CRIMINAL DEFAMATION: GANDHI’S SECOND MONKEY

by Prakhar Raghuvanshi, B.A. LL.B (Hons.), II Year, National Law University Jodhpur

If the laws of each age were formulated systematically, no part of the legal system would be more instructive than the law relating to defamation. Since the law of defamation professes to protect personal character and public institutions from destructive attacks, without sacrificing freedom of thought and the benefit of public discussion, the estimate formed of the relative importance of these objects, and the degree of success attained in reconciling them, would be an admirable measure of the culture, liberality, and practical ability of each age.
Defamation is an offence under Section 499 of the Indian Penal Code [hereinafter “I.P.C] which holds a person liable for making an imputation against a person that aims at lowering his/her reputation.
S.499. Defamation.— “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.”
There has been a long going controversy about the constitutionality of this section. This controversy was finally resolved by the apex court, in Subramanian Swamy v. Union of India, where it held that section 499 of the I.P.C is constitutional. The appellant contended that the section was beyond the scope of reasonable restrictions provided in Article 19(2) as the term defamation in Article 19(2) is conceptually different from what section 499 talks about. In my opinion, the contention of the appellants is right, but this article is restricted to the applicability of defamation, and will not discuss its constitutionality. Although the Supreme Court upheld the constitutionality of the section, it said –
“it is not necessary for all in the chorus to sing the same song. A magistrate should be extremely careful in issuing summons on a plea for the initiation of any criminal defamation case.”
Ingredients Of Criminal Defamation –
There are three essentials of defamation: – (1.) the words/imputations must be defamatory i.e. capable of injuring a person’s reputation, (2.) the words must be directed to the aggrieved party, and (3.) they must be maliciously published.
Halsbury Laws of England define a defamatory statement as one that aims at lowering the estimation of a person in the eyes of right-thinking members of society. The estimation of a person by the right-thinking members of society is one’s reputation, as against the character of a person. For this purpose, it is necessary to define the meaning of a right-thinking member of society. Any person who is not unduly suspicious or avid for scandal can be termed a right-thinking member of society. Injury to reputation is an essential ingredient of a defamatory imputation. Any statement which exposes a person to ‘contempt, hatred or ridicule, or tends to injure him in his profession or trade, or causes him to be shunned or avoided by his neighbours’. In the United Kingdom, it is defamatory to impute dishonesty [Greville v. Chapman, [(1844) 5 Q.B. 731] or immorality [Hulton v. Jones, (1910) A.C. 20 (H.L.) 29.].
With reference to the offence of defamation, Section 199 of the Code of Criminal Procedure, 1973 provides that only an ‘aggrieved party’ can file a complaint about defamation. An aggrieved party is a party that goes on to suffer some specific legal injury, aggrieved by which it proceeds to file a complaint. Based on the facts and circumstances of each case ‘aggrieved party’ is ascertained by the courts. For instance, mentioning the full name leaves no discrepancy as to whom the imputations are being made.
Making a publication with the intention to harm (which imparts mens rea) or with the knowledge that it will harm the reputation of another is a necessary ingredient of Section 499. Publication here refers to communication to a person other than the accused and communicating the imputations only to the complainant does not come under the purview of publication. The courts go on to state that actual harm is immaterial if it proved that the defamatory statement was made with a mala-fide intention to harm the reputation of the complainant, which is essentially the spirit of the said law.
The Exceptional Case Of Exception –
There are ten exceptions to the offence of defamation given under Section 499. Although the discussion about all the exceptions is beyond the scope of this article, there is an important judgment of Karnataka High Court, with respect to an accused who claims protection under any of the ten exceptions, which must be discussed. A claimant need not necessarily prove the ingredients of defamation with respect to the accused’s imputation. In J. Sudhir Chandrashekhar v. T. Lokaprakash, the Court held that the accused, by way of claiming an exception to defamation, admitted that the imputations published by him are per se defamatory. Thus, the claimant is discharged from the burden of proving that the accused statements were defamatory in nature. To what extent we can consider this judgment to be applicable is something to be discussed. The important question is can we shift the burden of proof like this?
A straightforward answer, in my opinion, would be, Yes. Consider a hypothetical situation with respect to the offence of murder. Y gives grave and sudden provocation to A. A, on this provo­cation, fires a pistol at Y, neither intending nor knowing him­self to be likely to kill Z, who is near him, but out of sight. A kills Z. Here A has not committed murder, but merely culpable homicide. In this scenario, A has killed Z is an undeniable fact. This means to say though A is not liable for murder, this can’t change the fact that A killed Z. Similarly, if A is accused of the offence of defamation and claims exception 1 to section 499, viz. imputation of truth which is for public good, this means that A has accepted that his statement was defamatory in nature but since it was true and made for public good, he should not be held liable.
What Does The World think?
There are some strong arguments put forward by people in support of criminalization of the offence of defamation, other than the constitutional aspect. Firstly, criminal defamation is necessary to protect women. Women in a society like ours are susceptible to defamation or most vicious forms of defamation, especially about ‘how’ they have achieved things in their life (the reference here is being made to success through sexual advancements). It is therefore argued that such women should have criminal defamation as a recourse, something more than civil defamation to protect themselves.
Secondly, the supreme in Subramanian Swamy v. Union of India when the court mandates the magistrate to be ‘extremely careful’, it would not result in misuse of the section. In my opinion, it should be read Section 52 of the I.P.C. If something is done in good faith, i.e. with due care and attention, it shouldn’t attract the wrath of the offence and it is upon the magistrate to do so.
However, it is well settled that a coin has two faces. Criminal defamation has that bad face too in the area of applicability. There is a catena of cases that prove the misuse of the section. One such case is of the comedian Kiku Sharda. He was arrested for alleged defamatory remarks against an individual, who had a powerful public image due to followers of his sect.
Conclusion –
In conclusion, it can be said that criminal defamation is a double-edged sword. A false criminal suit for the offence of defamation can always be countered by a counterclaim. But the main idea remains the same, one’s right to freedom of speech and expression is to be balanced with other’s right to reputation. If it can be done by civil law only is a question, to which my answer is in the affirmative. However, since there is a criminal liability already imposed on it, the concern is to control its misuse. To keep in place an effective mechanism so as to ensure minimum false cases. The provision must be amended in order to safeguard the interests of the accused in cases of false complaints.

Can we consider a suicide note as a Will?

by Abhijeet Srivastava, B.B.A. LL.B. (H.), Specialization in Corporate Law, 4th Year, School of Law, UPES (Dehradun).

Will is a legal document made by the testator where he expresses his intention concerning his property which he desires to carry on after his death. It is pertinent to note that according to Section 63 of the Indian Succession Act, 1925  it is compulsory for the testator to provide an attestation of at least two witnesses while making a will. However, the issue becomes interesting when a person at the time of committing suicide, express his intention concerning his property in his suicide note. Can we consider this as a Will, even if it does not satisfy the essentials required under section 63 of the Act? The present article attempts to answer this question.

  1. Mental State of a Person while committing suicide:

Recently, on 7th November 2019, a similar issue was raised before the revenue court of Haryana, where financial commission  Ashok Khemka, held that- “If suicide note is scribed by the deceased it will be a valid Will even when it is without the signature of the testator or attestation by the two witnesses”. According to the court, suicide is an act in desperation and during the period immediately before committing suicide, the situation is extremely emergent, where the testator thinks and believes his death to be imminent. He does not have inclination or time to think or act in leisure. He is a man seized, who wishes to make a last and final declaration of his intention with respect to his property, which he desires to be carried into effect after his imminent death. Therefore, in such a situation, it is not prudent for any person to fulfill the above requirement of attesting two witnesses as enumerated underSection 63 of the Act.

  • Lex non cogit ad impossibilia:

This famous doctrine means that law does not compel anyone to does impossible things. Mostly, this doctrine is used as a defense in legal proceedings. Moreover, Hon’bleSupreme Court in the case of Excise Commissioner &Ors v.Ajith Kumar &Anr (2008) 5 SCC 495, said that nobody can be asked to do which is not possible to perform. Therefore, if this doctrine is applied in the instant situation, it is not reasonable for the person who is committing suicide to call two witnesses for attestation as required by the law.

  • Foreign Jurisprudence:

To find out the answer we can also take reference from the Australian Law. Section 7 of the Wills Act 1997, deals with the validity of a will. It says:

Section 7:

“How should a will be executed? (1) A will is not valid unless— (a) it is in writing, and signed by the testator or by some other person, in the presence of, and at the direction of the testator; and (b) the signature is made with the testator’s intention of executing a will, whether or not the signature appears at the foot of the will; and (c) the signature is made or acknowledged by the testator in the presence of two or more witnesses present at the same time; and (d) at least two of the witnesses attest and sign the will in the presence of the testator but not necessarily in the presence of each other. (2) A statement in a will that the will has been executed in accordance with this section is not necessary for the will to be valid.”

On careful analysis, it is crystal clear that section 63 of the Indian Succession Act, 1925 is identical to section 7 of the Wills Act, 1997 of Australia. Alike the former, the latter provision also requires providing an attestation of two or more witnesses by testator while making a will. However, in cases of suicide notes, Australian courts have also relaxed this requirement of attestation of two or more witnesses. In the case Costa v. Public Trustee [2007] NSWSC 1271, initially at the trial stage, court did not consider suicide note as a will because it does not satisfy the requirement for attestation of witnesses. However, when the matter went for an appeal, the decision of the trial court was overruled by the higher court, where it said the trial court did not give sufficient weight to the situation like suicide which is unique and held that suicide note can be considered as a will. Moreover, in the case of Estate of Yu [2013] QSC 322, where the testator committed suicide in Queensland and had left a message that all his property will go to his brother and also provided all his bank details, PIN, credentials, etc. Supreme Court of Queensland held that this will be considered as a valid will. Similarly, the court in the case of Estate of Irvine [2015] NSWSC 432, also said that mere creation of a will like a document has itself considered an assent given by the testator.

Conclusion:

Therefore, this article aims to urge policymakers to craft a narrow exception to the attestation condition mentioned under Section 63 of the Indian Succession Act. This is because mere technical considerations cannot nullify the substance of the will, especially where it is virtually impossible to seek compliance with the rigors of the law.

DISQUALIFICATION UNDER THE REPRESENTATION OF THE PEOPLE ACT, 1951: IS THERE A LACUNA?

by Tanuj Agarwal, 3rd year (Batch 2017-2022) B.Com. LL.B. (Hons.), Institute of Law Nirma University, Ahmedabad

Subtitle: Section 8 of Representation of the People Act, 1951 aims to discard candidates convicted of certain offences from contesting an election. However, it raises important concern pertaining to the right to contest election when such a conviction is stayed by the appellate court.

Introduction

The Representation of the People Act, 1951 (hereinafter “RPA, 1951”) is an act enacted by the Indian Parliament to impart the administration of the election of Centre and State legislatures. It lays down disqualifications and qualifications of members for affiliation of those Houses. Further, the act also enunciates corrupt practices and different offences at or regarding elections.

Specifically, Section 8 of RPA, 1951 states the grounds for disqualification on conviction of certain offences pursuant to Section 8 of RPA, 1951, in case the candidate is convicted of certain offences specified under sub-section (1) (2) (3) of Sec. 8 and sentenced to indicated fine or imprisonment, then such a candidate is disqualified from being a member of either house of Parliament or State Legislature from the date of such conviction till the stated time.

Identification of lacuna under section 8 of RPA, 1951

Section 8 of RPA, 1951 indisputably extends to the cases in which the court has convicted a person of certain offence where the sentence of fine or imprisonment has been passed and thereby disqualified him from being a member of the legislature. However, Section 8 of RPA, 1951 does not deal with the condition where there is a stay on the order of conviction by the appellate court. Section 482 of Criminal Procedure Code, 1973 empowers the High Court to order a stay on conviction in exceptional cases. Moreover, in the case of Rama Narang v Ramesh Narang, the court held that section 389 (1) of Cr.P.C also empowers the appellate court to stay the conviction. Thereby, it is undeniable that the court has the power to put the stay on the execution of sentence as well as to stay the order of conviction itself. In the case of Manpreet Kaur and others v. State of Punjab, it is stated that such an order of stay of conviction renders the conviction “non-operative”. The conviction order which is non-operative in nature does not come within the ambit of Section 8 of RPA, 1951 since it only extends to the persons who are convicted and sentenced to prescribed fine or imprisonment.  Consequently, Section 8 of RPA, 1951 does not give effect to subsequent order by the appellate court to put a stay on the order of conviction passed by the lower court. Such subsequent order of stay on conviction restores a presumption of innocence in favour of a candidate which consequently directs the case outside the preview of Section 8 of RPA, 1951. Therefore, there is a lacuna under Section 8 of RPA, 1951 that leads to such a case being in-effectuated by the prescribed disqualifications.

Filling the lacuna under section 8 of RPA, 1951

Since there is a lacuna in RPA, 1951 regarding subsequent order of stay of conviction by the appellate court in case of disqualifications mentioned under Section 8 of the Act, the pertinent concern is as to the effect of a prior order of conviction by the lower court. Whether such an order of stay of conviction applies prospectively or retrospectively from the date of order of conviction. If the subsequent order is applicable prospectively, then the candidate is only eligible to participate in the further election after such an order passed. In the same way, it will disqualify such an elected candidate who is elected after the conviction order passed by the lower court but before such order subsequently stayed by the appellate court.

To resolve such a concern there is a need to deliberate upon the effects of stay of conviction by the appellate court. With that regard, the Supreme Court in the case of Navjot Singh Sidhu v State of Punjab held that:

“The legal position is, therefore, clear that an appellate Court can suspend or grant stay of order of conviction. But the person seeking stay of conviction should specifically draw the attention of the appellate Court to the consequences that may arise if the conviction is not stayed. Unless the attention of the Court is drawn to the specific consequences that would follow on account of the conviction, the person convicted cannot obtain an order of stay of conviction. Further, grant of stay of conviction can be resorted to in rare cases depending upon the special facts of the case.”

Consequently, if the appellate court orders a stay of conviction, there must be special facts in a case. Moreover, in the case of Ravikant S Patil v Sarvabhouma S Bagali, the Supreme Court stated that where there is an order of stay of conviction, the High court has a special reason to believe the innocence of previously convicted candidate. Thereby, the disqualification on the grounds of conviction mentioned under sub-section (1), (2) or (3) of Section 8 of the RPA, 1951 will not operate if the appellate court has passed the order of stay of conviction under Section 389 or Section 482 of Criminal Procedure Code.

As the disqualification is inoperative by way of stay on order of conviction, such an effect should be followed retrospectively from the date of order of conviction by the lower court. In this regard, the Supreme Court in the case of Lok Prahari v. Election Commission of India, held that where there is an order of stay of conviction itself as against a stay of execution of the sentence, the disqualification under Section 8 of the Act becomes “retrospectively inoperative”. Such stay of conviction ensures that conviction on untenable or frivolous grounds cannot cause serious prejudice to the candidate as has been deliberated in the case of Lily Thomas v. Union of India. In the case of Jyoti Basu v. Debi Ghosal, the Right to Contest an Election is recognized as a statutory right in the Indian regime. Moreover, the election procedure must be fair, impartial & fearless. Thereby, frivolous conviction should not cause prejudice by not sanctioning a candidate to contest the election. In case a candidate is held disqualified even if there is a stay on conviction, there will be an evident violation of right to contest election if the conviction came out as frivolous. Therefore, the disqualification under Section 8 of the Act shall be applied retrospectively and cease to operate after the order of stay of conviction.

DOCTRINE OF CONSTITUTIONAL STATUTES: ITS APPLICATION IN INDIA

 by Siddhant Singh, 3rd-year student, HNLU.

Recently concluded Parliament session of the newly constituted Lok Sabha has once again ignited the old and never-ending debate of the role of the judicial system in containing the insatiable desire of power of the Executive and Legislature. It is commonly accepted that in India there is no strict separation of power among the three organs of the Democracy, thereby to balance the same, the principle of checks and balances is embedded in the Constitution. However, unlike the US, in India, there is as such no difference of membership between the Legislature and Executive, as in India the minister needs to be a part of the legislature[1], therefore when there is a majority government like in contemporary time, then the principle of checks and balances relies heavily on Judiciary.

At this time the question arises that, whether the Judiciary has enough tools to encounter the ever-changing tactics used by the government to seize power.  In this particular article, I shall advocate the use of the doctrine of Constitutional Statute/Instruments, by the Indian Judiciary as a weapon to protect the rule of law in the society from the ever-craving desire of the legislature to seize power.

Constitutional Statutes/ Instrument

As per British Administrative Court[2], a constitutional statue is one that conditions our relationship as citizens with the state or alters the scope of basic rights, in addition to it as per the court these statutes are more difficult to repeal than an ordinary one. Taking the view forward as per the UK Supreme Court, the Constitutional Statutes (Scotland Act in question)  cannot be implied repealed, under any circumstances due to its “Fundamental Constitutional” status.[3] However, there had been debates related to the constitutional validity of the said decision and obiter respectively as according to some the said decisions are flawed as these doctrines put a bar on the Parliamentary sovereignty and decision making.

Nevertheless, the dictum in H[4]case is significant for several reasons. First, whereas Thoburn was a decision of the Administrative Court, H is a Supreme Court decision and, on the issue of competency, it was unanimous. Second, whereas Thoburn said that a constitutional statute can be impliedly repealed by a particularly clear implication and the principle of legality says that a common-law constitutional right can be overridden by necessary implication, Hsays that the Scotland Act cannot be impliedly repealed – no exceptions.[5]

Doctrine of Implied Repeal and Constitutional Statutes in India

Though after analysis of the above said decisions of the court, it can safely be assumed that a Constitutional statute cannot be impliedly repealed by the Parliament. According to the doctrine of implied repeal, if a later Act makes contrary provision to an earlier, Parliament (though it has not expressly said so) is taken to intend the earlier to be repealed’.[6] Therefore, the recent RTI Amendment bill passed by the Parliament could be safely be assumed to be violating the Constitutional Statue/ Instrument as it is enacted in pursuance of the State’s positive obligation to fulfill a constitutional right and thereby is fundamental to the Constitution of India.[7] Further, as per the Supreme Court of India in Alok Verma v. Union of India[8] it was held by the court that if the function performed by the body include implementing a constitutional right and standing between the individual and the State, then certain further requirements flow from that, one specific requirement is that of independence and autonomy (a characteristic feature of constitutionalfunctionaries)[9]. Thereby, by the interpretation of the Apex Court Judgment, it can be inferred that certain statutory functionaries are quite fundamental to the Constitution and so should be preserved and protected by the Judiciary so that they can function independently for the betterment of the citizens and people at large.

The above said provision could be applied in the recent Amendment bill passed by the Parliament thereby infringing the independence of the Chief Information Commissioner, Information Commissioners and State Information Commissioners, which as an institution is an oversight body to see the functioning of the Right to Information Act, 2005 and thereby an instrument for the effective implementation of a constitutional right of Freedom of Speech and Expression[10] and should not be impliedly repealed or amended by the Parliament as an ordinary statute.

In the UK there are constitutional statutes, such that subsequent statutes ought to be interpreted strictly so as not to repeal or amend those earlier constitutional statutes.[11] Nevertheless, whatever the reason, H[12] raises the strong possibility that courts in the future will take a new approach to constitutional statutes. Unless there is a change in judicial thinking, courts will not treat constitutional statutes as exempt from express repeal, but they will treat them as exempt from implied repeal. Constitutional statutes will thus not be fully entrenched, but they will be quasi-entrenched.[13]


[1]Art. 75(5), the Constitution of India.

[2] Thoburn v Sunderland City Council, [2002] EWHC 195 (Admin), [2003] Q.B. 151.

[3] H v. Lord Advocate, [2012] UKSC 24, [2013] 1 A.C. 413.

[4] Ibid.

[5]Farrah Ahmed, Adam Perry, THE QUASI-ENTRENCHMENT OF CONSTITUTIONAL STATUTES, 73 Cambridge Law Journal 514, 520 (2014).

[6]Francis Bennion,  Bennion on Statutory Interpretation: A Code, 304 (LexisNexis, 5th ed, 2008).

[7]Gautam Bhatia, The Amendments to Right to Information Act are Unconstitutional, Indian Constitutional Law and Philosophy ( last seen on 25/08/2019)

[8]Alok Verma v. Union of India, (2019) 3 SCC 1.

[9] Supra 6.

[10]Art. 19 (1), The Constitution of India.

[11]Bruce Chen, The Principle of Legality: Protecting Statutory Rights from Statutory Infringement, 41 Sydney Law Review 73, 75 (2019).

[12]Supra 3.

[13]Supra 4.

Admissibility of Illegally Obtained Evidence in International Commercial Arbitration

by Varshini Sunder, 4th-year student, HNLU

Evidence in international commercial arbitration can be admitted at the sole discretion of the Arbitral Tribunal. There are no rules concerning the admissibility of illegally obtained evidence in specific. Generally, the only criteria the evidence must meet is the test of relevance and materiality.[i] While there are no reported instances of commercial arbitrations on illegally obtained evidence, the plethora of decisions in the international investment forum may throw some light on the issue.

However, unlike investment arbitrations, public interest is not a matter of concern in commercial arbitration as both parties are individuals with private interests. Therefore, documents which would tip the scales in the name of public interest and support admission, will not reach the same conclusion in commercial arbitrations.

In the case of Caratube International Oil Company LLP v. Republic of Kazakhstan[ii], the claimant sought to rely on certain privileged documents that were published on a website after the Kazakh Government’s network was hacked. The Tribunal allowed this evidence to be admitted stating that “it should not be deprived of any evidence which is in the public domain.”

This gives us an indication that evidence in the public domain, albeit illegally obtained, can be admitted before Tribunals. However, this gives rise to another notorious question, what constitutes public domain?

While WikiLeaks released several confidential and privileged information into the public domain, one wouldn’t know whether a particular document is, in fact, available on it, unless its entire data is rummaged through. Therefore, although it is in the public domain, in theory, it is not known to the people at large, and therefore is not in the public domain in the real sense. This was the rationale adopted in Wee Shuo Woon v. HT S.R.L.[iii] where the email sought to be admitted was not deemed to be in public domain merely because it was published by WikiLeaks. It stated that,

“Merely making confidential information technically available to the public at large does not necessarily destroy its confidential character. Public media, in particular the Internet, must not be the gateway through which all confidentiality is dissolved and destroyed.”

The case also stressed on the general duty of confidentiality which is imported when a person receives information he knows to be confidential as elucidated on in the Attorney-General v. Guardian Newspapers (No 2)[iv]. This is reasonable as the confidentiality of a document must be protected as long as it is not entirely stripped of it.

Admitting illegally obtained evidence could have certain implications on the procedural fairness of the proceedings. Therefore, the ethical standards which the tribunal ought to maintain must not be vanquished. A doctrine to validate illegally obtained evidence in arbitrations is the “clean hands doctrine”. According to this approach, the “possible unlawful nature of the disclosure” of the evidence cannot be held against a party which wants to place reliance on such evidence and, was not involved in its illegal disclosure.[v] Therefore, as long as the person who seeks to admit the information was not engaged in its procurement, the evidence must be admitted.

A striking example of lack of clean hands is the Methanex Corp. v. USA[vi] case wherein the Claimant searched through the dumpsters of the office of a lobbying organization to obtain certain notes and correspondence. This case of dumpster diving was held to violate the equality of arms between parties and principles of natural justice and fairness they ought to maintain.

The clean hands approach though reasonable does not absolve the evidence of its illegal source. While the “fruit of the poisonous tree” doctrine is usually adopted in criminal cases, some commentators in recent times have advocated its application to civil cases as well.[vii] Since the evidence is still tainted by some illegality, it could run contrary to the public policy of the country where enforcement is sought, rendering the award unenforceable.

The repercussions of admitting such evidence, are [viii]however, frightening. It could incentivize people to procure more such privileged and confidential information unlawfully should find that their admissibility isn’t problematic. The rationale behind doing away with strict rules of evidence in international commercial arbitrations was to minimize the formalities and increase the tribunal’s efficiency, not to trivialize the law and encourage its transgression.  Therefore, the Tribunals must always weigh and balance the competing conflicting interests cautiously while determining matters of admissibility as its effects are manifold.


Endnotes:

[i] Article 19(2), UNCITRAL Model Law on International Commercial Arbitration (1985 with amendments adopted in 2006).

[ii] Caratube International Oil Company LLP v. Republic of Kazakhstan, ICSID Case No. ARB/13/13.

[iii] Wee Shuo Woon v. HT S.R.L., [2017] SGCA 23.

[iv] Attorney-General v. Guardian Newspapers (No 2), [1990] 1 AC 109.

[v] Blair, Cherie & Gojkovic, Ema Vidak, Wikileaks and Beyond: Discerning an International Standard for the Admissibility of Illegally Obtained Evidence, 33 ICSID Review 235-259 (2018).

[vi] Methanex Corp. v. USA, (2005) 44 ILM 1345.

[vii] Cooper, Nigel, The Fruit of the Poisonous Tree – The Admissibility of Evidence in Civil Cases.

ARBITRATION UNDER A CODE: A COSTLY AFFAIR

by Arpita Satangi, 4th-year student, HNLU

The Supreme Court recently in the case of National Highways Authority of India v. Sayedabad Tea Company and Ors.[i] was faced with the question about the application of Section 11 of the Arbitration and Conciliation Act, 1996[ii] (hereinafter “Act 1996”) in view of Section 3G(5) of the National Highways Act, 1956 (hereinafter “Act 1956”) which provides for appointment of an Arbitrator by Central Government.

Relevant Provisions of the Act 1956.

Section 3D of the Act 1956 empowers the Central Government to acquire property. Moreover, Section 3G of the Act 1956 provides that an amount has to be paid to the other party as determined by the competent authority. Further, Section 3G(5) provides that if the amount is not acceptable to either of the parties, they may file an application for re-determination of the said amount by an Arbitrator as appointed by Central Government.[iii]

Facts of the above case.

The Appellant acquired some property through Section 3D of the Act 1956. The Respondent being dissatisfied with the amount determined filed an application for appointment of an Arbitrator to re-determine the said amount on 8th December 2006. The Central Government did not respond within the prescribed time limit of 30 days as mandated under Section 11(5) of the Act 1996.[iv] Hence, the Respondent filed an application under Section 11(6)[v] of the Act 1996 to the CJ of Calcutta HC to appoint an Arbitrator on 7th March 2007. In the meantime, an Arbitrator was appointed by Central Government in the month of April.

The Calcutta High Court took note of the appointment of Arbitrator by the Central Government and held it to be invalid. The Court held that the right of Central Government to appoint an Arbitrator under the Act 1956 is forfeited by the application of Section 11(6) of the Act 1996.

The appellant, feeling aggrieved filed a review petition in the High Court contending that the Act 1956 is a special enactment laying down a procedure for appointment of Arbitrator. Hence, an application of Act 1996 cannot be allowed. However, the Court did not consider it as a valid ground for a review application.

Hence, feeling aggrieved the appellant preferred an appeal to the Supreme Court of India. The appellant contended that the enactment is a code in itself providing not only for the procedure of acquisition but also for the determination of compensation and as a result, the respondent could not take the help of the Act 1996. It also relied on the judgement of General Manager (Project) National Highways and Infrastructure Development Corporation Ltd. vs. Prakash Chand Pradhan &Ors[vi].,where a similar dispute arose, the Court held that the Act 1996 cannot be applied and appointment of an Arbitrator can only take place via Section 3G of the Act 1956.

The Respondent relied on Section 3G (6) of the Act 1956. The Section provides that subject to the provisions of the Act 1956, the provisions of the Act 1996 shall apply to every arbitration carried out under the Act 1956.[vii] Hence, the Respondent contended that they are empowered to take the help of Act 1996 when no appointment was made by Central Government within 30 days from the filing of application. Therefore, the Central Government forfeits its right of appointment when an application under Section 11(6) of the Act 1996 is made for appointment.

The Decision of the Court.

The Supreme Court relying upon the Judgement cited by the Appellant held that the Act 1956 is a special enactment and a code in itself. Hence, Act 1996 cannot be applied. On the question of the interpretation of Section 3G (6) of the Act 1956, the Court held that use of the expression “Subject to” indicates that the legislature intended to give overriding effect to the Act 1956. Hence, provisions of Act 1996 can be applied to the extent where Act 1956 is silent. Therefore, recourse to Act 1996 cannot be taken for appointment of Arbitrator as Act 1956 clearly stipulates for the same.

The Lacuna of the above Interpretation.

In these circumstances, the question that arises is what remedy does a party have if the Central Government has the sole repository of power to appoint an Arbitrator and it mischievously lingers it for long. On this question the Court held that the only remedy available would be to file a writ directing the Central Government to appoint an Arbitrator. However, it is pertinent to note that writs are costly and all may not afford it. This would lead to a travesty of justice as party would be left either with a costly remedy or none at all.


[i]2019 SCC OnLine SC 1102

[ii]The Arbitration and Conciliation Act, 1996, §11.

[iii] The National Highways Act, 1956, § 3G(5).

[iv]The Arbitration and Conciliation Act, 1996, §11(5).

[v]The Arbitration and Conciliation Act, 1996, §11(6).

[vi]2018 SCC OnLine SC 3245

[vii]The National Highways Act, 1956, § 3G(6).

A case study on Bulun Bulun Case

by Nikhil Issar

  1. Introduction

The Bulun Bulun Case in the words of Justice Von Doussa represent another step by Aboriginal people to have communal title in their traditional ritual knowledge.[1]

The previous T -Shirts case[2]and the Ten Dollar Note case[3] had established that traditional Aboriginal artwork constituted ‘original’ works for under the Australian Copyright Actand therefore they deserved protection against a breach of copyright. The issue at hand in the Bulun Bulun case involved notions of communal ownership of the material embodied in the artistic work as the artistic work had been derived from the common heritage of the Ganalbingu clan.

  1. Facts

The bark painting Magpie Geese and Water Lilies at the Waterhole created by Mr. John Bulun Bulun was created in inspiration of and in accordance with the traditional customs of the Ganalbingu people and had been blessed with the necessary consent of Ganalbingu elders.

The painting had been reproduced in a fabric print and imported into Australia, thus necessitating a copyright infringement action. Continue reading A case study on Bulun Bulun Case

The Unruly horse of Indian Arbitration: The evolution of Public Policy under sections 34 and 48 of the Arbitration and Conciliation Act 1996.

by Rohit Shankar

 

Introduction

‘Public policy’ has been long regarded as an abstract concept that incorporates within its ambit, considerations of legality under the prevailing laws of the nation as well as factors emerging from the sovereign rights of the nation, such as its interests in the realm of foreign policy, as well as its unique notions of justice and morality; First under common law, and later codified into statues governing contractual relationships, contracts, whose objects are in violation of the State’s public policy are regarded as void[1].

Courts have described the concept as an ‘unruly horse, which could lead anywhere’[2] as well that ‘with a good man at the saddle, the unruly horse can be tamed and jump over obstacles’[3]. Apart from a mild case of overuse of the metaphor, these rulings reflect the almost universal trend of conflicting interpretations as to the nature and scope of the concept of public policy. The choice between a broad and elastic interpretation juxtaposed with a restrictive and narrow interpretation, has been one that most jurisdictions, have struggled with and have never adequately resolved.

Arbitration has always been a means of Alternate Dispute Resolution tracing its origins, according to some authors, to the biblical judgment of Solomon[4]. Today, arbitration has become an internationally recognized method for dispute resolution with inter-state, inter-party and investor-state arbitrations being practiced in various forms both domestically in as well as internationally.

The New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958, with over 150 contracting states, provides an international framework within which an arbitral award, regardless of which state the award was passed in. Among the defenses granted to a contracting state to refuse the recognition and enforcement of an award is an instance where the enforcement of the award would be contrary to the public policy of that state[5].

India’s law on arbitration emerges from the Arbitration and Conciliation Act, 1996, which mirrors the provisions of the New York Convention in allowing the refusal of recognition and enforcement of a foreign award, or the setting aside of a domestic award, on public policy considerations[6]. The position in Indian law in this regard has been consolidated through the Arbitration Amendment Act of 2015, which added explanations to the extant provisions, stipulating the scope of what might be considered the ‘public policy’ of India for the purposes of the Act.

Public Policy under common law

English courts have examined the test of public policy in the context of contracts, both to censor a contract between parties and to examine whether it must be enforced. Lord Mansfield laid down the principle that ‘no court will lend its aid to a man who founds his cause of action upon an immoral/illegal act’, thus, in effect, laying the foundations for the refusal to enforce an illegal contract.[7]

The concept of public policy, due to its inherently vague nature has lent itself to two main types of interpretations, a broad interpretation, granting Courts the power to add to its scope and a narrow or restrictive interpretation that fixes the concept to a certain stipulated number of considerations. The conflicting interpretations of the concept could also be characterized as a debate as to whether public policy was a judge-made test or one that was grounded in legislation.

In Egerton v Brownlow, the House of Lords while considering the question, sought the opinions of eleven judges. The opinion in favor of a broad interpretation was given by Justice Pollock, who postulated that even in a case without precedent where a judge had to weigh public good with the caprice of a contracting party, the judge was entitled under common law to make a determination as to the same, in favor of the public good.[8] The converse opinion, provided by Justice Parke was that judges could not create the law and could not speculate as to what could be considered good for the community.[9] The House of Lords, eventually, chose the broader interpretation of public policy, though the debate as to the conflicting interpretations continued.

Notably in the famous case of Richardson v Mellish[10], Justice Burroughs, urging a restrictive interpretation of the concept, held – “I, for one, protest, as my Lord has done, against arguing too strongly upon public policy; -it is a very unruly horse, and when once you get astride it you never know where it will carry you. It may lead you from the sound law. It is never argued at all but when other points fail.” The uncertainty faced in the application of a test of ‘public conscience’, or merely weighing the outcomes of enforcement against its refusal, was observed in Tinsley v Milligan, by the House of Lords[11].

The modern position on the concept is illustrated in a recent judgment by the Queen’s Bench in Parkingeye Ltd. v Somerfield Stores Ltd[12], where three factors were used in making a final decision; they were: –

(i)            Whether the parties had intended at the time of entering into the contract for it to have an illegal consequence.

(ii)          Whether the illegal portion of the contract was central to its execution; and

(iii)         Whether the gravity of the illegality was sufficient to render the contract unenforceable.

Thus, it may be concluded that under the English Arbitration Act 1996, when an arbitral award is refused because its enforcement would violate public policy, the Courts will use factors that are similar to those laid out in Parkingeye. Further, that the Court will seek a compromise between the conflicting interpretations of the concept of public policy under common law.

Public policy under Indian Law

The concept in general

The concept of public policy, while finding its place in numerous statues under Indian Law, such as the Indian Contract Act[13], The Transfer of Property Act[14], The Indian Penal Code[15] etc., has not been conclusively defined. The definition of the concept has arisen out of interpretations by the Indian judiciary, which, like its English counterpart, has juxtaposed a broad interpretation with a narrow interpretation. This lack of a conclusive definition has even been recognized by the Law Commission of India, in its specific recommendations aimed at providing clarity in the context of arbitrations[16].

The Supreme Court, in a matter regarding the validity of a wagering contract, expounded upon the doctrine of public policy, holding that- “for want of better words Lord Atkin describes that something done contrary to public policy is a harmful thing, but the doctrine is extended not only to harmful cases but also to harmful tendencies; this doctrine of public policy is only a branch of common law, and, just like any other branch of common law, it is governed by precedents; the principles have been crystallized under different heads and though it is permissible for Courts to expound and apply them to different situations, it should only be invoked in clear and incontestable cases of harm to the public; though the heads are not closed and though theoretically it may be permissible to evolve a new head under exceptional circumstances of a changing world, it is advisable in the interest of stability of society not to make any attempt to discover new heads in these days.”[17]

The Supreme Court’s ruling above, was founded, in addition to the common-law jurisprudence on the subject, upon an analysis of earlier rulings by various Indian High Courts on the matter.[18] In a matter concerning the withdrawal of a letter of resignation submitted by a judge, a five-judge bench of the Supreme Court, affirmed the stand that public policy was a questionable and unsafe ground for a judicial decision and was to be adopted only in instances where there was clear and undeniable harm to the public[19].

The Supreme Court has also recognized that the concept of ‘public good’, upon which the doctrine of public policy is based, is subject to variance with changing times[20]. Through this holding along with several others[21], the Court has leant toward a broader interpretation of the concept, reflecting the ongoing debate as to its scope.

Public policy in arbitrations

The concept of public policy has been a debated issue of interpretation by the Supreme Court of India in various arbitration matters before it. Given that the Indian Arbitration and Conciliation Act 1996, which allows under sections 34 and 48, for domestic awards to be set aside and foreign awards to be refused recognition and enforcement respectively, on public policy considerations, there have been several judgments on the issue.

The first pronouncement regarding the concept was in the case of Renusagar Power Co. v General Electric Co,[22] where the Supreme Court addressed a matter concerning the enforcement of a foreign award, under the Foreign Awards Act 1961 and the Indian Arbitration Act 1940. Section 7(1)(b)(ii) of the Foreign Awards Act 1961, provided that the enforcement of a foreign award could be refused if the enforcement was contrary to public policy. The arbitral tribunal in the matter had awarded interest upon interest owed by a party to the other, as well as providing compensatory damages for the same. The award was challenged on the ground that the awarding of interest on a sum that was owed by way of interest was against the public policy of India as well as the State of New York, which was the seat of the arbitration.

The Court held that the term ‘public policy’ under section 7 of the Foreign Awards Act 1961, meant exclusively the public policy of India. It further went on to hold that since the Act provided that the enforcement of a foreign award may be refused if it violates Indian law or public policy, the separation of the two grounds would indicate that there had to be more than a violation of Indian Law for there to be a contravention of public policy. The Court proceeded to lay down the scope of the public policy consideration as being restricted to: –

(i)            The Fundamental Policy of Indian Law;

(ii)          The interests of India;

(iii)         Justice and Morality.

The above narrow interpretation of public policy was however, broadened in the case of Oil and Natural Gas Corporation Ltd v SAW Pipes Ltd[23]. The Supreme Court relied upon its holdings in Muralidhar Agarwal and Central Inland Water Transport Corporation, to rule that the concept of public policy was subject to changing conceptions of ‘public good’ and that it was the duty of the Court to broaden the concept and add new heads of public policy if the situation called for it. On this basis, it was held that if the award passed by the Tribunal was patently illegal, or in direct conflict with a statutory provision, an enforcement of the award would be contrary to public policy. It thus added a new ground – that of ‘patent illegality’ – under which an award could be set aside under the public policy consideration in section 34. However, the Court stipulated that the illegality was to go to the root of the matter for the award to be termed as violating public policy.

The SAW Pipes judgement has been heavily criticized on account of its enlargement of the ambit of the term public policy. However, on an empirical examination the ruling appears to be founded on strong legal grounds. It is based on the ruling in Central Inland Water Transport Corporation, where contracts that were patently arbitrary or unfair due to unequal bargaining power was held a violation of article 14 of the Constitution of India as well as section 23 of the Contract Act. Further the ruling must be seen as having been made in exercise of the jurisdiction conferred under section 34, therefore not making it an instance of judicial intervention that is not expressly permitted under the Act.

The Supreme Court followed the SAW Pipes judgment while adjudicating the case of McDermott International v Burn Standard[24]. However, it was observed that while there were numerous criticisms regarding the correctness of the earlier judgment, its overruling was left to a larger bench.

While hearing a matter in its appellate jurisdiction concerning the enforcement of a foreign award which was being challenged as being contrary to public policy, the Supreme Court in Phulchand Exports v OOO Patriot, held that the expanded scope of the term provided under the SAW Pipes ruling would apply to Section 48. However, it examined the matter on facts and held that the enforcement of the award would not violate public policy.

The Supreme Court, in a three-judge bench, had the opportunity to revisit the position in Shri Lal Mahal Ltd v Progetto Grano Spa[25]. The Court was presiding over a matter concerning challenge to the enforcement of a foreign award under section 48 of the Arbitration and Conciliation Act 1996. It analyzed the holdings in Renusagar, Phulchand and SAW Pipes, while determining the scope of public policy for section 48. It held that the ruling in Renusagar, where another three-judge bench narrowly interpreted the concept would be applicable, while the ruling in SAW Pipes would apply exclusively to proceedings for the setting aside of domestic awards on public policy considerations. The Court further overruled the Phulchand case stating that for the purposes of enforcement of a foreign award the term public policy would consist of the three components laid down in the Renusagar case.

Another three-judge bench had the opportunity to examine the SAW Pipes judgement – with its now limited applicability – to section 34 proceedings for the setting aside of a domestic arbitral award. The Supreme Court in Oil and Natural Gas Corporation v Western Geco,[26] while examining the ambit of the term public policy, affirmed the SAW Pipes ruling and further held that the ‘fundamental policy of Indian Law’, was a concept that included three basic principles: firstly that a ‘judicial approach’ was adopted in the making of the award, secondly that the principles of natural justice were followed by the Tribunal and lastly, that the award was not so perverse and unreasonable that it offended the conscience of the Court. To test whether the award was unreasonable, the Court applied the test of reasonableness, as was famously propounded in the Wednesbury[27] case. The test laid down by Lord Justice Diplock is that a decision would be considered unreasonable if it was ‘so outrageous in its defiance of logic or accepted moral standards that no sensible person who had applied his mind to the question could have arrived at the conclusion’. Continue reading The Unruly horse of Indian Arbitration: The evolution of Public Policy under sections 34 and 48 of the Arbitration and Conciliation Act 1996.

‘Undertaking’ Test for Slump Sale Transactions Under The Income Tax Act: Examining Recent Trends

by Saumya Raizada

What is a Slump Sale?

A Slump sale is a sale/transfer of a business/division of a company that is effected under a normal agreement and can be achieved without going through the court process of a demerger. Under the 2013 Act, the Company needs to obtain an approval from its shareholders constituting super majority, if it needs to dispose an undertaking or a substantial portion of an undertaking.[1]Slump sale remains a popular form of reorganization, by which assets are transferred from one taxpayer to another. Other  than a demerger or share transfer, an “undertaking” is transferred via slump sale. Undertaking, as per Income Tax Act, 1961( “ITA”) includes “any part of an undertaking, or a unit or division of an undertaking or a business activity taken as a whole, but does not include individual assets or liabilities or any combination thereof not constituting a business activity”.

Continue reading ‘Undertaking’ Test for Slump Sale Transactions Under The Income Tax Act: Examining Recent Trends

Latest trends in passing off

by Nikhil Issar

The concept of passing off has undergone changes. At the outset, it was based on representation that the goods were being marketed as the goods of another.[1] However, the concept has now developed to include profession and non-trading activities and at present it is applicable to various forms of unfair trading where such activities caused damage or injury to the goodwill associated with the activities of another person.[2] Lord Dipock had stated the essential characteristics of a passing off action in the following words:

(i) misrepresentation, (ii) made by a person in the course of trade, (iii) to prospective customers of his or ultimate consumers of goods or services supplied by him (iv) which is calculated to injure the business or goodwill of another trader and (v) which causes actual damage to a business or goodwill of the trader by whom the action is brought or will probably do so.[3]

The Controversy of “Goodwill” vs “Reputation” in the United Kingdom

Lord Dipock had enunciated that a misrepresentation made by a person must be with a motive to injure the goodwill of another trader so as to constitute a ground for a passing off action.[4] It is stated that the concept of “Goodwill” has been recognized distinctly from the concept of “Reputation”. The generally accepted definition of “Goodwill” is “benefit and advantage of the good name, reputation, and connection of a business”.[5] In the United Kingdom, the courts have held that a claimant has to establish a customer base within the UK as a pre-requisite to satisfy the goodwill requirement for the obtainment of a passing off action.[6] Thus, in the United Kingdom, a business which has a reputation overseas but does not possess customers in the United Kingdom, shall not succeed in the institution of a passing off action as they would fail to meet the “Goodwill requirement”.[7] A mere reputation within the jurisdiction is not enough to base a passing off claim. In the words of Lord Neuberger, the rationale for the continuance of this interpretation of goodwill is that a business which has simply gained a reputation in the United Kingdom and has not indulged in any trading has “not done enough to justify an effective monopoly”.[8]

Furthermore, the United Kingdom has a stringent definition of the word “Customer” which as per a recent decision which only includes “Paying Customers” under the category of “Customers”.[9] In the current world of online marketing where most services are available free of cost, the word “customer” cannot be restricted to only a “paying customer”. This rationale had been in fact adopted by the English High Courts but was surprisingly not accepted by the English Supreme Court.[10] The exclusion of non paying customers further raises the bar for achieving the “Goodwill requirement” in order to institute a passing off action.

The Transborder-Reputation approach

In Australia, the reputational approach has been recognized as far back in 1992[11] as it was felt that the English approach of goodwill was not in consonance with the international trade and commerce which had begun to take its roots.

Even in India protection is extended to foreign marks which have acquired a reputation in India by extensive advertisements and publicity even though a business is not trading in India.[12]

However, even this approach has two flaws: First, it provides protection to reputable foreign business that do not intend to trade in the country which follows this approach, Secondly, it is much more difficult to prove the existence of a reputation in contradistinction to goodwill which can be proved through amounts generated via revenue.

Balance between reputational and goodwill approach

The most balanced approach can be noticed in New Zealand. New Zealand has adopted the goodwill approach, however “Goodwill” in New Zealand is established through “sufficient business activity” rather than having customers in the jurisdiction.[13] “Sufficient business activity” obviously includes having customers within New Zealand, however it has also been stretched to encompass negotiations to extend an international brand into the jurisdiction. Thus, businesses intending to enter into the jurisdiction of New Zealand may qualify the criterion of “Sufficient business activity” and therefore they would be able to sue for passing off. Thus, New Zealand is able to give necessary protection to businesses which intend to trade in New Zealand and thereby avoid the risk of indulging in “over-protectionism”.

Conclusion

It is very difficult to choose between the goodwill approach and the trans-border reputational approach. However, it can be safely stated that rigid following of the goodwill approach in today’s globalized world is economically unsound. However, the trans-border reputational approach has the risk of “Over-Protectionism” as it would protect even the reputations of businesses which do not seek to carry on trade within the host nation. Thus, this would stifle the growth of legitimate businesses within the nation. The approach of New Zealand seems to be much more logical as it provides protection to businesses which intend to operate in the host nation. This provides the necessary equilibrium needed to satisfy domestic as well as international economic requirements.

[1] Singer Manufacturing Co. v. Loog, (1880) 18 Ch.D. 395.

[2] Bata India Limited v. M/S Pyare Lal & Co., AIR 1985 All. 242

[3] Erven Warnink B.V. v. J. Townend & Sons (Hull) Ltd., 1980 RPC 31; This judgment had been approved in Cadila Health Care Ltd v. Cadila Pharmaceutical Limited, (2001) 5 SCC 73

[4] Supra Note 3

[5]  IRC v Muller [1901] AC 217.

[6]  Anheuser-Busch Inc v Budejovicky Budvar Narodni Podnik [1984] FSR 413 cited in Starbucks (HK) Limited v British Sky Broadcasting Group PLC [2015] UKSC 31

[7] Starbucks (HK) Limited v British Sky Broadcasting Group PLC [2015] UKSC 31

[8] Ibid

[9] Ibid

[10] Plentyoffish Media Inc v Plenty More LLP [2011] EWHC 2568.

[11] ConAgra Inc v McCain Foods (Aust) Pty Ltd (1992) 106 ALR 465.

[12] Mars Incorporated v. Chanda Softy Ice Cream and Others, AIR 2001 Madras 237

[13] Dominion Rent-A-Car Ltd v Budget Rent-A-Car Systems (1970) Ltd [1987] 2 TCLR 91.