SECTION 80 CIVIL PROCEDURE CODE AND ARBITRATION ACT: AN ANALYSIS

By Ekta vats

ABSTRACT

This article basically talks about section 80 of CPC,1908 and Arbitration Act, 1996. In introduction part it deals with the question of the fact that why this act is being implemented. Under CPC, this article mainly covers the nature, object of section 80 of CPC and also case laws Under Arbitration act, it mainly talks about the term conciliation and Arbitration and their purpose.

INTRODUCTION^[1]

In general sense, for filling suit no notification is required between individuals but when it comes to govt. or public officer then section 80 of CPC says 2 month notice is required if the suit is filed to govt. or public officer while section 80 of Arbitration act makes it clear that conciliator cannot acts as arbitrator for any party in case of dispute between the parties in judicial proceedings, rather if the parties agrees by mutual understanding then only this section is applied. Here the word Conciliator means the settlement of dispute in an agreeable manner, where a neutral person meets with the parties to dispute and explore how the dispute might be resolved. Hence it is different from arbitration as arbitration is the tribunal selected by the parties to decide disputes and it is binding over the parties.

NATURE OF SECTION 80: CPC

Section 80, CPC is not procedural rather substantive one, hence it contains the rule of procedure which is regarding notice before filing suit. This sections mainly deals which the two types of cases: 

• Suit against government
• Suit against public officer

Case laws:

State of Madras V. Chander Kant^[2], In this case SC observed that notice must be given to government in every cases if the suit is filed against govt. And when it comes to public officer then notice is necessary only when the suit is in respect of any act purporting to be done by the public officer discharge to his duty and not otherwise.

OBJECTIVE OF SECTION 80: CPC^[3]

The objective of section is the advancement of justice and securing of public good by avoidance of unnecessary litigation which purports to save money.

ARBITRATION AND CONCILIATION ACT,1996

Salient features of Arbitration and Conciliator act,1996

The Arbitration and Conciliation Act, 1996 improves upon the previous laws regarding arbitration in India namely the Arbitration Act, 1940, the Arbitration (Protocol and Convention) Act, 1937 and the Foreign Awards (Recognition and Enforcement) Act, 1961.Further, the new statute also covers conciliation which had not been provided for earlier.

The Act of 1996 aims at consolidating the law relating to domestic arbitration, international commercial arbitration, enforcement of foreign arbitral awards and rules regarding conciliation.

OBJECTIVE: Arbitration and Conciliator act,1996

• To ensure that rules are laid down for international as well as domestic arbitration and conciliation.
• To ensure that arbitration proceedings are just, fair and effective.
• To ensure that the arbitral tribunal gives reasons for its award given.
• To ensure that the arbitral tribunal acts within its jurisdiction.
• To permit the arbitral tribunal to use methods such as mediation and conciliation during the procedure of arbitration.
• To minimise the supervisory role of courts.
• To ensure that an arbitral award is enforceable as a decree of the court.

SECTION 80: ARBITRATION AND CONCILIATION ACT,1996^[4]

This section provides two types of restrictions on Conciliator. Section 80, Arbitration act provides the restriction on Conciliator that he is not permitted to act as an arbitrator or as a representative or counsel for any party in any arbitral or judicial proceedings. However, the Conciliator may be permitted to act as an arbitrator by mutual agreement between the parties. The Conciliator is also not allowed to appear as a witness on behalf of parties in any arbitral or conciliation proceedings. Although the Conciliator may be prevented by the parties as a witness in any such proceedings only by an agreement between the parties.

PURPOSE: SECTION 80 ARBITRATION ACT, 1996^[5]

Section 80 is necessary in order to provide equal protection and equal status to the parties based on the principle of natural justice as Conciliator being friendly person with the parties knows the weak or strong points of the subject matter of disputes which may cause undue influence on the parties against whom he applies his knowledge.

CONCLUSION

By the analysis of section 80 of Arbitration act and CPC, it can be concluded that both sections ensures justice by avoiding unnecessary litigation. However under section 66 ^[6]of Arbitration act,1996 the Conciliator is not bound by the rules of CPC,1908 and Indian Evidence act, 1872 but this doesn’t mean he can act arbitrarily in the conduct of conciliation proceedings.

---

^[1] https://www.scribd.com/document/474535505/Dr-S-C-Tripathi-Arbitration-and-Conciliation-Act-1996-India-with-Alternative-Disputes-Resolution-ADR-Central-Law-Publications-2012-pdf

^[2] (1977) 1 SCC 257

^[3] https://indiankanoon.org/search/?formInput=section%2080%20of%20civil%20procedure%20code

^[4] https://www.casemine.com/search/in/Section%2080%20of%20arbitration%20and%20conciliation

^[5] https://ibclaw.in/arbitration-act-sections/80/

^[6] https://www.scribd.com/document/474535505/Dr-S-C-Tripathi-Arbitration-and-Conciliation-Act-1996-India-with-Alternative-Disputes-Resolution-ADR-Central-Law-Publications-2012-pdf

[7] Picture: law_all.com

Advertisement

CUSTODIAL VIOLENCE: AN INFRINGEMENT OF HUMAN RIGHTS

By Chesta Bamel

ABSTRACT:

Violence is one of the biggest elements to kill the humanity.  It can be in any form like a murderer, a thief, sometimes the police. Yes, the police, sometimes does heinous crimes, by misusing their powers, it is called Custodial Violence. Custodial Violence is considered as one of the torturous forms of human rights abuse. It includes all types of physical as well as mental torture.

But, there are some questions arising here that, what is custodial violence?  Is it not a crime in the eyes of law? If yes, then why is it still happening? And are there any provisions which protect people from this? The answers to all these questions are explained in this article.

INTRODUCTION:

“Torture is a wound within the soul which is so painful that, sometimes you’ll almost touch it, but it’s also intangible, that there’s no way to heal it. Torture is despair or fear or hate. It is a desire to destroy and to kill including yourself.”[i]

The term ‘custodial violence’ has not been directly defined under any law of the country. It is basically a combination of two words, i.e., custody and  violence. Here, the term custody means guardianship and it is used in reference when a person is arrested by the official authority in order to find something. The another term violence means, the behavior of inflicting injuries to a person or any property by the use of physical or mental force. The custodial violence together defined as ‘the violence on the judicial and the police custody, involving the victim subject to rape, torture and even death.’[ii] The Police authorities are the custodians of law and it is their duty to protect the rights of people. But sometimes, they degrade their powers they  hold and causes crime. The cases of custodial violence are increasing, which is shown by a report of the National Campaign against torture. The report stated that in 2019, there were around 1,700 people died in heinous custodial violence.[iii]  Now, another question arises here that, how this crime has committed by the police authority or what are the elements of this violence?

ASPECTS OF CUSTODIAL VIOLENCE:

The act of custodial violence is done by the police in order to investigate the matter. The element by which the act is called violence is that, the police, using the wrong way and commit heinous crimes by using physical or mental force. The person who has a power to protect the rights of the citizens, misuses his powers, intentionally imposes the force to confess the matter.

However the legal frameworks like the Constitution of India, doesn’t consider it a crime. Even the National Crime Records Bureau has no record of such crimes. But, the National Human Rights Commission has a record of deaths in police custody, which has rapidly increased from 128 deaths in 2011-2012 to 145 deaths in 2016-2017.[iv]

REASONS BEHIND INCREASING CUSTODIAL VIOLENCE:

There are many reasons which promote custodial violence like, lack of awareness about their rights, lack of proper legislation, ignorance of reality, and so on. Some of the main reasons are explained below:

• LACK OF STRONG LEGISLATION:  This could be one of the main reasons behind increasing such violence. India doesn’t have any proper anti-torture legislation, and because of that, this crime has  increased, under the bridge, where nobody could notice it.
• USE OF EXCESSIVE FORCE:  The use of excessive force can be helpful to the government, as it can be used to target the marginalized communities and can be used to control the people  in any propaganda or any movements.
• INSTITUTIONAL CHALLENGES: India fails to bring a good prison reform and due to this, the prisoners continue to be affected by the poor conditions like lack of minimal safety, overcrowding, and so on.

PROVISIONS PROVIDING PROTECTION AGAINST CUSTODIAL VIOLENCE:

The Constitution of India doesn’t directly explains the custodial violence, but it does give some recognition to the prisoner’s, by giving them certain rights as the citizens of India. Part III of the Constitution of India provides six Fundamental Rights to all the citizens of India. This part includes various articles such as Article 14, 19, 20, 21 and 22. The relevance of some of the articles are given below:

• ARTICLE 20 OF CONSTITUTION OF INDIA:

Article 20 provides a remedy against double jeopardy, which explains that ‘no one can be punished twice for the offense which that person has committed only once.’[v]

• ARTICLE 20(3) OF THE CONSTITUTION OF INDIA:

This article also provides protection to the person from self- incrimination. This provision is formulated to impose a restriction on the powers of the state authorities, so that they cannot violate the rights of the person by misusing their powers.[vi]

• ARTICLE 21 OF THE CONSTITUTION OF INDIA:

Article 21 of the Constitution of India provides the Right to Life and Personal Liberty, which also includes a right against assault and any kind of torture by the state officials.[vii]

The Constitution also provides certain other rights with the help of some landmark case, D.K. Basu V. State of West Bengal is one among  them. The Supreme Court, in this case, held that, “Custodial torture is a naked violation of human dignity. The situation is aggravated when violence occurs within the four walls of a police station by those who are supposed to protect the citizens from such crimes.”[viii] In that case, in total eleven guidelines were issued in order to regulate the procedure of detention.

In case of Sunil Batra II V. Delhi Administration,[ix] the court stated that, ‘handcuffs and irons be speaks a ruthlessness, aggressive to our goal of human dignity and social justice.’ In other words, it can be said that, sometimes the procedure of detention could be against the law of humanity.

OTHER REMEDIES:

Some other provisions are also there in Indian legal system, in order to remove this violence, one of them is mentioned in Section 176(1) of Code of Criminal Procedure,[x] which states that, the magistrate has a power to hold the inquiry of a case, if the person has died on police custody. On that section, the matters related to the disappearance and custodial rape were also added, after the amendment of 2005. The UDHR in its article 5 stated that, “no one shall be subjected to torture or to cruel, inhuman or degrading treatment or punishment.”[xi]

SUGGESTIONS AND CONCLUSUON:

The legal system of India could make a medicine to remove such disease which is hindering the development of the country. In order to remove such crime from the country, the government should make police reforms in order to provide education about the basic rights of the citizens and the government should also make some decent methods of investigation, so that the police do not have to use extra force. There should also be some unrestricted access to any qualified person to the places of detention in order to inspect. CCTV cameras should also be installed in police stations.  

---

[i] Manmeet Singh, “Custodial violence in India;legalserviceindia.com. http://www.legalservicesindia.com/article/1893/Custodial-Violence-in-India.html#:~:text=Custodial%20violence%20primarily%20refers%20to%20violence%20in%20police%20custody%20and%20judicial%20custody.&text=Sections%20330%2C%20331%20%26%20348%20of,torture%20to%20extract%20confessions%20etc.   

[ii] Gaurav Gautam, “Custodial violence: an infringement of Human Rights. Legal service India.com https://www.legalserviceindia.com/legal/article-6254-custodial-violence-an-infringement-of-human-rights.html.    

[iii] National Campaign Against Torture: Annual report on torture, 2019.

[iv] Baljeet Kaur, “India’s Silent Acceptance Of Torture Has Made It Public Secret” ,Quill Foundation, 6  September,2018.

[v] INDIA CONST. art. 20.

[vi] INDIA CONST. art. 20 cl. 3.

[vii] INDIA CONST. art. 21.

[viii] D.K. Basu V. State of West Bengal, A.I.R. 1997 SC 610.

[ix] Sunil Batra V. Delhi Administration, A.I.R. 1980 SC 1579.

[x] Code of Criminal Procedure, 1973, §176 cl. 1.

[xi] United Nations, Universal Declaration of Human Rights, 1948 art. 5

[x] Picture: ibailmeout. com

THE PREEMPTIVE EFFECTS OF PRIVATISATION

by Tayyaba Siraj

“Privatisation is a bitter pill but it is a pill that we must curve”

INTRODUCTION

Privatisation refers to the transfer of ownership of any enterprise from the government to the private sector. By implementing it, the government then ceases to be the sole owner of the entity or business. Privatisation, implemented through various levels and phases, is considered beneficial for the growth & development of a country, as it brings more efficiency and objectivity to business. India adopted Privatisation as a part of the New Economic Policy or the LPG reforms.

The process wherein a publicly traded company is taken over by private enterprises is called privatisation. Hence, the stock of the previously publicly-owned company is no longer traded in the stock market; and the general public is also barred from holding a stake in such a company. After privatisation, the company gives up the name ‘limited’ and starts using ‘private limited’ in its name.

In the year 1991, India faced the most terrific calamity, a financial crisis. The Public Sector Undertakings were under losses and that became the reason behind the birth of LPG (Liberalization, Privatization, and Globalization).[i]

There are six major sectors that are not permitted to be privatized always, they are:

• Defense
• Railways and
• Atomic Energy
• Cigarette
• Chemical Fertilizers
• Hazardous Chemicals.

These sectors are confidential, or they might involve a lot of work and time to be privatized.

Objectives of Privatisation

Privatization has its own advantages and disadvantages. But the idea or concept of privatization was brought up keeping the following in mind:

• Efficiency Improvement

Nowadays, the concentration of certain ruling parties is politically intentional. They do not see the side of the economy of the state and the well-being of the people. It stops or puts a barricade when it comes to the growth of public sector companies. So, Privatization reduces the political influence and concentrates on aiding the public well-being and economic growth.

• Increase in Competition

While state-run companies do not have competition, they enjoy a monopoly and tend to forget the cause of their work. They either take time to finish a particular project or do not involve in quality work and output. But when privatized, people work better keeping in mind the competitions they have. This also accelerates the overall growth in industries and the economy.

• Diversifying Market Options

Privatization advances the market progression which makes the market work organically. Also, because there is no influence from the political side, market dynamism is promoted and people keep track of the demand and supply and work accordingly. This also produces higher revenues.

• For Revenue

This is one of the major objectives of privatization. This one-time revenue from the sale of the sector or company helps a lot when there is a financial crisis.

The choice of whether or not to enact a privatization law depends upon the constitutional and legal circumstances of the country concerned. Typically in the case of countries with constitutions derived from the French legal tradition, a privatization law to authorize the sale of state assets will be a constitutional requirement. Even if a separate privatization law is not mandatory, such a law can serve a variety of purposes, such as to:

• Define the government’s objectives and establish commitment to the privatization process;
• Make amendments to existing laws which otherwise would be an obstacle to privatization, e.g. laws preventing private sector participation in what were previously thought of as “strategic” activities;
• Create institutions with the authority to implement privatization;
• Avoid the “vacuum of authority” which can lead to spontaneous or unauthorized privatization;
• Allow for the financial restructuring of enterprises prior to sale and permit liabilities to be cancelled, deferred or swapped for equity;
• Define the methods of privatization and any limitations on potential bidders; and
• Provide for the allocation of sale proceeds.

A principal function of a privatization law is to define the scope of the program and any exclusions of specific sectors or enterprises. Though the law may list the enterprises to be privatized, the disadvantage of doing so is that the listing becomes inflexible, with the resulting difficulty of either removing or adding enterprises as the program evolves. Other alternatives are to:

• Adopt a “negative list” approach, so that all state enterprises are eligible for privatization other than named exceptions; or
• Require a high-level political decision on a case-by-case or sectoral basis to transfer an enterprise to the privatization agency for disposal.

Concept of Privatisation:

1] Delegation: Here via a contract or franchise or lease or grant etc. the government keeps the ownership and the responsibility of an enterprise. But the private company will handle the daily activities and deliver the product or service. The state will remain an active participant in this process.

2] Divestment: The government will sell a majority stake of the enterprise to one or more private companies. It may keep some ownership but will be a minority stakeholder in the enterprise.

3] Displacement: The first step here will be deregulation. This will allow private players to enter the market. And slowly and gradually the private company will displace the public enterprise. Here the private sector will compete with public companies and ultimately outperform them, causing the public enterprise to be displaced.

4] Disinvestment: Directly selling a portion or whole of a public enterprise to private parties.[ii]

POSITIVE EFFECTS OF PRIVATISATION

1. Improved efficiency:

The main argument for privatization is that private companies have a profit incentive to cut costs and be more efficient. If you work for government-run industry managers do not usually share in any profits. However, a private firm is interested in making a profit, and so it is more likely to cut costs and be efficient. Since privatization, companies such as BT, and British Airways have shown degrees of improved efficiency and higher profitability.

• Lack of political interference:

It is argued governments make poor economic managers. They are motivated by political pressures rather than sound economic and business sense. For example, a state enterprise may employ surplus workers which is inefficient. The government may be reluctant to get rid of the workers because of the negative publicity involved in job losses. Therefore, state-owned enterprises often employ too many workers increasing inefficiency.

• Short term view:

A government may think only in terms of the next election. Therefore, they may be unwilling to invest in infrastructure improvements that will benefit the firm in the long term because they are more concerned about projects that give a benefit before the election. It is easier to cut public sector investment than frontline services like healthcare.

• Shareholders:

It is argued that a private firm has pressure from shareholders to perform efficiently. If the firm is inefficient then the firm could be subject to a takeover. A state-owned firm doesn’t have this pressure and so it is easier for them to be inefficient.

• Increased competition:

Often privatization of state-owned monopolies occurs alongside deregulation – i.e. policies to allow more firms to enter the industry and increase the competitiveness of the market. It is this increase in competition that can be the greatest spur to improvements in inefficiency. For example, there is now more competition in telecoms and the distribution of gas and electricity. However, privatization doesn’t necessarily increase competition; it depends on the nature of the market. E.g. there is no competition in tap water because it is a natural monopoly. There is also very little competition within the rail industry.

• Government will raise revenue from the sale:

Selling state-owned assets to the private sector raised significant sums for the UK government in the 1980s. However, this is a one-off benefit. It also means we lose out on future dividends from the profits of public companies.

NEGATIVE EFFECTS OF PRIVATISATION

1. Natural monopoly:

A natural monopoly occurs when the most efficient number of firms in an industry is one. For example, tap water has very significant fixed costs. Therefore there is no scope for having competition amongst several firms. Therefore, in this case, privatization would just create a private monopoly that might seek to set higher prices than exploit consumers. Therefore it is better to have a public monopoly rather than a private monopoly that can exploit the consumer.

• Public interest:

There are many industries that perform an important public service, e.g., health care, education, and public transport. In these industries, the profit motive shouldn’t be the primary objective of firms and the industry. For example, in the case of health care, it is feared privatizing health care would mean a greater priority is given to profit rather than patient care. Also, in an industry like health care, arguably we don’t need a profit motive to improve standards. When doctors treat patients, they are unlikely to try harder if they get a bonus.

• Government loses out on potential dividends:

Many of the privatized companies in the UK are quite profitable. This means the government misses out on their dividends, instead of going to wealthy shareholders.

• Problem of regulating private monopolies:

Privatization creates private monopolies, such as water companies and rail companies. These need regulating to prevent abuse of monopoly power. Therefore, there is still a need for government regulation, similar to under state ownership.

• Fragmentation of industries:

In the UK, rail privatization led to breaking up the rail network into infrastructure and train operating companies. This led to areas where it was unclear who had responsibility. For example, the Hatfield rail crash was blamed on no one taking responsibility for safety. Different rail companies have increased the complexity of rail tickets.

• Short-termism of firms:

As well as the government is motivated by short-term pressures, this is something private firms may do as well. To please shareholders they may seek to increase short-term profits and avoid investing in long-term projects. For example, the UK is suffering from a lack of investment in new energy sources; the privatized companies are trying to make use of existing plants rather than invest in new ones.[iii]

CONCLUSION

Applicability of administrative principles has seen improvement but a lot still needs to be done. It is now clear that to ensure economic growth, and efficiency of the public sector companies, privatization is inevitable. However, it should also be noted that these private actors should be regulated to ensure the rights of the citizens of India, especially the private companies performing government-like functions. This, in my opinion, can be ensured only by giving power for its insurance to the Indian judiciary.

---

[i]https://www.google.com/url?q=https://economictimes.indiatimes.com/definition/privatization&usg=AOvVaw3Bs54uLs4Y7QqSY4wRs2j9

[ii] https://m.economictimes.com/definition/privatization

[iii] https://www.economicshelp.org/blog/501/economics/advantages-of-privatisation/

[iv] Picture: vskills

Right of Prisoners in India: A Comparative Analysis to USA, UK and Australia

by Saptak Majumdar

“Crime is the outcome of a diseased mind and jail must have an environment of hospital for treatment and care”.            

                                                                                                               –   Mahatma Gandhi

Abstract: When a person commits a crime and is punished for it, it does not make him inhuman. Therefore, the State has no right to treat his inanimate state. The Indian Constitution guarantees everyone’s right to life and freedom, and they cannot be deprived unless there is a due process of law. This clause also applies to prisoners, which is why some protection is provided to them. This paper explains the existing constitutional and legal framework in India compared with USA, UK and Australia to guarantee the rights of prisoners and clarifies various administrative and judicial guidelines issued from time to time regarding the needs, requirements and care of prisoners.

Introduction

The right to life must always be interpreted from the broadest perspective, not just a right, but also the quality of life we ​​live. The imprisoned prisoners are the result of their violation of a country’s land law, but their basic human rights are granted by various international conventions and constitutional laws and must not be violated at any cost. The investigation involved different laws and regulations passed in India related to the rights that prisoners can enforce. He also talked about how basic human rights are abused in prisons. Legislation and enlightening precedents are additional factors needed to determine the rights of prisoners.

The term ” prisoner ” can be used to refer to any person who violates the law of the Country and is therefore detained by the police in order to restrict their freedom in order to maintain the welfare of society. A person in prison allows himself to suffer under the most inhumane and contemptuous conditions. They suffered human rights violations in prison. But we must remember that prisoners in modern democracy have no civil rights, but reformist methods must be allowed. One cannot reform himself and become a better person without adopting reform methods. If we conduct reality checks on prisons, we will hear a few words about overcrowding, and lack of security[i]. Not only they are isolated from the world, they are also at risk even in prison. According to the United Nations Human Rights Council (UNHRC), they should be treated with dignity and their right to life, including their basic requirements and safety, should not be violated. They must also be protected from inhumane torture. Human rights are vital to a person’s survival. Therefore, in spite of the crimes committed, prisoners must not be allowed to suffer.

Prisoner Rights in International Conventions

After World Wars, some citizens were deprived of their rights and some prisoners were forced to work or were recklessly killed. This led to changes in international prisoner law. The United Nations had established certain minimum requirements for the treatment of prisoners. It provides standards that state that prisoners receive adequate food, good hygiene, bedding, and medical facilities. Article-3 of the Universal Declaration of Human Rights clearly establishes that both prisoners and free people in society must enjoy the right to life. The International Covenant on Civil and Political Rights explores the same issues and art. Article-10 stipulates that no one shall be deprived of liberty and human dignity must be respected. Reduce the line between the defendants before and after the trial. The basic objective of these treaties and conventions is that prisons are not subjected to inhuman torture or degrading treatment[ii].

Main issues regarding violation of Human Rights of prisoners

The basic human rights granted to all people are violated every day in prison. Let them suffer in a crowded environment in the narrow prison cells along with other prisoners. Incarceration for rape in prisons is increasing, and it is one of the places where a person is restricted by social welfare and that person eventually loses their dignity. The level of physical torture and violence that prisoners face is unbearable and sometimes leads to what we call death in prison. Various prisons around the world have witnessed genocide, slavery and the murder of prisoners in the name of encounters. The right to life, which is a basic requirement, has been violated. Malnutrition is also a vital cause of death in prison. They were not provided with adequate food and sanitary conditions.

Several examples from different prisons around the world can explain human rights violations[iii].

1. In Venezuelan prisons, inmates face rape and extortion, with only one guard taking care of 150 people.
2. In the Model Prison of Panama, it can be observed that the prison population exceeds its capacity.
3. In United States of America, the American Civil Liberties Union investigated the issue of prisoners in solitary confinement and stated that there is a great need to stop curbing violations.
4. In Iraq, there were some reports of abuse in prison in 2003. They said that prisoners were forced to remove their clothes and subjected to inhumane torture.

                                             Prisoner Rights in India

In India, the prisoners’ rights are guaranteed and protected by the different Legislations. Such are as follows ——-

A. The Indian Constitution[iv]: –

Article – 14, 20, 21 & 22 Of the Indian Constitution specifically guaranteed the rights of the Prisoners of India. Article-21 is a unique term that describes right to life and personal liberty. Under the range, certain rights find places such as food, bonds, fast testing and free legal assistance rights. Article-21 also offers prisoners with violence of detention and health rights to maintain basic human dignity. There was a specific law on the rights of Indian prisoners. They have the right of other rights for non-human heterotrophic treatment in prison. The rights of the interview and the right to know friends and family are important rights of prisoners.

B. Other Legislations[v]: –

1. Prisoners Act, 1894

This act is one of the oldest prison laws in India. Chapter VII of the law stipulates matters related to the employment of prisoners, so it says that they can work and earn income with the permission of the prison director, but the rules stipulate that they should not work more than 9 hours a day. Section- 37 of the Prisoners Act of 1894 stipulates in any case, if the prisoner becomes ill, the responsible officer will talk to the jailer and must call the subordinate doctor immediately. Other parts of the law discuss whether civil or trial prisoners can obtain their products, such as clothing, bedding, or food, from outside the prison.

2. The Transfer of Prisoner Act, 1950

The purpose of the act is to allow prisoners to be transferred between states in India. The purpose is to provide professional training, reduce prison overcrowding, and maintain basic human dignity.

3. Americans with Disabilities Act, 1990

The act stipulates that, taking into account all disability factors, there is no distinction between prisoners and non-prisoners. The protection and safety of disabled prisoners and the required accommodation are a key point that should be reflected here.

                                Impact of cOVID – 19 in Indian Prisons

Coronavirus, one of the deadliest epidemics facing the world today. In the prison, there are some overcrowded and underestimated prisoners who are in trouble. Countries are unwilling to verify the factor of overcrowding in prisons. Due to overcrowding, the State Government was forced to take action, releasing several detainees on parole, and the prison was also ordered to close. Health experts say that overcrowding in prisons can cause health problems, and the disease can spread because it is an infectious disease and becomes a terrible situation. It is said that it will not only infect the prisoners but also the guards. In Madhya Pradesh prisons, some 20 inmates have reportedly tested positive for the coronavirus[vi].

After predicting the pandemic, the World Health Organization urged prison officials and governments in many countries to reduce the number of prisoners because the virus is spreading rapidly.

At present, there are two main situations to focus by The Governments to pay attention to: one is

1. The model prison manual,

and ,

• The ignorance of the mental health of the prisoners.

The Supreme Court asked the State Government to review the matter. The Chief Justice of India Shri Sharad Arbind Bobde, stated that a committee should be established to classify prisoners and distinguish the types of prisoners who can be released. Statistics show that as of April, about 12,000 prisoners have been released.

                                                    landmark Judgement

1. M.H. Hoskot  v. State of Maharashtra[vii]

The Supreme Court of India stated that if the defendant cannot provide legal aid, the state must provide free legal aid to the defendant.

• Hussainara Khatoon v. Home Secretary, State of Bihar[viii]

In this case, if the prisoner on trial remains in detention for a longer period of time, then Article-21 of the Constitution of India will be violated.

3. D. K. Basu v. State Of West BENGAL[ix]

One of the most remarkable judgment given by the Apex court in the case of an increasing number of custodial deaths in India. This case made a landmark judgement, which stipulated guidelines for arresting a person, otherwise more crimes would be committed in the name of justice.

4. Hirst v. United Kingdom[x]

The fact is that the prisoner cannot vote on the U/S – 3 of the 1983 People’s Representative Act, but a case was later filed in which he claimed that his voting rights had been violated. The judgment of the European Court of Human Rights announced that the voting rights of British prisoners can be revoked in accordance with the law.

• Prem Sankar v. Delhi Administration[xi]

The court ordered UOI to investigate the matter, saying that it was inhumane to wear handcuffs and violated Article 21.

• Bonner v. Coughlin[xii]

In this case in the United States, the prisoner went to court to demand compensation, claiming that the prison guards did not open his cell. Therefore, due to their negligence, the court transcript was lost. It is said that prisoners have limited privacy rights.

                                        Suggestion and Conclusion

By examining a contemplative situation, stringent legislation must be made for their welfare, as well as better protection must be provided to them by judge-made laws. In the current situation of the epidemic worldwide, many prisoners are released because they mostly committing non-heinous crime. The criminal situation will make a crime to commit. Therefore, adequate rehabilitation and periodic approaches should be adopted. When the member generated by income goes to jail for fraud, he or her family must suffer.

Developing countries are not providing financial support for that particular family. Families without bread in the mouth cannot think about buying a lawyer to save the prisoners. Therefore, the State must maintain fundamental right equally and treat them as well as others. UNODC is firmly believed that prison reforms are prison obligations only if prison policy is governed by prison. The prison and the best health care systems are affiliated with prison, and national laws can be fuel to be processed.

---

[i] http://www.radheykrishnafoundation.org/rights-of-prisoners/

[ii] https://www.legalserviceindia.com/legal/article-75-rights-of-prisoners.html

[iii] http://www.britannica.com/topic/prison

[iv] The Constitution of India, https://legislative.gov.in/constitution-of-india

[v] https://www.legalserviceindia.com/legal/article-6228-rights-of-prisoners-under-indian-laws.html

[vi] https://timesofindia.indiatimes.com/blogs/lawtics/prisoners-rights-in-india/

[vii] AIR 1987 SC 1548

[viii] AIR 1979 SC 1360

[ix] AIR 1997 SC 610

[x] (2006) 42 EHRR 41

[xi] AIR 1980 SC 1535

[xii] 545 F.2d 565 (7th Cir. 1976)

[xiii] Picture: The Sentinel Assam

ANALYSIS OF THE EXTRADITION LAW IN INDIA

By Kashish Batta

Increased inter relations between countries and also with advent of the globalization, offenders can easily escape to other nation to avoid the prosecution. With the advent of various laws still India is facing issues in order to extradite offenders from requested state or nation. This article talks regarding the various issues, suggestion and also cases where India failed to extradite offender back.

INTRODUCTION

Crime is increasing day by day at an alarming rate and turning into international. Serious offences have cross many border implication. So to avoid the trial or punishment, criminal fugitive flees to other country. In India, Extradition act 1962 [i]deals with the extradition of the fugitive accused. Comity of nation principle evolves the device of extradition in which one state (requested state) surrender offender person (requested person) to other state (requesting state) in whose jurisdiction offence was committed. The word extradition arises from two words ex and traditum means the delivery of criminals. In simple terms, extradition is the formal process of a state that hands an individual over to another state to be prosecuted or punished for the crimes committed in the jurisdiction of the requesting country.

Starke defined the term “extradition” as the process by which on the basis of the treaty or on the basis of reciprocity a State surrenders to another State at its request an accused person or convicted of an offense committed against the laws of the requesting State, that requesting State has jurisdiction to prove the alleged offender.

Grotius- defined “extradition” as the duty of state to return the accused person to the requesting state in whose jurisdiction offence was committed or to punish the offender.

Currently, India has bilateral extradition treaty [ii][section 2(d) of Extradition act, 1962] with the 43 countries and extradition agreements with 10 countries. Thus, the main reason for the enactment of Extradition act, 1962 is to prevent crimes and punish criminals as it is in the interest of all countries to punish criminals and prevent crimes because the country where a person of a criminal character resides is in the interest of that country to ensure the extradition of such person but also depends on a bilateral treaty and the principle of reciprocity but where there is no treaty or agreement then the country can ask the other country in which the perpetrator of the crime resides to extradite the fugitive or the perpetrator of the crime and it is in the interest of security and the law and order of that country to extradite the accused.

 PRINCIPLES GOVERNING EXTRADITION ARE AS FOLLOWS:-

• Dual criminality
• Extraditable offence
• Competence
• Reciprocity
• Specialty
• Prima facie case which is against fugitive
• Relative seriousness of offence or crime
• Fair trial
• Proportionality between sentence and crime or offence

ISSUES

India is having extradition treaties with various nation, despite the mechanisms of the binding treaty, the extradition process of fugitives is long, complex and highly dependent on domestic law and the policy of the requested state. This is not surprising as extradition is, after all, a sovereign decision. There are various issues with the extradition law in India and also various issues emerge between the nation not having extradition treaty and arrangements {section 3(4) of extradition act 1962}. As Autrefois convict or double jeopardy principle is incorporated in our Indian constitution under Article 20(2) [iii]which means that no person will be punished for the offence twice. Because of the principle of double jeopardy, India is not able to given punishment to David Hedley who was sentenced to 35 years in prison by a US court for the 2008 terrorist attack in Mumbai which killed more than 160 people.

Another issue is delayed responses by the Indian agencies and this can be explained by the case of lalit modi or IPL SCAM, Board of Control for Cricket in India (BCCI) filed a complaint against Mr. Lalit Modi and others in October 2010, accusing them of indulging in criminal conspiracy, cheating and forgery of accounts. The charge was that funds amounting to ₹ 468 crore had been embezzled in conducting the IPL. Lalit modi went to UK and also he ignored various summon. After many years when the case was registered, the enforcement direction, which had also registered a money laundering case against Mr. Lalit Modi and others, wrote a strong message to the Tamil Nadu police to expedite the investigation. As no significant progress was made by the Central Crime Branch of the city police, the DGP transferred the case to CBCID. This shows that India failed to extradite him from UK because of the requesting state (India) is not able to extradite Lalit modi from UK.

Poor condition of prison is a major problem with the extradition law. Due to fall short of the desired facilities like bedding, good quality food, facilities for health etc. this discourages Western nations from extraditing fugitives for human rights violations. In sanjeev chawla case[iv], he was charged for cricket match fixing and was extradited to India only by the requested nation when the judges of High court of India assured that accused person will be provided proper health facilities, personal space and with proper security and safety as cell to be occupied by the accused person exclusively. Another case of Vijay Mallya, accused of defrauding Indian banks for 90 billion rupees, is accused by both the CBI and the enforcement directorate. His lawyer raised the question that the poor conditions of the Arthur Road prison in Mumbai amounted to inhumane treatment, which led the British court to issue an order asking the Indian government to send a video of the prison to assess the conditions. Serious punishment like of life imprisonment, death penalty can also be the reason and requested state can refuse to grant extradition of the accused person to the requesting state.

Compared to other countries, India has fewer bilateral extradition treaties. One of the main troubling facts is that India has no extradition treaties with its neighboring states such as China, Pakistan, Afghanistan etc. with the absence of the treaties, India could face problems in trying to ensure the surrender of criminals fleeing to the border state. So if there is absence of this extradition treaty then this can also be major drawback or bar of the extradition law in India.

Political concerns which are regarding to the extradition arise when the legal and political concerns of the requested state take precedence over those of India. During the Bhopal gas tragedy[v] in 1984, there was evidence that then Union Carbide CEO-Warren Anderson was aware of this untested technology, flawed design, and also the dangerous location of the lethal methyl isocyanate. When Anderson visited Bhopal, a few days after the tragedy, he was arrested by the authorities, although he was soon released on bail at the order of the central government under U.S. pressure. After nearly 20 years, in May 2003, India has asked for Anderson’s extradition on the basis of criminal charges that the United States refused as it did not meet treaty conditions due to lack of evidence.

SOLUTION AND CONCLUSION

Extradition is a big step towards international cooperation in the suppression of crime. States should consider the extradition as responsibility resulting from the international solidarity in the fight against crime. In order to have the better laws, India need to maintain harmony with other nation by signing more extradition treaties and arrangements and also must improve their domestic framework. This will help in transparent and speedy extradition process. India must also take measures to regarding the poor prison conditions and potential violations of the requested person’s human rights. Indian government assurances of this are often not accepted by foreign courts. As a short-term measure, India could propose to detain the delivered offenders in prisons with better facilities. It has been rightly said by Gary becker that if cost or the penalties will be high this will directly affect the crime numbers also. As the cost of the apprehension and the conviction changes similarly the number of the offences also changes.

---

[i] Faraz alam sagar & pragati sharma/ extradition law: fundamental and process part 1/ mondaq (august 8, 2019)

[ii] https://indiankanoon.org/

[iii]  India Const. art 20, cl.2

[iv] Devika sharma/ Sanjeev Chawla alleged in the criminal conspiracy of match fixing to be in police custody for investigation at Tihar only/ SCC online blog/ February 21, 2020/ fullur/.

[v] 1989 SCC (2) 540

[vi] Picture: Indian corporate law CAM

ELECTRICITY BILL AMMENDMENT, 2021: AN ANALYSIS

by Anurag Yadav

ABSTRACT

This article tells us about the recent amendment made to electricity act 2003after last amendment made to this act in 2013 and the government is planning to made amendment in this bill that will be known as Electricity (Amendment) Act 2021. It tells us that how this reform can be considered as one of the greatest reform in India and how it does affect the lives of the people and what are the key features of it that will introduce by this amendment.

INTRODUCTION

The Electricity Amendment Bill 2021 is set to be tabled in parliament in monsoon session of Parliament which concludes on August 13. The Electricity (Amendment) Bill 2021, which enables power consumer to choose from multiple service providers as in the case of telecom services. Participating in the virtual Bloomberg NEF (BNEF) Summit, Power and Renewable Energy Minister R K Singh said the bill seeks to delicense distribution of electricity. It is being considered as a panacea for the power sector by many.

The bill seeks to delicense power distribution to reduce entry barriers for private players for creating competition in the segment, which would ultimately enable consumers to choose from multiple service providers. The bill also prescribes the rights and duties of electricity consumers. The minister further said the penalty for non-compliance of renewable purchase obligation (RPO) would be increased. Under the RPO, discoms and other large consumers are required to buy certain proportion of renewable energy prescribed by their respective regulators. They can also buy renewable energy certificates to meet the RPO obligation. For the renewables space, he said the government is in the process of introducing ‘green tariff’. Green tariff will help the discoms supply electricity generated from clean energy sources like solar or wind at a cheaper rate as compared to power from conventional fuels like coal.[i]

According to the Lok Sabha bulletin, the bill is in the tentative list of government’s legislative and financial business that is expected to be taken up during the sixth session of the 17th Lok Sabha. Speaking at a conference organized by lobby group Confederation of Indian Industry (CII), power minister Raj Kumar Singh on Thursday said all stakeholders, including states, industry and the ministries, have been consulted over the proposed amendments.[ii]

FEATURES OF ELECTRICITY AMENDMENT BILL, 2021

1. Delicensing of power distribution: The bill proposed to abolition of power “Distribution license” which means allowing several distributors in the same area and giving choices to consumers to chose the power supplier at their own discretion. It also remove the barriers for the private companies now they also can enter into market as power supply provider or in other words that all areas are also opened to private distribution companies.
2.  Mandatory appointment of a member from law background in the Electricity Regulatory Commission in Compliance to the Hon’ble Supreme Court Judgment dated 12^th April 2018.[iii]
3. Strengthening of Appellate Tribunal for Electricity: In view of the large pendency of cases and consequent delay in deciding the appeals, it is proposed to increase the number for appellate tribunal for Electricity. So from the present strength of two benches it would increase to four benches.[iv]
4. Responsibility of RPO shifted to central government: Keeping in view the national climate change goals, the responsibility of fixing renewable power obligation (RPO) is shifted from state commissions to the central government. The RPO is a mechanism by which the obligated entities (mainly power distribution utilities or discoms are obliged to purchase a certain percentage of electricity from renewable energy sources, as a percentage of the total consumption of electricity and non compliance to it will impose huge amount of penalty i.e. Rs. 1 crore.[v]

ISSUES RESPONSIBLE FOR AMENDMENT;

1. Problems faced by Discoms: It is one the major issue that is faced by the Distribution companies as despite the last 25 years of reforms in the power sector, Discoms are hardly met with their expenditure, unable to pay the power generators, and unable to repay the loan taken from the Banks and Financial institutions due to their poor financial health that is due to the delay in payment from the consumer side and power theft by the people. Discoms able to cover its 75% to 80% of their purchase cost therefore they always run in loss.
2. Poor availability of electricity and quality related issue: It is one of the major concerns that availability of power is very bad and bad quality except some major cities. Power is not available for hours at small towns and rural areas after some little natural phenomena like drizzling and thunderstorm etc. and if there is any defect in the power system then the supply provider takes many days to repair the power system.
3. Monopoly of State or Government companies: Monopoly of power supply’s companies in hand of government is also a major issue because power is in hand of single person or there a single or limited number of power supply provider in area due to which people have limited choices and they can’t change their power supplier easily and had to tolerate the monopoly of power supplier.

IMPACT OF ELECTRICITY AMENDMENT BILL, 2021

The impacts of the bill are as follows:

1. Improvement in the availability and quality of Power Supply: After the implementation of the proposed bill, 2021 it improve the availability of power supply and also the quality of power supply that means when there is a large number of power suppliers in a given area like telecom companies then they will improve the condition and quality of power supply which is necessary for their long term survival and profits just like the telecom companies.
2. Monopoly come to an end: When there is no barrier for private companies after delicensing then monopoly will not be there and there will be a multiple service provider start emerging in market that leads to competition in the market among the service providers which will force the supply providers to provide electricity uninterrupted and at better price or affordable price.
3. Prepaid Smart meter: It is very effective solution to stop power theft and delay in payment from consumer that means the consumer should recharge their meter in advance and the amount will deduct from meter balance as per the consumption made by the consumer, business etc. if they fail to do so within stipulated time then the connection will cut off and stop the supply of light.
4. Better implementation of law because of the mandatory appointment of a member from law background in the Electricity Regulatory Commission in Compliance to the Hon’ble Supreme Court Judgment dated 12^th April 2018 and quicken in decision making by Strengthening of Appellate Tribunal for Electricity.
5. Right of Electricity also becomes a right of people as they are able to take compensation if the suppliers fail to discharge their duty.

CONCLUSION

The brief discussion on Electricity Amendment, 2021 help us to understand the basic approach of it’s toward the nation that how does this bill affect the lives of the people and bring revolution in the field of Electricity. This bill can be considered as one of the greatest reform in India. It is really a wonderful amendment through which electricity can be available at affordable prices and also improve the quality and availability of Electricity due to competition among the service provider and due to the end of monopoly. Our grievances will be redress at very rapid pace due to the competition and it is only possible when there is no barrier for Private companies or players and because of the entry of private players government owned also started functioning efficiently and effectively. It is also a very good step by government as by making compulsory appointment of a member from law background for better implementation of law by and quicken decision making by increasing the number of member from 2 to 4 in Appellate tribunal for electricity. There is nothing in this world flawless so the bill is but overall the proposed bill is one of the greatest reforms in field of electricity in India and brings evolution in the world.

---

[i] Available at: https://economictimes.indiatimes.com/industry/energy/power/electricity-amendment-bill-likely-to-be-introduced-in-monsoon-session-power-minister-r-k-singh/articleshow/83956193.cms (Last visited August 06 2021) 

[ii] Available at: https://www.livemint.com/industry/energy/power-users-may-soon-get-to-choose-supplier-11626375847269.html (Last visited August 06 2021)

[iii] E-Pdf Available at: https://tnebeaengineers.in/wp-content/uploads/2021/02/Board_Proposed-amendment-to-Elelctricity-Act-2003-522021.pdf (Last visited August 06 2021)

[iv] Ibid.

[v] E-Pdf Available at: https://blog.forumias.com/electricity-amendment-bill-2021-explained-pointwise/ (Last visited

    August 06 2021)

[vi] Picture: the sentinal assam

Hindustan Lever Employees Union v. Hindustan Lever Limited (AIR 1995 SC 470)

By Vartika Johri

ABSTRACT

“Two plus two is not sometimes equal to four! It is equal to four plus one, for one is a powerful amalgamation.” Schemes of arrangement have been a useful method of implementing mergers and acquisitions in the Indian context. Historically under the Companies Act, 1956, schemes were supervised by the High Courts, but the Companies Act, 2013 conferred that jurisdiction upon the National Company Law Tribunal (NCLT). Under the regime set forth in the 1956 Act, the High Courts had adopted a largely non-interventionist approach relating to schemes and stepped in only in very specific circumstances. The Supreme Court developed important jurisprudence in Miheer H. Mafatlal v. Mafatlal Industries Limited[i], (1996) 87 Comp. Cas. 792 and Hindustan Lever Employees’ Union v. Hindustan Lever Limited[ii],

INTRODUCTION

Hindustan Unilever along with its subsidiary company and Tata Oil Mills Company Ltd were the two major parties to this case. In 1917 TOMCO was the first Indian company to be financially stable. The Federation of TOMCO and HUl Employees’ Unions, as well as a few nominal owners, contested the merger in the High Court. According to them, the provisions of the Monopolies and Restrictive Trade Practices Act 1969 contain legislative breaches and procedural errors. This occurred, resulting in the undervaluation of their stock. The price of the preferred allocation was lower than the market price. As a result, it failed to defend the interests of both employees and businesses. It also went against the public’s best interests. The high court found this fact suspicious that there couldn’t be both and hence, either the merger which took place was against the interest of the public elsewise the valuation of the shares was prejudicial to the interest of the shareholders of TOMCO or that the interest of the employees was not adequately protected. It was stated that there is no violation as per section 391(1) of the act. The court contended that the petitioner failed to establish any fraud or violence or prejudice. The court valued the share exchange ratio and found that valuation was done with a renowned firm of chartered accounts. The Monopolies and Restrictive Trade Practices Commission received the complaint. However, the HC and the MRTP Act have completely distinct jurisdictions. The lawsuit relates to the denial of the merger scheme’s approval. It was decided that the retrenchment of HUL employees had been denied and that taking the issue to the labor court would be futile because the preferential allotment was less than the market price, the court determined that HLL owned 51 percent of the company’s shares. This was before any hares were assigned. The allocation was made at par, which was deemed fair and did not constitute a violation. The court is required by Section 394 to be satisfied that the proposed merger or amalgamation is not in the public interest. The fundamental concept of such satisfaction is none other than the broad arid general principles inherent in any compromise or settlement reached between parties, which is that it should not be unjust, adverse to public policy, or unconscionable. In the case of corporate mergers, the courts have developed the notion of the ‘prudent business management test, which states that the plan should not be used to circumvent the law.

The firm sought guidance from the Merchant Banking Division of Industrial Credit & Investment Corporation of India Limited on a reasonable price for the planned preferential allocation to UL, according to the statement. The HLL’s figure was accepted, according to the Merchant Banking Division of the Industrial Credit & Investment Corporation of India Ltd. Not only was the figure found to be fair and reasonable by the authorities, but it was also guaranteed that UL would not transfer the shares for a minimum of seven years from the date of allotment and that UL would sell the shares at any time after seven years but within twelve years of the date of allotment. They would do so in the first instance in the best interests of other members of the company, in a fair and reasonable way, at a price calculated using a price-earnings multiple of 15 as per the firm’s most recent published accounts available at the time of disposal. It was also argued that the Rs. 105 pricing was set in conformity with the Indian government’s new industrial policy on 24^th July 1991.

JUDGEMENT

The appellant filed the case before the Supreme Court on May 18, 1994, after being aggrieved by the decisions of the lower courts. All five appeals that had previously been filed were rejected by the Supreme Court. The courts also took into account the foregoing facts, as well as the financial accounts and evaluations that had been completed thus far. It also reviewed whether the merger of the two firms should be delayed since it would be in the public interest. With the Amalgamation plan, legal problems have now been raised. For the first time, the valuation report was given before this court, together with the charts of both firms. The exchange ratio was judged to be extremely fair based on all of the statistics. The court noted that the appraisal was completed in accordance with the Act’s provisions. The NCLAT held that a scheme should be fair and in the interest of all shareholders and not only for a few among them. The NCLAT clarified further that the constitution of the NCLT comprises both judicial and technical members. Thus, it has enough expertise to examine a scheme and to ensure that it is fair and just to all shareholders. The NCLAT agreed that it may not be desirable for the NCLT to look into mathematical details. However, if, from a broad review of the scheme, it appears to be unfairly beneficial to a particular class of persons, then it should exercise the expertise available to it and refuse to approve a scheme if, according to its opinion, it fails to uphold the public interest. In the context of the instant case, the NCLAT held that without going into deep mathematical details, it was apparent that the benefit to the accord of INR 12 crores was flowing into the hands of the common promoters of the Appellants even though the net worth of the Transferor Company was only INR 22 lakhs. Accordingly, the NCLAT held that the Scheme was not beneficial to shareholders at large and upheld the decision of the NCLT.

The Supreme Court was of the opinion that it could not find the valid reason behind the amalgamation of both the companies could harm the employees of these companies. Therefore, there was no substance of contention and the employees would continue to remain on the same terms and conditions as before. This amalgamation will not prejudice not even harm the public interest. At last, the vague allegation is malafied.

PRINCIPLES LAID DOWN

The observation made in the Hindustan Unilever case was heavily based on the precedent of Miheer H. Mafatlal v Mafatlal Industries Ltd and the principles held in the case by the supreme court were: –

1. The merits of the compromise or arrangement have to be judged by the parties who as sui juris with their open eyes and fully informed about the pros and cons of the scheme arrive at their own reasoned judgment and agree to be bound by such compromise or arrangement compromise or arrangement.
2.  The court has neither the expertise nor the jurisdiction to delve deep into the commercial wisdom exercised by the creditors and members of the company who have ratified the scheme by the requisite majority requisite majority.
3. The court cannot, therefore, undertake the exercise of scrutinising the scheme placed for its sanction with a view to finding out whether a better scheme could have been adopted by the parties.
4. That the provisions of the statute have been complied with.
5. That the class was fairly represented by those who attended the meeting and that the statutory majority are attended the meeting and that the statutory majority are acting bona fide.
6.  That the arrangement is such as a man of business would reasonably approve.
7. There should not be any lack of good faith on the part of the majority.
8. Scheme not contrary to public interest or any other law[iii]

The extract of the principles addressed in the Hindustan case was: –

1. Valuation is an art, not an exact science.
2.  A combination of the yield method, asset value method and market value method were used was used.
3.  Courts not to generally question valuation done by independent professional expert and approved by the shareholders.
4.  Valuation of experts not to be set aside in the absence of fraud or malafide on the part of experts

CONCLUSION

It is evident that the NCLT should not simply rubber-stamp plans that have received unanimous shareholder approval. This is especially true when concerned authorities, such as the ITD, express complaints. Simultaneously, the NCLT’s exercise of scheme authority (as backed by the NCLAT) has seen a steady extension of such power. Given that public interest has been engrained in Indian scheme law, it is no one’s case that such an issue should be regarded lightly. The tribunal must, however, create a solid set of rules to guide its exercise of discretion in order to provide greater clarity to parties involved in the scheme of arrangement transactions.

---

[i]   (1996) 87 Com Cases 792 (Supreme Court)

[ii] AIR 1995 SC 470.

[iii] https://vinodkothari.com/wp-content/uploads/2014/01/MERGERS-Amalgamation-presentation-by-Payel-Jain.pdf

#NCLAT #NCLT #Shareholder #HindustanUnilever #Tata #India #Companylaw #Supremecourt #Caselaw #Analysis

DEMERGER: CONCEPT OF TAX NEUTRAL DEMERGER & UNDERTAKING

by Amrit Behera

Abstract

This paper mainly focuses on the concept on merger and Demerger. This paper focuses on the development of the demerger and also discusses about the current state. And most importantly it analyses the concept and focuses on the provisions and aftermath of the concept. This paper also discusses about the use of this concept and hoe is it implemented in the Budget.

Introduction

A “demerger” is a company’s split or division into a larger number of businesses. The transferees, or new firms, do not have to be subsidiaries of the parent corporations that have split or divided.[i] The term “demerger” is defined by the New Oxford Dictionary as “the division of a bigger corporation into two or more smaller firms.”[ii]

The Finance Minister, in her maiden Budget speech for the Financial Year 2019-2020, Finance Minister Nirmala Sitharaman made policy announcements and proposed amendments to existing economic policies, infrastructure development program, and the taxation regime in order to facilitate economic growth and make India a five trillion dollar economy in the next five years. Existing tax laws were also clarified in order to avoid ambiguity and litigation.

One such clarification in the taxes regime is the revision of the concept of “demerger” to remove uncertainty and challenges for corporations that must adhere to Indian Accounting Standards (Ind-AS).

Provisions and aftermath

Currently, the provisions of section 2(19AA) of the Income-tax Act, 1961 (Act) define “demerger” in relation to companies as a means of transfer undertaken pursuant to a Scheme of Arrangement under sections 230 to 232 of the Companies Act, 2013, whereby one or more undertakings of the demerged company (transferor company) are transferred to the resulting company (transferee company) after attaining the required level of success. If certain conditions are met, such transfers are deemed to be exempt transfers (i.e., not taxable under the Act).

Transfer of all assets and liabilities of the undertaking by the demerged company to the resulting company, issue of shares as consideration by the resulting company to the shareholders of the demerged company, transfer of the undertaking on a going concern basis, and so on are some of the conditions for a tax neutral demerger under section 2(19AA) of the Act. Section 2(19AA)(iii) of the Act further stipulates that the demerged company must transfer the undertaking’s assets and liabilities as they appear in the books of accounts immediately before the demerger, implying that the transfer must be done at book value.[iii]

Companies followed the accounting rules under the Indian Generally Accepted Accounting Principles until Ind-AS was introduced (Indian GAAP). However, because there was no special accounting standard for demergers in Indian GAAP, firms transferred the assets and liabilities of undertakings at book value to conform with the Act’s definition of “demerger.” As a result, the demerged firm used book value to transfer assets and liabilities, and the successor company utilised book value to record assets and liabilities.

Ind-AS was created in India to match with International Financial Reporting Standards (IFRS) by adapting the IFRS to the Indian economy’s needs. The Ind-AS regime introduced the idea of “business combinations,” which included mergers, demergers, slump sales, and other transactions. The accounting standard for company combinations, Ind-AS 103, gives guidelines on the accounting rules to be followed for business combinations, stating that acquisitions involving unrelated parties should be recorded at their acquisition-date fair values.

Many Ind-AS corporations had difficulties while executing demerger activities since the accounting standard required the new company to record assets and liabilities at a fair value that differed from the demerged company’s book value. This created the ambiguity that if section 2(19AA) of the Act was implemented, the provisions of Ind-AS were not being followed, which could result in the audit report being qualified by auditors. If the assets and liabilities were recorded at their fair values in accordance with Ind-AS, there was a possibility that the demerger would be interpreted as non-tax neutral, and hence tax would be imposed. The inconsistency between tax and Ind-AS provisions caused confusion for companies legally required to follow Ind-AS, and raised concerns about whether the anomaly between fair value accounting under Ind-AS and book value accounting under section 2(19AA) of the Act could jeopardise the tax neutrality of demergers.[iv]

There were multiple interpretations of the tax and Ind-AS provisions of the statute, one of which was that a demerger is not tax neutral since the provisions of section 2(19AA) of the Act are not followed. Another viewpoint was that such a fair valuation is required from the acquirer’s standpoint to comply with Ind-AS, whereas the requirement of transfer at book value is for the demerged firm from a tax perspective. There was a risk of lawsuit as a result of these viewpoints, as well as differences in the positions of different authorities in different forums.

As a result, the Finance Minister has proposed to amend section 2(19AA) of the Act to allow the resulting company to record the value of assets and liabilities of the demerged undertaking at a value other than book value in accordance with Ind-AS and still be considered a tax neutral demerger in the Finance Bill, 2019.

Conclusion

The proposed change would take effect on April 1, 2020, and would apply to Assessment Year 2020-2021 and subsequent years.

Although this is welcome news for Ind-AS companies considering demergers in the future, what happens to those that have already done so or are in the process of doing so? The 2019 Finance Bill is silent on this crucial clarification.

The government has proposed a number of reforms and initiatives to reduce the cost of litigation, and the proposed easing of the definition of “demerger” is one of them.

This suggested alignment of tax neutrality of demergers with Ind-AS accounting norms is a good improvement that would help India’s M&A market grow. However, because the proposed amendment is prospective, further information is needed to determine if the benefit would be available to past demergers as well.

---

[i] J. C. (Jagdish Chandra) Verma et al., Bharat’s corporate mergers, amalgamations & takeovers : concept, practice & procedure, 1631 (2008)

[ii] demerger noun – Definition, pictures, pronunciation and usage notes | Oxford Advanced Learner’s Dictionary at OxfordLearnersDictionaries.com, https://www.oxfordlearnersdictionaries.com/definition/english/demerger (last visited Jul 28, 2021)

[iii]  Demerger: Alignment of tax neutrality with Ind-AS requirements, https://taxguru.in/income-tax/demerger-alignment-tax-neutrality-ind-as-requirements.html (last visited Jul 28, 2021)

[iv] Demerger under Company Law, http://www.legalservicesindia.com/article/420/Demerger-under-Company-Law.html (last visited Jul 28, 2021)

[v] Picture: India Filing

RELIGIOUS CRIMES IN DEVELOPING COUNTRIES: INDIAN PERSPECTIVE

by Rashi Srivastava

INTRODUCTION

The term religious crime, as the name suggests, relates to the criminal offenses associated with religion. In India, secularism is an important part and this is evident from the fact that religion is the fundamental right that is provided to every citizen in the country. Every religion and its beliefs in India are protected by the Constitution of India. Religion is a sensitive topic as it dictates the morals and the upbringing of an individual. In the past, there have been many instances that tell that mostly all societies have had criminal offenses related to religion. Religious crimes have been a universal problem since immemorial times. Thus, religion has certain negative impacts on the country where violence has occurred mostly in the name of religious hate crimes. It is a major threat to society now. In the present times, when the country is advancing towards technology and development, yet hate crimes exist which contributes as the main reason for the drawback in a civilized society.

Main Issue

To understand religious crimes, firstly some light must be thrown upon religious laws. Religious laws are those which are based upon morality, ethics, culture, and likewise certain obligations of a particular religion. There has been always an interrelation between religion and law. In India, every individual has a different religion, beliefs, caste, and own faith[i]. In the case of SR Bommai vs. Union of India[ii], it was observed that the freedom of religion is a fundamental right provided to the citizens of India by the Constitution. Thus, there is a provision for the protection of the religious beliefs of the people of the country. But, if there will be a misuse of these laws, then the people can be penalized too. Also, India is the origin of the four major religions: Hinduism, Buddhism, Jainism, and Sikhism. Talking about the Muslim population, 180 million of it resides in India making the country the third largest in the world after Indonesia and Pakistan[iii]. A small population of about 30 million people of Christian minority also resides in India.

But nowadays, there are cases of religious brutality on the rise. People have a prejudice that goes against somebody else’s religion and race. There have been many examples of minorities in India where religious contempt is converted into religious brutality or hate crimes. So, what is understood by hate crimes?

Hate Crime is a crime that is mostly encouraged by intolerance towards a particular race, culture, color, national origin, religion, gender, ethnicity, disability, or sexual orientation. These crimes are those acts that are done with some kind of a motive. The main essence of hate crimes is criminal offense combined with a bias motive. Hate crimes differ from ordinary crimes not only on the grounds of the type of offender but also because of their effect on the victim. It disturbs and destroys the fabric of society and also violates several rights of the citizens like the right to equality, the dignity of humans, and further can cause psychological injury thus leading to depression and anxiety[iv].

Hate Crimes and Minorities in India. As per a Hate Crime Watch report[v] that minorities were facing 75% of the attacks related to religious hate crimes. The main issue which the developing countries are facing right now is the crime associated with religion. Most of the hate crimes that occurred in the past years are the 9/11 attack, the Nazi slaughter of Jews, the Gujarat Communal Riots, and many more. These crimes were done with a biased motive and that too, in the name of religion. There is also a role of religious law in hate crime. It is a fact that almost every nation has its own set of religious laws on the basis of its religious dictates and teachings, and these laws are supported with penal provisions. Talking about the misuse of freedom of religion, there have been several cases of conversion and re-conversion. Out of the 29 states in India, seven of them have adopted the Freedom of Religion Act which is also known as Anti-Conversion Laws. This act prevents the conversion of religion generally by the use of force, stimulus, or by any other fraudulent means. However, this has given rise to discriminatory practices against minorities. Also, the Indian Constitution does not guarantee the right to freedom of conversion, it only talks about the right to freedom of religion as given under Article 25[vi].

In a case of Digyadarsan Rajendra Ramdassji v. State of Andhra Pradesh[vii], the Supreme Court held that “the right to profess and propagate one’s religion means the right to communicate an individual’s beliefs to another individual or to expose the principles of that faith but would not include within it the right to convert another person to the former’s faith”.

Religious crimes in our country include many instances and examples like the famous Babri-Masjid Incident which was a coalition between the two religions- Hindu and Muslims. One more incident happened, the Godhra train incident, which arose tensions between the two groups. Similarly, in Saudi Arabia, there is an existence of Islam religion throughout the country. Restrictions have been put upon the non-Muslim people in the country and thus, they face discrimination in society[viii].

Foreign Contribution Regulation Act, 1976. This Act was passed in the year 1976 and was amended in 2010. It has continuously been used against many civil society organizations, charities, and other non-governmental organizations. This Act provides that the missionaries, foreign religious organizations must come under the FCRA that puts a limit on the overseas aid to certain NGOs including those too with the religious coalition. Thus, Section 9 of the said Act allows the Government of India to put a stop to the acceptance of foreign aid which will affect the public in general.

Suggestions and Conclusions

The spirit of Secularism is to ensure that the people of the country are living at peace and professing diverse religions, beliefs, or faith. It is a choice to follow any religion. Thus, there should be no kind of restriction on the same. Religious crimes or hate crimes like mob lynching, love jihad, conversions are specifically the origins of making people forced to follow the other religion and therefore, violation of the same gives rise to violence. It infringes various other rights like the constitutional and legal rights of the minorities. To conclude, it can be said that all religions, be it Islam, Hinduism, Christianity, Buddhism, Jainism, etc. should be embraced with peace and should be respected by everyone.

---

[i] Hate Crime, Dictionary.com(Digital Edition,2012)

[ii] 1994 SCC (3)(1)

[iii] Kronstadt K. Alan, India :Religious Freedom Issues, Congressional Research Service, August 2018 (Apr 29 2020, 19:55 IST) https://digital.library.unt.edu/ark:/67531/metadc1281657/

[iv] https://www.ijlmh.com/wp-content/uploads/2020/05/.pdf

[v] https://scroll.in/latest/907238/religious-hate-crimes-in-india-rose-to-a-decade-high-level-in-2018-report

[vi] https://indiankanoon.org/doc/631708/

[vii] AIR 1970 SCR (1) 103

[viii] https://licitgist.in/religious-laws-and-religious-crimes-in-developed-and-developing-nations/

[ix] picture: the Hindu

Analysis of Rule of Majority in Company Law

by Vartika Johri

INTRODUCTION

Incorporate world, all democratic choices, and control of an organization are made with the majority rule that is deemed to be truthful and justifies. The Corporate world is witnessing the legal battle of shareholders for a long time. This problem lies not only in India but across the globe. Corporate democracy is a very essential pillar of good corporate governance as the word ‘governance’ is itself seems to be a politically influenced word in public law. For better implementation of the model of corporate democracy, it is paramount that every member irrespective of whether he is in a minority or majority should get the opportunity to participate in the decision-making process of that corporation. The majority rule of decision making, quite often that not overlooks the views of minority shareholders. Majority power has exquisite importance in the running of a corporation and the “Courts will now not generally interfere at the instance of the shareholder in matters of internal management.” General public participants enjoy the splendid authority to exercise the power of the organization and commonly to govern its affairs and the minority shareholders must concede to most people’s choices. This power has led to developing a tendency to be oppressive towards the minority shareholders. To overcome misusing such power, the Companies Act 2013 came up with a solution to tackle the problems faced by minority shareholders.

MAJORITY RULE

Section 47 of the companies act 2013, relates to the voting rights of shareholders in a Company. The following are some of the highlights of the provisions in the Companies Act. Each member of a company that is limited by shares in adding up to holding equity share capital will have a right to vote on every resolution related to the company. The voting right on a poll will be in the percentage of his share in the paid-up equity share capital associated with the company. Hence, if a shareholder owns 51% of the company in terms of paid-up equity, he will have the right to exercise majority control over the company. Generally voting rights are available only to the equity shareholders of the company. Preference shareholders do not enjoy normal voting rights like equity shareholders. But under certain circumstances voting rights will also be available to the preferred shareholders of the company.

This rule was introduced in an English case of Foss v Harbottle[i]where two shareholders named Foss and Turton of minority group allege in the general meeting of a company that directors of the company have misapplied the property of the company and have defrauded it, as the majority shareholders in a general meeting decided not to bring any kind of action against directors. The legal action commenced by the plaintiff in the court and the maintainability of the suit was in question.

The court ruled that the suit brought by the minority shareholders could not be maintainable. The wrong some to the company is one which could be ratified by the majority of members. The company was the proper plaintiff and the company can only bring the action through majority shareholders and those members should decide whether to commence proceedings against directors. t was held by the court that majority decisions are binding on minority groups and they have to oblige it as per “Majority Rule.”

Another important principle discussed in this case was the proper plaintiff rule, which means that only the company is competent to bring legal action against any person who causes any harm to the company as it is a separate legal entity. So, this idea that only a company can file a suit against the wrongdoer and no individual member can do it confer an important power to a majority as a company performs through its majority group’s will and so any member from minority will not be able to even complain of a wrong done by the majority group.

An Indian case that applied the majority test for the first time was Bhajekar v Shinkar[ii]. The dispute, in this case, was on the appointment of certain persons as managing agents by BOD by passing a resolution by majority favor but some directors oppose it by filing a suit on the ground that the appointment is irregular.

The court dismissed the suit by stating that even if it is irregular it was ratified by the majority group in general meeting and so the suit is not maintainable.

Another case of Parshuram v Tata Industrial Bank, Ltd, [iii]Bombay high court accepted the non-interference principle and observed: “officious interference by the court in such matters would paralyze the working of all joint-stock companies.”Sometimes with the help of majority rule, the majority shareholder uses to adopt unethical practices which are prejudicial to minority rights. So, the strict application of majority rule sometimes proves to be harsh and unfair for minority shareholders, therefore with the development of the corporate world, certain exceptions to this rule evolved for the protection of the rights of minorities

EXCEPTION OF MAJORITY RULE

Generally, the rule of the majority is applicable in every company and thus the minority shareholder cannot bring the action, but in the below-mentioned scenarios, the minority shareholders can protect their interests.

1. Ultra Vires and Illegal Acts–

Acts violative of the object clause of MOA/AOA are ultra vires and illegal acts and no company has a right to act beyond the particulars mentioned under their memorandum of association. Such acts cannot be rectified by the majority cote on resolution can come within the purview of courts. Ultra vires and illegal acts cannot be rectified on unanimous votes by the members. Hence, the Foss rule is not applicable, one can approach the court in both representative or derivative capacity depending on the situation.

A similar situation was faced in Bharat Insurance co. v Kanhayala[iv]. The court allowed the suit and stated that normally the court will not interfere but since the transaction by the directors are ultra vires the suit is maintainable.

• Fraud Or Oppression Against Minority–

When the majority of the company’s members exploit their position to deceive or mistreat the minority, even a single shareholder can challenge their actions. The deception or oppression must entail an unjust use of the majority’s authority that results in or is likely to result in financial loss or unfair or discriminating treatment of the minority. The court will annul such resolution that tries to amend MOA/AOA that:

• Indirectly or directly appropriating property of company to themselves
• Appropriating money to themselves
• Actions where shareholders are entitled to participate but are prevented by the amendment in MOA/AOA.

A similar direction was made in the case of Menier v Hooper’s Telegraph work Ltd.[v]

• Breach of Fiduciary Duties –

Derivative action will be launched against the directors and promoters because they have a fiduciary obligation to the company, When the directors are in control of the company and misappropriate the firm’s property, Misusing the company’s assets in violation of the company’s act, denying members, the ability to continue their actions.

Derivative actions against promoters can be taken If they are found guilty of misrepresentation, the contracts between them and co. will be canceled.

If they do not reveal certain hidden gains, the court will require them to reimburse the firm any money obtained under contracts.

• Inadequate Notice of a Resolution Passed at Meeting of Members –

When a general meeting is called and a proposed resolution is mention then, the insufficient information of the same arises when:

• A member could be attending meeting and voting against the resolution
• A member may decide not to attend

Therefore, these two types of members may bring a representative suit to restrain the company and its directors from carrying out such a resolution.

• Qualified Majority –

If the MOA or AOA requires a qualified majority (special majority) for passing a resolution then the rule in Foss v Harbottle will not apply to override that requirement. The action brought for such irregularity will be a personal action. In cases like Baillie v Oriental Telephone and Electric Co. Ltd [vi]and Nagappa Chettiar v Madars Race Club.[vii]

• Infringement of Individual Member’s Personal Rights –

The member in such a case can proceed in his own name. It is not a corporate membership right.

The Company’s Act, 2013 lays down certain Statutory Exceptions to Foss Rule in order to prevent the rights of minor shareholders.

1. Section 48 – Variation of class rights: when the shares issued are divided in various classes as provided in MOA/AOA, the rights attached to the shares can be varied with the consent of 3/4th majority of the shareholders of that class. In case when the classes are made and rights are varied with consent of requisite majority, the holder of not less than 10% of issued shares of that class who has not assented to the variation may apply to the tribunal for cancellation of variation under section 48(2) of the act.If company does not comply with order of tribunal, it is punishable with fine of not less than 25000 which can be extended up to 5 lakhs or officer of company may be awarded imprisonment for 6 month or fine or both.
2. Section 213 – Request for Investigation: An application may be made to tribunal for investigation in the affairs of company by
3. Company with share capital
4. 100 or more than 100 members
5. Members holding not less that 1/10^th of total voting power
6. In case company don’t have share capital:
7. Application may be made by not less than 1/5^th of the members.

• Section 230 – Scheme of compromise or arrangement:Provides for compromise and arrangement with creditors and member’s and provides for protection to minority, section 230 (7) (c) provides that if these two results in variation of shareholder’s right it shall be given effect to under provision of section 48, section 230
  (7) (e) provides that tribunal order may also provide for exist offer to dissenting shareholders to effectively implement the term of compromise and arrangement.

• Section 241 – Oppression and Mismanagement:Principle of majority rule does not apply where the section 241 is applicable. If a member complains that the affairs of the company are being conducted in a manner oppressive to some of the members including him, or against public interest, he may apply to tribunal by petition under section 241.

• Section 235 – Rights of dissentient shareholders under take-over bids:Offer for the purchase of the share received, 90% shareholders have accepted, the party making the offer can take the rest 10% on same term. Notice to be given to dissenting shareholders, specifying the terms. They have right to make application to tribunal praying that their shares not be acquired on these terms. Tribunal may make an order, as it may think fit.

• Section 235 – Class Action: Application to the tribunal by prescribed no. of members seeking certain reliefs on the grounds that the affairs of the company are being conducted in a manner prejudicial to the interest of company and its members. Tribunal may make an order, as it may think fit.

CONCLUSION

While a company can establish a proper balance between its majority and minority shareholders obviously the company will operate smoothly which will result in increased profit. The company should create such a model that no rights of either shareholder are questioned at any time. The Indian laws have recently started considering the fact there have been cases of oppression of minors by major shareholders and have created provisions to avoid such misuse and it will be better for companies to stay within the limits of the statutory provisions to reap benefits in the long run.

---

[i](1843) 67 er 189, (1843) 2 hare 461

[ii](1934) 36 BOMLR 483

[iii](1928) 30 BOMLR 1115

[iv] 1934-7-79. high court of Lahore.

[v](1874) 9 C App. 350

[vi][1915]1 Ch. 503

[vii](1949) 1 MLJ 662

[viii] Picture: India Filings