994: Section 103(a) of the Act directs all telecommunication carriers to ensure that all their equipment which enables communication has certain capabilities. The capabilities include interception of communications and delivering the intercepted communication to the government.

3. The United States also imposes import and export controls on certain forms of encryption. The provisions relating to import and export controls are laid down in the International Traffic and Arms Regulations and the Export Administration Regulations.

4. California Consumer Privacy Act, 2018: The Act applies to California. It is only applicable to organizations

1. Share the personal information of at least 50,000 consumers and have more than 25 Million in their gross revenue. 
2. Derive 50% or more of their revenue from selling consumers’ personal information. 

The law states that organizations have to encrypt and secure data of their consumers, if they fail to do so they will be liable to be sued by their consumers. 

Australia

1. The Telecommunications Act, 1997: The Act lists three kinds of requests and notices that the government can issue to the telecommunication service providers: 

1. Technical Assistance Requests: Through this request law enforcement agency can ask the service providers take certain steps to ensure that the service provider is capable of giving help to the agency for the purpose of national security. 
2. Technical Assistance Notices: They require that the service provider take certain steps to help the law enforcement agency for the purpose of national security.
3. Technical Capability Notices: These can only be issued by the Attorney General and require that the service provider take certain steps which would ensure that the provider is capable of helping the security agencies in matters of national security. 

2. Cybercrimes Act, 2001: Section 3LA of the Act states that, if a law enforcement officer has a warrant, then the person who has knowledge of the computer shall assistance that is reasonable which allows the constable to:

1. Access the data held a computer or data storage device. 
2. copy data held in, 
3. Convert into documentary form or another form intelligible to a constable. 

Provided that, the computer or storage device,

(i) is on warrant premises; or

(ii) is at a place for examination or processing; or

(iii) has been seized under the Act

Non-compliance with the provision would be punishable with 6 months Imprisonment.

New Zealand

1. Telecommunications (Interception Capability and Security) Act 2013: Section 9(1) of the Act directs all network operators to ensure that all public telecommunications networks and services have “full interception capability”. 

1. Search and Surveillance Act 2012: Section 130 of the Act states that a person who has a search power can require another person to decrypt an encrypted information. If a person fails to decrypt or assist the person with the search power, he or she can face imprisonment up to 3 months.  

United Kingdom 

1. Regulation of Investigatory Powers Act, 2000: Section 49 and 50 of the Act, regulates the investigation of electronic data protected by encryption. It allows law enforcement agencies, to direct a person who holds encrypted information to produce the data in an intelligible format or to provide the key for its disclosure. If the person fails to do so, he or she is liable to be punished up to five years’ imprisonment in cases involving national security or child indecency, and by up to two years’ imprisonment in cases relating to any other offence.

2. Investigatory Powers Act, 2016: Sections 254 to 259 of the Act regulate “technical capability notices”. They allow the Secretary of State, when they consider it to be “necessary” and “proportionate”, and with the authorisation of a Judicial Commissioner, to impose a “technical capability notice” on a service provider imposing certain obligations. Such an obligation could include that service providers have to remove encryption that they have applied on communications.

Canada

1. The Canadian Charter of Rights and Freedoms: Section 8 of the charter states that “everyone has the right to be secure against unreasonable search or seizure”. This provision also applies to any law that limits encryption in Canada.

2. Export and Import Permits Act: Under Section 3 of the Act, the government establishes an Export Control List. The items on the list require an export permit before they can be exported from Canada. This list includes certain forms of cryptography as well.

3. Personal Information Protection and Electronic Documents Act: The Act applies to private-sector organizations that handle Canadian consumers’ personal data for commercial activity. 

The Act states that individuals and the Office of the Privacy Commissioner of Canada (OPC) can file complaints against companies, who do not,

1. use collected personal data as directed or,
2. Implement appropriate security safeguards. 

Organizations can be penalized for non-compliance.

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

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This article is written by Aarchie Chaturvedi, a first-year student pursuing B.A.LLB from the National University of Study and Research in Law, Ranchi. This article is about the top 10 law blog websites in the year 2019 and a brief about what these blogging websites actually work for.

Ranked as per estimated visits per year

Introduction

Reading and learning are the cornerstones of the legal profession. Knowledge is not meant to be caged in the mind of the thinker alone but is meant to be shared because it is only then that knowledge will grow and will ultimately have a fruitful effect on the society.

Legal websites and blogs provide a platform for thinkers and readers to think, research and share information for the overall improvement and development of law in the 21st century where the world runs with the help of the internet. 

Most of these platforms are in the form of online legal search portals stacked with statutory Indian data. The blogs and portals analyze Indian case laws in great depth and some of them also provide study material for the students. Following are some of the most famous and most browsed online legal blogs and websites in India  which a legal practitioner, enthusiast or student should follow:

Disclaimer: The above data has been taken from https://www.similarweb.com/  and https://www.worthofweb.com/calculator/

Bounce-Rate: Bounce rate is an Internet marketing term used in web traffic analysis. It represents the percentage of visitors who enter the site and then leave (“bounce”) rather than continuing to view other pages within the same site.

About the websites

Indian Kanoon 

Indian Kanoon, a law understanding tool used by students for understanding judgments was founded by Sushant Sinha in the year  2008.

What is its main function?

Firstly, finding the most applicable sections from hundreds of pages of law documents is too daunting for common people. Secondly, laws are often vague and one needs to see how they have been interpreted by the judicial courts. Currently, the laws and judgments are separately maintained and to find judgments that interpret certain law clauses is difficult.

In order to remove the above two structural problems, Indian Kanoon was started. By breaking law documents into the smallest possible clause and integrating law/statutes with court judgments, it achieves its purpose.

LiveLaw

It was created in 2013 by Rashid M.A. It is the largest blog platform in India. 

What is its main function?

They wanted to create awareness in society by being a source of honest and correct information. They try to provide a space for constructive criticism of the judiciary.  

iPleaders

iPleaders was established in 2010. It was founded by NUJS graduates Ramanuj Mukherjee and Abhudyay Agarwal.

What is its main function?

It is an education start-up whose main purpose is to make legal education accessible for students. It focuses on legal issues and legal questions. It also provides notes and studies material for free.                           

Path Legal

Path Legal a lawyers directory founded by Sunil Joseph (who is the current CEO also) in the year in the year 2011.

What is its main function? 

It provides legal advice online, telephone consultation, free legal advice, free LPO training, legal papers, free legal case management tool and much other legal software.

Lawctopus

It was founded in 2010. Tanuj Kalia is the CEO and founder of Lawctopus.

What is its main function?

Lawctopus is a site exclusively for law students. It advises students regarding their career, internships and other opportunities that they can grab. It is one of the most popular and most trusted websites. 

Bar & Bench  

Bar and Bench is established in 2011. 

What is its main function?

It is a comprehensive news and analysis portal for the legal community. Bar and Bench provide the newest information on interviews, news, and columns spanning the entirety of the legal spectrum.

SCC Online

Eastern Book Company-an internationally renowned publishing house and recognized leader in the field of law publishing in India for more than 75 years.

It was in the 1940s when two brothers, Late Shri C.L. Malik and his younger brother, Late Shri P.L. Malik, decided to settle in Lucknow and embark on a law bookselling and publishing career. Together they laid the foundations of what has today grown into a group of companies under the banner of Eastern Book Company-a group recognized and respected for its contribution to legal literature around the world.

Reliable and comprehensive law reporting of the Supreme Court of India has been achieved through EBC’s weekly law report since 1969, the Supreme Court Cases (SCC online).

What is its main function?

Its main function is to pioneer law information databases using the finest of technology and innovations to make law easily accessible in the electronic medium. This Information Database and search program is a proven source of quick retrieval of Indian Supreme Court case-law precedents.

Legally India

One of the leading blog pages in India; it was founded by Kian Ganz. It was established in the year 2009.

What is its main function?

Legally India reports news and information pertinent to Indian law firms,  Indian lawyers, international law firms and business lawyers in India.

Vakilno.1

Vakilno.1 is a group of lawyers and legal experts in India who are passionate about providing the latest information and articles on the Indian legal system.

Law Times Journal

India’s one of the leading online educational portal devoted to the law that was founded in the year 2014.

What is its main function?

Law Times Journal inculcates ‘ free education ‘ ideology in the Indian Legal sector. It also provides services and tips for the resume and improvement of C.V. which would be instrumental in obtaining the desired internship for young students. Student review of their respective law schools is an integral part of this portal that would provide first-hand accounts of the present students to the prospective law students.

If you want to know about the top 10 Legal websites in the world in 2019, click here https://blog.ipleaders.in/top-10-legal-websites-in-the-world-in-2019/

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

The post Top 10 legal websites in India in 2019 appeared first on iPleaders.

This article is written by Aarchie Chaturvedi, a first-year student currently pursuing BA-LLB from the National University of Study and Research in Law, Ranchi. In this article, she discusses the evil of acid attack in Indian society.

Introduction

“Acid is a weapon; You know how America is talking about guns? That’s how acid is used in India.”

These were the words of an acid attack victim published in a newspaper report. They show the mental conditions of the survivors of acid attacks. In reality, they feel equal or more hurt, in their lives than a person who is shot with a bullet. It is very difficult for them to heal. According to Tania Singh, the CEO of ‘Make love Not Scars’ approximately 300 cases of acid attacks are reported every year and there are 1000’s of cases that go unreported. This crime can happen to anyone irrespective of their gender, class, caste, sex, religion, and age. However, statistics show that it mostly happens with women. In very few cases the cause for this crime is land and property dispute otherwise majorly, the most common reasons for this crime are the refusal for marriage, the denial of sex, or the rejection of romance by the female gender. This crime is instigated by deep-rooted jealousy, feelings of enmity, hatred or revenge against the women. In this article, we will be dealing with the various laws in India covering this offence, the afterlife of a survivor, landmark cases and the success story of some of the survivors.

Acid attack as discussed under IPC 1862, and Indian Evidence Act, 1872

Now let’s first discuss what is acid. The Indian Penal Code does not provide a definition as to what is an acid.

Acid is a substance with a PH below 7, sour taste, releases hydroxyl and turns litmus paper red. Strong acids are corrosive in nature while weak ones are harmless. Sulphuric acid or hydrochloric acid which are easily available in the market are used by men as a weapon to exploit women. At some places where acids are controlled substances, aqueous solutions of strongly alkaline materials such as caustic soda are also used.

Throwing of acid or any inherently dangerous or corrosive substance is commonly referred to as ‘Acid Attack’. In many cases, the victim was attacked by a man or a group of men known to her. 

Causing grievous hurt by weapons or other means was not very successful in dealing with this heinous crime. Hence the 18th Law Commission headed by Justice A.R. Lakshmanan proposed a new Section 326 A and 326 B in the IPC and Section 114B in the Evidence Act. 

Section 326 A of IPC states that whoever causes grievous hurt to a person by administering or throwing acid on them, with the intention of causing such injury or with the knowledge that he/she can cause such injury, causes injury in the form of partial or permanent damage, burns or maims, disfiguring or disabling of part or parts of body then under these circumstances he/she would be liable for imprisonment for a period of not less than 10 years which can be extended to life accompanied with fine. The text of this section further also contains some clarifications which are as follows: 

• All damages must be just and reasonable so as to meet the medical expenses of the victim.
• All damages would be given to the victim.
• For the purpose of this particular section, the word ‘acid’ is not restricted to those substances which show properties of acid according to science but the word acid here means all the substances of corrosive or acidic nature which can cause burns or are capable of causing bodily injury or scars which can lead to disfiguring/disability in the body temporarily or permanently.
•  For the claiming of damages for compensation under this crime, the injury caused need not be of irreversible nature.

Section 326B of IPC further lays down the punishment for the attempt of throwing acid on someone. According to this section, a person for an attempt to throw acid shall be liable for punishment that would be of minimum 5 years which can even be extended to 7 years accompanied by a fine.

Section 114B, of Evidence Act, added by the Criminal (Amendment) Act, 2013 states that if acid is thrown or administered on one person by the other person, then the court in such circumstances will presume that such an act has been done with the intention of causing bodily injury as mentioned in Section 326 A of the IPC.

Consequences of Acid Attack on the victim

“People say inner beauty matters, but in reality, only a few people go beyond physical features.” These were the words of an acid attack victim, Lakshmi Agarwal. After the incident took place Lakshmi could not understand what happened. She was so traumatized that she didn’t even touched her face or looked at the mirror for months. She even contemplated suicide. The condition of Lakshmi is no different from other victims. Her story depicts how horrified or shocked each victim of an acid attack is after such incident happens to them. Let us discuss in detail the various consequences of such a crime.

Injuries and Physical Consequences

Acid is capable of eating two layers of skin. Sometimes when acid is thrown, not only the fat and muscles are broken down but also the bone is dissolved. The depth of the injury depends upon the power of the acid and the duration for which it was in contact with the skin. As soon as the acid comes in contact with the face of the person it quickly eats into the eyes, ears, nose and mouth. Eyelids and lips may burn off completely. Ears wither up. The nose may fuse closing the nostrils. Wherever the acid may drip from the face, neck, shoulders or arms, it burns everywhere. Burning would continue until the acid is completely washed off with water. 

The worst and the most immediate danger for the victim is breathing failure. Inhaling of acids can create breathing problems in two ways:

• By causing a poisonous reaction in the lungs, or
• Swelling of the neck which obstructs the airway and strangulates the victim.

After burns heal, scars are formed. The scars pull the skin very tight and cause disfigurements. Some examples of disfigurements are:

• Eyelids may not close; 
• Mouth may not open, lips tore down;
• Chin becomes wielded to the chest;
• The nose is shrunken, nostrils are closed completed, cartilage may be destroyed;
• Cheeks become scarred;
• The chest may have narrow lines or the wide spots of the scars caused by the acid that dripped or sprinkled upon it;
• The shoulder may be damaged to the extent that the victim’s arms movement may be restricted.

Social consequences

Lakshmi Agarwal (the acid attack victim) mentioned in one of her interviews that people in the society, mostly women taunted her, spoke ill about her and her family. Pain is not only internal but also external imposed by the comments and the taunts of the society. Society does not accept them as a normal human being. You continue to face discrimination from society for years. Victims are not able to leave their homes thinking they would be made fun of. They fear the antagonistic attitude of the general public towards them. Victims who were not married are unlikely to get married evin the future.

Economic Consequences

The victims because of their disability are unable to work which leads them to be dependent on someone else for their food & shelter. Even if the victim is able to do some work, they won’t get any work. The employers while assessing the qualification, talents, and capabilities also tend to assess the looks of the individual which often leads to these victims being rendered jobless. 

Psychological Consequences

Not only victims feel shocked or traumatized in general but they also feel traumatized in the way they feel and think about themselves, society and everything. This occurs due to the horror they suffer while being attacked. This feeling of terror also dwells in them because it is unbearable for them to accept that they have to live with whatever disability they suffered throughout their lives. They suffer from depression weakness, tiredness, lack of concentration, dearth of hope for years if not for their entire life.

Cases related to acid attack

Lakshmi v/s Union of India 

Facts

In this case of Lakshmi v/s Union of India, Lakshmi (the victim) was attacked by acid when she was 16 years old. She was attacked by a man whom she refused to marry. Lakshmi in 2006 filed a PIL in the Supreme Court. Apart from asking for compensation, she also asked for the creation of new laws and amendment of the existing laws related to acid attacks. She demanded the complete ban or curb on the sale of acids in the market.

Judgment

The Supreme Court directed the Central Government to sit and work with the State Governments to draft a plan to curb the sale of acids in order to stop chemical attacks. However, seeing the non-seriousness on the part of the central and state governments in regards to the crime, the Supreme Court on its own formulated a new set of guidelines and passed a ruling in favor of Lakshmi. According to the guidelines laid down:

• Acid cannot be sold to anyone who is below the age of 18 years;
• If you want to purchase acid you have to furnish your photo identity proof.

These legislations were passed by the court because one of the major reasons for the increasing number of acid attacks is the unauthorized sale of acids in the market. It is so readily available that it has become the easiest means for committing crimes against women. Hydrochloric acid is as cheap as buying a bar of soap. Furthermore, there is no regular check or inspection of stocks of acid as there is for other explosives.

However, Lakshmi has claimed that despite the regulations not many things have changed. Acid is still freely available in the shops. She along with some volunteers has herself gone and purchased acids. Nevertheless, it is argued that completely banning acids is not possible as acids are used for some other purposes also like in cleaning, in the making of car batteries, etc. It was suggested that the discouragement of the use of acid should come in some other way like passing laws that provide for more harsh punishments to the offenders who commit the horrendous crime.

Parivartan Kendra v/s Union of India, (2016) 3 SCC 571

Facts

In this case of Parivartan Kendra v/s Union of India, an NGO named Parivartan Kendra exercised their right to file a writ petition in the Supreme Court under Article 32. They tried to address the plight of the acid attack victims which was not getting any better even after the pronouncement of the Supreme Court’s judgment in the case of Lakshmi v/s Union of India. The NGO wanted to draw the court’s attention towards the increasing number of cases of acid attacks which proves the inefficiency of the laws and regulations which were in place. 

This case was filed after acid was thrown on an 18-year old Dalit girl named Chanchal living in a village in Bihar. Initially, she was verbally and sexually harassed by 4 persons (who are the convicts). But one day, one of the 4 persons climbed the roof of her house. Chanchal was sleeping with her sister at that time. The accused grabbed the opportunity and threw acid on Chanchal’s face. Not only Chanchal, but her sister as well, endured the injuries. Some of the drops of the acid cascaded on Chanchal’s sister too. They were taken to the hospital where the doctors delayed their treatment and their condition worsened. Chanchal’s father had to pay for the expenditure on medication which amounted to 5 lakh rupees. He was not able to pay that large amount and he came under debt. The family also suffered mistreatment by the doctors owing to their caste. The police also didn’t do anything until pressure was created by the media and other local people, after which the police took under arrest the accused, without recording the statements of the girls. 

After much deliberation, Chanchal’s father arranged for 3 lakh Rupees which was given for the treatment of the girls under the light of the case of Lakshmi v/s Union of India. But the amount was not enough to cover the losses suffered by the family.

Free medical care, medicines, daily check-up expenses were also found necessary. Hence Chanchal’s father approached the petitioner who after analyzing the whole case filed a writ petition.

Issues 

The petitioner raised the issues that: 

• Whether the amount of 3 lakh rupees was sufficient for victims of the acid attack as decided in the case of Lakshmi v/s Union of India;
• Whether there is a requirement for systematized treatment and health management guidelines for faster recovery of acid attack survivors; 
• Whether additional measures are needed to be taken for securing the fundamental right of victims.

Judgment

The Court after analyzing the facts of the case and issues raised came with the judgment that: 

• Rs 3 lakh should be made the minimum compensation that will be given to a victim;
• Held the State Governments careless that even after so many regulations there were not able to control the distribution of acid and prevent it from going to the wrong hands;
• Observed that the States failed to adhere to the ‘Victim Compensation Scheme’ and provided a very scant amount of compensation that was not sufficient;
• Allowed for compensation of Rupees 10 lakh for Chanchal and for Rupees 3 lakh for her sister, to be paid within a period of three months;
• Took the responsibility of dealing with such victims themselves and asked the State to make provisions for including acid attack victims in the disability list.

State of Maharashtra v/s Ankur Panwar (Preeti Rathi Case), 2019

Facts

The case of State of Maharashtra v/s Ankur Panwar is about a 23-year-old girl who was looking forward to establish her career. She got a job as a nurse in a hospital in Mumbai. The accused then once asked her to marry him. However, the victim refused as she was concerned about her career. The accused then not only became agitated on being refused for marriage but was also jealous of the victim as she could get a job when he was unemployed. Therefore, under the subsistence of this rage, when once the victim was traveling by train he threw acid on her. The victim accidentally swallowed some drops of the acid. Even a bit of acid is very dangerous. So, it was then very difficult for the victim to survive. She was admitted to the hospital but could only live for a month as she was not able to sustain the fatal injuries caused by the acid attack.

Judgment

The case was heard by a Special Court women judge A.S Shinde who at first pronounced death sentence for the accused in line with Bangladesh’s Acid Crime Suspension Act. 

This judgment was given by her because what happened had not happened ever before. A victim dying because of Acid Attack was something very shocking, even for the bench and therefore for the gruesome incident, a gruesome punishment was given. However, it was observed by the court that no one was sentenced till date for this offense. Therefore bearing in mind the gravity of the offence and keeping in line with the earlier Supreme Court judgments, the punishment was changed from a death sentence to life imprisonment. 

After ordering the punishment, the courts also ordered the guilty to pay a fine of Rs 5000 to the parents of the victim. 

Srimanthula Chinna Sathaiah and Anr. Vs. The State of A.P.

In this case of Srimanthula Chinna Sathaiah and Anr. Vs. The State of A.P enmity evolved between two men. The accused had a doubt that the other person had shown him to be a part of a crime. The accused also had a suspicion that his wife was having an extra-marital affair with the victim’s elder son. As a result, the accused drawn by the feelings of revenge threw acid upon the victim which caused her burns and injuries. The accused was charged under 302 of the IPC and was liable to the punishment of rigorous imprisonment. 

Piyali Dutta vs State of West Bengal

In this case of Piyali Dutta v/s The State of West Bengal, the petitioner, Piyali Dutta, is an acid attack survivor who had written to the Chief Secretary, State of West Bengal requesting for interim compensation of Rs. 3 lakhs, pursuant to the acid attack. She received no response from the office of the Chief Secretary and finding no other alternative, was constrained to file a writ petition before the High Court at Calcutta. 

The West Bengal State Legal Services Authority (SLSA) entered in the case and took the stance that in 2009, an amendment was made to the Code of Criminal Procedure, which entitled “acid attack victims to compensation”, and in 2013, the Supreme Court passed a landmark judgment in Laxmi v. Union of India, regarding compensation for acid attack victims. The SLSA stated that since the acid attack on the Petitioner was in 2005, much before the two above-mentioned events, the Petitioner would not be eligible for any compensation. The matter came up for hearing before the High Court at Calcutta. The court observed that according to the West Bengal Victim Compensation Scheme, 2017, the State or the District Legal Services Authority is empowered to decide an application for a grant of compensation under Section 357A(4). On July 7, 2017, the court passed a judgment asking the ‘appropriate authority’ to pass orders on the compensation issue. Piyali was granted a compensation of Rs 3 Lakh in February, 2018.

Compensation in cases of acid attacks as defined under CrPC

Apart from the IPC and the Evidence Act, the CrPC also deals with the crime of acid attacks. Section 357 A sub-section(1) states that every State Government with the help of the Central Government shall draw a scheme so as to provide compensation to those who require rehabilitation, or to the victims or the dependants of the victims, who suffered loss.

Subsection(2) of section 357A further states that if the recommendation is provided by the Court, then the State Legal Services Authority or the District Legal Services Authority( as the case may be) can decide what compensation is to be paid as mentioned in subsection (1).

Under sub-section(3), it is also stated that the Court may also order compensation if it feels that the compensation provided under Section 357 is not satisfactory for the rehabilitation of the victim or if the accused is discharged or acquitted the court may still for the rehabilitation of the victim re-commend compensation.

Sub-section (4) further talks about the rights of the victim. It says that if the offender cannot be found or traced, but the witness can be identified then the victim or his/her dependents can ask for compensation by writing an application to the State or District Legal Services Authority.

Sub-section(5) further facilitates the functioning of sub-section(4) by saying that if under such an application as mentioned under sub-section(4) the District Legal Services Authority feels satisfied after due inquiry that compensation is needed then it may provide such compensation.

The last subsection i.e sub-section(6) states that the State or the District Legal Services Authority should try to make immediate first-aid facility or medical benefits free of cost. This would help in reducing the sufferings of the victim. But these benefits will only be given on the certificate issued by a police officer not less than the rank of the magistrate of the area. Any other interim relief can be granted as deemed fit by the appropriate authority.

Section 357B of CrPC further clarifies that any compensation paid by the State to the victim under Article 357 shall be in addition to the compensation granted under 326 A, 376 AB, 376 D, 376 DA and 376 DB of the IPC. Section 357C of CrPC further tries to insist on the point of Section 357B by stating that all public and private hospitals run by local government, State Government or Central Government shall provide immediate assistance or medical help to victims of any offence covered under the Section 326A, 376, 376A, 376AB, 376B, 376C, 376D, 376DA, 376DB or section 376E of the Indian Penal Code, and shall immediately inform the police of such incident.

Treatment in cases of acid attack

• The first thing that should be done as soon as the acid gets in contact with the skin, is to wash the area with cold water for 60 minutes at least.
• Emergency treatment at hospitals should include cleaning and bandaging the wounds and easing any problem in breathing caused by the fumes of the acid.
• Infection is a major danger as the dead tissue around the burn gets infected and prevents the burn from healing. It can even spread to the healthy part of the skin and may even kill the victim within weeks or months right after the attack. Therefore it must be ensured that wounds are not infected and antibiotics are given to fight infection.
• Eyes are at the highest risk of catching an infection and therefore it must be ensured that eyes can be closed and are not dry and infected. Eyelids might also be required to be re-built in some cases. And even as the burn heals if there are thick scars near the eyes they need to be repaired by surgery.
• Eating is essential for fighting infections and for wounds to heal. However, eating could be difficult if there are wounds around the mouth, as it may lead to pain in swallowing the food. 
• When burn heals (3 to 12-month process) they leave scars. Scars take over a year to change. However, during this time scars thicken and contract and so the victim can become permanently disabled by the stiffening of joints and the restricted movement. Thus the doctor would perform the operation to release the scars and graft new skin over them.
• Long periods of physical therapy are required to decrease the victim’s lack of movement due to the scars. Special elastic bandages can be used to reduce the thickness and firmness of the scars.

The last stage is to try restoring the appearance of the victim as much as possible, By this stage, the victim’s burns might have healed and the full extent of the scars on the body might be visible. This stage of restoring may require 2 to 3 years. 

What not to do in the event of Acid Attack?

It is a common myth that milk can act as a soothing remedy in the case of an acid attack but it is not so. Milk is alkaline and when alkaline milk comes in contact with acid it will result in an exothermic reaction. It will cause more heat and can do more damage and increase the risk of infection. Thus always stick to water as a remedy.

Success story of some acid-attack survivors

Lakshmi Agarwal

Initially, when the incident happened Lakshmi was in a state of shock for two and a half months. She did not even had the courage to look at her face in the mirror. She was struggling to bear with the mental and physical toll of the attack. For days she remained inside a blanket and didn’t come out. Even a piece of cloth was like a weight on her. Managing her menstrual cycles was becoming a very arduous task for her. She wanted to commit suicide but thinking of her parents she didn’t give up on her life. After her treatment was over she started taking counseling. She simultaneously filed a case in the court in 2006( which we have discussed above and whose judgment came in 2013).

Lakshmi refused to suppress to the injustice that happened to her. Slowly with her parent’s support, she gained confidence and managed to join the National Institute of Open Schooling, Delhi. It was somewhere in 2009 that she realized that all the medication was futile if she was going to cover her face and therefore she removed her dupatta and started to move around freely. This move was very much criticized in her community. However, Lakshmi paid no heed to it and moved on with completing her diploma course. In 2013, she became a part of the ‘Stop Acid Attacks Campaign’ which was started by Alok Dixit and Asish Shukla.

In 2014 with the culmination of all of their efforts they started the ‘Chhanv Foundation’. With the help of this foundation, Lakshmi began to reach out to hundreds of victims and began to assist them with legal aid, treatment, medication, etc. She felt anger inside her as she met more and more patients. Her anger instilled the passion in her to do something more for the victims. Therefore she opened a cafe named Sheroes at Fatehabad Road in Agra to provide employment and job opportunities to the acid attack victims. According to her, a job opportunity boosts the confidence of the survivor and the family of the survivor. And at the same time, it gives a better chance to the victims and the general public to interact in the open and become sensitized. She also counsels the victims now. She teaches them how to move forward, what is the procedures that must be followed in the case of an attack. She even encourages the public to donate skin. She, through her foundation spreads awareness about the plight of acid attack survivors and simultaneously educate the society about the need for men to respect women, understand their consent, and flight for women’s rights. Lakshmi also won the International Women of Courage, Award in 2014. Hats-off to the bravery of people like Lakshmi.

Reshma Quereshi

Reshma was 17-year-old when she was attacked by acid. She was at the railway station of her hometown returning from Allahabad when a group of four men, including her sister’s husband hurled acid on her face and disfigured it completely. Reportedly her sister’s husband mistook her for her sister. 

Reshma was very depressed after the attack. Gradually she tried coming over it and established her career in modeling. She made her debut in EndAcidSale which became a big hit. She also made videos on YouTube condemning the selling of acids in India. She became popular when she walked the ramp at the New York Fashion Week. Reshma became a blogger too, and has recently written a book titled Being Reshma describing her journey out of depression. In one of the events, she said that ”Make your heart beautiful; Beauty is not just about how you look.” 

Anmol Rodriguez

Anmol was two-years-old when her father threw acid on her mother. Her mother succumbed to her injuries and died, However when her father threw acid on her mother she was lying in the lap of her mother and suffered severe burns due to trickling down of droplets of acid. She underwent many injuries, lost one of her eyes and her face was permanently disfigured.

Anmol as a kid was kept in an orphanage where she suffered from the problem of socializing. She could not interact with friends. At some point of time in her life, she left her job because of the discrimination she faced at her workplace. However, she is now a fashion icon. She has modeled for several Instagram pages and YouTube channels. She is currently the face of an online brand selling nightwears. Anmol said that acid can only change our face but not ruin our soul. “We are the same inside out and we should accept ourselves for who we are and live our lives happily.”

Madhu Kashyap

More than 2 decades ago a man hurled acid on Madhu’s face. It melted the skin on her forehead and cheeks and blinded her in one eye. For years, she was not able to show her face in public. She could not find any job as she was told she looked very ugly for the front job.

However, in 2016, she joined ‘Sheroes Cafe’ as a waitress. Now she does not hide behind her scars as many tourists come to the cafe and take pictures of the staff including her. She now feels empowered and is now the sole earner in the family, supporting her husband and three children.

The present scenario in India and the international plane 

Today, there is an increase in the number of acid attacks across countries. Bangladesh records the highest number of acid attacks. It is followed by countries like India, Cambodia, Pakistan, Afghanistan, Nepal, etc. In Pakistan, the accessibility of acid is easy and so is the commission of attacks there. However, like India a few more countries have come with legislations to regulate the crime of acid attacks.

Laws made in Bangladesh

Bangladesh, the country recording the highest number of attacks came up in the year 2002 with rules and laws to fight the evil. The Acid Control Act, 2002 and the Acid Crime Prevention Act, 2002 were passed. These acts mention the punishment in cases of acid attack and attempts to restrict the import, export and sale of acids. Some important features of these acts are:

• Creation of Acid Attack Control Council Fund;
• Creation of rehabilitation centers for acid attack victims;
• Adequate treatment of victims;
• Providing legal aid to the victims.

Laws made in Cambodia

Cambodia also passed the Cambodian Law on Regulating Acid in 2011. This law tries to criminalize acid attack violence and tries to control and regulate the use of concentrated acid. This Act provides an exhaustive definition of concentrated acid so as to include within it even those items that have a probability of being added in the list of concentrated acids in the future. For sale, distribution and all other purposes of usage of acid, Cambodia requires appropriate sanction from the ministry.

The numbers released by the National Crime Bureau (NCB) show that 523 cases of acid attacks were reported in India which were at a high from 2017 when 442 cases were registered and 2016 when 407 cases were registered.

In 2017 only 9.9 percent of the cases were disposed of. However, in 2018 it reduced to 6.11%. This reflects that the system is unable to provide swift justice in these matters and there is a need to pace up. Uttar Pradesh and West Bengal topped the list of reporting the most number of acid attacks in between 2016-2018.

However, it must be borne in mind that these are not the only cases that are filed in a year. There are many other incidents that take place however there are settled outside the court. Certain external factors that go unnoticed also play a role in the registering of the cases in the court like class, caste, power, etc.

Role of NGOs in combating acid attack

NGOs provide a ray of hope to the victims. They try to balance their unsettled life after the attack. They help in uniting the victims from different parts of the country so that they don’t feel alone in their fight. Living together with each other would provide every one of them with additional support. NGO’s try to explore employment opportunities for the victims. When the government is not able to do much NGOs come forward and try to raise funds for the treatment and medication of the victims. They organize seminars where the victims can participate and work towards developing skills. 

Suggestions

• Changing Attitudes

Many countries possess a high level of violence against women. Violence is rooted in gender-based discrimination. Social norms and gender stereotypes perpetuate that violence. So the best way to stop acid attacks (which is also a result of violence against women) is to try preventing it first by addressing what is the root cause for it. Education is crucial for ending all kinds of violence against women. Prevention should start early in life, by educating and working with young boys and girls promoting respectful relationships and gender equality.

• Research 

Research helps to gain an understanding of the cause and effects of acid attacks. It would be helpful in recognizing feasible and practical policy solutions. Quality research enables to establish consensus for change, especially helps in persuading policymakers to change policies, laws.

• Ensuring the enforcement of the rights of the victim

The central and state government’s role is not limited to providing monetary compensation to the victim. Their work also includes helping victims restore in society. They have to work to ensure certain rights are granted to these victims. Some of those rights are: 

• Right to be fair treatment;
• Right to attend and be present at criminal proceedings;
• Right to be shielded from intimidation and harassment;
• Right to appeal for victim compensation;
• Right to a speedy trial;
• Right to privacy;
• Right to be heard;
• Right to restitution from criminal offender;
• Right to be informed;
• Right to compensation.

Conclusion

Though these days acid attacks are getting attention but much more needs to be done to prevent this dreadful crime. In the previous years, we have seen many bills being passed, many laws being amended but we know it is not enough. There is a serious need to regulate the sale of acid. Unregulated sale of acid is the major reason in the increasing number of these crimes. Deepika Padukone starred film Chappak also tries to bring light to this issue. 

We, as a society should understand the plight of the victims of acid attack. Those victims already feel hopeless. But we must not let them think so. We should treat them as our equals. They deserve respect and dignity like any other human beings. Apart from society, law should ensure that justice is served and the victims get adequate compensation.

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

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The article is written by Ayush Verma, a student of IInd year at RMLNLU, Lucknow. The article discusses the National Security Act, its provisions, recent uses and the controversy surrounding it.

Introduction

Amid the ongoing protests in Delhi against the CAA and NRC, Delhi’s Lieutenant Governor Anil Baijal, on 17th January 2020, vested the power to detain any person under the National Security Act, 1980 (hereinafter referred to as NSA) for the next three months, in the hands of the Delhi Police Commissioner. The sub-section (3) of Section 3 of NSA along with clause (c) of Section 2 of the Act gives power to the Lt. Governor to endow emergency detaining authority powers to the office of Delhi Police Commissioner. The act allows police to detain any person if it feels that the said person is a threat to national security. The person detained also need not be informed of the charges upon which he was detained for 10 days. The Delhi police will get such detention power with effect from January 19, 2020, to April 18, 2020. 

However, the Delhi police has claimed that it is a routine order and is issued quarterly to maintain law and order in the country.

In August 2019, the Act was extended to the state of Jammu & Kashmir following the repeal of Article 370 of the Constitution of India, giving powers to armed forces in the area to detain a person on the ground of threat to national security.

What is NSA?

The NSA was brought in by the Parliament of India in the year 1980. The Act provides for preventive detention in certain cases and matters connected therewith. The Act focuses on maintaining law and order in the country and provides for detention of individuals who try to impede the law and order situation of a state or country. The Act contains 18 sections and confers power on states and central government to detain any person in the presence of the following grounds:

• Acting in any manner prejudicial to the defence of India, the relations of India with foreign powers, or the security of India.
• Regulating the continued presence of any foreigner in India or with a view to making arrangements for his expulsion from India.
• Preventing them from acting in any manner prejudicial to the:
  • Security of the State;
  • Maintenance of the public order; and 
  • Maintenance of supplies and services essential to the community it is necessary to do so.

Tracing the timeline of the Act

India has had preventive detention laws dating back to the start of the colonial era. In the year 1818, Bengal Regulation III was passed which empowered the then government to arrest anyone in matters relating to defence or maintenance of public order without giving the person option of judicial proceedings. Again, after 100 years, the British government passed the Rowlatt Acts of 1919 that provided for the confinement of a suspect without trial. 

After India got independence, the first Act that provided for preventive detention rule was enacted in the year 1950 during Prime Minister Jawaharlal Nehru’s government. The Act was called the Preventive Detention Act, 1950. The NSA is enacted on similar lines with the 1950 Act. After the expiration of the Preventive Detention Act, 1950 on December 31, 1969, Indira Gandhi, the then Prime Minister, brought in the contentious MISA, 1971 (Maintenance of Internal Security Act), giving similar powers to the government. Though the MISA was abrogated by the Janata Party government in 1977, the successive government, headed by Indira Gandhi, brought in the NSA, 1980.

Certain provisions of the Act

Disclosure of grounds of detention to the persons affected by the order

Section 8 of the Act states that when a person is detained in pursuance of a detention order made under the NSA, the authority, making the order shall as soon as may be, but ordinarily not later than 5 days, and 10 days from the date of detention, in case of exceptional circumstances, for reasons to be recorded in writing, communicate to him the grounds on which the order of arrest was made and shall afford him the earliest opportunity of representing himself against the order to the appropriate government. 

However, as per sub section 2 of Section 8, the authority has the right to not disclose the facts which it deems to be against the public interest to disclose.

Constitution of Advisory Boards

Section 9 of the Act states that:

• The Central and State government shall constitute one or more Advisory Boards, whenever necessary, for the purposes of the Act. 
• Every such Board shall be composed of three persons who are, or have been or are qualified to be appointed as Judges of the High Court and such persons shall be designated by the appropriate government. 
• The appropriate government shall choose one of the members of the Advisory Board who is, or has been, a Judge of a High Court to be appointed as its chairman, and in the case of a Union Territory, the appointment to the Advisory Board of any person who is a Judge of a High Court of a State shall be made with the previous sanction of the State government concerned.

Reference to Advisory Boards

Section 10 of the Act states that, save as otherwise expressly provided in this Act, in every case where the detention has been made under NSA, the appropriate government shall, within three weeks from the date on which the person was detained under the order, place before the Advisory Board commissioned by it under Section 9, the grounds on which the order has been made and the representation if made, by the person affected by the order and in case where the order has been made by an officer specified in sub section 3 of Section 3, also the report by such officer under sub section 4 of that Section.

Procedure followed by Advisory Boards

Section 11 of the Act emphasises that the Advisory Board shall, after taking into account materials placed before it and after calling for further information as it may consider necessary from the appropriate government or from any person called for the purpose through the appropriate government or from the person concerned, and if, in any specific case, it considers it essential so to do or if the person concerned wishes to be heard, after hearing him in person, submit its report to the appropriate government within 7 weeks from the date on which the person concerned was detained.

It specifies that the report submitted by the Advisory Board to the appropriate government must separately specify the opinion of the Advisory Board as to whether or not there exists a sufficient cause for the detention of the person concerned.

It further states that when there is a difference of opinion among the members of the Advisory board, the majority opinion of such members shall be deemed to be the opinion of the Board.

The Section further reads that nothing in this Section shall entitle any person against whom a detention order has been made to appear by any legal practitioner in any matter related with the reference to the Advisory Board; and the proceedings of the Advisory Board and its report, excepting that part of the report where the opinion of the Advisory Board is specified, shall be confidential.

Period of Detention

Section 13 of the NSA talks about the maximum period for which a person can be detained.

It states that the maximum period for which a person may be detained in pursuance of any detention order that has been made and confirmed is twelve months from the date of detention. However, the section contains a proviso which suggests that the appropriate government has the power to revoke or modify the detention order at any earlier time.

Revocation of Detention Order

Section 14 talks about the revocation of a detention order. It states that, without prejudice to the provisions of Section 21 of the General Clauses Act, 1987 (10 of 1987), a detention order may be revoked or modified at any time:

• Notwithstanding that the order has been made by an officer specified in sub section 3 of Section 3 by the State government to which that officer is subordinate or by the Central government; and
• Notwithstanding that the order has been made by a State government, by the Central government.

The expiry of revocation of a detention order (hereinafter referred to as earlier detention order) shall not [whether such detention order has been made prior to or after the commencement of NSA (Amendment), 1984] bar the making of another detention order (hereinafter referred to as subsequent detention order) under Section 3 against the same person.

However, in a case where fresh facts have arisen after the revocation of the earlier detention order made against the person concerned, the maximum period for which such person may be detained in pursuance of the subsequent detention order shall, in no case extend beyond the expiry of a period of 12 months from the date on which such person was detained under earlier detention order.

Immunity against an action taken in good faith

Section 16 states that no suit or legal proceeding shall lie against the Central government or a State government, and no suit, prosecution or other legal proceedings shall lie against any person for any action taken in good faith or intended to be done in pursuance of the Act.

How detention under NSA is different from normal detention?

Recent use of the Act

There have been many times when the provisions of the Act were used arbitrarily and without any reasonable cause. In January 2019, the BJP led Uttar Pradesh government arrested 3 persons under the NSA in connection with an alleged cow slaughter case in Bulandshahr. In December 2018, a journalist from Manipur named Kishore Chandra Wangkhem was detained for a period of 12 months under the NSA where he has posted an offensive post against the Chief Minister on Facebook. Experts opine that the governments sometimes use this Act as an extra-judicial power.

Why is the Act contentious?

When a person is arrested normally, he or she has certain basic rights. Such rights include: the right to be informed of the reason for arrest and the right to bail. These rights are ensured by the various laws functioning in the country. Section 50 of the Criminal Procedure Code (Cr. PC) provides that an arrested person has the right to be informed of the grounds of such arrest, and the right to bail. Likewise, Section 56 and 76 of the Cr. PC also enumerates that an arrested person shall be produced before a court within 24 hours of arrest. Furthermore, Article 22(1) of the Constitution of India guarantees that an arrested person cannot be denied the right to consult, and to be defended by a lawyer of his choice.

However, such basic rights are not available to a person who has been detained under the provisions of NSA. A person has no right to know about the grounds of his detention for up to 5 days and in certain circumstances, not later than 10 days. While providing the reason for arrest, the government has the power to reserve information which it thinks would go against the public interest if disclosed. The arrested person has no right to seek the aid of any lawyer in any matter concerned with the proceedings before an Advisory Board, which has been constituted by the government to deal with the NSA cases. 

Moreover, the National Crime Records Bureau (NCRB), which collects data related to crime in India, does not include cases under the NSA as no FIRs are registered in this regard. Thus, it is impossible to have an idea about the exact number of detentions that have been made under this Act.

Conclusion

The Act, though, provides for maintaining law and order in the country, lacks reasonableness. Certain provisions of the Act are arbitrary and there is no recourse available against such provisions. The Act also ignores the basic rights of the arrested persons that are available to them if they are arrested normally.

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

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This article is written by Devansh Sharma, a first-year student at Law School, Banaras Hindu University. In this article, the author discusses provisions related to the Lokpal and Lokayukta. The writer also puts light on the limitations and reforms needed for the Lokpal.

Introduction

Maladministration is like a termite that slowly erodes the foundation of a nation. It hinders administration from completing its task. Corruption is the root cause of this problem that our country faces. Though there are many anti-corruption agencies in India, most of these anti-corruption agencies are hardly independent. Even the CBI  has been termed as a “caged parrot” and “its master’s voice” by the Supreme Court of India.

Many of these agencies are only advisory bodies with no effective powers to deal with this evil of corruption and their advice is rarely followed. There also exists the problem of internal transparency and accountability. Moreover, there is not any effective and separate mechanism to maintain checks on such agencies.

In this context, an independent institution of Lokpal and Lokayukta has been a landmark move in the history of Indian polity which offered a solution to the never-ending menace of corruption. It provides a powerful and effective measure to counter corruption at all levels of the government.

What are Lokpal and Lokayuktas?

The Lokpal and Lokayukta Act, 2013 mandated for the establishment of Lokpal at the Union level and Lokayukta at the State level. Lokpal and Lokayuktas are statutory bodies and these do not have any constitutional status. These institutions perform the function and role of an “Ombudsman” (an official appointed to investigate individuals’ complaints against a company or organization, especially a public authority). They inquire into allegations of corruption against certain public bodies/organizations and for other related matters.

Origin and History

The story of the Lokpal and the Lokayukta has a long story. Lokpal and Lokayukta is not Indian origin concept. The concept of ombudsman originated in 1809 with the official inauguration of the institution of Ombudsman in Sweden. Later in the 20th century, after the Second World War, the institution of ombudsman developed and grew most significantly. Countries like New Zealand and Norway also adopted the system of ombudsman in the year 1962. This system proved extremely significant in spreading the concept of ombudsman to other countries across the globe.

Great Britain adopted the institution of the Ombudsman in the year 1967, on the recommendations of the Whyatt Report of 1961. Through the adoption of such a system, Great Britain became the first eminent nation in the democratic world to have such an anti-corruption institution. After great Britain, Guyana emerged as the first developing nation to adopt the concept of the ombudsman in the year 1966. Subsequently, this concept was further adopted by Mauritius, Singapore, Malaysia, and India as well.

In India, the former law minister Ashok Kumar Sen became the first Indian to propose the concept of constitutional Ombudsman in Parliament in the early 1960s. Further, Dr. L. M. Singhvi coined the term Lokpal and Lokayukta. Later in the year 1966, the First Administrative Reform Commission passed recommendations regarding the setting up of two independent authorities at the central and at the state level. According to the commission’s recommendation, the two independent authorities were appointed to look into complaints against public functionaries, including members of Parliament as well.

After the recommendations from the commission, the Lokpal bill was passed in Lok Sabha in 1968 but lapsed due to the dissolution of Lok Sabha. Since then, the bill was introduced many times in Lok Sabha but has lapsed. Till 2011 as many as eight attempts were made to pass the Bill, but each of them failed.

Before 2011, a commission, headed by M.N. Venkatachaliah, was also set up, in the year 2002 to review the working of the Constitution. This Commission recommended the appointment of the Lokpal and Lokayuktas. The commission also recommended that the Prime Minister ought to be kept out of the ambit of the Lokpal. Later in 2005, the Second Administrative Reforms Commission chaired by Veerappa Moily came up with the recommendation that the office of Lokpal needs to be established without delay.

Though all these recommendations were never given the due preference, the government in 2011 formed a Group of Ministers, chaired by the former President Pranab Mukherjee. These groups of ministers worked to examine the proposal of a Lokpal Bill and to suggest measures to tackle corruption. 

Not only the administration and the government but even the people of India felt the need for such a system to be introduced into the Indian governance system. India rose into a nationwide protest for Lokpal. The “India Against Corruption” movement was led by Anna Hazare to exert pressure on the United Progressive Alliance (UPA) government at the Centre. 

The protests and the movement resulted in the passing of the Lokpal and Lokayuktas Bill, 2013, in both the Houses of Parliament. The bill received assent from President on 1 January 2014 and came into force on 16 January 2014 under the name “The Lokpal and Lokayukta Act 2013”.

Lokpal and Lokayukta Amendment Act, 2016

After the introduction of the Lokpal and Lokayukta Act 2013, a bill was passed by Parliament in July 2016 which amended the Lokpal and Lokayukta Act, 2013. This amendment enabled the leader of the single largest opposition party in the Lok Sabha to become a member of the selection committee in the absence of a recognized Leader of Opposition.

This bill also amended Section 44 of the Lokpal and Lokayukta Act 2013. Section 44 of the Act dealt with the provisions of furnishing of details of assets and liabilities, within 30 days of joining the government service, of any public servant. This amendment replaced the time limit of 30 days. It stated that the public servants will make a declaration of their assets and liabilities in the form and manner as prescribed by the government.

In the case where any non-governmental organization receives funds of more than Rs. 1 crore from government or receives foreign funding of more than Rs. 10 lakh then the assets of the trustees and board members were to be disclosed to the Lokpal. The bill provided an extension to the time limit given to trustees and board members to declare their assets and those of their spouses.

Structure of the Lokpal 

Let us try to understand the structure of the Lokpal. Lokpal is a multi-member body consisting of one chairperson and a maximum of 8 members.

The person to be appointed as the chairperson of the Lokpal must be either:

1. The former Chief Justice of India; or
2. The former Judge of the Supreme Court; or
3. An eminent person with impeccable integrity and outstanding ability, who must possess special knowledge and a minimum experience of 25 years in matters relating to:
   1. Anti-corruption policy; 
   2. Public administration; 
   3. Vigilance;
   4. Finance including insurance and banking;
   5. Law and management.

The maximum number of members must not exceed eight. These eight members must constitute:

• Half members to be judicial members;
• Minimum 50% of the Members should be from SC/ ST/ OBC/ minorities and women.

The judicial member of the Lokpal must be either:

• A former Judge of the Supreme Court or;
• A former Chief Justice of the High Court.

The non-judicial member of the Lokpal needs to be an eminent person with flawless integrity and outstanding ability. The person must possess special knowledge and an experience of a minimum of 25 years in matters relating to:

• Anti-corruption policy;
• Public administration;
• Vigilance;
• Finance including insurance and banking;
• Law and management.

Term and appointment to the office of Lokpal

Lokpal Chairman and the Members can hold the office for a term of 5 years or till they attain the age of 70 years, whichever is earlier. The members and the chairman of Lokpal are appointed by the president on the recommendation of a selection committee.

The selection committee consists of:

• The Prime Minister of India; 
• The Speaker of Lok Sabha;
• The Leader of Opposition in Lok Sabha;
• The Chief Justice of India or any Judge nominated by Chief Justice of India;
• One eminent jurist.

The Prime Minister is the Chairperson of the selection committee. The selection of the chairperson and the members is carried out by a search panel of at least eight persons, constituted by the selection committee.

Lokpal search committee

As per the Lokpal Act of 2013, the Department of Personnel and Training needs to create a list of candidates who are interested to become the chairperson or members of the Lokpal. The list was then to be presented to the proposed eight-member search committee. The committee on receiving the list shortlists the names and place them before the selection panel, headed by the Prime Minister.

The selection panel has discretion in selecting the names from the list presented by the search committee. In September 2018, a search committee was constituted by the government which was headed by former Supreme Court judge Justice Ranjana Prakash Desai. The Lokpal and Lokayukta Act of 2013 also mandates that all states must set up the office of the Lokayukta within one year from the commencement of the Act.

Jurisdiction and powers of Lokpal

The Jurisdiction of Lokpal extends to:

• Prime Minister, Ministers, 
• Members of Parliament,
• Groups A, B, C and D officers,
• Officials of Central Government.

The Jurisdiction of the Lokpal extends to the Prime Minister, except in the cases of allegations of corruption relating to:

• International relations; 
• Security;
• The public order;
• Atomic energy and space.

The jurisdiction of the Lokpal does not include ministers and members of Parliament in the matter relating to:

• Any speeches delivered in the Parliament or; 
• For a vote cast in the Parliament.

Lokpal’s jurisdiction also includes:

• Every person who is or has been in charge (director/ manager/ secretary) of a body or a society set up by the act of central government,
• Any society or body financed or controlled by the central government,
• Any person involved in act of abetting, 
• Bribe giving or bribe-taking.

The Lokpal and Lokayukta Act states that all public officials need to furnish their assets and liabilities as well as their respective dependents. The Lokpal also possesses the powers to superintendence over the CBI. It also has the authority to give direction to CBI. If a case is referred to CBI by the Lokpal, then the investigating officer in such a case cannot be transferred without the prior approval of the Lokpal. The powers of a civil court have been vested with the Inquiry Wing of the Lokpal.

The Lokpal also possesses powers regarding the confiscation of assets, proceeds, receipts, and benefits arisen or procured by means of corruption in special circumstances. It also has the power to make recommendations regarding the transfer or suspension of public servants connected with the allegations of corruption.

Lokpal is capable of giving directions to prevent the destruction of records during the preliminary inquiry.

Limitations

The institution of Lokpal came up as a much-needed change in the battle against corruption. The Lokpal was a weapon to curtail the corruption that was spreading in the entire administrative structure of India. But at the same time, there are loopholes and lacunae which need to be corrected. The appointing committee of Lokpal consists of members from political parties that put Lokpal under political influence.

There are no criteria to decide who is an ‘eminent jurist’ or ‘a person of integrity’ which manipulates the method of the appointment of Lokpal. The Lokpal and Lokayukta Act 2013 failed to provide any kind of concrete immunity to the whistleblowers. The provision related to the initiation of inquiry against the complainant, in cases where the accused is found innocent, leads to discouraging people from making complaints. One of the biggest lacunae is the exclusion of the judiciary from the ambit of the Lokpal.

The Lokpal does not have any constitutional backing. Also, there are no adequate provisions for appeal against the actions of Lokpal. The states have complete discretion with respect to the specific details in relation to the appointment of Lokayukta. The need for functional independence of the CBI  has been catered to some extent, by the change brought forth in the selection process of CBI’s Director, by the Lokpal and Lokayukta Act.

The Lokpal and Lokayukta Act also mandates that no complaint against corruption can be registered after a period of seven years from the date on which the mentioned offense is alleged to have been committed.

Conclusion

In order to tackle the problem of corruption, the institution of the ombudsman should be strengthened both in terms of functional autonomy and the availability of manpower. The appointment of Lokpal in itself is not enough. The government should address the issues based on which people are demanding a Lokpal. Merely adding to the strength of investigative agencies will increase the size of the government but not necessarily improve governance. The slogan adopted by the government of “less government and more governance”, should be followed in letter and spirit.

Moreover, Lokpal and Lokayukta must be financially, administratively and legally independent of those whom they are called upon to investigate and prosecute. Lokpal and Lokayukta appointments must be done transparently so as to minimize the chances of the wrong sorts of people getting in. There is a need for a multiplicity of decentralized institutions with appropriate accountability mechanisms, to avoid the concentration of too much power in any one institution or authority.

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

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