RIGHT TO PRIVACY IN MARRIAGE: AN ANALYSIS - The Daily Guardian
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RIGHT TO PRIVACY IN MARRIAGE: AN ANALYSIS

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In a clear, cogent, commendable, composed and convincing judgment titled Neha vs Vibhor Garg in CR No. 1616 of 2020 and CR No. 2538 of 2020 (O&M) that was delivered finally on 12.11.2021, the single Judge Bench comprising of Justice Lisa Gill of the Punjab and Haryana High Court while hearing a matrimonial dispute matter has held categorically that recording of telephonic conversations of the wife without her knowledge amounts to infringement of her privacy and the transcripts of such conversations cannot be accepted as evidence by Family Courts. It must be mentioned here that the husband had filed for divorce from the woman in 2017 to whom he was married in 2009 and the couple has a daughter. We thus see that the Punjab and Haryana High Court Bench set aside the 2020 Bhatinda Family Court order which had allowed the husband to prove the telephonic conversation between him and his wife to make out a case of cruelty against his wife. The husband had filed a divorce suit under Section 13 of the Hindu Marriage Act.

In hindsight, we saw earlier also how Justice Arun Monga of the Punjab and Haryana High Court had in 2020 asserted quite unequivocally that, “The act of clandestinely recording conversation would, rather, amount to infringement of privacy rights.” In no uncertain terms, Justice Arun had also very rightly underscored that, “An undercover conduct of the husband to record private spousal conversation without knowledge of the other is an infringement of privacy and can hardly be appreciated.”

To put things in perspective, the Single Judge Bench comprising of Justice Lisa Gill of the Punjab and Haryana High Court said that though a Family Court is not bound by strict rules of evidence, it is not at liberty to accept a CD containing secret recordings of wife’s telephonic conversation in evidence which is a clear cut infringement of the right of privacy of the wife. Justice Lisa Gill also said quite emphatically, elegantly, eloquently and effectively that, “Recording of telephonic conversation of the wife without her knowledge is a clear cut infringement of her privacy…it cannot be said that as the Family Court is not bound by strict rules of evidence, it is at liberty to accept the CD in evidence which is a clear cut infringement of the right of privacy of the wife.” Very rightly so!

It may be recalled that the Punjab and Haryana High Court was hearing two petitions – one that was filed by the husband and the other filed by the wife. The wife had challenged an order of the Bathinda Family Court clearly allowing the husband to finally reproduce telephonic recordings of their conversation. The husband on the other hand, had sought expeditious disposal of his divorce petition.

Needless to say, the main issue that was before the Punjab and Haryana High Court to adjudicate upon was whether the order of the Family Court allowing the husband to produce recordings of the conversations between him and the wife was against the fundamental right to privacy of the wife. The petitioner-wife minced just no words to argue vehemently that the evidence sought to be led by the husband was completely beyond pleadings and, therefore, absolutely impermissible. It was pointed out that the pleadings did not refer to any such conversations which were sought to be proved. It was also submitted that therefore, the evidence was wrongly allowed by the Family Court.

As it turned out, the Bench stated at the outset that even if the general averments in the petition about cruelty were proven by the evidence requested to be supplied, the CDs in question could not be admitted in evidence. The Bench also went on to say in this regard that recording the wife’s telephonic discussion without her consent is a clear cut breach of her privacy.

To start with, the single Judge Bench of Justice Lisa Gill who authored this extremely learned, laudable, latest and landmark judgment sets the ball rolling by first and foremost observing in the opening para that, “This matter is being taken up for hearing through video conferencing due to outbreak of the pandemic, COVID-19. This order shall dispose of CR No.1616 of 2020 and CR No. 2538 of 2020. CR No. 1616 of 2020 has been filed by the petitioner (wife) arrayed as respondent in the petition under Section 13 of the Hindu Marriage Act, 1955 (for short ‘the Act’) filed by the husband before the learned District judge, Panchkula, challenging order dated 29.01.2020, passed by the learned Principal Judge/Family Court, Bathinda, whereby the husband has been allowed to prove the Compact Disc (for short ‘CD’) pertaining to conversation between him and the wife subject to the condition of its correctness.”

Furthermore, the Bench then states that, “CR No. 2538 of 2020 has been filed by the husband, seeking direction to the learned Family Court to expedite proceedings in the petition under Section 13 of the Act, in a time bound manner. This revision petition was directed to be listed along with CR No. 1616 of 2020.”

While elaborating on the facts, the Bench then observes that, “Brief facts of the matter as emanating from CR No. 1616 of 2020 are that petition under Section 13 of the Act was filed by the respondent-husband seeking divorce on various grounds. Marriage between the parties was solemnized on 20.02.2009. A daughter was born out of the wedlock on 11.05.2011 and petition seeking divorce filed in the year 2017. An amended petition was filed on 03.04.2018. Husband submitted his affidavit by way of evidence in chief on 07.12.2018. When the matter was listed for cross-examination, an application was moved by the husband on 09.07.2019 seeking permission to submit his supplementary affidavit by way of examination-in-chief along with CD and transcriptions of conversations so recorded in the memory cards/chips of the respective mobile phones. Reply was filed to the application. Application dated 09.07.2019 was allowed by the learned Family Court vide impugned order dated 29.01.2020 while observing that the husband is allowed to prove the CD pertaining to the conversations between him and his wife subject to the condition of correctness and that strict principles of evidence are not applicable to the proceedings before the Family Court keeping in view Section 14 and 20 of the Family Court Act.”

Of course, the Bench then mentions that, “Aggrieved therefrom, CR No. 1616 of 2020 has been filed by the wife.” After hearing the learned counsel for the parties, the Bench then while noting this and also that the files have been gone through with their able assistance goes on to observe that, “Respondent-husband in this case filed a petition under Section 13 of the Act, seeking dissolution of marriage by decree of divorce on various grounds. Admittedly, there is no mention of the conversations recorded by the husband between the years 2010 to 2016 in the said petition. There is no mention on these conversations in the amended petition filed on 03.04.2018 as well. It is further a matter of record that in the affidavit filed by the husband by way of examination-in-chief, there is again no mention of these conversations. It is only on 09.07.2019 that an application is moved by the husband to submit his supplementary affidavit by way of examination-in-chief along with memory cards/chips of the respective mobile phones, CD and transcript of alleged conversation/s so recorded in memory cards/chips of the respective mobile phones. It is stated in application dated 09.07.2019 that various conversations between the husband and his wife from November 2010 to December 2010, August 2016 to December 2016, were recorded and stored/procured by him. These conversations were further recorded on CD for convenience. It is further averred that due to inadvertence, specific mention of these conversations has not been made in the earlier affidavit. It is thus evident that the husband was well aware of these conversations which could very well have formed part of the pleadings at the very outset, but clearly did not find mention. Furthermore, there was no averment regarding these conversations in the amended petition or even in the affidavit dated 07.1.2018 tendered in examination-in-chief. Moreover, even if it is accepted that the general averments in the petition regarding cruelty would very well cover the evidence sought to be produced, in my considered opinion the CD’s in question cannot be permitted in evidence. This is so for various reasons as delineated in the following paras.”

As we see, the Bench then stipulates that, “Before proceeding further it is relevant to note that without doubt provisions of the Indian Evidence Act, 1872, have been diluted by Section 14 of the Family Court Act, which reads as under:-

“A Family Court may receive as evidence any report, statement, documents, information or matter that may, in its opinion, assist it to deal effectually with a dispute, whether or not the same would be otherwise relevant or admissible under the Indian Evidence Act.””

To be sure, the Bench then holds that, “Clearly, the technicalities and procedures otherwise followed by the Civil and Criminal Courts may not be applicable to proceedings before the Family Court. There is in-fact no quarrel with argument of learned counsel for the respondent that a Family Court is not bound by strict rules of evidence.” While continuing in the same vein, the Bench then hastens to add that, “At the same time, it cannot be ignored that acceptance of the CD in question shall amount to a clear breach of fundamental right of the petitioner-wife i.e., her right to privacy, as has been upheld in various judicial pronouncements. The Hon’ble Supreme Court in People’s Union for Civil Liberties Vs. Union of India, (1997)1 SCC 301, has observed as under:-

“18. The right to privacy-by-itself has not been identified under the Constitution. As a concept it may be too broad and moralistic to define it judicially. Whether right to privacy can be claimed or has been infringed in a given case would depend on the facts of the said case. But the right to hold a telephone conversation in the privacy of one’s home or office without interference can certainly be claimed as “right to privacy”. Conversations on the telephone are often of an intimate and confidential character. Telephone-conversation is a part of modern man’s life. It is considered so important that more and more people are carrying mobile telephone instruments in their pockets. Telephone conversation is an important facet of a man’s private life. Right to privacy would certainly include telephone-conversation in the privacy of one’s home or office. Telephone-tapping would, thus, infract Article 21 of the Constitution of India unless it is permitted under the procedure established by law.”” As a corollary, the Bench then holds that, “Thus, recording of telephonic conversation of the wife without her knowledge, is a clear cut infringement of her privacy.”

In addition, the Bench then clearly also points out that, “Furthermore, it cannot be said or ascertained as to the circumstances in which the conversations were held or the manner in which response elicited by a person who was recording the conversations, because it is evident that these conversations would necessarily have been recorded surreptitiously by one of the parties. A Coordinate Bench of this High Court in Deepinder Singh Mann Vs. Ranjit Kaur, 2015 (5) RCR (Civil) 691 in this respect has observed as under:-

“3. As an aside I would say that there are voice changing software available on the Net waiting to be downloaded to be applied in hiding or creating identities, creating true or false evidence, making room for impersonation, deceit and the like, which may be hard to crack without special detection by experts specially trained in this evolving field of investigation when experts are not easily found or available presently in courtrooms which remain severely handicapped and ill equipped with newfangled tools for use or misuse of modern science and technology and to easily apply to a case in hand the repercussions of which may be far reaching and beyond one’s ken.

Read concluding part on www.thedailyguardian.com

It would be a rather dangerous trend to allow people to be fixed or exposed on Audio CDs obtained by malfeasance, in its object of collecting evidence and the secretive means adopted to achieve a lawful or an unlawful end. The computer age is a dangerous age. The mobile phone or electronic gadgets should not be readily allowed to be used as an instrument of torture and oppression against a wife in a matrimonial action unless the court in satisfied that it might tilt the balance between justice and injustice in its cumulative judicial experience, wisdom and discretion in decision making. A married woman too has a valuable right to her privacy of speech with her husband in the confines of the bedroom. Couples speak many things with each other unwary that every word would be weighed one day and put under the judicial scanner. Courts should be very circumspect in such matters before allowing such applications as presented in this case. The Courts cannot actively participate in approving mischief and invite invasion of privacy rights not called for in deciding a case where parties are free to adduce evidence aliunde which may or may not be sufficient to obtain a decree of dissolution of marriage. Fools rush in where angels fear to tread.””

Going ahead, the Bench then holds that, “The caution which has been sounded is indeed to be heeded. To permit a spouse to record conversations with an unsuspecting partner and to produce the same in a court of law, to be made the basis of deciding a petition under Section 13 of the Act, would indeed not be feasible. It is rightly observed in Deepinder Singh’s case (Supra) that couples speak many things with each other, unaware that every word would be weighed in a Court of law. Moreover, the court would be ill-equipped to assess the circumstances in which a particular response may have been elicited from a spouse at a given point of time, notwithstanding the right of cross-examination.”

While citing the relevant case law, the Bench then specifies that, “In Dr. Tripat Deep Singh Vs. Dr (Smt.) Paviter Kaur, 2018 (3) RCR (Civil) 71, it was held that conversations between husband and wife in daily routine cannot be made the basis of or considered for deciding a petition under Section 13 of the Act. The Coordinate Bench of this High Court in the said case has observed as under:-

“16 The conversation between husband and wife in daily routine, in the considered opinion of this court, cannot be made basis or can be considered for deciding the petition under section 13 of the Hindu Marriage Act, inasmuch as quarrel on trivial matters between them in our Society is a routine matter. More so, recording of conversation between the husband and wife and production of a CD thereof, would not be sufficient to ascertain as to under what circumstances, the conversation was recorded, what was the atmosphere and circumstances prevailing in the family at that moment, would be relevant to take into consideration the conversations recorded in the CD to extract the truth.””

What’s more, the Bench then also pointed out that, “Andhra Pradesh High Court in Smt. Rayala M. Bhuvaneswari Vs. Napaphander Rayala, 2007 (31) RCR (Civil) 664, specifically held that the act of recording conversation without knowledge of the wife is illegal and amounts to infringement of right to privacy and even if, the chips in question are true, they are not admissible in evidence. Similar was the view expressed by the Madhya Pradesh High Court in Anurima @ Abha Mehta Vs. Sunil Mehta s/o Chandmal, 2016 AIR (M.P) 112.”

Quite significantly, the Bench then notes that, “Argument raised by learned counsel for the respondent with reference to Section 122 of the Indian Evidence Act, has been succinctly dealt with by the Rajasthan High Court in Vishal Kaushik Vs. Family Court and another 2015(9) R.C.R (Civil) 831 while observing as under:-

“22. Aspect about admissibility of evidence with reference to provisions of Indian Evidence Act, 1872 has indeed been diluted by Section 14 of the Family Court Act. The question, which still arises in the present case, is whether conversation tape recorded by the husband without wife’s consent or without her knowledge, can be received in evidence and be made use of against her? That question has to be answered in an affirmative no, as recording of such conversation had breached her “right to privacy”, one of the facets of her ‘right to liberty’ enshrined under Article 21 of the Constitution of India. The exception to privileged communication between husband and wife carved out in Section 122 of the Indian Evidence Act, which enables one spouse to compel another to disclose any communication made to him/her during marriage by him/her, may be available to such spouse in variety of other situations, but if such communication is a tape recorded conversation, without the knowledge of the other spouse, it cannot be, admissible in evidence or otherwise received in evidence. The argument that this would defeat right of fair trial of the petitioner-husband, proceed on the fallacious assumption of sanctimony of the method used in such recording and in that process, ignores the right of fair trial of the respondent-wife. In a case like present one, husband cannot be, in the name of producing evidence, allowed to wash dirty linen openly in the Court proceedings so as to malign the wife by producing clandestine recording of their conversation.””

Most significantly, the Bench then minces no words to hold aptly that, “Keeping in view the factual matrix of the case, it cannot be said that as the Family Court is not bound by strict rules of evidence, it is at liberty to accept the CD in evidence which is a clear cut infringement of the right of privacy of the wife. The decision of Rajasthan High Court in Preeti Jain Vs. Kunal Jain and another, 2016 AIR (Rajasthan) 153, relied upon by learned counsel for the respondent-husband is not relevant in the given facts and circumstances of this case, as the same relates to a matter where the husband sought to adduce video clippings recorded through pinhole camera for establishing extra marital affair of his wife. Moreover the aspects as discussed in the foregoing paras have not been discussed therein. Therefore, acceptance of the CD by the learned Family Court allegedly containing conversations between the husband and wife recorded surreptitiously without the consent or knowledge of the wife and allowing the husband’s application is unjustified. No other argument has been raised.”

Finally, the Bench then aptly concludes by rightly holding that, “Accordingly, impugned order dated 29.01.2020, Annexure P-4, passed by the learned Family Court, Bathinda, is set aside. Consequently, application dated 09.07.2019 filed by the respondent-husband, is dismissed. Keeping in view the facts and circumstances, learned Family Court is directed to take steps for expeditious disposal of the petition filed under Section 13 of the Act, preferably within six months from the date of receipt of certified copy of this order. Accordingly, CR No. 1616 of 2020 filed by petitioner-wife is allowed and CR No. 2538 of 2020, filed by respondent-husband, is disposed of.”

In conclusion, the single Judge Bench comprising of Justice Lisa Gill of Punjab and Haryana High Court has been most forthright in holding commendably that secretly recording the wife’s telephonic conversation sans her knowledge is definitely a clear cut infringement of her right to privacy and therefore it cannot be accepted as evidence. We have discussed the relevant case laws also. Thus the Bathinda’s Family Court order in favour of husband was so very rightly quashed! No denying it!

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NCLT BAR ASSOCIATION’S PLEA CHALLENGING 3-YEAR TENURE OF NCLT MEMBERS IN JUNE: A PLEA IN SUPREME COURT

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The Supreme Court in the case National Company Law Tribunal Bar Association Vs Union Of India observed in a petition filed by the NCLT Bar Association challenging the notification of the Ministry of Corporate Affairs fixing the tenure of the members of National Company Law Tribunal as 3 years, while adjourning the hearing.

It was being argued before the court that the discharge of full five years is necessary for Tribunals to functions effectively and efficiently and by the time the members achieve the required knowledge, efficiency and expertise and a term of three years is very short as one term will be over.

On April 5, a notice is being issued on the petition to the Centre by the bench comprising of Justice L Nageswara Rao.

Further it was argued that the Notification is contrary to the judgments passed by the Supreme Court in Madras Bar Association v. Union of India & Anr. (2010) and Madras Bar Association v. Union of India & Anr. (2021) The Court held that the term of members should be 5 years. It was also being observed in the Madras Bar Association Case in which the Supreme Court observed that a longer term was necessary to ensure independence and the Court disapproved the shorter term.

It was being argued by the Association that the said notification is contrary as according to Section 413 of the Companies Act, 2013 which clearly prescribes the term of members for 5 years and even also the early expiration of the tenure will create a void and will add to the pendency of cases before Tribunals.

The Committee is considering all aspects of the matter including the verification report, assessment of suitability etc As on June 20, one of the members is due to retire and it was being submitted by Solicitor General the matter can be considered on June 15.

Solicitor General Tushar Mehta submitted that a meeting was held by the committee On April 20.

The term prescribed by Companies Act, 2013 is 5 years was being submitted before the court by Senior Advocate Tushar Malhotra, Appearing for the Petitioner.

The Bench comprising of Justice DY Chandrachud and the Justice Bela M Trivedi observed deferred the hearing to June 15 as the bench was being told that a committee chaired by the Chief Justice of India and consisting of Justice Surya Kant and the Secretary of the MCA is holding a meeting to deliberate on the term of 23 NCLT members appointed in 2019 by the Solicitor General of India.

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UNDER COMMERCIAL COURTS ACTS, SC ORDERS EXCLUDING PERIOD FROM 15.03.2020 TILL 28.02.2022 AS PRESCRIBED UNDER THE ACT

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The Supreme Court in the case Babasaheb Raosaheb Kobarne vs Pyrotek India Private Limited observed with respect to the limitation prescribed under the Commercial Courts Act, 2015. The Court observed that for the purposes of limitation the period from 15.03.2020 till 28.02.2022 is also applicable.

In an order dated 10.01.2022, The Supreme Court had issued the following directives:

It is directed from 15.03.2020 till 28.02.2022 the period shall extend stand excluded for the purposes of limitation as may be prescribed under any general or special laws in respect of all judicial or quasi-judicial proceedings and the order dated 23rd March, 2020 is restored and in continuation of the subsequent orders dated 8th March 2021, 27th April 2021 and 23rd September 2021.

It shall become available with effect from 1st March 2022 Consequently, the balance period of limitation remaining as on 3rd October 2021, if any

In the event the actual balance period of limitation remaining, with effect from 01.03.2022 is greater than 90 days, that longer period shall apply and in cases where the limitation during the period between 15th March 2020 till 28th Feb 2022, would have expired all persons shall have a limitation period of 90 days from 01.03.2022, notwithstanding the actual balance period of limitation remaining.

The Sections which prescribe the outer limits i.e., within which the court or tribunal can condone delay and the period(s) of limitation for instituting proceeding includes Section 12 A of the Commercial Courts Act, 2015 and provisos (b) and (c) of Section 138 of the Negotiable Instruments Act, 1881 and as prescribed Sections 23 (4) and 29A of the Arbitration and Conciliation Act, 1996 including the termination of proceedings and any other laws and it is further being clarified that the period from 15.03.2020 till 28.02.2022 shall also stand excluded in computing the periods, The court observed while referring to the case Centaur Pharmaceuticals Pvt. Ltd. And Anr. v. Stanford Laboratories Pvt. Ltd

Therefore, the bench directed the Trial Court to take on record the written statement filled by the appellant-respondent.

The Commercial Courts Act, 2015 being a Special Law, the said order shall also be applicable with respect to the limitation prescribed under the Commercial Courts Act, 2015 also and the period from 15.03.2020 till 28.02.2022, in the view of this matter and for the purposes of limitation as may be prescribed under any General or SPECIAL LAWS shall have to be excluded as may be prescribed under any General or SPECIAL LAWS with respect to all quasi-judicial or judicial proceedings.

The Bench comprising of Justice MR Shah and the Justice BV Nagarathna observed while allowing the appeal filled by the defendant the purpose of filing the written statement and ought to have permitted to take the written statement on record as the High Court ought to have excluded the aforesaid period.

In the event the actual balance period of limitation remaining, with effect from 01.03.2022 is greater than 90 days, that longer period shall apply and in cases where the limitation during the period between 15th March 2020 till 28th Feb 2022, would have expired all persons shall have a limitation period of 90 days from 01.03.2022, notwithstanding the actual balance period of limitation remaining.

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Supreme Court expresses disapproval of judicial officer for not releasing accused despite order granting bail

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The Supreme Court in the case Gopal Verma v State of UP observed the recently deprecated act of a judicial officer on the release of the accused despite Court’s order of directing his release against whom FIR was registered u/s 498A, 304B of IPC and section 3/4 of Dowry Prohibition Act.

Since October, 2020 the appellant has been in custody and the bench had granted bail to the accused after being apprised of the fact that the charge of the accused was as under Sections 304B and 498A, Indian Penal Code, 1860

In December, 2021, the charge sheet was filed and as yet only one witness had been examined whereas the prosecution had cited 64 witnesses, the counsel argued before the Court.

the bench while considering criminal appeal assailing Allahabad High Court’s order of refusing to grant bail to the accused on 17.05.202, the bench granted bail to the appellant on terms and conditions to the satisfaction of the Trial court and upon hearing learned counsel for both the parties.

The bench comprising of Justice SK Kaul and the justice MM Sundresh while observing in their order said:

the appellant was not released and that should have been the matter of concern by the trial court as from December 2021, only one witness has been examined rather than what is sought to be raised ad the bench have no hesitation in adding those provisions to the order but don’t appreciate the conduct of the judicial officer whereby despite the orders of this Court.

on the pretext that while the order mentions the charges under Sections 304B and 498A, IPC it does not mention Sections 3/4 of the Dowry Prohibition Act, The Judicial Officer refused to release the accused.

The bench further added that the bench has no hesitation in adding those provisions to the order but the conduct of the judicial officer won’t be appreciated despite the order of this courts the appellant was not released.

Further the court added that only one witness has been examined by the trial Court from December 2021 and that should have been the matter of concern rather than what is sought to be raised by the trial Court.

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The Unresolved Issue of AMP Expenses in Transfer Pricing – India

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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