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Better to buy than compete?

Whether de-merger is the right solution or resorting to other remedies like compulsory licencing would be viable, remains to be seen. However, in this process, one thing the authorities need to keep in mind is that the solution must cure the problem without compromising or disincentivising the innovation.

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INTRODUCTION

 In the past 15 years, the social networking industry has certainly been one of the fastest-growing industries in the world. A recent study estimated that the global market for mobile social networking stood at 3.2 billion users in the year 2020 and is projected to reach a revised size of 4.9 billion users by 2027, growing at an annual growth rate of 6.5% over next seven years. The numbers depict how deeply personal social networking has penetrated our lives and hence the conduct of these booming service providers has also become more relevant than ever. Other than a host of data privacy concerns raised against these service providers, there have also been recent complaints of antitrust violations being flagged up against them.

Recently, two lawsuits have been filed by the US Federal Trade Commission (“FTC”) & governments of 48 US states and territories, accusing Facebook of eliminating competition by acquiring its competitors and resorting to anticompetitive trade practices. The lawsuit has once again brought the conduct and the present structure of the giant social media company under the scanner. Ian Conner, director of FTC’s Bureau of Competition, has remarked that “Facebook’s actions to entrench and maintain its monopoly deny consumers the benefits of competition. Our aim is to roll back Facebook’s anticompetitive conduct and restore competition so that innovation and free competition can thrive,” This complaint and the statement is particularly interesting as it suggests a significant shift in the United States’ antitrust policy. FTC, which generally follows a non-interventionist approach – unlike the CCI in India and the CMA in the UK, through this complaint seems to have heralded a new era where even the FTC wants to intervene and review the business practices in the digital world.

The FTC’s complaint also resembles very closely to the recent Competition and Markets Authority’s (“CMA”) report on Facebook. Both – the complaint and the report, highlights noteworthy anti-competitive practices adopted by Facebook.

 FACEBOOK’S BUSINESS MODEL IN A NUTSHELL

Facebook, formed in February 2004, was one of the first personal social networks to gain significant popularity. In contrast to the limited functionalities of email and messaging, Facebook’s personal social network gained immediate popularity by providing a distinct and richer way for people to maintain personal connections. Generally, personal social networking providers e.g. Twitter, Facebook, Google+, have introduced a unique business model where on one side of the market – the social networking services, there is no monetory price for the services, but on the other side – the digital advertisement, the advertisers are charged heavily and are faced with take it or leave it situation. Facebook too monetizes its businesses by selling advertising that is displayed to users based on the personal data about their lives that Facebook collects. This business model has been highly profitable for Facebook, both in the market of social networking as well as in the display advertising. Advertisers pay billions – nearly $70 billion in 2019 – to display their “specific ads” to “specific audiences”, which is facilitated by Facebook using proprietary algorithms that analyse the vast quantity of user data it collects from its users.

FTC’S LAWSUIT

FTC has filed a lawsuit before the District Court of Columbia alleging that Facebook has maintained its monopoly position by buying up companies that present competitive threats and by imposing restrictive policies that unjustifiably hinder actual or potential rivals that Facebook does not or cannot acquire. Facebook’s 2012 acquisition of Instagram for $1 billion and the 2014 acquisition of WhatsApp for $19 billion have been cited as attempts to illegally eliminate competition. Furthermore, the complaint highlights the exclusionary trade conditions imposed by Facebook on third-party applications for using its Application Programming Interfaces (APIs).

The case has been filed under S. 2 of the Sherman Act, 15 U.S.C. §2, which the F.T.C imposes through S. 5 of the FTC Act. Section 2 of the Sherman Act penalizes companies for using anti-competitive means to acquire or maintain a monopoly. The suit has been petitioned for a permanent injunction to restrain Facebook from imposing anticompetitive conditions on access to APIs and data, along with a prayer for divestitures of assets, including Instagram and WhatsApp.

 DEFINING RELEVANT MARKET

Under every antitrust regime, abuse of dominance investigation begins with defining the relevant market. The relevant market is essentially a tool to identify and define the boundaries of competition between firms. In the instant suit, the personal social networking service is defined as the relevant product market along with the United States as the relevant geographical market. Interestingly, an attempt has been made to define the relevant product market as narrowly as possible. Three key elements have been highlighted that make personal social networking services market distinct from the market for other forms of online services:

That the personal social networking services are built on a ‘social graph’ that maps the connections between users and their friends, family, and other personal connections. This social graph forms the foundation upon which users connect and communicate with their connections. Personal social networking providers use this social graph to inform what content they display to users in the shared social space and when.

 That the personal social networking services include features that many users regularly employ to interact with personal connections and share their personal experiences in a shared social space, including in a one-tomany “broadcast” format.

 That the personal social networking services include features that allow users to find and connect with other users, to make it easier for each user to build and expand their set of personal connections.

Further, the suit has specifically distinguished the market for personal social networking with;

 the market for specialized social networking services like LinkedIn as these services are designed for and are utilized by a narrow and specialized set of users primarily for sharing a narrow and highly specialized category of content;

the market for online video or audio consumptionfocused services such as YouTube, Spotify, Netflix as users employ these for passive consumption and posting of specific media content (e.g., videos or music) from and to a wide audience of often unknown users. These services are not used primarily to communicate with friends, family, and other personal connections. the market for mobile messaging services as these do not feature a shared social space in which users can interact, and do not rely upon a social graph that supports users in making connections and sharing experiences with friends and family.

 ASSESSING DOMINANCE

 The second step in an ‘abuse of dominance’ investigation is to assess the market strength enjoyed by the enterprise. The strength of an enterprise is usually assessed through a variety of factors. The FTC’s complaint takes under consideration two important factors i.e. market share and entry barrier, to show that Facebook holds a dominant position in the relevant market.

The suit alleges that Facebook has maintained a dominant share of more than 60% in the U.S. personal social networking market since the time of establishment, until the present day. The suit also alleges that Facebook’s dominant position in the U.S. personal social networking market is resilient, due to significant entry barriers, like direct network effects and high switching costs. A strong network effect is a significant entry barrier because the personal social network is generally more valuable to a user when more of that user’s friends and family are already members, and hence a new entrant faces significant difficulties in attracting a sufficient user base to compete with Facebook. Therefore, even an entrant with a “better” product often cannot succeed against the overwhelming network effects enjoyed by a dominant personal social network.

Another significant entry barrier is in form of high switching costs, which means that the users are reluctant to shift to a new service provider because they have already built connections and develop a history of posts and shared experiences, which they would lose by switching to another personal social networking provider. Thus, significant entry barriers in the market facilitate Facebook’s continuing dominance.

ANTI-COMPETITIVE CONDUCT

FTC has accused Facebook of using its dominance and strength to deter, suppress and neutralise competition by either acquiring its competitors or by imposing anticompetitive conditions that automatically drive its competitors out of the market.

 FTC has alleged that due to the strong network effect existing in the digital market, a competing product can only become relevant at moments of social transition, for instance, with the advent of smartphones, there was a significant transition in personal social networking because smartphones were portable and offered integrated digital cameras, making social networking with family and friends through taking, sharing, and commenting on photographs via a mobile app optimized for that activity increasingly popular. However, Facebook was struggling to provide a strong user experience for this kind of personal social activity. It was built and optimized for desktop use, not smartphones, and its performance with sharing photos on mobile devices was weak. Facebook feared that its personal social networking monopoly would be toppled by a mobilefirst, photo-based competitor emerging and gaining traction. It was soon clear that Instagram was just that competitor and thus Facebook decided to buy than to compete. In sum, Facebook’s acquisition and control of Instagram represent the neutralization of a significant threat to Facebook Blue’s personal social networking monopoly and the unlawful maintenance of that monopoly by means other than merits competition.

Similarly, FTC’s complaint throws light on another social transition that started around 2010 in consequence of the increased popularity of smartphones. Consumers shifted from using traditional shortmessage-service (“SMS”) to using text messaging via the internet through overthe-top mobile messaging apps (“OTT Mobile Messaging Services”). At that time, Whatsapp was emerging as an increasingly popular OTT mobile messaging app. As a result, Whatsapp posed a threat to make a move into the personal social networking market. Facebook’s leadership feared that Whatsapp would serve as a path for a serious competitive threat to enter the personal social networking market as a mobile messaging app as it had reached sufficient scale and just by adding additional features and functionalities, it could enter the personal social networking market at competitive scale and undermine or displace Facebook’s social networking monopoly. Therefore, Facebook neutralized yet another threat by acquiring Whatsapp.

This conduct of Facebook deprived users of the benefits of competition from an independent Instagram or Whatsapp, which had the potential to penetrate the U.S personal social networking market. Moreover, Whatsapp’s strong focus on the protection of user privacy and Instagram’s unique functionality could have provided an important form of product differentiation for them to be an independent competitive threat in personal social networking. The third aspect of the FTC’s complaint stresses on the imposition of unfair trade conditions by Facebook on access to its valuable platform interconnections – APIs, that it makes available to third-party software applications. To communicate with Facebook ((i.e., send data to Facebook, or retrieve data from Facebook) third-party apps must use Facebook APIs. FTC has alleged that for many years, Facebook has made key APIs available to third-party apps only on the condition that they refrain from providing the same core functions that Facebook offers, including Facebook Blue and Facebook Messenger, and also refrain from connecting with or promoting other social networks. These conditions have helped Facebook maintain its monopoly in personal social networking, in two ways:

First, these restrictive conditions have deterred thirdparty apps that relied upon the Facebook ecosystem, from including features and functionalities that might compete with Facebook or from engaging with other firms that compete with Facebook. This deterrence, according to FTC, suppresses the emergence of threats to Facebook’s personal social networking monopoly.

 Second, the enforcement of these conditions by terminating access to valuable APIs hinders and prevents promising apps from evolving into competitors that could threaten Facebook’s personal social networking monopoly.

 FACEBOOK’S DEFENCE

Facebook has responded to these charges in an extensive post calling these lawsuits as revisionist history. Facebook’s defence can be divided into two parts:

On the acquisition of Instagram and Whatsapp, Facebook primarily contends that the FTC which had itself approved the mergers years ago, cannot now retroactively kill those mergers. Moreover, Facebook has pressed on the defence of ‘consumer benefit’. It argues that both the acquisitions have resulted in better products for consumers. Since the merger, Instagram has grown over a billion users worldwide due to improved features and better experiences. Meanwhile, Facebook has enabled Instagram to help millions of businesses engage their customers and grow. Similarly, Facebook made WhatsApp free worldwide, adding valuable new features like voice and video calling, and making it more secure by encrypting it end-to-end.

On the accusation about the imposition of anti-competitive conditions, Facebook maintains that it had created this platform for innovation on which millions of developers have created new apps, but there are certain thirdparty apps which unfairly duplicate services already being provided by Facebook. The objective behind the imposition of such conditions is to only avoid the use of Facebook’s platform to essentially replicate Facebook. Moreover, these restrictions are standard in the industry, where platforms give restricted access to other developers, while many do not provide access at all, but all of this is only to prevent duplication of core functions.

REMEDYING THE DISTORTION OF COMPETITION BY A MERGER: WHAT DOES THE INDIAN REGIME HOLD?

The FTC’s lawsuit has attracted a lot of academic discussion on powers of antitrust authorities globally to kill mergers retroactively, which they once approved. Under the US Antitrust regime, the Hart-Scott-Rodino Act provides a mechanism for agency review of and preconsummation challenges to reported mergers through a challenge under S. 7 of the Clayton Act. Moreover, nothing in the statute prohibits the agencies from challenging a reported merger at some later stage, including after merger review, merger clearance, and merger consummation. In fact, Section 7(A)(i) of the Hart-Scott-Rodino Act states that any action under this section shall not bar any proceeding or any action with respect to such acquisition at any time under any other section of this Act or any other provision of law. Thus, by the express terms of Section 7(A)(i), the fact that the agencies reviewed and cleared a reported merger does not preclude the agencies from challenging the transaction at a later date.

 This problem is more complex under the Indian competition regime as there is nothing like Section 7(A)(i) under the Indian Competition Act. Moreover, under the Indian merger control regime, the transaction which meet the jurisdictional threshold provided under Section 5 constitues a combination and requires the approval of the CCI, while the trasnations which do not neet the threshold limits of S. do not require prior approval. The Indian problem can be analysed in three parts; first, whether the CCI can hear an ex-post challenge to a previously approved combination; second, whether the CCI can hear an ex-post challenge to an unnotified transaction; and third, whether the CCI has the power to grant a structural remedy in terms of causing the breakup of the merged firm or divestiture of the assets of the enterprise. In cases of previously approved mergers, the statute gives a categorical power to the CCI to conduct an expost review of such a merger. Under S. 20(1), Commission can inquire into whether a notified combination under S. 5 has caused or is likely to cause an appreciable adverse effect on competition in India. However, the proviso restricts such review only up to one year of consummation. The question then arises is whether the commission can hear an ex-post challenge after a year of consummation? The answer may lie in S. 3(1) of the Act since the provision specifically includes an acquisition agreement. Therefore, even after a year of consummation, nothing precludes the CCI from conducting an ex-post facto analysis of the acquisition agreement under Section 3. Needless to say, it has to be shown that such trasncation has caused AAEC in the marketSimilarly, for unnotified mergers, since no provision restricts an ex-post review, the CCI has valid powers under S. 3(1) to check the anti-competitive effect of such agreement at any point of time. In India, the problem with the FacebookInstagram-Whatsapp acquisition was that it was never notified as it didn’t fall under the threshold limit and therefore the commission couldn’t even conduct an ex-ante review. However, looking at the wide powers under S. 3(1), the commission today may certainly look at the acquisition agreements in light of the factors under S. 19(3) and pass necessary orders.

On the question of powers of the commission to break up the enterprises, S. 27 and S. 28 of the Indian Competition Act gives the commission vide enforcement powers to remedy the distorted competition in the market. S. 28 empowers the commission to direct division of an enterprise enjoying a dominant position to ensure that such an enterprise doesn’t abuse its dominant position. Moreover, S. 27(g) empowers the commission to pass any order or issue any direction to remedy the abuse of dominance. Thus, by using these unequivocal powers given to it by the statute, CCI can impose structural remedies on already consummated mergers, causing the breakup of the merged firm or divestiture of some of the acquired assets.

CONCLUSION

 It is one thing to see if the antitrust authorities theoretically possess the power to divest assets of a firm, and totally another thing to see if the antitrust authorities would use such power to demerge an enterprise. Despite the antitrust authorities’ ability to challenge reviewed and cleared mergers after the fact and the pro-competitive benefits of such ex-post challenges, the cases of such demergers are extremely rare. That’s the reason why the Competition and Markets Authority (“CMA”), even after finding tech giants abusing their dominance, didn’t take the responsibility of breaking them up. Technical experts have also vehemently argued against breaking up these tech giants as demergers might be counter-productive. Facebook has spent years integrating Instagram and WhatsApp: weaving their ad systems, user profiles, databases and other technology with Facebook. What to the public appear as distinct products are one giant social network on the back end. Therefore, the problem might not be solved only at the grant of prayer for demerger, the Courts would have to play a pivotal role in facilitating such de-merger, keeping in mind the importance of the tech-giant for the US economy. A famous line by an economist is worth keeping in mind, “it is dangerous to apply twentiethcentury economic intuitions to twenty-first-century economic problems”.

 Whether de-merger is the right solution or resorting to other remedies like compulsory licencing would be viable remains to be seen. However, in this process, one thing the authorities need to keep in mind is that the solution must cure the problem without compromising or disincentivising the innovation. It would be interesting to see how the court goes about developing the remedy package if it holds Facebook abusive of its dominant position.

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Legally Speaking

The Unresolved Issue of AMP Expenses in Transfer Pricing – India

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One of the most perplexing yet significant concepts within the Transfer Pricing Dispute Resolution is with regards to the Advertisement, Marking and Promoting (AMP) Expenses that are drawn by the Indian Entities of a company for the products of its foreign Associate Entity. This concept has been surrounded by controversy and confusion since its inception within the practice and study of Transfer Pricing and this is because of the absence of any statutes or regulations dealing with it and its jurisprudence is built purely on the judicial precedents that have been delivered by the Tribunals and High Courts, however, interestingly even the courts appear to have a tough time dealing with issues pertaining to AMP expenses.

The origin of this dispute can be traced back to the United States Tax Court in the case of United States v. DHL Corporation, after the introduction of the US Regulations of 1968 which introduced an important concept pertaining to “Developer Assister Rules” as per which the entity which has incurred the AMP Expenses (Developer) would be treated as the economic owner of the brand which is being marketed even though it might not be its legal owner, and the legal owner of the Brand i.e., the Assister need not pay any compensation for the use of the brand by the developer. These regulations were grounded on the notion of equitable ownership of a brand on the basis of the fiscal expenditure and the risk incurred by them, and the legal ownership of the brand has not to be taken as one of the criteria for ascertaining who would be considered as the developer of the Brand or the intangible property in question.

However, it is pertinent to consider that the Transfer Pricing Rules in America create a clear distinction between “Routine” and “Non-Routine” expenditure, which is essential to understand the issue of the monetary remuneration that is given to the domestic associated entity for marketing intangibles. In DHL, the court framed the Bright Line Test (BLT) which created a distinction between the routine and non-routine expenses that were incurred by the companies. According to the Bright Line Test, it is necessary to ascertain the non-routine expenses that have been incurred i.e., for marketing purposes in contrast to the routine expenses that the incurred by the brand’s distributor for product promotion while ascertaining the economic ownership of the intangible in question.

The issue pertaining to AMP expenses was first dealt with in the case of Maruti Suzuki India Ltd. v. Additional Commissioner of Income Tax [(2010) 328 ITR 210] before the Delhi High Court, where the Bench held that the Advertisement, Marketing and Promoting Expenses will be considered as an international transaction only in cases where it exceeds the costs and expenses that have been incurred by comparable domestic entities which are similarly situated. However, the Delhi High Court’s judgement was remanded following which it was challenged before the Honourable Supreme Court in Maruti Suzuki v. Additional Commissioner of Income Tax [2011] 335 ITR 121 (SC) where it was overturned by the Apex Court.

In LG Electronics India Pvt. Ltd. v Assistant Commissioner of Income Tax [(2013) 140 ITD 41 (Delhi) (SB)], the Delhi Bench of the ITAT referred to the precedent by the Delhi High Court in Maruti Suzuki and held that the as per Chapter X of the Income Tax Act, 1961 the Assessing Officer has the right to make an adjustment for Transfer Pricing vide application of the Bright Line Test in issues pertaining to the AMP expenses that have been drawn by the Indian Entity, since this would fall within the ambit of an international transaction, and this would be deduced from the proportionally higher AMP expenses that were incurred by the Domestic Entity in contrast to two similarly situated domestic entities. The Revenue’s understanding that the AMP expenses which are incurred by the Domestic Associated Entity will inevitably result in a benefit to the Foreign Associated Entity in terms of increasing its brand value along with the lack of lack adequate compensation to the latter for the same, is the primary reason behind its attempt to bring all expenses pertaining to advertising, marketing and promotion within the ambit of the country’s Transfer Pricing Laws, thus it takes the job of applying an Arm’s Length Prince on such transactions which are used for AMP and the test that is most widely employed for this purpose is the Bright Line Test which used by the court in the case of LG Electronics, where it looked at the Bright Line, which is a line drawn within the total expenditure for the purposes of AMP which signified the average spending for the same purpose by comparable entities and any amount which would exceed the line would be considered as an international transaction which would represent the expenses that were drawn by the domestic entity for the building the brand value of the Foreign Associated Entity’s product.

The precedent in Sony Ericsson proved to be a gamechanger wherein the court went to the extent of overruling all of the abovementioned judgements with regards to whether AMP Expenses by the Domestic Entity would be considered as an internal transaction. In this case, the court did not face any issues in determining whether it would constitute an international transaction since the entities had submitted that the international between the Foreign Associated Entity and the Domestic Entity also included the money for the purposes of AMP. While the Revenue had relied on the precedent in LG Electronics to show cause for their application of the Bright Line Test in determining the part of the expenses towards AMP that would be considered as an international transaction. However, the court reject the Revenue’s submissions and reasoning while holding that the Bright Line Test did not have legislative or statutory backing and thus the precedent in LG Electronics was overruled with regards to the use and applicability of the Bright Line Test for ascertaining international transactions since this would be considered as an outcome of judicial legislation.

After the precedent in Sony Ericsson there has been a drastic change in the judicial approach towards issues pertaining to AMP expenses within the realm of transfer pricing. However, since the Court has failed to elaborate upon what would constitute an international transaction in Sony Ericsson, the courts and tribunals have gone back to the phase of drowning in confusion to deal with cases pertaining to AMP expenses and have struggled with determining a proper method for the same.

A transfer pricing adjustment can only be made when it has met the statutory framework of highlighting the existence of an international transaction, determination of the price and fixing an ALP in compliance with Section 92 C of the Income Tax Act. While the element of the international transaction was not disputed in all of the aforementioned cases, the primary issue was with regards what would constitute an international a transaction. The definition of an international transaction as per the Income Tax Act includes the parties to have an agreement between themselves for such a transaction and a shared understanding with regards to the transaction and its purpose. In LG Electronics and other cases prior to Sony Ericson, the primary criteria that were adopted by the courted in ascertaining international transactions and unsaid understanding, were on the basis of proportionally higher expenses with reference to comparable i.e. the courts had adopted the Bright Line Test which had been deemed incompatible with the Income Tax Act of 1961

At a glance at most of the cases pertaining to this issue, the Revenue has resorted to proving the existence of international transactions on the basis of the Bright Line Test, and most of the revenue’s judgements also fail to highlight or prove the same, otherwise except for the unique cases in which the Assessee Domestic Associated Entity and the Foreign Associated Entity had a written agreement between the two of them. This issue is purely because of the lack of any regulatory or statutory provisions within the Income Tax Act, and this was also brought to attention by the court in Maruti Suzuki(2011). In the absence of Statutory provisions and the inability to apply the Bright Line Test because of the precedent in Sony Ericsson, it becomes impossible for the revenue in such cases, especially in the absence of a written or express agreement between the Domestic and Foreign Associated Entities, where it is forced to assess the Domestic Entity’s subjective intentions however this method was also rejected in Maruti Suzuki(2011).

While the decision in Sony Ericsson has left the Revenue and Courts baffled with regards to the method, they should use to ascertain international transactions in matters pertaining to AMP expenses, hopefully, this will finally come to a conclusion since it is currently being heard by the Country’s Apex Court. It is of the utmost importance for the Apex Court to elaborate upon the method and procedure that must be followed by the revenue in determining cases pertaining AMP expenses and issue guidelines for the same.

The origin of this dispute can be traced back to the United States Tax Court in the case of United States v. DHL Corporation, after the introduction of the US Regulations of 1968 which introduced an important concept pertaining to “Developer Assister Rules” as per which the entity which has incurred the AMP Expenses (Developer) would be treated as the economic owner of the brand which is being marketed even though it might not be its legal owner, and the legal owner of the Brand i.e., the Assister need not pay any compensation for the use of the brand by the developer. These regulations were grounded on the notion of equitable ownership of a brand on the basis of the fiscal expenditure and the risk incurred by them, and the legal ownership of the brand has not to be taken as one of the criteria for ascertaining who would be considered as the developer of the Brand or the intangible property in question.

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INSURANCE COMPANY SHOULD NOT SEEK DOCUMENTS WHICH ARE BEYOND THE CONTROL OF INSURED TO FURNISH, SAYS SUPREME COURT WHILE SETTLING CLAIM

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The Supreme Court in the case Gurmel Singh vs Branch Manager, National Insurance Co. Ltd observed that due to circumstances which is beyond the insured control and which the insured is not in a position to produce while settling the claims, the insurance company need not be too technical and ask for documents.

While settling the claim, it is found that the insurance companies are refusing the claim on flimsy grounds and/ or technical grounds further which the insured is not in a position to produce due to circumstances beyond his control, While settling the claims, the insurance company should not be too technical and ask for the document As the insurance company ought not to have become too technical and ought not to have refused to settle the claim on non­ submission of the duplicate certified copy of certificate of registration as due to the circumstances beyond his control, the appellant could not produce on payment of huge sum by way of premium and the Truck was stolen, once there was a valid insurance. As the appellant was asked to produce the documents which are beyond the control of the appellant to produce and furnish those documents.

An amount of Rs. 12 lakhs along with interest @ 7 per cent from the date of submitting the claim, the appellant is entitled to the insurance and to pay the litigation cost of Rs. 25,000 to the appellant, the court held while allowing the appeal.

the insurance company has become too technical while settling the claim and the insurance company has acted arbitrarily, observed by the court in this case.

As when an appellant produced the registration particulars which has been provided by the RTO and further the appellant had produced the photocopy of certificate of registration and was just being solely on the ground that the original certificate of registration i.e., which has been stolen is not produced and the non-settlement of claim can be said to be deficiency in service. Therefore, the Insurance companies are refusing the claim on flimsy grounds and/or technical grounds, the facts and circumstances of the case. Furthermore, the appellant had tried his best to get the duplicate certified copy of certificate of registration of the Truck. the insurance company must have received the copy of the certificate of registration, even at the time of taking the insurance policy and getting the insurance.

the appellant has not produced either the original certificate of registration or even the duplicate certified copy of certificate of registration issued by the RTO, mainly on the ground the insurance company has not been settled in an appeal before the Apex Court. The bench further noted that the photocopy 5 of certificate of registration and other registration particulars as provided by the RTO, was being produced by the appellant.

The bench comprising of Justice MR Shah and the justice BV Nagarathna observed and contended that, in many cases, it is found that the insurance companies are refusing the claim on flimsy grounds and/or technical grounds.

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Supreme Court seeks response of Union and states on plea for guidelines to prevent sexual harassment of students in schools

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The Supreme Court in the case Nakkheeran Gopal v UOI & Or’s observed that any kind of harassment including the sexual harassment being carried out at educational institutions The Court while allowing the writ petition issued a notice seeking protection of children.

The plea stated that there is a vicarious liability upon the State Government to implement any law for the well-being and also for the protection of the children in their respective states.

the petition states that to implement any law for the well-being of children and also for the protection of the children in their respective states, it is the responsibility of the State Government and the plea further mentioned that it the vicarious liability of the State Government and It will be considered the lapse on the part of the State Government if there is Any lapse on the part of the educational institution as it remains a crucial department in the State Government With respect to the relevant organization, including Educational Institution, stated in the plea before the court.

The petitioner argued that till date no specific mandate or the law or the guidelines have been issued by the respective States and inspire of alarming rate in the offence against the children especially at school premises.

The petition further states with this regard that children can also themselves be coerced into becoming tools in furtherance of illegal and dangerous activities and under this circumstance the Increased online time can lead to grooming and both online and offline exploitation.

It is essential to ensure the constitutional right to dignity of children provided under Article 21 of the Constitution of India, while protecting children against sexual abuse when they are exposed to predators, which is compromised, stated by the petitioner in the plea.

The petition states that it indicates immediate concerns and measures for intervention are of paramount significance and further the court stated that this calls for the implementation of legislative actions and community-based interventions through virtual media to prevent a further rise in the statistics and to ensure child protection and when the safety of the children is at stake especially at educational institutions which is supposedly to be the safest shelter, and that too during this tough time. As it is necessary to Protecting the basic rights of children and is of utmost concern as otherwise there will be a posting of a substantial threat to the future and this would leave a regressive impression.

It is the fundamental right of the children under Constitution of India to engage and study in an environment when he/ she feels safe from any kind of emotional or physical abuse and is free, further being argued in the petition.

The bench comprising of Justice Indira Banerjee and the Justice CT Ravikumar observed and sought responses of the Union and the States for guidelines for the educational institutions for the protection of the children and also for the enforcement of the fundamental rights of Children at the educational institutions.

It is essential to ensure the constitutional right to dignity of children provided under Article 21 of the Constitution of India, while protecting children against sexual abuse when they are exposed to predators, which is compromised, stated by the petitioner in the plea.

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IN MEDICAL NEGLIGENCE COMPENSATION CLAIMS, MCI FINDINGS REGARDING DOCTORS’ PROFESSIONAL CONDUCT HAVE GREAT RELEVANCE: SC

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The Supreme Court in the case Harnek Singh vs Gurmit Singh observed while considering medical negligence compensation claims that the findings of the report of Medical Council of India on professional conduct of doctors are relevant.

from the date of SCDRC order as compensation thereafter the court directed the Respondents to pay to the complainants a total amount of Rs. 25,00,000 with interest @ 6% per annum. the complainants have made out a case of medical negligence against Respondents 1 and 2 and are entitled to seek compensation on the ground of deficiency of service and the court hold that the decision of the NCDRC deserves to be set aside. in reversing the findings of the SCDRC and not adverting to the evidence on record including the report of the MCI, the court is of the opinion that the NCDRC has committed an error. The case of medical negligence leading to deficiency in his services, the above-referred findings of the MCI on the conduct of Respondent 1 leave no doubt in our mind that this is certainly, observed by the bench.

The bench further observed that he opinion and findings of the MCI regarding the professional conduct of Respondent 1 have great relevance while referring to the contents in the report of MCI.

The issue raises in the above-mentioned case is weather a professional negligence is established by the complainant as per the standards governing the duty to care of a medical practitioner on the part of Respondent As the NCDRC gave its decision without referring to the MCI finding the complainants/appellants submitted, in an appeal submitted by the Apex Court. this complaint got summarily disposed of and they filed appeals before Medical Council Of India The Ethics Committee of MCI held one doctor medically negligent and issued a strict warning to be more careful during the procedure and to be more diligent in treating and monitoring his patients during and after the operation he complainants had also made a complaint to the Punjab State Medical Council against the professional misconduct of the doctors, hospitals, surgeons, While the proceedings were pending before the SCDRC.

the complaint and two among the opposite parties were allowed by SCDRC to directly pay Rs. 15,44,000 jointly and severally and Rs. 10,000 as costs as the appeal was allowed by The National Consumer Disputes Redressal Commission of these opposite parties and set aside the order of the SCDRC holding that negligence was not proved by the complainants.

The bench comprising of Justice UU Lalit, justice S. Ravindra Bhat and the justice PS Narasimha also observed and contended the question of intention does not arise that in the proceedings for damages due to professional negligence.

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WHERE THE CLAIMS OF EVENTS HAVE BEEN SUCCESSFULLY ESTABLISHED BY THE PROSECUTION, SECTION 106 OF THE EVIDENCE ACT APPLIES TO CASES: SUPREME COURT

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The Supreme Court in the case Sabitri Samantaray vs State of Odisha observed here chain of events has been successfully established by the prosecution, from which a reasonable inference is made out against the accused, the Section 106 of the Indian Evidence Act applies to cases.

in light of Section 106 of the Evidence Act the High Court rightly observed that as how the deceased lost his life and the onus was now on the appellants to disclose further the court observed that the appellants have failed to offer any credible defense in this regard and it can be deduced that the entire sequence of events strongly point towards the guilt of the accused appellants the burden was on the appellants to prove it otherwise as once the prosecution had successfully established the chain of events.

in the light of the statements made by all the sets of witnesses, with such an intention when analyzed and the fatal injuries sustained by the deceased at the relevant place and time further the court contended while dismissing the plea that it certainly makes out a strong case that death of the deceased was indeed caused by the appellants. in establishing intention of the accused-appellants for the commission of the offence, the prosecution has succeeded, the Court notice.

whenever an incriminating question is posed to the accused and he or she either evades response, or offers a response which is not true, in a case based on circumstantial evidence then in the chain of events such a response in itself becomes an additional link, when a case is based on circumstantial evidence As Section 106 of the Evidence Act from its burden to establish the guilt of an accused is in no way aimed at relieving the prosecution. where chain of events has been successfully established by the prosecution, it only applies to those cases from which a reasonable inference is made out against the accused.

the Section 106 it merely prescribes that when an individual has done an act and in no way exonerates the prosecution from discharging its burden of proof beyond reasonable doubt Thereafter the onus of proving that specific intention falls onto 9 the individual and not on the prosecution. If the accused had a different intention than the facts are specially within his knowledge which he must prove, with an intention other than that which the circumstances indicate. As the Section 106 of the Evidence Act postulates that the burden of proving things which are within the special knowledge of an individual is on that individual. Although the Section in no way exonerates the prosecution from discharging its burden of proof beyond reasonable doubt, observed by the Bench as the said provisions Since it is all based upon the interpretation of Section 106 Evidence Act, the contentions of either

the bench comprising of CJI NV Ramana, Justice Krishna Murari and the justice Hima Kohli observed and contended whenever an incriminating question is posed to the accused and he or she either evades response or that which being offers a response is not true then such a response in itself becomes an additional link in the chain of event, in a case based on circumstantial evidence.

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Legally Speaking

A candidate has no legal right to insist that the recruitment process set in motion be carried to its logical end: SC

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The Supreme Court in the present case Employees State Insurance Corporation vs Dr. Vinay Kumar observed that the recruitment process set in motion be carried to its logical end as the candidate does not have a legal right to insist.

The bench directed the Corporation-appellants to take a decision regarding whether to complete the recruitment process, bearing in mind all relevant aspects within a period of two months, while allowing the appeal further it stated there is however no doubt from holding that the employer is free to act in an arbitrary manner.

A recruitment process which is set in motion be carried to its logical end candidate who has applied does not have a legal right to insist that Even in the select list may not clothe the candidate with such a right and that too even in the inclusion of a candidate.

A recruitment process carried to its logical end and the process set in motion, the candidate who applied does not have the legal right and thereafter the court further contended that the cardinal principle we must bear in mind is that this is a case of direct recruitment, observed by the bench.

The Court further said that it is quite likely that any candidate who may have being desirous of applying, may not have applied being discouraged by the fact that the advertisement has been put on hold and by agreeing with the applicant the court contended and said that the direction to conclude the proceedings within 45 days is unsupportable.

The recruitment process set in motion be carried to its logical end and the Candidate who has applied does not have a legal right to insist the recruitment process.

The ground raised by the appellants for not proceeding with the procedure of direct recruitment is untenable, the respondent contended before the court and on the other hand on account of certain developments which took place, there may really be no need to fill up the post of Associate Professor and the respondent may not have a right as such, the appellant contended before the Apex Court.

The High Court which dismissed the writ petition filled by the Corporation and it directed the Corporation to conclude the process positively within a period of 45 day. the Corporation filed appeal before the Apex Court, Aggrieved with this direction.

The bench comprising of Justice KM Joseph and the justice Hrishikesh Roy observed that Even inclusion of a candidate in the select list may not clothe the candidate with such a right and it does not mean that the employer is free to act in an arbitrary manner, the bench clarified.

The recruitment process set in motion be carried to its logical end and the Candidate who has applied does not have a legal right to insist the recruitment process.

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