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Homebuyers under IBC: United they stand, divided they fall

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“If you have to fight for what’s your own, you are either the Pandavas or an Indian homebuyer”

 What goes as a jovial proverb amidst the real estate lobby is an apt depiction of the never-ending ordeal of the homebuyers. The primary reason as to why an Indian homebuyer is an emotional litigant is that in almost all middleincome societies, a home is not a mere investment or an asset but a structure of accomplishment, mostly irrigated with lifetime savings and fueled with a dream to own a house. A new chapter to the plight of the homebuyers was recently inserted by virtue of the Insolvency and Bankruptcy Code (Amendment) Ordinance, 2019 (“Ordinance”) passed on 28.12.2019 [1], which was later fortified into the Insolvency and the Bankruptcy Code (Amendment) Act, 2020 (“Amending Act”) dated 13.03.2020 [2]. The Amending Act amended Section 7 of the Insolvency and bankruptcy Code, 2016 (“Code”) among many others and inserted the following proviso:

“Provided further that for financial creditors who are allottees under a real estate project, an application for initiating corporate insolvency resolution process against the corporate debtor shall be filed jointly by not less than one hundred of such allottees under the same real estate project or not less than ten per cent. of the total number of such allottees under the same real estate project, whichever is less.”

The implications of inserting the said proviso are that an individual homebuyer would now be ineligible to file an application for initiating insolvency proceedings against the prospective Corporate Debtor under the Code.

Deciphering the decision of the Supreme Court

The Supreme Court in a welcoming decision in Pioneer Urban land and Infrastructure Ltd. vs. Union of India [3] (“Pioneer’s case”) had held that homebuyers squarely fell within the category of Financial Creditors since the very inception of the Code and the 2018 amendment was a mere clarification to the same effect. What deserves a keen inspection is the fact that the Supreme Court in Pioneer’s case had dealt with an “individual homebuyer”. If the proviso in question of the Amending Act is read in a superimposed manner with the decision in Pioneer’s case, it can be rightly deduced that the present amendment runs contrary to the decision of the SC owing to the fact that the Supreme Court held that it was the individual right of every homebuyer to be treated as a Financial Creditor. The present amendment adds a qualification to the eligibility of the homebuyer which the Apex court did not intend to.

 Is legislature empowered enough?

 The Proviso to Section 7 of the Amending Act disqualifying the individual homebuyers is wrapped in a bubble pack of retrospective application. The third proviso to Section 7 of the Amending act states that all applications filed by the real estate allottees which were pending before the Adjudicating Authority shall have to comply with the qualifications stipulated in the first and second proviso. However, this is clearly contrary to the position of law upheld in the case of The State of Karnataka Vs. The Karnataka Pawn brokers Association & Ors. [4] wherein it was held that:

“However, the Legislature cannot set at naught the judgments which have been pronounced by amending the law not for the purpose of making corrections or removing anomalies but to bring in new provisions which did not exist earlier. The Legislature may have the power to remove the basis or foundation of the judicial pronouncement but the Legislature cannot overturn or set aside the judgment, that too retrospectively by introducing a new provision. The legislature is bound by the mandamus issued by the Court. A judicial pronouncement is always binding unless the very fundamentals on which it is based are altered and the decision could not have been given in the altered circumstances. The Legislature cannot, by way of introducing an amendment, overturn a judicial pronouncement and declare it to be wrong or a nullity. What the Legislature can do is to amend the provisions of the statute to remove the basis of the judgment.”

Fathom a scenario wherein post the judgment of the Supreme Court in Pioneer’s case, a homebuyer had moved an application before the Adjudicating Authority in relation to a real estate project. Post the ordinance, the application of the homebuyer would become non-maintainable since he had to fulfil a subsequent eligibility criterion which technically snatches away his entitlement to be a financial creditor. This clearly replicates a scenario wherein a new provision has been added without removing the basis of the judgment in Pioneer.

Classic Scenario of Creating a Class within a Class

 The most precious vertex of the golden triangle of fundamental rights vests in Article 14 [5] of the Constitution of India. The aforesaid article guarantees the right to equality to all citizens of the country. It is a well settled position of law that creating a class within a class of citizens is a brutal violation of the right to equality. In the case of Sansar Chand Atri Vs. State of Punjab [6] the Supreme Court had held that creation of a sub class within a class of petitioners was manifestly arbitrary.

Further in the case of D.S. Nakara Vs. Union of India [7], the Supreme Court while deciding a dispute wherein the pensioners were differentiated on the basis of a cut-off retirement date held that such a differentiation would not amount to an intelligible differentia and created a class within a class of the petitioners and accordingly held the said differentiation to be violative of Article 14 of the Constitution.

In the present scenario, the Apex Court had held the real estate allottees fell within the definition of Financial Creditors. To conclude whether the Apex Court chose to treat the Financial Creditors differently, a glancing resort needs to be made to the definition of Financial Debt under Section 5(8) of the Code which states that:

“financial debt means a debt alongwith interest, if any, which is disbursed against the consideration for the time value of money….”

 Thus, the defining factor of a Financial Debt clearly comes out to be a consideration for time value of money. The Supreme Court in Pioneer’s Case had held that:

“In real estate projects, money is raised from the allottee, being raised against consideration for the time value of money.”

 It further held that:

“In real estate projects, money is raised from the allottee, being raised against consideration for the time value of money.”

As apparent it could be, the SC has applied the same test as it would have applied to any other Financial Creditor and did not indicate a homebuyer as any different to a Financial Creditor under Section 7. Even if the legislature intends to raise a placard of intelligible differentia on the basis of the misuse of the Code by an individual allottee, the Supreme Court in Pioneer’s case stated that:

“The Code is thus a beneficial legislation which can be triggered to put the corporate debtor back on its feet in the interest of unsecured creditors like allottees, who are vitally interested in the financial health of the corporate debtor, so that a replaced management may then carry out the real estate project as originally envisaged and deliver the flat/apartment as soon as possible and/or pay compensation in the event of late delivery, or non-delivery, or refund amounts advanced together with interest.”

 Thus, unless the State decided to pull a rabbit out of a hat, there is no apparent intelligible differentia, from treating the Homebuyers as a separate set of creditors under Section 7 of the Code. More so, while other financial creditors had a choice to either file a petition under Section 7 of the Code either individually or jointly, it is mandatory for a real estate allottee to file the said petition jointly with other real estate allottees.

The HCC Case Déjà vu

An analogical overview of the present scenario would reveal a similarity of situation already experienced by the Supreme Court in the case of HCC Limited Vs. Union of India [8] (“HCC Case”). In BCCI Vs. Kochi Cricket Pvt. Ltd. [9] (“BCCI Case”), the Supreme Court had explained the scope of the 2015 amendment in the Arbitration and Conciliation Act, 1996. Likewise, in Pioneer’s case the Supreme Court had decided upon the scope of the 2018 amendment. Post the BCCI Case an amendment was brought by virtue of Section 87 which technically nullified the decision in the BCCI Case. Similarly, in the present scenario the Amending Act partially nullifies the judgment in the Pioneer’s case by adding additional qualifications for the homebuyers. In the HCC Case, the Supreme Court rightly held that it was not correct on the part of the legislature to nullify a judgment of the court without removing its basis. Thus, an analogical streamlining would indicate that in the present scenario the legislature has again relied on its footmarks in the HCC Case which were eventually wiped out by the Ape Court. It is likely that the Supreme Court might adapt an analogous approach in deciding the challenge to the Amendment Act owing to the uncanny similarities in the factual matrix of the HCC Case and the pending challenge to the inserted proviso to Section 7 of the Code.

The Way Ahead

 • It would be correct to say that the said amendment is likely to reduce the litigation that could be initiated by the real estate allottees against developers and a misuse of the Code as a debt enforcement mechanism would come to a halt. However, a sustainment of the proviso to Section 7 of the Amending Act would surely be detrimental to the rights of the real estate allottees, statutory and constitutional.

• The aforesaid proviso, if sustains, would be available at the disposal of the developer, wherein it could enter into settlements with a few buyers to make sure that the qualification quorum remains a far-fetched reality.

• With an increase in the amount of default under Section 4 of the Code from Rs. 1 lakh to Rs. 1 Crore, other Financial Creditors could form consortiums with individual homebuyers, to increase the threshold limit, thus allowing the homebuyer to take the backdoor route and rendering the amended proviso to be a futile provision.

It would be interesting to see as to how the Apex Court would balance the scales in the case of Manish Kumar Vs. Union of India [10] along with other petitions wherein a challenge has been made to the Provisos to Section 7 of the Amending Act to be violative of Article 14 of the Constitution of India. It is likely that the all the issues would be zeroed down to the existence of any intelligible differentia between the homebuyers and all the other Financial Creditors in order to ensure that the amendment sails through the deep waters of Article 14.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

Ambika Pratiyush Swain is Managing Associate, L&L Partners Law Offices, and Siddhant Grover is a mentee at L&L Partners Law Offices.

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Analysis of the legal aspects of anticipatory bail: Law and reality

Shivanshu Goswami

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INTRODUCTION

 In Black’s Law Dictionary, bail has been defined as “a security such as cash or bond especially security required by a court for the release of a prisoner who must appear at a future date.”

This constitutes a very important element in our entire criminal justice system because it concerns the personal liberty of an individual, our constitution places personal liberty at a very high pedestal. The Hon’ble Supreme Court at many instances has emphasised the importance of following due process in the matter of arresting. The law regarding bails as well as anticipatory bail is all about balancing, on the one hand there is presumption of innocence, the right to liberty etc. on the other there is public interest it is the courts that has to somehow reconcile the tool. Thus the factual matrix of each case is important for the grant of a bail or a anticipatory bail application. The power of section 438 Cr.P.C being an extraordinary remedy has to be exercised sparingly. The Supreme Court in the case of Kamlapati v. State of West Bengal,1980 SCC (2) 91 defines bail as a technique which is evolved for effecting the synthesis of two basic concepts of human value, viz., the right of an accused to enjoy his personal freedom and the public’s interest on which a person’s release is conditioned on the surety to produce the accused person in the Court to stand the trial.‟ Now basically the bail and anticipatory bail are different to each other in terms that anticipatory bail is a pre arrest bail whereas a regular bail is a bail after the event of arrest has taken place. The guidelines and concepts are different between bail and anticipatory bail. Further discussing about the anticipatory bail, The innocence of an individual can’t be questioned till he’s established guilty in a criminal trial, bail is concomitant and inherently tangled with a person’s right to innocence and freedom till established guilty. Anticipatory bail may be a leap forward during this notion that permits the person to retain his right to freedom within the anticipation of his arrest with a reasonable cause. Way back The Hon’ble Supreme court in the case of Balchand Jain vs State of MP 1977 AIR 366,1977 SCR (2) 52. Court had observed Anticipatory bail means a bail in anticipation of arrest .

 In the Cr.P.C., 1898, there was no provision similar to section 438 of the 1973 Code which could provide for anticipatory bail. Anticipatory bail was, however, granted in certain cases by the High Courts’ inherent powers although the dominant read negatived the existence of any such jurisdiction. The Law Commission in its 41st Report, recommended the indulgence of a provision within the Code enabling the high court judicature and also the Court of Session to grant “anticipatory bail”. The Commission viewed that “the necessity for granting anticipatory bail arises chiefly as a result of typically authoritative persons attempt to implicate their rivals in false cases for the aim of disgracing them or for alternative functions by obtaining them detained in jail for a few days. As of late, this inclination is giving indications of consistent increment. Aside from false cases, where there are sensible reason for holding that an individual blamed for an offense isn’t probably going to steal away, or in any case abuse his freedom while on bail, there appears to be no support to require him first to submit to care, stay in jail for certain days and afterward apply for bail.A judgement which needs to be pointed out is a Constitutional Bench Judgement in the case of Gurubaksh Singh Sibbia v. State of Punjab,(1980) 2 SCC 565(1980) SCC (Cri)465.The Constitution Bench in this case consisting of five judges bench emphasized that provision of anticipatory bail enriched in Section 438 of Cr.P.C is conceptualised under Article 21 of the Constitution which relates to personal liberty, therefore such a provision calls for liberal interpretation of Section 438 Cr.P.C in the light of Article 21 of the Constitution. The court also stated that there is no restriction that anticipatory bail should be given in exceptional cases, Section 438 should be in short always be interpreted in the light of Article 21 of the constitution it held granting of anticipatory bail is a matter of right of individual should not be limited by time and court can impose restrictions on case to case basis. Whereas, In Salauddin Abdulsamad Shaikh vs State of Maharashtra (1995) case: SC overruled its earlier judgment and held that “granting of anticipatory Bail should be limited by time. “Finally in Siddharam Satlingappa Mhetre v. State of Maharashtra (2011) 1 SCC 694 The Supreme court laid down firm guidelines in granting the anticipatory bail.

Also when in a case the court grants anticipatory bail, what it does is to make an order that in the event of arrest, a person shall be released on bail unless a person is arrested and, therefore, it is only upon arrest that an order granting ‘anticipatory bail’ becomes operational. This very thing is to be understood properly that anticipatory bail order becomes active when the police or the investigation agency initiates to arrest the person and the event of arrest shall take place.

Scope of Anticipatory Bail

The offences has been categorized generally into two categories bailable offences and the non bailable offences ,in terms of the bailable offences the bail is treated as the right of the accused person while under the category of non bailable offences the bail is to be considers as the discretion of the Court adjudicating the application of bail keeping in mind the very thing that the accused should not be deprived of his fundamental rights as well as the society will not suffer because of the accused if he has been granted bail. Now,Anticipatory bail is granted in anticipation of arrest the anticipatory bail ensure freedom till the regular bail application decided by the Court. It means where a person has a reasonable ground that he may be arrested for an non-bailable offence by the police on suspicion, to prevent such arrest the person moves an application in an appropriate court seeking bail in advance prior to his arrest this procedure is called anticipatory bail. Where the application of the person has been allowed then he shall show that order of Court regarding anticipatory bail when the police come to arrest him, on producing such order the person shall be released on bail. This option of anticipatory bail is available to every person who is been suspected of committing or involved in some non-bailable crime or offence.

The High Court and the Session Court both have concurrent jurisdiction to hear the anticipatory bail, but in general practise as a matter of alternative remedy it is preferred to file a bail firstly before a session court and thereafter the High Court. Under section 438 the specific word which differentiate it with other sections relating to bail is “if it thinks fit” these words means that Courts have been given discretionary powers to grant anticipatory bail in non bailable offences.

The court of session or high court can grant anticipatory bail (both having concurrent jurisdiction) after considering the following factors:

1. Gravity of allegations

2. Antecedents of the accused approaching for the anticipatory bail

3. Chances to flee from justice

4. Chances that he may threaten the witnesses and tamper the evidences.

5. Whether any malicious prosecution is possible

Once a person has been enlarged on Anticipatory Bail, if arrested he would be released forthwith by the Officer-in-charge and if the court has to issue warrant, it would be a bailable warrant in first instance only. Though only Court of Session and High Court has power to grant Anticipatory Bail, a Special Leave Petition against the order of High Court is also maintainable if admitted by Supreme Court. A person may apply directly in High Court or approach High Court on dismissal of Anticipatory Bail application by Session Court.

 In a recent pronouncement The Supreme Court in Sushila Aggarwal v. State of NCT of Delhi (2020) case delivered a significant verdict, ruling that ordinarily no time limit can be set while granting anticipatory Bail and it can continue even until the end of the trial. The Court made reference of India’s freedom movement claiming that arbitrary arrests, indefinite detentions, and lack of institutional safeguards played an important role in rallying the people to raise the demand for Independence. A five judges bench observed that if any court which wants to limit the bail it can attach special features to it.There should not be any general rule but it is up to entirely upon the discretion of the court

 Thus in this case the scope of anticipatory bail has been extended but in a case if the proceedings of proclamation and attachment has been issued against the accused person then the limit of anticipatory bail will be effected.

Anticipatory Bail in the State of Uttar Pradesh

Anticipatory bail under section 438 was precluded from the Code of Criminal procedure (Uttar Pradesh amendment Act), 1976. This made anticipatory bail seekers surge either to the High Court or to the

Hon’ble Supreme Court. The Constitution vests powers under Article 246(2) to states to frame laws on the topics counted inside the concurrent list. The concurrent list secures uniformity within the main principle of law throughout country then on avoid excessive rigidity to two-list distribution. In this way, the states cause laws regarding to their political, social, financial and different necessities of that area. The crisis stage made it the necessity of great importance for the state to enact on certain current laws in order to check socio-political showings. Consequently, activities taken by the territory of Uttar Pradesh are frequently validated. Nonetheless, the execution shouldn’t be in a self-assertive way where the re-inclusion of the Segment in regards to anticipatory bail wasn’t started and joined till next 43 years bringing about the negation of the fundamental rights appreciated by the residents presented by the constitution Along these lines, it totally was significant that the justification for anticipatory bail be developed in Uttar Pradesh in such manner that central thought is given to the standard of crucial rights and produce the instrument at standard with the contrary conditions of India. There was a constant interest for its recovery and a few writ petitions were additionally documented. The State Law Commission had suggested rebuilding of this arrangement in its third report in 2009. An advisory group was comprised by the state government under the chairmanship of Additional Chief Secretary to the Uttar Pradesh Government of the Home Department, Special Secretary of the Legislatives, DG Prosecution and Additional Director General of Police (Crime) had also recommended the restoration of the provision. Thus, the provision of the anticipatory bail has been reinstated in Uttar Pradesh, providing the remedy for the accused to get anticipatory bail in non-bailable offences. The Allahabad High court and the apex court had been pressing the state government to re-apply this law. Thus the Section is laid down on the road map of the 2005 Amendment of the Cr.P.C. as provided under section 438(1),(2), (1A) and further providing State amendments as:-

 1. The disposal of the application of Anticipatory bail should be within 30 days by the sessions court or the high court

2.If an application has been filed before high court because of the concurrent jurisdiction and the same is disposed of the same application will not be filed in the sessions court.

3. The person will not be enlarged on anticipatory bail in the offences of the following Acts

(i) The Unlawful activities (Prevention) Act, 1967

(ii) The Narcotic Drugs and Psychotropic Substances Act, 198

(iii) The Official Secret Act, 1923

(iv) The Uttar Pradesh Gangsters and AntiSocial Activities (Prevention) Act, 1986

(v) Offences having punishment till death penalty.

Conclusion

Thus having discussed about the several judicial pronouncements of the apex court it can be rightly said in my opinion that there is no such hard and fast rule in the grant of anticipatory bail , In reality the discretion is of the court which is adjudicating the anticipatory bail application. The fundamental cannon of criminal jurisprudence that every individual is presumed to be innocent till he or she is found guilty should be followed by the court. Likewise the law-making body has not delineated court’s circumspection in any way while conceding expectant bail, along these lines, the court ought not restrict the request just for a predetermined period till the charge-sheet is filed and from that point constrain the denounced to give up and request regular bail under Section 439 of Code of Criminal Procedure. The governing body has given wide prudence to court in the matter of expectant bail in light of the fact that the court needs to apply it as per the specific situation and conditions of each case. The main rational behind the anticipatory bail is just like an insurance that an individual’s liberty is not being hampered unnecessarily and the trust pf people should be maintained in the criminal justice system. It is a device to protect the right of liberty of a person. Since many years, anticipatory bail has come to mean a safeguard for a person who has been falsely been implicated or charges made against him or her, most commonly because of enimity,as it ensures that if a person is falsely implicated he or she will be released because of this provision. Anticipatory bail is one amongst the foremost hotly debated subjects within the Indian criminal justice system. While, on one hand, it’s said to be the custodian of the basic right of life and liberty of a private, it’s also seen as some way to waste judicial time. in a very country that already battles extreme pendency of cases, the stakes do seem high Arbitrary and motivated arrests are an unfortunate reality in India and are only rising. Therefore, it might not be knowing strike down the supply of anticipatory bail as doing so would be detrimental to the guaranteed right of liberty. what’s essential is that a balance always is maintained between the non-public liberty of a personal and therefore the must maintain law and order in society. The courts should exercise their discretion wisely and in ways in which are just and fair, keeping in mind the principles of natural justice.

Adv. Shivanshu Goswami practises at the Lucknow Bench of the Allahabad High Court.

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Draft EIA Notification 2020: It may need a revisit by the executive

Vaibhav Choudhary

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The Ministry of Environment, Forest and Climate Change (MoEFCC) before the national lockdown has issued the Draft Environmental Impact Assessment (EIA) Notification 2020 for public consideration and comments. The draft notification is issued under the powers vested in the central government under the Environment (Protection) Act, 1986 to take all such measures for “protecting and improving the quality of the environment”. India notified its first EIA norms in 1994, setting in place a legal framework for regulating activities that access, utilise, and affect (pollute) natural resources. Every development project has been required to go through the EIA process for obtaining prior environmental clearance ever since. The 1994 EIA notification was replaced with a modified draft in 2006. The proposed draft notification is to incorporate the amendments and relevant court orders issued since 2006, and to make the EIA “process more transparent and expedient.”

Key Changes under the Draft EIA

 From bare reading it appears that the draft proposes new regime, which dilute EIA norms and public participation, protect project proponents, dilutes the existing mandatory provisions to discretionary ones, safeguarding violators and bring unaccountability and non transparency. However, the Government argues that the new draft notification is being brought in order to make the process more transparent and expedient by the implementation of an online system, further delegation, rationalisation and standardisation of the process. The Key features of the proposed notification include:

The draft has added almost sixty new definitions. The 2006 notification did not have any definitions clause, which made it difficult to ascertain the meaning of various terms used in the notification ;

 The draft mentions two types of approvals for e.g. prior environment clearance with expert committee’s appraisal and environmental permission without an expert committee’s appraisal for different category of projects;

All infrastructure projects and activities will be divided into three categories based on their potential social and environmental impacts and the extent of such impact;

 The draft proposed new expert body, namely, ‘the Technical Expert Committee’. The sole function of the TEC is categorising and re-categorising of projects as A, B1 and B2 on scientific principles on a regular basis. At present this is done by the environment ministry;

 The draft exempts certain projects from public consultation. These include all building, construction and area development projects, inland waterways, expansion or widening of national highways, and modernisation of irrigation projects;

The draft allows for postfacto approval for projects, meaning that the clearances for projects can be awarded even if they have started construction without securing environmental clearances;

 The draft seeks project promoter to file a compliance report once a year, explaining the activities carried out by them according to the allotted permissions. The 2006 EIA notification asks the promoters to file a compliance report every six months.

The draft proposes environment clearance validity for three phases with increased duration. The phases are construction or installation, operation and redundancy, closure and dismantling. Under the draft validity for mining projects will be increased to 50 years (currently 30), river valley projects to 15 (currently 10), and all others to 10 (currently seven);

The draft notification proposes new norm “Dealing with violation cases”, it states that cognizance of environmental violations will be taken in four ways; suo moto application of the project proponent; or reporting by any government authority; found during the appraisal by Appraisal Committee; or any violation found during the processing of the application, if any, by the regulatory authority;

 The draft notification seeks to fast forward clearances by digitising the process and standardising the approvals needed.

Issues in draft EIA Notification 2020

The eighty three page long draft notification consists of various new proposals and changes, which executive needs to revisit before its finalisation for betterment of environment protection. The major issues pertaining to draft notifications are as follows:

Categorisation of Projects: Under the draft notification, all projects and activities have been divided into three categories – ‘A’, ‘B1’, and ‘B2’ based on “the potential social and environmental impacts and spatial extent of these impacts” due to which 25 red and orange industries will be moved from Category A (which needs expert appraisal) to Category B1 or B2, which requires lesser EIA processes. These industries, including chemical processing and acid manufacturing, will be brought under Category B2, which doesn’t need public consultation. Real Estate projects are exempted from environmental clearances and public consultation by adding them under the B2 category, which goes contrary to NGT directions, wherein, the exemptions give to real estate projects in 2016 under 2006 notifications were set aside.

No Consultation with States: The draft notification does away with the requirement of committees to be set up “in consultation” with state governments and gives the central government more control over the constitution of state level regulatory authorities and expert committees. The central government can appoint and dismiss the members on all the state level committees responsible for appraisals and project approvals;

Public Hearing: Public consultations are a prominent feature of the EIA. It allows all concern to come together and discuss the environment impact through a meaningful and democratic process and brings transparency in the project. In  Samarth Trust v. UOI, W.P. (Civil) 9317 of 2009 the Delhi high court had considered EIAs “a part of participatory justice in which the voice is given to the voiceless and it is like a jan sunwai, where the community is the jury.” The draft notification is to do away with the mandatory process of public consultation for a wide range of projects for e.g. irrigation, acid and fibre manufacturers, bio-medical waste treatment plants, building construction, all projects concerning national defense and security or involving “other strategic considerations” as determined by the central government. The exclusion of public consultation implies that local and indigenous communities will have no representation or platform to raise their voice or grievances. The draft also proposes to reduce the public commenting period from 30 days to 20 days and requires that the public hearing process be completed in 40 days, compared to 45 days under the 2006 notification. The reduction of time would particularly pose a problem in those areas where information is not easily accessible or areas in which people are not that well aware of the process itself.;

Post facto Approval: The draft notification allows for post-facto approval for projects, meaning that the clearances for projects can be awarded even if they have started construction without securing environmental clearances, which violates ‘precautionary principle’ on which the EIA notification is grounded and the orders of the National Green Tribunal which had ruled against post-facto approvals. The Apex Court recently also struck down ex post fact grant of EC in Alembic Pharmaceuticals Ltd. v. Rohit Prajapati & Ors, Civil Appeal No. 1526 of 2016, wherein the Court held that the concept of an ex post facto EC is in derogation of the fundamental principles of environmental jurisprudence and is an anathema to the EIA notification dated 27 January 1994… The reason why a retrospective EC or an ex post facto clearance is alien to environmental jurisprudence is that before the issuance of an EC, the statutory notification warrants a careful application of mind, besides a study into the likely consequences of a proposed activity on the environment. An EC can be issued only after various stages of the decision-making process have been completed.  ;

Compliance: The new notification requires the promoter to submit a report only once every year. During this period, certain irreversible environmental, social or health consequences of the project could go unnoticed because of the extended reporting time. However, providing a longer period for filing reports can lead to disastrous consequences. In such a situation, the concerned authority will not have the opportunity to question the promoters for not following the terms of clearance. The only remedy would be to impose a fine or punishment; but that would not reverse the detrimental consequences on the environment.  The notification requires the promoters to file the documents on which the environmental impact is to be assessed. This leaves a lot of room for promoters to pick and choose the data and information which is to be supplied. 

This draft seems to be appeasing the business and economic interests over environmental interests. The draft notification if issued in current format will be a mockery for the country’s environmental jurisprudence. This will make the process of ‘environment clearance’ redundant and a rubber stamp approval. Therefore, the Government needs to revisit the entire draft notification and make its provisions more transparent, democratic, pro environment and in compliance of international norms and Court directions.

 Vaibhav Choudhary, Managing Partner, YHprum Legal.

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Indian environmentalism: Unconstitutional regression

The polluter must pay but he must be made aware of boundaries that are to be followed. Clarity and transparency are required on both sides.

Avishkar Singhvi

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Environmentalism is an omnibus construct, far beyond mere conservation and protection of air, soil, water and land. As US First Lady Bird Johnson said: “The environment is where we all meet; where we all have a mutual interest; it is the one thing all of us share.”

A disturbing trend has emerged, of concerted governmental action by way of rule changes and relaxations, degrading the environment with impunity. Two assaults—relaxations in several sectors qua environmental clearances and the generous and indiscriminate diversion of dense jungles for commercial/governmental use—require special mention. Close behind is conscious governmental silence qua pollution and water scarcity issues.

There is a grim failure to discharge the constitutional duty to protect the fundamental rights of citizens to preserve the environment, sidelining of experts, violating principles of non-regression and forgetting that this model cannot be sustainable in the long run because God never provides a free lunch for too long.

India witnesses an extremely high number of violations due to lack of proactive monitoring. It cries out for an environmental regime that has strict and clear standards and penalties for transgressions. The polluter must pay but he must be made aware of lucid boundaries that are to be followed. Clarity and transparency is required on both sides. In a country where the law spells out clear bright lines, there will be minimal need for vigilante “public interest” action which invariably creates serious bottlenecks for honest businesses that have followed due process of law.

 The Union Government amended the parent notification to dispense with Environmental Clearance ( EC) altogether for a large chunk of construction projects. For such categories, there is no requirement of Expert Appraisal (EA) or Environmental Impact Assessment ( EIA), the most crucial features in the process and without which there is mere lip service to the cause. Thankfully the courts stepped in in time and, while noting the complete desecration of the statutory framework as well as the wanton violation of the findings of the Kasturirangan Report, which had recommended the precise opposite, stayed the notifications. Ironically, these notifications are under section 3 of the 1986 Act, which only permits measures aimed solely at improving the quality of the environment and not degrading it. Meanwhile, the new 2020 notification languishes at the draft stage.

Similarly, the mining sector brazenly did away with EC for a large chunk of minor mineral leases and, worse, in the teeth of the Supreme Court’s ratio in Deepak Kumar’s case (2012) which laid down that EC procedures must apply even to small leases. Most mining leases are less than 5 hectares and cluster mining as also breaking up of large into smaller leases is the dominant reality in India. For such small leases, most of the EC processes are now to be dispensed with—yet another red flag egregiously crossed. The NGT sternly deprecated such practices and the matter is now before the apex Court. The fact that courts have somehow intervened to protect fragile environmental interests does not detract from bad intentioned and anti environmental attempts by the government to obviate scrutiny through venerable and tested tools like EIA and EA to achieve so called developmental goals in a tearing hurry.

 In the draft 2020 regime, for example, for the construction sector, a miniscule, almost non-existent level of scrutiny is proposed by way of an Environment Permission and standard EIA procedures are rendered inapplicable. Changing the name does not change the game, and most experts can see that this nomenclature change as a blatant, camouflaged relaxation.

The draft also introduces ‘ex-post facto clearances’ for violators, which militates against the very idea of a sequential process of Impact assessment study, management plans followed by an Environmental clearance after full application of mind. Such innovative amendments treat the sanctity of the environmental space with contempt and perform a far more dangerous function: post facto legitimation of illegalities. The timeless concept of once a forest always a forest has also been systematically undermined.

For Minor minerals, the draft proposes that ‘a one page deemed environmental permission’ would be enough, despite the existing decisions and the onerous mandate of the existing regime. Permission is virtually automatic, on the basis of a short questionnaire. These new concepts are introduced to circumvent the law and help powerful lobbies.

 These relaxations sync “admirably” with the projects undertaken by the government eg. Central Vista, Aarey colony, Netaji Nagar, Kidwai nagar, diversion of thousands of sq. km of forest land and so on. There is one common link. The government is the pro active player, playing a significant desecratory role and not the private sector! The age old dilemma rears its ugly head with no real answers: who will guard the guardians?

Corona, the scourge thrust upon us, has many benefits and lessons for those who want to be aware and wish to absorb. Minimizing the use of paper, virtual interactions, reduced transportation and energy costs, humongously reduced travel, minimalistic living, conserving our natural resources, decluttering, are all the compelling lessons of Covid, which should constitute the new normal. Instead, the government is regressing in the opposite direction qua environmentalism!

Campaigns such as Swachh Bharat or banning single use plastics, individually virtuous and desirable, seem hollow and hypocritical if the same governments who propound them, defile and deface the environment with such relaxations and such egregiously consuming mega projects. “Ease of doing business” cannot trump fundamentals relating to established and time tested environmental processes. If checks and balances seeking to ensure that projects are environmentally sustainable are diluted to vanishing point, then the consequence can only be irretrievable damage.

Pope John Paul II’s anguish must be remembered by all: “The Earth will not continue to offer its harvest, except with faithful stewardship. We cannot say we love the land and then take steps to destroy it for use by future generations.”

(The author is an Advocate, Supreme Court of India.)

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Sushant Singh Rajput case: Much ado about nothing

Even assuming that big film camps did not sign the star, or the lady friend used the actor’s credit cards and was his mental anchor and later allegedly abandoned him, none of them could be booked for abetment of suicide which carries a jail term of 10 years.

D.N. GOBURDHUN

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Shakespeare’s words keep echoing “much ado about nothing”! A simple, well-planned suicide, by a Bollywood star, Sushant Singh Rajput, which is an open and shut case, has been magnified into a big criminal conspiracy on pure imagination. The investigation, information and the findings of the factual matrix unequivocally show, that the hanging by the star was of his volition!

A young single man, is found dead in his room; doors are closed from inside and no forced entry. A locksmith is brought to open, the forensic science report shows, that it is not a ‘murder’, as this basic distinction whether it is “suicide or murder” is well known to the experts and lawyers.

Admittedly, there was no suicide note which could have given a clue. That note too would have pointed out that the person, has instigated me to kill myself! What most of us, as commoners are not aware of the Law on “abetment to suicide.” This herd like investigation is a gross abuse of public money, and valuable time of the police, who could do more weighty investigation in serious crimes.

But politician make hue and cry! So the policeman has to toe the line!

 It is a simple case of suicide and not covered under abetment. The irony is, if the star would have survived suicide, he himself would have been booked for “attempt to suicide”.

The police investigation reveals that many film producers promised him work and ultimately did not sign him up. Hours and hour of investigation of the films makers, show that he was selected but dropped later.

Elizebeth’s Director, stated that he was to do a big film for a big banner, which did not happen and he felt, he was let down.

Now, the father has joined the bandwagon and a FIR has been registered in Patna, [alleged offence is in the city of Mumbai] against a social friend of the star, for squandering his wealth and for emotional abuse.

A tax-payer’s money is being spent on the travel/ lodging of Bihar Police. For what? While Mumbai Police is already investigating the same very matter. Perhaps this is an election call!

The glaring facts show even assuming the big film camps did not sign the star, or the lady friend used the star’s credit cards and was his mental anchor and later allegedly abandoned him, none of them could be booked for abetment of suicide which carries a jail term of 10 years?

 The answer is an emphatic NO! Their Lordships of the Supreme Court held, in year 2010, in Madan Mohan’s case, that a person can be made an accused only, and tried only under Section 306 Indian Penal Code, when there is material evidence, with the prosecution to charge sheet him, when: Such a person had persisted and goaded the star continuously to “kill himself”. That is to say, there should be clear and unmistable intention of a continuous threat, pressurizing and nagging by the person to the deceased, that he should hang himself/ kill yourself/ and the deceased fully complied with it.

The law on abetment does not allow a person to be even charge sheeted, leave alone convicted, even if the person who is in command, screams at his subordinate for terrible deliverance of his duties and utters “why do you, and not go, kill yourself” for this gross negligent work, and the subordinate staff, does commit suicide? Master herein cannot be charged. A ‘Saas’ telling her “bahu mar ja ke,” a too familiar heard expression in North India, too cannot be prosecuted.

 So, in this Bollywood hungama maze, why this princely treatment? No one had said a word, as the law, contemplates to utter, to the star which would have compelled him, to take his own life. There was no abetment in law, as required under Section 107, 306 IPC. Instigation is totally missing. As Supreme Court held, that when the driver, wrote a suicide note, blaming his master who was tough on him, abusive, and stressed him which led to the suicide due to depression and wrote with his hand, “my master is solely responsible for my death. My life has been ruined by him”. Supreme Court, correctly ignored it, as irrelevant in the facet of criminal law. Thus a microscopic examination of the evidence and materials gathered in the case, it cannot be said by any stretch of imagination that any person intended the star to commit suicide. There is no proximity at all and no nexus between the suicide and any alleged acts of the persons. Even, if the friend took out big chunks of money then also the friend cannot be tried.

There is not even remote evidence in this case not even diary. Had it been a Ramlal/ Shyamlal a common man, police would not have spent a days’ time in closing the case. Supreme Court laid emphasis that when the person is gone and not available for cross examination in Court, unless, there is a specific allegation and material of definite nature and not imaginary or inferential, it would be hazardous for such a person to face the trial. A criminal trial is not a pleasant journey. Such suicide notes only show the anguish and that the person was harsh on him. Grudge cannot be converted into criminal trial. Unlike Bollywood film, which are make believe by and large, let us not make our criminal justice system look remotely like Bollywood.

Author is a practising Lawyer in the Supreme Court.

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Are tortious interference suits antithetical to free market competition?

Existence of a contract is an essential concomitant for this tort to have occasioned. The act of wrongfully inducing a person not to enter into a contract does not amount to tortious interference.

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What is the Tort of Interference? Strictly speaking, the foundational decision which recognised the economic tort of interference in English contract law was the case of  Lumley v. Gye rendered by the Queen’s Bench in 1853. However, it was not until the year 1978 when, in the case of Greig v. Insole, the Chancery Division crystallized the fundamental conditions to be fulfilled by a plaintiff in a suit for Tortious Interference.

 The broad parameters encapsulating the tort of interference set forth in Grieg’s case were cited with approval in a decision rendered by the Calcutta High Court in Lindsay International Pvt. Ltd v. Laxmi Niwas Mittal. This decision was perhaps what can be stated to be introductory case on the subject in Indian jurisprudence.

Developed, as the law become thereafter, the threshold conditions for the commission of this tort came to be casted into the following formulation:

Firstly, there needed to be a contract which is clearly identifiable. Existence of a contract is an essential concomitant for this tort to have occasioned. The act of wrongfully inducing a person not to enter into a contract does not amount to tortious interference (see: Midland Cold Storage Ltd. v. Steer & Ors)

Secondly, the defendant must have had knowledge of the existence of the contract. It was, however not necessary for the defendant to know the exact ingredients of the contract.

Thirdly, the breach of such contract must be have been caused by the defendant by unlawful means.

Fourthly, damages ought to have occasioned to the plaintiff due to such breach.

Winfield and Jolowicz on Tort, best condenses the commission of this tort, with the aid of an illustration, as follows:

“A commits a tort if, without lawful justification, he intentionally interferes with a contract between B and C, (a) by persuading B to break his contract with C, or (b) by some other act, perhaps only if tortious in itself, which prevents B from performing his contract.”

The recent decision by the Hon’ble High Court of Delhi in INOX Leisure Limited v. PVR Limited is the latest addition in the treatise to Tortious Interference Suits, albeit on a view au contraire.

 Factually, the premise of the suit filed by Inox against PVR Cinemas, was, inter alia, that while Inox, with an intent to expand its business footprint, had entered into a binding term sheet with a developer with regard to a property in Amritsar, PVR Cinemas continued to persuade the developer to enter into an agreement for that property with itself, by inducing it to breach the term sheet entered into by Inox and the developer. It was further averred that the developer entered into an agreement qua the same property with PVR and informed Inox that the term sheet stood automatically terminated on account of its failure to execute the main Transaction Document within the stipulated time. This, according to Inox, happened at the behest of PVR and illegal inducement of the developer by PVR was attributed. Therefore in a nutshell, Inox’s case was that PVR interfered in the contractual relationship of Inox with a third party, inspite of being aware of such contractual relationship.

The Court postulated three possible scenarios which could have occasioned, and offered the correct remedy for each of them, as follows:

If Inox had binding lease with the developer/owner of the properties and had not been put into possession of the property, his remedy was to seek to be put into possession of the property.

If Inox had no binding agreement or a lease but only an agreement to lease, its remedy was to sue for specific performance thereof; and finally.

 If Inox had a promise from the developer/owner of the said properties to grant a license to the plaintiff of the said properties and the developer/owner were in violation thereof, its remedy was to claim damages from them.

However, the High Court held that in none of the three situations, was a Suit for Tortious Interference a proper remedy against a third party (in that case, PVR). The court held that “…grant of injunction claimed by the plaintiff on the premise of the actions of the defendant comprising a tortious act of interference with contractual relations of the plaintiff, would be in violation of the fundamental right of the defendant, its promoters and directors to carry on trade and business…”.

The aid to the above enunciation was premised on a prior decision of the Hon’ble Delhi High Court in Modicare Limited v. Gautam Bali wherein it was held as follows:

“37.…where should the Court draw the line, between what constitutes enticement to commit breach of contract and unlawful interference in business on the one hand and competition on the other hand. Any new entrant in the market, to be able to create a niche for itself, in spite of the existing players, has to compete with the existing players, by approaching the same customers and the same cache of employees who over the years have acquired expertise in that particular field. ….In my view, it is practically impossible to draw a line between such persons, on their own approaching the new entrant, and the new entrant approaching them….”

 The Delhi High Court in Inox and in Modicare has in so many words expressed the view that the tort of interference could perhaps not exist in a modern day economy which is epitomized by free market competition. To summarize, the view expressed by the Delhi High court is that these tortious interference suits are infact antithetical to free market competition and stifle the growth of the economy.

The house is divided. The view expressed by the Calcutta High Court, recognizing this tort, clashes with the view of the Delhi High Court in distancing from its application in the contemporary economic climate.

Neither views can be discounted or applied in toto. It is felt that the view of the Calcutta High Court in recognizing the tort of interference has to abide by respecting the consideration for competition in the economy. For this balanced consideration the following questions (ofcourse, in addition to the above restated threshold paramenter) may need to be addressed by the courts to decipher whether an injunction against a third party for commission of said tort has occasioned or not:

Whether there is a concluded contract between two parties, of which the third party (i.e. the defendant) has express knowledge, however infinitesimal the knowledge may be?

What is the point of inflection where free market competition ends and tortious interference begins; and most importantly

Whether the presence of sufficient alternate remedies between two contracting parties such as suits seeking specific performance or of damages, would be an equitable bar from entertaining a suit against a third party for tortious interference?

Therefore, it seems that while the tort took more than a century to find its feet in common law, the same might only receive limited application in the Indian context on account of extreme globalization and competition. Only an authoritative pronouncement, perhaps by the Supreme Court, can now clarify and help converge the law on the issue. Short of that, the uncertainty of the law will only impede the development of the governing law on commercial transactions.

Adv. By Rushab Aggarwal is a advocate practising at the Supreme Court of India.

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Custodial deaths: Banality of evil?

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Mahatma Gandhi in his journal Harijan once wrote- “The police of my conception will be servants, not masters of the people. The police force will have some kind of arms, but they will be rarely used, if at all. In fact, the police men will be reformers. Their police work will be confined primarily to robbers and dacoits.”

Gandhiji saw police as a tool to forge solidaritybased relations in his social project. The men who would enter the ranks of police will be believers in nonviolence. The malfeasance on the part of Thoothukudi police, which took place in Tamil Nadu draws a sharp contrast between the role that was envisaged and what was witnessed on the unfateful night of 19th June, 2020 . All the more baffling is the timing of it when there is a global outrage against the law enforcement agencies in general, following the death of George Floyd in the United States of America.

The Toothukudi atrocity led to the death of the father-son duo in the custody. The policemen who have the moral and legal duty to observe the rule of law strayed from performing that duty. If we try to create an imagery through the lens of Mahatma Gandhi’s eyes, we would fail because our vision will get clogged up by the filth from abuse of power and a blatant neglect to the rule of law.

 The alleged charge of lockdown violation would have attracted a maximum of three months imprisonment if they were proven guilty. The policemen were clearly hoodwinked into thinking they were super cops from a cop-centric blockbuster for it was so easy for them to strip away their moral accretions.

 They violated the basic fundamental right, Article 21 of Indian Constitution that, inter alia, guarantees protection from police atrocities under the ambit of right to life and personal liberty. The Supreme court in Kharak Singh v. State of held that ‘life’ meant something more than mere animal existence. In the Maneka Gandhi v. Union of India expanded its interpretation to rule that living is not merely restricted to physical existence but it also included within its ambit the right to live with human dignity. Thus, there is no dearth of precedents to understand what is a dignified life and what threatens it.

Torture is one such element that threatens a dignified living. The apex court in D.K. Basu v. State of West Bengal has prescribed guidelines to prevent any kind of violation of rights of prisoners. Any form of torture or inhuman or degrading treatment during the investigation, interrogation or otherwise is in violation of Article 21 of the Indian Constitution.

Despite such precedents, custodial violence in India is a reality we should not shy away from. The National Crime Records Bureau (NCRB) data pegs custodial deaths at 1,727 between 2001 and 2018. However, a paltry 26 policemen were convicted of custodial violence. The situation seems grimmer in the states of Tamil Nadu, West Bengal, Gujarat, Andhra Pradesh and Maharastra where there is nil conviction despite more than 100 deaths.

Another very marked evidence of the lackadaisical approach towards custodial violence and human rights in general, is the weak functioning of National Human Rights Commission. It remains a “toothless tiger” with role being limited to providing compensation to victims.

These are tell-tale signs of the dilution of ethos of human rights and justice. Keeping this article an easy read by not making it stolidly fact-laden, we would like to categorically state that police barbarity is becoming a new normal in India. The men who were tasked to serve, rescue and protect the common man and his rights are now perplexing him from inside.

Having said that, it is pertinent to discuss how this new normal has emerged which shows our tryst with non-violence as a hypocritic observance only. India is yet to have an anti-torture legislation that could criminalize custodial violence. We signed the UN Convention against Torture in 1997, but have not ratified it yet. Thus, the government is not obligated to fulfill the commitments under the convention as of now.

What this means for the citizenry in India is that it cannot sue a police officer for any wrongdoing and such a prerogative rest only with the government. Taking cognizance of this loophole, the Supreme Court in Prakash Singh v Union of India, directed the states to constitute independent complaint authority to inquire into the cases of police misconduct. But, a study by Commonwealth Human Rights Initiative (CHRI) shows that only 12 states had constituted a Police Complaints Authority (PCA) in accordance with the directive even after a decade. Moreover, not even a single state complies with the court’s directions with regards the composition, selection process and functioning of the PCAs which was the most perturbing revelation for us.

Way Forward

It must be categorically stated that the death of the duo is a ruthless exhibition of abuse of power and there ought to be no excuse for the perpetrators. But, we must also ask ourselves whether it will be enough to set things right. This incident is also a wake-up call for our law makers to devise a robust framework to counter the evil of custodial violence.

To begin with, India should ratify the UN convention against torture. The need for obtaining sanction under Section 197 of the Code of Criminal Procedure before pursuing charges against police misconduct should be done away with.

The magistrate in the Toothukudi case sanctioned the remand of Jayaraj and Bennix without checking on injuries and bleeding. Such incidents of judicial impropriety should not go unpunished. Judicial magistrates are the first line of protection from rogue police and thus, have immense responsibility in deliverance of justice.

 It goes without saying that human rights framework in our country needs an overhaul. This argument gains more credence when it is seen in the light of enactment of the Protection of Human Rights Act (1993) and the dip in the incidents of custodial violence thereafter, reflecting a negative correlation between the two. Moreover, it is high time to consider the recommendations of the NHRC on police reforms which include, inter alia, the constitution of a Police Security and Integrity Commission (PSIC) to lay down a concrete set of service guidelines for the police.

In addition to these, Law Commission in its 198th and 273rd report has iterated that there is an urgent need to strengthen the witness protection regime to protect the victims and witnesses of custodial killings.

Apart from these institutional measures, ethical luminaries make a case for reforming the behavioural aspects too. A report by Common Cause and CSDSLokniti shows that 12 per cent of the police personnel never receive human rights training. Also, the methods adopted by policemen that are against the ethos of Article 21, ignorance of rules, unnecessary arrests etc. reflect that the Code of Conduct for the police has failed to improve policing on the ground. So, there is a need to sensitize the lower-rung policemen and imbibe the values of public service in them. A landmark DK Basu judgment comes to our mind in which the apex court issued directions to increase transparency and due diligence while making arrests.

The modernisation of police is long overdue. CAG has highlighted the issue of underutlisation of funds allocated under the Modernisation of Police Forces (MPS) Scheme. The fund can be put to use to bring interventions like body cameras, CCTVs, narcoanalysis etc. These tools and techniques would go a long way towards striking a balance that sufficiently assuages skepticism about the negative role of the police without compromising the powers they need to carry out their duties.

 Lastly, the culture of impunity needs to go. The policemen involved in the incident must realize the gravity of their sins. Strict punishment and remorse is the only way forward for them. If those involved go scot-free again, a dangerous precedent will be set.

To sum up, the police is an extended arm of the state. As such, the aim of the police must align with that of state: governance and service. The Leviathan state is an outdated concept in the age of human rights and should not come back again. Constant police harassment of people will leave the victims and lay public alike in a constant state of fear. In addition to the Tamil Nadu incident, there have been a few incidents of display of high handedness by the police in recent times during the anti-CAA protests and otherwise in the lockdown too. In the long term, increased frequency of such altercations between the police and lay populace may give rise to retributive violence that will be detrimental for the society based on peace and order.

“Never react to an evil in such a way as to augment it,” wrote the great French philosopher, Simone Weil. He could not have been more correct. Any kind of overreaction is to be avoided at this time. The need of the hour is to act before the evil of custodial violence becomes banal in India. But, instead of reacting to this unfortunate incident by blaming the police as a failed institution in entirety as has been the trend on the social media these days, we must focus on bridging the trust deficit. The police have been on the war-footing in tackling the Corona-induced crisis and we must also be thankful to them for their efforts.

Pratiksha Priyadarsini is a final year law student at Bharati Vidyapeeth Deemed University, Pune. A rank holder, Nyayshastram National Article Writing Competition. Shubham Satyam is B.Tech, Vellore Institute of Technology (VIT), he had cleared SSC CGL 2017 in his first attempt. Currently he is preparing for Civil Services Examination.

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