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Phone tapping: The saga of right to privacy and the Telegraph Act

The right to privacy was conceived around the home, and unauthorised intrusions into homes were seen as interference with the right to personal liberty. The court recognised ‘the right to the people to be secure in their persons, houses, papers, and effects’ and declared that their right against unreasonable searches and seizures was not to be violated.

Manjunath Kakkalameli

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In the Era of Digital Communication, Telephone – Tapping is a serious invasion of an individual’s privacy. With the growth of highly sophisticated communication technology, the right to sold telephone conversation, in the privacy of one’s home or office without interference, is increasingly susceptible to abuse. It is no doubt correct that every Government, howsoever democratic, exercises some degree of sub-rosa operation as a part of its intelligence outfit but at the same time citizen’s right to privacy has to be protected from being abused by, she authorities of the day. Although Phone Tapping is a debatable issue in India, as it directly infringes one’s Right to Privacy, which is a fundamental right of every Indian.

However, meanwhile in Maharashtra, As Smt. Rashmi Shukla, IPS Officer alleged to be leaked the confidential data of intercepts, which create a whirl in Maharashtra Politics. In this background let’s travel to revisit the issue of Phone Tapping.

PHONE TAPPING

The term “phone tapping” means interception of the contents of communication through a secret connection to the telephone line of one whose conversations are to be monitored usually without the consent of the person whose communication is monitored. Here, the question arises about the violation of the right of privacy of individuals. Every act without the consent of the person termed as an illegal act by a private person or public officer but in the case of public emergency or in the interest of public safety does not need any consent.

While it is moral and ethical not to peep in some one’s privacy but when it comes to sovereignty and Internal security of the state, the state has every Legal right to do so.

Life and liberty are not empty words; they include all those necessary ingredients which give meaning to them. Privacy of a person is a part of his life and liberty under our Constitution. Any invasion of this right, which is fundamental in nature, can be done only according to the constitutional limitations.

The act of telephone tapping affects right to privacy as well as right to freedom of speech and expression, both are Fundamental Rights under the Constitution. Art 21 of the Constitution.

Therefore, not only substantive law but even the procedure should satisfy the constitutional test. The power of interception of communication can be resorted to, when it is necessary or expedient so to do in the interest of the sovereignty and integrity of India, security of the state, friendly relations with foreign state, public order or for preventing incitement to the commission of an offence.

PHONE TAPPING, RIGHT TO PRIVACY AND THE JUDICIARY

The Judiciary of India, have time to time uphold the right to privacy, Courts in its order/judgments have observed that any private conversations of any individual have to be protected unless it is disturbing the National Security and Sovereignty.

However, The process related to the right to privacy began in Kharak Singh v. State of U.P., where the court discussed the relationship between surveillance and personal and found that unauthorized intrusion into a person’s home would interfere with his/her right to personal liberty.

The right to privacy here was conceived around the home, and unauthorized intrusions into homes were seen as interference with the right to personal liberty. The court recognized “the right to the people to be secure in their persons, houses, papers, and effects” and declared that their right against unreasonable searches and seizures was not to be violated.

Further, in People`S Union vs The Union of India And Another, the court ruled that telephone tapping would violate Article21 of the Indian Constitution unless it was permitted by the procedure established by law and that it would also violate the right to freedom of speech and expression under Article 19 unless it came within the restrictions permitted by Article19(2) & has issued certain guidelines-

1. An order for telephone-tapping in terms of Section 5(2) of the Act shall not be issued except by the Home Secretary, Government of India (Central Government) and Home Secretaries of the State Governments. In an urgent case the power may be delegated to an officer of the Home Department the Government of India and the State Governments not below the rank of Joint Secretary. Copy of the order shall be sent to the Review Committee concerned with one week of the passing of the order-.

2. The order shall require the person to whom it is addressed to intercept in the course of their transmission by means a public telecommunication system, such communications as are described in the order. The order may also require the person to whom it is addressed to disclose the intercepted material to such persons and in such manner as are described in the order.

3. The matters to be taken into account in considering whether an order is necessary under Section list of the Act shall include whether the information which is considered necessary to acquire could reasonably be acquired by other means.

4. The interception required under Section 5(2) of the Act shall be the interception of such communications as are sent to or from one or more addresses specified in the order belong an address or addresses likely to be used for the transmission of communications to or from, from one particular person specified or described in the order or one particular set of premises described in the order.

5. The order under Section 5(9) of the Act shall, unless renewed, case to have effect at the end of the period of two month from the date of issue. The authority which issued the order may, at any time before the end of two-month period renew the order if it by the State Government.

(a) The Committee shall on its own, within two months of the passing of the order by the authority concerned, investigate whether there is or has been a relevant order under Section 5(2) of the Act. Where there is or has been an order whether there has been any contravention of the provisions of Section 5(2) of the Act.

(b) If on an investigation the Committee concludes that there has been a contravention of the provisions of Section 5(2) of the Act, it shall set aside the order under scrutiny of the Committee. It shall further direct the destruction of the copies of the intercepted material.

(c) If on investigation, the Committee comes to the conclusion that there has been no contravention of the provisions of Section considers that it is necessary to continue the order in terms of Section 5(2) of the Act. The total period for the operation of the order shall not exceed six months.

6. The authority which issued the order shall maintain the following records:

(a) the intercepted communications,

(b) the extent to which the material is disclosed,

(c) the number of persons and their identity to whom any of the material is disclosed.

(d) the extent to which the material is copied and

(e) the number of copies made of any of the material.

7. The use of the intercepted material shall be limited to the minimum that is necessary in terms of Section 5(2) of the Act.

8. Each copy made of any of the intercepted material shall be destroyed as soon as its retention is no longer necessary in terms of Section 5(2) of the Act.

9. There shall be a Review Committee consisting of Cabinet Secretary, the Law Secretary and the Secretary, Telecommunication at the level of the Central Government. The Review Committee at the State level shall consist of Chief Secretary, Law Secretary and another member, other than the Home Secretary, appointed 5(2) of the Act, it shall record the finding to that effect.

Further, in the case of K.L.D Nagasree v. Government of India (2006), while referring the ruling of the Court in the P.U.C.L case, it was held that “For the reason of making an order for interception of messages in the exercise of powers under Section 5(1) and (2) of the Telegraph Act, 1885 the happening of any public emergency or the existence of a public safety interest is the sine qua non (mandatory).”

PHONE TAPPING: ONLY IN CASE OF NATIONAL SECURITY AND THREAT TO SOVEREIGNTY

In 2019, The Bombay High Court in Vinit Kumar vs State of Maharashtra held that tapping of telephones was only allowed in cases of public emergency or public safety. Observing that illegal phone tapping was an infringement of the fundamental right to privacy, the court quashed three orders passed by the Union Home Ministry allowing investigating agencies to intercept the calls of a businessman involved in a bribery case.

CONCLUSION

In light of the above, it can be said that there is no legal impediment in recording the telephonic conversation with prior written consent of all the parties to the telephonic conversation and the same is not in violation of right to privacy enshrined under Article 21 of the Constitution and shall also be outside the ambit of interception.

Interception in the general sense means monitoring of such information by means of a monitoring device or viewing, examination or inspection of the contents of any direct or indirect information and diversion of any direct or indirect information from its intended destination to any other destination. Remedies that are available to aggrieved persons can be that in cases where unlawful interception infringes the right to privacy then the aggrieved person can file a complaint in the Human Rights Commission.

For now, the Indian public has gradually become aware of possible privacy violations that could be caused by technology and they know for prevention and investigation of crimes or in maintaining the sovereignty, integrity, and security of the state or if such information discloses clues and evidence of a crime or scandal, they have to be pursued.

An FIR can be lodged under the IT Act & telegraph act, when illicit phone interception comes into the knowledge of the person. Moreover, the aggrieved person can move to the Court against the person or company doing the Act. Therefore, in India, phone tapping has to be approved by a designated authority and it is illegal otherwise.

The Author is Executive Member of Maharashtra BJP Executive Committee – Legal Cell.

The term ‘phone tapping’ means interception of the contents of communication through a secret connection to the telephone line of one whose conversations are to be monitored usually without the consent of the person whose communication is monitored. Here, the question arises about the violation of the right of privacy of individuals. Every act without the consent of the person is termed illegal by a private person or public officer but in the case of public emergency or in the interest of public safety does not need any consent.

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Legally Speaking

Pre-trial role of the police: Exhaustive or insufficient?

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From the data and statistics collected from, United Nations Office on Drugs and Crime, latest available till 2013, says there are 138 police personnel per lakh of the population in India. This has been substantiated by the Indian Parliament in 2014, that there was shortage of 5.6 lakh police personnel against the sanctioned strength of 22.8 lakh, which clearly takes the figures to 25% vacancy. State police has 24% vacancies in January 2016, as the strength sanctioned is 181 police personnel per lakh people. These statistics serve for two crucial purposes, firstly in questioning the qualitative work function of the police, secondly in analysing the work function of the police, in all the domains. Our Police force, is legally regulated by Police Act, 1861 and Modern Police Act,2015, primarily for executing its functions. But there are certain duties and functions which police is bound to perform in the light of Cr.P.C, which is again in consonance to their primary source of regulation. In this paper, the author has tried to analyse the duties and role of police, primarily pertaining to the Judicial functions, which will also ensure the exhaustive analysis of the checks and control, which serves as the threshold for the police personnel in the exercise of their duty. This paper, is an attempt to link the work function of police, pertaining to the police acts and Cr.P.C by taking into account various factors like modernisation, training prospects, pre-trail functions in a coherent way.

CHAPTER- 1

DUTIES OF POLICE IN THE POLICE ACTS

“ Independent India must choose, whether we will have a people’s police or a ruler appointed police, or in other words whether the people should rule or the parties shall rule. The Constitution has laid down that the people should rule, so the police must also be the people’s police”

– Khosla Commission in 1968

Under our highest organic law of the land, police is kept under the domain to State list, so it is the duty of the state to provide efficient and coherent police force, for proper policing. All the state polices are regulated by Indian Police Act,1861. The duties of the police enshrined under the Act, basically finds itself within the clutches of the test of time, with respect to colonialism vs democracy.

Section 23 of the Indian Police Act, clearly defines the general role and duty of the police officer and section 20 of the act, provides for the restriction which acts as a check and balance on the unfettered discretion of the police when exercising their duty. The changing times, drew great attention of the esteemed law makers of our country and for maintaining and preserving the social order and tranquillity of our state, so a new act was passed, Model Police Act of 2006, which exhaustively discusses the roles and duties of the police, in all the fronts.

The general duties of the police has been incorporated under section 57 of the Model Police Act, 2006, which brings out the general essence and theme of the concept policing, enshrined in our laws. In the present research, it is important to pay much heed to section 57(e), 57(f) and 57(g) of the Model Police Act, which basically deals with the role of Police in the trial procedures. Section 57(e), deals with the dynamic role of the police, which is really necessary for curbing the commissioning of the crimes and any other opportunity associated with such commission of the crime. Section 57(f) deals with the duty of the police, to accurately register all the complaints brought to their notice, by any form, right from in-person representation to the digital media information. In this regard it is pertinent to note, how the Hon’ble Rajasthan High Court, interpreted the idea, on telephonic FIRs, in the case of Tehal Singh v State of Rajasthan, by virtue of which the main essence of section 154 Cr.P.C has been maintained. Section 57(g) of the act, it deals with the duty of the police with regards to registration and investigation of the cognizable offences. This also furnishes, that free copy of the FIR to be given to the complainant. This provision of Cr.P.C is in full consonance with the spirit of section 154(1), 154(2) and section 156(1) of the Cr.P.C. All these changes were brought in the initial police act, in accordance to the guidelines and remarks made by Hon’ble Supreme Court in the case of Prakash Singh v Union of India.

(The essential functions of the police pertaining to the trial, which has been given in the police acts, has been discussed in the next chapter)

CHAPTER-2DUTIES OF THE POLICE UNDER CRPC

1) ARREST AND DETENTION IN THE CUSTODY

For prevention and detection of crimes, a police officer has the power and duty to arrest the accused on the reasonable grounds or reasonable suspicion or with appropriate orders(warrant of arrest). This has been enshrined under section 41 of the Cr.P.C, also the distinct power given to police under section 42 of the act is necessary for the further investigation and trial procedures. In case of the cognisable offence, a police can arrest the alleged culprit, without warrant and can investigate into the case, without any directions from the magistrate. In the case of non-cognizable offence there is an exception to the rule, as enshrined by section 42 of the act. The duties and procedure for the arrest should be made in consonance to section 41-B, 41-C and 41-D. Section 41-D, empowers the arrested to meet the advocate of his choice, during the process of interrogation and in regards to this Supreme Court has given some guidelines for arresting a judicial officer, which are not too exhaustive, in the case of Delhi Judicial Service Assn. v State of Gujarat. Also, section 57 empowers the police for the search of the place, who is sought to be arrested, which is further fabricated by section 51 which gives the police, power to search for the arrested person and if found something police officer can seize them under section 102 for producing it in the court and further under section 52, gives power to seize offensive weapons. According to section 53, it is the duty of the police to get the medical examination of the accused by the medical practitioner and Supreme Court held in the case of State of Bombay v Kathi Kalu Oghad, held that section 53 is not violative of article 20(3). It is further extended by section 54, where the arrested is examined by a registered medical practitioner.

By virtue of section 50(1), it is the duty of the police officer to inform the arrested person, his ground for arrest, which is in true consonance with the article 22(1) of the Constitution, which is a precious right as held in the case of Udaybhan Shuki v State of U.P. By virtue of section 50(2), it is again the duty of the police to inform whether the person arrested has right to bail, if arrested for non-bailable offence. In the case, Joginder Kumar v State of U.P and D. K Basu v State of W.B made it obligatory on the part of the police, to inform the relatives or friends of the arrested person and also to make an entry in a register maintained by the police, this has been incorporated with a view to maintain the dignity of the rights provided under article 21 and 22 of the Constitution. Under section 56 and 76 of the act, it is the duty of the police to take the arrested to the magistrate without any delay, which has been specified and formulated well in the section 57, which provides for the time threshold of 24 hours, with an exception as explained under section 167. The purpose for not detaining the arrested for more than 24 hours has been explained in the case of Mohd. Suleman v King Emperor and the Hon’ble Supreme Court portrayed this provision to keep a check on the healthy investigation by the police, and directed to be observed positively. Apart from this, as per the requirements of section 62, the procedure for the serving of the summons has to be done by a police officer in general, otherwise specified by the Courts. By virtue of section 79, the police officer has the power to arrest outside the jurisdiction, with the warrant of arrest.

2) PRE-TRIAL: INVESTIGATION BY POLICE

After the FIR is lodged, as per the ingredients of section 154, it is the duty of police under 154(1) to register the FIR, as held in the case of Lalita Kumari v Govt. of U.P, pertaining to any cognizable offence and such information must be definite and not vague. Further as per the mandatory provision of the section 154(2), it is the duty of the police to furnish the copy of FIR to the complainant, whose exception has been explained categorically in the case of State v Gnaneswaran. In the case of non-cognizable offences, complying with the provisions of section 155(1), a police officer cannot proceed to investigate without the orders of the magistrate and its non-compliance may be a material cause in vitiating the ultimate proceedings, as well as it may be violative of Article 21. When the police officers gets an order from the magistrate for investigating a non-cognizable offence, the police officers, save as powers to arrest gets the power to arrest as in the case of cognizable offence. The police officer, by virtue of section 156, gets power to investigate the cognizable offences, where under 156(3) a magistrate has the power to order investigation, only at the pre-cognizance stage. The right of the police officer for investigation under section 156 is unfettered and cannot be controlled by Judiciary. Another important procedural aspect is the prompt lodging of the FIR is necessary for recording the spontaneous version of the case, hence it is the duty of the police to do the same. While analysing the section 156, we find the concept of cognizance by magistrate under section 190. The police in complaints sent to them under section 156(3) may make the investigation of the offence and send a report to the Magistrate under section 173. It will deemed to have been taken on the police report not on the original complaint. A magistrate may take cognizance of the offence under section 190, and instead of ordering investigation under section 156(3) can examine the complainant under section 200, and if the magistrate finds the matter fit, can postpone the issue of process against the accused and can either inquire into the case himself, or direct an investigation by the police officer, as to whether there is sufficient ground for proceeding. When police officer receives the complaint under section 202 for investigation and report, he has all the powers which is required for the investigation, similar to his power in case of an offence invoked via section 154. Further by virtue of section 158, the duty of the police officer pertaining to the submission of report, for which the state government appoint the senior police officer for the same.

In case of the cognizable offence, after the lodging of the FIR, the police officer shall proceed to the spot, to investigate and after necessary discovery, may make arrest, as per section 157(1). Moving ahead with the procedural aspect, there is the power of police under section 160(1), to require the attendance of the witness maintaining the conditions specified therein. There is a proviso attached to the section pertaining to person below 15 years or age and person above 65 years of along with woman or a man who is physically disabled. In Queen Empress v Jogindra Nath Mukerjee, it was held magistrate cannot issue any process compelling a person to attend before a police magistrate. Further section 161 and 162 gives the power to the police, for examination of the witness. According to section 161(1), oral examination of the person acquainted with the facts and circumstances of the case. As per the provision, it is the legal duty of the person to attend the investigating officer, if required, as intentional omission is an offence under section 174 IPC. In Pushma Investment (P) Ltd. v State of Meghalaya, Gauhati High Court has held, police can require witness to attend the police station, if they reside within the limits of the station or the adjoining police station. Section 161(1) lays down certain prescriptions, to be followed pertaining to the rank of the police officer, which must be specified by the State Government, must be duly followed. Analysing the flavour of the section, we can understand that the person, who is being examined must answer all the question correctly, but this would not bound him as such, which can invoke criminal liability against himself. Furthermore, in the case of Gian Singh v State(Delhi Admn.), it was held that police can question the accused even on his right to silence, with due permission of the magistrate, in the judicial custody. While interrogation, if a person furnishes voluntary false information to the police, or gives false evidence can draw penal action under section 193 and 177 of IPC respectively. In this context, Nandini Satpathy v P.L Dani, case is extremely important, which says area covered by section 161(2) and Article 20(3) is substantially the same and the 161(2) of Cr.P.C is a parliamentary gloss on the constitutional clause. The Supreme Court held that, a person is bound to answer where there is no clear tendency to criminate. The concept of “Compelled Testimony” was brought into the picture, and in the case, some guidelines were framed which were to be followed. The most important one was that the accused must be allowed to meet his lawyer, during the interrogation, which was also held in the D.K Basu v State of W.B. In one of the guidelines of the Satpathy’s case, it was held, police has the duty to invariably warn and record the fact, about the right to silence against self-incrimination and after the examination of the accused, the police officer must take him to the magistrate or any responsible person(in case of absence of his lawyer).

Finally, all these guidelines were not binding in nature, but were necessary for bringing out the prudent police policy. The section 161(3) gives wide power to the police to record or not to record any statement during the investigation. Now section 162 and 163, broadly talk about the validity and admissibility of the nature of statements recorded by the police under section 161. Section 162, prohibits signing of any statement obtained by the police, during the course of investigation, supports that it protects the accused from zealous police officers and untruthful witnesses. This provision is time specific and is applicable only during the time of investigation, with an exception to the dying declaration which is admissible under section 32 of the Indian Evidence Act. Therefore, the statements not reduced in writing by the police cannot be used as contradiction, under section 145 of the Evidence Act. The Court cannot rely on the confessions of the accused and case diary statements of the witnesses to come to a conclusion, as statements of witness under section 161 are admissible to the limited extent permitted under section 162(1) proviso and 162(2). Finally, the pivotal provision to test the aforesaid examination comes into picture, section 163, by virtue of which statements cannot be recorded by the police by any kind of pressure or inducement. This section derives its aroma in the presence of section 24 of Indian Evidence Act and 163(1) is not only applicable to the police but to any person in authority. Finally, when the investigation is complete, there are certain procedures to be followed upon. When the evidence is deficient, the accused is to be released by the police, with a bond, with or without security, for the procedure, to be taken after cognizance and during the trial(Section 169). When the evidence is sufficient, the case has to be taken by the police to the magistrate, for the trial and if the offence is bailable he has to be released on bail, with a bail bond with or without securities(Section 170(1)). Secondly, as per provision 170(2), the police officer has to forward any weapon or article, or any security to the magistrate, in order to give evidence for the charge framed against the accused.

On the completion of investigation, a mandatory report is submitted by the Investigating Officer, which is commonly called, ‘Charge-sheet’, and it is given without delay (173(1)). It includes all the necessary details of as prescribed under section 173(2)(i) and submission of this report is a part of the investigation. In this regard it is pertinent to note that, the magistrate under section 156(3) has the power to further direct the investigation even after submission of the report by the police. This means it would not affect the power of the investigating officer to further investigate the case even after the submission of the report. Finally as per the section 174 the police has the power to investigate and report the cases in cases of unnatural and suspicious deaths and under section 175 the police has the power to summon at inquest, in order to investigate the case registered under section 174 and their statements are again governed by the section 162.

CONCLUSION

The role of police, their duties in the light of various police acts and under the Cr.P.C is undoubtedly exhaustive and coherent. The Pre-trial role of the police, right from arrest to the investigation is in full consonance to the spirit of the fair trial, an original form of natural justice. This has been elucidated in the above research, which deals with the role of the police which is to be expected right from arresting a person, by allowing the arrested certain basic human rights is really commendable.

The latent jurisprudence of all these rights clearly furnish that, our highest organic laws of the land, grants us certain Fundamental Rights, which is not jeopardised throughout the pre-trail role performed by the dynamic police. The investigation procedure, requires that magistrate and the judicial bodies are kept informed about the procedures adopted by the police, which keeps a check on the process.

The recording of statements by the police, has been always subjected to the evidence and its value, which again doesn’t give the draconian power to the police authorities, making the whole actions and procedures adopted by them smooth, justifiable and in the interest of the fair trial for the accused. Therefore, from the above discussion and research I am of the view that the role of police, is the pre-trial is exhaustive enough to make the process coherent.

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Legally Speaking

COGNISANCE BY MAGISTRATE: AN OVERVIEW

Shivanshu Goswami

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The primary step in any criminal case is taking cognisance of the offence. By taking cognisance it is meant to take judicial note of an offence. Only after taking the cognisance of offences, the judiciary comes into picture. If we apply the dictionary meaning it simply refers to becoming aware or getting the knowledge of any such offences. This was also enunciated by the apex court, in the case of R.R.Chari v. State of U.P were it defined it as the application of judicial mind. Section 190- 199 of the Code of Criminal Procedure, 1973 describe the methods by which, and the limitations subject to which, various criminal courts are entitled to take cognizance of offences. Section 190 (1) states about the powers and conditions under which any magistrate of first and second class specifically empowered in this behalf can take cognizance

The word cognizance has nowhere been defined in the Code. The definition of cognizance has been derived from the case laws. According to the legal dictionary the meaning of cognizance is as under-

The power, authority, and ability of a judge to determine a particular legal matter. A judge’s decision to take note of or deal with a cause. In simple words, the word cognizance can be defined as cognizance means exercise of a judicial discretion to proceed with the case.

As per black law dictionary “Cognizance” –

1) A court’s right and power to try and to determine cases; JURISDICTION.

2) The taking of judicial or authoritative notice.

3) Acknowledgment or admission of an alleged fact; esp. (hist), acknowledgment of fine

(Bryan A. Garner (Editor in chief) BLACK’S LAW DICTIONARY 10th edition)

The word “cognizance” has no esoteric or mystic significance in criminal law or procedure. It merely means “become aware of” and when used with reference to a court or judge, “to take notice judicially” [Ajit Kumar Palit v. State of W.B., (AIR 1963 SC 765).

Taking cognizance does not involve any formal action, or indeed action of any kind, but occurs as soon as a Magistrate, as such, applies his mind to the suspected commission of an offence for the purpose of proceeding to take subsequent steps (under Section 200 or Section

202, or Section 204) towards inquiry and trial [Darshan Singh Ram Kishan v. State of Maharashtra, (1971) 2 SCC 654]. However, when a Magistrate applies his mind not for the purpose of proceeding as mentioned above, but for taking action of some other kind, for example, ordering investigation under Section 156(3), or issuing a search warrant for the purpose of investigation, he cannot be said to have taken cognizance of the offence [Tula Ram v. Kishore Singh, (1977) 4 SCC 459]. The word “cognizance” has been used in the Code to indicate the point when the Magistrate or a judge first takes judicial notice of an offence [Gopal Marwari V. Emperor, (1944) 45 Cri LJ 177].

TAKING OF COGNISANCE

Meaning of what is “taking cognizance” has not been defined in the Criminal Procedure Code. However, it can be said that any Magistrate who has taken cognizance under Sec. 190 (1) (a), Cr. P.C., he must not only have applied his mind to the contents of the petition, but he must have done so for the purpose of proceeding in a particular way as indicated in the subsequent provision i.e., proceedings under Section 200, and thereafter sending it for inquiry and report under Section 202. It can be said that before a Magistrate takes cognizance of an offence, he must have applied his mind for the purpose of proceeding in a particular way as indicated in the subsequent provision. When a Magistrate applies his mind not for the purpose of proceeding under the subsequent sections but for taking action of some other kind, e.g., ordering an investigation under Section 156 (3) or issuing a search warrant for purposes of investigation, he cannot be said to have taken cognizance of. As to when a cognizance is taken will depend upon the facts and circumstances of each case and it is not possible to define what is meant by it. It is only when a Magistrate applies his mind for purposes of proceeding under Section 200 and subsequent sections of Chapter XV (XVI old) or under Sec. 204 of Chapter XVI (XVII old) of the Code that it can be positively stated that he has applied his mind and, therefore, he has taken cognizance [Narayan Das Bhagwan Das v. State of West Bengal, AIR1959 SC 1118]

MAGISTRATE NOT BOUND BY OPINION OF INVESTIGATING OFFICER

One of the courses open to the Magistrate is that instead of exercising his discretion and taking cognizance of a cognizable offence and following the procedure laid down under Section 200 or Section 202 of the Code, he may order an investigation to be made by the police under Section 156(3) of the Code, which the learned Magistrate did in the instant case. When such an order is made, the police is obliged to investigate the case and submit a report under Section 173 (2) of the Code. On receiving the police report, if the Magistrate is satisfied that on the facts discovered or unearthed by the police there is sufficient material for him to take cognizance of the offence, he may take cognizance of the offence under Section 190 (l)(b) of the Code and issue process straightway to the accused. However, Section 190 (l) (b) of the Code does not lay down that a Magistrate can take cognizance of an offence only if the investigating officer gives an opinion that the investigation makes out a case against

Under section 190(1) (a), a Magistrate can take cognizance upon receiving a complaint. But the question as to whether the Magistrate has taken cognizance of the offence depends upon the steps taken afterwards. If he applies his mind to proceed with the complaint under sections

200 to 203, he must be said to have taken cognizance; whereas if he applies his mind to the complaint and proceed under section 156(3) or section 93, he cannot be said to have taken cognizance of the offence (K.N.C. Pillai, R. V. Kelkar’s Criminal Procedure, Sixth Edition, Eastern Book Company, 2015)

The reference can be drawn from the cases below-

(1)- Superintendent & Remembrancer of Legal Affairs vs. Abani Kumar Banerjee, AIR1950 Calcutta 437

(2)- Narayandas Bhagwandas Madhavdas v. State of West Bengal, (1960) 1 SCR 93

(3)- Ajit Kumar Palit v. State of W.B. & Anr., (1963) Supp (1) SCR 953;

(4)-Hareram Satpathy v. Tikaram Agarwala & Anr., (1978) 4 SCC 58

(5)- Bhushan Kumar vs. State (N.C.T. of Delhi), (2012)2 SCC(Cri.)872

When a written complaint disclosing an offence is filed before a Magistrate or Court, as the case may be, under chapter XV of the code, as soon as the Magistrate registers that complaint for recording the statements of the complainant and the witnesses present, if any, under section 200 of the Code, the Magistrate is deemed to have taken cognizance.

The important judgment of Hon ‘ble Supreme Court on this topic is

S.K. Sinha, Chief Enforcement officer vs Videocon International Ltd. & Ors, 2008 (61) ACC 371 SC.

Since the Hon’ble Apex Court has discussed various case laws in the aforesaid judgment, hence, it will be appropriate to reproduce the relevant part of the judgment, herein below

“…12. The expression cognizance has not been defined in the Code. But the word (cognizance) is of indefinite import. It has no esoteric or mystic significance in criminal law. It merely means become aware of and when used with reference to a Court or a Judge, it connotes to take notice of judicially. It indicates the point when a Court or a Magistrate takes judicial notice of an offence with a view to initiating proceedings in respect of such offence said to have been committed by someone. Taking cognizance does not involve any formal action of any kind. It occurs as soon as a Magistrate applies his mind to the suspected commission of an offence. Cognizance is taken prior to commencement of criminal proceedings. Taking of cognizance is thus a sine qua non or condition precedent for holding a valid trial. Cognizance is taken of an offence and not of an offender. Whether or not a Magistrate has taken cognizance of an offence depends on the facts and circumstances of each case and no rule of universal application can be laid down as to when a Magistrate can be said to have taken cognizance. Chapter XIV (Sections190-199) of the Code deals with Conditions requisite for initiation of proceedings. Section 190 empowers a Magistrate to take cognizance of an offence in certain circumstances. Sub-section(1) thereof is material and may be quoted in extenso.

1) Subject to the provisions of this Chapter, any Magistrate of the first class, and any Magistrate of the second class specially empowered in this behalf under sub-section (2), may take cognizance of any offence

(a) upon receiving a complaint of facts which constitute such offence; (b) upon a police report of such facts;

(c) upon information received from any person other than a police officer, or upon his own knowledge, that such offence has been committed.

13. Chapter XV (Sections 200-203) relates to Complaints to Magistrates and covers cases before actual commencement of proceedings in a Court or before a Magistrate. Section 200 of the Code requires a Magistrate taking cognizance of an offence to examine the complainant and his witnesses on oath. Section 202, however, enacts that a Magistrate is not bound to issue process against the accused as a matter of course. It enables him before the issue of process either to inquire into the case himself or direct an investigation to be made by a Police Officer or by such other person as he thinks fit for the purpose of deciding whether there is sufficient ground for proceeding further. The underlying object of the inquiry under Section 202 is to ascertain whether there is prima facie case against the accused. It thus allows a Magistrate to form an opinion whether the process should or should not be issued. The scope of inquiry under Section 202 is, no doubt, extremely limited. At that stage, what a Magistrate is called upon to see is whether there is sufficient ground for proceeding with the matter and not whether there is sufficient ground for conviction of the accused.

14. Then comes Chapter XVI (Commencement of proceedings before Magistrates). This Chapter will apply only after cognizance of an offence has been taken by a Magistrate under Chapter XIV. Section 204, where under process can be issued, is another material provision which reads as under:

204. Issue of process.- (1) If in the opinion of a Magistrate taking cognizance of an offence there is sufficient ground for proceeding, and the case appears to be

(a) a summons-case, he shall issue his summons for the attendance of the accused, or

(b) a warrant-case, he may issue a warrant, or, if he thinks fit, a summons, for causing the accused to be brought or to appear at a certain time before such Magistrate or (if he has no jurisdiction himself) some other Magistrate having jurisdiction.

(2) No summons or warrant shall be issued against the accused under sub- section (1) until a list of the prosecution witnesses has been filed.

(3) In a proceeding instituted upon a complaint made in writing, every summons or warrant issued under sub- section (1) shall be accompanied by a copy of such complaint.

(4) When by any law for the time being in force any process-fees or other fees are payable, no process shall be issued until the fees are paid and, if such fees are not paid within a reasonable time, the Magistrate may dismiss the complaint.

(5) Nothing in this section shall be deemed to affect the provisions of section 87.

15. From the above scheme of the Code, in our judgment, it is clear that Initiation of Proceedings, dealt with in Chapter XIV, is different from Commencement of Proceedings covered by Chapter XVI. For commencement of proceedings, there must be initiation of proceedings. In other words, initiation of proceedings must precede commencement of proceedings. Without initiation of proceedings under Chapter XIV, there cannot be commencement of proceedings before a Magistrate under Chapter XVI. The High Court, in our considered view, was not right in equating initiation of proceedings under Chapter XIV with commencement of proceedings under Chapter XVI.”

In Devarapalli Lakshminarayana Reddy & Ors. v. V. Narayana Reddy & Ors., (1976)

3 SCC 252, Court Observed

“It is well settled that when a Magistrate receives a complaint, he is not bound to take cognizance if the facts alleged in the complaint, disclose the commission of an offence. This is clear from the use of the words “may take cognizance” which in the context in which they occur cannot be equated with must take cognizance”. The word “may” gives discretion to the Magistrate in the matter. If on a reading of the complaint he finds that the allegations therein disclose a cognizable offence and the forwarding of the complaint to the police for investigation under Section 156(3) will be conducive to justice and save the valuable time of the Magistrate from, being wasted in enquiring into a matter which was primarily the duty of the police to investigate, he will be justified in adopting that course as an alternative to taking cognizance of the offence, himself.

This raises the incidental question: What is meant by “taking cognizance of an offence” by a Magistrate within the contemplation of Section 190?. This expression has not been defined in the Code. But from the scheme of the Code, the content and marginal heading of Section 190 and the caption of Chapter XIV under which Sections 190 to 199 occur, it is clear that a case can be said to be instituted in a Court only when the Court takes cognizance of the offence alleged therein. The ways in which such cognizance can be taken are set out in Clauses (a), (b) and (c) of Section 190(1). Whether the Magistrate has or has not taken cognizance of the offence will depend on the circumstances of the particular case including the mode in which the case is sought to be instituted and the nature of the preliminary action, if any, taken by the Magistrate. Broadly speaking, when on receiving a complaint, the Magistrate applies his mind for the purposes of proceeding under Section 200 and the succeeding sections in Chapter XV of the Code of 1973, he is said to have taken cognizance of the offence within the meaning of Section190(1)(a). If, instead of proceeding under Chapter XV, he has in the judicial exercise of his discretion, taken action of some other kind, such as issuing a search warrant for the purpose of investigation, or ordering investigation by the police under Section 156(3), he cannot be said to have taken cognizance of any offence. [see also M.L. Sethi v. R.P. Kapur & Anr., (1967) 1 SCR

COGNISANCE TAKEN BY A MAGISTRATE NOT EMPOWERED

If any magistrate not empowered to take cognizance of an offense under S. 190(1)(a) and 190(1)(b), does erroneously in good faith take cognizance of an offense, his proceeding shall not be set aside merely on the ground of his not being empowered.

Purshottam Jethanand v. State of Kutch [9]: If a magistrate takes cognizance of an offense and proceeds with a trial though he is not empowered in that behalf and convicts the accused, the accused cannot avail himself of the defect and cannot demand that his conviction be set aside merely on the ground of such irregularity, unless there is something on the record to show that the magistrate had assumed the power, not erroneously and in good faith, but purposely having knowledge that he did not have any such power. On the other hand, if a magistrate who is not empowered to take cognizance of an offense takes cognizance upon information received or upon his own knowledge under. 190(1)(c) his proceeding shall be void and of no effect. In such a case it is immaterial whether he was acting erroneously in good faith or otherwise.

COGNISANCE OF OFFENCES BY COURT OF SESSION

No court of session shall take cognizance of any offense as a court of original jurisdiction unless the case has been committed to it by a magistrate under S. 193 of the Code. When an offense is exclusively triable by a court of session according to S.26 read with the First Schedule the Magistrate taking cognizance of such offence is required to commit the case for trial to the Court of Session after completing certain preliminary formality. Sometimes the posts of CJM and ADJ are held by one individual. In such a case the CJM was required to take cognizance and try economic offenses. It was ruled that S. 193did not apply to that case. For proper distribution of the work in the court of session and for administrative convenience, it has been provided that an Additional Session Judge or Assistant Session Judge shall try such cases as the Sessions Judge of the division may, by general or special order, make over to him for trial or as the High Court may, by special order, direct him to try under S.194 of the Code.

But it is very important to point out at this juncture that once the case is committed to the Sessions Court under Section 209 Cr.P.C, the embargo engrafted in Section 193 Cr.P.C is lifted and the Sessions Court assumes all jurisdictions which are vested with the court of Original jurisdiction including the power to summon such other co-accused persons who have not been charge-sheeted by the investigating officer. Reliance in this regard is placed upon the judgment of the Hon’ble Supreme Court in Kishun Singh v. State of Punjab, (1993) 2 SCC 16, the relevant extract of which is reproduced herein below for the kind consideration of this Hon’ble Court:

16. We have already indicated earlier from the ratio of this Court’s decisions in the cases of Raghubans Dubey [(1967) 2 SCR 423 : AIR 1967 SC 1167 : 1967 Cri LJ 1081] and Hareram [(1978) 4 SCC 58 : 1978 SCC (Cri) 496 : (1979) 1 SCR 349 : AIR 1978 SC 1568] that once the court takes cognizance of the offence (not the offender) it becomes the court’s duty to find out the real offenders and if it comes to the conclusion that besides the persons put up for trial by the police some others are also involved in the commission of the crime, it is the court’s duty to summon them to stand trial along with those already named, since summoning them would only be a part of the process of taking cognizance. We have also pointed out the difference in the language of Section 193 of the two Codes; under the old Code the Court of Session was precluded from taking cognizance of any offence as a court of original jurisdiction unless the accused was committed to it whereas under the present Code the embargo is diluted by the replacement of the words the accused by the words the case. Thus, on a plain reading of Section 193, as it presently stands once the case is committed to the Court of Session by a Magistrate under the Code, the restriction placed on the power of the Court of Session to take cognizance of an offence as a court of original jurisdiction gets lifted. On the Magistrate committing the case under Section 209 to the Court of Session the bar of Section 193 is lifted thereby investing the Court of Session complete and unfettered jurisdiction of the court of original jurisdiction to take cognizance of the offence which would include the summoning of the person or persons whose complicity in the commission of the crime can prima facie be gathered from the material available on record.

The Hon’ble Supreme Court in in Dharam Pal v. State of Haryana, (2014) 3 SCC 306 has authoritatively held that the language of Section 193 of the Code very clearly indicates that once the case is committed to the Court of Session by the learned Magistrate, the Court of Session assumes original jurisdiction and the Sessions Judge has jurisdiction to summon those persons shown in column 2 of the police report to stand trial along with those already named therein and it is absolutely fallacious to contend that the Sessions Court would have no alternative, but to wait till the stage under Section 319 Cr.P.C was reached. Thus, it becomes evident that upon committal of the case to the Sessions Court, the Court under Section 193 Cr.P.C has sufficient power to proceed to summon the accused not charge-sheeted against whom a prima facie case is made out.

CONCLUSION

The expression “to take cognizance” has not been defined in the code, nor does the code prescribed any special form of taking cognizance. The word “cognizance” is however, used in the code to indicate the point when the magistrate or judge takes judicial notice of an offence. It is a word of infinite import and is perhaps not always used in exactly the same sense. The expression ‘cognizance’ merely means ‘become aware of’ and when used with the reverence to a court or judge, it connotes ‘to take notice judicially’. It indicates the point when the court or a magistrate takes judicial notice of an offence with a view to point initiate proceeding in respect of such offence said to have been committed by someone. Taking cognizance” means cognizance of an offence and not of an offender. Once the magistrate takes cognizance of an offence. it is the duty to find who the offender really is and once he comes to the conclusion that apart from the person sent up by the police some other person is involved, it is his duty to proceed against those people. Thus, it is unfortunate to say that, the Magistrates, who have been repeatedly advised and guided by the Hon’ble Supreme Court to exercise great caution in taking cognizance, have abruptly failed in adhering to such guidance, as a result of which, the immersion of civil disputes with criminal charges is immensely growing with each passing day as reflected in the statistics furnished before the subordinate courts of India. Day in and day out, hundreds of such complaints have been entertained by some of the Magistrates and cognizance is taken. Humanly, it is impossible if there is proper application of mind. To conclude, as remarked by the Supreme Court, there is no special charm or any magical formula in the expression ‘taking cognizance’ which merely means judicial application of the mind of the Magistrate to the facts mentioned in the complaint with a view to take further judicial action.

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Present generation taking concept of marriage very lightly, they apply for divorce on unimaginable trivial issues: Madras HC

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It has to be taken most seriously that none other than the Madras High Court which is one of the oldest High Courts in India has taken most serious note of the present generation taking concept of marriage very lightly and they apply for divorce on unimaginable trivial issues and marriage is broken. This clearly reflects that the tolerance level in the present generation is decreasing very rapidly. The present generation can only at its own peril prefer to ignore what the Madras High Court has ruled in this notable case.

To start with, this leading, latest, learned and laudable judgment titled Annapoorani Vs. S. Ritesh in C.R.P.No. 106 of 2021 and C.M.P. No. 995 of 2021 authored by a Single Judge Bench of Justice V Bhavani Subbaroyan of the Madras High Court sets the ball rolling in para 1 wherein it is put forth that, “The present Civil Revision Petition has been filed under Article 227 Constitution of India with the prayer to strike off the petition in O.P. 4784 of 2019 on the file of III Additional Family Court, Chennai on the ground that the invocation of Section 12(1)(a) of the Hindu Marriage Act is not sustainable by raising various grounds.”

To put things in perspective, the Bench then points out in para 2 that, “The present Civil Revision Petition has been filed by the wife as against the petition in O.P.No.4784 of 2019 filed by the respondent / husband before the said Family Court. The respondent / husband has filed the Original Petition before the Family Court against the petitioner / wife herein on the ground that the respondent / wife is suffering from Polycystic Ovarian Syndrome (for brevity ‘PSOS’) and the respondent / wife was not fit for cohabitation or give birth to a child. Apart from that, he has also raised many other issues, instances as against the wife for seeking declaration declaring that the marriage solemnized on 01.07.2018, which was subsequently registered on the same day, vide Sl.No.95 of 2018 before the Marriage Registrar, Joint II, Saidapet, Chennai – 15, as null and void. After filing this petition, the respondent / husband has also filed an I.A. 1 of 2020 seeking for an amendment to include the provision of law from 12(1)(a) and 12(1)(a) and (c). The said petition seeking for amendment is pending before the Family Court for decision.”

Needless to say, the Bench then also mentions in para 5 that, “Heard the learned counsel for the petitioner in length and perused the materials available on record.”

As it turned out, the Bench then points out in para 6 that, “It is to be noted that the petitioner herein had approached this Court seeking to strike off the petition under Article 227 of the Constitution of India on the alleged facts which are pleaded in O.P.No.4784 of 2019 before the Family Court, Chennai . She also claims that she wedded to the respondent / husband on 01.07.2018, as per the Hindu Marriage Act and the same is the arranged marriage; arranged by the parents, elders and well-wishers of both the parties. However, the said marriage did not last long on the alleged ground of physical condition that the petitioner / wife cannot give birth to a child, as alleged by the husband, owing to ‘PSOS’ on the part of the wife.”

Be it noted, the Bench then mentions in para 7 that, “On a careful perusal of the said petition filed before the Family Court, Chennai, it is seen that the respondent . husband has narrated various facts apart from the issue of ‘PSOS’ which he relies most as a ground for seeking divorce. It is also seen that the respondent / husband has made categorical allegation that the petitioner / wife is suffering from ‘PSOS’ due to which’ her menstrual cycle will extend for more than 25 days and she is under mediation ever since the date of puberty.”

It is also worth noting that it is then pointed out in para 8 that, “The issue of ‘PSOS’, which is now commonly prevailing among the present generation of women due to various habits, such as, mental stress and to a very great extent, the contaminated environment, in which we live, is also one of the cause for particular women, who develop this physical problem. The term ‘PSOS’ by itself cannot be termed as ‘impotency’. Impotency is different and unable to give birth to a child is different, owing to various physical and mental reasons.”

Please read concluding on thedailyguardian.com

Most remarkably, what forms the cornerstone of this leading judgment is then enunciated in para 9 wherein it is held that, “On a careful perusal of the entire pleadings in a petition filed by the respondent / husband, it is clear that he has not pleaded that the wife’s inability to give birth to a child as ‘Impotency’, but he seeks for annulment of a marriage on the reason that there was no cohabitation and wife could not bear a child. In fact, he has also pleaded that the wife has not cooperated for cohabitation owing to her medical condition, as she was almost 25 days on her menstrual cycle. The marriage being a bondage between men and women as husband and wife, it not only limits to a biological needs and desires, but also as a companion in life caring forward to the next generation through their children. This bondage is a factor, through which, we are living in this world for centuries. However, the concept of marriage in the present generation are taken very lightly and even for trivial issues, they file divorce and marriage is broken. That is why the Family Courts increase in numbers to cater the demand of intolerant couple, who are unmindful of the institution of marriage, break the relationship on unimaginable trivial reasons.”

In the present context in this notable case, the Bench then observes in para 10 that, “As far as the present case on hand is concerned, on going through the entire pleadings it is clear that the respondent / husband has not spelt out any single word connoting impotency towards his wife/ petitioner herein. But he has approached the Family Court mainly on the issue complaining that his wife/ petitioner herein could not bear a child on two reasons, viz., firstly, there is no cohabitation, secondly, the wife is suffering from ‘PSOS’ due to which the said wife suffer a improper menstrual cycle. At this stage of the case, the petiitoner / wife has filed the present Civil Revision Petition, who has not filed any counter to the said allegation.

For the sake of clarity, the Bench then makes it a point to clarify in para 11 stating that, “With regard to invocation of Article 227 of Constitution of India is concerned, it is only a supervisory jurisdiction of the High Court on its Subordinate Courts and in several cases, Hon’ble Supreme Court as well as this Court have confirmed that when the suit filed on frivolous fact and when there is an abuse of process of law, the court can extend its power strictly and if on plain reading of the plaint, it shows abuse of process of law, the court can intervene. The supervisory jurisdiction of this Court can be invoked only when there is manifest error committed by the Subordinate court and the said arguments of the petitioner’s counsel does not come under the said reason and the same will not fall under realm of exercising the power under Article 227 Constitution of India, as the respondent / husband contrary to the submissions made by the learned counsel petitioner, has not made any allegation in the petition with regard to the impotency of the petitioner / wife.”

What’s more, it is then pertinently mentioned which is quite ostensible also in para 12 that, “It is a legitimate expectation of the husband to live with his wife and have cohabitation and bear children and if the same is not achieved owing to any physical and mental problem among the partners, it is quite logical that either of the parties will approach the court for seeking divorce on such allegations. Except in few cases, where the couple understand each other and come forward with the life issue-less or even go for adoption, however, the same has to be proved by the person claiming that his or her partner is incapacitated to give or bear the child. But in the case on hand, the petitioner is not in a position to show that there is no cause of action disclosed by the averments made in the petition filed by the husband/respondent or that the cause of action disclosed by the averments made in the petition is not natural, but illusive.”

Finally, it is then held in the final para 13 that, “Under these circumstances, it could be seen that the petitioner has not made out any grounds seeking for intervention of this Court under Article 227 of the Constitution of India to strike off the petition in O.P.No.4784 of 2019 on the file of III Additional Family Court, Chennai. Accordingly, the Civil Revision Petition does not even merit admission and the same is liable to be dismissed at the threshold and the same is dismissed. The learned III Additional Judge, Family Court, Chennai shall proceed on merit in the said H.M.O.P.No.4784 of 2019 uninfluenced by the observations made by this Court in the present Civil Revision Petition. In the result, the present Civil Revision Petition is dismissed. Consequently, the connected miscellaneous petition is closed. No costs.”

To conclude, it is high time and the present generation must at least now wake up their ideas and adhere to what the Madras High Court has said in totality. They must learn to be more tolerant towards each other as had been the case in the earlier generations and stop applying for divorce on unimaginable trivial issues as has been very rightly pointed out also by the Madras High Court in this notable case also. Only then will they be able to live a happy and peaceful life. What is the harm in doing so? Why start fuming in anger over very trivial issues and then foolishly going in for litigation which hurts both the parties as both have to spend money on hiring lawyers and other expenses! They will themselves stand to gain the most if they prefer to do so as has been very commendably suggested by the Madras High Court in this leading case. Justice V Bhavani Subbaroyan of the Madras High Court who is herself a woman and who has delivered this brief, balanced and brilliant judgment has set the record straight on this and it is the bounden duty of the present generation to pay heed to what she has said in her commendable and noteworthy judgment which is being widely appreciated also! Let’s fervently hope that they do so accordingly!

Sanjeev Sirohi, Advocate,

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CENTRE ISSUES ORDINANCE TO INTRODUCE PRE-PACKAGED INSOLVENCY FOR MSMES

Tarun Nangia

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The IBC Amendment Ordinance has made available pre packaged insolvency process for Micro Small and Medium Enterprises (MSME). There are a little over 6 lakh MSMEs in the country.

The IBC Amendment Ordinance 2021 (“Ordinance”) makes available the pre-packaged route to genuine and viable cases, to ensure least business disruption. While modelled on debtor-in-possession approach, it vests significant consent rights to the financial creditors, such that the mechanism cannot be mis-used by errant promoters. Further, adopting plan evaluation process akin to Swiss Challenge, it retains competitive tension such that promoters propose plans with least impairment to rights and claims of creditors. The ability of the committee of creditors to require dilution of promoter shareholding/ control, in cases resolution plans submitted by the corporate debtor provides for impairment of any claims owed by such corporate debtor, should also be a significant deterrent against unreasonable terms in resolution plans, said Soumitra Majumdar, Partner J Sagar Associates

“As we had seen in the past, contractual restructurings are fraught with major co-ordination problems, which should get adequately redressed by this route. Protecting the process from competing litigations and co-ordinating the consent process, this approach should solve issues arising from fragmented credit arrangements. As with any legislation, this Ordinance will also need to evolve, as it goes along to address implementation issues which will arise. Illustratively, the payment/ restructuring terms to dissenting creditors may have to be dealt with soon, especially in light of the recent Supreme Court judgement. In summary, this is a welcome move, aimed at flexible, timely and viable resolutions, with the sanctity of a statutory process,” Majumdar said.

MSME’s contribute significantly to India’s economy and also are the largest employers cumulatively. The pre packaged insolvency process will quicken the process of resolution of MSME’s.

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Indus Biotech vs Kotak India: Decoding Supreme Court’s approach towards arbitrability of insolvency disputes

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There has been a lot of discussion across jurisdictions regarding the intersection and interaction between insolvency and arbitration. On 26th March 2021, the Supreme Court of India rendered its judgment in Indus Biotech vs. Kotak India, putting to rest some important questions surrounding this relationship, most importantly the question as to when do insolvency disputes become inarbitrable. This article is an attempt to decode the observations of the Supreme Court and their impact on future questions relating to arbitrability.

BACKGROUND TO THE DISPUTE

Kotak India Venture Fund had subscribed to Optionally Convertible Redeemable Preference Shares [“OCRPS”] issued by Indus Biotech Private Limited. There arose a dispute between the parties regarding the appropriate formula to be adopted, and to arrive at the actual percentage of the paid-up share capital which would be converted into equity shares and the refund, if any, thereafter.

When Indus failed to redeem the OCRPS, Kotak approached the National Company Law Tribunal (hereinafter “NCLT”) seeking the initiation of corporate insolvency resolution process under Section 7 of the Insolvency & Bankruptcy Code, 2016. At the same time, Indus invoked the arbitration clause provided under the Share Subscription and Shareholders Agreement (“SSSA”) and requested the Tribunal to refer the parties to Arbitration under Section 8 of the Arbitration & Conciliation Act, 1996.

NCLT’S DECISION

The Adjudicating Authority observed that in a Section 7 petition there has to be a judicial determination as to whether there has been a “default” within the meaning of Section 3(12) of the IBC, and in that light determined that a ‘default’ had not occurred in the instant case. The Tribunal also noted that Indus was a solvent, debt-free, and profitable company. Considering that the dispute was purely contractual in nature, the NCLT directed the parties to resolve their dispute by arbitration, thereby dismissing the application filed by Kotak under the IBC.

Aggrieved by the said decision, Kotak approached the Supreme Court of India by way of a Special Leave Petition. The primary contention raised by Kotak before the Supreme Court was that the dispute sought to be raised, being a matter in rem, belongs to that class of litigation which falls out of the scope and ambit of arbitration. It is in this context that the aforementioned dispute becomes extremely relevant to the insolvency versus arbitration debate.

THE TEST OF ARBITRABILITY IN INDIA

In order to understand the importance of the Apex Court’s decision in the instant case, it becomes imperative to look at the test of arbitrability in India and how it has transformed in the recent times.

Until recently, the decision of the Supreme Court in Booz Allen and Hamilton Inc. v. SBI Home Finance Ltd., used to serve as the primary guiding point in so far as the question of arbitrability was concerned. The Apex Court in Booz Allen, using a rights-based approach formulated a test wherein disputes involving rights in personam (i.e., rights enforceable against a particular person) were held to be amenable to arbitration, whereas disputes involving rights in rem (i.e., rights enforceable against the whole world at large) were characterized as inarbitrable. Further, the Court also listed certain examples of inarbitrable disputes, including insolvency disputes.

However, due to its overly broad nature and its inability to differentiate between the mere involvement of rights in rem and the effects of such involvement, i.e., any erga omnes effect of such involvement, the test formulated in Booz Allen was considered to be inherently problematic and has been rightly criticized by noted arbitration scholars such as Ajar Rab.

At this juncture, it is also important to refer to the landmark decision of Swiss Ribbons Pvt. Ltd. & Anr. vs. Union of India & Ors., which is often cited to support the argument that disputes involving insolvency are inarbitrable in nature. Kotak, in the instant case, too had placed reliance on Swiss Ribbons. However, it is argued that a simple reading of the Apex Court’s observations in Swiss Ribbons would highlight as to why such reliance is misplaced. The SC had clearly observed that the Code gets triggered on the admission of an application and upon such admission the proceeding becomes in rem in nature (Paragraph 52 of the Judgment). Therefore, the argument that the Court had observed that insolvency disputes are inarbitrable per se is wrong and misplaced.

In December 2020, through the case of Vidya Drolia & Ors. vs. Durga Trading Corporation, the Supreme Court devised a more nuanced four-fold test of arbitrability. This test fills the void of ambiguity that was created by Booz Allen, and therefore, any further reliance upon Booz Allen has become redundant. As per the test, a dispute would become inarbitrable when:

(I) it relates to actions in rem or actions that do not pertain to subordinate rights in personam that arise from rights in rem.

(II) it affects third party rights; has erga omnes effect; requires centralized adjudication, and mutual adjudication would not be appropriate and enforceable.

(III) it relates to the inalienable sovereign and public interest functions of the state; and

(IV) it is expressly or by necessary implication non-arbitrable as per mandatory statute/s.

ARBITRATION ACT VS IBC: WHAT PREVAILS?

There are two fundamental rules relating to repugnancy of Statutes which must be understood in order to answer this question: (I) the provisions of special law prevail over the provisions of general law [Supreme Court in Sharat Babu Digumarti v. Govt. of NCT of Delhi], and (II) when two special laws have provisions repugnant to each other, then the statue later in time shall prevail [Supreme Court in KSL And Industries Ltd. v/s Arihant Threads Ltd]. 

The first rule does not have any application in so far as the tussle between the Arbitration Act and the IBC is concerned, considering that both these statutes have been enacted for a special purpose. While the Arbitration & Conciliation Act is a special law, consolidating and amending the law relating to arbitration and matters connected therewith or incidental thereto [Supreme Court in Consolidated Engineering Enterprises v/s. Principal Secretary, Irrigation Department & Others], the IBC was introduced to “consolidate and amend the laws relating to reorganization and insolvency resolution of corporate persons”. Therefore, the answer to the instant question lies in the second rule of repugnancy.

Coming to the second rule, the IBC being a statute enacted later in time will prevail over the Arbitration & Conciliation Act. The over-riding effect of IBC has been granted statutory recognition under Section 238 of the Code, which provides that the provisions of the Code shall have an over-riding effect over all other statutes. In order to understand the position better, a reference can be made to the case of ABG Shipyard Limited v/s. ICICI Bank Ltd., wherein NCLT Ahmedabad held that the provisions of IBC would prevail over those of the Electricity Act, 2003 for the reason that IBC being later in time would prevail over the Electricity Act (considering both the statutes are special law).

SUPREME COURT’S OBSERVATIONS IN INDUS BIOTECH VS KOTAK

The observations of the Supreme Court can be divided into two heads, considering the aforementioned context:

(1) ARBITRABILITY OF INSOLVENCY DISPUTES

With respect to the question of arbitrability, the Court took a nuanced approach and held that an insolvency proceeding becomes in rem only after it is admitted. An admission leads to the creation of a third party right in all the creditors of the corporate debtor, thereby creating an erga omnes effect. Therefore, the Apex Court observed that the moment an insolvency application is admitted under Section 7 of the IBC, the dispute would become inarbitrable and a Section 8 application under the Arbitration & Conciliation Act would not be maintainable.

On the other hand, it was also observed by the Apex Court that if the Adjudicating Authority leads to the conclusion that there is no default committed by the Company and thereby dismisses the application, it would be open for the parties to secure the appointment of an Arbitral Tribunal in an appropriate proceeding as contemplated in law.

(2) Over-riding effect of the IBC and its Implication

At the very outset, the Apex Court observed that the position of law that the IBC shall override all other laws as provided under Section 238 needs no elaboration. In what is an extremely important observation, the Court went to describe the implication of this over-riding effect in so far as the relationship between insolvency and arbitration is concerned. The implication, as per the Court, would be that the Adjudicating Authority is duty bound to deal with the enquiry under Section 7 of the IBC by examining the material placed before it and record a satisfaction as to whether there is a default or not, even if an application under Section 8 of the Arbitration Act has been filed simultaneously.

COMMENT

Sound Approach Towards Arbitrability

The authors are of the opinion that the Court has taken a sound and progressive approach towards the question of arbitrability, by choosing not to tread on the ambiguous path laid down by Booz Allen and instead choosing to follow the latest and more nuanced test laid down in Vijay Drolia. By doing so, the Court, instead of making blanket observations rendering an entire category of disputes inarbitrable, has provided some much-needed clarity as to when would insolvency proceedings create third party rights and truly become in rem in nature. This is also consistent with the proposition that disputes should become inarbitrable only when they create an erga omnes effect and not due to the mere involvement of rights in rem. To quote an example, an intellectual property right is a right in rem, however, a dispute relating to the licensing of a patent, is purely between the owner and the licensee and is, therefore, inter partes. It has no effect erga omnes and should be amenable to arbitration. Similarly, an insolvency proceeding becomes in rem only when it effects third party rights, i.e., upon admission, and if there is no admission, such disputes are fully capable of being settled by arbitration.

PREVENTION OF DRESSING UP OF CLAIMS

Further, by holding that an insolvency proceeding becomes in rem only upon admission, the Court has put in place a system which would prevent the “dressing up” of reliefs in so far as insolvency disputes are concerned. The Bombay High Court in the case of Rakesh Malhotra vs Rajinder Kumar Malhotra & Ors. described “dressed up” reliefs as reliefs which are designed as such to evade the arbitration clause. By the virtue of the impugned decision (Indus), a party would no longer be able to simple evade or wriggle out of the arbitration clause, by merely filing an insolvency application and claiming that the dispute has become inarbitrable. The Adjudicating Authority would necessarily have to determine the question relating to the existence of a default, which would in turn bring out the true nature of the dispute.

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Legally Speaking

The delusion of inclusivity in the National Education Policy, 2020

Delving into the aspect of digitisation, NEP 2020 has called for substantial investment for upgrading the digital infrastructure and for establishing digital repositories, online teaching platforms, high-quality online content, and so on. The policy has strongly addressed the significance of technology and has intended to introduce the pedagogy for online teaching and learning. The National Educational Technology Forum (NETF) is an innovative component of the policy through which the field of research has been centralised and which aims to channelise the dissemination of academic information.

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The National Education Policy (hereinafter referred to as “NEP”), approved in July 2020, has espoused notable changes in the education system in India. The committee headed by former ISRO Chief K. Kasturirangan has advocated a holistic approach to address the incumbent challenges that are being faced by the marginalized sections of the society. It is aiming at a complete restructuring of academia with the cardinal intent to ensure equity and inclusivity. Deliberating on the issue of cultural and economic inclusivity, it would be prudent to analyze the surrounding factors associated with the aspects of digitization, language, and privatization in the sector of education.

Delving into the aspect of digitization, this policy has called for substantial investment for upgrading the digital infrastructure and for establishing digital repositories, online teaching platforms, high-quality online content, and so on. The policy has strongly addressed the significance of technology and has intended to introduce the pedagogy for online teaching and learning. The National Educational Technology Forum (NETF) is an innovative component of the policy through which the field of research has been centralized and which aims to channelize the dissemination of academic information.

The aforementioned issue is sorely affected by the aspect of accessibility that is strongly hindered by the pre-existing rural-urban divide. Digital education is not only about lecture videos but also about the various digital platforms, technology, tools, interactivity, curation, content, and a lot more. The lack of resources to provide digital education will further make the rural versus urban divide even stronger on account of absent or inefficient internet connectivity in the rural areas. According to data released by the National Sample Survey Office (NSSO), only 4.4% of rural households and 23.4% of urban households own computers. Out of which only 14.9% of the rural households have an internet connection in their computers. It was quite surprising to note that 70% of the rural population lacks access to an active internet facility, as per a report by Nielson in 2019. The NITI Aayog in one of its reports, namely “Strategy for New India@75” had asseverated that more than fifty-five thousand villages are in need of mobile network coverage. The factual scenario has been largely overlooked, and the present allocation of funds to the sector would not suffice for such drastic infrastructural change. The ongoing pandemic situation has highlighted the glaring inequalities among the array of opportunities for learning and educational support.

In the landmark case of State of Tamil Nadu & Ors. v. K. Shyam Sunder & Ors., it was held that “There has been a campaign that right to education under Article 21-A of our Constitution be read in conformity with Articles 14 and 15 of the Constitution and there must be no discrimination in the quality of education….” Going by the aforementioned dictum, it is an obligation on the State to effectively repress any form of inequality that might emerge out of its policies. Addressing the digital divide in the nation, there have been notable suggestions of the use of television and radios for the broadcasting of educational programs but how far will it be successful in bridging the digital gap is still a matter of concern.

In consonance to the first NEP, the continuance of the Three-Language Formula (hereinafter referred to as “TLF”) is a notable feature in the present NEP, 2020, which recommends mother tongue as the prescribed medium of instruction. According to the Census released in the year 2011, there are 270 identifiable mother tongues; however, only 47 of them were used as mediums of instruction in Indian classrooms as per a 2017 study. It is not feasible for teachers to impart lessons in so many languages as students often have different mother tongues. It is not a viable option for those children whose parents have transferable jobs. Moreover, students often migrate to other States as well as other countries to pursue their higher education and under such a scenario, it is imperative to have a common language for classroom interaction. Most of the academic resources are available in English which makes it all the more important to have a good grasp of the subject. Even within the country, it is not feasible for every university to have faculties who can explain in so many regional languages. The aforementioned contentions portray the problems that shall be created due to the implementation of TLF.

While the government intends to upgrade the education system and match it to the global standards, making English optional is worrisome for the reason that English is a global language. It is important to formulate the academic curriculum in consonance with the requisites imposed by the industries. From a perusal of the basic requisites imposed by the employment sector, it is discernible that candidates who are affluent in English have always been preferred and such requirement is mandatory in the majority of jobs, especially in the corporate sector. This is the cardinal reason why parents strive to get their wards enrolled in an English medium school. Although the policymakers had the intention to make way for the vernacular subjects, one also needs to consider the opportunities available. From such a viewpoint, the dominance of English is quite vivid, and people with no access to English are often excluded from all spheres of socio-economic and political life. Any form of detachment from English will thus create a huge disparity among the students.

Another striking facet of the policy is its attempt to shore up the involvement of private bodies, which was once criticized when brought forth by the policy of 1986. The concept of “alternative models of education” has eased the statutory restrictions and has thereby created a convenient road map for the “non-governmental philanthropic organizations” in the establishment of schools. To establish private schools, the policy has not sufficiently emphasized the strict adherence to the various norms enumerated in the Right to Education Act (hereinafter referred to as “RTE Act”). As a consequence, certain states like Himachal Pradesh which had done away with one teacher schools will again be pushed back into promoting such educational inequity. This aspect brings forth a reasonable apprehension that certain individuals camouflaged under the garb of the term “public-spirited private” might misemploy the provisions of the policy to proliferate their profits. The policy has inconspicuously made enough room for them as it states, “…the encouragement and facilitation of true philanthropic private and community participation.”

Furthermore, extending the scope for autonomy will empower the colleges to initiate self-financed courses and indiscriminately enhance the fee structure. This unhindered authority will promote inequality within the sector, which will surely affect the outreach of higher education among the lower class. Government scrutiny, coupled with strict regulations is of paramount importance to ensure a preventive and punitive framework to subvert any high-handedness by the private bodies.

Deliberating on the schooling system, it has been observed that the majority of government schools have been infamous for their outdated infrastructure, the dearth of well-equipped laboratories, and lack of opportunities in non-conventional subjects. These factors cumulatively compel the students to opt for private schools which charge significantly higher than the government ones. In India, at least 45% of the school enrolment is in private institutions. For the professional courses, 72.5% of the undergraduates are enrolled in the private sector while for the post-graduate students it is 60.6%. The above statistics substantiate the high dependency of parents on private institutes which makes it all the more important to cap the educational charges, otherwise, quality education shall remain a privilege accessible only by the rich and the urban middle-class students. Although some states like Gujarat have passed laws to regulate the fees chargeable by private schools, it still imposes a financial burden on the majority of the Indian population. Under such a scenario, the policy should have ensured drastic improvisation in the government schools and institutions so that the commoners considered them at par with the modern private institutions. Privatization will upgrade the quality of education in the country, but it will not cut the Gordian knot which led to the enactment of the RTE Act. To substantiate further, it would be appropriate to bring forth the views of the United Nations Special Rapporteur on the Right to Education, Mr. Kishore Singh, who had stated that, “Privatisation negatively affects the right to education both as an entitlement and as empowerment. It breeds exclusion and marginalization, with crippling effects on the fundamental principle of equality of opportunity in education.” Instead of privatization at such a large scale, it would have been more pragmatic if education at all levels could have been enclosed as a legal right. Without this, this imminent commercialization of education is bound to affect the Constitutional ethos of equality and inclusivity.

The apparent outcomes of the policy seem contradictory to the goal of ensuring quality education to all. In a country where nearly 50% of the students depend on free education, the increasing intervention of corporates in the education system is not a viable remedy to its core problems. Moreover, the implementation of TLF will lead to several difficulties, as this formula is an outdated solution to multilingualism and to the idea of having a connecting language in this diverse linguistic demography called India. Thereby, the policy appears to be antithetical to the very core idea of inclusivity.

The continuance of the Three-Language Formula is a notable feature in the present NEP, 2020, which recommends mother tongue as the prescribed medium of instruction. According to the Census released in the year 2011, there are 270 identifiable mother tongues; however, only 47 of them were used as mediums of instruction in Indian classrooms as per a 2017 study.

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