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Legally Speaking

I remember Ram Jethmalani as a very large-hearted man

Dr. Abhishek Manu Singhvi

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Thank you, Mahesh. To commemorate your father’s memory is a great idea and everything said about him till now is true and valid, but let me say that above all I remember him as a very large-hearted man. I remember a person who I knew candidly that he virtually disliked, and that person happened to pester me for the admission of his son to one of the today well-known law colleges and I was hesitant that I mentioned it once to Ram and he said, “Why wouldn’t you tell me? The fact that I don’t get along with that person doesn’t matter.” And he put in a word for that person. This is just one small example of his large-heartedness amongst many more. He was truly as somebody said, a friend of a friend, a ‘yaaron ka yaar’. His friendships cut across generations and many of us today are decades younger than him but that generation gap was never felt. He was truly a fearless person and also a fearsome person. When he wanted to be fearsome, he could be fearsome. A tremendous sense of humour, he was once after my life for many decades to play badminton with him and in the years when he used to play singles at 5.30 in the morning, he told me many times that he should be ashamed about not coming and playing with me. I said that I will be more humiliated and ashamed if I lost to a man two or three decades older than me so I’d rather not come. But Mahesh apart from congratulating you for commemorating our friend and colleague’s memory, I must also congratulate you for being a reasonably good astrologer because you informed us telephonically at least me about this topic about three and half weeks ago and few of us could have realised that at that time the direction, velocity and momentum this theme would pick up even over the last four weeks or three weeks. So today it is the most possibly the most relevant theme in our national ethos and therefore another kind of congratulations for your incipient astrological talent. Let’s make no mistake about it when you claim the exalted status of the fourth pillar of democracy after all there are only three recognised constitutional pillars. So the fourth pillar is a very exalted status, and you have to be prepared to face the slings and arrows of scrutiny. Just as much and more than the other three pillars and you cannot have your cake and have it too by escaping that exalted status and even more humongous power must come with heightened accountability. I am going to inspire words even less because I believe words must be an assault to the senses for reform to occur. I also want to say at the outset that perhaps a little different from the previous speakers, I don’t, I think that to see today’s theme which you have chosen ‘Pros and Cons of Trial by Media’, in a narrow pedantic or semantic sense limited to the role of media in judicial proceedings would  according to me be a piecemeal because you have to see the larger picture, a holistic approach starting of course from the sub-judicial role to the larger role and responsibility of the media within which that role sits because you can’t bifurcate the role. And further onwards to the peculiarities of the visual and social media as opposed to the textual media if I may call it that and further onwards the role of the government and of course above all to the voyeuristic depths to which society ‘us’ have sunk. So I think all of them are really at par with the same theme even though the focus may be on trial by media. Well, first the larger picture and let me preface it by saying that there is no doubt of two axioms, one the media has done fantastic works, sterling works in news gathering, investigation, etc, etc and nobody who believes even remotely in democracy wishes to curtail that. And secondly, the aberrations which I think are getting bigger and bigger are still, fortunately, an exception. So given these two, I would still say that Indian news has plummeted in the wrong direction of the equation. In the wrong direction of the equation between sense and sensationalism, between news and noise, between civility and chaos and needed I would say between balance and extremism. You know terrorism is a global scourge and we all know that but the time I fear may not be too far off when we have to invent a new offence of verbal terrorism, visual extremism and content fundamentalism. And I can derive all three from showing you actual clips of the media.  

Undoubtedly this has a lot to do with what I call the ‘Toxic triangle’ of viewership, of the rating game and of revenue. If you add to this toxic triangle, a liberal and spicy dose of politics, of glamour, of insidious but very real government control, of premeditated and motivated stands, of ambitious anchors and of course of a public baying for blood then it becomes a heavy cocktail which I think would make the manufacturers of whiskey, vodka and rum blush, even Ram blush. The Delhi High court not too long ago rightly told us that today the best substitute for action fillers is in certain Television news programs. Now there is humour here in the Delhi high court’s statements but there is also a pathos. There is a cry of anguish, but the sad part is it is astonishing how so many business houses, and it is truly sad, so many channels, so many anchors and so many journalists and I am still, I caveatted by saying there is still, fortunately, an exception not the norm. But so many have mortgaged their calling, their training and their consciences to the lure of temporary wealth, power and property. They have done this by becoming spokespersons of ideologies, of viewpoints, of persons, of authorities, of vested interest lobbies. As I said the only saving grace is it still remains an exception and by large the disease has not become the rule in the media. 

Before we come to the remedial framework, a minute or two on the techniques which are widespread. Nonlevel playing field debates, deliberate interruptions and unless you see the trial by media in the largest setting of our debasement devaluation, the form will not occur. Deliberate interruptions, a gleeful verbal sport I would call it, verbal blood sport, a conscious invitation of biased and malicious participants, strategic cutting off of mics, formulation of one-sided themes, unevenly numbered viewpoints,  many other are standard techniques for driving TRP ratings and advertising revenues. Serious news items are presented as crime fillers. An extremist and fundamentalist’s viewpoint are easily spoken whether by anchors or participants without regard to their potency to democracy. I have here on my mobile phone three out of many clips of thirty seconds each which we submitted in a delegation that I led to the NBSA, The National Broadcasting Standards Authority and I am itching to show you this on the screen here to give you an idea of the depths we have plummeted in terms where we have regenerated in news programs. Some outdated notion of propriety restrains me from showing it. I ask myself the questions that it is not that we have not seen media in the UK or USA and several other democracies, very aggressive and very intrusive but why do I never see the kind of scenes captured in these types of clips which I have on those channels and in those countries. It is not that they are doing their duties any less. Also, I think we have missed out that society, in general, is exempt as a principal accused in this whole game. Viewership will not drive this engine unless society has begun treating celsius as sane and is prepared to believe the worst about everyone.

Whether it has lost its moral compass or otherwise, compassion and analysis are replaced with glee at others misfortune. It is replaced with irrational and illogical reactions. So in that sense, we can’t mistake it, it is we, you and me who have given this circus a great degree of legitimacy and strength. Divided we stand, so we let the dog eat dog and let the devil take the high post. As far as your narrower topic is concerned, the sub-judiciary role died long ago. Even its observes were performed and bones entered the forgotten recess of our memory. Of course, at one literal sense, your theme may not be right because I cannot think of situations where there can be pros for a trial held by the media except in the very nascent stages for a very short while, Pros of a media trial are very difficult to imagine. Was it ever intended as a supplantation of decision making by sovereign courts or of institutional mechanisms by the wisest framers of our fantastic constitution, the answer is obvious. The objective of a media trial is to create a perceptional reality which is of course an oxymoron but it is a perceptional reality. The merits and outcomes become irrelevant. They become immaterial. Demoralistaion of the investigator becomes one object. Defamation of the entire police force becomes another. The derailment of the enquiry is a third. No second thought is given to taking a side vigorously. Pronouncing the verdict and proudly, of course, playing the role of a judge, jury and a prosecutor and prosecutor all roles into one because this is the best way to whip up a frenzy. The Supreme court, of course, seems to be giving repeated warnings and summons which are being treated nowadays as mere ink on paper. 

Three examples I picked up, Sibel’s judgement in 1961, Rajender Gandhi’s judgement in 1997, Sales judgement in 2005. The Supreme court has been giving very strong words about trial by media and sub-judiciary roles and our fourth estate or a large section of it has seemed to have completely forgotten about it. In Gandhi’s judgement, the courts have said that in a trial by press, electronic media or public agitation is the very antithesis of the rule of law. One sentence sums up everything. It can very well lead to a miscarriage of justice. A judge has to guard himself against any of such pressure and he has to be guided strictly by rules of law and so on. In the same judgement which is after the advent of 24×7 media channels, the court said and I quote, “The reach of the media in the present times of 24-hour channels is to almost every nook and corner of the world. A large number of people believe it is correct that which appears in the media, print or electronic”. Of course, there is this over romanticised notion that judges are supposed to be so robust and concrete. They are not affected by all this, they are not paper persons.  Lord Denning used a nice phrase. He castigated this fictional notion that no judge will be influenced by the media. He said that the claim to judicial superiority over human frailty is one which I find impossible to accept. Cardoso in a very nice piece hundred years ago, imagine there was no 24×7, there were no social media. He said the forces which enter into the conclusions of the judges on judicial decision making and then he commented, “The great tides and currents which engulf the rest of the men do not turn aside in their curse and pass the judges by.” This is the power of the press and the abuse of that power and the true meaning of the subjudiciary role. Of course, the fact that it is also additionally contempt seems far from the course of. Nobody remembers that. And possibly it is the court itself to be blamed partly at least for misplaced benevolence in the wrong cases. You have exercised contempt in the wrong cases and similarly, you have misplaced benevolence against contemptuous in the wrong cases which has given a fillip to these egregious defaulters. Obviously we all understand that judges have to be balanced and cautious, we know that judges should not tilt at windmills and new development is also kept in mind is that now at least in India, the judicial intrusion and judicial reviews has entered every known sphere of human endeavour. I don’t think there is per se no go area for judicial review. So obviously the old classic subjudiciary role which anyway has entered with its bones cannot apply now to mean a gag order or a chilling in any effect given the all-pervasive availability of judicial review in every sphere. Nobody is suggesting that and judges ought to keep that in mind but it is pretty much like we can’t easily define an elephant but we all know one when we see one. We all understand genuine reporting as opposed to some of the filth which blows the subjudiciary role to smithereens.  

Let me now end with a few suggestions on remedial measures because without that quite frankly much of this very valuable platform that you have provided goes as empty theorising and mere incantation of hope. First, it must start with awareness. Awareness of lapse, awareness of accountability and awareness of urgent necessity. Of course primarily by the press but also by every stakeholder. Second, it must start with the awareness of a paradox that external control has to be excluded. Self-regulation is again and again the key and yet peer regulation has failed.  Unless you are aware of this basic truth you are living in a cloud cocoon land.  The Press Council is worse than a toothless tiger because a tiger can at least roar, A toothless tiger can also roar. No less than its own chairman has called for the repeal of the Press Council Act. This is not too far off.  Not too long ago. In relative terms the peer regulator for visual media, NBSA has fared better but remains hopefully inadequate given the size and degree of the mess. The real problem with both the bodies especially the first is the conspiracy of silence. The incestuous ambience of a peer’s exclusive club, the ‘chalta hai’ attitude and this old boy’s cartel is too difficult for any NBSA or press council to even easily attempt to bust.  Third, The existing powers of the NBSA are pretty wide. I think we are always an over legislated and under enforced country. We have to go running for legislation and rules. All the codes are there, some of them are cited, the cable television act, the Press Council court. But the real point is what? Let’s take the NBSA court. It ranges from warn, admonish, censor, express disapproval, impose a fine upon the channel or a broadcaster and even recommend to the authority to suspend and revoke its license. In that delegation, I have asked the NBSA how many times they have exercised the lost power. The answer is Nil. And a lot of us are pretty happy to face the warning, the admonition and merrily go across our ways. It is now, therefore, time to name and shame especially by the peers because these bad apples will ground you. There is no point in flaunting yourself as a good apple. It is now time to name and shame without inhibition because if the medicine from the doctor has to be good, it is also bitter and urgent. As the industry’s conscience keeper, the NBSA, I am talking more of the visual now, must keep getting its teeth into the issue, it must issue advisories much more and those must not only bare its teeth, it must not be followed merely by snarling but by biting and biting hard. Only a few egregious violators if they are made examples by the NBSA, a lot of this will stop and you will be getting kudos and applause from a sickened public. Then fourthly, the NBSA guidelines must be recognised by the Ministry of Information and Broadcasting as the selfregulatory guidelines for the new genre. There is a very interesting funny catch here, it will be funny if not tragic. The NBSA guidelines must be notified under Cable TV act and regulations. Reason being without that it does not bind the non-members. Now you have heard many cases where the farcical spectacle is seen on several channels after exhibiting shocking programs when they are found with their hands in the till. They simply exit the membership of the NBSA. So this is a very nice convenient way of avoiding any of the harsh penalties. So it requires some statutory government recognition and there is some precedent provided by the advertising court, the ACI has such status already and if you are serious about this you must recognise this because otherwise, the NBSA is trying to do a good job but failing because the channels simply have to leave the membership to continue merrily their egregious actions. Fifthly, there is a most urgent need for an independent rating agency. Where does it all come from? What is the source of all this? The source of all this is the King of media, not the chairman, not the boss, not the editorial head, the king of media is TRP.  We are supposed to have 30,000 measuring metres in this country, somebody said the last count is 44,000, let me take the higher figure of 44,000. I said I will give a Nobel Prize for miniaturisation because India miniatures your desire by 44,000 metres in a country of 30 crores. Surely, it requires a Nobel Prize for miniaturisation. Certainly, this sample is what runs it, if you see the clips we have, if you see the drama we see on television, it is caused by this 44,000 metres along with several slates of hand by algorithms which are supposed to determine weekly TRP ratings, decides what the content is. At the end of the day, the advertiser is what rules it and the advertiser is ruled by the TRP.

Lastly, we cannot ignore the elephant in the room, the need to create Chinese walls to eliminate serious conflicts of interest in the media. A Broadcasting bill has been languishing in this country since 1997, I don’t know of any bill other than the Lokpal Bill, on which the parliamentary committee under my chairmanship had the privilege to report, a Bill now languishing in more or less the same form for about 25 years. It is also not far for us to guess it’s non-enactment, it provides for specified percentages for ownership in media, it provides for ownership across different forms of media, platforms of media, it deals with issues of simultaneous cross-holdings of media on the one side and certain other prohibited or related sectors on the other. It creates some of the necessary regulatory divisions. Let me end by saying, many things Chinese, are now suspect, rightly but one thing we need here is Chinese walls between these kinds of conflict of interest, they are the need of the hour.

Mahesh, let me say, I don’t think anyone would be happier than Ram if we achieved even fractionally or even partially, what we have discussed today. We owe it not only to Ram, but we also owe it to ourselves and owe it to this country.

Excerpts from Dr Abhishek Manu Singhvi’s speech at the Ram Jethmalani Memorial Lecture.

Legally Speaking

MSMEs and Intellectual Property Rights

In this competitive market, one major issue faced by smaller entities is exploitation by larger entities and the same continues in case of the MSME sector.

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According to a research, IP-intensive industries generate 72 percent more value-per-employee than non-IP-intensive industries globally. This idea of establishment of L2Pro platform and training the MSME sector already get success in many different countries like France, Germany and the UK. 

On 14 October 2019 the Department for Promotion of Industry and Internal Trade (DPIIT) launched a platform named L2Pro (Learn to Protect, Secure and Maximize your innovation) to help MSMEs sector to maximize and promote innovation after acquiring knowledge of trademark, patent and copyrights and other plethora of aspects of Intellectual property rights. The DPIIT decided to launch and establish this platform for MSMEs and to collaborate for the long run benefit in terms of economic development and enhancement in figures of National output. 

This will not only promote and paves way to growth and extension in the national figure of MSMEs but also help in order to get edge in this competitive market and globalized world. With the establishment of L2Pro platform, India’s as a ground of 63 million gets enormous support in terms of learning and the platform designed in such a way that it will taught and help MSMEs to get better insight of the whole gamut of IPR.

 Before the introduction of L2Pro platform, concept of IPR and its related concepts like- Copyright, trademark and patents are totally beyond the reach of MSMEs sector and they have not even the basic knowledge of it. Without acquiring sufficient knowledge and training of IPR it will act as devastating element for any sector.

 IPR and its crucial role in MSMEs Sector 

In this competitive driven market the one major issue faced by any smaller entities is exploitation from larger entities and same continues in case of MSMEs sector in this competitive market. MSMEs looks exploitation as a major issue and threat and to combat this problem DPIIT came up with the idea of L2Pro so that MSMEs gets training and knowledge of IPR and to deal with problem of registration of product, filing of infringement suit to get remedy and to cope up with issue of exploitation of large scale industries. In the absence of it large scale enterprises exploits MSMEs sector by copying their innovation and earns a huge profit out of that innovation and this is also a major reason behind this idea. 

IPR and MSMEs Collaboration: A Global Scenario

 After the globalization and interlinking of nations the market becomes more competitive and full of exploitation and threat due to which it is very much important to provide a shield to the MSMEs sector so that they can protect themselves from all exploitation and threats and largely contribute to the national figure. According to a research IP-intensive industries generates 72 percent more valueper-employee than non-IPintensive industries globally. This idea of establishment of L2Pro platform and training MSMEs sector already get success in many different countries like- France, Germany and UK.

 Imparting Education and training regarding IPR to MSMEs only is not sufficient. Providing holistic views on this particular arena is required along with providing different incentives to MSMEs sector to contribute to National economy through this long-run pairing.

 Online transfer or sharing of files never a debatable issue or contemporary issue before the Napster Case of P2P network comes in highlight in the year 2001 when some major companies decided to sue Napster Incorporation. Around 1990s, a network came in front of audience or consumer as a medium of peer-to-peer file sharing and soon attains popularity in the market for the sharing or transferring of music by converting it in mp3 format.

 Different companies sued Napster Inc. but the case of A&M Records, Inc. v. Napster Incorporation, draws attention of people towards the illegal way of sharing music and contributory & vicarious infringement. This case when addressed by the Court of Appeals for the Ninth Circuit many issues were taken into consideration. The first and major one is Fair Use Defence, Second one is Direct Infringement and last one is Contributory Infringement and while addressing all dilemma, court came up with different reasoning with legal support. 

Analysis of Case along with Legal Reasoning

 A&M Records, Inc. v. Napster Inc., is considered to be a landmark judgment in IPR field for the establishment of regulation of copyright in online file sharing. The Court of Appeals agreed to the legal reasoning applied by the district court and the judgment pronounced. Three issues were addressed by the court of appeals in order to deliver the judgment with proper explanation of legal reasoning as already mentioned.

 While dealing with the issue of Fair Use Defense, the court mentioned 17 U.S.C. Section 107 that talks about ‘Limitation on exclusive rights: Fair Use’ and laid down four most important factors to determine whether the use of that work falls within the ambit of Fair Use Defense or not. 

1. Whether use is for commercial purpose or not? 

2. Nature of the copyrighted work. 

3. Amount and sustainability of the portion used of the copyrighted work. 

4. What is the overall effect of the use on the copyrighted work? After analyzing and checking reasonability, the court of appeal held appropriate injunction with its opinion against any of Napster’s future infringing activities. But same peer-to-peer sharing issue again addressed by the court in the case of MGM Studious Inc. v. Grokster, Ltd. 

Post-related effects of Napster Case: Positive & Negative Implications 

Napster case has overall mix effect on music industries as well as on different arena. Some of the major effects that faced and noted down are that peer-to-peer sharing network leads in the decline of sale of CD and contribute in generating profit in illegal way. It is not like that it leaves only negative impact but also positive impact like exposing or interaction of an individual to different artists which is never possible without this network. 

So, as like everything peerto-peer file transfer has also both negative as well as positive implication and different forms of it developing with the passage of time and a remarkable and huge impact on economy’s output which also shifted the attention towards the MSMEs sector and how collaboration of IPR paves way in strengthening National output. 

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Legally Speaking

The delay disaster

The justice delivery system continues to lumber on for now, but the question really is whether it is delivering justice or whether the justice delivery system is maintaining a Nelson’s eye to all serious and severe problems arising from mounting arrears.

Amir Singh Pasrich

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Indian Judiciary

A little known fact is that during the pandemic there has been an increase in the number of cases pending in Indian courts by roughly 20,000 cases per day. A Delhi High Court Judge is reported to have calculated in 2009 that if we are to clear the arrears in the Delhi High Court, it might take up to 464 years. The Law Commission noted this in its 230th report and opined that the position “may not be that gloomy” but it was “still alarming”. That was their view on the 5th of August 2009. Eleven years later, the Chairman of the Law Commission has naturally moved on, the recipient of the report who was the then law minister has also demitted his office and several Chief Justices have been sworn in and then retired in the Supreme Court of India and in each of the High Courts. The justice delivery system continuesto lumber on…for now, but the question really is whether it is delivering justice or whether the justice delivery system is maintaining a Nelson’s eye to all serious and severe problems arising from mounting arrears. Are we not ignoring the tremendous injustices perpetuated upon every innocent person who remains under trial and is yet incarcerated while s/he is accused of an offence, but has not been adjudicated to be guilty? The favourite maxim of the courts that you are innocent until proven guilty is actually a chimera insofar as it concerns persons who don’t get bail once they are accused of a serious crime. It is even worse if such innocent folks happen to be poor, picked-up by an overzealous police officer who finds the right ingredients of suspicious activity, perceived notoriety and prior criminal record even if such prior criminal record is patently unproven. 

As a reader I would not blame you if you thought: “Surely not – Mr. Author – surely this system is better than that you would assume it to be in your pessimistic article? Surely, we have a system in place to put these people behind bars when they have actually done something wrong?” But the answer sadly is that 69% of India’s jails are occupied with undertrials who have not been convicted. That is the figure as of today. What is worse is that although we started understanding the seriousness of the problem somewhere in the late 90s when the Supreme Court issued its first set of serious directions in the case of Anil Rai vs. State of Bihar in the year 2001, we had no idea how much this behemoth would grow. Far from improving the situation, the number of pending cases has grown from 3.14 crore casesin the year 2009 to 3.46 crore cases today. Shockingly a report that showed a pendency of 3.34 crore cases in late July 2020 when seen in the context of pendency as on Friday, the 25thof September 2020 reflects an increase of 1.2 million cases in just 60 days. If we aren’t bothered about human rights, the effect of “pendency” on prisoners, or the consequences of sending other innocent people to jail for long periods of time (after all – they must have done something wrong!), perhaps our people may worry about money. After all, money determines everything and affects our day-to-day business. India strives to demonstrate its economic power through the new and renewed Ease of Doing Business (EoDB). Chambers of Commerce and business houses alike seek to “unclog the Indian legal system” so as to improve contract enforcement and have faster dispute resolution mechanisms. With courts still stuck in the pendency paralysis, it is clear that our money and the cost of pursuing an ordinary business will be compromised unless we begin with strictly enforced new measures for contract enforcement. Our companies will need to be “saved” from the clutches of civil court pendency which is robbing India of a major element of its business credibility. Mr. Fali Nariman, one of India’s most noted jurists, famously said that in some countries they have Order and in India we have Law. Should we not now quickly marry the two and deliver law and order so as to change international perceptions about how our courts involve themselves with dispute resolution in a purposive and result-oriented approach that might eventually be better than what is on offer elsewhere? What we really need is serious reform and steps for that must be identified soon. 

We are debating this issue in an online platform of the PHD Chamber of Commerce and Industry on this 26th of September, please feel free to find the link at www.phdcci.in and listen in. After this first initiative, another part of this article will emerge with suggested steps for reform based on the lessons of the past. 

Amir Singh Pasrich is Managing Partner of I.L.A. Pasrich & Company, Advocates. He is co-chair of the India Working Group of the International Bar Association (IBA) and is an elected member of the IBA’s LPD Council, he is also Chairman of the Law & Justice Committee of the PHD Chamber of Commerce.

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Legally Speaking

Know about farm bills that have been turned into law

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Farm bills

The farmer is the only man in the economy who buys at retail, sells everything at wholesale, and pays the freight both ways. This line by John F. Kennedy reflects the pain which a farmer faces in conducting his trade. The farm bills which passed through Rajya Sabha on Tuesday amidst great opposition from various parties and high voltage drama in the Upper House seeks to bring revolutionary changes in the trading process of farm produces. Farmers have showed up in huge numbers on the roads of Punjab, Haryana, Uttar Pradesh and many other states across the nation to show their dissatisfaction against these bills. Adding flare to the agitation Union Minister for Food Processing Industries, Harsimrat Kaur Badal resigned from the Central Government in solidarity with the farmers. The big question which arises is whether the leaders of such farmer groups which are up in arms against the bills really want to bring about change in the lives of the farmer or are just masquerading as the farmers to get political mileage. The bills which are due to presidential assent are The Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Bill, 2020, the Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Bill and The Essential Commodities (Amendment) Bill, 2020. These bills aim to channelize the trade of farm produces directly between the farmer and the buyer leading to economic welfare of the farmers. It is a very historic moment in the Indian agricultural scenario which seems to bring a revolutionary change just like the 1991 liberalisation and globalisation phase.

 Farmers’ Autonomy

 Terming the present three bills which are due for assent by the president of India, as “anti-farmer” bills is a rhetoric completely made in ignorance. These bills are rather providing flesh and blood to a farmer’s right to trade, commerce and intercourse as enshrined under Article 19 of the Constitution and Article 301 of the Constitution. The existing framework was set up by different state governments for the regulation of trade and commerce of agricultural produce, which is done through Agricultural Produce Marketing Committees (APMCs). This framework is hit by many deficiencies such as cartelization by APMC agents which lead to a non-transparent price fixation mechanism and paying variety of tax and cess which leads to up the total value of their farming cost. Additionally the existing framework creates a highly anti-competitive market system where there is rampant red tapism through licencing of traders, making it very difficult for a new trader to join in. 

The new farm bills seeks to create an alternate trading atmosphere which will be more conducive for the farmers and based on the principle of laissez faire attracting minimal governmental intervention. It aims to remove all the barriers and restrictions imposed on the trading autonomy of a farmer. The new farm bills are going to amplify the magnitude of the fundamental right to trade of the farming community in its fullest sense.

 Art. 19 of our Constitution ensure the freedom to practise any profession, or to carry on any occupation, trade or business. Moreover, Art. 301 ensures freedom of trade, commerce and intercourse throughout the territory of India. A conjunctive reading of Article 19 and Article 301 paints a greater constitutional mandate regarding an individual’s freedom to trade by supplementing it with freedom to trade inter-state or intrastate both. The definition of ‘trade area’ as per Clause 2(m) of the Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Bill, 2020 specifically excludes “market yards, sub-market yards and market sub-yards managed and run by the market committees formed under each state APMC (Agricultural Produce Market Committee) Act” and “private market yards, private market sub-yards,direct marketing collection centres, and private farmer-consumer market yards managed by persons holding licenses or any warehouses, silos, cold storages or other structures notified as markets or deemed markets under each State APMC Act in force in India”. In the existing framework due to reasonable restrictions, a farmer could only trade in the mandis regulated by the APMCs. But with coming of these bills into force, the farmers will have a choice to trade inside their outside that area with their free will and without any unnecessary obligations. It also allows farmers to freely trade through electronic medium. It aims to reduce the total farming cost which a farmer incurred in the existing framework by abolishing any kind of market fees charged by the state government subject to trade takes place outside the APMC market. 

Now a farmer will have negotiating power as regards to price of his produce. He can bargain the amount to his benefit and not just settle at the amount manipulated by existing trader cartels. He can participate in an agricultural market which is open to competition and not just controlled by a few big players. The Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Bill, 2020 seeks to provide the farming community with a significant role to play in the agricultural market and not just be a raw material provider surrendered at the hands of agents and traders. It seeks to bind farmer and buyer in an agreement which takes place prior to production and price fixation is done with the consent of both the parties. This is known as ‘Contract Farming’. Such type of farming provides a farmer with benefits like there is drastic reduction of price related risk because they have already the price to their benefit. Any volatile market situation will not affect their pre-defined right to a certain amount of money. Many farmer groups are apprehensive that they will not get the appropriate amount for their produce. Their fear is also valid as it seems to them that they will not even receive the Minimum Support Price as big corporations may use their influence to get the agreement signed at a lower price. But all these fears should not exist as these bills are not here to replace the already existing framework of APMCs but to give an alternative which respects a farmer’s individual autonomy. If a farmer experiences that he is not able to get a price worth of his produce then he has the option to conduct his trade at the mandis setup by the APMCs. The sole aim of these bills is to recognize the individual autonomy of a farmer in conducting trade of his hardly grown produce. Another big advantage of this contract farming is going to be linkage of agreement with credit or insurance schemes of central or state governments. Now the farmers will not be dependent on local moneylenders for quick loans which led such farmers into a debt trap and with this linkage there will be a huge risk mitigation in the favour of farmers. 

Dispute Resolution

 After introduction of these bills into the parliament there was a huge hue and cry across the nation against introduction of ‘contract farming’. It is being perceived that due to unequal bargaining powers between a corporation and a small farmer, the agreement may heavily favour the interest of corporations and be detrimental for poor and illiterate farmers. But these doubts are really uncalled for because the bill already provides enough safeguard through its provisions from Sections 3 to 12. The biggest problem is when there are parties with unequal bargaining powers, the party with the high bargaining power like corporations draft boilerplate contracts and insert dispute resolution clauses which bends in their favour and party with a lower bargaining power is kept away from justice. The Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Bill, 2020, introduces a dispute resolution provision to cure this mostly used method to deny access to justice to party with a lower bargaining power. It is a big step in the direction of providing access to justice to the farming community by introducing conciliation as a method of dispute resolution. It saves a farmer a whole lot of money and time by keeping him away from litigation. Now a farmer could resolve his agricultural dispute in a speedy manner without knocking the heavy doors of courts. 

The power-sharing gauntlet 

Post-tabling the concerned farm bills, the Upper house witnessed opposition admonishing the bills on the account that it was a brazen attack on the federal structure of our constitution. It is hereby rebutted that the concerned bills do not in any case breach the constitutional limits. Moreover, they bolster the idea of cooperative federalism.

 The legislative power sharing between the centre and the state has been enunciated in seventh schedule of our constitution. The seventh schedule of the Indian constitution has three lists. List I refers to the subjects under the Centre or the Union, List II refers to the state list and List III refers to the concurrent list where the states and the Centre are co-sharers of power and responsibility.

 Entry 33 of the Concurrent List says that Centre and the States have powers to control production, supply and distribution of products of any industry, including agriculture. Further, Entry 34 of the concurrent list deals with price control. Conjunctive reading of Entry 33 and Entry 34 connotes that the centre has power to make laws on trade and commerce in production, supply and distribution of products of agricultural industry and further on fixation of the prices. Constitutional propriety of Centre to make laws on agricultural products flows from the above mentioned entries of Concurrent List. Thus, the centre in no way is encroaching upon the laws making powers of the state. 

Moreover, the concerned farm bills do not crumble upon the idea of cooperative federalism envisaged by our constitution. The above proposition can be well elucidated by the following stance: 

1. Agricultural Produce Market Committee i.e. APMCs are established by a state government though their respective state legislations. APMCs are physical market places where farmers are required to bring their produce to the market if they have to sell it there. Gradually, these APMC’s have become de facto monopolies because of the fact that almost all farmers used these markets to sell their produce which resulted in no serious competitions. 

2. Farmers Produce Trade & Commerce (Promotion & Facilitation) Bill, 2020 seeks to ameliorate the mischief created by the state APMCs. The concerned bill allows intra-state and inter-state trade of farmers produce outside: (i) the physical premises of market yards run by market committees formed under the state APMC Acts and (ii) other markets notified under the state APMC Acts. 

What can be construed is that Farmers Produce Trade & Commerce (Promotion & Facilitation) Bill, 2020 will eliminate the restriction that used to be imposed by the state APMC’s. It seeks to demolish the dens of monopolistic power which throttle the Indian farmer. The concerned bill creates a legal framework to set up markets that will run parallel to what the states have established through APMCs. Thus, it in no way, restricts the operation of the state APMC’s. What is does is that, it expands the horizons of options for the Indian farmers to sell their produce. 

Cooperative federalism, also known as marble-cake federalism, is a concept of federalism in which federal, state, and local governments interact cooperatively and collectively to solve common problems, rather than making policies separately but more or less equally. This step significantly bolsters the notion of cooperative federalism in a way that, now, the farmers will have two recourses, i.e. either to sell their produce through the state established APMC’s or do it individually by virtue of Centre’s Farmers Produce Trade & Commerce (Promotion & Facilitation) Bill, 2020. Thus, the concerned bill seeks to establish the harmony between the centre and state.

 Concluding Remarks

 The bills which are being protested are not ‘antifarmer’ but those who are protesting these bills are certainly ‘anti-farmer’, they are trying to impede the positive change which is going to boost the economic condition of farmers. The farm bills aim to enhance the scope and freedom of farmers to trade. The Government has introduced these bills to further enlarge the individual autonomy of farmers to trade as guaranteed under Article 19(1)(g). India is witnessing the epitome of co-operative federalism wherein without any kind of encroachment on the State’s framework; the Centre has carved an alternative method for the welfare of farmers. Both the frameworks are mutually exclusive of each other. The Farm Bills are breaking the chains of cartelization and licencing away from the farmers which stood in the path of their glory. The economic boost which the farmers will now experience will never let a food provider die of hunger.

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Legally Speaking

Fifty one shades of speech

J. Sai Deepak

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In the previous piece, this author had raised the following questions in the process of etching the contours of public morality: “The sum and substance of these discussions is that under the framework of the Indian Constitution, it is the State, meaning thereby the Executive and the Legislature but not the Judiciary, which has the power to invoke public morality within reasonable bounds for the purposes of placing reasonable restrictions on fundamental rights guaranteed by Part III of the Constitution. The Judiciary’s role is limited to examining the constitutional validity of the claim made by the State that the latter’s action is in the interest of or furthers public morality. 

That said, what are the parameters that must be applied to such an examination? In other words, how does the State demonstrate that its action represents public morality? What kind of exercise must the State undertake, if at all required by the Constitution, to assess public morality in relation to a given right? Or does the Constitution grant elected representatives the unfettered right as parens patriae i.e. parent of the nation, to speak on behalf of their constituents on every issue merely because they have been elected? Can members of the State form an opinion on public morality in relation to a given issue or topic without consulting members of the society to marshal some form of concrete evidence to base their positions on? Critically, in the context of a diverse society such as Bharat, how can the State hope to do justice to varying and often conflicting positions on public morality?

… Does this mean that the scope of use of public morality by the State as the basis for limiting individual freedoms is limited to public spaces? What is the position of the Indian civilization and the Constitution on the spaces and contexts in which public morality may be used as a legitimate restriction on individual rights? What constitutes public morality within the framework of the Indic civilizational worldview and what are its sources?” 

While the author’s original intent was to address these specific questions in the present piece, a legitimate and related digression is warranted in the current atmosphere to give the discussion a much more relevant and concrete peg. Over the last few days, “hate speech” has become the talk of the town because some have taken offense to the contents of a certain programme which, they believe, target a particular community. While the Ministry of Information and Broadcasting, and the Hon’ble Supreme Court, are simultaneously, and perhaps incongruously, seized of the case, it may be worthwhile to understand the relationship between speech, culture and public morality. In the interest of fair disclosure, this author is appearing on behalf of a few Intervenors in the proceedings before the Supreme Court. Therefore, in the interest of propriety, he shall desist from commenting on the specific merits of the case. The focus of the instant piece is the meta nexus between speech and civilizational ethos.

 Language, while acting as the vehicle for expression of thought, results in speech. Therefore, speech could be treated as but one form of expression, and for the purposes of the discussion at hand, may be treated as a broad representative of varied forms of expression. To reduce speech to merely a collection of words is to betray one’s ignorance and superficial understanding of human psychology, both individual and collective. Speech, in fact, contains the markers of a civilisation’s journey, depth and the values it believes in. One could go even a step further to make the point that speech is perhaps the most literal, visible, audible and ubiquitous expression of public morality. The lessons, beliefs, achievements, tragedies, the objects of worship and hatred of a people take the shape of similes, idioms, usages, proverbs and even cuss words. Therefore, to police speech, is to police not just the ability to express thought, but thought itself because policing the formers chills and stifles the latter, thereby killing the idea at source. 

Given the implications of policing speech, society is naturally expected to be extremely cautious and selective in handing the right to police its speech and thought to any particular organ as part of its social contract with the State. To hedge against unilateralism and authoritarianism, the republican premise is that it is safer, if not the safest, to put faith in organs which are vulnerable to and are the product of the will of the people, namely the Legislature and the Executive. Even if this choice has the inherent risk of surrendering one’s individual right at the altar of a process which ruthlessly rewards the numerical majority, it still puts faith in the deeper churn of a society and its tendency to see the light through trial and error. Perhaps this is because of the unspoken belief in the existence of a “society” which shares a common minimum pool of values and aspirations, notwithstanding differing political perspectives and ideological persuasions. More often than not, this common minimum pool of shared values and aspirations traces its origins to the fundamental ethos of a people or a civilization i.e. the shared ethos which justify the reason for the existence as a single national/ civilizational, and hence political unit. This demonstrates that politics cannot faithfully and fully reflect the bonds that connect the members of a society. It also explains why as part of a social contract an individual is assumed and expected to submit to the dispensation which the majority has elected even if the individual is at loggerheads with the dispensation’s positions.

 In view of the above rationale, an organ, such as the Judiciary, whose rectitude is its hallmark and is presumed to translate to impartiality and objectivity, cannot, must not and is not designed to attempt to step into the shoes of elected organs. This is not only because it violates the rules of “the” social contract, namely the Constitution, but also because it deprives the people of their say in the process of laying down the law, which partakes significantly, if not solely, from public morality. Critically, since notions of public morality vary from society to society and even within society, only the State, namely the Legislature and the Executive but not the Judiciary, is competent to and mandated to prescribe the red lines of free speech.

 In a brilliant paper titled “Morality as a Legitimate Government Interest” published in Penn State Law Review in 2012, Daniel F. Piar, then a Professor of Law at Yale Law School, examined in detail the United States Supreme Court’s tendency to homogenize moral standards in the name of the Constitution (a.k.a constitutional morality), and concluded as follows:

 “As discussed above, moral diversity yields numerous moral benefits to individuals and to the society that they constitute. To resist the proliferation of moral diversity is to deny that we are a pluralistic society. If we are to remain true to our liberal commitments, we must acknowledge—and accept— that the world is full of matters on which people of reason and good will are apt to disagree. A productive moral diversity then may flourish, to the betterment of each of us and our society. 

The law, however, has trod a more dangerous road, threatening to suppress diverse responses to moral issues through a homogenizing constitutionalism. If society is to retain the social and personal benefits of moral diversity, society will need to be attentive to the points at which the law impedes it, as well as to the opportunities in law for sustaining it.” Why should the logic be any different in the Indian context?

 J. Sai Deepak is an Advocate practising as an arguing counsel before the Supreme Court of India and the High Court of Delhi. 

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Legally Speaking

The case of SC gag order against Sudarshan News

One of the arguments advanced by the intervenors is that ‘hate speech’ is punishable under Sections 153A
and 153B of the Indian Penal Code, Section 3(i)(x) of the SC/ST Act and Section 5 of the Cinematograph Act.
Without getting into the details of the said provisions and examining whether the content falls under their purview or not, what is to be seen here is that these provisions are punitive in nature, not preventive.

Siddharth Nayak, Vijay K Tyagi & Krishnagopal Abhay

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There has always been a huge debate on this among various writers. Locke provides an interpretation to this as well. He sternly believes that ideas do require labour. Well we can’t expect that an idea to invent a bulb was without an extreme labour being done by Thomas Edison.

The evolving nature and spectrums of the mode of data distribution by the fourth pillar of Indian Democracy has given rise to dynamic challenges for the existing legal framework to control and regulate. Media being the fourth pillar is indeed playing a pivotal role in the society by trying to educate masses. The freedom of press ensures that citizens are vigilant, well informed, and therefore, can discharge their role in a democracy by fixing accountability.

Freedom of Press and Right to Know

The public’s “right to know” has become an increasingly popular political ideal in India. The essence of this right, for both the public and the press, has gained significance and acquired a new meaning in the contemporary era. Although the Constitution does not expressly guarantee the public the “right to know”, an increasing number of constitutional scholars argue that it is an implicit right guaranteed under Article 19 of the Constitution and by the general principles of constitutional democracy. Freedom of press constitutes not only the individual right of the owner of the news publications, the editor, or the journalist; it also includes the right of the citizens to be informed. It can be forcefully argued that the tenets of Article 19 offers within its ambit, the ‘right to know’ without any constitutional, statutory or executive frame- work to restrict or regulate the same before the cause of action arises. Comparatively speaking, the judicial discourse had long evolved since the days of classical Greek and Rome or the 16th century France which staunchly believed in prior restraints along with post- facto substantive measures.

Thus, freedom of press flows from the citizens’ right to know, which is conceived to be paramount. The Hon’ble Supreme Court of India, through several of its decisions on fundamental rights, has developed this jurisprudence. The courts have always been of the opinion and champion of the concept that censorship, since it necessarily restricts freedom, has always been and will continue to be unpopular with those who, from principle, perversity or for profit, insist on unbridled freedom.

Here, as the journalist is claiming that his show is based on his investigation and analysis of data avail- able in the public domain on the selection of students in UPSC Civil Services Examination, it is not only the journalistic freedom which is restricted by the gag order, but it’s also affecting the people’s right to know about the pattern of selection of students in UPSC-CSE.

Writ Jurisdiction when Alternative Remedy is Available

The petitioners approached the Court by way of Article 32 of the Constitution of India, which allows the citizens to approach the Apex Court for enforcement of Fundamental Rights directly. It is settled law that this jurisdiction can only be invoked in the absence of a redressal mechanism or alternative remedy, unless there are compelling circumstances warranting interference of the constitutional court for vindication of fundamental rights. The doctrine of exhaustion of remedies also cements this. The powers conferred and vested with the Apex Court under Article 32 is too infallible to adjudicate upon such issues as well (emphasis on the word ‘adjudicate’).

Rule 6 of the Cable and Television Networks (Regulation) Rules has adequate provisions which disallow the running of any programme, which is an attack on any religion, defamatory or communal. As noted by the Hon’ble Supreme Court in its order, if a show is found to be violative of the said rule, sanctions under Sections 19 and 20 of the Cable and Television Networks (Regulation) Act, 1955 are imposed. A bare reading of Sections 19 and 20 makes it amply clear that such sanctions/prohibitions will come from “any authorized officer” or the “Central Government” respectively. The Court, after mentioning the previous sections, took it upon themselves to exercise a power which must be kept outside of their reach.

One of the arguments advanced by the intervenors is that “hate speech” is punishable under Sections 153A and 153B of the Indian Penal Code, Section 3(i)(x) of the SC/ST Act and Section 5 of the Cinematograph Act.

Without getting into the details of the said provisions and examining whether the content falls under their purview or not, what is to be seen here is that these provisions are punitive in nature, not preventive. Under no stretch of imagination can these be used by the Apex Court to issue a blanket order restricting the Freedom of Speech and Expression, which is guaranteed by Article 19(1)(a) of the Constitution. These provisions come into picture after the content is delivered/published, and if the person is found guilty, they shall be punished as per law. For the sake of argument, even if the Court interprets the said provisions to be preventive as well, it is well settled that Fundamental Rights will overpower statutory provisions if they are at loggerheads.

That right is not absolute; it comes with restrictions laid in Article 19(2). It is well settled that before restricting anyone’s freedom under Article 19(1)(a), the “speech/ expression” has to be examined; and if it passes the tests laid in Article 19(2) – post-examination – it may be restricted. One of the issues with this blanket gag order is that it was passed based on a “prima facie” view, formed after looking at some snippets of the show provided by the petitioners, even when the Counsel for Sudarshan TV requested the Court to watch and con- sider the series in toto. Quite interestingly, the Court did not enter the domain of Article 19(1)(a) vs. Article 19(2), but even if they had, it is not within the reach of the Court to pass gag orders invoking the restrictions laid in Article 19(2).

Notably, the constitutional text of Article 19(2) states that the State might make laws to restrict the right guaranteed under Article 19(1)(a). Firstly, it is the ‘State’ which can limit the right and secondly, it has to be done by bringing a ‘law’. In a long catena of judgments, the Hon’ble Apex Court has time and again held that judicial functions of the Judiciary are not under the ambit of “State” as per Article 12 of the Constitution. In the landmark judgment of K.A. Abbas vs The Union of India, the Hon’ble Apex Court held that pre-censorship is allowed as per Article 19(2), but the same has to be done by statutory bodies which are formed by the “State” as per law. It was also laid that statutory bodies will have to lay guidelines and clearly express what would not be permissible. The Court, while getting into the debate of free speech and hate speech, fails to observe that no such guidelines have been formulated as of now. The apex court could have directed the appropriate statutory body/executive body to con-sider the prior restraint position and take appropriate action instead of venturing into the content editorial domains. No matter how one justifies it, Sr. Counsel Shyam Divan’s submissions that a constitutional court should not enter into the fields of content regulation are legally sound.

In this case, the Ministry of Information & Broadcasting, News Broadcasters Association and the Press Council of India were asked to reply, but the order was passed before they could submit their response. Simply put, no stakeholders – including the judges – could examine whether the impugned show could be termed as “hate speech” before the voice was muffled.

On a petition seeking similar reliefs in Delhi High Court, the Ministry of I&B, in its order dated 9th September 2020 refused to ban the show and stated that if the show violates the Programme Code under the Cable Television Networks (Regulation) Act, suitable action will be taken.

Jurisprudence on Prior Restraint: Bypassing the Statutory Mechanism

Delving into the jurisprudence of Prior Restraint, we shall start with the gold- en words of Mr. William Blackstone which strike at the heart of the current issue:“The liberty of the press is
indeed essential to the nature of a free state”. He emphasized on laying no previous restraints on publication, rather punish the publisher after publication, as per the established law. In Patter- son vs Colorado [205 U.S. 454, 462], Holmes J. of The Supreme Court of The United States, while referring to the cherished First Amendment of the American Constitution stated that it was passed to prevent previous restraints upon publications. Article 5 of the Basic Law for the Federal Republic of Germany and Article 21 of The Constitution of Japan guarantees Freedom of Speech and Expression and prohibit censorship of any kind, categorically that of the Press. In India, there are a plethora of cases which have held that prior restraint orders shall not be passed. While hearing a PIL filed by the NGO Common Cause in 2017 praying for regulating the content of the media, the Hon’ble SC had opined that pre-broadcast or pre-publication censorship is not the business of the Court and that all grievances against objectionable content will be dealt with in accordance with the law of the land after its publication.

The Counsel for the retired civil servants who intervened in the matter had argued that “hate speech undermines free market place of ideas”. Quite interestingly, in a blog, while defending free speech and criticizing blanket gag orders by the Apex Court, he had written: “Prior restraint is considered especially damaging to free speech because it chokes off the “marketplace of ideas” at its very source, and prevents certain individuals, or ideas, from entering the public sphere.” Subsequent to this, he also wrote: “we have been witnessing a disturbing trend where, in place of the legislature and the executive, it is the judiciary that has been taking upon itself the task of regulating, restricting, and censoring speech”. In another blog titled “Judicial Censorship: A Dangerous, Emerging Trend”, the Counsel had vehemently opposed the “trend” where Judiciary is passing gag orders which as per him is outside of the powers given to them by the Constitution of India. We, lawyers, have often been blamed for being biased towards our cause before the bench even though academically and legally we hold contradictory positions. But contradicting oneself with recorded writings is an insult to one’s own intelligence both as an academician and a lawyer.

It was argued that concession could be made in case of “hate speech”, which is distinguishable from “offensive speech”. For the sake of argument, even if we consider that the impugned show comes under the purview of hate speech, then also it has to be dealt with in accordance with the law. In Pravasi Bhalai Sangathan vs U.O.I. & Ors., the Hon’ble SC had laid: “As referred to here in above, the statutory provisions and particularly the penal law provide sufficient remedy to curb the menace of “hate speeches”. Thus, person aggrieved must resort to the remedy provided under a particular statute.” The precedents pertaining to categorization and classification of “hate speech” needs to be settled as well. Hate speech is an offence but dictating ‘prior restraint’ rationale akin to qui timet in the particular instance sets a dangerous precedent.

Observations of the Bench During Proceedings (Related to Constitution of a Committee of 5 Distinguished Individuals)

On Tuesday, in addition to free speech, self-regulation and legal restraint, the Court ventured into issues of ownership models of TV channels, revenue generation and the number of advertisements that the government gives to them. The discussion soon moved to the possibility of constitution of a committee of “distinguished individuals” to frame guidelines for the electronic media. Both the observations are deeply problematic because it’s not the domain of Judiciary to keep a check on the revenue model of media houses. The observation of the commis-be a case of judicial overreach.

Appointing committees and framing of regulations is a legislative and executive function. If someone believes in the idea of democracy, the concept of distinguished/eminent personalities can’t be said to conform with the high standards of constitutional democracy.

Hon’ble Justice Chandrachud observed that a pre-publication restraint is one of the rarest rationales to be exercised under extreme recourse and can take the Court down a slippery slope. The Court expressed its anguish but yet the gag order was not vacated and instead it went ahead with segments of content editorial suggestions. If one were to infer a ‘collateral bar rule’– which prevents any challenges to a court order if the party disobeys the order before first challenging it in court – arising out of such steps in the Indian context, it sets a duty of absolute obedience notwithstanding any constitutional rights un- less the concerned order has been set aside by a higher authority.

To conclude, the Court’s order of prior legal restraint is problematic in light of the availability of an alternative remedy under various Acts and the settled jurisprudence pertaining to the issue. It interferes with the people’s right to know. Moreover, it’s not the domain of Judiciary to keep a check on the revenue model of media houses; and the observation pertaining to the constitution of a commission, in our humble opinion, will be a case of judicial overreach.

Siddharth Nayak is Managing Partner, Atharva Legal. Vijay Tyagi is LL.M, Constitutional Law, Indian Law Institute and ex-LAMP Fellow. Krishnagopal Abhay is a 2nd-year student of LL.B at Campus Law Centre, University of Delhi.

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Legally Speaking

Competition law and state aid for aviation sector

Does the sector need specific regulator or general regulator? A bird’s eye view.

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With respect to having DGCA and Competition Commission of India as the adjudicating body, the question arises: Do we have a specific sector regulator for aviation or the general rules are applied by the competition commission? Observing the transit of the aviation sector through the Express Industry Case it is clearly observed that the investigation into cartel-like behaviour created in the oligopolistic market is a tricky one. 

‘Competition law treats agreements among rival firms to set the terms on which they trade as extremely serious offenses. Most of the world’s approximately 120 systems of competition law assign the prosecution of cartels a high priority.  

 In the wake of LPG policy triggered in India in 1991, a perception gathered momentum that the existing law for Market Regulation i.e. the Monopolistic and Restrictive Trade Practices 1969(MRTP Act) was not sufficiently arrayed to handle the competition in the Indian Market. With removal of trade barriers in 1991 the Indian Market became the hot gate for trade amongst the domestic players as well global giants which demanded a level playing field and a trade friendly environment. Need arose for a legal backing which would stimulate and shift the traditional practices of curbing monopoly to encourage companies to invest and grow, in-turn enhancing competition without abuse of dominant position.

 Competition and liberalization together unleash the entrepreneurial forces and the same was experienced back in the late 19’s. Basically competition is a situation in the market where the seller strives for a buyer for business objectives. These competition needs to be regulated as somehow some businesses may opt for anticompetitive practices for short term perks which actually nullifies and makes the competition void. The countries across the globe over the time focussed on regulating the market forces by providing absolute legal backing to relinquish the anti- competitiveness in the market and also reinforcing economies through setting up of regulatory bodies. Following the international trends Competition Act, 2002 was enacted in India to regulate the competition and reduce the formation of cartels thereby encouraging better business practices and better consumer base.

 Acc. to section to section 3 of the Act, no enterprise or association of enterprise or person can enter into any agreement which causes or likely to cause “appreciable adverse effect” on competition, otherwise the agreement would be void. It may include: 

1. Directly or indirectly determining purchase or sale price, 

2. Limiting or controlling production, supply, technical development, investment or provision of service, 

3. Directly or indirectly results in bid rigging or collusive bidding shall be presumed to have an appreciable adverse effect on the competition. Provided that any agreement entered into through joint venture increasing efficiency in production, supply, distribution, storage etc. would not be void.

 Acc. to section 4 of the Act, the enterprise would be apprehended to have abuse the position in cases: 

1. He directly or indirectly imposes unfair condition in purchase or sale of goods, 

2. Regulates purchase price, 

3. Limits or restricts production of goods or provision of service,

 4. Regulating technical or scientific development, 5.

 Indulging in practices resulting in denial of market access etc. Being an omnibus code and regulating the market competition poses a great question towards the applicability of the Competition Act, 2002 to the Civil Aviation sector. The civil aviation sector has been considered to play in an oligopolistic market which entails a small group of players ruling the sector and somewhat indulging in the anti-competitive practices being in a dominant position.

 Applicability of Competitive Rules 

Increased deregulation and open market access to the players outside the territory of the country has led to adoption of advanced technology which has ultimately led to transformation in all sectors including the aviation sector. The sector has undergone radical changes in aeronautical science which has led to increased competition ultimately benefiting the consumers with competitive prices, more choices and being more choosy in opting for services. Despite this the airline industry operates in an oligopolistic market having more barriers for the entry thereby having reasonably less players which suspects apprehension of anti -competitive practices. Tacit domination of some players is highly apprehended. 

In the recent past there has been no new policy or rules enacted regulating the aviation sector but to the extent back in 1994 and then in 2016 the govt. opted for open skies policy under National Civil Aviation Policy (2016) which enables liberalization and ease of rules in the aviation sector for the foreign airlines in order to increase the tourist flow and develop the potential of being an air hub. The 2016 agreement allows the govt. to enter into reciprocal arrangement with (SAARC). Since then the country observed the Air India and Indian Airline Merger and many other agreements were ratified. Rule 135(4) of the Aircraft Rules, 1937 empowered the DGCA (Directorate General of Civil Aviation) to issue order incase the companies engages is an anti-competitive practice or predatory pricing so on and so forth, despite the law coming into force and previous rule in place the civil aviation sector has been completely bolstered by the act and to the extent the sector has not experienced any control by the (Competition Commission of India) or the (DGCA) in foreign merger such as Delta and North West, KLM and Air Force despite laws in place.

 Judicial Stand 

The Competition Commission of India in 2013 approved 24% equity infusion by the UAE based airline in the Jet Airways with the prior approval of SEBI, FIPB (Foreign Investment Promotion Board), CCEA (Cabinet Committee of Economic Affairs). The Commission for the first time without going into the investigation approved the same by analysing that such combination does not have Appreciable Adverse effect on the Competition as per Sec 5 of the Act as there are several other competitors in the relevant market. The combination had almost 38 routes to serve and where they had approximately 1 competitor on the route. Despite this, the combination would make the network more strong & high market shares of both the companies in their respective hubs is an advantage. The minority ruling gave 2-3 points against the combination such as: 

1. The Frequent Flyer Participation Policy would try to retain the consumer which creates barriers on new entrants thereby eliminating competition as the new entrant would be unable to create a customer base. 

2. The minority also mentioned that both the airlines are the only remaining competitors on New Delhi- Abu Dhabi route which would itself be eliminated pursuant to combination. 

3. One of several it mentioned that the airlines is not a substitutable product as precluded by the majority of judges. The airlines and also the consumer itself does not consider the services as substitutable and the connotation is based on wrong principle. 

4. The minority panel also mentioned that making Abu Dhabi as an exclusive hub for scheduled services to and from South Africa, North America would disable the Jet to share the code for certain origin and destination which would lead to market foreclosure and abuse of dominant position.

 In Turbo Aviation Pvt Ltd vs. Bangalore International Airport Pvt. Ltd (2016), the application filed by Turbo Aviation Pvt. Ltd in lieu of violation of section 3&4 of the Competition Act, 2002 by the Bangalore International Airport Ltd.(BIAL) & GVK. Power and Infrastructure Ltd. The commission while going into the merits of the case opined that there was no prima facie case against both the companies and put forth its opinion against the allegation in a precluded manner as in: 

The commission stated that there was abuse of dominant position by the BIAL & GVK Power and Infrastructure Ltd. but per se there was no violation of Section 4 of the Act as the act prescribes only the abuse of dominant position by the dominant player in the relevant market.

 It also pointed that there was no market denial to the Turbo Aviation Pvt Ltd.(informant) as the same needs to be previewed through the lens of GHS(Ground Handling Services) Regulation and the DGCA circulars and the laws governing it, no prima facie conclusion can be made out through the arguments put forth by the information. Further adding the commission pointed out that there was no violation of section 4(2)(e) of the act as the company itself was allowed to provide the GHS services at the Kempegowda International Airport Pvt. Ltd. through the DGCA GHS circular & GHS regulation. Although both the companies are in a dominant position but it is not clear as to how both are leveraging its position in the GHS market.

 In Express Industry Council of India vs. Jet Airways Ltd and Ors. (2015) the Competition Commission of India penalized three airlines namely Jet Airways, Spice Jet, Indigo in allegation posed against them. The Council of India alleges that the companies entered into Anti –Competitive Practice by increasing the FSC(Fuel Surcharge) despite decrease in the ATF(Air Traffic Fuel) which is in contravention of Section 3 of the Act. The commission allowed for investigation into the matter towards which no collusive evidence was found against the airlines in the report submitted by the DG. Despite this, the Commission passed an order against the airlines penalizing all three stating that the act of the airlines was against the market performa. An appeal was filed In COMPAT(Competition Appellate Tribunal) which was allowed and the penalties were set aside on basis of lack of application of principle of PNJ and thereby the case was sent back to the commission for reconsideration. Adherence to the principle of fairness was followed and response from the airlines were taken into consideration and the commission on 7 March 2018 ordered that there is a clear pattern which shows coordinated and well – connected efforts by the airlines in determining the FSC charge and this clearly postulates the price parallelism and formation of cartel entering into a anti – competitive practices thereby violating the provision of Competition Act. 

With respect to having DGCA and Competition Commission of India as the adjudicating body the question arises do we have specific sector regulator for aviation or the general rules are applied by the competition commission? Observing the transit of the aviation sector through the Express Industry Case it is clearly observed that the investigation and the propagation in cartel like behaviour created in the oligopolistic market is a tricky one. The concurrent challenges faced in regulating the same is difficult to strangulate in a market where there is dominance of certain players. To the extent there is no specific regulator both the agencies albeit try to comprehend economic efficiency. However on the other hand the DGCA has evolved as an sector regulator but not the market regulator which is concentrated in the hands of competition commission. There are no sector specific competition laws, the general rules of the act apply and this also imbibes that there is no state aid to the aviation sector except given to Pawan Hans Ltd. a government owned carrier. 

The CCI abruptly and concretely would modify agreements or make the agreement null and void if the same enables an appreciable adverse effect on the competition or any of business practice which tends to abuse their position and is derogatory to section 4&5 of the Act would be under strict scrutiny. Combinations are strictly dealt under section 5 of the act. Moreover the distinction between the specific sector regulator was also taken into consideration in Air India vs. Competition Commission of India and Interglobe Aviation Ltd. (2016) the COMPAT while upholding the decision by CCI held that predatory recruitment of pilots by Indigo does not intervene into any alteration in the structure of market. The DGCI have investigated into the matter which clearly showed that there is no competition concern in the market. The appellate tribunal also stated that the complainant should establish that the violator has indulged in predatory hiring of pilots from other airlines which thereby is causing adverse effect on flying operation and is in contravention to section 4 of the act albeit abusing the position in the market which is not the case in this pertinent scenario.

 The Way Forward

 It is a well settled principle that no enterprise or association of enterprise has the audacity to enter into an agreement which so makes them in a position to which they can use that position to dominate the competition in the market. It is recognized that identification of anti -competitive agreements entails exposure of cartel like behaviour. High interdependence of the players in the oligopolistic market tends them to move in a direction which excludes the new entrance of players and thereby deciding the output which make it very difficult to determine the existing cartel like behaviour. In light of this the Competition Commission of India strictly abrupts any activities which are in contravention of the act and is having appreciable adverse effect on the structure of the market. Few recommendations: 

1. Removal of Frequent Flyer Policy is not a solution to any effect as this only acts as a marketing strategy rather than a tool for abuse of dominant position. The DGCA should be empowered to investigate any kind of marketing strategy which tends to abrupt the market competition.

 2. The powers of DGCA and Competition Commission of India should go hand in hand and none of the agencies should supersede each other’s powers as the basic objective of both the agencies is economic efficiency and to the extent adequate laws are in place but implementation has always been an issue. Despite having adequate agencies in place, investigation and cheque balance system in cartel like behaviour has always been a part of debate.

 3. Being an oligopolistic market the basic objective of the agencies should be aligned prominently to cater the contravention of competition act to the extent prevention of anti -competitive agreement beyond that controlling each and every action of the sector would entail much interference. 

4. Major focus should aim at bringing about better services at affordable prices to the end consumer. Need for sector specific regulators or competition laws is not the need of the hour. State aid concept needs to step in smoothly to bring about a consumer centric approach and also due to the pandemic the aviation sector has been significantly impacted which calls for financial assistance from the state.

 The Competition Act is comprehensive enough and meticulously carved out in the light of current market structure which has dawned upon the Indian Economy. The current milieu of the act serves holistically the competition forces in India which is in synchronization of FDI policies, FEMA policies so on and so forth. The Competition Commission of India has risen up to the occasion and has acted as a general regulator for all the sectors so is the case with the aviation sector whereby seeking and encouraging better competition in the market. From our personal point of view, the need for a specific regulator for the aviation sector is not the need of the hour.

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