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The rise of cryptocurrency in India: Challenges and potential impacts on legislation




Cryptocurrency functions through the network, where a large number of computers are employed, which is why cryptocurrency is decentralized, and control of the currency is not confined to the hands of a government authority or a central authority.With everything being available online, cryptocurrency was a new phenomenon that enabled people to buy, sell, invest and trade in a currency that had no physical form. It stands out because it was decentralized and had no third party involvement unlike other payment systems, and this is the reason why any transaction made using cryptocurrency does not fail. When it comes to India, it is estimated that Indians have invested more than 1billion US Dollars in the cryptocurrency market alone, even though the fact that the picture regarding legality or cryptocurrency still seems blurry and unclear, creates a lot of confusion in the mind of investors as government lacks to take a strong stand of where cryptocurrency stands today and most essentials, what is its future it beholds.

Keywords: cryptocurrency, phenomenon, dece ntralized, blurry, unclear.


A cryptocurrency is a medium of exchange that is, encrypted, decentralized and digital. There is no central authority to determine the value of cryptocurrency. Instead, the value of cryptocurrency is determined by its customers over the Internet. Cryptocurrency got its name because it uses encryption to verify transactions. This means advanced coding is involved in storing and transmitting cryptocurrency data between wallets and to public ledgers. The aim of the encryption is to provide security and safe. Cryptocurrency is considered to be a pretty safe bet, because it uses the blockchain technology. It is a set of blocks that record transaction like who made the transaction to whom like a digital ledger that is disrupted and replicated in the entire network.The 2019 Bill defined Cryptocurrency as any information, code, number, or token generated through cryptographic means or otherwise, which has a digital representation of value and has utility in business activity, or acts as a store or a unit of account.


In a word, yes. Bitcoin was the first cryptocurrency, and is still the biggest, but in the eight years since it was created pretenders to the throne have come along.If you need more news for bitcoin, you can check bitcoin news.


A bitcoin doesn’t really exist as a concrete physical – or even digital – object. If I have 0.5 bitcoins sitting in my digital wallet, that doesn’t mean there is a corresponding other half sitting somewhere else.


Many crypto hobbits were inclined towards to emergence of bitcoin in India. It was the first time back in 2013 when a pizza shop called Kolonial in Mumbai, started accepting bitcoin as physical currency. In the year 2012 when cryptocurrency gained momentum in India and the price of cryptocurrency that was 5$ went to 1000$ in the year 2017. This gave a market to Bpay, Coinsecure, Unocoin, Koinex, and Pocket Bits, to enter, India letting people trade in cryptocurrency.

As the market expanded and investors became more and more interested. RBI saw this stir in the investor’s market, sprang into action, and declared that they do not back such currencies and they are merely speculative and will not be considered as an asset.

They further quoted sec 35A, 361A,45L,45, and Sec 65 of Banking Regulation Act which gives them the authority to caution people concerning public interest, and Sec 18 of Payments and Settlement System Act 2017. Later this circular was challenged in the case Internet and Mobile Association of India and Others v RBI . In this case, the petitioner argued that RBI holds no jurisdiction to impose a ban on cryptocurrency and that RBI is not well versed with what cryptocurrency is and has wrongly interpreted it.

They further claimed that many investors have invested in it and this sudden ban affects them and cleared that cryptocurrency as the name suggests is not a currency but a medium of exchange or a store of value. RBI contended that they do have jurisdiction as it is a mode of digital payment and it gives authority to RBI to regulate it. The SC gave its judgment in the year 2020, stating that even though RBI has enough powers to regulate cryptocurrency, but RBI prima facie fails to show at least some resemblance of any damage suffered by its regulated entities and ordered to take back its decision to effectively bar cryptocurrency in India.


Failed Government Policy:Due to the outbreak of the covid 19 pandemic, people suffered a big amount of monetary loss and somehow the govt policies failed to provide a big relief to the investor. Hence people aim to invest at places where they can expect higher returns and returns of bitcoin etc. are high as compared to the interest provided by Indian financial Banks.

Disillusionment with the banking system:Lower Interest rate, loan waivers, public sector banks bailing out with public’s money creates a question on the working of public sector banks. Crypto banks on the other hand do provide a loan with less interest rate.


On taxability of bitcoins earned during the ‘mining’ process, Wadhwa said, Bitcoins generated during the ‘mining’ process are classifiable as self-generated capital assets. Since the cost of acquisition of such Bitcoins is not available, the taxpayer can take the benefit of the judgment of the Supreme Court in the case of B.C. Srinivasa Shetty [1981] 5 (SC). In this case, it was held that if the cost of acquisition of an asset cannot be ascertained, the machinery provision for computation of capital gains will fail, therefore, no capital gains can be levied on the transfer of such assets. Therefore, Bitcoins generated in the ‹mining› process may be exempt from the tax.

Crypto is a digital gold:Crypto is now considered digital gold. If one invests in Crypto, the rise is pretty high. Bitcoin has meteoric rise. On 1 Oct 2013, Bitcoin has a rate of 123$ and in Jan 2021 the rate is 34000$ USD. India holds a high value for gold. Currently gold in India is 25000-50000. If a person invests in gold, the money is doubled while bitcoin gave 340 times more return ad hence is considered as digital gold.

Crypto Banks in IndiaCrypto banks like Easyfi Network, Vault, Kasa have started operating in India. The CEO of Vault, states that until now, they have given a loan of approx. $25 billion as loan. Cashaa has tied up with United, a Jaipur-based multistate cooperative society, to form a brick-and-mortar crypto bank called Unicas.Its branches are in Gujrat, Rajasthan, and Delhi. Their crypto banks work in such a way that let us say if a person has cryptocurrency like Bitcoin, Ripple and the person want some loan, crypto can be given as security, then considering the market value of crypto at that time a person will get 50-60 percent loan of the price of crypto.

This is because there are high chances of fluctuation on cryptocurrency. There is no specific time as to when that loan has to be returned, though obviously, one has to pay interest. Another point that makes cryptocurrency stand out is that banks usually demand interest of 12-24%, while one has to pay interest of 12%-15% only on cryptocurrency, along with a 2%-5% processing fee.The process of granting a loan in cryptocurrency is instant and what is the creditworthiness, CRISIL scores of the borrower don’t matter. Hence it is an easier form of granting loans. One can even keep their crypto in the banks and they get 4%intrest in it.

Cryptocurrency Bill 2021The Bill has not yet reached the public domain but there is a high possibility of the bill banning cryptocurrency and introducing digital currency of RBI, which will raise a lot of questions from the investors.


Sovereign Guarantee:Cryptocurrency is speculative. People invest in high amounts to attain big returns. This leads to Market Volatility. It means prices fluctuate a lot and many people can suffer big losses, thus has a huge risk. 


Cryptocurrency acts as an opportunity for those who plan to evade taxes or do money laundering. Easy mode of transfer in Cyber- terrorism, the most famous case was of WannaCry and Petya viruses in which $300 was paid in Bitcoin to decrypt files. Wanna cry is a perfect example crypto ransom that was used by criminals to extort money online. The hackers locked the individual’s computer and in return demand ransomware in the form of cryptocurrency. The Petya attack did the same attack and demanded bitcoin as ransom.


Digital currency is not operated by the govt and govt guarantee is not behind it.


Anything that is available in cyberspace is always under constant threat of being hacked. Once the hackers find a way to penetrate the security system of cryptocurrency, they can create n number of cryptocurrencies, can sell them, and even steal cryptocurrency from other users. There is always a Malware Threat Because it is a digital currency, it can be hacked, one can lose their password, virus, etc.

Money laundering:People will start investing in money laundering and very easy as one can send money from country to country without any accountability. As per a report criminals laundered US$2.8 billion through crypto exchanges in 2019, compared to US$1 billion in 2018. Research on the internet indicated that approx. 56% of cryptocurrency users have weak K.Y.C.Economic disbalance:The creation of cryptocurrency is very different from how actual cash is created in the economy. E.g.- In India, only RBI has the authority to create cash. It can do so only after maintaining the Minimum Reserve System and an asset whose value is up to 200 crore. This creates a balance of demand and supply. 


There was a notification by RBI which was titled prohibition on dealing with virtual currency which was read with section 35A of banking regulation act and section 45JA and 45L of Reserve bank of India act 1934 which imposes ban on all the institutions i.e. financial and it asks to refrain from providing services related to cryptocurrency transactions As a result of this circular the crypto market crippled over as banking service involves exchange of money, so many crypto users were forced to take out cash resulting in loss to both the industries which included banking and crypto industries.There was a petition filed in the Supreme Court by IMAI who are representing digital and online services in India, seeking to overturn the circular which was passed by RBI. The apex court applied the Doctrine of Proportionality and passed the decision in favour of cryptocurrency.

The supreme court was not able to decide on the validity of the bill called Banning of Cryptocurrency and Regulation of Official Digital Currency Bill, 2019 this bill has not been passed, the apex court said that the bill on one hand crypto users being faced with criminal penalties and there are other activities related to mining etc. which are prohibited by this bill and this bill also envisages and cleared the way for government to launch its own digital currency which is called as digital rupee.


Recently, according to the data of April 2021, there are more than 10,000 types of cryptocurrencies circulating across the globe.


They fall into two categories which are Tokens, Coins

Some popular cryptocurrencies are:


Bitcoin is the first officially accepted cryptocurrency, firstly being used by WordPress for making the transaction. It was developed by an unknown person in the year 2008 and was officially circulated in the year 2009. The transactions that take place in bitcoin are among the peer-to-peer network and the transfers are direct transfers that do not involve any intermediary.


The biggest competitor of Bitcoin in the modern market is Litecoin, which is another cryptocurrency that is used for basically transacting in a comparatively smaller value than Bitcoin and in a fast way. Charles Lee was the developer of Litecoin and which was developed in 2011. The basic difference between Bitcoin and Litecoin is that Litecoin can be developed and managed through a normal desktop with low processing whereas for Bitcoin the mining process is comparatively very heavy, hence today the value of Litecoin is compared with Bitcoin is four times than Bitcoin.


Ripple was developed in the year 2012 by Chris Larsen in a company called OpenCoin. The method by which Ripple works is very similar to Bitcoin, as the transactions that take place by Ripple can be done within seconds and in no time the funds can be transferred.


Alternate name for Ethereum is Eter as it was named after the platform it was developed on that was Ethereum. It was developed in the year 2013 by a computer programmer who was also a researcher on cryptocurrency only. The platform of ethereum is public and a smart scripting facility is also available on it. It is a platform made friendly for cryptocurrency and so it can be used for the purpose of making transactions as well. The price of Ethereum has grown significantly in the past year.


Mintchip is somewhat different from other cryptocurrencies as it traces its origin from the Royal Canadian Mint and is also backed by the Canadian Dollar. It is a smart card with electronic value and it can be used for making transactions that are secure and safe in nature. Mintchip has some similarities with Bitcoin as the user cannot be traced but unlike Bitcoin or any other cryptocurrency, it is the only cryptocurrency that is backed by physical and real fiat money i.e., the Canadian Dollar.


Initially when cryptocurrency started to circulate in the markets not many people were aware of the technology behind it and only a few people knew what cryptocurrency is. But when it comes it the legality of such currencies, initially people thought that because as the origin of the user could not be traced, cryptocurrency was used for all kinds of illegal purposes and on places such as the dark web, to fund terrorist activities, to deal illegally in drugs, black markets and a lot more such activities.

Nowadays, many countries are friendly with the use of cryptocurrency as a medium of exchange there, some are neutral but some countries are very restrictive to the use of cryptocurrency as a medium of exchange there. Talking about India, after a lot of dawdling of either banning or legalising cryptocurrencies, the Indian government has taken some encouraging steps for the regulation of cryptocurrencies in the country.


India is a country with the second largest population in the world and the amount of change the Indian financial market has gone through in the past years is nothing but a renaissance for the country.And with such a huge population and almost 70% of the total population having access to the internet and web services, cryptocurrency is not a new concept in India. Bitcoin and other types of tokens as well as coins with all forms of cryptocurrency have been used in India for a long time now. In the year 2012, Bitcoin transactions started to take place in the country, when slowly and gradually in the year 2013 when cryptocurrencies were rising across the globe and a few business houses started to accept payment by the mode of Bitcoin, a small pizza place in Worli, Mumbai became the first restaurant to accept payment through Bitcoin.

In no time, cryptocurrency started to gain popularity in the Indian market and shortly pioneers like Unocoin, BtexIndia and others started to offer cryptocurrencies transactions and exchanges that could take place via cryptocurrencies and soon after this Bitcoin-India, ZebPay and others also started to deal in cryptocurrencies.


According to the latest development, the government is planning to impose Cryptocurrency and Regulation of Official Digital Currency Bill, 2021 which plans to impose a complete ban on private cryptocurrencies but also keeping in mind the grey areas will also provide a framework as to the regulation of cryptocurrency and will provide certain exceptions as to the transactions that can take place via cryptocurrencies. India with the help of the Ministry of Corporate Affairs has managed the use to some extent but still, there is a long way to cover in near future and therefore is planning to introduce the new bill.

In March 2021, the government has issued new guidelines to businesses that before the start of the new financial year they have to disclose their income from cryptocurrencies which were undertaken in the previous financial year


The Indian Government should step up in this era of cryptocurrency as it can bring a huge leap in technological innovation in India. It is estimated that the tax imposed on cryptocurrency will add up to a whopping amount of direct tax to the Income Tax Department which can give a major push to the economy’s overall development.

Rather than putting a blanket ban, the Indian Govt should take steps to regulate cryptocurrency, making it safer, transparent, and more trustworthy. The more aware the citizens will be towards the functioning of cryptocurrency, the more investment it is expected, especially in a developing economy like India with the second largest population. The future that cryptocurrency holds is encouraging with regards to e-business, e investments, and e payments.It is important that the laws have to be made relating to cryptocurrency keeping in mind the various financial, legal, aspects of the country aiming towards a more secure and consumer-friendly system to deal with crypto.


Sunil Kumar Sharma & Krishma & Nihda Nisar & Er. C.K. Raina, Survey Paper on Cryptocurrency, 2IJSRCSEIT 307 (2017)

Brian Martucci, What is Cryptocurrency-How it Works History and Bitcoin Alternatives,

Understanding The Different Types of Cryptocurrency, Sofi Learn, January 2021;

Ashish Kheskani, Harsha Bucha, Yogita Aggarwal, Dr. Varsha Agrawal-A Study on Cryptocurrencies and Its Issues, 5 IJRAR, 48a, 49a (2018).

Reserve Bank of India, Prohibition on dealing in Virtual Currencies (VCs), (April 6th 2018),

Internet and Mobile Association of India V. Reserve Bank of India, Writ Petition (Civil) No.528 of 2018.

The Constitution of India,

The legality of cryptocurrency in India; The Legal 500;Amanraj Singh Chadha,Sarthak Chawla (July 18; 14:57 PM)

Writ Petition (Civil) No.528 of 2018.

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Legally Speaking

Electricity connection cannot be denied only because dispute regarding ownership of land is pending: Gujarat High Court

The bench of Justice Supehia noted that the Petitioners were owners of the concerned agricultural land for which electricity was sought. However, it was observed that the electricity was denied on the ground that the Petitioners were illegally occupying Government land.



The Gujarat High Court in the case Yogesh Lakhmanbhai Chovatiya v/s PGVCL Through the Deputy Manager observed and has clarified that occupiers of a land cannot be denied electricity connection only because a dispute regarding ownership of the land is pending.

The bench comprising of Justice AS Supehia observed and referred to a division bench judgment stating that right and title and ownership or right of occupancy has no nexus with grant of electrical connection to a consumer.

In the present case, the petitioner current occupiers of the land and submitted that they were denied an electricity connection only because the land that they were occupying was in the name of the Government. However, the proceedings were initiated by the Mamlatdar against them u/s 61 of the Gujarat Land Revenue Code for removal of encroachment. Further, to bolster their contention, it was relied by the petitioner on an order of the High Court and Sec 43 of the Electricity Act, 2003 which mandates the supply of electricity to any occupier or owner of premises.

The Petitioners could be said to be ‘occupier’ of the land in question and the connection could not be denied by the Respondent.

The bench of Justice Supehia noted that the Petitioners were owners of the concerned agricultural land for which electricity was sought. However, it was observed that the electricity was denied on the ground that the Petitioners were illegally occupying Government land.

Further, the bench of Justice Supehia concluded while perusing Sec 43 that the provision stipulated that the licensee shall supply electricity to those premises where the application had been filed by the owner or the occupier. Consequently, a reference was made to the order of the Division Bench of the High Court in LPA No. 91/2010 wherein it was observed:

The Court stated that such power being not vested under the law with the company and as the company cannot decide the disputed question of right and title and this court is of the view that ownership or right of occupancy has no nexus with grant of electrical connection to a consumer.

While keeping in view of the aforesaid provisions, it was directed by Justice Supehia that the Respondent-Company to supply electricity connection to the Petitioners in the premises of the property at the earliest in accordance with the list maintained by the name containing the names of the Petitioners in the list.

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Recently, Section 194 R was inserted by the Finance Act 2022, which came into effect on July 1st, 2022. CBDT made certain recommendations via Circular 12 from the day of the addition of this section, it has become highly debatable. Before touching the issues of this section, we need to understand the legal provision of section 194 R.

In simple terms, the new section mandates a person who is responsible for providing any benefit or perquisite to a resident to deduct tax at source at 10% of the value or aggregate value of such benefit or perquisite before providing such benefit or perquisite. The benefit or perquisite may or may not be convertible into money, but it must result from such resident’s business or professional activities. As per this section, tax will be deducted by business or profession on any benefits or perquisites of a person who is residing in India. The benefit or perquisite can be in the form of cash or kind, or partially in cash and partially in kind. Tax deduction will be 10 percent if the aggregate value doesn’t exceed INR 20,000. In such a case, tax will not be deducted. Such conditions will not be applicable in If the turnover of business doesn’t exceed INR One Crore, If the turnover of the profession doesn’t exceed INR fifty lakhs, For instance, if a person is a sales agent and he exceeds the target allotted by the company and receives a new car worth INR 5, 00,000/-the value of INR 5,00,000 will be taxed under the head of Profit.

The intention of this section is to expand the scope of deducting tax on benefits or perquisites and to increase transparency in the reporting of benefits and perquisites received by an individual. Because this particular incentive is in kind rather than cash, recipients of such kinds of transactions do not include it in their income tax return. As a result, inaccurate income information is provided. Such an incentive or bonus in kind ought to ideally be reported as income under the 1961 Income-tax Act (ITA). Also, according to Section 28(iv) of the ITA, any benefit or perk received from a business or profession, whether convertible into money or not, must be reported as business income in the hands of the receiver. Now Section 194(R) gives the right to the payee to deduct the amount, whether in cash or kind, arising out of business promotion.

The terms “benefits and perquisites” are not defined under the IT act. If they receive any such perquisites or incentives, whether in cash or in kind, they must deduct TDS. In cases where the benefit is wholly in kind, the person providing such a benefit or perquisite is required to pay TDS on the value of such benefit or perquisite out of his own pocket. In this case, benefits and perquisites are determined as per the value of the purchased price and manufactured price. However, no taxes to be deducted u/s 194R on sales discount, cash discount, or rebate are allowed to customers.

In the matter of ACIT Vs Solvay Pharma India Ltd, the court held that free samples provided by the pharmaceutical company for promotion purposes would be taxable income. As such, free samples cannot be treated as a freebie. The complimentary sample of medication serves solely to demonstrate its effectiveness and to win the doctors’ confidence in the high quality of the pharmaceuticals. Again, this cannot be regarded as gifts given to doctors as they are intended to promote the company’s goods. The pharmaceutical corporation, which manufactures and markets pharmaceutical products, can only increase sales and brand recognition by hosting seminars and conferences and educating medical professionals about recent advances in therapeutics and other medical fields. Since there are daily advancements in the fields of medicine and therapy taking place throughout the globe, it is crucial for doctors to stay current in order to give accurate patient diagnosis and treatment. The main goal of these conferences and seminars is to keep doctors up to date on the most recent advancements in medicine, which is advantageous for both the pharmaceutical industry and the doctors treating patients. Free medication samples provided to doctors by pharmaceutical corporations cannot be considered freebies in light of the aforementioned value.

Hence, under such circumstances, for such a sales effort, the pharmaceutical company may deduct its expenses. The promotion would, however, be taxable income in the hands of the receiver, and the pharmaceutical company would need to deduct TDS on it.

Another question that pops up is that in the case of gifts and perks received on special occasions like birthdays, marriages, and festivals, under such circumstances, Section 194R will only be applied if they arise out of business or profession.

As we know, we are heading towards digitalisation. There are many social media influencers who are playing a crucial role in marketing strategy. Income received by an influencer is calculated by deducting expenditure incurred on their business. Filming costs, such as cameras, microphones, and other equipment; subscription and software licencing fees; internet and communication costs; home office costs, such as rent and utilities; office supplies; business costs, such as travel or transportation costs; and others are examples of what can be written off as a social media influencer. To illustrate how Section 194 R will be applicable in such a situation, let’s consider Nandini is a social media influencer. She received an offer from a company for product promotion in another city. She charged her fee of Rs 88,000 and the travel expense incurred by her was Rs 25,000. Here, the company will reimburse her travel expenses. So, the travel expenditure incurred by the company is covered under the benefits and perquisites provided to Nandini. Hence, TDS is to be deducted under section 194R at the rate of 10%, i.e., Rs 2500 is deductible from the fees payable to Nandini.

There is no further requirement to check whether the amount is taxable in the hands of the recipient or under which section it is taxable. The Supreme Court took the same view in the case of PILCOM vs. CIT in reference to the deduction of tax under Section 194E. It was held by the Hon’ble Supreme Court that tax is to be deducted under section 194E at a specific rate indicated therein, and there is no need to see the taxability under DTAA or the rate of taxability in the hands of the non-resident.

In the matter of ACIT Vs Solvay Pharma India Ltd, the court held that free samples provided by the pharmaceutical company for promotion purposes would be taxable income. As such, free samples cannot be treated as a freebie. The complimentary sample of medication serves solely to demonstrate its effectiveness and to win the doctors’ confidence in the high quality of the pharmaceuticals. Again, this cannot be regarded as gifts given to doctors as they are intended to promote the company’s goods. The pharmaceutical corporation, which manufactures and markets pharmaceutical products, can only increase sales and brand recognition by hosting seminars and conferences and educating medical professionals about recent advances in therapeutics and other medical fields. Since there are daily advancements in the fields of medicine and therapy taking place throughout the globe, it is crucial for doctors to stay current in order to give accurate patient diagnosis and treatment.

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The Gujarat High Court in the case Shambhavi Kumari v/s Sabarmati University & 3 other(s) observed and has declined to intervene in a writ petition seeking reinstatement with full back wages and benefits filed by an Assistant Professor against a private university, Sabarmati University.

The bench comprising of Justice Bhargav Karia observed and has clarified that the dispute regarding termination was ‘in the realm of a private contract’ and therefore, held that if on the part of the respondent, there is an alleged arbitrary action, the same would give cause to the petitioner to initiate civil action before the Civil Court but in the facts of the present case, the writ petition would not be maintainable against the private educational institution governed by the Gujarat Private Universities Act, 2009.

In the present case, the petitioner was given a three months’ notice starting August 2013, allegedly without any reason. Consequently. Earlier, an application was filled by the petitioner before the Gujarat Affiliated Colleges Service Tribunal and thereafter, withdrew the application to file the writ before the High Court.

It was contested by the respondents that the petition was not maintainable on the ground that the University was a private University and did not fall within the term ‘State’ under Article 12 of the Constitution of India. Therefore, the employment conditions of the Petitioner would not bring her services within the realm of ‘duty or public function.’

It was observed that the petitioner, per contra, insisted that the University was established under the Gujarat Private Universities Act, 2009. However, Universities were established to provide quality and industry relevant higher education and for related matters and hence, it could not be said that the Universities were not performing public duty. It was directed by the State Government and pervasive control over the functioning of it as was mentioned in Sec 31-35 of Chapter VI of the Act. Reliance was placed on Janet Jeyapaul vs. SRM University and ors. where the Top Court had held that the writ petition was maintainable against the deemed university and whose functions were governed by the UGC Act, 1956.

The bench of Justice Karia, while taking stock of the contentions referred to Mukesh Bhavarlal Bhandari and ors vs. Dr. Nagesh Bhandari and ors where the Coordinate Bench of the High Court in similar circumstances had reiterated that merely because the activity of the said research institute ensures to the benefit of the Indian public, it cannot be a guiding factor to determine the character of the Institute and bring the same within the sweep of ‘public duty or public function.

It was observed that the High Court also rejected the reference to Janet Jeyapaul since in the instant case and held that in the realm of a private contract, the Petitioner termination was to be decided.

Further, it was observed that it is not necessary to go into the merits of the case with regard to the issue of show-cause notice for providing an opportunity of hearing resulting into breach of principle of natural justice and weather the action of the respondent University is unfair or not because all such disputes essentially are in the realm of private contract.

Accordingly, the bench dismissed the petition.

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Gujarat HC Quashes Reinstatement Order: Industrial Dispute Act| Person Working In The Capacity Of ‘Consultant’ Cannot Be Deemed ‘Workman’



The Gujarat High Court In the case Santram Spinners Limited v/s Babubhai Magandas Patel observed and has struck down the order of the Labour Court which had held that the Respondent-workman was entitled to reinstatement along with 20% back wages in the Petitioner-institute. Thus, the High Court, after perusing, Form No. 16A which pertains to Tax Deducted at Source, concluded that the Respondent was being paid consultant fees and not a salary and the same had been ignored by the Labour Court.

The bench comprising of Justice Sandeep Bhatt noted that the Respondent had raised an industrial dispute, inter alia, claiming that he was working in the company of the Petitioner as a Technical Maintenance In-Charge while the respondent earning a salary of INR 9,000 per month. Thereafter, it was alleged by him that he was terminated orally in 1997. Consequently, the Labour Court ruled in his favour and ordered reinstatement and back wages.

It was submitted by the petitioner that the Respondent did not fall within the definition of the term ‘workman’ in Sec 2(s) since he was employed as a Maintenance Consultant, receiving consultant fees and not a salary and the respondent had failed to produce any documentary evidence such as TDS statement, appointment letter, bills to bolster his contention.

Further, it was also averred by the petitioner that the relevant documentary evidence was absent. It was stated that Form 16A was produced to show that if the Respondent was a consultant, then there was no need to deduct TDS. It was observed that the Form No. 26K was disagreed by the Labour Court, which was produced by the Company to show that the tax was deducted from fees for technical or professional services.

The bench comprising of Justice Bhatt firstly observed that the Respondent had admitted that he had no evidence with him to prove that he was working as a ‘workman’ in the Company of the Petitioner that his salary was fixed at INR 9,000 per month. It was stated by the Manager of the Company that the Respondent was rendering services as a consultant raising his Vouchers/bills regularly and being paid through cheque. As per the Bench, there was ‘ample evidence’ to prove that that the Respondent was employed as a technical consultant.

Justice Bhatt stated that it is pertinent to note that the learned Labour Court has committed gross error in holding that those documents are complicated and thus, the learned Labour Court has also erred in giving findings that since TDS is deducted by the petitioner company and therefore, the respondent is workman, who is serving in the petitioner institute and in my opinion, this finding of the learned Labour Court is against the settled proposition of law and is highly erroneous.

Therefore, the High Court affirmed that there was no evidence that the Respondent had been working for more than 240 days during the year preceding termination.

Accordingly, the High Court struck down the award of the Labour Court.

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The Gujarat High Court in the case Gujarat Insecticides Ltd. & 1 other(s) v/s Presiding Officer & 2 others observed and has reiterated that a person working in “supervisory” capacity cannot raise an industrial dispute under the Industrial Disputes Act, 1947.

The bench comprising of Justice AY Kogje observed and further made it clear that while deciding whether such person is a workman or not, the Labour Court ought to carefully consider the evidence placed on record and there is no exhaustive list of work to differentiate between the management employee and the Workman.

In the present case, the Petitioner Company averred that the Respondent was working in the non-workman category and engaged in the ‘supervisory category’ and was drawing salary of more than INR 1600. Therefore, the dispute was not an industrial dispute within Section 2(s) of the Act, 1947.

It was insisted by the Respondent that he had worked with the company as a Maintenance Engineer and the duties assigned to him were of the nature of a workman’s duties as per the ID Act. The respondent was wrongly terminated by way of termination and without any procedure established by law and as such, was entitled back wages.

It was observed that the high court took into consideration the Respondent’s appointment letter and witness depositions regarding the nature of work performed by him to conclude that the Respondent in Grade-9 was indeed discharging duty of Maintenance Engineer. It was also specified by the depositions that the hierarchical grading in the petitioner-company as per which, the employees above Grade-7 were of the Management Cadre.

The High Court observed that the Labour Court has completely disregarded this evidence, which according to this Court is most relevant for the purpose of deciding the status of workman and the Labour Court has proceeded that the petitioner-company ought to have produced evidence in the nature of whether the respondent-workman has sanctioned any leave, sanctioned any overtime or prepared any gate passes for employees to go home or has made any ordered or Appointment dismissal. Thus, when the Labour Court, instead of referring to this evidence already on record to establish the nature of work of the respondent and has decided to chase the evidence which is not on record and then on the basis that such evidence not being on record, it was concluded that in the definition of workman, the workman will be covered, this is where, in the opinion of the Court, perversity has crept in.

Accordingly, the bench quashed the impugned order. Therefore, seeing the passage of time, it was held by the High Court that the allowances paid u/s 17B of the Act should not be recovered by the Petitioner company.

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The Court while dealing with a case related to 2020 Delhi riots, a city Court has called for sensitisation of investigating officers (IOs) on making the photos obtained from digital sources as admissible in evidence by filing a certificate under section 65B of Indian Evidence Act, 1872.

The bench comprising of Additional Sessions Judge Pulastya Pramachala observed and thus ordered that whenever, photographs are filed from digital sources it is needless to say that a certificate under Section 65-B of I.E. Act, is must to make those photographs admissible for the purpose of evidence. However, all the IOs are required to be sensitized this respect as well and it is high time to control the casual and callous approach of any IO.

It was also observed that court expressed displeasure over “casually prepared site plans” by stating that preparation of the same were not even expected in cases triable by the Metropolitan Magistrates.

Adding to it, the Judge stated that unfortunately this kind of site plan has been filed in such a serious case involving session triable case. Moreover, from the documents filed on the record, the court find that certain photographs have been placed, but without any certificate under Section 65-B of Indian Evidence Act.

In the present case, the court was dealing with an FIR registered on the complaint of one Salim Khan wherein it was stated by him that his spare parts and barber shop shop was looted and was put on fire during riots.

It was admitted by one of the accused Dharmender that his involvement in the matter and he, with other co-accused was seen carrying the carton of Rooh Afzah from the warehouse of a complainant in another FIR.

The Court stated that a serious re-look over the quality of evidence/documents place on the record in the case, is required by senior officer with all serious attention.

Further, the court added that in this case the ld. DCP (North East) is requested to go through the records and to submit his report, if the prosecution is to be carried on, on the basis of other materials and same site plan as placed on the record.

As in future, the Special Public Prosecutor undertook to be much careful.

Accordingly, the Court listed the matter for further hearing on August 17.

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