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Ban on Chinese investments: Should India bother about Bilateral Investment Treaty?

Currently, many Chinese companies have an investment in India either in manufacturing like Oppo or Haier or passive investment in various new technology businesses like Byju and Ola.

Gagan Kumar

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The relationship between India and China has been mostly of mistrust and doubt. It is only in the last decade or so when FDI started flowing into India and sophisticated products started being available at an affordable price, the perception towards China began changing, and Indians started overlooking proclivity of encroachments. So much so that successive governments were being criticised for not following the China model of growth.

However, with the tracing back of origin of Corona pandemic in China and recent bloody encounter at the Galwan Valley has been seen as intentional infliction. In a way, the dalliance with China seems to be over now.

To de-escalate the situation and as expostulation, certain firm decisions have been by taken by the Government.

 In this article, I am examining the consequences of a hypothetical situation where the extreme step of expelling the Chinese investment may be taken. Whether that would put India in a spot in terms of international law or would India be within her rights to take such an asseverating step predicated on the surreptitious and wanton attack on the Indian soldiers?

Currently, many Chinese companies have an investment in India either in manufacturing like Oppo or Haier or passive investment in various new technology businesses like Byju and Ola etc.

 India entered into a Bilateral Investment Treaty (“BIT/Treaty”) with China in the Year 2006 and bestowed China as “Most Favoured Nation” (“MFN”). Indubitably, China has been oscillating between a hostile nation and a friendly nation. This ephemeral friendly relation between India and China came to an end in the year 2018, when India terminated the BIT, citing usurious conduct of People Liberation Army in Indian territory. However, in the event of termination, the Saving clause enshrined under the Treaty would kick in, to mitigate the adverse impact of such conduct by the host nation.

Therefore, in case the Indian Government decides to take the aggressive step and prohibits investment in India and withdraw all the approval granted to do business and concluded investment in past, in India; invariably, the investors would be sternly hit by such ministerial decision. The contemplated norm under the International Law, to mitigate such ministerial situation at the high table, is to opt for International Arbitration, invoking BIT.

 Grounds under which Chinese Companies may invoke BIT

A petulant Chinese Company may possibly institute International Arbitration, invoking BIT, alleging breach of the treaty on the following grounds:

  1. Fair and Equitable treatment;
  2. Discrimination and Arbitrary ministerial decision; or
  3. Expropriation

Let’s have a brief look at all the above-mentioned grounds.

Fair and Equitable Treatment

The interpretation of the “fair and equitable treatment” is ambulatory, and it varies with time and with the circumstances of each case. It is, therefore, challenging to establish an equivocal and static concept of these alleged notions. However, the disputing nation will need to prove that there exist wilful neglect and subjective bad faith to prove; there exists a breach of fair and equitable treatment obligation as per the BIT.

However, it is imperative that the ministerial decision should be supported with substantial reasoned judgement/information by the host nation. Further, it is trite law that in case of any official decision restricting foreign investment citing national security would result in the inapplicability of any other provision enshrined under the BIT.

Discrimination and Arbitrary ministerial decision

The second major alleged breach as per the Treaty is discrimination and arbitrariness. The settled position of law against the allegation is, ‘discrimination requires intentional treatment in favour of a national investor and to the detriment of a foreign investor; a treatment that doesn’t apply to other nationals in a similar situation’. Discrimination and arbitrariness require bad faith or wilful disregard of the due process of law. An inference can be drawn from the reason cited for banning the 59 Chinese mobile apps by the Indian Government. The Government cited the issue of national security, and in such a scenario, it becomes a matter of defence. The judgement regarding any aspect of national security is left at the discretion of the subjective opinion of the nation. Whereas, an allegation of bad faith and wilful neglect should be supported with substantial proof and not with disputable facts.

Expropriation

The most generic, out of all the allegations in case of any BIT breach dispute before the International Arbitration forum is of Expropriation. Expropriation can be of two types direct and indirect depending upon the conduct of the host nation. The former can be termed as one which arises due to forcible State action using either legislative or administrative action. At the same time, the latter can be defined as a gradual or growing form of creeping towards expropriation.

All the allegations described above could be repelled citing the sagacious reason of National Security as essential security interest (“ESI”) measure, prescribed in the Exception clause, envisaged under Article 14 of the BIT, which precludes India against the allegations mentioned above.

 It is trite in the international law that the rights of the investors are protected under Customary International Law. However, such rights are superseded in case the Host Country does any action in the interest of Essential Security Interest, and thus such rights are subjugated pro-tanto. No compensation is payable to the investor even if the expropriation is permanent where the Host Country invoked the ground of National Security. Compensation against expropriation of such investment can only be granted or allowed if Essential Security Interest is not demonstrated (“ESI”).

Nonetheless, the host nation must balance the two-competing interest as evolved over the period: i. Degree of measure’s interference with the right of ownership; and ii. The power of the State to adopt its policies.

Where the host nation satisfies that the measures taken were necessary because of ESI, then the damage suffered by the investor cannot be claimed, and it is to be borne by the investor alone.

Now let us have a cursory look at what may be regarded as Essential Security Interest.

Essential Security Interest

As observed in the case of CMS v Argentine that there need not have one event to conclude national security threat, even unfolding series of events can also threaten a country and enough to speculate an issue of national security.

In the matter of national security, whether in the short run or long run, the State is not required to show urgency or imminent threat. Generally while invoking ESI clause, the following factors must be borne by the Host Country that the ministerial action:

  1. Apply a prohibition/restriction
  2. Which is for the protection of an ESI
  3. And only to the extent, it is necessary and reasonable
  4. And applied on a nondiscriminatory basis.

 It has been reiterated in several International Arbitration cases that measure to protect ESI are the subjective judgement of the Host Country, and there should exist nexus between the measure at issue and the interest pursued.

 The Arbitral tribunal may not sit in judgment on national security matters as on any other factual dispute arising between the investor and a State. National Security issues related to the existential core of a State. An investor who wishes to challenge the Host State’s decision has a heavy burden of proof. On the contrary, Host Country in its rebuttal may have to show that the measures at issue were necessary to safeguard ESI.

Looking at the sequence of events, the conduct of Chinese Army and the fact that most of the Chinese investors are ultimately stateowned, such an argument may carry a great force, and Chinese investor in such hypothetical scenario may not gain anything at the International Arbitration Forum.

Gagan Kumar is a practising Advocate, a qualified Chartered Accountant, an Author and custodian of Krishnomics Legal based at New Delhi.

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Legally Speaking

NEED TO INCREASE WOMEN REPRESENTATION IN THE FIELD OF CYBER SECURITY: JYOTI ARORA

Tarun Nangia

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In the last two years, the number of cyber attack incidents has gone up to almost 3 lakhs from 1.5 lakh incidents that took place in the year 2018 and in order to stop these attacks there is a need to diversify the representation in the field of cyberspace, said Jyoti Arora, Special Secretary & Financial Adviser, Ministry of Electronics and Information Technology (MeitY). Govt. of India

Arora mentioned that the digital penetration and people’s dependence on the digital space has gone up multiple folds in the last one year due to the pandemic. “Even in the government service, people are relying more on online means right from getting the vehicle registrations, passport renewals, or even paying taxes. This brings the importance of electronic security,” Arora said at the virtual Awards & Conclave on Women in Cyber – Making a difference organized by The Associated Chambers of Commerce of India (ASSOCHAM).

Arora informed that India has almost 750 million internet users and boasts of having the second largest internet user base in the world. “This interconnectivity has also given the emergence of cyber security threats. The government has taken several steps in this regard as a part of its National Cyber Security Policy which includes setting up of Cyber Swachhta Kendra for detecting botnet infections and malware analysis in India and to notify, enable cleaning and securing systems of end users so as to prevent further infection,” She informed.

Sheenam Ohrie, vice-president, Dell Digital and CIO Leader, APJ, Dell Technologies explained that there is a need to encourage diversity and make the cyber security industry accessible to everyone. “In the last one-year 52 percent of all the domestic companies have seen some or the other form of cyber-attacks. We need to have an army capable of having new ideas and so there is a need to groom diverse talents,” She said.

 Ohrie also stated that the cyber space is a male dominated industry and there is a need to bring people from diverse backgrounds and empower women leaders.

Mini Gupta, partner, EY informed that promoting women in the cyber security business can make a huge difference as they bring a different thought process to the table. “Women are known for their multi talking skill sets. Though things are changing, there is a lot more that needs to be done,” She said.

 Speaking on the representation in the cyber security space, Gupta explained that there is 30 percent representation at the entry level, 10 percent at the management side and just 1 percent at the top leadership. “In the recent past more and more women have come forward to fill the jobs and even the organizations have noticed the difference that has made in their style of working,” She pointed out.

Santha Subramoni, global head, TCS Cyber Security Practice said that India has a huge IT talent base and has the potential to become the destination for all kinds of cyber security solutions. “In this current pandemic all companies are innovating and running their businesses. It has become a perimeter-less and a boundary- less environment today and so the need to protect their systems becomes all the more important,” She said.

  Subramoni also added that the size of the cyber security business globally has gone up to around $250 billion and India has hardly touched a business size of $7.6 billion. “So, in the true sense, we have barely scratched the surface. There is also a lot of business on the periphery which would mean the non-IT business for the analysts and defense personals which India can also tap,” She explained.

Deepak Talwar, National Security Officer, Microsoft & Chairman, ASSOCHAM National Council on Cyber Security stated that diversity drives innovation and market growth. Talent does not need an identity, a gender or bias to prove its worth. Diversity can come from many places and does not require a decade of prior experience. Building diverse team had always been advantageous to solve complex problems.

Talwar explained that there with an estimated shortfall of 3.5 million security professionals by 2021, the current talent gap to be addressed with “a sense of urgency”. To fill this cyber talent gap there should only be one clear way “understand and acknowledge the power of diversity”. Diverse teams need to be working quickly to address the constantly changing cyber security and privacy landscape and there is plethora of opportunities in the field of security, compliance, privacy and many such specialised domains in every sector and every level of jobs to be filled,” he said.

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VIOLATIONS OF HUMAN RIGHTS UNDER THE SEMBLANCE OF SOVEREIGN IMMUNITY

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WHAT IS SOVEREIGN IMMUNITY?

Sovereign immunity, or state immunity, is a principle of customary international law, by virtue of which one sovereign state cannot be sued before the courts of another sovereign state without its consent. Put in another way, a sovereign state is exempt from the jurisdiction of foreign national courts. Thus, the question of immunity is at the same time a question of jurisdiction: only when the court already has jurisdiction will it become meaningful to speak of immunity or exemption from it. For this reason, sovereign immunity is also referred to as “jurisdictional immunity” or “immunity from jurisdiction.” Because different types of legal proceedings may be brought against foreign states, sometimes courts find it necessary to refer to jurisdictional immunities of states. In history, the words “ex-territoriality” and “extra-territoriality” were also used in this sense. The current law of state immunity has developed predominantly as a result of cases decided by national courts in legal proceedings against foreign states. Doctrinal debates among the scholars are of much later occurrence and consist mainly of comments on decided cases. The fact that the law of state immunity is primarily judge-made law gives judicial decisions a prominent position among the possible sources of international law as contemplated by Article 38 (1) of the Statute of the International Court of Justice; instead of being a “subsidiary means for the determination of rules of law,” they are now a main source of legal rules. This feature of the law also shapes and determines the contours of a research guide on sovereign immunity.

INTERNATIONAL DIMENSION

Sovereign immunity always had two dimensions – a national and an international one. So far, the international community has witnessed several attempts to codify the law on sovereign immunity, but until now only the European Convention on State Immunity (ECSI) has entered into force.1 However, even this Convention has received only eight ratifications since 1972, with Germany having been the last state to ratify it in 1990.2 The United Nations have, of course, also worked on the matter – for several decades. Still, since its adoption in December 2004, the UN Convention on Jurisdictional Immunities of States (UNCJIS) has not been ratified by enough states in order to become effective.3

Parallel to these efforts on the international level, some states enacted national legislation on sovereign immunity, most importantly the US Foreign Sovereign Immunity Act (FSIA).4 Other states include the UK, Australia, Canada, and South Africa.5 States, for whatever reason has forgone the opportunity to pass national legislation rely on international custom to determine the scope of immunity which foreign states might claim. In doing so, most states – or, to be more precise, their courts — assume that sovereign immunity serves as the basic rule until the existence of an exception has been proven.6

To conclude, in constitutional monarchies the sovereign is the historical origin of the authority which creates the courts. Thus the courts had no power to compel the sovereign to be bound by them as they were created by the sovereign for the protection of his or her subjects.

DOCTRINE OF SOVEREIGN IMMUNITY IN INDIA

The doctrine of sovereign immunity evolved from common law jurisprudence existed in United Kingdom based on commonly followed notion that ‘King can do no wrong’, the legal maxim for which is ‘rex non potest peccare’. The British rule in India had brought the ideologies, laws and culture of such nature within the country.

There are typically two forms of sovereign immunity- Immunity to Jurisdiction, which implies that one state government’s authority or an official if commits wrong in any other state, the state cannot be tried for that matter, hence, state courts do not have jurisdiction over another state. Another form is Immunity from Execution, wherein it would be improper for one state to seize any property of another state. However, both the immunities can be waived by the State themselves. The judicial trend for doctrine of sovereign immunity could be divided into Pre and Post Constitution era in India.

PRE-CONSTITUTION PERIOD

The doctrine was established for the first time in case of P&O Steam Navigation Company v. Secretary of State (5 Bom HCR App 1), Peacock C.J. classified ‘sovereign’ and ‘non-sovereign’ power and two-fold character of East India Company as sovereign power and trading company and interpreted Government of India Act, 1858. Whereas, in Secretary of State v. Hari Bhanji ( (1882) ILR 5 Mad. 273) the court took contrasting view and denied any distinction of sovereign and non-sovereign functions along with extending non-liability of Government for acts related to public safety. These cases were considered as Precedents, but still there was an ongoing judicial battle on distinction between sovereign and non-sovereign.

INTERSECTION OF CONSTITUTION AND JUDICIAL DECISIONS

Post enactment of constitution, there was resentment and filing of review petitions in courts by aggrieved petitioners for genuine damages, leading with a liberal and constitutional requisite, the Indian courts sway away from the ancient doctrine and narrowed the scope providing rightful justice and damages to the victims.

Article 300 of the Indian Constitution can be considered the torchbearer for eliminating the doctrine of sovereign immunity as it clearly laid down that Government of India as well as State may sue or can be sued along with pertinent description and applicability. In State of Rajasthan v. Vidyawati (AIR 1962 SC 933), the apex court first time dealt with the sovereign immunity post-constitution and laid down that in modern times, the State have social and welfare responsibilities and hence, required to function on constitutional norms and not invoke the defense of old feudal laws. Additionally, in Kasturi Lal Ralia v. State of UP (AIR 1965 SC 1039), SC took a view protecting the State from liability of torts committed by the servants within their statutory power, herein, in our view the court applied sovereign immunity partially to not let State suffer with undue litigations and damages.

INTERPLAY BETWEEN HUMAN RIGHTS AND SOVEREIGN IMMUNITY

In the 1996 case, D.K. Basu v. State of West Bengal, the Supreme Court held, “for the violation of the fundamental right to life or the basic human rights… this Court has taken the view that the defense of sovereign immunity is not available to the State… for the established violation of the rights guaranteed by Article 21 of the Constitution of India.”  Compensation awards and determinations that a lawsuit contains a breach of a constitutional right, rendering sovereign immunity inapplicable, are always rulings taken at the discretion of individual judges. “Courts often reject compensation lawsuits in fundamental rights cases,” according to SAHRDC. Apart from the lack of mandatory payments, de facto and de jure protection remains an external hurdle, limiting survivor reparation and allowing human rights violations to occur across India.

Internationally, the concept of sovereign protection has become a significant contributor to the most appalling condition of human rights enforcement. The ICJ ruled that Italy infringed on international law by granting Germany sovereign immunity from domestic sovereignty in the case of Jurisdictional Immunities of the State (Germany v. Italy). Germany has been accused of violating international humanitarian law and fundamental human rights. According to this principle, when a state violates secured human rights norms that are called peremptory international law norms, such as jus cogens, the state’s jurisdictional protection is not protected. The fundamental principles of international humanitarian law, the prohibition of torture and genocide, the right of self-determination, and the prohibition of violence are all examples of jus cogens. The principle argues that international law grants immunity to a state in cases of human rights abuses. According to this theory, sovereign immunity is not a jus cogens norm, and therefore ranks lower in the order than all other jus cogens principles. The International Law Commission (ILC) gave an example of a list on which the prohibition of crimes against humanity was considered a jus cogens. In order to correct human rights abuses, normative hierarchy theory states that the maintenance of jus cogens norms takes precedence over all concepts of international law. In his book Enhancing Global Human Rights, R. Falk mentions that the principle of non-intervention does not apply in situations of violation of human rights norms is well-established rule of law. For example, in Nada v. SSEAs, the Swiss Federal Court recognized fundamental human rights as jus cogens norms. Similarly, All states are required by Article 6 of the International Covenant on Civil and Political Rights (ICCPR) and Article 12 of the International Covenant on Economic, Social, and Cultural Rights (ICESCR) to accept the non-derogable right of everybody to the highest level of health and to take all reasonable precautions to contain and avoid epidemics, endemics, and pandemics. Sovereign immunity is not a protection that prevents the international community from taking civil action against human rights violations. The Soviet Union dropped its claim to exclusive jurisdiction at the Conference on Security and Cooperation in Europe and instead engaged in a meaningful discussion about the issues at hand in Belgrade.

However in Indian context in many a cases it is seen quite in contrast, In an otherwise excellent order by the Allahabad High Court on 1 September 2020, awarded no compensation was given to Dr Kafeel Khan for his unjustified detention. The court granted him bail and declared his detention under the National Security Act as illegal. He was arrested by the Uttar Pradesh government, which said he gave a hate speech inciting people to hate each other and inciting students on the basis of religion. Dr. Khan had instead issued a call for national integrity and reconciliation, as well as a condemnation of terror, according to the ruling. After months in prison for an offence he did not commit, he received no remuneration.

CONCLUSION

The doctrine is a torch bearer of an ancient principle, the requirement of which has been diminished in the modern contemporary world. The harmonious contrition of international and state laws along with judicial precedents on sovereign immunity have taken into account the essence of social protection by protecting human rights and eliminated the draconian aspect of complete immunity to sovereign states.

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Legally Speaking

DISPOSE OF EXECUTION PROCEEDINGS WITHIN SIX MONTHS FROM THE DATE OF FILING: SC ISSUES DIRECTIONS TO REDUCE DELAY

In a suit for payment of money, before settlement of issues, the defendant may be required to disclose his assets on oath, to the extent that he is being made liable in a suit. The court may further, at any stage, in appropriate cases during the pendency of suit, using powers under Section 151 CPC, demand security to ensure satisfaction of any decree.

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While taking the right stand, the Supreme Court just recently on April 22, 2021 in a latest, landmark, laudable and learned judgment titled Rahul S Shah vs Jinendra Kumar Gandhi in Civil Appeal Nos. 1659-1660 of 2021 (@ Special Leave To Appeal Nos. 7965-7966/2020) and 2 Other Civil Appeals while issuing directions to reduce delays in the execution proceedings observed that an Executing Court must dispose of the Execution Proceedings within six months from the date of filing which may be extended only by recording reasons in writing for such delay. It must be mentioned here that the Bench of Apex Court headed by former CJI SA Bobde asked the High Courts to reconsider and update all the Rules relating to Execution of Decrees made under exercise of its powers under Article 227 of the Constitution of India and Section 122 of CPC, within one year of this order. The Bench also comprising of Justices L Nageswara Rao and S Ravindra Bhat observed that, “These directions are in exercise of our jurisdiction under Article 142 read with Article 141 and Article 144 of the Constitution of India in larger public interest sub-serve the process of justice so as to bring to an end the unnecessary ordeal of litigation faced by parties awaiting fruits of decree and in larger perspective affecting the faith of the litigants in the process of law.”

To start with, the ball is set rolling in para 2 wherein it is put forth that, “The present appeals arise out of the common judgment and order dated 16th January, 2020 of the Karnataka High Court which dismissed several Writ Petitions. The course of the litigation highlights the malaise of constant abuse of procedural provisions which defeats justice, i.e. frivolous attempts by unsuccessful litigants to putting up spurious objections and setting up third parties, to object, delay and obstruct the execution of a decree.”

While elaborating in detail, the Bench then observes in para 3 that, “The third respondent (hereafter referred to as ‘Narayanamma’) had purchased a property measuring 1 Acre (Survey No. 15/2) of Deevatige Ramanahalli, Mysore Road, Bengaluru (hereafter referred to as ‘suit property’) under the sale deed dated 17.03.1960. The suit land was converted and got merged in the municipal limits of Bengaluru and was assigned with Municipal Corporation No. 327 and 328, Mysore Road, Bengaluru. Narayanamma sold 1908 square yard of the suit property in Municipal Corporation (Survey No. 327) to 2nd and 3rd respondents (hereafter referred to ‘Jitendra’ and `Urmila’) under a sale deed dated 13.05.1986. This was demarcated with the sketch annexed to the sale deed. The adjacent portion of property, Survey No. 327 was sold to Shri Moolendra Kumar Gandhi and Smt. Baby Gandhi by another sale deed dated 13.05.1986. This property was also demarcated in the sketch and clearly shows its dimensions and boundaries annexed to the sale deed. Therefore, the first two respondents, Shri Moolendra Kumar Gandhi and Smt. Baby Gandhi became absolute owners of the suit property with the totally admeasuring of 3871 square yards. Thus, Narayanamma had sold about 34,839 square feet of the property out of 1 Acre land (43,860 square feet) owned by her. Subsequently, after the sale of the major portion of the said property to the first two respondents and their brother, Narayanamma who is the mother of A. Ramachandra Reddy the fourth respondent (hereafter called “the vendors”) filed a suit1 for declaration that the two sale deeds in favour of the first two respondents (also called “purchasers” or “decree-holders”) as well as against Shri Moolendra Kumar Gandhi etc. were void. The vendors and Shri Anjan Reddy (deceased respondent no. 8) on 25.03.1991 executed a registered partition deed. This document did not advert to the sale deed executed in favour of the purchasers and Shri Moolendar Kumar Gandhi and Smt. Baby Kumari Gandhi. The purchasers were restrained by an injunction from entering the property which Narayanamma claimed was hers.”

To put things in perspective, the Bench then points out in para 4 that, “During the pendency of the suit for declaration, the first purchasers filed two suits (O.S. Nos. 9077/ 1996 and 9078/1996) against the vendors for possession. During the pendency of these suits on 11.02.2000 by two separate sale deeds Shri Dhanji Bhai Patel and Shri Govind Dhanji Patel purchased 7489 square feet and 7650 square feet respectively, out of the residue of the property owned by Narayanamma. While so, during the pendency of the suits instituted by the purchasers, the vendors again sold the suit property i.e. the land to the present appellant (Rahul Shah) and three others (Respondents no. 5-7) by four separate sale deeds. (Dated 09.11.2001, 12.12.2001, 05.12.2002 and 20.10.2004) In the possession suits the vendors filed counter claims (dated 18.04.1998). During the pendency of proceedings the purchasers sought for transfer and mutation of property in their names which were declined by the Municipal Corporation; this led to their approaching the High Court in Writ Petition No. 19205/1992 which was disposed of with a direction (Dated 05.11.1998) that after adjudication of the injunction suit (filed by the vendors) the khata be transferred.”

Furthermore, the Bench then states in para 5 that, “The proceedings in the injunction suit filed by the vendors and the other two suits filed by the purchasers were clubbed together. The City Civil Judge, Bangalore by a common judgment dated 21.12.2006 allowed and decreed the suits for possession preferred by the purchasers and dismissed the vendor’s suit for injunction. The decree holders preferred execution proceedings. (Execution Case Nos. 458-459/2007). They filed applications under Order XXI Rule 97 of the Code of Civil Procedure (CPC) since the judgment debtors/vendors had sold the property to the appellant and respondents no. 4 to 7. The appellant i.e. a subsequent purchaser filed objections.”

As it turned out, the Bench then enunciates in para 6 that, “During the pendency of the proceedings the front portion of the suit property bearing Municipal Corporation No. 327, Mysore road, Bangalore became the subject matter of the acquisition for the Bangalore Metro Project. The decree holders (the first two respondents) preferred objections to the proposed acquisition and further claimed the possession. In the meanwhile, aggrieved by the dismissal of the suit and decreeing the suit for possession, Narayanamma filed first appeals in the High Court (R.F.A. No. 661-663/ 2007). In these proceedings it was brought to the notice of the High Court that the suit properties had been sold to the appellant and respondents no. 4 to 7. By an order dated 10.04.2008, the High Court directed the vendors to furnish particulars with respect to the sale, names of the purchaser and area sold etc. By common judgment dated 22.10.2009 the High Court dismissed all the appeals pending before it. The Special Leave Petition preferred by the vendors (S.L.P. (C) Nos. 16349-13651/2010) was also dismissed by this Court on 23.07.2010.”

To be sure, the Bench then points out in para 12 that, “All these orders led to initiation of five writ petitions on behalf of the appellant, and the vendors etc. Three First appeals (R.F.A. Nos. 441, 468 and 469/2017) were preferred by obstructers challenging the decision of the Executing Court dated 15.02.2017. By impugned common order all these Writ Petitions and appeals were dismissed.”

Quite remarkably, the Bench then stipulates in para 41 that, “Having regard to the above background, wherein there is urgent need to reduce delays in the execution proceedings we deem it appropriate to issue few directions to do complete justice. These directions are in exercise of our jurisdiction under Article 142 read with Article 141 and Article 144 of the Constitution of India in larger public interest to sub-serve the process of justice so as to bring to an end the unnecessary ordeal of litigation faced by parties awaiting fruits of decree and in larger perspective affecting the faith of the litigants in the process of law.”

Most remarkably, the Bench then in para 42 which forms the cornerstone of this commendable judgment very rightly holds that, “All Courts dealing with suits and execution proceedings shall mandatorily follow the below-mentioned directions:

1. In suits relating to delivery of possession, the court must examine the parties to the suit under Order X in relation to third party interest and further exercise the power under Order XI Rule 14 asking parties to disclose and produce documents, upon oath, which are in possession of the parties including declaration pertaining to third party interest in such properties.

2. In appropriate cases, where the possession is not in dispute and not a question of fact for adjudication before the Court, the Court may appoint Commissioner to assess the accurate description and status of the property.

3. After examination of parties under Order X or production of documents under Order XI or receipt of commission report, the Court must add all necessary or proper parties to the suit, so as to avoid multiplicity of proceedings and also make such joinder of cause of action in the same suit.

4. Under Order XL Rule 1 of CPC, a Court Receiver can be appointed to monitor the status of the property in question as custodia legis for proper adjudication of the matter.

5. The Court must, before passing the decree, pertaining to delivery of possession of a property ensure that the decree is unambiguous so as to not only contain clear description of the property but also having regard to the status of the property.

6. In a money suit, the Court must invariably resort to Order XXI Rule 11, ensuring immediate execution of decree for payment of money on oral application.

7. In a suit for payment of money, before settlement of issues, the defendant may be required to disclose his assets on oath, to the extent that he is being made liable in a suit. The Court may further, at any stage, in appropriate cases during the pendency of suit, using powers under Section 151 CPC, demand security to ensure satisfaction of any decree.

8. The Court exercising jurisdiction under Section 47 or under Order XXI of CPC, must not issue notice on an application of third-party claiming rights in a mechanical manner. Further, the Court should refrain from entertaining any such application(s) that has already been considered by the Court while adjudicating the suit or which raises any such issue which otherwise could have been raised and determined during adjudication of suit if due diligence was exercised by the applicant.

9. The Court should allow taking of evidence during the execution proceedings only in exceptional and rare cases where the question of fact could not be decided by resorting to any other expeditious method like appointment of Commissioner or calling for electronic materials including photographs or video with affidavits.

10. The Court must in appropriate cases where it finds the objection or resistance or claim to be frivolous or mala fide, resort to Sub-rule (2) of Rule 98 of Order XXI as well as grant compensatory costs in accordance with Section 35A.

11. Under section 60 of CPC the term “…in name of the judgment- debtor or by another person in trust for him or on his behalf” should be read liberally to incorporate any other person from whom he may have the ability to derive share, profit or property.

12. The Executing Court must dispose of the Execution Proceedings within six months from the date of filing, which may be extended only by recording reasons in writing for such delay.

13. The Executing Court may on satisfaction of the fact that it is not possible to execute the decree without police assistance, direct the concerned Police Station to provide police assistance to such officials who are working towards execution of the decree. Further, in case an offence against the public servant while discharging his duties is brought to the knowledge of the Court, the same must be dealt stringently in accordance with law.

14. The Judicial Academies must prepare manuals and ensure continuous training through appropriate mediums to the Court personnel/staff executing the warrants, carrying out attachment and sale and any other official duties for executing orders issued by the Executing Courts.”

Going forward, the Bench then observes in para 43 that, “We further direct all the High Courts to reconsider and update all the Rules relating to Execution of Decrees, made under exercise of its powers under Article 227 of the Constitution of India and Section 122 of CPC, within one year of the date of this Order. The High Courts must ensure that the Rules are in consonance with CPC and the above directions, with an endeavour to expedite the process of execution with the use of Information Technology tools. Until such time these Rules are brought into existence, the above directions shall remain enforceable.”

Finally, the Bench then holds in para 44 that, “The appeals stand dismissed.”

In sum, these above mentioned directions laid down by the three Judge Bench of Apex Court headed by former CJI Sharad Arvind Bobde and also comprising of Justice L Nageswara Rao and Justice S Ravindra Bhat must be followed by all courts dealing with suits and execution proceedings. Until the rules are made these directions shall remain enforceable as has been very rightly laid down also. All courts must comply with it accordingly! No denying it!

The writer is an Advocate.

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Legally Speaking

NABFID ACT, 2021: ANALYSING THE CHALLENGES AHEAD

Sine qua non, the banks and other financial institutions must comply with statutory norms and requirements framed by the supervisory authorities. It is imperative to hire external auditors to scrutinise the working of the institution and book members if they indulge in financial malpractices or breach regulatory and statutory code of conduct.

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Infrastructure development of any nation plays crucial role in attracting foreign investments and boosts the economic development of the country. Improvement in Infrastructure financing facilitates rapid economic growth. Prime Minister Narendra Modi in his 2019 Independence Day speech laid the foundation of National Infrastructure Pipeline (NIP) for financial year 2019 to financial year 2025 with the purpose of injecting almost Rs100 lakh crore into the social and economic infrastructure projects of the country such as roads, rail, ports, energy, housing, water etc.Presently, around 7,400 projects have been included so far under NIP within more than 30 sub-sectors out of which over 1800 projects have already been sanctioned and are now under the developmental phase.

Infrastructure projects involve high capital investments, high risks and long gestation periods. Owing to large capital investments in these projects, the major focus of lenders is on revenue generation. Before financing such projects the lenders analyse the potential of such projects considering commercial, environmental, regulatory, engineering and financial aspects that would govern the implementation of such projects. With the aim of providing the facility of Infrastructure Financing, the government of India has established a new Development Financial Institution which will go by the name of The National Bank for Financing Infrastructure and Development (hereinafter referred to as NaBFID).

INCEPTION OF DFI

The inception of Development Financial Institution (DFI) can be traced back to the time of India’s independence. In the year 1948, India’s first DFI, Industrial Finance Corporation of India (ICFI) was set up. Industrial Credit and Investment Corporation of India Limited (ICICI) — nation’s first DFI in the private sector, was established in 1955. An initiative of the World Bank, ICICI Bank Limited was initially established prior to ICFI in 1944 and it was only in 2000; that both ICICI Limited and ICICI Bank Limited agglutinated into the first Universal bank of India. Industrial Development Bank of India (IDBI) was set up in 1964 under RBI and converted to a universal bank in 2003. All these primary financial institutions were responsible for assisting long-term financing in the industrial sector of the economy of the country.

Some sector- specific Development Banks such as EXIM Bank, National Housing Bank and Housing and Urban Development Corporations followed by State- specific DFIs came up in the 70s and 80s with the objective of providing concessional lending to small and medium enterprises. Yet, in early 1990, the financial reforms drastically compressed and condensed the role of DFIs in financing the industrial sector by drawing out concessional funding through Long Term Operation (LTO) funds from RBI thereby making it impractical and non- sustainable. As a result, ICICI and IDBI were transmuted into Commercial banks and IIBI was shut down.

The idea of DFI was again resuscitated in 2017 by RBI in an attempt to cater long-term financing needs of the economy. Finance Minister Nirmala Sithraman while presenting the Union Budget 2021-22 stated that, India’s Infrastructure needs long term debt financing. A professionally managed Development Financial Institution is necessary to act as a provider, enabler and catalyst for infrastructure financing. Therefore, India will set up a new DFI called the National Bank for Financing Infrastructure and Development.

STATUS QUO

The National Bank for Financing Infrastructure and Development (hereinafter referred to as NaBFID) bill was introduced in Lok Sabha on 22nd March, 2021 and was passed on 23rd March, 2021. The bill was subsequently passed in Rajya Sabha on 25th March, 2021. This bill states that the institution established by it will be the principal DFI for infrastructure financing. The institution is set up as a corporate body with authorised share capital of one lakh crore rupees. Its shares will be held by:

1. Central Government

2. Multilateral Institutions

3. Insurers

4. Sovereign Wealth Fun

5. Pension Funds

6. Financial Institutions

7. Banks

8. Any other institution as the central government prescribes.

The central government will own 100% shares initially but they can in the future be reduced to at least 26%. The Bill establishes NBFID as a company with share capital amounting to one lakh crore rupees. NBFID has been set up with the primary motive of lending, investing or to attract investments for infrastructure projects located wholly or partially in India. This institution will also facilitate the market for bonds and derivatives for development financing.

The Institution will discharge two types of functions: (i) Financial Objective, (ii) Developmental Objective. Financial Objectives include directly or indirectly lending, investing or attracting investments for projects entirely or partly within Indian territory whereas developmental objective facilitates the development of market for bonds, loans and derivatives for infrastructure financing.

Board of Directors will form the governing body of NBFID and the Chairperson will be appointed by the central government in consultation with the Reserve Bank of India. Central Government will constitute a body that will recommend candidates suitable for the post of Managing Directors and Deputy Managing Directors. Independent Directors will be appointed based on the recommendations of the internal committee.

CRITICAL ISSUES

The weakening of growth impulses and subdued credit off-take are playing out, with sporadic credit default events and incidents of frauds exacerbating the reluctance to lend which is starkly evident in the slowdown of flow of resources, both from banks and non-banks to the commercial sector in the first half of 2019-20. Frauds can occur on account of overlooking regulatory guidelines and/ or on lapses in internal risk governance, compliance, and audit functions. In particular, lack of prudent internal control mechanisms and surveillance systems is limiting their ability to prevent frauds. The increased Incidents of forgery and fraud not only result in financial loss to the institutions but additionally disturb the fiduciary relationship which exists between the customer and the institution.

Considering the business shambles like IL&FS, RBI has come up with stringent set of rules for the auditors of financial institutions and banks respectively. As per the reports, the primary function of fraud management, monitoring and investigation must be assigned to the Audit Committee of the Board. Thus, it is clearly evident that auditing process should be free from the other pillar of the government namely the legislature yet under their perusal. The bone of contention of lack of parliamentary oversight of a DFI was raised by members of Parliament while debating on the National Bank for Financing Infrastructure and Development (NaBFID) Bill, 2021.

While referring to Section 26 of the bill, it was contended that DFI would remain outside the purview of Comptroller and Auditor General (CAG), Central Vigilance Commission (CVC) and Central Bureau of Investigation (CBI). Since these development institutions will be expending huge amount of government funds, the inspection by these 3Cs becomes imperative. Opposing these contentions, Finance Minister Nirmala Sitharaman said, “Every year audited accounts (of this bank) will come to each House of Parliament….so Parliament oversight (of the institution) is in-built in the bill.” Section 26 of the Act provides, “The Institution shall furnish to the Central Government and the Reserve Bank within four months from the date on which its accounts are closed and balanced, a copy of its balance-sheet and accounts together with a copy of the auditor’s report and a report of the working of the Institution during the relevant year, and the Central Government shall, as soon as may be after they are received by it, cause the same to be laid before each House of Parliament.”

Section 6 of the Act states the procedure for appointment of board of directors. According to the section, the members of the board will be appointed by the Central Government which means there are chances of political biasness for infrastructure financing. The political party in power may then appoint its own people to the board and may then favour its own people by financing their projects thereby making it politically biased.

Secondly, Section 35 states that before initiating any investigation against the employees of the institution prior sanction of the Central Government is necessary. Prior sanction is mandatory for Courts as well before taking cognizance of the offences under any law against the employees of NBFID. Now, this provision makes the employees of the institution immune from legal proceedings and as has been mentioned under section 6, the government will appoint these employees and prior sanction from the government will lead to defiance of the principles of accountability as then they will not be answerable for their actions. This Section will help such employees evade their responsibilities and consequently there will be no transparency thereby going against public welfare.

CONCLUDING REMARKS

Sine qua non, the banks and other financial institutions must comply with statutory norms and requirements framed by the supervisory authorities. It is imperative to hire external auditors to scrutinize the working of the institution and book members if they indulge in financial malpractices or breach regulatory and statutory code of conduct. Thus, there is a need for an independent and efficacious audit system to ensure sound health of these institutions as per the recommendations of the Expert Committee set up by the Reserve Bank (Chairman: Shri Y H Malegam).

India is striving towards becoming a major economic power and in that direction government is taking every possible step to strengthen up the economy. By establishing this DFI the government is trying to improve the infrastructure of the country as any country’s infrastructure development is a litmus test of knowing whether the country is financially sound or not. But the government should also have considered that by only establishing the new institution this objective cannot be achieved as what’s more important is the implementation and the mechanism of the new institution and therefore, on reading of section 6 and section 35 of the Act we can see that there will arise issues on the governance of the institution. The governance of DFIs matters a lot since these are public financial institutions dealing with public money. Therefore, it is of utmost importance that these DFIs should be transparent in their operations and accountable to the public.

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DRUG ABUSE IN INDIA: POLICY REFINEMENT FOR EFFICIENT CONTROL

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“Drug abuse is a social evil. It destroys vitals not only of the society but also adversely affects the economic growth of the country…..” Y K Sabarwal, Former Chief Justice of India (2006)

It is no secret that despite being illegal, marijuana, also known as cannabis, can be availed very easily. As per the Indian law, the consumption or possession of marijuana is a criminal act and those found guilty can face a jail term up to 10 years or a fine of Rs. 1 lakh or both. When the Britishers arrived in India, they found the widespread trade of cannabis and its massive consumption as a source of revenue. Accordingly, they had levied a tax on it and were the first one to pass a law in connection with the usage of marijuana in 1838, 1871, and further in 1877.

The vogue of substance abuse in young generation has assumed alarming dimensions in India. Changing cultural values, increasing economic stress and dwindling supportive bonds are leading to initiation of substance abuse. According to the World Health Organization (WHO) substance abuse is persistent or sporadic drug use inconsistent with or unrelated to acceptable medical practice. Drug addiction causes immense human distress and the illegal production and distribution of drugs have spawned crime and violence worldwide. Today, there is no part of the world that is untouched from the curse of drug trafficking and drug addiction. Millions of drug addicts, all over the world, are leading miserable lives, between life and death. India too is caught in this vicious cycle of drug abuse, and the number of drug addicts is gradually increasing. Cannabis, heroin, and Indian-produced pharmaceutical drugs are the most frequently abused drugs in India. Cannabis products, often called charas, bhang, or ganja, are massively abused throughout the country

From traditional plant-based drugs such as cannabis, cocaine and heroin to synthetic drugs such as tramadol, consumption of narcotic substances in India has increased manifold over years, pushed through a strong network of drug cartels. In terms of users, India’s illicit drug markets are mostly dominated by cannabis and opioids.

According to a 2019 study, National Survey on Extent and Pattern of Substance Abuse in India, by the Ministry of Social Justice and Empowerment, there are nearly three crore cannabis users in India.

THE CONSTITUTIONAL APPROACH AND DRUG POLICY

India’s approach towards Narcotic Drugs and Psychotropic Substances is enshrined in Article 47 of the Constitution of India which mandates that the ‘State shall endeavour to bring about prohibition of the consumption except for medicinal purposes of intoxicating drinks and of drugs which are injurious to health’. Article 47, which is based on Gandhian principle, provides social security and justice to the citizens by enumerating duties of the state which are important for achieving the goal of a better society, and it includes better conditions of living, access to healthy and nutritious food and public health and hygiene. As intoxicating drinks and drugs are injurious to health and therefore it has been expressly provided by article 47 that state should take steps to reduce or stop the consumption of such injurious drinks or drugs. The same principle of preventing use of drugs except for medicinal use was also adopted in the three international conventions on drug related matters, viz., Single Convention on Narcotic Drugs, 1961, Convention on Psychotropic Substances, 1971 and the UN Convention against Illicit Traffic in Narcotic Drugs and Psychotropic Substances, 1988. India has signed and ratified these three conventions. India’s commitment to prevention of drug abuse and trafficking predates the coming into force of the three conventions.

THE NARCOTIC DRUGS AND PSYCHOTROPIC SUBSTANCES ACT, 1985: A CRITICAL ANALYSIS

The NDPS Act prohibits cultivation, production, possession, sale, purchase, trade, import, export, use and consumption of narcotic drugs and psychotropic substances except for medical and scientific purposes in accordance with the law. Preparation to commit certain offences is punishable as is attempt. Accessory crimes of aiding and abetting and criminal conspiracy attract the same punishment as the principal offence.

The NDPS Act lays down the procedure for search, seizure and arrest of persons in public and private places. Safeguards such as prior recording of information, notifying a superior, limiting powers of arrest to designated officers, informing the person being searched of her/his rights have been scrupulously enforced by the courts, in light of the stringent punishments prescribed under the Act. At the same time, norms for investigation and evidence are permissive and have been interpreted in a manner that prejudices the accused. In 1988, the NDPS Act was supplemented by the Prevention of Illicit Traffic in Narcotic Drugs and Psychotropic Substances Act to provide for preventive detention of people suspected or accused of involvement in drug trafficking

Adolescents are adventurous, self confident and often do new things to show that they can. By and large, this is the age at which most addicts get initiated into drugs. Section 32B of the NDPS Act lists ‘the fact that the offence is committed in an educational institution or social service facility or in the immediate vicinity of such institution or facility or in other place to which school children and students resort for educational, sports and social activities’ as one of the aggravating factors which may be considered by the Court for imposing higher than the minimum penalty prescribed for the offence.

THE JUDICIAL RESPONSE

The Indian judiciary is considered as one of the most proactive adjudicatory wings when it comes to judicial review of the Indian legislations and policies. In 2008, a division bench of the Supreme Court of India in the case of ‘E Michael Raj v Intelligence Bureau, Narcotics Control Bureau had ruled that punishment under the NDPS Act will depend on the quantity of offending drug present in a consignment seized by the police. Five grams of heroin would classify as a small quantity while 250 grams of the same contraband would be considered a commercial quantity attracting a punishment of up to 20 years of imprisonment. Drug peddlers would sell heroin mixed with caffeine, chalk powder, zinc oxide, to get around the law and escape with minor sentences. Reversing the 2008 decision of E Michael Raj, a three-judge bench of Justices Arun Mishra, Indira Banerjee and MR Shah in the case of Hira Singh And Another v. Union Of India And Another held that, “The problem of drug addicts is international and the drug mafia are working throughout the world. It is a crime against society and it has to be dealt with an iron hand. The use of drugs by young people in India has increased. The drugs are being used for weakening the nation.” Therefore, if it is accepted that it is only the actual content by weight of offending drug which is relevant for the purpose of determining whether it is a small quantity or commercial quantity, in that case, the object and purpose of enactment of NDPS Act would be frustrated,” the court said.

The evil of drug abuse not only creates shackles on the very idea of a better life but it also acts as an impediment to the growth of the country. The legal framework which is present to counter the abuse of drugs is based on a solid foundation. As far as the drug law enforcement is concerned, the Narcotics Control Bureau (NCB) has been compiling statistics on seizures, etc. from various State and Central law enforcement agencies and has been compiling the National Drug Enforcement Statistics (NDES) every month. These statistics represent the drug law enforcement as well as the comparative performance of various agencies and the compilation need to be done within the appropriate time so as to comply with the provisions of the Narcotic Drugs and Psychotropic Substances Act (NDPS), 1985.

THE AMELIORATIVE APPROACH FOR EFFICIENCY

In 1988, the Prevention of Illicit Traffic in NDPS (PITNDPS) Act was enacted to provide for detention in certain cases for the purpose of preventing illicit traffic in narcotic drugs and psychotropic substances and for matters connected therewith. The act may be used to secure preventive detention of the major drug traffickers. As the drug traffickers deal in large volumes, and earn substantially through trafficking, every effort should be made by the concerned organization to identify, seize and freeze their properties and follow up the case vigorously till the properties are forfeited. Moreover, the need of the hour is to improve the quality of estimates and statistical reports on narcotic drugs and ensure that these reports are submitted in a timely manner, including the reports on consumption of narcotic drugs, in conformity with the definition of “consumption” in the Single Convention on Narcotic Drugs, 1961, as amended by the 1972 Protocol.

Efforts have to be made to keep up and further strengthen the mechanism for collection of statistics on drug law enforcement by the NCB. The mechanism of collection of statistics on legitimate manufacture, trade, use, consumption and stocks of narcotic drugs, psychotropic substances and precursors should be strengthened and streamlined so as to ensure strict compliance of the Narcotic Drugs and Psychotropic Substances Act, 1985.

Apart from this, the authorities must strive for the development of a mechanism to regularly collect statistics on drug and substance abuse in the country and to use such statistics as a yardstick to measure the effect of various interventions.

Efforts have to be made to keep up and further strengthen the mechanism for collection of statistics on drug law enforcement by the NCB. The mechanism of collection of statistics on legitimate manufacture, trade, use, consumption and stocks of narcotic drugs, psychotropic substances and precursors should be strengthened and streamlined so as to ensure strict compliance of the Narcotic Drugs and Psychotropic Substances Act, 1985.

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RIP VAN WINKLES HAVE A PLACE IN LITERATURE, NOT IN LAW, SAYS ALLAHABAD HIGH COURT

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In a latest, laudable, landmark and learned judgment titled Ganga Sahay & Ors. v. Deputy Director of Consolidation & 14 Ors. in Writ- B No.- 302 of 2021 delivered recently on March 18, 2021, the Allahabad High Court has most rightly, remarkably and rationally observed that the rule of delay and laches as a policy of litigative repose, creates certainty in legal relations and curtails fruitless litigation thereby ensuring that the administration of justice is not clogged by pointless litigation. The observation came from a Single Judge Bench of Allahabad High Court comprising of Justice Ajay Bhanot while dismissing a writ petition filed after a delay of more than 4 years, by observing it to be barred by the rule of delay and laches without there being any satisfactory explanation as to the delay. Justice Ajay Bhanot has done certainly the right thing and has thus once again only reiterated what is well known that a party who does not care in filing the petition in time and wakes up after a long period of time without any reasonable cause is bound to be held barred to file petition after the lapse of a certain period of time as we see in this notable case also!

Needless to say, as goes the well known legal maxim also which is titled “Vigilantibus Non Dormientibus Jura Subveniunt” which means that, “The law assists only those who are vigilant, and not those who sleep over their rights.” There can be no denying it! It must also be mentioned here that this famous legal maxim makes it amply clear that it is the obligation of individuals to not only be aware of their rights under the law, but also to be vigilant while exercising or using the same. If they are not vigilant then they are bound to pay a heavy price for it as we see in this case also where the petitioner’s claim is rejected for not filing the petition well within time! We even see in the Limitation Act of 1963 that if the suffered/aggrieved party does not file a suit for relief within the stipulated period, for the breach of his rights, then it cannot be claimed at a later stage.

To start with, the ball is set rolling in para 1 of this notable judgment wherein it is observed that, “Petitioners have assailed the order dated 09.09.2016. The petitioners were not parties in the proceedings before the courts below. The petitioners claim inheritance from one Ram Avtar (since deceased) who had allegedly executed a Will deed in favour of the petitioners. The authenticity of the Will deed and rights of petitioners as successors have first to be approved by the competent court before the petitioners can maintain any petition on behalf of the deceased Ram Avtar. It could not be pointed out what heritable rights of the petitioners devolving from Ram Avtar (since deceased) are being canvassed before this Court.”

As we see, it is then pointed out in para 2 that, “Learned Standing Counsel raises a preliminary objection to the maintainability of the writ petition. He submits that the writ petition is barred by delay and laches and the petitioner has approached this Court after a delay of more than four years.”

To put things in perspective, the Bench then very rightly maintains in para 3 that, “Clearly, the writ petition is barred by delay and laches. The petitioner has approached this Court after more than four years. There is no satisfactory explanation for laches and the delay in filing the writ petition on the part of the petitioner. Further third party rights have been entrenched. The law has long set its face against indolent litigants who approach this Court after a long delay.”

Needless to state, it is then underscored in para 4 that, “The courts have consistently observed that delay and laches on part of the litigant will disentitle him to any relief. In this regard the Hon’ble Supreme Court has settled the law with clarity and observed it with consistency.”

Furthermore, it is then enunciated in para 5 that, “The line of authorities on this point are consistent and long. The discussion will benefit from the authorities in point.”

While citing the relevant case law, the Bench then seeks to substantiate its reasonable stand by pointing out in para 6 that, “The Hon’ble Supreme Court in R & M Trust Vs. Koramangala Residents Vigilance Group and others reported at 2005 (3) SCC 91 held thus:-

“There is no doubt that delay is a very important factor while exercising extraordinary jurisdiction under Article 226 of the Constitution. We cannot disturb the third party interest created on account of delay. Even otherwise also why Court should come to rescue of person who is not vigilant of his rights.””

While citing yet another relevant case law, it is then pointed out in para 7 that, “The Hon’ble Supreme Court in Maharashtra State Road Transport Corporation Vs. Balwant Regular Motor Service reported at AIR 1969 SC 329 held thus:-

“Now the doctrine of laches in Courts of Equity is not an arbitrary or a technical doctrine. Where it would be practically unjust to give a remedy, either because the party has, by his conduct, done that which might fairly be regarded as equivalent to a waiver of it, or where by his conduct and neglect he has, though perhaps not waiving that remedy, yet put the other party in a situation in which it would not be reasonable to place him if the remedy were afterwards to be asserted in either of these cases, lapse of time and delay are most material. But in every case, if an argument against relief, which otherwise would be just, is founded upon mere delay, that delay of course not amounting to a bar by any statute of limitations, the validity of that defence must be tried upon principles substantially equitable. Two circumstances, always important in such cases, are, the length of the delay and the nature of the acts done during the interval, which might affect either party and cause a balance of justice or injustice in taking the one course or the other, so far as relates to the remedy.”

While continuing in a similar vein, the Bench then makes it a point to mention in para 8 that, “A similar sentiment was echoed by the Hon’ble Supreme Court in Shiv Dass Vs. Union of India reported at 2007 (9) SCC 274, the Hon’ble Supreme Court opined as under:-

“The High Court does not ordinarily permit a belated resort to the extraordinary remedy because it is likely to cause confusion and public inconvenience and bring in its train new injustices, and if writ jurisdiction is exercised after unreasonable delay, it may have the effect of inflicting not only hardship and inconvenience but also injustice on third parties. It was pointed out that when writ jurisdiction is invoked, unexplained delay coupled with the creation of third party rights in the meantime is an important factor which also weighs with the High Court in deciding whether or not to exercise such jurisdiction.”

For esteemed readers exclusive benefit, it must be mentioned here that it is then pointed out in para 9 that, “When the issue of delay and laches came up before the Hon’ble Supreme Court in Shankara Co-op. Housing Society Ltd. Vs. M. Prabhakar and ors. reported at 2011 (5) SCC 607, Hon’ble Supreme Court reiterated settled position of law and confirmed the well established criteria which has to be considered before exercise of discretion under Article 226 of the Constitution of India. The relevant portion is extracted herein below:-

“53. The relevant considerations, in determining whether delay or laches should be put against a person who approaches the writ court under Article 226 of the Constitution is now well settled. They are: (1) there is no inviolable rule of law that whenever there is a delay, the court must necessarily refuse to entertain the petition; it is a rule of practice based on sound and proper exercise of discretion, and each case must be dealt with on its own facts. (2) The principle on which the court refuses relief on the ground of laches or delay is that the rights accrued to others by the delay in filing the petition should not be disturbed, unless there is a reasonable explanation for the delay, because court should not harm innocent parties if their rights had emerged by the delay on the part of the Petitioners. (3) The satisfactory way of explaining delay in making an application under Article 226 is for the Petitioner to show that he had been seeking relief elsewhere in a manner provided by law. If he runs after a remedy not provided in the Statute or the statutory rules, it is not desirable for the High Court to condone the delay. It is immaterial what the Petitioner chooses to believe in regard to the remedy. (4) No hard and fast rule, can be laid down in this regard. Every case shall have to be decided on its own facts. (5) That representations would not be adequate explanation to take care of the delay.”

While continuing further, the Bench then also points out in para 10 that, “The Hon’ble Supreme Court also noticed the ingenuous devices adopted by unscrupulous litigants to tide over the delay and laches on part of such litigants. One such commonly used device is by filing a representation to the authorities after a long delay. Such litigants then approach the Court with an innocuous prayer to decide the representation. Once such representation is decided in compliance of orders of the court, it is claimed that a fresh cause of action has arisen. Stale wine does not become fresh in a new bottle. The Hon’ble Supreme Court saw through the designs of such litigants and foiled their intent in no uncertain terms.”

Be it noted, it is then very aptly pointed out in para 11 that, “The Hon’ble Supreme Court considered this issue in C. Jacob Vs. Director of Geology & Min. Indus. Est. and another reported at 2008 (10) SCC 115. The law laid down by the Hon’ble Supreme Court would guide the fate of the case. The relevant extract of the judgment is reproduced hereunder for ease of reference :-

“6. Let us take the hypothetical case of an employee who is terminated from service in 1980. He does not challenge the termination. But nearly two decades later, say in the year 2000, he decides to challenge the termination. He is aware that any such challenge would be rejected at the threshold on the ground of delay (if the application is made before Tribunal) or on the ground of delay and laches (if a writ petition is filed before a High Court). Therefore, instead of challenging the termination, he gives a representation requesting that he may be taken back to service. Normally, there will be considerable delay in replying such representations relating to old matters. Taking advantage of this position, the ex-employee files an application/writ petition before the Tribunal/High Court seeking a direction to the employer to consider and dispose of his representation. The Tribunals/High Courts routinely allow or dispose of such applications/petitions (many a time even without notice to the other side), without examining the matter on merits, with a direction to consider and dispose of the representation. The courts/tribunals proceed on the assumption, that every citizen deserves a reply to his representation. Secondly they assume that a mere direction to consider and dispose of the representation does not involve any ‘decision’ on rights and obligations of parties. Little do they realize the consequences of such a direction to ‘consider’. If the representation is considered and accepted, the ex-employee gets a relief, which he would not have got on account of the long delay, all by reason of the direction to ‘consider’. If the representation is considered and rejected, the ex-employee files an application/writ petition, not with reference to the original cause of action of 1982, but by treating the rejection of the representation given in 2000, as the cause of action. A prayer is made for quashing the rejection of representation and for grant of the relief claimed in the representation. The Tribunals/High Courts routinely entertain such applications/petitions ignoring the huge delay preceding the representation, and proceed to examine the claim on merits and grant relief. In this manner, the bar of limitation or the laches gets obliterated or ignored.””

It is also worth noting that no differently, it is then also stated in para 12 that, “A similar view was taken by the Hon’ble Supreme Court in S.S. Rathore Vs. State of Madhya Pradesh reported at 1989 (4) SCC 582. The relevant extract of the judgment is reproduced hereunder for ease of reference :-

“It is proper that the position in such cases should be uniform. Therefore, in every such case only when the appeal or representation provided by law is disposed of, cause of action shall first accrue and where such order is not made, on the expiry of six months from the date when the appeal was filed or representation was made, the right to sue shall first accrue. Submission of just a memorial or representation to the Head of the establishment shall not be taken into consideration in the matter of fixing limitation.””

Most significantly, what forms the cornerstone of this worth emulating judgment is then stated quite elegantly, effectively and eloquently in para 13 that, “Law has long set its face against delay in approaching the court. The courts have consistently declined to condone the delay and denied relief to litigants who are guilty of laches. Litigants who are in long slumber and not vigilant about their rights are discouraged by the courts. Belated claims are rejected at the threshold. Rip Van Winkles have a place in literature, but not in law.”

No less significant is what is then stated in para 14 that, “All this is done on the foot of the rule of delay and laches. Statutes of limitation are ordained by the legislature, rule of laches was evolved by the courts. Sources of the law differ but the purpose is congruent. Statutes of limitation and the law of delay and laches are rules of repose.”

To be sure, it is then also postulated in para 15 that, “The rule of laches and delay is founded on sound policy and is supported by good authority. The rule of laches and delay is employed by the courts as a tool for efficient administration of justice and a bulwark against abuse of process of courts.”

Going ahead, it is then stated in para 16 that, “Some elements of public policy and realities of administration of justice may now be considered.”

While explaining why the rule of laches and delay is strictly adhered to by courts, the Bench then minces no words to hold in para 17 that, “While indolent litigants revel in inactivity, the cycle of life moves on. New realities come into existence. Oblivious to the claims of the litigants, parties order their lives and institutions their affairs to the new realities. In case claims filed after inordinate delay are entertained by courts, lives and affairs of such individuals and institutions would be in a disarray for no fault of theirs. Their lives and affairs would be clouded with uncertainty and they would face prospects of long and fruitless litigation.”

Truth be told, it is then further expounded in para 18 that, “The delay would entrench independent third party rights, which cannot be dislodged. The deposit of subsequent events obscures the original claim and alters the cause itself. The refusal to permit agitation of stale claims is based on the principle of acquiescence. In certain situations, the party by its failure to raise the claim in time waives its right to assert it after long delay.”

Not stopping here, it is then also put forth in para 19 that, “The rule of delay and laches by preventing the assertion of belated claims puts to final rest long dormant claims. This policy of litigative repose, creates certainty in legal relations and curtails fruitless litigation. It ensures that the administration of justice is not clogged by pointless litigation.”

What’s more, it is then most aptly stated in para 20 that, “The above stated position of law on the question of delay and laches on part of the petitioners, controls the facts of the case. There is no satisfactory explanation of the delay in the writ petition. The explanation for laches is self serving and lacks credibility is accordingly rejected. The writ petition is barred by delay and laches and is not liable to be entertained.”

Finally, it is then held in the last para 21 that, “The writ petition is dismissed.”

To conclude, Justice Ajay Bhanot of Allahabad High Court has done certainly the right thing giving the right reasons for holding so and has thus once again only reiterated what is well known that a party who does not care in filing the petition in time and wakes up after a long period of time without any reasonable cause is bound to be held barred to file petition after the lapse of a certain period of time as we see in this notable case also! All the parties must always be cautious of it and adhere to the time limit without fail. It is in their own best interest to do so because if they err then their petition is bound to be rejected as we see so ostensibly in this case also!

Sanjeev Sirohi, Advocate

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