Mr. Kejriwal goes to Delhi

The other day I watched Frank Capra’s 1939 film ‘Mr. Smith goes to Washington‘, a political drama about a small town Boy Ranger who is appointed by the governor of a Western state to replace a deceased Senator. The newly appointed Senator, Jefferson Smith (played by James Stewart) is a rookie to the world of politics; idealistic, highly patriotic, naive, and is selected for the position because it is thought by the governor and his cronies that he will not interfere in their monetarily beneficial political plans (monetarily beneficial of course, only to them). When Senator Smith gets wind of these plans, namely, a bill for the construction of dam on the lands upon which he had  proposed a national boys’ camp, he opposes the same in the Senate and false charges of corruption are planted against him.The dam-building graft scheme is supported by James Taylor, a rich industrialist who has in effect put the politicians backing the scheme into power. Down, out and ready to give up, Senator Smith with some inspiration from his more experienced secretary launches a filibuster to delay the appropriations bill for the graft scheme and to prove his innocence. Eventually after continuously speaking for 23 hours, he collapses, the conscience of his fellow state Senator is pricked, and the falsity of the charges against Smith are admitted to.

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What particularly struck me of this film (apart from the excellent acting and filmography and the simplicity of the story) was the fact that during Smith’s filibustering, even though at times the audience and press seemed to be in support of what he was saying, due to the magnitude of James Taylor’s influence, everything actually printed in the newspapers is in a negative light, and subsequently, the immediate public opinion on Senator’s Smith’s guilt is adversely affected.

Now in the day and age of this film the media was limited only to the print media and thereby control over the news and public opinion was simple enough, if one had the sufficient means and influence to do so. This fact made me think of the Anna Hazare’s anti-corruption agenda/the Aam Admi Party/Arvind Kejriwal/ the Jan Lokpal Movement. In the current scenario, the media has expanded to include television and social networking in addition to news print. It may seem therefore that infiltration of the sort depicted in Mr Smith goes to Washington would not be possible. However, it is my opinion that distortion of the facts has become less obvious, more subtle, pervasive and dangerously influential upon public opinion.

Today there has been great praise and promise written about the Aam Admi Party’s showing in the Delhi Assembly elections and Arvind Kejriwal’s announcement that he will form government in the Capital. However, going back to Anna Hazare’s first fast in 2011, there was great praise and promise written of Anna’s movement during its inception as well. What happened subsequently? I derive the trajectory of public opinion on the issue through my own opinions on the same and how they have been continually changing without my own consciousness of the same. After Anna’s 6th or 7th fast, the news reports began to become highly negative, branding him as a foolish and senile old man, desperate for publicity, clinging to an outdated Gandhian ideal in vain. The same media sources which had, weeks earlier, lauded him as a saviour of the people and a crusader for justice. Then came the split between Kejriwal’s camp and Anna’s camp which unleashed with it a tidal wave of negative publicity. Kejriwal was heavily discredited and the public lost faith in his capabilities. We lawyers, law students, liberal intellectuals and political enthusiasts engaged in heated discussion on how fickle they all were and how there was no unity between Anna Hazare and his followers. And of course, that he was just a stupid old man who needed to stop fasting.

Then suddenly due to the lack of choice (NaMo v. RaGa) we all decided that the Aam Admi Party was the future of justice and transparent governance in our country (when we earlier criticised Kejriwal, branding him a hypocrite for entering the political realm). Because there was no strong candidate projected to appeal to our intellectual senses, we again turned back to the AAP. The same AAP which we had dismissed to negative publicity over the Anna-Kejriwal split. The constant interchange between the positive and negative light in which these personalities and their programmes have been chronicled makes me question the character of our national media, and whether it is truly as unbiased as it claims to be.

As life at times appears to imitate art, in Kejriwal I see a version of Senator Jefferson Smith, a rookie to politics and in some respects misrepresented and misunderstood. Anna Hazare and Arvind Kejriwal had ideological differences about whether or not to enter the political realm to combat corruption. This does not make them hypocrites, nor should it render their movement meaningless. While Anna chose to stay clear of politics, Kejriwal felt the need to engage in the democratic process to bring about change. Whether he succeeds in fulfilling his promises, remains to be seen. Whether the conscience of corrupt politicians is eventually pricked remains to be seen (though I don’t think 2014 shall bode as well for conscience-pricking as 1939 did). Whether Anna, Kejriwal, the Congress or the BJP are right, wrong, just, corrupt or progressive are subjective notions to be determined by each citizen and resident based on their own thinking capacity and opinion generating faculties. Neither should we be forced to support any particular movement or political party, nor should we be irrationally turned against them. In the nation with the longest democratic constitution in the world, it is the hope that we are free to make our own opinions and that our opinions are not subtly controlled by the media, in turn controlled by the influential. In the meantime, Mr. Kejriwal has gone to Delhi. It remains to be seen whether he will stay there, or if negative forces shall succeed in conspiring against him.

VII NLSIR Symposium

VII NLSIR Symposium 2013-14: Bridging the Security-Liberty Divide

 

The National Law School of India Review (NLSIR), the flagship journal of the National Law School of India University (NLSIU), Bangalore is pleased to announce the VIIth NLSIR Symposium on “Bridging the Security-Liberty Divide” scheduled to be held on December 21 and December 22, 2013 at the National Assessment and Accreditation Council (NAAC, opposite NLSIU Campus, Nagarbhavi) Conference Hall, Bangalore. The decade following September 11 has been dubbed “liberty’s lost decade”, not just for the United States of America but for the world at large, marked by increasing tension between State interests in national security and individual liberty. As we continue to grapple with the implications of this clash, one clear winner seems to be emerging, best observed by examining changes in legal systems throughout this decade. The recent upsurge of criticism against NSA activity globally, however, could be seen as indicative of a changing trend. The VIIth NLSIR Symposium seeks to trace this dialogue between competing notions of security and liberty, and hopes to assess and analyse similar developments in India.

Confirmed speakers for the Symposium include Hon’ble Justice Muralidhar, Menaka Guruswamy, Mrinal Satish, Bharat Karnad, Aparna Chandra, Chinmayi Arun, Shyam Divan, Bhairav Acharya, speakers from ARA Legal, Yug Mohit Chaudhary and Saikat Datta.

This year, the discussions will be divided into four panels:

Session I: Securing Liberty from the State – Redefining Thresholds for Offences

(Forenoon, December 21, 2013, Saturday)

Session II: Intrusive Intelligence – Surveillance Programs and Privacy in India

(Afternoon, December 21, 2013, Saturday)

Session III: Beyond Borders – Extradition, Asylum and Concerns of State Security

(Forenoon, December 22, 2013, Sunday)

Session IV: Security and Liberty in India – Redefining the Debate

(Afternoon, December 22, 2013, Sunday)

Registration fee for those who make an advance payment/bank transfer is Rs. 500 for students and Rs. 750 for others. All those interested are requested to register at: https://docs.google.com/forms/d/19s9HkuoTRNBxKahu_pDSYbDb-6CCXvk6ZV4d1kkOW9s/viewform.

The registration fee for those who register at the venue is Rs. 750 for students and Rs. 1000 for others.

For more details visit our Facebook page https://www.facebook.com/events/393805164084543/ or visit our website http://nlsir.in/symposium.html.

For further information, please contact Abhinav Sekhri (Chief Editor): +91-9538003614; Mansi Sood (Deputy Chief Editor): +91-9632745265 or email us at mail.nlsir@gmail.com

Guest Post: The Jet-Etihad Deal: Fasten Your Seatbelts?

This piece is a guest post by Vishal Achanta, a fourth year student of the National University of Advanced Studies, Kochi.

The CCI recently cleared the JV between Jet Airways and the UAE based Etihad Airways; it was a four to one decision, Mr. Anurag Goel being the lone dissenting member. The majority order can be found here and the dissent here.

The antitrust analysis of a JV involves the consideration of numerous factors, some legal and many economic, behavioral or market-based. Very often, it is the possibility of adverse economic effects on competition in India that determines the outcome; even though parties try to support their assertions with economic theory and evidence, a large degree of conjecture is involved: hence, the need for careful consideration of each and every factor. This is something that neither Mr. Goel’s opinion or the opinion of the majority seems to have done.

A brief description of the landscape of air travel between the UAE and India is necessary: India and the UAE had an MoU that allowed 13,330 “seats per week” (13,330 passengers could fly between India and the UAE each week) between India and the UAE. This has been increased (but at the date of the clearance was not yet effective) to 50,000 seats per week by a more recent MoU; from the UAE side, Etihad will be entitled to all 50,000 seats and on the Indian side, Jet will have to compete with other airlines for a slice of the 50,000 seats per week pie. These “seats per week” are, in effect, allocated between “O&D pairs” (Origin and Destination pairs) such as the Mumbai-Abu Dhabi route, or the Kochi-Sharjah route. It is also important to note that there are three international airports in the UAE, at Abu Dhabi, Dubai and Sharjah; the three are quite close to each other geographically, and are therefore regarded to be in the same “catchment area” for passengers.

A comparison of the opinions follows, which for the sake of brevity will confine itself to comparing two aspects of the opinions: Firstly, the definitions of the relevant market, and competition within those relevant markets; and secondly, the efficiencies created by the combination.

A. Comparing Relevant Market Definitions

The determination of the relevant market is the foundation of every antitrust analysis. A relevant market is a delineated area within a market wherein the goods/services of competitors are considered “substitutes” for each other (if two goods/services are not “substitutable”, they are in different relevant markets). Within this area, the market shares of companies and their activities are scrutinized to see if any of them can exercise “market power” i.e. raise their prices without losing customers to competitors. Usually, the greater a company’s share in a relevant market, the greater the likelihood that it has market power, and the greater the likelihood that it will have an adverse effect on competition.

The importance of determining the relevant market cannot be overemphasized. For example, if I were to consider the entire automobile industry in India as a relevant market, two particular manufacturers might have a combined market share of 40%, but if I were to consider the market for only petrol cars, their market share might fall down to 15%, and this would have a huge impact on whether they have market power or not.

Comparing Mr. Goel’s determination of the relevant market to the majority’s, we find that they use different approaches to arrive at more or less the same relevant market. Mr. Goel considers it to be the market for international air passenger transportation to and from India, such as towards North America, and then considers specific O&D pairs between Mumbai, Delhi, Kochi and each of the UAE’s three airports, focusing on Abu Dhabi. The majority primarily considers O&D routes from nine Indian cities to the UAE (all three of its airports together), and then considers other, non-UAE bound, international O&D pairs such as routes towards Brussels or the U.S. Each opinion then calculates Jet and Etihad’s present and (in future) combined market shares on these routes.

There is, however, an important difference in the two approaches to relevant market definition: Mr. Goel regards the three airports in the UAE as non-substitutable, which means that the route between each UAE airport and an Indian airport is a separate relevant market. Mr. Goel compares airfares to the three airports (the airfares differ substantially), shows that neither Indian nor foreign airlines consider the airports substitutes for each other, and statistically shows that passengers don’t consider them substitutes either. Thus, Mr.Goel isolates the Mumbai–Abu Dhabi and Delhi-Abu Dhabi O&D pairs and shows that the proposed combination will have high (50% plus) market shares on those routes.

The majority, on the other hand, relies on a Report of the ECA Air Traffic Working Group, “Mergers and Alliances in Civil Aviation”, on the fact that the airports are within two hours of each other, on the fact that Etihad and Emirates offer free shuttle services between the airports, and on the flimsy assertion that passengers living in a “catchment” area may consider the airports substitutable to each other to conclude that the three airports are substitutable as one end of an O&D pair. The majority regards Sharjah-Delhi as the same as Abu Dhabi-Delhi and Dubai-Delhi, or at least, in the same relevant market.

This makes all the difference in the market share, as the proposed Jet-Etihad combination is no longer evaluated simply for the Abu Dhabi airport which Etihad uses as its hub, but the other two UAE airports as well; consequently, the size of the relevant market increases by the inclusion of two other airports, Jet-Etihad’s proposed market share within it falls drastically, and the antitrust threat posed by the merger plummets as well. The majority opinion concedes as much: “When these airports are considered as substitutable, the combined market share of Jet and Etihad decrease significantly (it comes down to around 30%)”.

The majority’s reasoning on the crucial point of whether the three airports are substitutable comes up short, and their faulty relevant market definition means that for at least two O&D pairs (Mumbai & Delhi to Abu Dhabi), which in themselves constitute relevant markets, Mr.Goel reaches the right conclusion: that the Jet-Etihad combination’s high market share might well result in anticompetitive effects.

This in itself might not raise any concerns, but it is here that Mr.Goel puts forward two points that the majority neglects to consider: Firstly, that Jet-Etihad’s largest competitor, Air India, is in a sorry state, and in future might not offer much meaningful competition to Jet-Etihad, meaning that they will be in a plum position, post combination, to dominate the relevant market if Air India folds up. The gap on this point between the two opinions is glaring: the majority calls Air India a “credible” player, and spares no thought for its inability to compete with Jet-Etihad.

Secondly, Mr.Goel observes that even if the appreciable adverse effects of the combination on competition in the airline sector are just short-term in nature, it would still be undesirable because of the inherent nature of the airline industry: it has very high entry barriers (an Indian carrier can only begin international operations after five years of domestic operation and setting up an airline is an expensive affair). This could result in short term anticompetitive effects shutting out the sector for good to other, as yet unborn, Indian airlines.

B. Comparing the consideration of Efficiencies created by the JV

The other issue where the two opinions diverge is on the issue of efficiency. Defined in extremely simple terms, an efficiency is a decrease in the cost of production of goods/services, due to the economies of scale created by a combination. The rationale is that this decrease in the cost of production would be beneficial to the consumer, since prices of that good/service would be lower, and that this would offset the anticompetitive effects of the merger.

In almost all jurisdictions, efficiency is either factored in when assessing a merger substantively, or can be raised as a defense to the anticompetitive effects of the merger. The majority felt that the JV would create efficiencies and that the effects of the same would be “passed on” to the consumers (meaning that airfares will decrease).

Mr.Goel’s opinion reveals its one major flaw here. He simply dismisses the efficiency claims put forward by Jet and Etihad as “not quantified”, “unsubstantiated” and made on the “basis of economic theory”, without even attempting to provide reasons for his rejection. In doing so, he contradicts himself because in an earlier part of his dissent, he accepts and factors in the efficiency claim to show that Jet and Etihad’s synergy will make them the largest carrier to North America.

The reason that this is a major flaw is that there is a good chance that had the efficiencies engendered by the Jet Etihad deal been considered by Mr.Goel, they might have offset the anticompetitive ill effects otherwise generated by the deal. Efficiency is not a defense, in India, to the anticompetitive effects of a combination; it can only be considered as a mitigating factor. Mr. Goel’s failure to consider the efficiency claim is disappointing, the only major blemish in his order.

In conclusion, the majority found the Jet-Etihad deal harmless because of the other players (the majority terms them “intense competition”) in the market: their “dynamic responses” to the deal, and their presence as a restraint against Jet-Etihad hiking airfares. Mr.Goel points out facts that undermine the majority’s reasoning, and exposes their faulty relevant market determination; such errors are not something one expects to see being committed by what is supposed to be an expert body. 

Constitutional tort law and compensation

Another guest post from Kartik Monga, a third year student at NALSAR University of Law, Hyderabad

In this piece the author discusses how the opening of writ jurisdiction as a source for monetary compensation in cases of Human Rights infringements has led some very arbitrary amounts being awarded as compensation, especially in the absence of any set rules or jurisprudence. The problem would be discussed through some specific case laws.

The victims of any wrong generally seek compensation under the law of torts at the local civil courts. This process is tedious and insufficient at most times but the damages awarded under torts are well defined and categorized under the heads of Compensatory, Nominal and Punitive. The least amount courts provide is the direct financial loss suffered by the victim in terms of medical cost or the cost to repair the property or any such similar loss.

The Indian Supreme Court has time and again invented new methods for securing fundamental rights under Article 32. The Article 32 (2) provides the Supreme Court with power to issue directions, orders or writs for enforcement of any fundamental right. The power of the Supreme Court under Article 32 are not subject any limitations and the court has used these powers to both prevent and remedy the violations of fundamental rights. In the past few decades, India witnessed the birth of a new mechanism for damages in specific cases of Human Rights infringement. The rise of this new jurisprudence of compensation with respect to Human Rights is a welcome step from the constitutional courts but the various amounts awarded by the highest court has started a new debate.

The advent of this remedy has raised many questions. Should compensation be given in all cases of violation of Article 21? Should compensation be awarded for violation of Article 21 or for other fundamental rights also? Should the state pay compensation even when the officials were performing non-sovereign functions? and so on. Instead of engaging with all these questions, I will only discuss the arbitrariness of the amounts awarded in all these cases and save the other questions for some other day.

All the cases which will be discussed below are habeaus corpus petitions.

It all began with the landmark judgment in the case of Rudul Shah vs State of Bihar (Rudul Shah was kept in illegal detention for over 14 years after his acquittal in a murder case). In this case the Supreme Court decided to grant monetary compensation for violation of right to personal liberty. This was the first time when someone was awarded monetary compensation under the writ jurisdiction provided in Article 32 of the constitution. In this case the court decided to award a compensation of Rs. 35,000. The Court awarded this compensation as an interim relief to Rudul Shah and the court also said that this order won’t preclude Rudul Shah from bringing a suit for recovery of adequate damages from the State and the officers responsible. The honourable court gave no reasoning for arriving at the specific amount as interim relief.

This new remedy was used in the  case of Sebastian M. Hongray vs Union Of India (C. Daniel and C. Paul, were last seen alive at an army camp. The court held that this was a case of custodial death and the state is responsible for their mysterious disappearance). In this case the court ordered the State to pay ₹ 1 lakh as exemplary cost, this was given to both the widows as compensation. In this case again, the court arrived at the amount in a completely arbitrary manner without any discussion and even gave it the colour of exemplary costs.

Next is the case of Smt. Nilabati Behera Alias Lalit Behera V. State Of Orissa & Ors. In this case of custodial death from Orissa, the Supreme Court tried to display some reasoning in arriving at the amount of compensation. The Court said that the “The deceased was aged about 22 years and had a monthly income between ₹ 1200 to ₹ 1500. A total amount of ₹ 1,50,000 would be appropriate as compensation”. The mention of the income and age gives a hint that the amount arrived at, may be based on the principles set out in private torts law but the amount is again arbitrary and without any reasoning or logic.

In the case of People’s Union for Civil Liberties v. Union of India , The police picked 5 persons from the village and later shot dead two of them. Though the circumstances were quite similar to the previous two cases and this judgment came 17 years after the Sebastian Hongray judgment, the Supreme Court found it fit to provide 1 lakh in compensation. It’s impossible to comprehend how even after 17 years, the Supreme Court thinks that the same amount would be sufficient for compensating a custodial death.

One year later the same court in the case of Malkiat Singh v. State of U.P., awarded 5 lakh as compensation to the family of each victim. This case also had similar facts as previous case, 10 sikh youths were killed in a fake encounter by UP police. Again the Supreme Court gave no reasoning as to how it arrived at the amount of 5 lakhs and why a year back 1 lakh was the sufficient amount for a similar case and now suddenly the same court thinks that 5 lakh should be sufficient. In the same year the in the case of Amitadyuti Kumar v. State of W.B. the Supreme Court gave only 70,000 as compensation to the wife for custodial death of husband.

In 2003, the Supreme Court again went back to the amount it awarded 20 years back in the Hongray case. In the case Shakila Abdul Gafar Khan v. Vasant Raghunath Dhoble, the victim died because of the torture inflicted on him while in police custody. It’s beyond comprehension how the Supreme Court found the amount of 1 lakh as compensation for this heinous violation of Human Rights.

In the past three four years the compensation awarded in such cases has been in the range of 1 to 10 lakh rupees but again these amounts are highly arbitrary and depend on the whims of the judges. The Supreme Court further increased the unpredictability when in the famous case of Sohrabuddin Sheikh fake encounter the court left it to the whims of Gujarat government to decide the amount of compensation even though in all similar cases in past the same court has awarded compensation.

The Honourable Delhi High Court in the tragic case of Uphaar Cinema fire tried use the private law technique to decide the amount of compensation under public law. High Court framed out the average income of the deceased persons, and thereafter multiplied it with the digit 15 in order to conclude the final amount to be awarded to each of the claimants. In this matter, High Court awarded Rs. 18 lakhs to the legal heirs of those deceased aged 20 years or more, and Rs. 15 lakhs to the legal heirs of those deceased persons aged 20 years or less. The Supreme Court out rightly rejected the use of this method to award compensation under a Public Law remedy (Article 32 and 226 of the Constitution). Supreme Court, in the case, was of the opinion that considerable amount of compensation by means of Public Law Remedy is not safe and this turned out to be the reason for the reduction of compensation by the Supreme Court but the Court at least laid down the factors which should be borne in mind while arriving at the amount of compensation. These factors were

The first is the age of the deceased, the second is the income of the deceased and the third is number of dependants (to determine the percentage of deduction for personal expenses).

The sad truth is that the court has repeatedly ignored these factors and has arrived at extremely different amounts in cases with similar circumstances.

It’s time for the highest court in this country to lay down some definite guidelines for compensation under constitutional torts law for itself and all the High Courts to follow. Justice Radhakrishnan himself recommended that a specific legislation is urgently required so as to address the compensation claim under Public Law.

Guest Post: Lily Thomas – the possible loophole?

The following is a Guest Post from Kartik Monga, a third year student at NALSAR. We hope to see more of his writing in the future.

The recent drama around the ordinance to protect legislators from instant disqualification in case of conviction by the trial court and the eventual withdrawal of the ordinance has demonstrated that the political masters can’t blatantly ignore the amplified demand for cleaner politicians by the citizens. The need for an ordinance arose after the Supreme Court judgment on the writ petition questioning the constitutional validity of Section 8(4) of Representation of People Act, 1951 filed by  Ms. Lily Thomas and the organisation Lok Prahari.

Petitioners

Senior Advocate Fali S. Nariman appearing for the petitioners questioned the Parliament’s power to enact Section 8(4) of the Act.  Section 8 deals with the disqualification of legislators on conviction for certain offences.  Sub-sections 1 to 3 of section 8 lists the types/terms of convictions which will lead to a disqualification. The section 4 provides an exception to the first three sub-sections for sitting members of Parliament and State legislatures. It states that the disqualification laid down in the first three sub-section will not take effect for a period of three months. In addition, if in the three month period an appeal for revision is brought before the higher court then the disqualification won’t take effect till the appeal is disposed of.

The parliament’s power to enact Section 8 of the Act is sourced from the Article 102 and 191 of the Constitution. The Articles state that:

(1) a person shall be disqualified for being chosen, and for being a member of either house of the parliament/legislative assembly or council of the state:

(e) “if he is so disqualified by or under any law made by the parliament”.

Mr Nariman argued that the Articles 102 and 191 require that the disqualification for being chosen and being a member must be same and therefore, Section 8(4) which is enacted on the basis of Article 102 and 191 cannot create a distinction between the two categories.

Mr. Shukla relied on the Constituent Assembly Debates. CAD rejected a proposed amendment to replace clause (e) of Article 102 and 191 with a provision similar to sub-section (4) of section 8 of the Act. He argued that if the Constituent assembly decided against creating a special category for elected members then the parliament also cannot create this distinction as it derives the power to legislate on this issue from Article 102 and 191 only.

Nariman also relied on the constitution bench judgment in the case of Election Commission, India vs. Saka Venkata Rao [AIR 1953 SC 210]. In Saka Rao, the court has held that the disqualifications laid down in the Article 191 are same for people contesting election and those continuing as members.

Respondents

ASG Siddharth Luthra stated that the Constitution bench judgment in the case of Prabhakaran v. P. Jayarajan [(2005) 1 SCC 754], has already upheld the validity of Section 8(4) of the Act.

While dealing with the power to legislate on the issue, he argued that if the court is of the opinion that the power cannot be sourced from Articles 102 and 191 then it can be traced to Entry 97 (residuary powers – matters not listed on List II or III) of List I of the Seventh Schedule.

ASG Paras Kuhad argued that the distinction created by Section 8(4) is not setting a separate disqualification criteria for the sitting members but only delaying the disqualification till the appeals are settled.

Judgment

The court refused to rely on the Prabhakaran judgment as in that case the validity of section 8(4) was not challenged on the basis of Parliament’s legislative power to enact the contentious provision.

The Court rejected the contention that the power to legislate on the issue can be traced to entry 97 (residuary powers) as Article 102(1)(e) and 191(1)(e) specifically confer power on the Parliament in this regard.

Court relied on the Saka Rao judgment and accepted Mr. Nariman’s contention that the Article 191 and 102 allows the Parliament to make same laws for a person to be disqualified and for being chosen as a member of the legislative house.

The contention that the disqualifications laid  down are same and Section 8(4) only delays the effect was rejected by the court as the Article 101(3)(a)/190(3)(a) of the Constitution states that “If a member of a House of the Legislature of a State/Parliament- (a) becomes subject to any of the disqualifications mentioned in clause (1) or clause (2) of article 191/102. his seat shall thereupon become vacant”

Finally, the court held Section 8(4) of the Act as ultra vires the Constitution but  added that the judgment will not apply to legislators who are already convicted.

The escape route

When ASG Siddharth Luthra raised the argument that the number of acquittals in the level of Appellate courts are very high in India and therefore, an instant disqualification will leave the person remediless, the court discussed the possible stay on disqualification. The court referred to the three judge bench judgment in Ram Narang v. Ramesh Narang [(1995) 2 SCC 513]. In that case the court has held that an appeal under Section 374 of CrPC, is an appeal against both the conviction and the sentence. Therefore, the High Court either under the Section 389(1) of the CrPC or under its inherent jurisdiction of 482, can stay the conviction. More specifically in Ravikant S. Patil v. Sarvabhouma S. Bagali [(2007) 1 SCC 673] stayed appellant’s conviction which meant that a disqualification arising out of his conviction under the Section 8(3) of RPA also ceased to operate after the stay. This exact remedy was used by Navjot Sidhu in 2007 to again fight election after his disqualification.

As the court discussed this remedy in reply to Mr Luthra’s contention, one possible understanding is that the disqualified MP/MLA would get his seat back if the appellate court grant a stay on conviction but this will lead to practical problems. As the legislator would be immediately disqualified, the election commission would go ahead, hold an election and someone else gets the seat but if the convicted legislator gets the stay at this stage then we would have two representative for the same seat. Therefore, the apt interpretation would be that even if a legislator  gets a stay on his conviction, it will only work prospectively and allow the person to fight elections and not retain the seat.

The missed distinction

Throughout the judgment, Justice Patnaik stressed on the fact that Article 102 and 191 necessitate same set of disqualifications for being chosen and for being a member. This was stretched by the court to reject Government’s contention that Section 8(4) is only delaying the disqualification and not creating separate disqualifications criteria. The judgment is well reasoned to the point that it’s a plain and simple reading of the text of the constitution but the court clearly created a loophole by giving a possible remedy to one group and not to the other. As discussed in the last section when an elected person is convicted, he is immediately disqualified and he is not left  with any remedy to get his seat back but the person can still fight an election if he can get a stay on conviction from the appellate court. This clearly runs contrary to court’s own interpretation of Article 102 and 191 which meant equal treatment to both the categories i.e. disqualified for being chosen, and for being a member.

Note: Various recent news reports saying that Lalu Prasad Yadav can’t fight an election for next  11 years have clearly missed this possible remedy.       

VIth NLSIR Symposium : “Mapping the Future of Commercial Arbitration in India”

The National Law School of India Review (NLSIR) – the flagship journal of the National Law School of India University (NLSIU), Bangalore is pleased to announce the VIth NLSIR Symposium on “Mapping the Future of Commercial Arbitration in India” scheduled to be held on May 18 and 19, 2013at the NLSIU campus. The last three years have witnessed dynamic shifts in the law and practice of Arbitration in India. While there have been steps in the right direction, an unwieldy system continues to weigh down practitioners. Four years after first delving into the nuances of commercial arbitration in India, the Symposium hopes to assess the development of Arbitration law over the last few years.

Confirmed speakers for the symposium include renowned legal luminaries such as Hon’ble Mr. Justice (Retd.) S U Kamdar (Former Justice, Bombay High Court), Mr. Anirudh Krishnan (Advocate, Madras High Court), Mr. Ashwin Shanker (Advocate, Bombay High Court) Mr. Aditya Sondhi (Advocate, Karnataka High Court), Mr. Ajay Thomas (Registrar, London Court of International Arbitration, India), Mr. Vivekananda N. (Head (South Asia) & Counsel, Singapore International Arbitration Centre), Mr. Nangavaram Rajah (Nani Palkhivala Arbitration Centre), Mr. Promod Nair (Partner, J Sagar Associates), Mr. Shreyas Jayasimha (Partner, AZB & Partners), amongst others.

This year, the discussions will be divided into four panels:

Session I: The Implications of BALCO on Arbitration Practice 
(Forenoon, May 18, 2013, Saturday)

Session II: Revisiting the Expansive Role of the Indian Judiciary and its Implications
(Afternoon, May 18, 2013, Saturday)

Session III: Determining the Governing Law of the Arbitration Agreement – Arsanovia and Beyond
(Forenoon, May 19, 2013, Sunday)

Session IV: The Way Forward: A Call for Institutional Arbitration?
(Afternoon, May 19, 2013, Sunday)

Registration fee for those who make an advance payment/bank transfer is Rs. 500 for students and Rs. 1000 for others. All those interested are requested to register at: https://docs.google.com/forms/d/1hXthITsHurIQBClJAkZkiKWdbjkXoKJ4MFRSI0VgGfU/viewform

The registration fee for those who register at the venue is Rs. 750 for students and Rs. 1250 for others.

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For further information, please contact Ashwita Ambast (Chief Editor): +91-9986478265; Sahil Kher (Deputy Chief Editor): +91-9739265715 or email us at mail.nlsir@gmail.com.

The rights of Equity Shareholders without Voting Rights

The Companies Act, 1956 was amended in 2000 allowing companies to issue shares with differential voting rights or otherwise. The Companies (Issue of Share Capital with Differential Voting Rights) Rules were prescribed in the year 2001 to facilitate the same. In Ashwin K Doshi and Ors. v. SEBI and Ors the SAT observed that equity shares without voting rights can be issues as shares with differential voting rights under the rules. According to Rule 3 Sub-rule 9 item (f), an explanatory statement stating that the holders of equity shares with differential voting rights shall enjoy all other rights to which the holder is entitled to excepting the right to vote have been differentiated.

Thus, the position of law as may be inferred is that holders of non-voting equity shares will have all rights except the right to vote. In the case of LIC of India v. Escorts Ltd, the Supreme Court laid down the rights of Equity shareholders thus:

i) to elect directors and thus to participate in the management through them

ii) to vote on resolutions at meeting of the company

iii) to enjoy the profits of the Company in the shape of dividends

iv) to apply to the Court for relief in the case of oppression

v) to apply to the Court for relief in the case of mismanagement

vi) to apply to the Court for winding up of the Company

vii) to share in the surplus on winding up

As the voting rights of equity shareholders without voting rights are non-existent, all other rights enumerated above excepting the right to vote are available to such shareholders.

Trademark Dilution and the Tort of Passing Off

The tort of passing off under common law is based upon the fundamental principle that an individual cannot represent their goods and services as those of another. Action arising from the tort of passing off protects the plaintiff’s reputation and goodwill from damage arising from misrepresentation by the defendant. Trademark dilution is the phenomenon by which the value of a manufacturer’s trademark is effectively ‘diluted’ due to the usage of his trademark, or a similar trademark by another manufacturer.

The question arises as to why statutory provisions relating to trademark dilution have hardly been utilised since their coming into existence when there is a prevalence of the concept of dilution in litigation on the tort of passing off.

Passing off action applies to both registered and unregistered trademarks. There are three elements of passing off action (i.e. goodwill, misrepresentation and damage) as laid down in the Satyam Infoway case and the expanded five element test as laid down in the Cadilla Healthcare judgment. The plaintiff’s right to action under passing off is independent of any statutory right to a trade mark. There is a clear distinction between dilution under statutory provisions and under tort law. Misrepresentation is a vital component to action under passing off, whereas the same is not vital to action upon statutory provisions on dilution.

The difficulty of calculation of loss or damage to the plaintiff arises in cases where the plaintiff and defendant operate in different geographic or product markets. The problem of how the goodwill requirement is satisfied in cases where the party does not have commercial establishment in India is met with the doctrine of trans-border reputation. The Budweiser decision highlights the necessity of goodwill among consumers as opposed to mere reputation in the British context. The fact is that necessary goodwill is a narrower measure than reputation, but a broader measure than having a place of business in England (or in other contexts any particular country). Thus, the claimant need not actually conduct business in England in order to have goodwill of the consumers, but that mere reputation is not sufficient to constitute a claim under passing off. Indian Courts in several decisions have deferred from the rigid English position in the Budweiser judgment, and have sought to prevent trade practices by which manufacturers are benefited by reputation that is not their own through passing off, though this process must be limited to similar or same products. The requirement of having a place of business in India to satisfy the goodwill requirement has been seemingly superseded by mere reputation. However, some decisions have required evidence of actual sales in India, and some decisions have held that international reputation which reaches India is sufficient to constitute the tort of passing off.

The Indian position on trans-border reputation and dissimilar goods is rather ambiguous, as diverging views can be seen through different decisions.

The Elderflower Champagne cases demonstrate the damage that is caused by dilution. Trademark dilution destroys the uniqueness or exclusive nature of the plaintiff’s product. In the passing off context, dilution is simply a type of harm, rather than an independent cause of action, as it is in the statutory context.

The question as to why passing off is the preferred instrument to dilution action under statutory provisions arises. There may be three possible explanations, namely, that Indian courts are experienced in passing off disputes, that in such cases injunctions are generally sought, and that passing off action has traditionally resulted in injunction orders, and that since dilution is a species of damage in passing off decisions, it is prevalent in such cases and not as an independent cause of action.

The understanding of dilution as a harm to a trademark by reducing its function of identifying with a unique good or service is in contrast with the traditional notion of consumer confusion. Further, protection against dilution was earlier limited to similar goods mentioned in the registration specification.

Remedy under section 29(4) of the Act of 1999 is to be utilised only for those trade marks that deserve such a safeguard. Provisions relating to prohibition of trademark registration of the same Act can be looked into to enhance the protection sought from section 29(4). The concept of fame and reputation of trade marks is important and the requirement for a mark to be ‘well known’ is more than mere reputation.

Blurring is the reduction of a signs ability to identify the origin of the service or goods through usage of a trade mark by another manufacturer. The question as to whether mental association of the consumer to the original product bearing the trade mark is sufficient to bring action upon another manufacturer’s usage of the same or similar trade mark is addressed through varying judicial decisions. Unlike under the statutory provisions, under passing off, the term dilution is used lightly as, in such cases, misrepresentation is the actual harm.

 

 

Land Acquisition in Sri Lanka

There has been a history of land acquisition in Sri Lanka. The Crown lands Encroachment Ordinance of 1840 is the most important of the 39 operational laws governing land use in Sri Lanka and it vested ownership of all unused, uncultivated and forest lands as well as lands in which ownership was difficult to establish with the government. Agricultural statistics from 1982 show that 82.3% of the land is still controlled by the government, demonstrating the continuing influence of such legislation. The Waste Land Ordinance of 1897 led to the introduction of commercial tea plantations in Kandy by a British Businessman. Such plantations thrived on the exploitation of natives and migrants for forced labour.

Even today, thousands of people are displaced due to such revenue generating plantations, destroying the livelihood of smallholder farmers. A recent cabinet memorandum  provided details of the new “Sri Lankan Land Alienation Policy to Promote Development Activities”. This policy will lead to investment in private agricultural production and the creation of special economic zones for tourism and industry. After the civil war in Sri Lanka in 2009, many Tamils are facing difficulties in carrying on their livelihood.

Using the war against Tamil militants as propaganda, the Sri Lankan government has begun the acquisition of lands occupied by Tamils. Thousands of Tamil civilians are being prevented from resettling in the High Security Zones in Weligamam North by the government and the army. Displaced Tamil civilians from Sampur in the eastern district of Trincomalee have filed a Fundamental Rights petition in the Supreme Court against a gazette dated May 17, 2012 enabling the government to demarcate thousands of acres in Sampur as a Special Zone for Heavy Industries and prevent the resettlement of the war refugees there. (See http://newindianexpress.com/world/article545610.ece)

Informed consent in land acquisitions, even in the rare cases where required, is rarely taken and there is a lack of a strong legal framework to protect the rights of displaced persons. In many cases, such persons do not have formal documentation of their rights to the land or access to legal information, and there is a general lack of transparency in such situations. Projects such as Tata Motors SEZ in Singur and the Sardar Sarovar Dam on the Narmada river in Gujarat are examples of land acquisition for developmental purposes in India. Although it can be argued that such projects promote socioeconomic development, they come at the cost of displacement of natives and loss of livelihood. Rehabilitation and compensation efforts are rarely adequate. The balance between economic progress and indigenous rights is a complex issue to resolve.

RTIs by NRIs

The Indian government this week took steps towards allowing  Non-resident Indians to file RTI applications. A service called eIPO (Electronic Indian Postal Order) has been launched, through which NRIs can directly pay the requisite fees and file their RTI applications. Users of the web-based portal must first register themselves with the government Ministry or Department from which they require information and the said information is subsequently retrieved only from the Department which the applicant has so specified.  All legal requisites of the RTI Act, 2005 are applicable to these online transactions.  The Central Public Information Officers are to maintain records of the eIPOs received from outside India, but these records can be verified by the applicants through the India Post website – www.indiapost.gov.in.

This is a major step for Right to Information and Public Interest Litigations, especially with the large number of NRIs who have migrated back to India, but have retained their foreign citizenship (because measures such as the Overseas Citizen of India and the Person of Indian Origin cards pretty much guarantee most rights associated with an Indian citizenship to these persons).  The online RTI applications have opened up a world of possibility for such persons as well as for concerned expats around the world.