This article is written by Agam H Maloo.

Too many organization rely on the safety net of a corporate social responsibility report. It’s not enough.

–Katherine Garrett-Cox, CBE CEO of Alliance Trust.

Abstract

Corporate Governance deals with relations to board, management and shareholders of a corporate body. Good Governance is the foundation upon which  environment of trust, transparency and accountability is built. With regards to the same, the author attempts to explain the relationship of corporate governance with the implications of new Report by the Kotak Committee under the chairmanship of Uday Kotak on the Corporate Governance with salient amendments in SEBI Regulations. The author through this article attempts to critically examine the salient amendments inserted in the  SEBI (Listing Obligations and Disclosure Requirements) (Amendment) Regulations, 2018.SEBI (Listing Obligations and Disclosure Requirements) (Amendment) Regulations, 2018 The amendments made into the provisions of financial results, fees to statutory auditors and credential of auditors, resignation of auditor, Audit Qualification, Statutory Auditor to undertake Limited Review, Independent Directors and the committee this time introduced a new  provision regarding women empowerment and accordingly SEBI inserted the mandatory clause for the appointment of one Women Independent Director. This article also explains the evolving concept of reporting called Triple Bottom line for economic prosperity and sustainability and how it depends upon the efficient innovations and quality of the management as well as an organisations’ adherence to the principles of good corporate governance. This article also criticizes the US trial of Bernard “Bernie” Lawrence Madoff  investment scandal which is a major case of stock and securities fraud discovered in 2008 for the enforcement of legal principle laid down in the case.

Tracing the Origin

From last two decades, norms of corporate governance have evolved with the recommendations of several committees constituted from time to time. Some of the major establishments like National Stock Exchange and the Securities and Exchange Board of India have remarkably revamped the standards of governance prevailing in India. The Confederation of Indian Industry (CII) outlined a series of voluntary recommendations concerning best in class practices of corporate governance in India has released a report named “Desirable Corporate Governance: A Code”. In the year 1999, SEBI created a  committee under Kumar Mangalam Birla committee to promote and raise the standards of good corporate governance. Subsequently, in 2000, the key recommendations given by Birla Committee were accepted and enforced by SEBI which became part of clause 49 of the listing agreement of the stock exchange. In 2002, Naresh Chandra Committee was constituted by the Department of Company Affairs which made recommendations in financial and non-financial disclosures and independent oversight mechanism. Consequently, in the year 2003, SEBI constituted a committee under the chairmanship of Mr. N.R. Narayana Murthy with a view to review the clause 49 and suggest measures to improve the Corporate Governance standards. Later on, under the chairmanship of Dr. J.J. Irani, the Ministry of Corporate Affairs (MCA) constituted an expert committee for offering recommendations on Company Law.

Following from Harshad Mehta Scam to Nirav Modi Scam including the Satyam-Maytas Infra-Maytas Properties scandal especially that has rocked India since 16th December, 2008 are the examples of  massive fraud and to curb it lots of initiatives and actions have been taken by the Ministry of Corporate Affairs and Institute of Chartered Accountants of India by improving the existing norms of governance and ethics within the realm of their jurisdiction. NASSCOM (National Association of Software and Services Company), under the chairmanship of N. R. Narayana Murthy, initiated a committee for corporate ethics and corporate governance which issued its recommendations in 2010.

Later on, new provisions were introduced in the Companies Act, 2013 for improving Governance, Leadership, and Ethics in Indian Companies. These provisions relate to the working and conduct of a company’s leader called Independent Director, measures for securing the independence of the Board, aggrandized role and responsibility of audit committee, self-declaration of interest by the Directors as it was discussed in the case of removal of Cyrus Mistry from Tata, closer regulation and monitoring of related party transactions, proper formalizing of whistle blower policy and empowering shareholders group to file class action suits.

The Kotak Committee which was formed in June, 2017 under the chairmanship of Mr. Uday Kotak submitted its report on October 5th, 2017 detailing several recommendations on corporate governance. After inviting comments on such recommendations from the public and stakeholders, many of the recommendations were accepted by SEBI (some of them with certain modifications) at a meeting held on March 28th, 2018. Some of the accepted recommendations were :

1. Expanding the eligibility criteria for independent directors, disclosures of expertise & skills of directors and reduction in the maximum number of listed entity directorships from 10 to 7 by 2020,
2. Disclosure of utilization of funds from Qualified Institutional Placement/ preferential issue,
3. Enhancing the role of audit committee, nomination and remuneration committee and Risk Management Committee,
4. Disclosure of auditor credentials audit fee, reasons for resignation of auditors etc,
5. Enhanced obligations with reference to subsidiaries and mandatory disclosure of consolidated quarterly results from 2019-20,
6. Enhanced disclosures of related party transactions and related parties to be permitted to vote against such transactions.

Legal Scenario And Enforcement Technique

Mr. Madoff, the promoter of Madoff Company in the US was caught in the financial fraud of $65 billion. The fraud came into light in 2008 and then the trial was conducted and he was prosecuted with charges. Punishment of 150 years of imprisonment was given to him. Considering Mr. Madoff was an aged person, one might wonder about the purpose of such a severe punishment which cannot be fully served by any convict, but such a severe punishment sends two important messages to the society at large:

The investigation and judicial process carries out expeditiously and the verdict will be given within a short period of time so no one can do any such malpractice and get away with it without being indicted,

With this judgement, all those with fraudulent intentions are forewarned to what is in store for them if they defraud the stakeholders/public and erode the trust and confidence they are entrusted with.

If the Indian system gears up to adopt these two principles and effectively can get them in practice, then there would be absolute trust and faith in the legal system of the country which is essential to escalate investment flow to India.

Triple Bottom Line Reporting

In developed economies, the focus has shifted from financial reporting to Financial as well as Social and Environmental reporting recognized as Triple Bottom line Reporting (TBR). With this evolving concept the management, stakeholder and auditors need to learn about this and gear up to play their respective roles. The word Social and Environmental Reporting is not just about Corporate Social Responsibility, it is a very comprehensive concept. One of an integrated concept in it is Corporate Social Responsibility. Measuring financial results are easy for reporting but calibrating contribution to social aspects of the society is challenging. The efficient use of the natural resources depends on the business carried on or off by the established and growing industry and it’s the main concern of good governance. The present generation shall mainly be motivated towards sustainable development but they cannot be allowed to exhaust the natural resources to become successful at the cost of making lives of  future generation disastrous. When TBR emerges in India, the norms of governance will undergo a paradigm shift.

Ethical Governance And Economy

Corporate Sector in India plays a vital role in promoting economic growth of the nation. In 2014, India was ranked 142 among 189 countries in ‘ease of doing business’ list. Later on it moved to 130th rank. It is achieved mainly due to large reforms introduced in the legal field.

Salient Amendments in SEBI (Listing Obligations And Disclosure Requirements) (Amendment) Regulations, 2018

The Securities & Exchange Board of India (SEBI) on 9th May, 2018 issued SEBI (Listing Obligations & Disclosure Requirements) (Amendment) Regulations, 2018 (Amended Regulations) following the report of Kotak Committee on Corporate Governance issued on 5th October, 2017 suggesting amendments to be made in previous SEBI Regulations, 2015. Following are the amended regulations concerning Financial Statements, Audit Committee, Audit & Auditors and Independent Directors –

Financial Results

The following three clauses have been added after clause 33 (3) (f) which deal with Financial results :

“(g) The listed entity shall also submit a part of its standalone and consolidated financial results from the half year and also statements of cash flows for the half year through a note.

(h) The listed entity shall ensure that for the purpose of quarterly financial results, at least 80% of each of the consolidated revenues, assets and profits respectively, shall have been subjected to audit or in case of unaudited results, subjected to limited review.

(i) The listed entity shall disclose in the results of last quarter in financial year, by way of a note, the aggregate effect of material adjustments made in the results of the quarter which pertain to earlier periods.”

Comments

To enhance the level of transparency, submission of quarterly financial results as well as the publication of cash flow Statements half yearly is mandatory for the listed companies by the said amendment. The Company Act doesn’t require submission of Quarterly Financial Results but the Listing Regulations contained detailed provisions for the same.

The inserted clause of audit/ limited review at least 80% of consolidated revenue, assets and profits is to ensure that the underlying subsidiaries are also considered for audit/ limited review.

Earlier, foreign subsidiaries were not subjected to mandatory audit as per the local municipal laws and therefore this condition will be difficult to comply with.

The said amendment at present requires companies to submit the Audited Financial Results of last quarter along with the results of entire financial year. The last quarter results are balancing figures between the audit figures, figures of full financial year and published figures up to the third quarter of the current financial year.

With value to the interpretation of statute, in regulation 33(3)(b) the word ‘may’ has been replaced by the word ‘shall’ henceforth, it becomes the mandatory provision and they shall submit quarterly year-to-date consolidated financial results, and the option to opt submission of quarterly/ year-to-date consolidated financial results has been done away.

Fees To Statutory Auditors And Credentials Of Auditors

With respect to appointment/ reappointment of the statutory auditors, Annual General Meeting is required to include the following by a notice in the Explanatory Statement:

a) Proposed fees payable to statutory auditor(s) along with the terms of appointment and in case of a new auditor, any material change in the fee payable to such auditor from that paid to the outgoing auditor with the rationale for such change.

b) Basis of recommendation for appointment includes the details in relation to and credentials of the statutory auditor(s) proposed to be appointed (Insertion of Clause 5 to regulation 36). 

Comments

The reason behind the introduction of these provisions is to assure that the shareholders make informed decisions on the appointment of statutory auditors of listed companies.

Now, it has been laid down that the proposed fees must be disclosed in the notice and if there is any change in the fees paid to a new auditor as compared to current audit fee, the rationale for the same must be provided.

Critically, it will lead to solicitation/ advertisement which is not in line with the ICAI/ or any of the corporate firm Code of Ethics which prohibits a firm from marketing its credentials whether client wise, industry wise or in any other manner.

Resignation Of Auditor

Insertion of sub-clause 7A to schedule III of the listing regulations –

“In case of resignation of Auditor of the listed company, detailed reasons for resignation given by the said Auditor should be disclosed by the listed entities to the Stock Exchanges as soon as possible but after 24 hours of receipt of such from the Auditor”. 

Comments

According to Section 140(2) of the Companies Act, 2013 the auditor who has resigned from the company shall file within a period of thirty days from the date of resignation a statement in the prescribed form with the company and the Registrar, and also in reference to Companies Act sub-section 139, the auditor shall also file such statement with the Comptroller and Auditor-General of India, stating the reasons and other facts as may be relevant with regard to his resignation.

Rule 8 of the Companies (Audit & Auditors) Rule, 2014 lays down that when an auditor has resigned from the company, he shall file a statement in form ADT-3.

But in the said amendment, the auditor doesn’t have to disclose the detailed reasons of change/ resignation even though as per the new regulations, in case of change, auditor is deemed to be a material event and disclosure is required to be made to stock exchanges.

If an auditor resigns before the expiry of the term may be a cause for concern. As we discussed above that the listing regulations is mainly concern with the greater transparency and is required by the management, stakeholders and auditors.

The listed entities are required to intimate the stock Exchange within 24 hours of receipt of Resignation of the Auditor.

Audit Qualifications

The Existing Clause BB of Schedule IV (Disclosures in Financial Results) of the Listing Regulations has been substituted by the following.

1. The management shall mandatorily make an estimate which the auditor shall review and report accordingly.
2. Notwithstanding the above, the management may be permitted to not provide estimate on matters like ongoing concerns or sub judice matters, in which case the management shall provide the reasons and the auditor shall review the same and report accordingly.

Comments

The amendments relate to Audit Qualification where the Impact of qualification is not quantifiable.

In the Existing listing Regulations, the Management was required to make an estimate and the auditor was required to review and report accordingly where impact of qualification is not quantifiable.

An amendment has been made to clarify that the management is permitted to not provide estimate on matters like ongoing concerns or sub judice matters in which case the management shall provide the reasons for it and the auditor shall review the same report accordingly.

Enhanced Role Of Audit Committee

The Role of Audit Committee has been enhanced to review the utilisation of loans and/or advances from/investment by the holding company in the subsidiary exceeding Rupees 100 crores or 10% of the asset size of the subsidiary whichever is lower including existing loans/advances/investments existing as on the date of coming into force of this provision (Insertion of a new sub-clause 21 in Part C Clause A of Schedule II of Listing Regulations relating to Corporate Governance).

Comments

This time Uday Kotak Committee on Corporate Governance added extra responsibility on the Audit Committee to review utilization funds of the listed entity infused into unlisted subsidiary including foreign subsidiaries.

The fixed limits are to ensure that the Audit Committee review only such loans and/or advances as significant.

Independent Directors

Changes in Criteria of Independence –

Regulation 16 dealing with Definition of Independence Director has two changes effective from 1st October 2018 which are as follows –

In sub-clause (ii) of clause ‘b’ the words “or members of the promoter group of the listed company have been inserted”.

Consequently, this clause will not be read as “who is or was not a promoter of the listed Company or its holding, subsidiary or associate Company or member of the promoter group of the listed company”.

The following new clause has been added after clause vii.

“who is not a non-independent director of another company on the Board of which any non-independent director of the listed company is an Independent Director”.

Comments

Hence, an Independent Director cannot belong to the promoter Group as well.

Further, the Amendments excludes ‘Board Interlocks’ consequent to common non-independent directors on Boards of listed companies.

Insertion of a New Regulation 17A

“No person shall hold office as a director, including any alternative member in more than 8 listed entities at the same time (of which independent directorships shall not exceed seven) with effect from April 1, 2019 and not more than seven listed entities with effect from April 1, 2020,

Provided that any person who is serving as a whole-time director/ managing director in any listed entity shall serve as an independent director in not more than three listed entities.”

Comments

Critically, the said provision was essentially required through which the director would be able to provide sufficient time to the company to be effective in his role.

Independent Women Director

The Provision inserted in sub-Regulation 1 to Regulation 17 i.e.,

“Provided that the Board of directors of the top 500 listed entities shall have at least one independent woman director by April 1, 2019 and the Board of directors of the top 1000 listed entities shall have at least one independent woman director by April 1, 2020.”

And the following Explanation inserted in the same regulation:

“Explanation: the top 500 and 1000 entities shall be determined on the basis of market capitalization, as at the end of the immediate previous financial year.”

Comments

Companies (Appointment & Qualification of Directors) Rules, 2014 mandate the appointment of at least one Woman Director in a listed company. But such director need not be an Independent Director.

The objective concerning the Amendment is to ensure that the Women Directors are Independent as well. In recent corporate era, many of the women directors are from the family of the promoters/ directors.

Conclusion

There have been fascinating changes in the corporate culture in India and worldwide. The statutes and various regulations have also been modified and perspectives have been reshaped. The Government of India and Indian Judiciary is trying to impose strict and mandatory rules on the corporate entities by which the interest of investors and stakeholders should be preserved and transparency should be maintained.

The post Implications of Kotak Committee Report on Corporate Governance in India appeared first on iPleaders.

How ‘Deceptively Similar’ back kicks Sardarbuksh

Penalties come along when; domestic Companies use names of big brands in a funnier manner to promote their product. This time it is a coffee company, SardarBuksh, that sound deceptively similar to the very famous Starbucks. Started with a business from cart and now after opening five outlets throughout Delhi the brand SardarBuksh now have to pull it all back and change it to Sardarji-Buksh in order to make it distinctively separate from Starbucks as per an interim order of Delhi High Court.

The real issue behind the whole controversy is; whether trademark of Sardarbuksh is deceptively similar to Starbucks trademark phonetically or visually?

The analogy behind deceptively similar stems from Section 2(1)(h) read with Section 11 of the Trademarks Act, 1999 that states; when two marks are placed beside each other causes confusion or deceive the spectators it would be deceptively similar and hence cannot be registered.

As the Trademark Act do not set out fixed criteria for the concept of deceptive similarity, the plethora of judgments by Supreme Court and High Court does.  According to judgments several principles are to be considered for deciding the scope of deceptive similarity such as Principle of phonetic and visual similarity, rule of entirety, test of likelihood and confusion, goodwill etc. are some of the important tests. Also in the cases of Polaroid Corporation vs. Polarad Electronics Corporation 287 F.2d 492 (1961) and National Sewing Thread Co. Ltd. vs. James Chadwick and Bros AIR 1953 SC 357 it was held that the controversy of deceptively similar can only be decided by stepping in the shoes of purchaser, who is considered to be a man with ordinary intelligence. If the identification of two brands causes confusion to the purchaser then it would be right to say they are deceptively similar.

Putting these tests on the image above it would make Sardarbaksh deceptively similar to Starbucks without any doubt. As Starbucks is a globally recognized trademark registered across borders compared to trademark Sardarbuksh dealing in similar products, it would be unfair on Starbucks if such trademarks are allowed.

Although in cases, where the business or products dealt under trademarks are distinct the Supreme Court seems to have no problem, such as in the case of  M/s Nandhini Delux v. M/s Karnataka Co-operative Milk Producers Federation Ltd. CIVIL APPEAL NO. 2943-2944 OF 2018 where due to difference in the variety of products traded and difference in visuals of both companies the Court opined trademarks ‘NANDINI and NANDHINI’ to be non-infringing.

As the registration of deceptively similar names are prohibited as per Section 11 of the Trademarks Act 1999. By looking at the name Starbucks and SardarBuksh it might sound a little bit different but not entirely, leaving a room for confusion. While deciding the issue related to ‘deceptively similar’, usage of names or logos, the Courts tend to delve deep to figure out the class of products dealt and the quantity of harm on the market of either company or unfair competition in the market. Although, figuratively looking at the opinions of Apex and High Courts stands clear that usage of such deceptively similar trademarks are prohibited and will be taken down if it causes confusion.

Leaving the legality of the trademarks aside and talking about the effect of such deceptively similar trademarks on the market would be an identical stance. Starbucks having a more global image compared to SardarBuksh would affect not only the image of Starbucks in India but also globally. Taking Pakistan as an example, there already exist Sattarbucks café with a different logo, poses a threat to Starbucks sale if it decides to start a business their. According to the sources the name of SattarBucks Café was changed on receiving a notice from Starbucks of an infringement. It would not be wrong to say that Sardarbuksh have entered in a economies of scale by sounding similar to Starbucks. As the company that started with a coffee on cart in 2015 now expects to open almost 20 outlets all over Delhi, it must have saved allot by branding its product familiar to a global brand.

Similar discussion happened in the recent past, about burgers, where Mr. Singh Burger King (domestic) and Burger Kind (Global brand) came across tables. Burger King brought a law suit against Mr. Singh Burger King being deceptively similar phonetically and visually. Mr. Singh Burger King by an order of Court had to change its name to Mr. Singh Food King. Well it would not be wrong to say that domestic entrepreneurs are honest concurrent user but when a global brand have registered their trademark prior to domestic user preferences will be given to the global brand. Also it cannot be denied also that several domestic entrepreneurs register their trademark similar to that of global brand to get market attention rapidly. Although, Starbucks first came in 2012 to India (Mumbai), Sardarbuksh entered the market in 2015 from Delhi (India) where more than 20 plus outlets already which would have got Sardarbuksh’s attention. Also looking at the circular logo and the writing style on Sardarbuksh products would stand similar to Starbucks to an ordinary person with sound mind.

As the products that will be served at Sardarbuksh and Starbucks belong to similar classes it would confuse the consumer as if Starbucks is trying to come up with another concept. The social media platform also takes hit over these issues and spread it across the globe rapidly resulting in injuring the prolonged repo of Starbucks. Also looking at the online platforms where both the products are sold such as Zomato, UberEats etc. the two branding are similar along with similar products. Starbucks might face a global loss, for such a tricky branding from domestic companies, as many people globally might take this as a business tactic to promote their products initially and when sued change it to something else.

Ultimately, the two companies have employed there best resources to get a winning deal but, it is tougher to convince the court that using deceptively similar trademarks would not effect the other companies market. Through an interim order the court opined in favor of Starbucks by making changes in SardarBuksh to Sardarji-Buksh for any future business.

Abhi Bansal

Legal Trainee at Nishith Desai Associates

The post Concept of ‘Deceptively Similar’ in Indian trademark law: Starbucks v Sardarbuksh appeared first on iPleaders.

This article is written by Akansha Singh.

Undoubtedly, the year of 2017 has been a landmark year in the history of Supreme Court of India. The year saw being pronounced some important judgments by the Supreme Court such as judgements on triple talaq, right to privacy which kept it in the headlines of newspapers throughout the year. This article summarises the 15 most important judgements of the Hon’ble court.

Right To Privacy Now a Fundamental Right Under Article 21 of Indian Constitution

In the case of Justice K.S. Puttaswamy v. Union of India, 2012, a Constitutional bench of Nine-Judge of the Supreme Court declared that the Right to Privacy is a Fundamental Right. In an unanimous decision, the bench held that right to privacy is an intrinsic part of right to life and personal liberty envisaged under Article 21 of the Constitution of India. This case overruled the observations which were held in the case of MP Sharma and Kharak Singh that held that the right to privacy is not protected by the Constitution of India.

Triple Talaq Is Unconstitutional And Against The Shariat

In a landmark judgement, Supreme Court of India declared in the case Shayara Bano v. Union of India and others that the practice of Triple Talaq is unconstitutional by a 3:2 majority. While Justices Nariman and Lalit held that instant Triple Talaq is unconstitutional and violative of Article 14 (Right to Equality), Justice Joseph struck down the practice on the ground that it goes against Shariat and the basic tenets of the Quran. Thus, in totality, the judges opined that “Triple Talaq is not a basic and integral part of Islam” as Quranic procedure works on the rationale that the termination of marriage must not happen in a state of sudden provocation, rage or whims. In fact, it demands time and patience by delaying the divorce in the hope of a union between the individuals. Further, it is against principles of equality, international human rights law. The court also observed that the practice of instantaneous Triple Talaq is unconstitutional, derogatory and discriminatory for women.

Seeking Vote In The Name of Religion Is Not Permissible

A seven-judge constitution bench of the Supreme Court held in the case of  Abhiram Singh v. C.D. Commachen that asking for votes in elections in the name of religion, caste or community will amount to corrupt practice and election of a candidate who indulged in such practice can be set aside. The bench headed by Chief Justice T.S. Thakur passed the ruling by a 4:3 majority and observed that such practices are against the secular ethos of Indian Constitution. The bench also examined the Section 123(3) of the Representation of Peoples Act and observed that “Election is a secular exercise and therefore a process should be followed….the relationship between man and god is an individual choice and state should keep this in mind”. Thus, seeking votes in the name of religion, caste by emotionally influencing the common man is an unconstitutional practice and it should be stopped.

Aadhaar Link With Income Tax Returns Is Valid

The Hon’ble Supreme Court, in the case of Binoy Viswam v. Union of India & Ors. upheld the constitutional validity of Section 139AA of Income Tax Act which made it mandatory for people to link  IT returns with their Aadhaar Number. Further, the Court said that the provision is also subject to the outcome of final verdict of the validity of Aadhaar case which is yet to come. Further, the Bench also clarified that those who don’t have Aadhaar Card can also file their IT returns. Thus, the court held that Section 139AA of Income Tax Act is a valid but it is not compulsorily  required for filing IT returns.

Sex With Minor Wife Is Rape

In the case of Independent Thought v. Union of India, a two-Judge Bench of Supreme Court of India,  held that sexual intercourse with a minor wife is rape as in toto,  having sex with minor is rape. The bench examined the issue that whether  sexual intercourse between a man and his minor wife amounts to rape or not?

The two judge bench ruled that sexual intercourse with a girl below 18 years of age is rape regardless of whether she is wife or not. Further the bench Clarified that Section 198(6) of the CrPC will be applicable with regard to this issue and cognizance can be taken only in accordance with the provisions of Section 198(6) of the Code,1860. The court  also observed that the exception of section 376(2) of Indian Penal Code,1860 creates an unnecessary distinction between a married girl child and an unmarried girl child and this artificial distinction is violative to the provisions of Article 15(3) and Article 21(3) of the Constitution and our commitments in international convention.

Re-Promulgation of Ordinances is against the spirit of Constitutionalism

In another landmark judgement named  Krishna Kumar Singh v. State of Bihar, a seven judge Constitutional bench of the Supreme Court held that “re-promulgation of ordinances by executive is a fraud on the Constitution and a subversion of democratic legislative processes”. The court further said that Ordinances promulgated under Article 123 and Article 213 are subject to judicial review. The court has full power to check the validity of an ordinance. Further, the bench with regard to the question of placing the Ordinance before the Legislature, held that the requirement is mandatory under Indian Constitution.

Death Penalty confirmed for all the convicts of Mukesh and Anrs. Vs NCT Delhi (Nirbhaya Case)

In a long-awaited justice for Nirbhaya, the Supreme Court of India finally upheld the death penalty awarded by the Trial Court to all culprits of Nirbhaya case. In a heart-touching judgement, the Court said that “it sounds like a story from a different world where humanity is treated with irreverence”. Thus, The three-Judge Bench dismissed the Appeals filed by the convicts and confirmed the capital punishment. Read the Judgment here.

Women are free to guide their love life

Withholding the dignity of a woman, a bench of three-Judge Bench of Supreme Court held that women have right to reject or love someone under Article 21 of Indian Constitution. This observation was made in the case of Pawan Kumar v. State of Himachal Pradesh, 2017 , where a man was sentenced to 7 years by the Himachal Pradesh High Court for teasing and compelling a girl to take extreme step of committing suicide. The court not only dismissed the appeal but also observed that “in a civilised society, male chauvinism has no room and this egoism must succumb to law. The obnoxious act of eve-teasing affected justice and the rights of a woman. It has to be kept in mind that she has a right to life and entitled to love according to her choice and this legal right should be recognized in the society. It has to be socially respected. No one can force a woman to love without her choice. She has the absolute right to reject”.

Relaxation of the six months cooling off period in Divorce cases

In Amardeep Singh vs Harveen Kaur, the Supreme Court held that the period of six months is not mandatory for divorce with mutual consent. Section 13B(2) of Hindu Marriage Act, 1955 stipulates to wait for a minimum period of six months in order to get a decree of divorce in the case of parties who are seeking divorce with mutual consent. The court while analyzing the section said that the provision is to save parties from a hurried decision and to give time to consider their divorce application. However, if parties are not willing to cohabit for six months and both of them are mutually asking for divorce then the period of six months can be waived and parties are not further obliged to wait for a period of six months.

A Bench comprising Justices A.K. Goel and U.U. Lalit held that:

“We are of the view that the period mentioned in Section 13B (2) is not mandatory but directory; it will be open to the court to exercise its discretion in the facts and circumstances of each case where there is no possibility of parties resuming cohabitation and there are chances of alternative rehabilitation”.

Directions To Prevent Misuse of Section 498A of the Indian Penal Code

In another landmark Judgement, in the case of Rajesh Sharma & Ors. v. State of U.P., the apex court provided guidelines to prevent misuse of Section 498A of Indian Penal Code, 1860. The purpose behind  inserting the section 498A in IPC was to save women from domestic violence. But in the recent years, the country saw gross violation of this section and therefore the apex court has to come up with some guidelines in order to stop misuse of the Section 498A of Indian Penal Code.

A two-Judge Bench comprising of Justices AK Goel and UU Lalit, observed that “Section 498A was inserted in the statute with the laudable object of punishing cruelty at the hands of husband or his relatives against a wife particularly when such cruelty had potential to result in suicide or murder of a woman. But not to abuse it.” Read directions in the Judgement_

WhatsApp Conversation Cannot Be Considered As a Document Under The Evidence Act, 1872

The Delhi High Court took a strict view in the case of National Lawyers Campaign for Judicial Transparency and Reforms & Ors. v. Union of India & Ors , wherein a petition was filed on the basis of information available on the WhatsApp, seeking to  issue a direction to the State of Arunachal Pradesh and its Police Officials to register an FIR based on allegations contained in the alleged suicide note of Arunachal Pradesh’s late Chief Minister, Kalikho Pul. The Court dismissing the petition, held that any available information on WhatsApp does not qualify as document under the Evidence Act, 1872. Thus Whatsapp conversation will not be considered as document under the Evidence Act, 1872.

Guidelines For Prison Reforms

A two-Judge Bench of the Supreme Court comprising Justices Madan Lokur and Dipak Gupta  issued directions on prison reforms while hearing a Writ Petition (Civil) NO.406/2013, IN Re- Inhuman Conditions In 1382 Prisons. The bench said that prisoners, like all human beings, deserve to be treated with dignity. In this case, the court considered the statistics provided by National Crime Records Bureau and National Human Rights Commission of suicides that occur in prisons and its increasing number. The court realized that there is a need to improve the conditions of prisons across the country. Further the court observed, “What is practiced in our prisons is the theory of retribution and deterrence and the ground situation emphasizes this, while our criminal justice system believes in reformation and rehabilitation and that is why handcuffing and solitary confinement.” Read the guidelines here

Guidelines To Reduce Road Accident

The Supreme Court issued guidelines in a writ petition S.Rajaseekaran vs Union Of India And Ors. to reduce the number of deaths that occur as a result of road accidents. The Bench noted that the number of deaths due to road accidents is over 100,000 in a year, which means almost one death every three minutes. The court also stated the compensation awarded for deaths and other motor accident claims crosses over hundreds of crores of rupees. Thus, the apex court provided some guidelines to reduce the number of road accidents. Read the guidelines here

Deadline To Make Public Services More Accessible For Visually Disabled People

In a significant judgement, the Supreme Court issued some important directives and set deadlines while disposing of a petition filed by a visually disabled Gurgaon resident Rajive Raturi in a civil writ petition no. 243 of 2005 seeking proper and adequate access for visually disabled persons to public places. The Bench comprising Justice A.K. and Justice Ashok Bhushan directed that 50% of all Government buildings of the national capital and all State capitals be made fully accessible by December, 2018.

Every Author Has a Fundamental Right To Speak Out Ideas Freely and Express Their Thoughts Adequately

Once again preserving the Article 19(1)a, the Bench of Chief Justice Dipak Misra, alongwith  Justices A M Khanwilkar and Dr.DY Chandrachud, dismissed a petition in the case of K.L.N.V. Veeranjaneyulu v. Union of India & Ors which asked for a ban on the book ‘Samajika Smugglurlu Komatollu’  written by Professor Kancha Ilaiah. Upholding the Author’s fundamental right to free speech, the Court held,  “Any request for banning a book of the present nature has to be strictly scrutinized because every author or writer has a fundamental right to speak out ideas freely and express thoughts adequately. Curtailment of an individual writer/author’s right to freedom of speech and expression should never be lightly viewed”.

References

• http://www.livelaw.in/

• https://www.scconline.com/

• https://indiankanoon.org

• https://www.scconline.com/webedition.aspx

• https://www.manupatrafast.com/

• www.vakilno1.com/uncategorized/annual-newsletter-landmark-judgments-of-2017.html

• http://www.clatpathshala.com/home/

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Introduction                                                        

According to the dictionary meaning, indemnity is protection against possible damage or loss, especially a promise of payment, or the money paid if there is such damage or loss.[1] It is a security against, or compensation for loss, etc.[2]  This is where a claim for indemnity arises, in such a case there are two persons one who agrees or promises for the reimbursement or incurring the loss such a person can be called as “indemnifier”, and the other person to whom such a loss has been caused is the “indemnity holder” or “indemnified”. This is how in such cases the loss gradually shifts from one person to another person.

What is indemnity?                                                       

The claim for indemnity or indemnification arises when a party (indemnifier) promises to protect another party (indemnity holder) from any kind of loss, cost, expense, damage or any other legal consequences caused by the conduct of the indemnifier or any third party. Initially the basic importance of indemnity clause is to shift the liability, in whole or in part, from one party to another party. Section 124 of the Indian Contract Act,1872, lays down that the claim of indemnity arises when a person agrees or gives assurance to another person to save him from any kind of loss that has been caused to him by any action of the person who is promising or action of any other person who may not be a party to the contract. Here it is very clear from the above definition that the provision of indemnification arises only when a prior promise is made to save a party from the loss. The question of reimbursement arises only when there was an anticipation of loss and in that context a promise was made to incur the loss.

Under the following section the main criterion which usually gives rise to indemnity is “any action or conduct of the indemnifier or any other person or let’s say the third party who may not be a party to the contract due to which the loss or any damage that has been caused to the indemnity holder”. Section 124 of the Act it only covers those cases where the loss or damage that has been caused by the action or conduct of the promisor himself or any third party. It is very clear that it does not include any such cases where human conduct is absent.

Under Indian Law                                                            

Previously under Indian law, the definition of Section 124 of the Indian Contract Act, 1872, it included only those cases of indemnification where the loss or damage has been caused by the action or very conduct of the promisor himself or any other third party from which the claim of indemnity arises. Any promise to compensate for a loss that has not been caused by the human conduct was not covered under the purview of the section of indemnity. The section did not cover the contract of insurance. But later on The Law Commission of India in its 13th Report in the year 1958, recommended to amend Section 124 of the Act and accordingly Section 124 was amended to include all the cases of loss or damage that may or may not have been caused by the action of any person. Promise to indemnify must be implied as well.

Under English Law                                                         

Basically under English common Law the word “indemnity” includes all such cases to rescue or to save the indemnified from a loss or damage that may or may not depend upon the conduct of human or the event may be fire or any kind of accident. So contract of insurance is included under the indemnity law though excluding the contract of life insurance.

A contract of life insurance cannot be termed as contract of indemnity as, for instance, a contract of insurance at the event of death a certain person or on the event of expiry of a specified time period may provide a certain amount of money may provide a certain amount of money even if the assured is still alive. In such a case the question of loss or damage suffered by the person does not arise. Again the life of a person cannot be valued unlike any property even if certain amount of money is payable at the event of the death of a person. These reasons exclude the contract of life insurance from the purview of “indemnity”.

Rights of the indemnity holder when an indemnity clause is inserted in a commercial contract

When a suit is instituted against the indemnity holder or the indemnified, he may be compelled to pay damages, and incurred costs, etc. While in a similar way he can bring an action against the indemnifier to compensate for the damages and costs, etc. paid by the indemnity holder himself, if the indemnifier has agreed in such a case for reimbursement or indemnification. Section 125 of the Indian Contract Act lays down the provision regarding the rights of the indemnity holder-

If a promise has been made in a contract of indemnity to save an indemnified from a loss or any damage by the indemnifier and the promise made by the indemnifier is within the scope of his own authority then the indemnity holder is entitled to recover from the indemnifier the following-

• All such damages which the indemnity holder may be compelled to pay in a suit in respect of any matter provided that the promise applies to the following matter;
• All costs which the indemnity holder may be compelled to pay in any such suit which he has brought without contravening any orders of the indemnifier and acted as  a prudent man in the absence of any such contract of indemnity, or he was authorized by the indemnifier to bring or defend such a suit;
• All sums which the indemnity holder may have paid in a case of any compromise of any such suit, if the compromise was not contrary to the orders of the indemnifier and is one in which the promise would be prudent to be made in the absence of any such contract of indemnity, or if the indemnity holder was authorized by the indemnifier to compromise the suit.

Importance of indemnity clause in a commercial contract

An indemnity is slightly different in commercial contract than in common law. Indemnity clause is the commonly used elements in the commercial contracts. The purpose of inserting the indemnity clause in a contract is to shift or allocate the risk, or cost from one party to another. More precisely it can said business transaction between the two parties by obligating one party to pay the expenses incurred by the other party under certain circumstances.

As from the above definition and explanation of indemnity it is very clear that one party agrees to indemnify (often hold harmless & defend) the other party. To indemnify someone is to absorb the losses caused to that party. The real significance of an indemnity clause is to protect the indemnified party against the third party lawsuits.

Indemnity clause often sets out a list of what actions a party is insured against, for example:

• All lawsuits, actions or proceedings, demands, damages and liabilities.
• All claims, liabilities, losses, expenses and damages arising from a contract.
• Loss, damage, injury or accidental death from any cause to property or person occasioned or contributed to any of your acts, omissions, neglect or breach or default.

Scope of Indemnity

In commercial Contracts the indemnity clauses are drafted in a wide manner in order to include the third parties by whose conduct, action or negligence any loss or anticipated circumstances might occur, which are beyond the ordinary circumstances of breach actionable under common law. In certain special cases or circumstances the indemnity clauses might apply even when no breach of contract has occurred. Indemnities in such cases extend into unintended obligations which the common law might not impose otherwise.

Can an indemnity holder seek indemnity before he has suffered any actual loss?

It has always been a controversial point, regarding whether the indemnity holder can seek indemnity before he has suffered any actual loss in this context.

Under English common law, no action can be brought against the indemnifier for reimbursement until the indemnity holder has actually suffered any loss. This provision creates a great hardship for the indemnity holder as in some situations he might not be in a position to meet the claim or the damages from his own pocket. In those cases relief was provided by the Court of Equity. The Court of Equity evolved the rules as a result now the indemnity holder can seek indemnity from the indemnifier in respect of the obligation against which the indemnity has been promised.

In India, there have been different views among various High Courts regarding whether or not the indemnifier can be compelled to indemnify before the indemnity holder has suffered any loss. According to Nagpur High Court [3], a person cannot be indemnified before he has actually suffered any loss. The High Courts of Bombay [4], Calcutta [5], Madras [6], Patna [7], and Allahabad [8] have expressed a different view, and they are of the opinion that the indemnity holder can seek indemnity before he has suffered any actual loss.             

Drafting of the indemnity clause

While drafting an indemnity provision in a contract the following points must be considered-

• Who is the indemnity-holder and who is the indemnifier?
• Whether or not there is any need for indemnity at all or the indemnity provides greater protection for the breach of contract than would normally be available for the breach of contract under the common law? If not, indemnity is not needed.
• An indemnifier must limit the amount of indemnities that is given while entering into a contract. An express obligation must be imposed so as to minimize the loss, and the duration of time in which the claim can be brought must be limited.
• An indemnity-holder should make sure that the indemnity clause must never be drafted in a wide manner as it risks the effect of achieving the desired claims and might even exclude some anticipated liabilities,
• Indemnity for breach of contract and breach of negligence must be considered in addition to the common law rights.
• In the event of breach of contract, the effect of indemnity should be-

1. The breach will also give rise to other remedies under the contract (termination, liquidated damages or rights to payment)
2. The breach will allow the indemnified party to be entitled to a payment, compensation or reimbursement.

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Conclusion

Generally the indemnity clauses arise out of commercial negotiations and seek to protect specific commercial risks. Indemnity clauses are sometimes reasonable for the contract’s terms or even essential for parties to carry out an agreement. Indemnity clauses must negotiated properly before putting it into a contract. Serious consequences can arise due to a poorly negotiated indemnity clause. Ambiguity in the drafting of an indemnity clause presents a risk that the indemnity will not be held to cover losses, which they expected it to cover. It is very important to draft the indemnity clauses properly and precisely. They are reasonably important as it shifts the loss from one party to another which might have been caused due to the negligence of the former.

References

[1]  Cambridge University Press. Retrieved from Cambridge Dictionary: https://dictionary.cambridge.org/dictionary/english/indemnity

[2] Retrieved from Chambers New English Dictionary

[3]  Ranganath Vs. Pachusao and others (NAGPUR JUDICIAL COMMISSIONER’S COURT March 7, 1935).

[4] Gajanan Moreshwar Parelkar vs Moreshwar Madan Mantri (Bombay High     Court April 1, 1942).

[5] Prafulla Kumar v. Gopee Ballabh Sen (Calcutta High Court 1944).

[6] Ramaligna v. Unnamolai, 791 (Madras High Court).

[7] Chunni Bai v. Nathu Bai, 655 (Patna High Court).

[8] Abdul Majeed v. Abdul Rashid, 598 (Allahabad High Court 1936).

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Like any other property rights, intellectual property rights allow their creator or owners to benefit from their own work and investment made. Upon registration of Intellectual Property, the owners are allotted with the exclusive rights over same. The owner or say, the IP-holder can assign or license the intellectual property to a third party for either and receive royalties in return. In this article, we are specifically speaking of an assignment in case of trademarks.

Trademark Assignment

Transfer of ownership and rights over the Trademark to any other person or entity is known as Trademark Assignment in legal terms. An assignment can also be partial which is commonly known as licensing. Further, it is assignable with or without the goodwill of the business either in respect of all goods or services or a part thereof. A trademark is usually assigned by the execution of an agreement between the parties known as the Trademark Assignment Agreement. The most important requirement for a valid assignment agreement is that it must show intention the part of the assignor to transfer complete or partial ownership of the mark.

Although the assignment is an agreement between two or more parties, there are certain cases prescribed wherein the restriction to the assignment is provided.

• The assignment creates exclusive rights for more than one person with respect to the same goods or services.
  For example; if you assign trademark to X for providing services related to health care and also to Y who is providing services and manufacturing goods related to health care, such assignment would not be permitted as it is creating exclusive rights for more than one person.
• If the assigned marks are used simultaneously by different individuals in different parts of the country then the assignment is not permitted as it would deceive or cause confusion.

Types of Trademark Assignment in India

Multiple types of Trademark assignment are accepted in India. Based on the need and requirement, the parties would fall under the specific type, and accordingly, the Assignment Agreement would be drafted.

Complete assignment

In this case, all the rights that are vested in the registered trademark are assigned to a third party. The assignee then enjoys all the rights that the original trademark owner had. The assignee would then be the sole owner of the trademark having rights to assign, trade, and market it and also to stop others from using it without authorisation.

Partial Assignment

In this type of assignment, the transfer of ownership is restricted only to certain products/services as decided by the parties and expressed in the Trademark Assignment Agreement. For example, if the owner of a trademark named “owa” mentions in the assignment agreement that the assignee can use the assigned trademark for only food products that are suitable for human consumption only. Then he cannot use the mark for any other goods/ services except food products for human consumption.

Now, both, the complete and partial assignment can be made with the assignment of goodwill or without goodwill.

Assignment with goodwill

When an assignment is made with goodwill, the rights and value associated with the trademark are given for using the mark for the products and services already being sold by the assignor.

For example, X, the owner of “owa”, owns trademark for manufacturing and selling of shoes, can assign the trademark along with giving the assignee the right to use the said trademark for the same product and activity for manufacturing and selling of shoes.

Assignment without goodwill

Here, the assignor can restrict the assignee’s rights for the product already used by him. This means that assignor & assignee both can use the same trademark but in distinct goods or services.

For example, if the owner of the trademark “owa” uses it for manufacturing and selling of shoes and decides to assign it without the goodwill, it means that the assignee can use the trademark “owa” for any other product the trademark covers but other than the shoes.

Benefits of Assignment of Trademark

Find out your trademark’s monetary value

• When you invest your money, time, and work after a brand, you must seek the returns, too. In addition to product values, the TM owner can also encash the brand value through assignment, which is only recorded on a piece of paper.
• With the assignment process, the brand is valued and the consideration in terms of royalty or otherwise is received by the owner.
• To note one, the Ahmedabad-based brand, Havmor Ice Cream has transferred the partial rights over to Lotte Confectionery for INR 1020 Crore.

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Security for both – The Assignor and The Assignee

With the assignment process, the Trademark Assignment Agreement is executed by both parties. It creates a valid proof that is admissible in the court of law in case of any dispute. The assigned mark is published in the trademark journal by the registry and all the clauses of the assignment agreement are scrutinized adequately to avoid any hurdles in the future.

Benefit from an already established brand

For the assignee, purchasing a pre-recognised brand would certainly be a benefit in terms of market base. Further, the assignee would be exempted from investing a lot of money, time and labour in the creation and marketing of the brand. And certainly, assignee need not pass from the months-long registration process, if the concerned mark is already registered.

Expansion of business

Licensing is also one of the assignment types, whereby the assignor, as well as the assignee, has the right to associate the brand with their respective business. Therefore, the combined efforts of all would increase the value. Further, with the partial assignment, the assignor can expand the business by inviting more vendors to contribute to brand building. In the case of Havmor, the chairperson also believed that the Lotte Confectionery (assignor) is the right brand to take the company to next level.

Conclusion

Assignment of brands may open vistas of opportunities with proper strategies. The concept of assignment involves a degree of planning for the future of the involved parties and the brand in question. The development of a brand, its propagation, and its use, all lies in the hands of the proprietor that makes the assignment an effective method to manage the same. Assignment helps in keeping the brand alive that avails many benefits to the assignee and the assignor as well.

About LegalWiz.in

LegalWiz.in is a leading online legal service provider committed to offering simplified and hassle-free solutions to the businesses and corporates across India. From company registration to trademark protection, the team of experts makes managing and protecting the business easier by simplifying legal processes. LegalWiz.in is a one-stop solution for all the businesses.

LegalWiz.in can help you with trademark assignment in India online at an affordable cost. If you are seeking assistance from experts regarding trademark assignment or have any other concerns regarding intellectual property protection, feel free to get in touch with our expert at support@legalwiz.in

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This article is written by Pratyush Jain is a 5th-year student in the B.L.S. LLB Program at Government Law College, Mumbai.

Introduction

In the past few years, India has seen a tremendous growth in number of mergers and acquisitions (“M&As”) with more than 1,000 M&As in the year 2017 alone. These digits are highest in the current decade. Government’s initiative of ‘Make in India’ and thrive to improve its global ranking for ‘Ease of Doing Business’ has brought about many regulatory and judicial changes in the nation. In order to improve the grey areas and improve the market conditions, steps have been taken to liberalise the stricter norms and approval requirements in order to pave a way for fast and efficient merger transactions.

This article highlights some of the recent merger trends along with an analysis, observed in India in order show some light over the increased liberal initiatives adopted by Government paving a friendly regulatory environment.

Merger Trends

1. Merger of LLP into Company (Cross-entity)

National Company law Tribunal, Chennai bench (“Tribunal”) recently passed a landmark order in the matter of scheme of amalgamation between M/s. Real Image LLP with M/s. Qube Cinema Technologies Private Limited which paved a way for merger of LLPs with a private company. The current provisions for merger in both the Limited Liability Partnerships (“LLP”) Act, 2008 and the Companies Act, 2013 (“Act”) which are the governing statutes of LLPs and companies respectively does not permit expressly such cross-entity mergers. Tribunal stated that “If the intention of Parliament is to permit a foreign LLP to merge with an Indian company, then it would be wrong to presume that the Act prohibits a merger of an Indian LLP with an Indian company.” It further went upon to state “…the legislative intent behind enacting both the LLP Act, 2008 and the Companies Act, 2013 is to facilitate the ease of doing business and create a desirable business atmosphere for companies and LLPs.” to finally conclude that there does not appear any express legal bar to allow/ sanction merger of an Indian LLP with an Indian company.

Analysis: The merger order by Tribunal is much welcomed by the industry as it gives a thumbs-up to cross-entity mergers in cases of LLPs and companies. Moreover, with no statutory backing, the order per se could be further challenged at the appellate authority (in this case National Company Law Appellate Tribunal) and without any clear provisions there can be problems (tax implications, procedural delays, etc.) in implementing such schemes.

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2. Reverse merger

When a large/healthier company merges into a smaller or weaker company, it is called a reverse merger. The trend of reverse merger has been in picture with ICICI (Industrial Credit and Investment Corp of India) and two of its wholly-owned subsidiaries, ICICI Personal Financial Services and ICICI Capital Services, reverse-merged with ICICI Bank in 2002. With Government’s approval of merger between Vodafone India and Idea Cellular, the concept and structure of reverse merger has again taken up the limelight in the news. In this case, Vodafone India will merge with Idea Cellular thus creating country’s largest mobile phone operator with entity renamed as Vodafone Idea Ltd. The benefits of going public without raising money, reducing competition and increasing the market share have been the determinant grounds of this deal.

Analysis: Reverse mergers are found to be more attractive for companies intending to go public without the need of raising money. They can avail the no-IPO way by simply getting reverse merged with a listed company. Further the losses of weaker company can be carried forward and will eventually help the entity to pay lower taxes. With increased competition and disruptive telecom market in the country, Vodafone Idea merger is expected to start on a frail footing.

3. Matters relating to public interest

The compulsory merger order of 63 Moons Technologies Limited (“63 Moons”) formerly known as Financial Technologies (India) Ltd. & Ors with National Spot Exchange (“NSEL”) is one of the prominent merger order in the recent past. Section 396 of Companies Act, 1956 empowers the Central Government to pass necessary orders with respect to amalgamating two or more companies where it is satisfied that it is essential in public interest to do so. In this special order, 63 Moons was allowed to merge with NSEL (its fully owned subsidiary) to provide relief to hundreds of investors who were stuck with an outstanding amount of more than 5000 Crores. Ministry of corporate affairs ordered the said merger in the month of February 2016 which was further upheld by Bombay High Court[1] which went on to conclude that “…If exchanges such as these are permitted to be subverted or fail without honouring their obligations and commitments, the confidence in national economic institutions is bound to suffer and the repercussion to the national economy will be severe. In such situations, a negative perception about the business environment of the country is created, which has grave repercussions on the national economy. The Central Government, quite conscious of all such factors, has taken a balanced decision in the facts and circumstances of the present case”.

Analysis: Government’s step to merge such entities is much welcomed as it brings relief to investors by assuring that the holding company, 63 Moons doesn’t go scot free from the losses faced by its wholly owned subsidiary. This shows Government’s intervention in matters relating to public interest and its intention to primarily help the investors of the said entity. Aggrieved by the same order of Bombay High court, 63 Moons along with its promoter(s) have appealed to Supreme Court of India and the matter[2] is listed in late September this year.

4. Special Approvals

Insurance Regulatory and Development Authority of India’s (“IRDAI”) Guidelines for Listed Insurance Companies, 2016 restricts ownership of listed insurance companies to fifteen percent of the paid-up capital of entities operating in the financial sector. An exception to this rule is observed by Life Insurance Corporation (“LIC”) and Industrial Development Bank of India (IDBI Bank) merger in which LIC is permitted to take 51% stake in the entity. IRDAI approved the deal on a condition that LIC will reduce its stake in the coming years. This approval will infuse capital in debt-laden bank and help both entities to strengthen financially as well as their subsidiaries which offer financial products such as housing finance and mutual funds.

Analysis: Government’s special approval of merger of both these entities is a deviation from the general rule which listed insurance companies are expected to follow. However, looking into the wide-ranging synergy benefits for customers of both these entities, such merger would help LIC to realise its vision of becoming a financial conglomerate.

5. Deemed approval for Cross-border mergers

Reserve Bank of India (“RBI”) vide its notification dated March 20^th, 2018 provided for the much awaited Foreign Exchange Management (Cross-Border Merger) Regulations (“Regulations”) with explicit details with respect to both in-bound and out-bound mergers. Prior to these Regulations, Section 234 of the Act required that a foreign company (incorporated under notified jurisdictions) obtain prior approval from RBI before merging into a company registered under the Act or vice versa. However, with the introduction of these Regulations, all merger transactions which are compliant with it shall stand as ‘deemed approved’ by RBI.

Analysis: These regulations are the first foot steps towards a friendly regulatory environment in the country with respect to cross-border mergers. The deemed RBI approval would be much applauded by the market but somehow the advantage or relief proposed to be given by it seems to be overshadowed by Regulation 7(2) of the Regulations. Regulation 7(2) provides that companies involved in the cross-border merger shall ensure that regulatory actions, if any, prior to merger, with respect to non-compliance, contravention, violation, or, of the Foreign Exchange Management Act, 1999 or the rules or regulations framed thereunder shall be completed, thus, in a way making a company compliant with rules and regulations by itself (without intervention of RBI).

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Conclusion

Government’s steps to strengthen Indian economy and improve global ranking in World Bank’s Ease of Doing Business, have created a merger storm in the nation. With Alibaba’s acquisition in Paytm and the much heated Walmart-Flipkart merger has shown the rise of foreign investors’ interest in the Indian market. Further, with time lined and eased procedures in merger laws in the country, India will not only attract foreign investors but will also strengthen its position and help in making India the hub for foreign cross-border mergers.

[1]BHC WP-2743-2014

[2]SLP(C) No./4210/2018

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This article is written by Abhyuday Aggrawal, COO at LawSikho.

A senior associate was speaking on the VSAT on a recent M&A transaction and the Takeover Code. Lawyers from 3 cities were hooked onto the screen, eager to learn. Zia Mody asked a few questions. She was called Zia by everyone in office, even interns, as the culture there was to call everyone by first name. All the partners participated and suggested alternatives. It was an animated discussion, very much like an active game of chess. Associates listened keenly.

I was pursuing my 4th year corporate law firm internship, and for me, this was a radical contrast to the abstract and conceptual experience of corporate law.

This was AZB’s periodic knowledge sharing meeting, held approximately every fortnight, from what I remember. Everyone had to participate, even the senior-most partners. Zia Mody herself took keen interest in the meeting and participated.

I learnt one thing from the knowledge-sharing sessions – it was only about the deal (or transaction). My ‘bare act’ and ‘case law’ friendly mind had to be re-wired. My thoughts had to originate from a different place. From then on, my mind started getting tuned to looking for how to provide solutions to clients.

As I have been working on legal education for the past six years to create courses, I took up a simple approach – the business approach.

When I speak to people or read a statutory provision or a case, I keep finding problems. When I read a statute, what goes on in the back of the mind is the problems that the statute is trying to address, and problems that it is not addressing. When I read a case, I think of the commercial situation that must have played out. While preparing for an IP law class, I came across the Mattel case and the Oxford University Press case, instead of merely learning about the ‘ratio’, that is, the rationale behind the court’s decision, I was asking the following questions:

How can a university enable the highest quality of learning to be available to its students without paying a high cost for purchasing multiple copies of expensive foreign treatises and books?

How can a game or toy manufacturer, e.g. Funskool or an app developer use this to protect his IP?

Similarly, when I recently learnt about a Bombay High Court judgment on third-party rights, before jumping to the analysis of the doctrine, I first looked at which commercial situations in real life could actually impact third parties in this manner?

As a law student, I would have thought of this as a conceptual proposition about third party rights and the law of arbitration. Many lawyers think like this, and their responsibility to publish or share knowledge is limited to sharing the ‘ratio’ of the latest case, or analyzing the differences in the law laid down by different judgments, without appreciating whether and how it impacts clients directly.

The former approach makes your takeaways long-lasting – you may read something once, but the learnings can be applied in multiple scenarios which are faced by others.

As a result, almost anyone who has completed Class XII can pick up and learn from (it is not simple because I can run the risk of making a course too basic or exclude people from learning).

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This really is the secret sauce to why the content in our courses is so different, and it all started back then, 10 years back, when I interned in AZB. I literally got a good look into the mind of a managing partner in the country’s top law firm.

I realized how valuable this perspective is later on, when in some meetings (events such as Legally Social, etc.) I heard that when clients talk to managing partners of India’s best law firms, the conversation is purely around business, and very little is said about the law.

I realized a few days back that we are not trained to think like this, even after we start working in law firms. I take inputs from a lot of practitioners to create practical courses, and they enjoy working with us, as it is challenging and they an the opportunity to use their legal brain in a different way.

This methodology is not ingrained into our legal education system, but this is what business lawyers do day in and day out. I know many associates who despite working for a couple of years are unable to pick up the intent of the clients in this way. Many lawyers leave it to clients or the commercials of the deal, as though their only job is to put copy paste the commercials into a standard contract. Hence, their learning is slowed down. The danger they face is that they may not mature into versatile lawyers, even as they gain years of experience. They can be phased out relatively easily.

You don’t want to be a textbook nerd, or be a lawyer who does not adapt to fit the need of the hour.

How will you ensure you develop the instinct of catching the commercials? This is not an instantaneous development. You can keep getting better over time if you work on developing these skills. That is what the managing partners of the biggest law firms are great at.

How can you start? Here are a few actions you can take

• Talk to people and ask them why they do what they do. For example, you can speak to a friend who does business about how they deal with the legal system, or the problems they face in executing contracts, or someone who works in the police, SEBI, income tax department about how they identify fraud, etc.
• Start asking questions when you read a case, a contract or perform a task at an internship.  
• Sign up for one of our courses (which pertains to your area of interest and your career goal) and perform all the exercises completely. We speak to lawyers, professionals and businessmen everyday about the challenges they face with the legal system and how to use the law to realize business outcomes. Consequently, the insights obtained over the past six years have been assimilated, and new insights are included every day. The exercises are designed to provide you a simulated environment for you to acquire the insights.
• Repeat the method and improve on the way, until your goal is achieved. Each one of you can have a different goal, and still this method will work. For example, you may be committed to achieving any of the following outcomes, and this method will work:
• • You may want to become a law firm partner or a general counsel
  • You may want to get a job in one of India’s best law firms or work in-house for a company
  • You may want to start your own practice as a litigator
  • You may want to build your own practice in a niche area, such as technology laws, media law, gender-related laws, etc.

My goal is to build a system which reliably provides such insights to lawyers working in law firms or who litigate, working professionals and ambitious students, and I still use the same method to achieve this.

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What if you could time travel like the Flash?

Spoiler alert for those who haven’t yet seen or read it.

DC comic superhero Barry Allen, is the Flash. He is a meta human speedster with superhuman speed. The speed force allows him to time travel when he runs at the flash speed. He goes back and forth in the past and future and inadvertently changes the timelines (and later fixes them, to an extent).

What if you could go back in the past or in the future, and change something about your life?

Would you do it knowing it could change the course of your life as you know it?

It is tempting to think of it though, isn’t it?

Just imagine, if you could change something in your past. What would you change? Are there any regrets, any mistakes, anything you said or did that you immediately wished you could undo?

Most of us have regrets in life, it can be anything from relationships to the dream job interview you just blew up, or losing a loved one. We wish we could change something in the past.

It is wishful thinking isn’t it?

I have always tried to analyse any issue – personal or professional with all available information and then taken a decision. Mostly, I don’t intend to change much about my past, except maybe a thing or two, which could have been turning points in my professional life.

Being a first generation lawyer who did things by the book, I did make a lot of errors in judgement. If I had known what I know now, I would have definitely used my superpower of time travel to go back in time, and change certain specific decisive actions.

# My first regret- undermining the power of networking

Networking.

Of all the things, I learnt in law school – about law, life and more, I missed this important lesson. I was too engrossed in trying to learn things and boosting my resume with moot courts and internships. Even if you googled “Top 10 things to boost your CV”, you’ll find everything but networking! No one tells you the importance of networking right at the time.

In fact I struggled tremendously while job hunting as I was not sure how to approach the right connections and do what exactly! Should I be asking them for favours? Why will they help me in the first place? What could I offer that would make the networking fruitful? Where to begin?

All these questions haunt me to date.

Once a friend in a college workshop saved the heavy questions for the managing partner of a prominent law firm. She had researched them before going and knew that they had a blog. She pursued them to their car at the end and ended up writing articles for their blog while in law school! At the time I was like “What’s wrong with her, chasing important people to their car?” But now I know she was just more prepared and persistent!

I wish I knew back then how to reach out to more people through social media, conferences, social gatherings.

If I could time travel, I would have attended them all with a more informed and prepared approach.

You need to be able to offer something of value like a strategy or a plan of action on a recurrent problem. Or something they may need assistance on, like their pet research project, or a book.

You can also come up with ideas which creates the demand. Try and make an offer that intrigues them. Like the Godfather, make them an offer they cannot refuse.

# My second regret- writing too few articles in law school

In law school we develop an obvious skill set that most of us did not utilize enough – writing articles.

In my present job, while I write, I have had numerous responses from readers and a couple of job offers too, just from writing! If I could go back in time, I would make myself read and write more articles. It is the best way to build one’s expertise in a subject as well as getting noticed by the right people.

I remember writing very few articles because I was buried under the course load, assignments, assessments, moot courts, etc. I was trying too many things as one should. But if I had been more diligent with my time management and worked on my writing, I would have made so much progress.

You are researching for tests and assignments anyway, while in law school. You might just turn an assignment into a research topic or just write more articles for publications. The point is – just start writing articles as soon as you read this.

There is guaranteed exposure from this skill set and it also helps increase your domain knowledge because of the research involved.

I know many of you are thinking, “But I am working or studying full-time, where do I find the time?” Don’t worry. Read more books or pick up the newspaper, scroll down your news feed as you do everyday. Pick up a topic and write for an hour. Just one hour from the aimless net surfing, smoke breaks, office-gossip sessions, or any other unproductive activity. You deserve time out of your own life.

And you have the time! Trust me. Write one article and let me know how it was via email. I can help you learn more about writing as I learn it myself.

# My third regret- cutting down the long internships short

There is the time I went for a long corporate internship. I worked for about four months and was really enjoying the work, work culture, learning. I was getting a basic stipend, but the learning scope was so intense, I did not care. I had planned to invest as much time as needed to bag a job in the company.

But then life happened. My father was diagnosed with third stage liver disease. The only solution was to have a liver transplant which costed around 30 lakhs back then.

My whole life, my father had supported all my crazy and drastic life decisions. He was my rock and now he needed help.

So, I did the prudent thing and left the internship to hunt for a stable job with steady income. I did the right thing at the time. But in the long run, if I had managed to stick out the internship, I would have had a much better career graph with the necessary life skills.

Don’t feel too bad for me, I eventually landed decent jobs post that. In fact the current job that I have, is completely because I liked the revolutionising concept of the startup. This time around, I followed a vision – changing the legal education system as we know it.

These are developing courses that are trying to bridge the gaps in the formal legal education. We have media law course, cyber law course, business law course and more. If you’d like, you can check them out here.

These subjects are not delved into law school in practical details. These courses teach you practical knowledge with regular exercises and article writing. You will not be stuck in your comfort zone. I can vouch for that.

I may not be the Flash (regrettably so) and may not be able to undo the past. But what I can do is that I can shape my future, and so can you.

Find out which domain you’re interested in and get into it. Make time, set aside an hour a day, read more, write more, study more.

There are no shortcuts to success. But there is no sweeter thing than that either. Knowing that you made a difference in your own life and contributed to others, is an unparalleled feeling. Start making the changes now and shape your future. Life is too short to have regrets and wishful thinking of an alternate reality.

Someone wise once told me, “You’re the superhero that you weren’t waiting for”. Be your own Flash and change the past regrets, by working in the present and shaping your future.

So, just like Dr. Wells says, ‘Run, Barry, run’!

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In this article, Shreya Bambulkar, of ILS Law College, Pune discusses IP issues in M&A reconstructions.

Introduction

In the past decade, the Mergers and Acquisitions (M&A) landscape has evolved significantly in India. It has become an important aspect of corporate strategy for organizations worldwide. According to an assurance, tax and advisory firm Grant Thornton, there were 1,147 deals (M&A and Private Equity) worth $60.54 billion in 2017.[1] A merger has been defined as an arrangement where the assets of two (or more) companies become vested in, or come under the control of one company (which may or may not be one of the original two companies).[2] The merger of two or more companies to form a new company such that all their liabilities and properties are transferred to the surviving company is known as amalgamation.[3]

Transfer of Technology in M&A Deals

With the advent of technology, acquiring high standard technology in the business can give the company huge market monopoly power. Upstream technology can help save transaction cost and downstream technology can assist in developing new products and technologies. Corporate diversification strategy is the rationale behind acquiring unrelated technology.

Technology knowledge transfer in M&A deals (know-how, know- what or know-who) creates problems as far as Intellectual Property Rights are concerned, as it differs from transfer of products in the following ways-

• Exchange of knowledge cannot be reversed
• Every country has different laws regarding knowledge protection (in case of International M&A)
• Assembling the necessary parts of knowledge required to develop future IP is a complex task
• In certain cases it is difficult to verify if specific piece of knowledge has been used.

Steps Involved in Technological Acquisitions

• Identification of attractive technologies or partners with technological capabilities
• Assessment of these opportunities, selection of the most promising ones and consideration of the terms of the acquisition
• Negotiation of the terms of acquisition between acquirers and sellers
• Transfer of the technology to the acquirer, if these negotiations have been successful. (technology acquisitions).[4]

Means of Acquiring Intangible Assets

• Acquisition Agreement- the main purpose of this agreement is to detail the terms and conditions of the acquisition. It identifies the issues specific to the transaction, the purchase price, the method of payment, date of closing and conditions precedent (if any). The seller also makes certain representations and warranties in respect of the assets.
• Transfer Documents- documents which transfer the assets, will allow the buyer to indirectly become the owner of the assets. They are executed separate from the acquisition agreement. The forms and other requirements for valid transfers differ from country to country.
• Sale of Assets- If a party acquires business vis-à-vis sale of assets, the intent to transfer trademarks and the goodwill associated with it is presumed, even though it is not expressly provided for.  An exception to this concept is in the context of transactions between parent corporations and their wholly-owned subsidiaries.
• Stock Purchase- in a stock purchase acquisition, ownership of trademarks and other intellectual property still remains with the acquired company. A separate agreement is usually necessary to lay down the parties’ intentions.

IP Due Diligence

Due diligence procedure can be a source of significant information for both the parties in an M&A deal. Intellectual property and technology assessment are the key determinants of the deal. IP due diligence is inherently difficult because of the issues faced in the valuation of IP. Poorly structured or inappropriately applied business strategy is amongst top listed reasons for ultimate failure of IP driven M&A.[5] Hence, a well structured and comprehensive due diligence is fundamental. It provides vital information specific to future benefits, economic life, ownership rights and the limitations of the assets.

Perceived as functional filter, due diligence procedure should identify potential risks, capable of harming inherent interests of the parties to the contract.[6] The following questions may be included in the due diligence-

1. Does the main impetus of M&A strategy reside in obtaining intellectual property assets?
2. What entities currently use given technologies or other IP, what is their position in relation to the acquirer and what other players on the market are interested in the given technology?  
3. Is the respective industry prone to litigation or not?
4. How sophisticated is the intellectual property policy of the target company?
5. Is an asset purchase or stock purchase considered by the parties?
6. What important objectives of the transaction may be identified?
7. What is the level of concentration on the given market?
8. How are the targeted intellectual property assets consistent with pursued IP business strategy of the acquirer?[7]

Non-Disclosure Agreement

Assuming that all the confidential information is shared in the due diligence stage, it is crucial that parties enter into a non- disclosure agreement. This will provide a safeguard to the interests of the parties if the M&A deal gets cancelled in the future. From the IP point of view, such agreement protects mainly copyrights (software programs), inventions that were not filed for patent yet, trade secrets, know-how, databases, list of customers, business methods.

An important requirement for protection of information under the non- disclosure agreement is that the information should be secret i.e. not in the public domain.

TRIPS agreement specifies the requirements for information, which is eligible for such protection:

• the information must be secret, not generally known or readily accessible for people working in the respective field
• the secrecy of information attributes it with certain value
• the owner of the information must have taken steps for protection of information from leak to the public domain.[8]

IP Valuation

IP being an intangible asset, its valuation is a crucial issue in the process of due diligence. The following factors have to be considered for IP valuation- Given industry, market share of the owner, profits, occurrence of new technologies, concentration and level of competitiveness on the given market, barriers to entry in respective industry, expansion prospects, granted legal protection, remaining economic life.[9]

Following are the methods of IP valuation-

• Income based method – The income-based method values the asset based on present value of future net income stream that the assets in question are expected to generate.[10] The application of income method requires four variables, as presented below – 
  1. Amount of net income the asset is expected to generate.
  2. The time period over which the income is expected.
  3. The present value discount rate for the future income (a risk free rate of return plus an inflation adjustment.
  4. The risk of realizing future income.[11]

• Cost based method – The cost-based method is designed to measure the future benefits of ownership by quantifying the financial amount required to obtain or develop identical or similar IP asset in question.[12]
• 1. Existent active market for the valued asset ( for patents, trademarks and copyrights)
  2. Sufficient number of comparable asset transactions. 
  3. Access to price information of comparable transactions.
  4. The comparable transactions must be performed on arm’s length. [14]Market based approach – it is widely accepted and used in case of valuation of tangibles. The actual value of an asset is calculated by comparison to equivalent or similar transaction of unrelated parties on the market.[13] In order to classify the transaction as comparable, four cumulative requirements must be in place.

Suggestions for Protection of Intellectual Property in M&A Deals

1. Worldwide Recordal of Intellectual Property Rights – IP rights acquired after an M&A deal need to be transferred immediately to the new owner in each jurisdiction where the right exists. Timely and comprehensive recordal as delay in the same can lead to loss of the purpose of trademark- as a true indication of origin. The new owner may not be able to sue for infringement or attend to renewals. It may also lead to a possible loss of royalties. 
2. Arbitration clause – The parties may decide to submit their disputes (if any) to arbitration to avoid the court delays and ensure a speedy and effective remedy.
3. Future costs – The parties may decide as to who will bear the expenses of that might occur in the future. For example- The expenses of filing, registration, renewals and maintenance of patents, trademarks etc.
4. Warranty and liability – These clause are crucial to the M&A deal as they ensure that the aggrieved party will get a contractual remedy, most commonly the damages. The parties can also decide a cap on the parties’ liability as a part of risk allocation.
5. Protection clauses in M&A agreement – The agreement should protect the interests of both the parties. Apart from the standard form of the agreement, additional clauses may be added to cater to the specific needs of the deal –

•  Parties changing their mind – A ‘right to exit on notice at will’ can be included in the agreement to provide safeguards to the weaker i.e. the smaller firm in the deal. It gives the party a right to terminate the contract in case of breach by the other. It can also involve termination payment to the innocent party.
• Use it or lose it – this clause can ensure that parties comply with their obligations in the specified time. This is useful where transaction fee is linked to the outcome of the M&A. For example –  Sharing the royalties earned by the sale of products in which the acquired IP used.
• Third parties rights – the parties may include clauses to protect the interest of the third parties with whom they already have legal relationships. For example – A condition that the acquirer shall not refuse to provide technology to the parties mentioned by the acquired.

Reconciling IP Laws with Competition Laws

An appropriate IP law designed with focus on transfer and dissemination of technology can help the developing countries to achieve their technological goals. But alone it cannot regulate all the technology transfer inflows or prevent the anti-competitive practices.  IP laws can help develop a balance system of law to promote competition and innovation as well as consumer welfare. Countries can also customize procedural aspects of their IP related competition laws to make it as a threat to foster technology transfer.[15]

Conclusion

Protecting company’s IP assets in the M&A deals is the most crucial task at hand since the company’s survival, goodwill and profit depends on it. Every step of the M&A deal has to be taken with great caution to ensure benefits to both the parties of the transaction.

The Government continues to send all the right signals through the economic reforms to encourage M&A in India. The land acquisition bill, labor law changes and GST will bring crucial changes in the corporate field. Also the M&A prospects are expected to remain steady in the coming future.

References

1. Corporate India’s M&, PE deals cross $60bn in 2017, THE HINDU. (JAN.28,2018)
2. Wolters Kluwer , Mergers And Acquisitions In India 15 (Ernst & Young eds. 4th ed. 2016)
3.  Id. at 15
4.  Letizia Mortara & Simon Ford, Technology Acquisitions- a guided approach to technology acquisitions and protection of ideas, Center for Technology Management, Institute PF Manufacturing, University of Cambridge, 2012 at 4.
5.  DePamphilis, D.M.: Mergers, Acquisitions And Other Restructuring Activities 136 (ELSEVIER eds.,  6th ed. 2012).
6. Berman, B. ET AL, From Assets To Profits : Competing For Ip Value And Return 207(John Wiley & Sons Inc eds., 2009).
7.  Bosch, M.C. and Burgy, A.L., Demystifying IP Due Diligence, Managing Intellectual Property, (JUNE. 6, 2006) [link] 
8. Agreement on Trade related aspects of Intellectual Property Rights (TRIPS) , Art.39
9. PARR, R, Singapore – WIPO Joint training course for Asia and the Pacific region on Intellectual Property and Technopreneurship development 11  Module 6: IP Valuation Issues and Strategies, 1999,
10. SMITH,G.V. and PARR,R., Valuation of Intellectual Property And Intangible Assets 164 ( John Wiley & Sons eds., 3rd ed. 2000).
11. Id. at  pg 164-168
12. Parr, supra note 9 at pg 13
13. DANIEL, B., Financial Aspect Of Licensing Agreements : Valuation And Auditing  94 (John Wiley & Sons eds.,  3rd ed. 2000)
14. Parr, supra note note 9, at pg 181
15. TU THANH NGUYEN, Competition Law, Technology transfer and The TRIPS Agreement: Implications for Developing Countries 34(Edward Elgar, Cheltanham, 2010).

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Abstract

Copyright, the most important aspect of intellectual property, is the exclusive right of the author on his writing, performance or creative work. The stringent application of this law will stifle creativity and freedom of speech in the society. This article tries to analyze the conflict between copyright and free speech and the legal treatment of parody which involves taking of a substance from the original work. If the object of the parody cannot be recognized it fails because of which it has become debatable. The courts have found themselves in an uncomfortable position balancing these two rights. The paper examines the extent to which copyright restrains freedom of speech. It argues that parody is not and should not be actionable under copyright law. For this purpose, the tests laid down by the statutes and the Courts to check copyright infringement and the defenses available for parody have been explored. In this backdrop, the paper has reviewed various cases which highlight the Court’s approach towards parody in India as well as in the US. Further, it argues that parody does not infringe the right to publicity of public figures whom it ridicules by discussing few case laws. It also proposes a few suggestions such as introducing defenses of freedom of speech and public interest to ensure more protection of parody. Finally the fact that copyright and freedom of speech have the same aim and hence they co-exist has been highlighted by focusing on various provisions in the Copyright Law itself that try to balance these two rights thus concluding that Copyright Law is not an obstruction to free speech.

Introduction

Copyrights are the rights of the creator of artistic, music or literary works in order to ensure his best interest and protect his work from piracy. It protects the expression of the idea and not the idea itself. Copyrights promote creativity by securing what has already been created and there by curbing repetition and piracy. However, creative work has become boundaryless. Thus Intellectual Property rights and Human rights clash at this point where copyright creates a fetter on what others are able to speak, write, use, display or create. This paper tries to reconcile these two aspects.

Parody is an example of a work that is stuck in this conflict between copyright and free speech. Parody tries to comment or criticize over the work of somebody else. It has an essential characteristic of borrowing work. There is no set boundary or format of parody and it has thus become a debatable issue. But many countries have protected parody as a form of creative expression.

Freedom of speech and expression is guaranteed by Article 19 of the Indian Constitution. The Copyright Law is an extension of this freedom, which means that if an individual has freedom of speech, that person will get to protect his intellectual work as property and also ensure that he cannot be deprived of his property without any law.

History of Copyright

History of copyright commences from the time of Guttenberg’s printing press. The number of printed books exploded in Britain thus requiring a need to protect the rights of both the publishers and the writers. [1] Printing rights were regulated by the crown by granting royal privilege, parliamentary privilege and stationer’s copyright. [2]

The first statute created for protecting the creator’s rights was the Statute of Anne, 1710. It granted legal protection to the creator’s work for 14 years. Statute of Anne gave recognition to the author as foundation head of protection. Copyright protection slowly expanded to other works as well, like performing rights, Sculpture copyright, musical and dramatic copyright.[3]

Today at the international level treaties and conventions are made for protection of creators. One of the most prominent treaties that laid the foundation of copyright is the Berne Convention of 1886.

Parody

The origin of the word ‘parody’ can be traced back to the old Greek times when parody was called paroidia – a compound of two words “para” (beside) and “ode”(song).[4] In the earlier times parody had a very narrow scope and it was limited to only parodising poems. However in today’s world, parodies have generated a huge fan base.

Parody is “an imitation of the style of a particular writer, artist or genre with deliberate exaggeration for comic effect”.[5] A few examples of parodies are ‘Gaana Wala Song’ is a parody of the song ‘Ishqwala Love’ and Michael Gerber’s ‘Barry Trotter’ book series parodizes J.K. Rowling’s ‘Harry Potter’.

Conflict between Copyright protection and Freedom of speech and expression

The Copyright Act protects the creations of human intellect i.e. their unique expressions of ideas. This object sometimes comes into conflict with individual’s right to free speech as it leads to the monopoly of the copyright owners. It restrains individuals from expressing themselves. It limits their scope of expression and movement of creativity. This problem of imbalance is most evident in a situation where it is necessary to adopt a part of a copyrighted work to comment, criticise or review as in case of parody.

A key feature of parody is that it should conjure up the original work in such a way that people can relate the two but it should not violate the copyright of the original work. It is often difficult to draw a line between the two and hence parody is caught in this conflict.

Parody and freedom of speech and expression

The basic premise of allowing works that would otherwise constitute copyright infringement is that there is a social value that outweighs the harm of infringement. Society values parody for its communication of original and creative expressions and they in turn are valued for their productive nature and participation in social dialogue. Critical parodies are a form of healthy, social and artistic criticism, and excluding parodic criticism silences this powerful expression.  Satirical items add to political, social discussion. They are also valued for their humorous expression and entertaining dialogue.

Thus denying parodists the opportunity to poke fun at symbols and names which have become woven into the fabric of our daily life, would constitute a serious curtailment of freedom of expression.

Hence parody should be protected as a free speech because it proves as a tool of societal development and progress. It is equally necessary to protect the creator’s rights. Therefore a balance has to be struck between the two with the help of certain exceptions and limitations.

Is parody a copyright infringement?

The ever increasing popularity of parody has resulted in a debate as to whether it is a copyright infringement. Copyright infringement takes place when the creator’s original work is reproduced directly or from memory. The act of copying may also be the result of reproducing an original work indirectly, which is from a copy thereof.[6]

Parody is not possible without reproduction of certain amount of work from the original content. A prime characteristic of parody is to create an amusing situation, which may violate the rights of the creator and cause copyright infringement.

Infringement of copyright occurs when a person does, without the consent of the copyright owner, anything which is the sole right of the copyright owner as per the statute.

In Otto Eisenchiml v. Fowcett Publications,[7]  Chief Judge Duffy observed-

An infringement is not confined to literal and exact repetition or reproduction; it includes also the various modes in which the matter of any work may be adopted, imitated, transferred, or reproduced, with more or less colourable alterations to disguise the piracy.

Whether parody is a copyright infringement or not can be proved by the following tests laid down by the courts.

Tests for copyright infringement

1. To test whether substantial part of the work has been reproduced quality of the extract should also be considered and not just its length.
2. Three factor test – The Court in Civic Chandran v. Ammini Amma [8] followed an approach that can help us decide whether a parody is a copyright infringement or not. It took into consideration the following factors – (a) the quantum and value of the matter taken in relation to the comments or criticism; (b) the purpose for which it is taken; and (c) the likelihood of competition between the two works.[9] The three tests are similar to the fair use criteria used in the USA. Such approach can provide the Courts with the necessary assistance to resolve the conflict between parody and copyright infringement.
3. A similar three factor test has also been laid down in Ashdown v. Telegraph [10] in which it was held that the success or failure of the defense depends on three factors: (a) whether the alleged fair dealing is in commercial competition with the owner’s exploitation or work, (b) whether the work has already been published or otherwise exposed to the public and (c) the amount and importance of the work which has been taken.

There is a very thin line that prevents parodies from violating copyrights. This thin line is a blurred spot. To obtain a clear picture of this scenario the Court usually takes help of such tests because neither is every parody a copyright infringement nor is it always exempted from violations.

Defenses Available for Parody

Comparison Between Fair Dealing and Fair Use

Fair Dealing – The term ‘fair dealing’ has not been defined in the Indian Copyright Act 1957. But Section 52 specifically deals with ‘fair dealing’. It provides an exception for copyright infringement for the work for criticism, review only as extracts or quotations from original work and not for reproduction. The quantum of extracts permissible depends upon the circumstances of each case. But any work cannot be used as “fair dealing” to such an extent that it becomes a blatant act of copying the work of another. It is only when the Court has determined that a substantial part has been taken that any question of fair dealing arises. Though once this question arises the degree of substantiality, that is, the quantity and value of the matter taken, is an important factor in considering whether or not there has been a ‘fair dealing.[11] Also, even if the purpose of reproduction is to criticize the portions of the drama or the ideologies of its author, still, it may not amount to ‘fair dealing’ unless the defendants prove that the criticism is fair and justifiable in the facts and circumstances of the case.[12]

To successfully avail the fair dealing defense in India, a parodist has to satisfy two conditions:

(i) he must not intend to compete with the copyright holder and

(ii) he must not make improper use of the original. [13]

Following cases focus on the usage of this doctrine in India –

In Civic Chandran v. Ammini amma, [14] the interlocutory injunction granted by the District Court on the counter drama ‘Ningal Are Communistakki’ written by Mr. Chandran based on Mr. Bhasi’s drama ‘Ningal Enne Communistakki’ was quashed in the appeal because though defendants had reproduced substantial portions of the drama, the Court held that its main purpose was not to copy to convey the same ideas, but to criticize the drama and that it was the original creative work of the defendants.

On the contrary, in Pepsi Co v. Hindustan Coca Cola Ltd [15] the appellants Pepsi Co. sought an interim injunction as the respondents infringed their copyright of ‘Yeh Dil Maange More’ as ‘Kyo Dil Maange No More’ and their roller coaster ride commercial in their own commercial. Defendants claimed that they had parodised the commercial. The Court held that defendant’s commercial was a colorable imitation of appellant’s commercial and that it was a replica hence put a restraint on it.

In these cases, Courts have applied all the tests and through a comparative analysis with the copyrighted work, have decided whether parody can be an exception under fair dealing.

Fair Use – Section 107 of The US Copyright Act deals with fair use. It has a four factor test to determine whether a work is a copyright infringement or not. The four factors are –

• Purpose and character of the use
• Nature of the copyrighted work
• Substantiality of the portion used
• Commercial factor.

These factors have been applied by the Courts time and again to decide the cases of parody.

In SunTrust Bank v. Houghton Mifflin Co.[16] plaintiffs held a copyright in ‘Gone with the Wind’. Defendant, in her critique of this book ‘The Wind Done Gone’, used similar characters, plots, and major scenes in the first half. So the SunTrust filed a copyright action and sought a preliminary injunction to stop the book from publication. In order to use the ‘fair use exception’ the court observes the purpose and characters of a book, its nature, the amount and substantiality of the portion of the book used and the effect on market value of the original. The Court held on these grounds that this parody on the book was appropriate and did qualify for the fair-use exception

In Dr. Suess v. Penguin Book Co.[17] the defendants sought to publish and distribute a book called “The Cat NOT in the Hat! Parody by Dr. Juice”, a rhyming summary of the O.J. Simpson. Plaintiff owned the copyright “The Cat in the Hat”. Defendant’s book had a lot of similarities to the original work, including rhyme scheme, narrative elements and certain chief character identifiers. Plaintiff filed a suit and the Court granted a preliminary injunction. The defendant appealed. The Ninth Circuit in the light of fair use analysis of the defendant’s work analysed that the work was not a parody because it merely mimicked Dr. Suess’s style to attract attention and there was no effort to create a transformative work with new expression, meaning or message was made. The defendant copied substantial portions of plaintiff’s work and its use was also commercial that could harm the original work’s market and thus the preliminary injunction was affirmed.

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These cases clearly highlight that there is no hard and fast rule in the way parodies are treated. It depends on the facts and circumstances of each case.

Transformative work

To be fair use, the use of copyrighted work should be transformative thereby furthering the constitutional goal of promoting the progress of science and useful arts.[18] A use must be productive which uses the quoted matter in a different manner or for a different purpose like criticism as in case of parody.[19] The author should invest his own skill, labor and creativity to make it more distinct from the original work.

Justice Harry Blackmun gave a dissenting opinion that the more transformative the new work, the less will be the significance of other factors, like commercialism, that may weigh against a finding of fair use.[20]Hence, if parody uses more transformative work, there is no copyright violation in it.

Does Parody Infringe Right To Publicity?

Right to Publicity is defined as an individual’s right to control and profit from original use of his or her name, likeness or persona.[21] Right to publicity is well developed in America but it hardly has any recognition in India.

In Jerry Falwell v. Hustler’s Magazine, [22] the ‘Hustler magazine’ published a parody of an advertisement claiming a Fundamentalist minister, Jerry Falwell, had a drunken incestuous relation with his mother in the outhouse. Falwell sued to recover damages for libel, invasion of piracy and emotional distress. The issue was ‘whether freedom of speech extended to the making of offensive statements about public figures’. The Court held that public figures may not recover for the intentional infliction of emotional distress without showing that the offending publication contained a false statement of fact which was made with actual malice. The Court added that protecting free speech surpassed the state’s interest in protecting public figures from offensive speech, as long as such speech cannot be construed to actual facts about its subject.

In Shri Ashwani Dhir  v. The State Of Bihar.[23]a television show titled as “Ram Khilawan (C.M) ‘N’ Family” parodied Lalu Prasad Yadav the former Chief Minister of Bihar. The title character closely resembled him in his distinctive attire, mannerisms and rustic wit and showed him being a party to corruption. The court quashed an injunction against the telecast of the show which was granted earlier on the reasoning that no actual harm was made to the plaintiff who filed the suit to restrain the telecast of the show. The submission that the show denigrated a specific caste to which the CM belonged was not supported by evidence. A creative artist is free to project the picture of society, the political system or the person in politics in the manner he perceives, provided it does not affect public order, decency or morality. It cannot be suppressed on the ground of intolerance of some people or existence of some hostile audience.

In all these cases the Court has held that the publicity right is not violated by parody, because publicity right only protects a public figure against use of his identity for purely commercial purposes, whereas the predominant object of a parody is to criticize and satirize the personality of a public figure.[24]

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Suggestions

• Court should have a liberal interpretation of ‘fair dealing’ and ‘criticism’.  An expansive approach is necessary so that every court can make a fact based decision rather than following precedents as every case varies from the other and this will reduce the stringency of the copyright law thereby promoting creativity and free speech.
• An express statutory exception for parody should be made in the statute as in the case of the UK (Section 30(A) and Schedule 2(2A) of Copyright, Designs and Patent Act 1988 as amended in 2014).Under this, right holders are unable by contract to restrict the use of their work for such acts.  This can help in stimulating creative growth in the society and provide it necessary protection. For this purpose, necessary principles can be laid down to determine whether a work is a parody or not. Some criteria can be.
• parody should be humorous,
• it should not infringe economic or moral rights of the author of protected works and
• it should have substantial modification of the protected works.
• Granting an injunction in copyright cases involving freedom of speech issues would amount to an unconstitutional prior restraint on speech, in such cases, it should be readily granted only in easy cases involving mass commercial reproduction of protected works; in all other such cases, it should be decided completely upon the merits of the case.
• Following factors should be considered before granting it:

1. Whether the injunction significantly burdens the defendant,
2. The magnitude of harm likely to be suffered by the copyright owner if the infringement is not restrained,
3. Whether the implementation of the injunction would be feasible and effective,
4. Whether other less burdensome and comparably effective means of restraining access to the infringing material are available.

• In Hubbard v. Vosper,[25]it was laid down that there should be a     competition between the two works for granting injunction.

• In Civic Chandran v. Ammini Amma, [26] the Court quashed the preliminary injunction against the defendant’s counter-drama because –

1. The defendants had made all expenses and arrangements to stage the drama thus it would have caused irreparable injury and hardship to them whereas it would not caused any such injury to the plaintiff if it was not granted.
2. Because of the public debate and advertising, public was eager to view it
3. It would have a great impact on the political development of the State
4. Even if loss was caused to the plaintiff by staging the counter drama, damages could be awarded to them.

The Court held that the injunction on staging the drama would be unjust and would interfere with freedom of expression as it dealt with matters of current importance thus it would lose all its relevance and would be practically worthless even if the suit was dismissed later. [27]

• Public interest as a defense

India has no statutory provision for this defense to copyright infringement, which is analogous to Section 171(3) of England’s Copyright, Designs and Patents Act, 1988.

In Ashdown v. Telegraph,[28] defendant published minutes of meetings of Britain’s former   Prime Minister without permission, being aware of its confidential nature. Thus plaintiff alleged copyright infringement. The defendant pleaded that the content was disclosed in public interest. But this defense was rejected as it followed the approach of Judge Aldous in Hyde Park v. Yelland [29] that the Court would be entitled to refuse copyright if the work is:

          (i) Immoral, scandalous

          (ii) Injurious to public life, health and safety,

          (iii) Incites to act in a way referred to in ii) [30]

But the Court of Appeal, felt that this test was too restrictive and preferred the reasoning of Mance LJ in Hyde Park, “The circumstances in which the public interest may override copyright are probably not capable of precise categorization or definition”. Hence the court considered that Section 171 of the Act permits the defense of published interest to be raised in such circumstances.” [31]

In India, in Super Cassettes v. Chintamani Rao, [32] the plaintiff sought a permanent injunction to restrain the defendants from engaging in public performance, reproduction, recording, broadcasting or publishing any works in which the plaintiff  had the copyright. In spite of this observation of Ashdown being cited, it has cited with approval the judgment of Judge Aldous in Hyde Park as the Indian position on this point.

Though Indian Courts have ignored this defense for a long time, there are situations where the copyright owner is extremely unlikely to grant a license for unpublished work dealing in matter of public interest as it may cast that person in an unfavorable light. Here, public interest overrides the individual’s rights (including copyright). Hence in such situations, the public interest defense has to be considered positively like in the Ashdown case as it will guarantee more freedom of speech.

• Freedom of speech as a defense –

Being the most crucial fundamental right in a democratic society, it is the mother of all liberties and the essence of a free society. It helps in unhampered flow of opinions and thus leads to discovery of the truth. Expressing opinions, criticisms ensure active participation in democracy and political stability. This is the basic right enshrined in our Constitution.

Parody should be considered as a way of exercising this right. This defense should apply where taking certain part of copyrighted work is necessary for the speaker to communicate his ideas but is not allowed by the internal mechanisms of copyright law. However, it is difficult to identify this necessity.

Barendt has suggested that freedom of expression challenges to copyright claims should only be sustained when copyright law is used to suppress the dissemination of information of real importance to the public or to stifle artistic creativity, parody or satire and when the legislation itself does not provide adequate safeguards for that problem [33]

In Ajay Gautam v. Union of India, [34] a PIL was filed to restrain the exhibition of the Hindi film ‘PK’ on the grounds of hurting religious sentiments, defaming Hindu culture and making a satire on Hindu Gods and saints. The Supreme Court refused to impose such a restriction because one has a ‘right to communicate’. It protects the right of the artist to portray social realities in all forms. Free speech cannot be suppressed on the ground either that its audience will form harmful beliefs or commit harmful acts.

However certain restrictions need to be exercised on this right which is evident in the following case.

Ram Gopal Varma in trailer of his film ‘Rann’ had used a parody of the National Anthem which was subsequently removed because the Central Board for Film Certification refused to air the trailers of the movie with the song in it since it tampers with and distorts the National Anthem. It was held that every line was tinkered to send a negative message. The Bench held that borrowing lines from the National Anthem to create a new song could not be termed an artistic expression since nobody had a right to tinker with it. [35]

Reconciling copyright protection and freedom of speech-

In Wiley Eastern Ltd v. Indian Institute of Management [36] the Division Bench had observed that the basic purpose of Section 52 is to protect the freedom of expression so that research, private study, criticism or review or reporting of current events could be protected. Thus ‘fair dealing’ should be understood keeping in mind the right to freedom of speech enshrined in Article 19(1) (a) of the Indian Constitution. Copyright granted is not in respect of the ideas contained in the works but it is for the tangible form in which they are expressed. [37] The Copyright Act ensures freedom to an individual to have his unique expression of an idea that already exists. But it does not allow to copy the verbatim expression of another person. Hence, copyright is not a constraint on freedom of expression but it tries to establish a balance between the rights of the copyright owner and the freedom of expressions given to others. However it can often be unclear as to what is an idea or expression in a particular case.

In Kenrick & Co. v. Lawrence and Co [38] plaintiff conceived the idea of publishing cards bearing a representation of a hand holding a pencil in the act of completing a cross within a square and procured an artist to do so under his direction. Subsequently the defendant published similar cards but the hand in the defendant’s card was in a slightly different position. Though the idea was clearly taken from the plaintiff’s card, it was held that the defendant had not infringed the plaintiff’s work as there was no copyright in that idea.

Moreover, there is no conflict between the two due to the existence of inbuilt exceptions and limitations within copyright law like the idea/expression dichotomy, the requirement of originality and transformative work, defenses for copyright infringement and the limited term of copyright that extends up to the life of the author and 60 years after his death as per section 22 of Indian Copyright Act 1957. Intellectual property rights are themselves human rights and share the same goals as other human rights; therefore both these sets of rights do not simply co-exist, but also coincide and co-operate. Copyright promotes the creation of distinct and unique expressions safeguarding the freedom of expression and hence both work towards achieving the same objective ‘to guarantee free speech to individuals’. Copyright encourages new independent expressions that are later protected by freedom of expression.Thus, Copyright Law provides an incentive to creativity by effectively protecting it from being reproduced without license. Copyright Law is not an obstruction to free speech because one can express his views and views of others- but not as his own. Hence it is not an obstruction to free speech.

Conclusion

In conclusion the authors firmly believe that Copyright Law encourages free speech and expression and also that Copyright cannot impose restriction over free speech and expression. That encouraging creativity is the aim shared by both, thereby proving the fact that parody is not a copyright infringement. The authors firmly believe that free speech should be promoted in the society as it enhances the free flow of ideas and works hand in hand with public interest. Given the treatment parody suffers in India, the authors suggest a more liberal approach of courts towards parody. Considerable and rational tests to measure the transformation in a work are also suggested.

Therefore in light of the discussion carried down in this paper, it is highlighted that parodies should be encouraged and protected under the intellectual property law and Copyright Law and free speech co-exist and co-operate.

References

[1] History of copyright. What are copyrights ?,HISTORY OF COPYRIGHT.ORG, http://www.historyofcopyright.org/(last visited January 03, 2017)

[2] H.Tomas Gomez Arostegu, The Untold Story of the First Copyright Suit under the Statute of Ann in 1710,25 Berkely Tech. L.J. 1247, 1251-54 (2010)

[3] Copinger and Skone James, Copinger and Skone James on Copyright 34-36, 15th ed. 2008

[4] Karan Maratha Trust v. Devidas Bagal, 1999 PTC 751

[5]Parody, Oxford Dictionary (3rd ed. 2010)

[6] Karan Maratha Trust v. Devidas Bagal, 1999 PTC 751

[7] 246 F 2d 598

[8]1996 (16) PTC 670 (hereinafter Civic Chandran)

[9] Id. at para 8

[10] [2001] 4 All ER 666 (hereinafter Ashdown)

[11] Copinger and Skone James, Copinger and Skone James on Copyrights 196 11thed  1971

[12]  Civic Chandran, supra note 14  at para 51

[13] Rahul Saha and Sryon Mukherjee, Not so funny now is it? The serious issue of parody in intellectual property law, 1 IJIPL 45, 48 (2008)

[14] Civic Chandran, supra note 14

[15] 2003(27) PTC 305

[16] 252 F. 3d 1165 (11th Cir. 2001)

[17] 109 F.3d 1394

[18] Campbell,supra note 6,  at 579

[19]  Pierre N. Leval ,Toward a Fair Use Stanadard, 103 Harv.L.Rev. 1105, 1111 (1990).

[20] Sony Corp. of America v. Universal City Studios, Inc. 464 U.S. 417, 451 (1984)

[21] Byrd,L., Privacy Rights of Entertainers and Other Celebrities: A Need for Change, 5 Ent & Spots L.J. 95, 100 (1998)

[22]485 U.S. 46 (1988)

[23] AIR 2005 Pat 101

[24] Saha and Mukherjee, supra note 18, at 52

[25] 1972 2 WLR 389

[26] Civic Chandran, supra note 14, at para 26

[27] Civic Chandran, supra note 14, at para 23

[28]  Civic Chandran, supra note 14, at para 23

[29] (2000) R.P.C. 604

[30]  Id. at para 66

[31] Ashdown, supra note 13, at para 58

[32] 2012 (49) PTC 1 (Del) at para 81

[33] Eric Barendt, Copyright and free speech theory, in COPYRIGHT AND FREE SPEECH: COMPARATIVE AND INTERNATIONAL ANALYSES 11, 32-33 (Jonathan Griffiths and Uma Suthersanen eds 2005)

[34] W.P (C) No. 112/2015

[35] Shan Kohli, Parody of National Anthem: Ram Gopal Varma ki Nayi Aag, 3 NULS L. Rev. 215, 216-227 (2010)

[36] 61 (1996) DLT 281 (DB)

[37] Taraporevala, supra note 29, at 174

[38] (1890) 25 Q.B.D. 99

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I am a city person. I was born and raised in Kolkata and I have lived in a metropolitan or cosmopolitan city ever since.

Then I moved to a small village in Goa called Mandrem.

Goa is beautiful! With old portuguese houses and churches spread across the state, it is picturesque. But Mandrem was a revelation.

I can never get tired of the view. With small hills surrounding the area and luscious green fields, it is a quiet village with friendly faces. The view from my present co-working space was what sold me to the idea.

When you come from Panjim, the road opens up in a clearing, with green fields on both sides. You can see the hills surrounding the area and clear blue sky lined with white clouds.

It is one of the most serene experiences to simply watch the sunset from the co-working space. I can sit and soak in the view for hours at a stretch.

Then I went back home. It was a complete 180 degree from Mandrem.

The sheer noise, lights, traffic, countless people moving around urgently seemed weird to me. But I guess that is how city life is.

When I came back to Panjim after a 3 day vacation at home, I started noticing the various constructions on the way to Mandrem. I also heard that a new airport is being constructed considerably nearer to the village. The immediate concern in my mind was that the natural beauty of the village would be threatened. With the airport and other construction development on the way, tourism will be on the rise and so will be the rate of real estate in these areas.

As a lawyer my mind immediately went to what a real estate lawyer can do in such situations. Professional hazard I guess.

The people who are in such areas with real estate will need real estate lawyers at some point or the other. Then the question arises – what do the owners of real estates and buyers need to know about real estate lawyers.

Who do they go to for the negotiation, contract drafting, title check, etc? Will they have to run around from one government office to other? Where and how will they get the documents registered?

All these questions can be solved by simply hiring a real estate lawyer. Here are four things you must know about real estate lawyers:

# Hire an attorney before the deal!

What is the best time to hire a lawyer? In the end, when paperwork needs to be done? No.

The best time to hire a real estate lawyer is before getting into the deal. You need a lawyer, every step of the way to advise you about the possible pitfalls, to do the negotiations, get the best deal for their client.

The problem with going to a lawyer after the deal is closed is that they cannot help you with many solutions after the deal is closed. In the preliminary stages they can help you avoid the dispute by doing the necessary background checks, looking into the ownership titles, paperwork, etc.

Imagine if you are entering into a deal for buying a house. You go through the agents and do not involve the lawyers until after registration of the sale deed. Now after a while you get to know that part of the house was built on a disputed property. This is when you go to the real estate lawyer. But, if you’d gone to the lawyer before then he could have done the necessary checks and figured this out before and helped avoid the dispute altogether.

Prevention is better than cure, so you need to go to the lawyers before the damage is done.

# Get the real estate lawyer

Being a lawyer, there is a major misconception amongst people that a lawyer will resolve any dispute. But, like doctors, lawyers have specialised fields too. Just because your high school friend has a flourishing criminal practice, does not mean he can help you with real estate disputes. You should not go to a criminal lawyer for advice on real estate.

A real estate lawyer has to develop his knowledge base, skill sets and network based on the industry. It is best advised to go to one in case of a real estate dispute or query as they have the specialised knowledge of the domain. One may learn the specialised knowledge from doing a real estate law course.

Click here to know more about real estate law course!

For instance, a corporate lawyer can draft a variety of contracts and agreements pertaining to mergers, acquisition, non-disclosure, licensing, etc. But when it comes to drafting a sale deed, development agreement or even a leave and license agreement, the better bet is on a real estate lawyer. They have the necessary skill set to do the job better.

# Seek advice from real estate lawyers, not agents!

Free advice is difficult to refuse. But it can be quite costly too.

Basically, people avoid going to the lawyers because they think that they charge too much for giving the advice. A doctor also advises the patient. But the checkup, medications, etc. are tangible exchanges between the patient and the doctor. That makes it seem like a fair exchange.

Whereas, the lawyers seems to be simply talking to the client, while advising. The lack of a tangible exchange makes it seem like an unfair exchange. This makes some people wary of lawyers in general. Therefore, they seek advice from other less expensive options and fall in trouble more often than not.

When entering into real estate transactions, you may need a real estate agent’s assistance. But that assistance should be limited to their area of expertise. You should not equate a qualified lawyers advice over an agent or any other person. It is not like that others do not know much about the dealings. But an expert opinion from a qualified person is necessary when entering into a real estate dealing. It helps avoid the expensive disputes.

# Real estate lawyers do way more than you know!

When a client receives the final documents and pays the fees, they go home knowing that the job is done. But what happens behind the scenes? How do these lawyers do the work behind the scenes in order to ensure the client’s peace of mind?

Real estate investments are usually one of the biggest financial decisions people make.

With a good real estate lawyer, clients are able to rest assure there are no problems with the title and that the terms of the purchase agreement are fair to them. Property law can be rather archaic and often still requires delving into old records that haven’t yet been digitized, so it isn’t exactly easy work either. But these lawyers provide these services with a lot of hard work.

The real estate lawyers need to be able to provide end to end service to a potential client. A client may come to them for a simple title search certificate or a leave and license agreement. Or a developer may come for understanding his contractual obligations to the client or whether the delay can be justified as unforeseen circumstance. These lawyers provide the necessary services so as the client does not have to be concerned with the nitty-gritty of the dealings. They negotiate for them the best possible deal.

So, now that you know about the real estate lawyers, hope you will cut them some slack in future when the turnaround time takes slightly longer than you’d like. They are doing the best in your interests, after all.

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In this article, Sakshi Goyal of Symbiosis Law School, Noida discusses the Emerging of Artificial Intelligence (AI) technology in the Legal sector.

Introduction

From Alexa, the virtual assistant to self-driving cars, Artificial intelligence is developing rapidly. The term Artificial Intelligence (AI) was coined by John McCarthy, an American computer scientist in 1956. According to Merriam Webster’s dictionary, “Artificial intelligence is a branch of computer science dealing with the simulation of intelligent behaviour in computers”. It is generally portrayed as robots with human intelligence.

Artificial intelligence has transformed every professional sector and the legal profession is no exception. Not only are the software solution replacing paperwork and data management, the legal industry is also becoming consumer-centric. Due to globalization, legal business has undergone continuous growth and technology advancement.

Except for the services which depend upon experience and judgement, everything else is open to being replaced by technology. As per Deloitte, “Over 100,000 jobs in the legal sector have a high chance of being automated in the next twenty years” No doubt that AI has received much attention but in the legal industry, it is still at an infant stage which makes it open for both great opportunities and severe challenges.

Uses of AI in Legal Profession

AI is scooping its ways into the legal profession and there are a number of software available in the markets which can replace the monotonous and tedious work done by the lawyers. AI helps the lawyers in the repetitive and routine jobs which indeed saves their time and further help them focus on important aspects.

LLegal Research

A legal practitioner spends a lot of time doing legal research. It takes years for new lawyers to learn how to do legal research, how to find the correct legal authority which could help them support their argument. For doing the research almost all the legal firms appoints paralegals. Accurate research plays a very crucial role in winning the case. Development of AI software is an aid to the lawyers in this specific area. There are several software available in the market which help the lawyer to find relevant case laws and applicable statutes. With this software, complex legal questions can be answered in simple and basic language which is easy to understand.

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Due Diligence

The lawyers are supposed to do a primary task of confirming the facts and situations on behalf of clients. It is on the basis of this information that they tell the clients as to what they are supposed to do or how they can proceed further with the case.

Due diligence is an exhausting and time-consuming procedure which definitely yields a positive result in the long run. On the other hand AI system helps to do the same task but in more sorted and faster way. AI makes thorough checks of the facts and the figures, evaluates the prior decisions given in the similar situation, which helps in providing effective counselling to the clients.

Prediction technology

Whenever a client approaches the legal counsel for any dispute the first question asked by him is “Should I settle?” or “What are the chances of winning if he goes for trial?”

AI technology has the capability to help the counsel in answering such questions. It can forecast the result based on algorithms. It evaluates prior decisions given by the ruling judge in similar cases. Not only this, many software also go through the documents attached in the case file, identify the high-risk documents and display the level of risk if the client chooses to undergo a trial. Group of professors and researchers have often tested the accuracy level of such software.

Recently Prof. Daniel Katz of Michigan State University and his group in 2017 achieved an outcome of 70.29% accuracy. A similar study was conducted by Nikolaos Alteras, where he reported Accuracy level of 79% in outcome prediction while analysing the cases from the European Courts.

Legal analytics

Case documents and dock entries are very important for any counsel so as to gain an insight during litigation. Analysing and reviewing all the documents in any file is also a time-consuming process. AI software improves the efficiency of lawyers while they are reviewing the documents by putting them in a required order. AI software flags the documents that are of high-risk or are relevant. Machines are efficient and faster than humans in sorting and reviewing the documents which helps the lawyer to save time and let him focus on the high-risk documents.

AI software not only help in the reviewing the case files but also the contracts which companies signs. Law firms are mostly involved in reviewing the contracts which their clients sign. They identify the risks or issues involved with the contract and then edit those clauses as per the needs of the clients. AI software helps identify the risky clauses and helps the clients by providing good negotiation points.

Contract generation

Nowadays many companies takes help from AI based software in drafting standard and routine legal contracts. AI software helps in generating basic templates which can be later customised as per the needs and requirements of clients.

Patent application

Most of the time IP lawyers are engaged in analysing large IP portfolios and trying to draw an insight from the available content. Filing a patent application is a long and tedious job. The process involves going through hundreds of documents and doing manual research. But with AI software all this is done at a faster pace. AI helps in formatting, drafting and reviewing patent applications.

Legal issues associated with AI

AI still being at an emergent stage has several legal issues which are developing all over the world. AI software uses large data to generate a significant amount of information. The data laws are also evolving all over the world. Last year US saw several legal issues between the US government and the technology companies and with the passage of time and development of AI software these issues are likely to grow. Recently in a murder case, Amazon Inc. has faced search warrants to provide data relating to its AI powered Echo device.

Moreover, there are no AI related laws or standards which can be relied upon and the only regulation provided is under data regulation laws and the data privacy laws.

Impact of AI on Indian Legal Industry

Indian Legal industry has not been much open to the technological changes. The principles on which the industry is based are the main reason for its resistance towards the technological development. The technological changes are expensive and inaccessible. Indian Legal system has always been labour intensive.

Many people in this country are not aware of the artificial intelligence which is tailored specifically for the legal work. In 2017, Cyril Amarchand Mangaldas, was the first Legal firm to sign an agreement with Kira Systems, a Canada-based machine learning software provider, to improve the efficiency, accuracy and speed of the firm’s delivery model for legal services. for legal research.

With the spread of Digital India, the Supreme Court has for the first time digitized its record which indeed has resulted into an adoption of AI technology by more law firms as AI uses the online information available.

Click here

Conclusion

The technological development in the legal sector has changed the framework in which it operates. It is difficult to consider the future of legal industry without thinking about the AI software which are evolving in markets. Now the legal business is becoming consumer-centric. Legal information is just a click away. Legal research is done through online software. Lawyers and firms are taking help of these software to draft and review the contracts as well as the case documents.

AI has benefited the lawyers and small law firms the most by providing them with the information and resources and bringing them at par with well-established law firms in terms of resource. Legal research is the most important aspect of practising law and because of technology, it has undergone a series of development. From journals and reporters to CD-ROMS and Online software, legal technological innovation has changed the way how legal services were rendered.

The technology advancement is to help the lawyers and users to do the task efficiently and quickly, but this does not mean that technology is going to replace the lawyers or their judgement or instinct.

References

1. A general approach for predicting the behavior of the Supreme Court of the United States by Daniel Martin Katz, (April 12, 2017), Accessed at http://journals.plos.org/plosone/article?id=10.1371/journal.pone.0174698
2. CAM pioneers use of AI for legal services in India by Raj Gunashekher, (February 6, 2017), Accessed at https://www.legalbusinessonline.com/news/cam-pioneers-use-ai-legal-services-india/73908
3. Steve Lohr, A.I. Is Doing Legal Work. But it Won’t Replace Lawyers, Yet, N.Y. Times, (March 19, 2017), https://www.nytimes.com/2017/03/19/technology/lawyers-artificial-intelligence.html?_r=0

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In this article, Lakshay Kewalramani discusses Application for Rejection of Plaint under Order 7 Rule 11 of CPC.

Introduction

Code of Civil Procedure is a constitution of Civil/Commercial Courts, Civil Jurisdiction and Appellate Civil Division in the High Court for adjudicating commercial/civil disputes. It is the foundation subject for anyone to understand Civil Jurisdiction and procedure of Civil Courts. That is why it is called procedural law as it contains the procedure in civil suits. Code of Civil Procedure, 1907 is the basis for anyone to practice Litigation in the civil side.

Order 7 Rule 11 of CPC, discusses Rejection of Plaint. CPC, 1907 contains a provision in Order 7 Rule 11 of the code that whenever a plaint is filed in any civil court for any claim/compensation to be recovered from the opposite party it can be rejected by fulfilling the following conditions mentioned below.

Rejection of plaint — The plaint shall be rejected in the following cases

(a) Where it does not disclose a cause of action – If the plaintiff does not discloses facts that give the plaintiff right to seek relief against defendant, the facts that are necessary to prove the damage caused to plaintiff. Case law on this provision – S.M.P. Shipping Services Pvt. Ltd. V. World Tanker Carrier Corporation; AIR 2000 Bom 34.

(b) Where the relief claimed is undervalued, and the plaintiff, on being required by the Court to correct the valuation within a time to be fixed by the Court, fails to do so;

(c) Where the relief claimed is properly valued, but the plaint is returned upon paper insufficiently stamped, and the plaintiff, on being required by the Court to supply the requisite stamp-paper within a time to be fixed by the Court, fails to do so – If the plaint is insufficient stamp under court fees act and the plaintiff fails to supply the plaint with correct stamp value.

(d) Where the suit appears from the statement in the plaint to be barred by any law; Example when the plaint filed looks like to be barred by any statue and gives no right to plaintiff to file the suit and liable to rejected if the court accepts the plaint is barred by law.

(e) Where it is not filed in duplicate – In any suit a duplicate copy of the plaint has to be filed and when a duplicate copy of plaint is not filed it is liable to be dismissed.

(f) Where the plaintiff fails to comply with provisions of rule 9 – Where the plaintiff fails to comply with the order 7 rule 9

Provided that, the time fixed by the Court for the correction of the valuation or supplying of the requisite stamp-paper shall not be extended unless the Court, for reasons to be recorded, is satisfied that the plaintiff was prevented by any cause of an exceptional nature form correcting the valuation or supplying the requisite stamp-paper, as the case may be, within the time fixed by the Court and that refusal to extend such time would cause grave injustice to the plaintiff.

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Provisions on rejection of plaint under the Code of Civil Procedure

1.) Order 7 Rule 12- Procedure on rejecting plaint: where a plaint is rejected the Judge shall record an order to that effect with reasons for such order.

2.) Order 7 Rule 13 – Where rejection of plaint does not preclude presentation of fresh plaint -The rejection of the plaint on any of the grounds mentioned in rule 11 shall not of its own force preclude the plaintiff from presenting a fresh plaint in respect of the same cause of action.

Two modes of rejecting plaint

1. The Defendant can file an application in the form of Interlocutory Application in any stage of proceedings.
2. Suo moto rejection under order 7 rule 11. Suo moto means own its own motion the court can itself try a suit under order 7 rule 11 if the plaint fulfils the conditions above discussed.

Landmark cases on rejection of plaint

• A plaint cannot be rejected in part and retained part under this rule. It must be rejected as a whole. As held in Kalepur Pala Subrahmanyam v. Tiguti Venkata. AIR 1971 AP 313.
• Where the suit filed earlier was at the stage of recording of evidence and an application under order 7 rule 11 of the code was filed to delay the proceedings of the suit, the application under order 7 rule 11 of the code was rejected. As held in Sopan Sukhdeo Sable V. Asstt. Charity Commr. AIR 2004 SC 569 (572).
• In Kuldeep Singh Pathania vs. Bikram Singh Jarya: – Court held has held that for an Application under Order VII Rule 11 (a) of Code of Civil Procedure, only the pleadings of the plaintiff can be looked into and neither the Written Statement nor averments can be considered for enquiry
• Application for Rejection of Plaint under Order VII Rule 11 of the Code of Civil Procedure can be filed at any stage and the Court has to dispose of the same before proceeding with the trial, the Apex Court has reiterated in K. ROJA VS. U. S. RAYU…
• An order rejecting a plaint is a decree and hence is Appealable. Held in Bibhas Mohan Mukherjee v. Hari Charan Banerjee AIR 1961Cal 491 (FB).

Conclusion

Readers may get comprehensive understanding of this provisions and how it can get beneficial for them to understand. Code of Civil Procedure, 1907 is the most important subject for anyone who wants to get in litigation and who wants increase their knowledge in civil litigation. Apart from this there are various of applications that are prescribed in Code of Civil Procedure, 1907 to meet the ends of justice and prevent injustice. These applications need to filed with the main Reply from Defendant or at any other stage of proceedings.

The author can be contacted at lakshay.kramani@gmail.com

Sample Application of rejection of plaint under Order 7 Rule 11

IN THE COURT OF THE LD. ^{………….} CIVIL JUDGE, ( Sr.Dv) at (District Name)

T.S.No.-…………. of …………….

……………………. …………………………..Plaintiff

VS

…………………………………………………….Defendant

An application under Order 7 Rule 11 r/w section 151 of CPC

1. That the plaintiff has filed this suit purportedly for eviction of  the defendant and for damages.

2. That primarily the allegations of the plaintiff is that the father of the plaintiff-Late Sivaji Sen, Director of M/S PEC Boilers(Pvt)Ltd was the original tenant and he undertook before hs untimely death to vacate the suit premises by the year 2003.

3. That it is the further case of the plaintiff that as the original tenant having not extended the tenancy before his death, the said tenancy comes to end with his death on ……….

4. That it s the further case of the plaintiff that the rate of rent of the suit premises having been more that Rs 6500/-, he is not eligible for protection under West Bengal Premises of Tenancy Act and he is liable to be evicted under the provision of section 106 of Transfer of Property Act.

5. That the plaintiff has further contended that he has already sent a notice determining the tenancy u/s 106 of the Transfer of Property Act and hence the instant suit has been filed under the provisions of Transfer of Property Act.

6. That the plaintiff on the other hand has categorically contended in his pleading vide paragraph no.11 that the defendant is not a tenant. The relevant portion of the pleading has been reproduced here as follows- “ That the defendant hs left the said premises and has been residing elsewhere and in all material times the portion of the said tenancy is lying vacant thereby he has no legal right to occupy the premises and cause inconvenience to the plaintiff. More so, at no point of time the defendant asked the plaintiff to transfer the tenancy in his name and nor he has paid or tendered full amount of rent thereby there is no landlord-tenancy relationship between the plaintiff and the defendant. The defendant is thereby occupying the suit premises in an unlawful manner.’’

7. That the plaintiff has also stated in his pleading that the defendant is illegally occupying the suit premises as a trespasser. Therefore according to the plaintiff the defendant is a trespasser.

8. That on the basis of the unequivocal contention of the plaintiff that the defendant s not a tenant at all and there is no relationship of landlord and the tenant, this suit has got no legs to stand.

9. That the plaintiff having conceded the defendant as not a tenant, rather a trespasser, the present sut for eviction of the defendant under the Provision of Transfer of Property Act is totally barred by law.

10. That because of this contention the present suit for eviction of the defendant does not disclose any cause of action.

11. That on the bare perusal of the pleading of the plaintiff it becomes quite clear that the plaintiff does not consider the defendant as a tenant and on the contrary he has clearly contended that such relationship is absolutely absent between the parties herein. According to the plaintiff the defendant is rather a trespasser.

12. That if that being the case of the plaintiff then the present suit under the provision of the Transfer of Puppetry Act can not surely be maintainable as having not only barred by law but also having disclosing no cause of action to sue the defendant under the provision of the Transfer of Property Act.

13. That it is the established principle of law that while considering the question of rejection of plaint, the court needs to peruse the plaint only and on bare perusal t becomes quite clear that the plaint does not disclose any cause of action ro is barred by law then the court need not look into any other document and the suit should be nipped in the bud.

14. That while considering this aspect the court should be careful to look beyond the clever drafting and see on the root of the case as to whether the plaintiff has any cause of action or not. The provision of rejection of plaint has been enacted to discourage the litigants from flooding the courts with frivolous and vexatious claims. Whenever the court even on its own motion finds a suit to be deficient in having a cause of action, such suit should be  rejected so that there is no more any abuse of the process of the court.

15. That the court can reject a plaint at any stage of proceeding if it is satisfied that the conditions of the provision is satisfied. Clever drafting creating an illusion of cause of action are not permitted in law and a clear right to sue must be shown in the plaint. Moreover, the power under order 7 rule 11 is not exhaustive and the court has got inherent powers to see that the vexatious litigations are not allowed to take or consume the time of the court. It is needless to submit that the provision for rejection of plaint is mandatory and the court is bound to act if the plaint is found to be lacking in cause of action or debarred to proceed ahead by any provision of law.

16. That if that being the position in law then in the context of pleading of the plaintiff this suit can not be allowed to proceed ahead and the plaint should be rejected having disclosing no cause of action to sue under the provision of Transfer of Property Act.

17. That the present petition s bona fide and for ends of justice.

18. That the petitioner would be prejudiced if the prayer for rejection of plaint is rejected. For ends of justice this petition be allowed.

In the circumstances mentioned above it is therefore be prayed that your honour be pleased to reject the plaint as provided for under the provision of order 7 rule 11 of cpc. And to pass such other order as deemed fit and proper.

A F F I D A V I T

I Sri …………s/o …………………., aged about XX years , by faith hindu, by profession – business , resident of …………………………, do hereby solemnly affirm and declare as follows:-

1. That I am the plaintiff of this case and as such I am fully conversant with the facts and circumstances of the same.

2. That the statements mentioned above are true to my knowledge and belief.

Deponent

Identified by me

Advocate

References:

1. Code of Civil Procedure, 1908.
2. Code of Civil Procedure, 1908 Amendment act, 1999.
3. Sarkar’s Code of Civil Procedure.

The post Application for Rejection of Plaint under Code of Civil Procedure appeared first on iPleaders.

How did Trump beat a candidate like Hillary Clinton?

We are all taught that if you do certain things in life, you’d get certain results. So we let our actions determine the outcome.

In case of Hillary Clinton, she was the perfect candidate on paper to beat Donald Trump. She had three decades of political experience, educational qualifications, public support, desired demeanour expected from a presidential candidate. She was by all means, the better candidate. Yet she lost the elections.

Not only did she lose, she lost to Donald Trump!

Trump is everything one did not want in a presidential candidate. He had no political background or qualifications. He was a reality show star, a celebrity and a businessman! He may have had public support due to this. But he was a rule breaker in every sense of the word.

Trump presidential election race was marred with financial scams, sex scandals, accusations of sexual assaults and harassment, divisive geo-political views, racist remarks, sexist remarks, etc.

He was obnoxiously loud throughout the campaign to say the least. Yet, he won! His policies ranging from the Mexico wall, immigration, trade have drawn criticism from various facets. His knowledge and twitter rants attacking various members of people or media criticising him has been as unpresidential as possible.

Trump has come in like a wave and changed the rules such that there is no going back, not anytime soon. He has shattered the rules, torn the playbook and basically changed the game of politics, as he emerged as the winner.

So how does the game work now? Are there any rules left? Is rule breaking the trend now?

Let’s compare this to lawyers. What are we taught back in law school?

We are literally to play by the old book. We have a set of laws that we need to work with. But everyday, the game changes ever so slightly.

As a lawyer should we be a rule breaker or someone who abides by them?

We all want to win. But the ‘how’ is now evolving.

I remember as a young lawyer, I was idealistic and wanted to play by the book. There is nothing wrong with that, except that lawyers need to be unbiased.

You may have to defend the people to the best of your abilities and by the book, in morally challenging situations. Then what do you do? Everyone is entitled to legal representation and being heard. So as a lawyer, if you must defend someone who is thought of as a criminal before the trial, what do you do?

Being a lawyer, I have had this discussion more times than I can count. I have been asked by laymen how can one represent or defend someone accused of rape or murder or financial scams, etc. in the first place.

To them my response has been this: we are lawyers and our job is to present the facts and evidence before the judge who decides the matter. We are merely ensuring that both sides are being represented and heard to the best possible extent. We are not the judges. It is not our job to prematurely decide things. Everyone is entitled to a fair trial, devoid of personal biases.

Let us say, if Nirav Modi or Vijay Mallya come to you for representation, would you turn them away because of the media reports and public image, etc. Would you not examine the evidence and facts and present them in the best possible manner to the judges? Or would you decline representation to them?

As lawyers, should you be playing by the book or reinvent the rules?

In legal drama series, like Law and Order, Suits, The Good Wife, Boston Legal, the protagonists are shown to be the rule breakers or idealistic in nature. There is no middle ground. They try every trick in the book or beyond to get the desired results.

So for lawyers, should you be going by the status quo or trying something different?

Let me tell you the story of a couple lawyers from the elite institutes of law, who went ahead and broke all established rules.

So there were two lawyers who realised while studying, that the things taught in college, the manner of education needs a revamp. They were being taught the legal provision, concepts and theories. But there was a problem. There was no practical application of law.

They started wondering how can education be revamped so as to include the practical application of all the theoretical knowledge that was being imparted as part of the curriculum.

Then they come with the idea that would change the face of legal education as we know it.

On their pursuit to making launched LawSikho, an online legal education platform.

The idea behind this is simply to bridge the gap in the traditional legal education. The gaps like subjects that are needed on the job, but not always taught so in law school. LawSikho has painstakingly put hundreds of hours in creating media law course, cyber law course, business law course, arbitration law course, criminal law course, corporate tax law course, IBC law course, company law course.

You can check out the detailed courses offered here.

These courses are based on study material and practical application of the same by way of exercises, assignments, and article writing. These courses ensures that not only you possess the necessary knowledge of the subject, but you’re able to apply them in real life situations. The exercises helps you develop not only your drafting skills, but also improves your strategic and logical thinking. So be it in an internship or a job, you’re able to outperform others because this gives you an edge over the rest studying only the traditional courses.

Both these lawyers who co-founded LawSikho, are developing one amazing course after the other in order to fill the multiple gaps in practical learning. They are doing it relentlessly and one day at a time.

The point is their irreverent attitude of the status quo and mediocrity, has resulted into something that will bring a systematic change and help evolve the existing system. Their breaking of rules make them a winner, either way.

Now the question that I am left with is this: Are you a ruler breaker or not?

Do let me know via email, what makes you a winner: rule breaking or abiding them.

The post When Does Rule Breaking Make You A Winner? appeared first on iPleaders.

In this article, Jahnvi Shah discusses the concept of Bailment under the Indian Contract Act.

Introduction

Bailment, as defined under Section 148 of the Indian Contract Act, 1872 is the delivery of goods by one person to another for some purpose, upon a contract that they shall, when the purpose is accomplished be returned or otherwise disposed of according to the directions of the person delivering them (bailor)[1].

One of the key ingredients emphasized on by this definition is the delivery of possession of the goods from the bailor to the bailee. The delivery of possession may be actual or constructive. Once the possession is handed over to the bailee, a contract of bailment arises regardless of the manner in which it was entered into. Hence, in one peculiar case, where the lady had handed over some of her jewels to a goldsmith to be utilized for making new jewels, and the lady used to take back the half-made jewels every evening for the purpose of safekeeping in her own box, the contract of bailment got over every evening as soon as the lady took the half-made jewels in her possession.[2] It was held in the Madras High Court that the lady did not have any action against the goldsmith as the jewels were lost from the possession of the lady at a time when the contract of bailment was not in force.

The two kinds of delivery of possession are

1. Actual delivery – when there is a physical transfer of possession of the goods, it is actual delivery. For example, when A and B who are classmates decide to exchange their notebooks to compare notes, they exchange the physical possession of the notebooks hence creating a contract of bailment.
2. Constructive delivery – where there is no physical transfer of possession, but something is done which has the effect of putting them in possession of the bailee. For example, when X goes out of town, he requests his neighbor Z to keep an eye on his car and hands him the keys. Though Z does not actually hold the car in his premises, the act of handing over of the keys constitutes delivery of possession of the goods from X to Z hence creating a relationship of bailor and bailee.

Considering this, it had become necessary for the court in the case of Atul Mehra v Bank of Maharashtra[3] to determine whether the hiring of the lockers by the plaintiffs constitutes actual delivery of possession to the defendants. This case was filed by Atul Mehra in appeal at the High Court of Punjab and Haryana. It is one of the landmark cases in India because it lays down the principle that hiring lockers at banks does not constitute a contract of bailment. It was previously talked about in some cases, and this court has upheld the principle that merely hiring a bank locker does not constitute delivery of possession which is a necessary ingredient for the contract of bailment. It was also said by the learned Judge that in order to constitute a contract of bailment, the bailee must be made aware of the contents of the locker so that it can gauge the nature and extent of the security and possible liability.

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Facts of the Case

PARTIES IN THE CASE :-

Atul Mehra                                                                                                                  … Appellants

Versus

Bank of Maharashtra                                                                                                  … Respondent

CITATION:- AIR 2003 P&H 11

• The case was filed at the Trial Court by Atul Mehra, the appellant in present court, whereby issue Nos. 1, 2 and 3 were decided against him and issue No. 4 was decided against the Respondent as it was not pressed. The suit was dismissed with costs. Thereby, an appeal was filed by the appellant in this case, Atul Mehra, in the Lower Appellate Court which has upheld the findings given by the learned Trial Court. Hence, the present Regular Second Appeal.
• Atul Mehra (i.e. the appellant) in the present appeal had hired locker No. 75 on 15^th January 1986 at Bank of Maharashtra (i.e. the respondent). He had deposited jewellery in the said locker the value of which he claimed as Rs 4,26,160.
• The strong room in which the locker was located was broken in and the contents thereof were stolen by miscreants. On 9^th January 1989 an FIR for the same was filed. It was stated in the FIR that all other 43 lockers in the strong room were also broken in and contents thereof stolen.
• On 2^nd February 1989, all the 44 locker holders made representation to the bank by a registered acknowledgment duly pointing out the gross negligence and misconduct of the respondent in maintaining the lockers. They have contended that the alleged strong room was made up affair and it was made only of plywood, whereas it ought to have been made of iron and concrete.
• On 20^th February 1989, a representation to this effect was also made to the Ministry of Finance, Government of India, and the Senior Superintendent of Police, Amritsar.
• On 21^st July 1989, the police had made a report about the defective strong room and the lockers therein.
• In contesting the suit, the Respondent has contended that the appellants had no locus standi to bring the suit against the Respondents. They have denied the following facts to be true :-
  • That jewelry in the value of Rs. 4,26,160/- was kept in the locker,
  • That there was any misconduct or negligence on the part of the respondent-bank in taking care of the lockers and strong room,
  • The police report dated 21^st July 1989,
  • That there was any statutory or contractual liability on them to make good the loss allegedly suffered by the appellants.
• The facts that they did admit to are the following:-
  • That the appellants had taken locker No. 75 from the respondent-bank on 15^th January 1986.
  • That the lockers were broken by miscreants and content of the same were stolen.
• The appellants filed replication. They refuted the contents of the written statement and reiterated the facts stated in the plaint.

Issues raised

1. Whether the plaintiffs have suffered loss due to misconduct and negligence by the defendant?
2. If issue No. 1 is proved, whether the plaintiffs are entitled to recover any amount. If so, to what amount?
3. Whether the defendant-Bank has no contractual liability to make good loss incurred by the plaintiffs?
4. Whether the plaintiffs have no cause of action or locus standi to file the present suit?
5. Would the relationship between the locker hirer and the bank fall within the definition of bailment as given in Section 148of the Indian Contract Act, 1872, merely on the locker being hired; or is it necessary also to prove by independent evidence entrustment, quantity, quality and value of the property claimed?

Arguments advanced

By the Appellant (Atul Mehra)

1. It was also argued that vital pieces of evidence was not considered by the later courts. Mr Chibbar had cited the Supreme Court’s judgment in the case of Ishwar Dass Jain v. Sohan Lal where it has been held that “the High Court can interfere with the concurrent findings of fact recorded by the Courts below if vital pieces of evidence have not been considered which, if considered, would have led to a different conclusion”[4].
2. According to the learned Counsel, once the relationship between the appellant and respondent is established as that of bailor and bailee, the lack of knowledge on the part of the respondent would be of no affect to their liability to compensate the appellant. It was argued repeatedly by the Counsel that the relationship between the parties is that of bailment as defined under Section 148 of Indian Contract Act, 1872.
3. The learned Counsel has aptly argued that if the bailee undertakes to mind some goods for reward, but fails to produce them to the bailor when asked to do so, it is a reasonable inference that the bailee has been negligent[5]. Hence, in the present case, it is reasonable to infer that the respondent has at least been negligent.
4. The learned counsel for the Appellant, Mr R. K. Chhibbar has argued that both the lower courts have erred in the judgment because they had based their findings on the case of Mohinder Singh Nanda v. Bank of Maharashtra[6] which he contends to be per incuriam.
5. Chhibbar, learned Senior Advocate, has also argued that both the learned Courts below have failed to take notice of the fact that the strong room, as well as the lockers, had been built in contravention of the guidelines on security arrangements in the banks issued by the Indian Banks Association and the guidelines issued by the Reserve Bank of India. According to the learned Counsel, these guidelines are to be strictly construed and strong room was to be built in accordance with the specification given therein. Learned Counsel has further pointed out that even DW-1, P. K. Aggarwal, Senior Manager of the respondent-Bank, had admitted that the guidelines issued by the Indian Banks Association are binding.
6. By the Respondent (Bank of Maharashtra)
7. Mr Ashok Pal Jaggal, learned counsel for the Respondent, has put forward the argument that the agreement between the parties constitutes the relationship of landlord and tenant. The agreement uses the term “rent and hirer”. This relationship cannot be equated with bailment. He has relied on Section 106 of the Transfer of Property Act which provides for giving a notice for termination of the tenancy. The hiring agreement between the two parties provides for a written notice of termination.
   

Judgment

The Bench, comprising of Justice S.S. Nijjar, has held that exclusive possession of the goods is sine qua non for bailment. Therefore, mere hiring of a locker would not be sufficient to constitute a contract of bailment as provided under Section 148 of the Indian Contract Act, 1872. He has added that the question of reasonable care and quantum of damages would arise only after it has been shown that actual exclusive possession of the property was given by the bailee to the bailor, i.e. the bank. Since the bank was not aware of the contents of the locker, hence it was impossible to know the quantity, quality or the value of the jewellery that was allegedly kept in the locker at the time when the robbery occurred. The appellant’s only evidence was of a witness’s statement that “he cannot admit or deny that there was jewellery weighing 1273 grams worth Rs. 4,26,160/- are kept in the locker”. The judge held it insufficient to prove that the appellant had entrusted the jewellery to the respondent. Learned judge has further added that the appellants alone had the knowledge of the contents of the locker. No sufficient evidence had been produced by the plaintiffs for the same. The plaintiff thus had failed to prove entrustment of the jewellery to constitute bailment.

On the argument of Mr Jaggal that the relationship between the two parties is of landlord and hirer, it was said that it cannot be said that such a relationship existed because the supposed hirer (the plaintiff) did not have direct access to the land that he has hired and the assistance of the bank employees is required in doing so.

The judge has also referred to the Mohinder Singh Nanda’s[7] case which refers to the same incident of the robbery of 44 lockers. The judge had held that it is not per incuriam hence the same will be binding on this court. In this case, it was held that there was no exclusive possession to the bank hence no compensation was allowed to the plaintiff. The lower courts have also relied on this judgment and the present court has established that there is no error in doing so.

In another case[8] the judge referred to lays down the same principle that it has to be proved that the bailor was aware of the value of the property and was entrusted with its safekeeping. The bank, in this case, was entrusted with the jewellery and the valuation of the jewellery had been proved with sufficient evidence produced to the police at the time of the robbery. The bank was held liable for negligence because the robbery was committed by the manager within the bank itself. The judge has asserted that the plaintiffs have miserably failed to prove the entrustment of the jewellery which was allegedly kept in the locker. There is no proof of any kind to show the value of the jewellery which was kept in the locker. No expert witness has been produced to show that the jewellery mentioned in the plaint would be worth the amount claimed.

The appeal was decided in favour of the Respondent.

Critical analysis

The whole decision relies on a previous judgment by the same court which relates to the same incident of robbery of Bank of Maharashtra’s 44 lockers. This judgment has laid down a crucial principle in the context of delivery of possession of goods in a contract of bailment. It has basically laid down that the bailee must be made aware of the contents of anything he receives for safe custody so as to gauge the amount of any possible liability that may arise in the future. In this case, the bank had no knowledge of the quality, quantity or nature of goods kept inside the locker.

The court has been right in giving this decision in favor of the respondents because holding the bank responsible for the loss of any goods kept in the locker by their customers would give rise to uncountable amount of liability as it may be found difficult to prove that there was no exclusive possession of the contents of the locker. Such uncountable liability would also discourage banks to give such a facility which is currently utilized by countless number of people around the globe. The judgment acts as a good precedent as it mitigates the responsibility of the banks to some extent which is absolutely required in to allow them to provide service to the public. The liability of the contents of a bank locker is placed on the customer itself as long as he has a part in accessing the lockers while the liability would undoubtedly shift to the bank in case of breach of trust on any of employee’s parts.

Bibliography

1. Indian Contract Act, 1872
2. Transfer of Property Act
3. Avatar Singh
4. R.K. Bangia

[1] Section 148 of the Indian Contract Act 1872

[2] Kaliaperumal Pillai v Visalakshmi, AIR 1938 Mad 32

[3] AIR 2003 P&H 11: (2003) 2 Banking Cases 570: (2002) 3 ICC 138

[4] 1999 (9) JT SC 305 : AIR 2000 SC 426

[5] Hunt & Winterbotham (West of England) Ltd. v. B.R.S. (Parcels) Ltd (1962) 1 QB 617

[6] 1998 ISJ (Banking) 673

[7] Supra note 3

[8] National Bank of Lahore Ltd., Delhi v. Sohan Lal Saigal, AIR 1962 Punjab 534

The post Atul Mehra v Bank of Maharastra – Case Study on Bailment under the Indian Contract Act appeared first on iPleaders.

In this article, Gaurav Tripathi does a case analysis on Murli s. Deora v. Union of India.

INTRODUCTION

It is a very well-known and renowned fact that cigarette smoking is injurious to health. Vonnegut said that “Cigarette smoking is the classy way to commit suicide”. It is a real paradox that people besides being aware of the consequences of the smoking to the smokers as well as non-smokers people continue to smoke affecting not only their health but also the society at a large pace. Even after the warning forced the manufacturers, cigarette still continues to be manufactured, stocked and sold the world over.

BACKGROUND

• Factual Summary

Tobacco consumption in the developing countries like India is very prevalent in the smoke and non-smoking ways causing a wide range of diseases. It is estimated that in India there are about eight hundred thousand deaths caused per year due to the consumption of tobacco and also there is a loss of about Rs.13,500 Crores annually which are spent to treat the diseases caused due to tobacco consumption. According to the reports and statistics of last fifty years of the World Health Organisation, it was found that there arise about seven million deaths per year all over the world and around sixty million deaths have been caused in the developing countries due to tobacco consumption during previous fifty years.

Tobacco consumption in public places is equally dangerous as it highly affects the health of non-smokers causing lung cancer, another disease, the reason for the death of a large number of people. This is a clear picture of infringement of article 21 of the Constitution of India which clearly states that no person shall be deprived of his life and personal property except according to procedure established by law[1].

Henceforth, the Petitioner, Murli S. Deora brought this issue into public interest on the basis of the right to life and liberty embraced in article 21 of the Indian Constitution.

When the case was taken into consideration, two facts were bought into force were the Cigarettes (Regulation of Production, Supply, and Distribution) Act, 1975 and the Cigarettes and Other Tobacco Products (Prohibition of Advertisement and Regulation of Trade and Commerce, Production, Supply and Distribution) Bill, 2001. These both acts are concerned towards the causes of tobacco consumption and smoking and public health, but still not implemented or banned.

ISSUES

• Is the decision of the court of prohibiting smoking only at public places correct?
• When people know the dangers associated with the smoking, why do they still continue to smoke?
• Should government alone make the efforts to control cigarette smoking in public places?

ANALYSIS

• Cigarette smoking is injurious to health. This is a fact which is known by all but even then people continue to smoke, which not only affects their health but also the health of the people in their surroundings. It is found in several studies that passive smoking reduces the life of the smokers by up to 25 years, but it is known by very few that smoking, if affects the health of smokers then it also affects the health of non –smokers who inhale the smoke and affected by diseases like lung cancer and other respiratory diseases like asthma. In the following case, it was observed that the people who are non – smokers, their right guaranteed under article 21 of the Indian Constitution is infringed. Therefore, agreeing to the issues raised by the parties to the petition the court found that smoking in the public places is injurious to health of non – smokers and violating their right to life and liberty and hence it directed the Union of India, State Government, and the Union Territories to implement this ban in all the public places which include auditoriums, hospital buildings, health institutions, educational institutions, libraries, public offices, court buildings and public conveyances including railways.
• It can be observed from the current situation that due to cigarette smoking near about six lakhs deaths occur due to indirect smoke which enters the body through inhaling of intoxicating substances of smoke around their surroundings. There are several diseases such ulcer, stroke, mouth and throat cancer, larynx cancer, various heart diseases, pulmonary disease, bladder and cervical cancer which may be caused due to constant smoke[2].

Nevertheless, the question arises that – “When people know the dangers associated with the smoking, why do they still continue to smoke?” There are certain facts which could be observed in this respect.

• The main reason observed behind it was that the people start to smoke at a very early age, usually at the age of teens due to certain reasons which may include advertisements promoting cigarette smoking or even peer pressure may be one of the reasons why people continue to smoke.[3]
• Another reason observed is that young people smoke to look mature and to be like their friends or the adults who smoke around them. This type of doing the experiment in their lives becomes a habit which becomes a real difficult task to avoid.
• It is a very well observed fact of the human nature that anything restricted them to do, that work attracts them the most. Even after being restricted they try it and face the consequences of the same. It is known that cigarette smoking is prohibited according to law in certain countries for the teens below the age of 18 years but it could be observed after they were crossing the age of 18 in the due excitement they approach these substances and become additive to the same and further it becomes difficult for them to leave these addictive habits[4].

Besides the dangerous effects of cigarette smoking, the bitter truth is that the production of the cigar and tobacco substances will not stop as they the substances which are most profitable to the state. But it is on the people who smoke that they at earliest realize the ill effects of smoking and also smoking at the public places. The decision taken by the court in the following case was also correct as to avoid infringing the right to life and liberty of other people, banning smoking in public places is very necessary. Besides the contribution made by the government, it is very necessary that the people make the contribution at the individual level itself and then may be the rate of deaths may decline.

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CONCLUSION

This case tells us that smoking in a public place should be banned because it pollutes air near them and also affects public health. Peoples mind need to change regarding pollution that they should take care of this environment. This case is regarding the environment and the public’s health which is being damaged by cigarette smoking. Public health play a critical role in promoting, restoring or maintaining the status of a country. The Right to Health is also infringed in cigarette smoking, it means non-smokers fundamental right to life in Article 21 is being infringed in this case, and fundamental right to life emphasize the value of human dignity, the Supreme Court began to address the importance of health as a fundamental right. The Court has shown that judges have enormous potential to effect change in society when they so desire, this has been proved in this following case. This case also tells us that there is the infringement of “social rights”- rights that protect the basic necessities of life or rights that provide for the foundation of an adequate quality of life.

Smoking is injurious to health and it affects the health of smokers but there is no reason that health of passive smokers should also be injuriously affected. In any case, there is no reason to compel non-smokers to be helpless victims of air pollution. A non-smoker is affected by various diseases including lung cancer or of heart, only because he required to go to public places.

A country can develop more efficiently, if the condition of pollution in that country is very less. Young generations are the future of our country. So they should come forward to clean this environment and also make everyone aware of this. Some of the major activity should be performed on regular basis to make aware to the public regarding health and pollution, all public places should have lots of pamphlet of smoking injurious to health, do certain amount of fine or punishment or both on smoker who caught in smoking at public place, make people aware of the pollution affecting this environment, teach children’s that this environment is your first home so you have to clean this too not only your home, and there should be ban on selling of all types of tobacco product in country so that people say No to Smoking and Tobacco product. The health department, Municipal department, and Pollution department should be more active to take care of these all types of activity in the state.

At last, I would like to conclude by saying – “To look Smarter, Younger and Healthier, Burn Fat, not the Lungs.”

Citation – (AIR 2002 SC 40)

[1] Art. 21 of Constitution of India, 1949.

[2] Sumit Sehgal, smoking is injurious to health (March 17, 2006), http://ezinearticles.com/?Smoking-is-Injurious-to-Health&id=163531.

[3] Why do people still smoke cigarettes, http://wonderopolis.org/wonder/why-do-people-still-smoke-cigarettes?

[4] Why people smoke, http://healthliteracy.worlded.org/docs/tobacco/Unit3/1why_people_smoke.html.

The post Murli s. Deora v. Union of India – A case study on legal consequences of tobacco consumption in public places appeared first on iPleaders.

This article is written by Pranav Gupta, Law clerk cum research assistant to Justice Sanjay Kishan Kaul, Supreme Court of India.

Introduction

The law for institution of the civil suit for infringement of the trademark is well envisaged under section 134 of the Trade Mark Act, 1999. This section confers jurisdiction to the ‘District Court’ to entertain the suit for the alleged infringement of the registered trade mark, relating to any right in a registered trade mark or for a passing off arising out of the ‘use’ by the infringer of any trade mark, implying that the registered proprietor and registered user of the ‘mark’ can institute a suit where he actually and voluntarily resides, or carries on business, or personally works for gain. 

The position with respect to the institution of the trade mark infringement suit under the provisions of the Code of Civil Procedure, was reiterated recently by the Hon’ble Delhi High court in the celebrated case of Burger King Corporation vs Techchand Shewakramani & Ors, where the issue that came up for consideration of their lordship was with respect to the entertainment of the suit under section 20 of the civil procedure code and section 134 of the Trade Mark Act, where there is no credible and strong apprehension at the time of filing of the suit and cause of action is quia timet cause of action passed on an imminent lounge of franchise by the Defendants in Delhi.

JUDICIAL DECISION

The factual matrix of the case, presented, before their lordship, were that the plaintiff filed the suit seeking permanent injunction restraining infringement of trademark, passing off, damages, in respect of the trademark ‘Burger King’ and ‘Hungry Jack’s’, both as a trademark, as also part of their corporate names. Whereas all the defendants are based out of Mumbai, Maharashtra. The Plaintiff is a U.S. based company. The plaintiff filed the suit before the Delhi high court under two separate laws, first under section 134 of the Trade Mark Act, 1999 and section 20 of the CPC, on the premise that numerous agreements and contracts had been entered into by him with various parties within the territory of New Delhi in furtherance of the imminent launch of its Burger King franchisee outlet in New Delhi, and that there was a strong and credible apprehension that the defendants will expand their operations under the impugned trading style/trade mark of ‘Burger King Restaurants’ in New Delhi and that there existed a threat that the Defendants will use the impugned trade-marks trade names within the jurisdiction of this Hon’ble Court.

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The learned counsel for the defendants submitted that the courts of Delhi have no jurisdiction to entertain this suit, as no cause of action arose in Delhi, since all the defendants are independent and distinct entities and have no relation with each other. Moreover, the subsequent events, after filing of the suit, cannot confer the jurisdiction to the court to entertain the suit. To buttress the argument, the defendant placed reliance on the case of Indian Performing Rights Society Ltd. v. Sanjay Dalia, followed by Ultra Home Construction Pvt. Ltd. v. Purshottam Kumar Chaubey and others, to submit that the Delhi high court had no jurisdiction, since the defendants actually and voluntarily resides in Mumbai and not in Delhi.

The Plaintiff submitted that the defendants are connected with each other and have a website which is interactive. The website of Defendant No.5 which is registered in the name of Defendant No.3 lists Defendant No.7 as its property, and uses the impugned mark ‘Burger King’, and was said to be expanding their operations into Delhi, as is clear from the various documents and agreements placed on record and that the apprehensions are not just imminent but in fact real, which is very much evident from the launching of the Burger King carts and outlets in Delhi, per various agreements filed by the Defendants.

Their Lordships, in this case, explain how, if the suit is preferred alleging the infringement of trade mark under Section. 20 of the CPC, what constitutes cause of action in such cases, was the “use of the marks” constituting an infringement or a passing off action. Their lords defined the term “use” placing reference to Kerly’s Law of Trade Mark and Trade Names and to the provision of the trade mark laws and went on to explain that it is the ‘use of the mark’ or ‘use of a mark in relation to goods’, which could be either in a physical or in any other relation whatsoever to such goods, where “In relation to” refers to advertising, promotion, publicity, etc.

In addition to actual sale of goods and providing services, if a person advertises his or her business under the mark in a territory, promotes his or her business under the mark in a territory, or for example, invites franchisee queries from a particular territory, manufactures goods in a particular territory, assembles goods in a particular territory, undertakes printing of packaging in a particular territory, exports goods from a particular territory, it would all constitute ‘use of a mark’.

Moreover, the objection of the defendant that the subsequent events after filing of the suit in the present case, i.e, the quia timet passing off actions qua the opening of a franchise in Delhi, was expounded by their lords after placing reliance on Laxmikant V. Patel v. Chetanbhat Shah & Ors, by holding that passing off is not to be determined by the facts as they exist on the date of filing of suit, but can be ascertained keeping in view the future expansions of the business, that may cause irreparable loss to the plaintiff-registered owner.

Therefore, the court rightly held that section 134 of the trade mark and section 62 of the copyright act are in addition to and not exclusion of section 20 CPC so far as jurisdictional forums are concerned, and if the plaintiff is successful in making out the cause of action within the jurisdiction of the court under section 20 CPC, he is not required to make reference to Section 134 of the Trade Mark Act.

Conclusion

The section 20 of the code of civil procedure is common law provisions, which provides the rights to the plaintiff to institute suit proceedings at a place where the defendant(s) are actually and voluntarily residing or carry on the business for gain. The intendment of the legislators behind section 20 of CPC is to provide a forum to the plaintiff to put forth his grievance against the defendant in whose local jurisdiction, the cause of action has arisen either wholly, or in part.

The provisions of section 134 of the Trade mark Act were enacted under the umbrella of Section 20 of CPC, which provides almost similar rights to the plaintiff with respect to the jurisdiction of the forum where the plaintiff (registered owner or registered user) can file a suit at his own place, or where he carries on the business for gain.

This forum so provided in section 134 is added to the forum so envisaged under section 20 of the CPC. The scope of applicability of section 20 cannot be garbed under the shadow of section 134 of Trade mark Act. Section 20 of CPC being procedural in nature, shall always prevail over the substantive law and thus goes hand in hand with Section 134 of the Trade Mark Act. Justice is the goal of jurisprudence – processual, as much as substantive.

Their Lordships in their obiter dicta, opined the importance of admission/denial in the commercial matters, regulated by the Commercial Courts Act. Admission/denial in literal meaning means either admits or denies the genuineness or validity of the documents so provided by the opposite parties. The main intention of the legislators in inserting provisions for admission/denial by way of an affidavit is to narrow down the triable issues and prevent prolonged trials and to deny only those documents whose existence, genuinity or authenticity is disputed. Their lordship held that documents such as trademark certificates, copyright certificates, legal notices, replies, e-mail correspondence, documents issued by the government, ought not to be permitted to be denied as such denials are bereft of merit and prolong the trial. Admission/denials affidavit ought to be fair, bona-fide and not prolong the trial by denying document just to harass the opposite parties into proving each and every document with certified copies/original.

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Corporate Restructuring through amalgamation, arrangement, mergers, acquisition and takeover has become vital to corporate strategy today. To attain accelerated growth, corporate in India nowadays resort more towards restructuring strategies. The Goods and Services Tax (GST) has been envisaged as an efficient tax system and it affects the structuring of the various operations in India. Corporate transaction in pursuance of amalgamation, arrangement, mergers, acquisition and takeover are also affected by GST. Thus, the industries are required to analyse the provisions of the GST Law and its impact on their business.

Registration

Registration of any business entity under the GST Law implies obtaining a unique number from the concerned tax authorities for the purpose of collecting tax on behalf of the government and to avail Input tax credit for the taxes on his inward supplies. By virtue of section 22(3) of the CGST Act, where a business carried on by a taxable person registered is transferred, the transferee or the successor would be liable to be registered with effect from such transfer or succession and he will have to obtain a fresh registration with effect from the date of such transfer or succession.

Section 22(4) states that if the business is transferred as an order of a High Court, Tribunal or otherwise pursuant to –

1. Sanction of scheme
2. Arrangement for amalgamation
3. De-merger of two or more companies,

The transferee would be liable to obtain registration from the date on which the Registrar of Companies issues a certificate of incorporation giving effect to such order of the High Court or Tribunal.

Input Tax Credit

Section 18 enshrines the provisions regarding availment of input tax credit by taxable person. Section 18(3) of the CGST Act as well as rule 41 of the CGST Rules stipulates that in case of change of constitution of a registered taxable person on account of sale, merger, demerger, amalgamation, lease or transfer of business, the registered person would be allowed to transfer the unutilized input tax credit to transferor. In this context, the registered person is required to furnish the details of sale, merger, de-merger, amalgamation, lease or transfer of business in Form GST ITC-02 electronically on the Common Portal along with a request to transfer the unutilized input tax credit lying in his electronic credit ledger to the transferee. The transferee would accept the details so furnished by the transferor on the Common Portal and, upon such acceptance, the unutilized credit would be credited to his electronic credit ledger.

In the case of demerger, the input tax credit would be apportioned in the ratio of the value of assets of the new units as specified in the demerger scheme.

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Itemised Sales

Where assets and liabilities of a business are transferred by way of assigning a value to each item then it is called as itemized sale. Such sale involves the disposal of key or selected business assets. Under the merger and amalgamation, value of each asset is calculated separately i.e. the whole business is transferred but item wise.

Transaction of itemized sale is supposed as supply under the ambit of GST and individual asset would be covered under the definition of goods as per schedule II of the CGST Act. Thus, GST would levy on itemized sale.

Slump Sale

Slump sale will have the same treatment as normal supply. Under the GST regime tax is payable by the registered taxable person on the supply of goods and/or services. The term ‘Supply’ is wide in its import cover all forms of supply of goods or services or both that includes sale, transfer, barter, exchange, license, rental, lease or disposal made or agreed to be made for a consideration by a person in the course or furtherance of business. Further, supply covers the activities to be treated as supply of goods or supply of services as referred to in Schedule II. Accordingly, transfer of business assets is supposed as supply.

The transfer of business is amounted to transfer of a part of the assets and not the whole business. Moreover, para 4© of the schedule II specifies that in case business is transferred as a going concern then it would not constitute as supply. However, in pursuance of Notification No. 12/2017 Central tax (rate) dt 28.06.2017 services, which are provided by way of transfer of a going concern as a whole or an independent part thereof, are exempted from GST. Thus, no GST would applicable on slump sale transaction as transfer of business on a going concern basis.

Liability of companies w.r.t. order of court or Tribunal

According to section 87 of the CGST Act, when two or more companies are amalgamated or merged in pursuance of an order of court or of Tribunal or otherwise and the order is to take effect from a date earlier to the date of the order and any two or more of such companies have supplied or received any goods or services or both to or from each other during the period commencing on the date from which the order takes effect till the date of the order, then such transactions of supply and receipt would be included in the turnover of supply or receipt of the respective companies and they would be liable to pay tax accordingly.

Such two or more companies would be treated as distinct companies up to the date of order and the registration certificates of companies would be cancelled with effect from the date of the order.

Sale of Securities

In most case, the usual mode is the acquiring of company by making an offer by the transferee company to the shareholders of the transferor company to purchase their securities, in the transferor company, at a price stated for the purpose. The definition of goods, as well as services under the GST regime, do not cover the securities, therefore GST would not be levied on the sale of securities.

Summing Up

Goods and Services Tax have impact on each and every industry and business in India. Transfer of business under mergers, amalgamation and acquisitions do not attract any tax liability under GST regime, they are unlikely to impacted by indirect taxation. For calculating the Capital gains, the holding period is calculated from the date of original purchase of shares. The companies who opt for merger and acquisition, the liability to register arises on the date of transfer for transferee of a business as going concern. Further, GST Law stipulates transfer or sale of business assets can take place either as a slump sale or itemized sale. In case of change of constitution of a registered person on account of sale, merger, demerger etc, the unutilized ITC would be allowed to be transferred to transferee. Thus, GST Law brought the immense clarity on the taxability of business transfer and related aspect thereof.

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Before entering the legal profession, we seek a lot of advice from a lot of sources. We ask our teachers, distant cousins, uncles, and do a lot of research on colleges, curriculum, and what not.

We start preparing for the entrance exams and study legal aptitude, logical thinking, english, general knowledge, mathematics, current affairs. After getting into law college we get the training to become a lawyer, bar exam, etc.

The process of becoming a lawyer is extensive and time consuming. Before entering the profession most people do a complete reconnaissance.

There is no denying that any amount of preparation does not come close to the challenges of doing the job until you enter the real world.

In this world, all the training and knowledge seems to be insufficient. That is why there is a training phase or probation period where you learn how to do the job at hand.

There is a vast difference between the traditional training and its practical application. There are online courses out there which help you bridge this gap by training you with the practical application through exercises, assignments, research based article writing.

I have been in the profession for five years now. I can safely say that I have about a decade worth of experience in preparing for my profession. I believe, I’ll never be done learning.

Recently, when I was having chat with my colleagues about work, life, et all, it hit me. I have not been able to do as much as some of my counterparts, professionally speaking. I had good grades, decent internships, research papers, moot court experiences on my resume. My resume was based on my research on the industry requirements. But I did not get as much favourable responses as I’d hoped for in the beginning of my career.

What was that I was missing?

I could see people with lower grades or lesser internships, research papers working for the most sought after organisations. I figured there was some secret I was not privy to. I wrote it off as people with legal background and good referrals.

But while conversing with my colleagues, the bossman told me something very obvious that I’d missed! He told me the two most obvious and crucial skill sets that law students and even lawyers overlook – writing articles and networking right!

# Networking Done Right!

As law students and lawyers, we are networking from the moment we walk through the door. We interact with our peers, seniors, professors.

When we go for internships, we interact with lawyers, associates, partners and the likes. This way we are networking without realising!

This is when my colleague shared her story. A few months ago, she was entrusted the entire backend work of conducting a daily webcast we host where established legal professionals and experts come for an hour and talk about a subject of their domain on “An Hour With LawSikho”. One of her many tasks was to reach out and find esteemed panellists for the show. Question was, how does she find these panellists. Soon, the realisation dawned her that she could reach out to her network from college days, and voila! It was done. She managed to book through for a month and with ease. She reached out to her seniors, peers, professors, mentors and either they agreed to come as panellist or gave her a good reference to reach out to.

This is the example of networking done right.

The bossman shared a story about how NOT to network. He told us about a recent graduate who came all the way to see him from another city. He wanted half an hour of his time. He came, spoke to the bossman, shared his proposal and then went after having tea and snacks. I asked him, how is this an example of poor networking.

This is when the bossman broke down good networking for me. He explained that although it is important to have a network of people and advisable to reach out to them, there is a method to this madness.

One cannot simply reach out to a person in the network and ask for favour or a job. You must have a clear goal in mind before reaching out to someone.

What do you want from this person? Do you want a referral or a job itself? What kind of job? Do you have the necessary qualifications? Do you have the requisite skill sets? Do you have anything which sets you apart from the countless others who have reached out to this person so far. And then the most important question of all.

What is in it for the person in question? What do they gain from this interaction?

Don’t get me wrong. I am not saying that there are people who don’t do this for the greater good. There must be some good samaritans out there. Kudos to them.

But from a rational point of view, the exchange has to be fair. If your goal is to get the job, then you must have something to offer which has value, for the other person.

Before approaching someone from your network, the best shot is to do a little research and figure out where you can add value to the other person. They may have a pet research project they need assistance on, or journals they wanted to compile into a book, or an idea for the next best application in the market. It can be anything!

The point is not to go empty-handed. Make yourself standout by making an offer of value in return for your ask! It is simple, obvious and effective. No one teaches networking while studying, although it is an integral part of the profession and all other professions!

# Writing Articles

The bizarre realisation I had while writing this is that I have been writing for decades now. We write so much in law schools, moot courts, internships, research papers, etc. throughout our college lives, that becomes a second nature to us!

Without realising, we are picking a lifelong skill set! How weird is that?

But even the best of gifts does not help if unutilised or underutilised.

I used to want to write research papers in college. Just to have my work be part of the famed law journals. I used to write well researched articles for my assignments every semester and even wrote one for a paper presentation.

The point is that, we write a lot during our college days. But somehow, with time, this skill goes to a waste. We may be overburdened with work, life or anything else. This essential skill set goes stale without practice.

I know this firsthand. When I started writing basic articles, I was having trouble stringing two words, I was not able to adhere to the word count, and eventually missed deadlines. All of this simply because I’d gradually stopped writing in the last five years.

I can see the difference on a professional level since I have started writing again.

I am able to think and speak more coherently about topics beyond my domain. I even managed to interview industry experts on a couple of occasions! I got a couple of job offers right after I started writing as my profile seemed to now have improved.

There are peers of mine who kept writing papers on the area of law which interested them. So when the time came for interviews and selection, they knew more than their counterparts and had research papers to support their expertise as well! Needless to say, they bagged their dream jobs, simply because of writing articles.

Writing articles improves your research, language,and knowledge in a particular legal domain. This puts you a step ahead of those who do not write articles. They will not possess the thorough knowledge that comes from writing a well researched article.

Recently, one of the reputed law firms from Bangalore interviewed me for a job that I wanted, but I did not have the right number of years in terms of experience. Nonetheless, the partner interviewed me further about my current profile and was impressed enough to create a separate profile for me in the firm! They did not take me for the job that I wanted, but I came out with another job offer anyway!

The point is writing is an underrated and underutilised skillset. This skillset opens doors for you, where one did not exist!

These obvious skillsets are so obvious that we overlook their importance in course of work. But these skills are of utmost importance along with others. They give you an edge over the rest, if done right.

So start today. Write and network right!

The post Which skill sets are both obvious yet most overlooked in the legal profession? appeared first on iPleaders.

In this article, Siddharth Shukla discusses the admissibility value of Illegally obtained evidence under the Indian Evidence Act.

The Right to privacy judgement has added a new dimension for consideration in law, especially in the law of evidence. Justice K.S. Puttaswamy vs Union of India,[1](also referred as a right to privacy judgement) has now created new opportunities for exploring the scope of section 5 of Indian Evidence Act, 1872. With the “right to privacy” being included as a fundamental right, I will be analysing the possible impact of the invocation of the doctrine in the Indian jurisprudence. I will be discussing the Rule of admissibility of illegally obtained evidence in the U.S.A., U.K. and India along with other common law jurisprudence.

Exclusionary rule in the US

• The exclusionary rule is enshrined in the fourth amendment of the American Constitution.[2]
• In the USA the evidence is not admissible if it was obtained in an unlawful search of his/her property, such search conducted or abetted by persons under the authority of United States. In addition to this, all the information which is obtained by such illegal search is also inadmissible.[3]
• All the pieces of evidence which are collected in breach of the Fourth amendment are rejected as the concept of “Fruit of the poisonous tree” is applicable.[4]
• It means that if the “tree”( evidence) is tainted then the fruit is also affected.[5]
• Fruit, the evidence is product of an illegal, the poisonous tree. The principle was laid down in Nardone v. United States.[6]
• This principle has some exceptions as well. The exclusionary rule does not apply to the third person.[7]
• The rule is not valid when the evidence was obtained by a private individual instead of from state official.[8]

One of the landmark decision based on the exclusionary rule is Boyd v. United States,[9] in this case, customs officers seized petitioner’s glass plates in suspicion that the documents related to these objects were falsified to evade customs duties. The petitioner was asked to produce the documents related to these disputed articles. The issue before the court was whether the production of person’s private papers to be used as an evidence against him in the trial, constitute unreasonable search and seizure within the fourth amendment. The evidence were excluded and court laid down a principle that all intrusion from the part of the government or its employee will constitute the breach of personal security, personal liberty and private property.[10] Another landmark judgement is Katz v United States,[11]In this case, Katz’s (a gambler) activities were monitored by FBI by recording his telephonic conversations through an electronic device attached to the telephone booth which were later used against him. The constitutional issue before the court was whether the fourth amendment will be applicable to the intangible areas like conversations overheard by others. It was ruled that eavesdropping by the FBI constituted a breach of the fourth amendment and exclusionary principle was applied, it will be considered as ‘search and seizure’ under the fourth amendment, the scope of seizure was extended to oral statements. Until Katz, the fourth amendment was limited to trespass on private location which was now extended protection from ‘places’ to ‘people’.[12]  These cases can be perceived as the examples of the interrelation between right to privacy and exclusionary principle. These cases were also discussed in Puttaswamy.

The rule in The United Kingdom

• In R. v. Leatham,[13] defendant objected against the production of the letter against him which was obtained through his answers given to the commissioners during an enquiry. But the defendant contended that such answers should not be admissible as provided the “Corrupt Practises Act”.
• Queen’s Bench held that though the answers won’t be used against the defendant if the clue is given for other evidence, The letters in the instant case which will prove the case, then answers were admissible.[14] Crompton J., famously said:“ It matters not how you get it, if you steal it even, it would be admissible in evidence.”[15].
• Kuruma v. Queen,[16]laid down the precedent that the only condition that is necessary for admissibility of evidence was its relevance to the issue. This is one of the famous principles of the English case laws. In addition to that, it also held that the evidence should be excluded if it is opposed to the fairness to the accused. So, here it is clear that though pieces of evidence obtained through improper techniques are admissible, the court still has the discretion to reject them.
• The above rule is also known as “The Unfair Operation Rule”.[17] Though the rule is not applicable to some instances like tricks as evidence is admissible even if it is obtained via trick or misrepresentation.[18]

The common law rule of Unfair Operation was later crystallised as a codified law. In U.K., evidence may be excluded by the court under section 78 of Police and Criminal Evidence Act 1984(PACE). It explicitly prohibits the evidence if it affects the notion of fairness of the proceedings with the enactment of the Human rights Act, 1998, based on European Convention the courts deterred the courts to allow illegally obtained evidence to comply with the European Convention on Human Rights.[19]

Rule of relevance in India

• The only criteria regarding the admissibility of evidence in the Indian court of law is “relevance”.[20]
• Though illegally obtained evidence is admissible, the value of such evidence may be affected as it was ruled that improperly obtained evidence will be analysed with due caution by the court.[21]
• Supreme court of India has explicitly held that there is no construction of fundamental rights in the constitution which can be construed in a manner so as to exclude the evidence obtained in an illegal search.[22]
• The most interesting thing to note here is that the Indian judiciary has referred to such case laws, in this particular case, which is now no longer used or applicable in England.[23]

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In India, State of Baldev Singh,[24] came close to an exclusionary rule akin to the U.S.A. In this case, the issue was should the evidence obtained in breach of Section 50 of the NDPS Act admissible. It was said in the judgement that Section 50 grants the accused certain procedural safeguards, a right is created which creates an obligation on the police officer to follow such procedures. Here, illegally obtained evidence was rejected. But the ratio is limited to the cases under NDPS act.

In countries like India, Myanmar and Sri Lanka, the rule of admissibility is governed by statutory provisions.[25] The statutes relating to evidence of these countries are based on Indian evidence Act, 1872, which was modelled by Sir Fitzjames Stephen.[26]

With the enactments in place, all the previous laws which are against the code are overruled. One cannot simply import ideas from other jurisprudence regarding the principle governing evidence based on public policy. The legislature has the power to formulate laws and until then the rule of the land, once created, remains the same.[27]

Karalina v. Excise Inspector. Matara,[28] a case law from erstwhile Ceylon, a comparable jurisdiction to India, has stated that the legislature can alone decide on the issue of the admissibility of illegally obtained evidence.

Analysis

Puttaswamy has ruled that the right to privacy is a fundamental right under Article 21 of Indian Constitution.  This right is enforceable against the state subject to reasonable restrictions. With the invocation of privacy as a fundamental right under Section 21 of the Indian constitution, the admissibility of illegally obtained evidence should now be questioned. The position of law has changed as unlike the reasoning is given in Pooran Mal,[29] now we can interpret Article 21 of the constitution to exclude the evidence obtained in an improper manner under Section 5 of Indian Evidence Act. No statute should contradict the fundamental rights enshrined in the nation’s constitution. If we consider the example of Baldev Singh[30] the case, then we will need to enact a statute that prohibits all the illegally obtained evidence. Or else with the privacy judgement in place, I think we should read section 5 of the Act with Article 20, which prohibits self-incrimination and Article 21(right to privacy). This will allow for the exclusion of illegally obtained evidence. In my opinion is better to follow the latter option as the former may take considerable time due to our slow law-making process.

There are four principles which are based on which illegally obtained pieces of evidence should not be accepted. The four principles are reliability principle, disciplinary principle, protective principle and judicial integrity principle.[31]According to Reliability Principle, the evidence is admitted based reliability but if evidence obtained through torture, violence or under pressure might not be reliable. “Disciplinary Principle” states that Judiciary should discourage the improper manners used for obtaining evidence. This will deter the prosecution or defendant from resorting to such manners for getting pieces of evidence. “Protective principle” follows the idea that exclusion of illegally obtained evidence is one of the remedies to the person against whom the evidence was obtained with the breach of individual’s right. “Judiciary Integrity Principle” is based on the idea that to maintain respect for the administration of justice, the court should be careful while admitting illegally obtained evidence as by allowing such shreds of evidence, courts are promoting the improper methods of procuring evidence.[32] In light of the above principle, In my opinion, illegally obtained evidence should be made inadmissible.

Conclusion

Admissibility of shreds of evidence obtained via illegal methods is an issue of a long debate. Judiciary U.S.A. settled its position with amending the constitution. On the other hand, U.K. enacted a statute codifying the rule of “The Unfair Operation Principle”. But the position remains unsettled in countries like India and Sri Lanka as the evidence is inadmissible in the cases where a statute explicitly prohibits such practice. One can hope a change in future with the Right to privacy as it may help in shaping the debate in India.

References

[1] Justice K.S. Puttaswamy (Retd.) v. Union of India, 1 SCALE 10 2017.

[2] “The right of the people to be secure in their persons. houses, papers and

effects, against unreasonable searches and seizures, shall not be violated, and no Warrants shall issue, but upon probable cause, supported by Oath or

affirmation, and particularly describing the place to be searched, and the persons or things to be seized.” Constitution of the United States of America, 1789.

[3] Joe H.; Larkin Munster, Murl A. Military Evidence

(1959).

[4] Brewer v. Williams, 97 S.Ct. 1232 (1977).

[5]Fruit of a Poisonous tree, CornellLawSchool.com, Accessed on April 25, 2018. https://www.law.cornell.edu/wex/fruit_of_the_poisonous_tree

[6] Nardone v. United States, 308 U.S. 338 (1939).

[7] Lefkowitz v. United States Attorney, 52 F . 2d(2d Cir. 1931)

[8] Burdeau v. McDowell, 256 U.S. 465(1921).

[9]Boyd v. United States, 116 US 616 (1886).

[10] Justice K.S. Puttaswamy (Retd.) v. Union of India, 1 SCALE 10 2017.

[11] Katz v United States, 389 US 347 (1967).

[12]Justice K.S. Puttaswamy (Retd.) v. Union of India, 1 SCALE 10 2017.

[13]R. V. Leathem 8 Cox Cc 498,501 (1861).

[14] R. V. Leathem 8 Cox Cc 498,501 (1861).

[15] R. V. Leathem 8 Cox Cc 498,501 (1861).

[16] Kuruma v. Queen, AC 197 (1955).

[17] Gautam, Khagesh. “The Unfair Operation Principle and the Exclusionary Rule: On the Admissibility of Illegally Obtained Evidence in Criminal Trials in India.” Indiana International & Comparative Law Review 27, no. 2 (2017): 147. Accessed April 19, 2018.

[18] R v Sang, AC 402 (1980).

[19]Talha Abdul Rahman,. “Fruit of the Poisoned Tree: Should Illegally Obtained Evidence Be Admissible?” S-38, PL, no. May (2011). Accessed April 7, 2018. http://www.supremecourtcases.com/index2.php?option=com_content&itemid=5&do_pdf=1&id=20972.

[20] Indian Evidence Act, Section 5, 1872.

[21] R.M. Malkani v. State of Maharashtra A.I.R. S.C. 157 (1973)

[22] Pooran Mal Etc vs Director Of Inspection of Income Tax 2, SCR 704 (1974).

[23] Rahman, ” Fruit of the Poisoned Tree: Should Illegally Obtained Evidence Be Admissible?” 1.

[24] Baldev Singh, 6 S.C.C. (1999).

[25] G. L. Peiris, “The Admissibility of Evidence Obtained Illegally: A Comparative Analysis.” Ottawa L. Rev. 13, no. 309 (1981). Accessed April 15, 2018. http://heinonline.org/HOL/Page?handle=hein.journals/ottlr13&collection=journals&id=315&startid=&endid=350.

[26] Peiris, The Admissibility of Evidence Obtained

Illegally: A Comparative Analysis, 313.

[27] Janson v. Driefontein Consol. Mines Ltd., A.C. 484 (1902)

[28] Karalina v. Excise Inspector. Matara,  52 C.L.R. 89 (1950).

[29] Pooran Mal Etc vs Director Of Inspection of Income Tax 2, SCR 704 (1974).

[30] Rahman, “ Fruit of the Poisoned Tree: Should Illegally Obtained Evidence Be Admissible?” 2.

[31] Rahman, “ Fruit of the Poisoned Tree: Should Illegally Obtained Evidence Be Admissible?” 2.

[32] Rahman, “ Fruit of the Poisoned Tree: Should Illegally Obtained Evidence Be Admissible?” 2.

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