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Understanding and bursting myths about the new farm laws 2020

The new farm laws aim to modernise the agriculture sector in the country, besides empowering those toiling hard on the field. So, why is there so much protest against these laws?

Tanya Sinha

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India has always been an agrarian economy. Agriculture sector shares around 20.5% in the GDP of India and around 70% of the country’s population depends upon agriculture for livelihood. Agricultural business in India has never been profitable for farmers as they were confined due to prevailing system of zamindars and money lenders. But this system was extremely exploitive so to end this; Government introduced a new framework known as APMC (Agriculture Produce Market Committee). It was introduced exactly at the same time when the green revolution started in India. Additionally, APMCs set up mandis or markets across the India were farmer’s produce were sold. Here the farmers sold their produce not to any public authority but to the middlemen also referred as “Arhatiyas”. Middlemen acted as an agent between the farmers and traders. This gave rise to yet another issue. The middlemen started exploiting the farmers where they bought the farmer’s produce at MSP (Minimum support price) but sold at higher prices to the traders.

As of late, the Indian government drafted a set of farm bills also referred as Indian Agriculture Act, 2020 asserting that these laws will tackle all the issues of the farmers. Thus, the Indian Parliament has passed three Farm Bills which have also received the President’s assent on 20th September 2020 which is why our country is witnessing gigantic protests of farmers. This Act conceives to acquire changes in certain portions of the Agricultural economy. For instance, trade in agricultural commodities, stock limits for essential commodities, price, farm services, etc. These acts also sought to bring reforms by eliminating the exploitation of the mediators and allowing farmers to take the market.

On the contrary, farmers believe that the new proposed bills are more likely to exploit them. Thousands of farmers at Delhi borders focusing over 30 farmers union are undermining to heighten the disturbance of the nation if the government does not recall these 3 Farm bills. These Farm Bills are:

(1) The Farmers Produce Trade and Commerce (Promotion and Facilitation) Bill, 2020

(2) The Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Bill, 2020

(3) The Essentials Commodities (Amendment) Bill, 2020.

The Farmers Produce Trade and Commerce (Promotion and Facilitation) Bill, 2020

The Farmers Produce Trade and Commerce (Promotion and Facilitation) Bill, 2020 promotes the idea of ‘One Nation One Market’ and creates an ecosystem where farmers will not have to pay taxes on the produce they will sell in the market i.e. there will be a barrier free sale.

Not only this but, it will also end the monopoly of APMCs (Agriculture Produce market Committee). APMCs condemn setting up of other markets. Some states have made it mandatory for farmers to trade only with APMC merchants. But this new legislation would help the famers to sell their produce as per their choice.

The Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Bills Services Bill, 2020.

This bill sets up a framework for contract farmingwherein the farmers and the buyer can strike a deal even before the production takes place. This legislation will empower the farmers to engage with retailers, wholesalers, exporters, etc without the fear of exploitation.

This newly proposed bill will act as a catalyst to attract private investments for the agriculture sector which will build supply chains to national and global markets.

ESSENTIAL COMMODITIES (AMENDMENT) BILL, 2020

This bill is an amendment made to the Essential Commodities Act which removes onions, seeds, pulses and other products from the list. This amendment contained in the Essential Commodities Bill will help to settle and stabilize the prices of these products.

For Instance, if the onion supply is more than its demand, it can be stored in order to avert the price from falling. Not just this but, it also improve the cold storage facility in India.

BENEFITS OF THE FARM BILLS:

ONE NATION, ONE MARKET

This can end the monopoly of “Agricultural produce Market Committees” (APMCs). APMCs condemn setting up of other contending markets. With the introduction of Farmers Produce Trade and Commerce Bill, farmers can now sell their produce as per their choice and the issue of middlemen which is one of the loopholes of APMCs will be eliminated.

Attracting private Investments

It will pull in private investments in the farming business. Private speculations can improve the framework of the agricultural sector which can prompt its modernization. This will in fact increase the competition to buy the produce and can fetch better prices for farmers.

CONTRACT FARMING

Contract farming will be beneficial for farmers since they’ll get price assurance even before the production takes place.

REDUCTION IN PRE-HARVEST INPUTS

Corporates would even provide requisite materials to the farmers which will in fact reduce the cost of inputs.

Alternate channels to sell & Inter and Intra state barrier free sale.

Now the farmers do not have to restrict their sale by selling their produce only in the mandis set up by APMCs controlled by the state government they can now sell their produce as per their choice. Moreover, the sale of produce would not be levied with any taxes by the government.

Better market linkages and efficient supply chains

The Farm Bills will create tailwinds for start-ups focusing on agritech. Anybody working on digital farmers platforms will be profited by the new act and empower them to directly interface with farmers. Not just this, it open up avenues and let farmers directly interface with agro service providers.

WHY ARE FARMERS PROTESTING?

On the contrary, many farmers unions and political parties believe that the new proposed farm bills are more likely to exploit the farmers. The protests continued to happen even on 26th January 2021 on the Republic Day and challenged the government by attacking and harming the police and hosting their own flag at the Red Fort.

The protest which was initiated peacefully at first has turned out to be a war like situation. But, this question must have been aroused in your mind at least once, if the act claims to benefit the farmers and uplift the agricultural sector than why are the farmers protesting? Here we’ll burst some myths about the farm bills and clear out certain facts as to how the rumours have taken the shape of miscommunication between the farmers and the central government resulting into protests.

MYTH: The congress led government in Punjab has described the legislations as a blatant attack on the federal structure saying the laws are highly central oriented.

REALITY: The state government is worried about losing the state revenue because these APMCS were controlled by the state govt. Moreover, the centre is not interfering with prices or any other matter concerned to the farmers. The centre is just providing protection to the farmers.

MYTH: The Central Government is trying to propel farmers towards the trap of contracts with the major Corporates.

REALITY: Firstly, it is not the first time that contract farming is implemented. The contract will guarantee the farmers to get the fixed price and farmers can withdraw the contract at any given point of time without penalty.

MYTH: State Governments are losing the APMC law due to the Agricultural Bills executed by the Central Government.

REALITY: No, they do not lose APMC law. The rights associated with APMC will not be encroached upon. It is not unknown that APMC has been inefficient with farmers relying on APMC merchants to sell their produce. This new system eliminates the predatory agents and farmers will have the opportunity to sell their produce either in the APMC discounted mandis or in “Exchange regions” outside the ward of APMCs made according to the farm bills.

CONCLUSION

We as researchers have researched upon the main reason behind the enactment of this ‘Farm Bills’ by the Indian Government. Further, the benefits of this particular farm bills give rise to many investments in agricultural field, good earnings to farmers, selling of produce by farmers itself at their own price or at market price. The manner in which the bills were passed created mistrusts among farmers on government sidelining the positive sides of the bills such as modernising Indian agricultural sector. Even though the primary concern is to guarantee the advancement of farmers but it is the duty of government to assess farmer’s issue and take their opinions. We have also discussed about some myths and realities about this farm bills for those who have misconception about certain issue regarding the new farm bills, 2020.

These laws set up a framework for contract farming wherein the farmers and the buyer can strike a deal even before the production takes place. This legislation will empower the farmers to engage with retailers, wholesalers, exporters, etc, without the fear of exploitation. These laws will act as a catalyst to attract private investments for the agriculture sector which will build supply chains to national and global markets.

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Legally Speaking

The anomaly in Afcons Infrastructure case

Feroz Pathan

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Is Section 89 of CPC, 1908 really an attempt to put a cart before the horse? Can the clash between Section 89 of CPC and Section 73 of ‘The Arbitration And Conciliation Act,1996’ be resolved ?

The Arbitration Act, 1940 was replaced by the Arbitration and Conciliation Act, 1996. The object of the Act was to consolidate and amend the law relating to domestic arbitration, international commercial arbitration and enforcement of foreign arbitral awards and also to define law relating to conciliation and for matters connected therewith or incidental thereto. It was in larger compliance with the United Nations Commission on International Trade Law (UNCITRAL)- The Model Law on International Commercial Arbitration in 1985.

Post WTO Free Trade regime and globalisation of world economy, commercial transactions had witnessed a sea-change in its nature. With growing complexities in world trade, there was an urgent need to revamp the conventional mechanism for speedy settlement of domestic and international commercial disputes. This was facilitated through alternative dispute resolution by means of arbitration, conciliation, mediation, and negotiation which are considerably speedy, inexpensive, and confidential as compared to the conventional method of court proceedings.

The Judgement of Afcons Infrastructure and Ors. v. Cherian Verkay Construction and Ors 2010 (8)SCC 24 changed the course of arbitration proceedings in India in addition to Salem Advocate Bar Association case. The scope and interpretation of Section 89 of CPC,1908, suitability and unsuitability of arbitration for various disputes, consent of parties to the suit for arbitration , mandatoriness or voluntariness of ADR process and many other co-related issues were largely settled by the apex court burying the hatchet once and for all.

BRIEF FACTS OF THE CASE

Cochin Port Trust(2nd Respondent) entrusted the work of construction of certain bridges and roads to Afcons Infrastructure(appellants) under an agreement dated 20th April,2001. The appellants sub-contracted a part of the said work to the first respondent i.e. Cherian Varkey Construction (hereinafter referred as CV Constructions) under an agreement dated 1st August,2001. The agreement did not contain any provision for reference of the disputes to arbitration.

The first respondent Cherian Varkey Construction had filed a suit against appellants Afcons Infrastructure for recovery of Rs. 2,10,70,881 which includes the amount due to the appellants from the employer with interest .

In the same suit an order of attachment was made in regards to Rs.2.25 crores. The first respondent , CV Construction thereafter filed an application under section 89 of the CPC,1908 before the trial court praying that court may formulate the terms of settlement and refer the matter to arbitration.

Afcons Infrastructure filed a counter stating that they were not agreed for arbitration process under Section 89. Thus, the first respondent agreed for arbitration, whereas defendants 1 and 2 were not agreeable for arbitration.

The trial court held that since the claim was related to work contract , so dispute should be settled by arbitration. The appellants Afcons Infrastructure filed for revision against order of the trial court in High Court. It was dismissed by High Court holding that apparent tenor of section 89 of CPC permitted court, in appropriate cases to refer the dispute to arbitration even if parties are unwilling. The pre-existing arbitration agreement as mandated under Arbitration and Conciliation Act,1996 for referring the disputes to arbitration is inapplicable under section 89 of CPC,1908, further stated the court.

The said order of the Kerela High Court was thus challenged in Supreme Court through an appeal.

ISSUE BEFORE THE COURT

On the contentions pressed by the appellant, two questions arise for consideration before the apex court –

What is the procedure to be followed by a court in implementing Section 89 of CPC,1908 and Order 10 Rule 1A of the Code ?

Whether Consent of all the parties to the dispute/suit is mandatory for reference to arbitration under Section 89 of the Code?

Section 89 was incorporated in the Code of Civil Procedure, 1908 by the Amendment Act of 1999 to resolve the disputes without going to trial and pursuant to recommendations of the Law Commission and Malimath Committee report. The object, purpose, scope, and tenor of Section 89 was dealt in-depth by the apex court in this case.

Section 89 of CPC deals with Settlement of disputes outside the court and it reads- 1)Where it appears to the court that there exist elements of settlement which may be acceptable to the parties, the court shall formulate the terms of settlement and give them to the parties for their observations and after receiving the observations of the parties, the court may reformulate the terms of a possible settlement and refer the same for-

a) arbitration

b) conciliation

c) judicial settlement including settlement through Lok Adalat ; or

d)mediation

2) where the dispute has been referred –

a) for arbitration or conciliation , the provisions of Arbitration and Conciliation Act,1996 shall apply as if the proceedings for the arbitration or conciliation were referred for the settlement under the provisions of that Act;

b)to Lok Adalat, the Court shall refer the same to the Lok Adalat in accordance with the provisions of sub-section(1) of section 20 of the Legal Services Authority Act,1987 and all other provisions of that Act shall apply in respect of the dispute so referred to the Lok Adalat;

c)for judicial settlement, the Court shall refer the same to a suitable institution or person and such institution or person shall be deemed to be Lok Adalat and all the provisions of the Legal Services Authority Act,1987 shall apply as if the dispute were referred to a Lok Adalat under the provisions of that Act;

d) for mediation, the Court shall effect a compromise between the parties and shall follow such procedure as may be prescribed.

Order 10 Rule 1A- Direction of the Court to opt for any one mode of alternative dispute resolution- After recording the admissions and denials, the Court shall direct the parties to the suit to opt either mode of the settlement outside the Court as specified in sub-section (1) of Section 89.

A bare perusal of Section 89 can seem to be nothing more than importation of Section 73 of the Arbitration and Conciliation Act,1996 which to a much extent is like its replica. Section 73 of the 1996 Act has provision for settlement agreement and it reads- 1) When it appears to conciliator that there exist elements of settlement which may be acceptable to the parties, he shall formulate the terms of a possible settlement and give them to the parties for their observations. After receiving the observations of the parties, the conciliator may reformulate the terms of a possible settlement in light of such observations.

2) If parties reach agreement on a settlement of the dispute, they may draw up and sign a written agreement. If requested by the parties, the conciliator may draw up, or assist the parties in drawing up, the settlement agreement.

3) When the parties sign the settlement agreement, it shall be final and binding on the parties and the persons claiming under them respectively.

4) The conciliator shall authenticate the settlement agreement and furnish a copy thereof to each of the parties.

One may infer that Section 89 is trying to transcend the express powers of ADR mechanism provided under Section 73 of 1996 Act. Furthermore, Section 89 also empowers the court to formulate and reformulate the terms of settlement at a stage prior to reference to an ADR process. Even if court draws the terms of settlement , those will be totally redundant in any subsequent ADR process. Thus, civil courts are unnecessarily burdened with the task of formulating the terms of settlement at a pre-reference stage.

Apex Court has thus aptly observed that Section 89 of CPC,1908 is like “putting a cart before the horse and is wholly impracticable, if not impossible, yet the object behind it was laudable.”

Section 89 of CPC presupposes that there is no-preexisting arbitration agreement between the parties. Its only when by means of a joint application, the parties to the dispute agree for ADR before the court , the matter can be referred to arbitration under section 89 of CPC and on such reference, the provisions of Section 8 or Section 11 of the Arbitration and Conciliation Act,1996 would apply. This will take the dispute out of the court stream once and for all.

Furthermore, the apex court pointed out various drafting errors in Section 89 of the Code of Civil Procedure,1908 . The first anomaly is the mixing up of the definitions of ‘mediation’ and ‘judicial settlement’ under the clauses (c) and (d) of the Sub-section( 1) of Section 89 of the Code.

Clause (c) states that for judicial settlement , the court shall refer the same to a suitable institution or person who shall be deemed to be a Lok Adalat.

Clause (d) provides that where reference is to mediation, the court shall affect a compromise between the parties by following such procedure as may be prescribed.

It makes no sense to call a compromise effected by a court as a mediation as is done in clause (d). One even wonders how can a reference of a dispute made by court to a suitable institution or a person for settlement purpose be described as a ‘judicial settlement’. The mix-up of terms ‘Judicial Settlement’ and ‘Mediation’ in Section 89 has indeed created a jumble and confusion and appear as typographical or clerical errors in drafting.

JUDGEMENT

Supreme Court pronounced that it’s not necessary for the court to formulate and reformulate the terms of possible settlement before referring the dispute to arbitration. It’s sufficient even if court merely describes the nature of dispute or its summary and makes the reference.

Section 89 starts with words- ‘where it appears to the court that there exists elements of settlement’. This amply implies that only those cases suitable for ADR should be referred by courts to ADR and cases which are not suited for ADR process should not be referred under Section 89 of the Code.

The suitability and unsuitability of cases for ADR process was elaborated by apex court by providing an illustrative list. The Supreme Court stated that all cases of civil nature whether pending in civil courts or any tribunals can be referred to ADR process such as-

All cases relating to trade, commerce, and contracts

All cases arising from strained relationship , such as matrimonial cases

All cases where there is a need for continuation of pre-existing relationship such as disputes between neighbours and members of societies

All cases relating to tortious liability, including motor accident claims and all consumer disputes.

The apex court also held that it’s not ‘Mandatory’ to refer the parties to any ADR process in all cases. Where case falls under an excluded category, the court need not refer it to ADR process. In all other cases, reference to ADR is a must.

It was also held that a civil court cannot refer a suit to arbitration unless all the parties to the suit agree for such a reference. Thus, consent of parties in suit will be necessary for referring the subject-matter of the suit to arbitration.

CONCLUSION

ADR mechanism facilitates speedy resolution of disputes. It also reduces the burden of civil courts that are already dealing with whopphing number of pending cases yet to be cleared by them. Furthermore, only those cases capable of being resolved through arbitration are referred to ADR mechanism. Under the Act of 1996, the award of arbitration is enforceable as if it were a decree of court. The Afcons case thus put an end to most of the debatable issues that were a bone of contention in ADR mechanism.

The author is a budding lawyer at Delhi.

The Arbitration Act, 1940 was replaced by the Arbitration and Conciliation Act, 1996. The object of the Act was to consolidate and amend the law relating to domestic arbitration, international commercial arbitration and enforcement of foreign arbitral awards and also to define law relating to conciliation and for matters connected therewith or incidental thereto. It was in larger compliance with the United Nations Commission on International Trade Law (UNCITRAL)—The Model Law on International Commercial Arbitration in 1985.

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Legally Speaking

Analysing WhatsApp privacy policy through the lens of Competition Law

In January this year, WhatsApp announced its revised privacy policy that would impact the user interactions with business accounts, including those which may be using Facebook’s hosting services. Will this be in contravention of abuse of dominance under Section 4 of the Competition Act?

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WhatsApp, in January 2021 announced its revised privacy policy which would impact the user interactions with business accounts, including those which may be using Facebook’s hosting services. The text of the notification reported in the Media read as follows:

WhatsApp is updating its terms and privacy policy. Key updates include more information about:

WhatsApp’s service and how we process your data.

How businesses can use Facebook-hosted services to store and manage their WhatsApp chats.

How we partner with Facebook to offer integrations across the Facebook Company Products

By tapping AGREE, you accept the new terms and privacy policy, which take effect on February 8, 2021. After this date, you will need to accept these updates to continue using WhatsApp. You can also visit the Help Center if you would prefer to delete your account and would like more information.

This updated privacy policy presented users with the option of either mandatorily accept the privacy policy of greater data sharing between WhatsApp and Facebook in its entirety or being unable to use the platform after 15th May 2021. This had arisen a huge debate throughout the world concerning protection of the privacy of individuals as well as the abuse of data sharing by the technologically giant companies.

WhatsApp on January 13 2021 published a blog post as a response and clarified through it that the updated privacy policy did not apply to personal chats or communications i.e. with friends, families, or relatives, but applied only to communications with business accounts via the WhatsApp platform. According to the blog, “But whether you communicate with a business by phone, email, or WhatsApp, it can see what you’re saying and may use that information for its own marketing purposes, which may include advertising on Facebook.”

The Competition Commission of India (CCI) relying on these media reports and the concern of potential harm to the competition framework in the country, decided to take suo moto cognizance of the matter In Re: Updated Terms of Service and Privacy Policy for WhatsApp Users, and seek a response from both WhatsApp and its parent company Facebook about the said privacy update. Similar issue was discussed by the Hon’ble Supreme Court of India, however, in this article, I shall restrict the analysis only from the angle of Competition Law and discuss the order of the Competition Commission of India which held WhatsApp and Facebook prima facie in violation of abuse of dominance under Sec 4 of the Competition Act, 2002 and hence, ordered the DG (Director General) investigation into the said matter.

PAST ENQUIRIES

In 2016, WhatsApp had announced similar privacy and data sharing policy with Facebook, wherein WhatsApp would share some user data with Facebook for several purposes like target advertising. Targeted advertising is a form of online advertising that focuses on the specific traits, interests, and preferences of a consumer. Advertisers discover this information by tracking the activity of the user or collecting specific data from the user on the Internet. This privacy policy was challenged before the Competition Commission of India In Re: Shri Vinod Kumar Gupta v. WhatsApp Inc. Case No. 99 of 2016, (hereinafter referred as Vinod Gupta case) for alleged abuse of dominance of WhatsApp in the relevant market for instant messaging services using consumer communication apps through smartphones in India under Sec 4 of the Competition Act. However, the Commission then had held in favour of WhatsApp on the grounds that it had provided its users the option of opting out from the sharing of user account information with Facebook within 30 days of agreeing to the updated privacy policy. The Commission held that, “We are therefore, of the view that it is always open to the existing users of “WhatsApp” who do not want their information to be shared with “Facebook” to opt for deletion of their account…….”

Additionally, in 2020, WhatsApp was again brought before the CCI In Re: Harshita Chawal v. WhatsApp Inc. Case No. 15 of 2020, (Hereinafter referred to as the Harshita Chawla Case) for anti-competitive conduct by integrating its payment option (WhatsApp Pay) into its user application. The Commission even then had held in favour of WhatsApp on the grounds that mere installation of WhatsApp messenger does not coerce the user to use WhatsApp Pay exclusively or to influence the consumer choice implicitly in any other manner. The Commission in this case did not discuss the allegations of data sharing with Facebook, as there was a lack of specific information and evidence provided by the Informant.

The present order

The general approach of the CCI is that before passing the order of investigation to the DG under Sec 26(1) of the Competition Act, the CCI, in most cases, relies on the information produced by the Informant in forming a prima facie opinion. In its previous orders, the CCI relied on the information provided by the informant, the market analysis, statistics, and market data while deciding in favour of WhatsApp, this time it simply relied on media reports and took a suo moto cognizance of the matter. This is, however not the first time that the CCI has taken a suo moto cognizance of contravention of the competition law. In Re: Alleged anti-competitive conduct by Maruti Suzuki India Limited (MSIL) in implementing discount control policy vis-à-vis dealers, Suo Moto Case No. 01 of 2019, wherein it had received an anonymous mail and on that basis, the CCI took suo moto cognizance of the matter against Maruti Suzuki. This demonstrates the evolving approach of the CCI while taking up matters by giving more importance to harm to the competition framework rather than the procedural requirements.

In the present matter, while presenting its contentions, WhatsApp relied on the previous approach of the CCI in its decisional practice in the Harshita Chawla Case, Vinod Kumar Case, and also in the case of XYZ v. Alphabet Inc. Case No. 07 of 2020, and contended that allegations against data sharing, data localizations cannot be looked in under the Competition Law. However, in this order, the CCI observed that in digital markets, unreasonable data collection and sharing thereof may grant competitive advantage to the dominant players and may result in exploitative as well as exclusionary effects, which is a subject matter of examination under competition law. This shows the evolving approach of the CCI while taking up matters related to the digital economy wherein consumer data is the most important consideration and can severely impact the dominance of an enterprise and its conduct in the market. This is also in consonance with the global decisional practices under antitrust laws wherein the competition regulators across the globe are considering the non-price competition factors involved in the dominant conduct of the enterprise in the market. The European Commission in Microsoft/LinkedIn merger case, Case Comp/ M.8124, had noted that although privacy concerns fell under data protection laws, it could be seen as a non-price competition factor in merger control assessments to the extent that consumers saw it as a significant factor in the quality of the services offered.

WhatsApp also contended that the privacy policy update has not been implemented yet and has been postponed to 15th May, 2021, hence, the CCI taking up the matter is premature. The CCI observed that the conduct has already taken place and the deadline of 15th May 2021 is just for acceptance to the updated terms. Sec 33 of the Competition Act also empowers the commission to intervene in the acts which are in contravention of Sec 3,4, or 6 of the Competition Act, if such acts are about to be committed. The CCI in its interim order In Re: Federation of Hotel & Restaurant Associations of India (FHRAI) v. Make My Trip India Pvt. Ltd. (MMT) and others, Case No. 14 of 2019 and Case No. 01 of 2020, had observed, that in digital markets which have a winner takes all potential, the likely outcome of any impugned conduct cannot be ignored till the conduct takes place in actual. Early redressal of such conduct and eliminating the same at its earliest is of utmost importance. The CCI also observed that, “Network effects coupled with even small actions by the platforms may exclude and marginalize rivals, and further strengthen these effects that may be difficult to dilute at a later stage. Any remedy at that stage will be too little and too late as the suppliers’ side of the market, i.e. the franchisee service providers, can be potentially eliminated due to the alleged anticompetitive conduct.” Hence, in digital markets, a slightly different approach than traditional markets is required and the conduct should be analyzed on its merits and its potential harm to the competition.

ANALYSIS

The CCI in this order has touched upon many aspects of abuse of dominance in the digital markets. Digital markets involve structural risks such as network effects, walled gardens, locked-in effects, increased switching costs to alternate platforms, etc. CCI held WhatsApp to be dominant in the relevant market for OTT messaging apps through smartphones in India, which was arrived on the basis of its previous orders in the Harshita Chawla and Vinod Sharma Case. This new privacy policy of WhatsApp removed the option of “opt-out” to the users which it provided in the Vinod Sharma Case and hence, this approach of “take it or leave” leaves no option for the users but to mandatorily accept the new policy to continue using the services of WhatsApp. WhatsApp is in the position to mandate such policies due to the network effects it has acquired. A communication network/platform gets more valuable as more users join it, thereby benefiting from network effects. Hence, the popularity or the value of WhatsApp for a user increases even more as his/her friends, family, and relatives register on the network. This has helped WhatsApp to strengthen its position and limit its substitutability with other similar platforms. The users tend to get locked-in in the ecosystem with less incentive to switch to any alternate network.

According to the Working Paper of the University of Cambridge on Big data for Big Business (March, 2014), the lock-in effect refers to a situation where consumers become dependent on a single manufacturer or supplier for a specific service and cannot move to another without substantial costs. Lock-in trends impact the level of competition in an industry, especially those in which network effects exist. If products are incompatible, switching costs, and network effects bind customers to vendors, locking-in not only customers but also markets to early choices. Even when efficient options are available, customers find themselves hindered by lock-in, giving vendors lucrative ex-post market power over the same buyer.

The CCI also analyzed the presence of such network effects from the fact that despite downloads of the rival apps like Signal and Telegram increased after WhatsApp announced its privacy policy, the user base of WhatsApp did not suffer any significant impact. Hence, on these lines and aspects, the CCI ordered a DG investigation against WhatsApp and Facebook for the alleged abuse of dominance under Sec 4 of the Competition Act.

CONCLUSION

As it was recently said by the CCI Chairperson Ashok Kumar Gupta that, “one-size-fits-all” approach does not work for digital markets and a nuanced assessment of cases based on facts is the need of the hour”. This order of the CCI opens up a new dimension for adjudication the matters that involve big data and the big data companies. Today, though the users might feel that they are able to use the tech services for free, but in this era of digital markets, nothing comes for free. These tech giants are able to access the data of the users and adapt their policies in consonance with such user data. The user data acts like one of the most crucial asset of these tech giant companies. In the words of one former Amazon employee who worked on the Prime team, “It was never about the US$ 79, it was really about changing people’s mentality so they wouldn’t shop anywhere else. (CCI Report on Market Study on the Telecom Sector in India, 20.01.2021). Hence, it becomes evident that the tech giant companies are constantly involved in capturing the user’s time, attention, and data and leaves them with almost no incentive to leave the platform. For example, once a user registers himself/herself on Amazon, the user can access Amazon Prime for visual entertainment, Amazon Kindle for reading, Amazon Music for music, Online Shopping, etc. and finally, there remains no incentive for the user to go anywhere else for availing these services.

As rightly observed by the CCI, cross-linking and integration of user data can further strengthen data advantage besides safeguarding and reinforcing the market power of dominant firms. Finally, the CCI observed that, for Facebook, the processing of data collected from WhatsApp can be a means to supplement the consumer profiling that it does through direct data collection on its platform, by allowing it to track users and their communication behaviour across a vast number of locations and devices outside the Facebook platform. Therefore, the impugned data sharing provision may have exclusionary effects also in the display advertising market which has the potential to undermine the competitive process and creates further barriers to market entry besides leveraging, in violation of the provisions of Section 4(2)(c) and (e) of the Act.

Though this order does not conclude and hold WhatsApp and Facebook in contravention of abuse of dominance under Sec 4 of the Competition Act, it definitely sets the stage for an evolution in the competition analysis framework in India.

This updated privacy policy presented users with the option of either mandatorily accept the privacy policy of greater data sharing between WhatsApp and Facebook in its entirety or being unable to use the platform after 15th May 2021. This had arisen a huge debate throughout the world concerning protection of the privacy of individuals as well as the abuse of data sharing by the technologically giant companies.

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Legally Speaking

ADDITIONAL DISTRICT JUDGE HAS JURISDICTION TO ENTERTAIN A PETITION FILED UNDER SECTION 34 OF ARBITRATION AND CONCILIATION ACT: KERALA HC

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While setting all the speculation to rest on whether an Additional District Judge has jurisdiction under Section 34 of the Arbitration and Conciliation Act, 1996 or not, the Kerala High Court has just recently on 9 April 2021 in a latest, learned, laudable and landmark judgment titled Kasim VK vs M Ashraf in Arb.A.No. 37 of 2020 held in no uncertain terms that an Additional District Judge has jurisdiction to entertain a petition filed under Section 34 of the Arbitration and Conciliation Act. The two Judge Bench of the Kerala High Court comprising of Justice CT Ravikumar and Justice K Haripal observed that, “Principal District Judge can only be considered first among equals and the Additional District Judge is in no way considered to be inferior to the Principal District Judge.” The Kerala High Court observed thus while dismissing an Arbitration Appeal.

To start with, Justice K Haripal who has authored this judgment for himself and Justice CT Ravikumar sets the ball rolling by first and foremost pointing out in para 1 that, “Whether an Additional District Court has jurisdiction to entertain a petition touching the matters falling under the Arbitration and Conciliation Act; Can a party to an arbitration dispute challenge the jurisdiction of the Arbitrator for the first time before the court in a petition filed under Section 34 of the Act, are the two questions posed for consideration in this appeal.”

As we see, the Bench then puts forth in para 2 that, “This is an appeal preferred under Section 37 of the Arbitration and Conciliation Act, 1996, hereinafter referred to as the Act, challenging the correctness of the order of the III Additional District Judge, Kozhikode in OP(Arbitration) No.270/2018. That was a petition filed by the appellant before the District Court, under Section 34 of the Act seeking to set aside the award of the Arbitrator, dated 29.09.2018.”

While elaborating on the facts of the case, the Bench then envisages in para 3 that, “It is the common case that the appellant and the respondent were partners in M/s.Shalimar Jewellery, a partnership concern dealing in the sale of gold. The partnership agreement was executed on 28.10.2013. Before the execution of that agreement, there were three partners in the firm, the appellant, the respondent and one V.K. Moidu. When Moidu chose to move out, the agreement dated 28.10.2013 was brought in existence. During the course of business the appellant and the respondent could not move on and thus, by a lawyer notice, the respondent notified the appellant his intention to dissolve the partnership. Thus he informed that the partnership stood dissolved with effect from 01.05.2015. In the matter of settlement of accounts the partners could not reach a consensus and that led to the appointment of two Arbitrators at the instance of the parties. The appellant nominated Sri. K. Aravindakshan as Arbitrator who dismissed the claim of the respondent. On the other hand, one Sri. Abdulla Manapurath was nominated by the respondent as Arbitrator who found that, at the time of dissolution of the partnership, 6481.580 grams of gold was the stockin-trade, the value of which was estimated to be Rs.1,91,85,476.80/- and thus the respondent was found entitled half of the said amount, i.e. Rs.95,92,738.40/-. In the light of divergent finding of the respective Arbitrators, both the Arbitrators jointly nominated Adv. Sri. A.K. Rajeev as the third Arbitrator, who, after taking evidence, passed an award to the effect that the respondent is entitled to claim Rs.1,13,77,405/- with interest at the rate of 11% on Rs.87,03,427/-. Aggrieved by the said award of the third umpire, the appellant moved the District Court with the above stated Original Petition under Section 34 of the Act. By the impugned order, on 02.03.2020, the learned III Additional District Judge dismissed the petition. Aggrieved by the same, the appellant has moved this Court under Section 37 of the Act.”

Needless to say, the Bench then states in para 4 that, “We heard Adv. Sri. B. Krishnan for the appellant and Adv. Sri. Mohammed Nias for the respondent. The records leading to the award and the order passed by the learned Additional District Judge were also summoned and perused.”

To say the least, the Bench then notes in para 5 that, “The point arising for consideration is whether the appellant could make out valid reasons for interference under Section 37 of the Act.”

Be it noted, the Bench then observes in para 6 that, “As mentioned earlier, it is the common case that both the appellant and the respondent were partners of a partnership firm by name M/s.Shalimar Jewellery doing business in gold at Nadapuram in Kozhikode district. The partnership agreement was executed on 28.10.2013 in continuation of the earlier business run by the parties themselves along with one V.K. Moidu. Clause 17 of the partnership agreement reads thus:-

“17. Any dispute or difference of opinion that may arise between the partners or their heirs or their legal representatives with regard to this partnership agreement or any other matter relating to this firm shall be mutually discussed and settled. If not settled, the dispute shall be referred to two arbitrators by common agreement of the partners. Where these arbitrators are themselves divided in opinion, the matters may further be referred to an umpire chosen by the said arbitrators.”

It is on the strength of the above clause in the agreement that the appellant and the respondent had nominated their respective Arbitrators. But divergent awards were passed by the Arbitrators, which necessitated the appointment of a third umpire and that was how the impugned award had come into existence.”

Furthermore, the Bench then envisages in para 7 that, “The impugned order indicates that even though the appellant had challenged the award with numerous contentions, at the time of argument he confined to one ground only namely, that the dispute is not capable of settlement by arbitration. The learned Additional District Judge considered this aspect and basing on the decision of the Hon’ble Supreme Court in M/s. V.H. Patel & Company and others v. Hirubhai Himabhai Patel and others [(2000) 4 SCC 368] and also A. Ayyasami v. Parasasivam and others [(2016) 10 SCC 386] ruled against the appellant and held that a dispute on the dissolution of a partnership is capable of being adjudicated by the Arbitrator and ultimately the petition was dismissed.”

It is worthwhile to mention that para 12 then stipulates that, “The preamble of the Act makes it amply clear that the Parliament enacted the statute almost on the same lines as the Model Law which was drafted by United Nations Commission on International Trade Law, UNCITRAL. Under the 1940 Act, an Arbitrator had no power to decide on his own jurisdiction. But Section 16 of the Act of 1996 is a recognition of the doctrine of competence-competence meaning that the Arbitral Tribunal can rule on its own jurisdiction. The crux of the arbitration process is the autonomy of the disputing parties with minimum judicial intervention. Once the Arbitral Tribunal, after hearing parties, gives a decision that the arbitration agreement exists between the parties, then by virtue of sub-section (5) of Section 16, the tribunal is bound to proceed with the arbitration matter and make the award and the validity of the order can be assailed by the aggrieved party only by filing objections against the award under Section 34.”

To put things in perspective, the Bench then envisages in para 13 that, “It is the requirement of the law that respondent must state his objections with regard to the jurisdiction of the Arbitrator before filing the statement of defence. However, the respondent may be allowed to raise objection to the jurisdiction of the Arbitrator even subsequent to the filing of the defence statement provided he can show good reasons to the Arbitrator for raising such an objection at a belated stage. In this connection, it is apposite to extract the following paragraphs from the decision reported in Gas Authority of India Limited and another v. Keti Constructions (I) Ltd. and others [(2007) 5 SCC 38]:-

“24. The whole object and scheme of the Act is to secure an expeditious resolution of disputes. Therefore, where a party raises a plea that the Arbitral Tribunal has not been properly constituted or has no jurisdiction, it must do so at the threshold before the Arbitral Tribunal so that remedial measures may be immediately taken and time and expense involved in hearing of the matter before the Arbitral Tribunal which may ultimately be found to be either not properly constituted or lacking in jurisdiction, in proceedings for setting aside the award, may be avoided. The commentary on Model Law clearly illustrates the aforesaid legal position.

25. Where a party has received notice and he does not raise a plea of lack of jurisdiction before the Arbitral Tribunal, he must make out a strong case why he did not do so if he chooses to move a petition for setting aside the award under Section 34(2)(a)(v) of the Act on the ground that the composition of the Arbitral Tribunal was not in accordance with the agreement of the parties. If plea of jurisdiction is not taken before the Arbitrator as provided in Section 16 of the Act, such a plea cannot be permitted to be raised in proceedings under Section 34 of the Act for setting aside the award, unless good reasons are shown.”

The above dictum is a complete answer to the argument raised by the appellant touching want of jurisdiction of the Arbitrator. At the risk of repetition, we may point out that the appellant has no dispute regarding the validity of the agreement, nor he had raised such a contention before the two Arbitrators chosen by the parties and also before the third umpire. In the circumstances, he is estopped from raising such a belated plea in a petition filed under Section 34 of the Act.”

While citing yet another relevant case law, the Bench then observes in para 14 that, “We have also come across the decision of a learned Single Judge of the Bombay High Court, reported in Yogendra N. Thakkar v. Vinay Balse and another [2018 KHC 5034], where the learned Judge has ruled, basing on the decision of the Hon’ble Apex Court in V.H. Patel & Company, quoted supra, that the power of dissolution of the partnership firm under Section 44(g) of the Indian Partnership Act on just and equitable grounds also is an action in personam and not in rem. We concur with the above view expressed by the learned Single Judge of the Bombay High Court.”

Of course, the Bench then hastens to add in para 15 that, “We have already referred to clause 17 of the agreement executed between the parties. It is quite patent that the said clause is very wide and the intention of the parties is to settle the dispute through arbitration, in the event it could be settled through mediation. Section 44 of the Partnership Act also does not impose any taboo or cause any restriction which prevents dissolution of partnership through arbitration. In other words, there is no inherent lack of jurisdiction in the matter of considering the question of dissolving the partnership through arbitration.”

To be sure, the Bench then points out in para 16 that, “During the course of argument, the learned counsel for the appellant also disputed the jurisdiction of the Additional District Judge in entertaining a petition under Section 34 of the Act. Referring to Section 2(e) of the Act, he said that ‘court’ means only principal civil court of original jurisdiction in a district and, therefore, the Additional District Judge has no jurisdiction to entertain the petition. In this connection, he placed strong reliance on Sree Gurudeva Charitable and Educational Trust, quoted supra. But we have no doubt in our mind that such an argument cannot be accepted in right earnest. Firstly, the decision in Sree Gurudeva Charitable and Educational Trust, was rendered in the context of Section 92 of the Civil Procedure Code and has turned up on its own facts. We are not called upon to make any opinion on the correctness of the said decision. Secondly, Section 2(1) (e) of the Act reads thus:

“2. Definitions.- (1) In this Part, unless the context otherwise requires,-

(e) “Court” means—(i) in the case of an arbitration other than international commercial arbitration, the principal Civil Court of original jurisdiction in a district, and includes the High Court in exercise of its ordinary original civil jurisdiction, having jurisdiction to decide the questions forming the subject-matter of the arbitration if the same had been the subject-matter of a suit, but does not include any Civil Court of a grade inferior to such principal Civil Court, or any Court of Small Causes;

(ii) in the case of international commercial arbitration, the High Court in exercise of its ordinary original civil jurisdiction, having jurisdiction to decide the questions forming the subject-matter of the arbitration if the same had been the subject-matter of a suit, and in other cases, a High Court having jurisdiction to hear appeals from decrees of Courts subordinate to that High Court.”

Most remarkably, the Bench then also points out in para 17 that, “A close reading of this provision will not impel us to adopt the argument raised by the learned counsel. The said provision enables the principal civil court of original jurisdiction in a district as the court having jurisdiction to decide the question forming the subject matter of arbitration; such a court does not include any civil court of a grade inferior to such a court or any Court of Small Causes. The latter limb of Section 2(1)(e) of the Act makes it abundantly clear that the definition of the ‘court’ does not include ‘any civil court of a grade inferior to such principal Civil Court, or any Court of Small Causes’. To put it in other words, legislature has not thought of excluding courts exercising identical or co-equal powers from the definition. In no stretch of imagination an Additional District Judge can be inferior to such principal civil court. A court is inferior to another court, when an appeal lies from the former to the latter. An inferior court must be construed to mean judicially inferior and has appellate jurisdiction. A court is an inferior court for the purpose of the prohibition in the provision whenever its jurisdiction is limited. The Additional District Judge enjoys an equal, concurrent jurisdiction with the District Judge. His powers are identical and co-equal with the Principal District Judge. Both are manned by officers in the category of District Judge. The Principal District Judge cannot revise an order passed by any Additional District Judge. District Court is the ‘court’ for the purposes of execution of the award and considering the matters under the Arbitration Act, it is important to note that the Principal District Judge has no appellate jurisdiction or revisional jurisdiction over the Additional District Judge. For all practical purposes, if there are more than one district court in a district, the Principal District Judge can only be considered first among equals and the Additional District Judge is in no way considered to be inferior to the Principal District Judge.”

Quite pertinently, the Bench then states in para 18 that, “When a similar contention, that an Additional District Judge has no jurisdiction to entertain an application under Section 9 of the Act, was raised, in Globsyn Technologies Ltd. v. Eskaaycee Infosys [2004 (2) ALT 174 : MANU/AP/0970/2003] the High Court of Andhra Pradesh ruled thus:-

“12. The short question that falls for consideration is as to whether the Court of the learned VI-Additional District Judge is a Civil Court of a grade inferior to the Principal Civil Court. The Court of the Principal District Judge and the Court of VI Additional District Judge are of equal grade. The Court of the learned VI-Additional District Judge is not a court of a grade inferior to the Court of the Principal District Judge. The expression “Court of a grade inferior” is required to be understood in its proper context.

13. The dictionary meaning of inferior is “lower in any respect, subordinate, a person who is lower in rank or station”. According to Black’s Law Dictionary, inferior means “one who, in relation to another, has less power and is below him; one who is bound to obey another. The term may denote any Court subordinate to the chief appellate Tribunal in the particular judicial system [eg. Trial Court]; but it is also commonly used as the designation of a Court special, limited or statutory jurisdiction”.

14. I find it difficult to accept the submission of the learned Additional Advocate General that the Court of the learned VI Additional District Judge at Visakhapatnam is a Court of a grade inferior to the Principal District Judge’s Court. ……..””

While continuing in a similar vein, the Bench then also states in para 19 that, “A Division Bench of the Madhya Pradesh High Court also considered the same question pointedly in Madhya Pradesh State Electricity Board and another v. ANSALDO Energia, S.P.A. and another [AIR 2008 M.P. 328]. After making an elaborate survey of authorities taken by various High Courts on the point, approving the dictum in Globsyn, mentioned supra, it was held that, the Additional District Judge has jurisdiction to entertain a petition filed under Section 34 of the Act. We are in respectful agreement with the above finding.”

Most significantly, the Bench then quite rightly points out in para 20 that, “In the context of the Kerala Civil Courts Act also such an argument of the learned counsel cannot hold good. Section 2 of the Civil Courts Act provides three category of positions namely, the court of a District Judge, the court of a Subordinate Judge and the court of a Munsiff. Section 3 provides for establishment of district court. Going by sub-section (2) of Section 3 of the Civil Courts Act, the Government shall establish a district court for each district and a Judge shall be appointed to such court. Section 4 provides for appointment of Additional District Judges. Under sub-section (1) of Section 4 when the state of business pending before a district court so requires, one or more Additional District Judges may be appointed to that court for such period as it deemed necessary. Sub-section (2) of Section 4 says that an Additional District Judge shall discharge all or any of the functions of the District Judge under this Act in respect of all matters which the District Judge may assign to him, or which under the provision of Section 7 may be instituted before him and in the discharge of those functions he shall exercise the same powers as the District Judge. When such additional district courts are established and Additional District Judges are appointed, sub-section (2) of Section 4 of the Civil Courts Act empowers the Additional District Judges so appointed with powers to discharge all the functions of the District Judges. It is very specific when it is provided that the Additional District Judge shall exercise the same powers as the District Judge. That is why it is stated that Principal District Judge is only first among equals among the District Judges in a district. In the circumstance, there is no jurisdictional error in Additional District Judges hearing petitions filed under the Act.”

Adding more to it, the Bench then states in para 21 that, “Arguments were also addressed stating that the award was given in total disregard of the time frame provided under Section 29-A of the Act. According to the learned counsel, the award is hit by subclause (4) of Section 29A of the Act. We are unable to subscribe this argument also. It is evident from the paper book produced by the learned counsel and also the records that, when two Arbitrators appointed by the parties had given divergent views, appointment of a third umpire became necessary. Accordingly, both the Arbitrators together, by letter dated 15.05.2017, nominated Sri.A.K. Rajeev, Advocate, Vadakara as the third umpire. The proceeding paper indicates that he had taken up the matter on 19.05.2017 and the impugned award was passed on 29.09.2018. No doubt such an award was not passed within a period of twelve months as provided under Section 29-A(1) of the Act. All the same, sub-clause (3) of Section 29-A provides that the parties may, by consent, extend the period specified in sub-section (1) for making award for a further period not exceeding six months. Referring to paragraph 8 of the impugned award, the learned counsel for the respondent submitted that the third umpire proceeded with the matter, as consented by the parties, under sub-section (3) of Section 29-A. Relevant portion of the award indicates that, ‘there was some delay in proceeding with the matter partly attributable to his personal inconvenience and also due to the delay and laches on the part of the parties in submitting their statements and documents before him’.

Please read concluding on thedailyguardian.com

The claimant filed his statement along with the documents only on 02.04.2018 whereas the respondent filed his statement on 09.05.2018. It is further stated that on 09.05.2018, that is before the expiry of twelve months starting from 15.05.2017, both the parties were requested by him to extend their cooperation to complete the proceedings and make the award as early as possible and at any rate on or before 15.10.2018. According to him, they accepted and agreed for the same and cooperated with him for completing the arbitration proceedings. In other words, taking the date of commencement of the proceedings as 15.05.2017, before the expiry of twelve months both the parties consented to extend the period specified in sub-section (1) of Section 29-A for making the award and the award was passed on 29.09.2018 within a further period of six months from the date of giving the consent. Sitting in this jurisdiction, we do not find any reason to disbelieve the version of the Arbitrator and to strike off the proceedings under sub-section (4) of Section 29-A of the Act.”

For the sake of clarity, the Bench then states in para 22 that, “This is not a regular appeal as provided under Order XLI CPC or Section 5 of the High Court Act, but an appeal under Section 37 of the Act. While considering an application under Section 34 of the Act, the District Court has only supervisory jurisdiction. The jurisdiction of this Court under Section 37, at the tapering end of the proceedings, is still narrow and thin.”

Quite aptly, the Bench then observes in para 23 that, “It is the settled proposition of law that an Arbitrator is a Judge chosen by the parties and his decision is final. The court is not expected to appraise evidence as done by a regular court of appeal. In a case where the award contains reasons, interference would not be available within the jurisdiction of the court unless reasons are totally perverse or the award is based on wrong proposition of law. An error apparent on the face of the records would not imply closer scrutiny of the merits of documents and materials on record. Once it is found that the view of the Arbitrator is a plausible one, the court will refrain from interfering in the matter.”

It cannot be glossed over that the Bench then states in para 24 that, “In the decision reported in P.R. Shah, Shares & Stock Brokers (P) Ltd. v. B.H.H. Securities (P) Ltd. (2012 (1) SCC 594 the Apex Court held that a court under Section 34(2) of the Act does not sit in appeal over the award of an Arbitral Tribunal by re-assessing or re-appreciating the evidence. An award can be challenged only under the grounds mentioned in Section 34(2) of the Act. In the absence of any ground under Section 34(2) of the Act, it is not possible to re-examine the facts to find out whether any different decision can be arrived at. Similarly, in Sutlej Construction Ltd. v. Union Territory of Chandigarh [(2018) 1 SCC 718], while commenting against an order passed under Section 34 of the Act, the Hon’ble Supreme Court held that the Judge ought to have restrained himself from getting into the meanderings of evidence appreciation and acting like a second appellate court.”

No doubt, the Bench then seeks to point out in para 25 that, “Coming down to the jurisdiction under Section 37, it is clear that the court cannot travel beyond the restrictions laid down under Section 34 of the Act. The Hon’ble Supreme Court has held that the Court cannot undertake an independent assessment of the merits of the award and must only ascertain that the exercise of power under Section 34 has not exceeded the scope of the provisions; in case an arbitral award has been confirmed by the court under Section 34, in an appeal under Section 37 the appellate court must be extremely cautious and slow in disturbing such concurrent findings.”

Finally, the Bench then holds in para 26 that, “We have considered the contentions of the parties bearing in mind the restrictions imposed by the statute and also the caution sounded by the Apex Court. On an overall consideration of the entire circumstances, we are sure that the learned Additional District Judge has considered the award in proper perspective and reached a correct conclusion. We are of the definite view that overwhelming reasons are not made out warranting interference in appeal. Point is answered accordingly and the appeal is dismissed. No costs. Before parting with, we once again record our deep appreciation for the erudite and enlightening arguments raised before this Court by the learned counsel for the appellant as also the learned counsel for the respondent.”

In essence, the two Judge Bench of the Kerala High Court comprising of Justice K Haripal and Justice CT Ravikumar in their 26-page painstaking brilliant, brief and balanced judgment make the picture pretty clear on whether Additional District Judge has jurisdiction to entertain a petition filed under Section 34 of the Arbitration and Conciliation Act. The Additional District Judge has jurisdiction to entertain a petition filed under Section 34 of the Arbitration and Conciliation Act and there is nothing wrong in doing so as this is permitted in law. Para 17 and para 20 explains this quite elaborately, explicitly, eloquently and elegantly and form the real backbone of this judgment which is par excellence.

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MORE AMMUNITION IN HANDS OF ARMED FORCES: PAKISTAN’S NEW LAW CURBS RIGHT TO FREE SPEECH

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An experiment that has completely failed, the vision of great leaders is futile for the nation for which it was separated from India. Once it was dreamt that nation would be on parity with its big brother India but the present picture is devastating. The nation is harbouring death squads, leaders of the nation turn into a vendor of delusion, on the world map the nation is now undoubtedly recognised as a heaven for terrorists, the conundrum on the Kashmir, the recent failure on weather war and a goof-up reports, the creeping failures, the recent development is the shocking and utterly unreasonable step from the legislatures of the nation and there is not an iota of doubt that democracy is just a misnomer that is not anymore existing in the nation. The nation about which I am talking is now clear to you, it is the Islamic Republic of Pakistan which is a democratic setup atleast as per the constitution of Pakistan but on the ground, it is a failed experiment. The latest development that will give you goosebumps is regarding the step of Pakistani legislatures and a clear violation of International law norms and basic human rights envisaged under Article 19 of UDHR.

A TOOL TO CURB FREE SPEECH: SHATTERING DEMOCRACY IN PAKISTAN

If you think people not responding to your WhatsApp messages and leaving you with blue ticks is an offence, think again. There are people in Pakistan who believe that making memes should be made illegal and criticism should be a criminal offence. If your mind thinking what about the right to free speech and expression don’t worry about it Pakistani legislatures tried every single attempt to curb it. Pakistan’s new bill criminalizes military criticism with two-year imprisonment coupled with a fine of five thousand Pakistani Rupees. The proposed bill already approved and passed by a panel of national assembly-the lower house of the country’s parliament. By approving this bill, the national assembly panel has approved the amendment in the country’s Penal Code and Criminal Procedure Code 198, sanctioning punishment to those who ridicule armed forces through intended criticism. Criminal Law Amendment Bill, 2020 proposes to amend Section 500 of the Pakistani Penal Code (PPC) which envisaged the punishment for defamation. As per the report, the amendment proposes “punishment for international ridiculing of the armed forces etc. Whosoever intentionally ridicules, brings into disrepute or defames the armed forces of Pakistan or a member thereof, shall be guilty of an offence punishable with imprisonment for a term which may extend to two years, or a fine which may extend to five hundred thousand rupees or both.”

The legislation will curb free speech and even constructive criticism against the army by anyone. It is a major question that is unanswered by legislators as to how they will define what will come under intentional criticism and what will not? It is again to be decided by the sole discretion of concerned authority that can lead to abuse of powers.

THE UNREASONABLE REASONING: WHY PROPOSED AMENDMENT IS UNACCEPTABLE

The proposed amendment has faced criticism in Pakistan itself by the opposition leaders. But, the reasoning tabled by the legislature presenting the bill was completely unreasonable and against the rule of law if we need a comparative aspect to analyze the law. The law is fundamentally a gross error and a step by the legislatures to completely curb down the criticism against the military in any way even if it’s a constructive one.

As per the constitution of Pakistan Article 19 already covered the freedom of speech etc. and the instant subject matter is already covered in the aforesaid article. Article 19 is a fundamental right and such rights cannot be taken by the government except is some conditions laid under the Article. Already, the aspect is covered under the Article and hence the proposed criminal amendment bill is futile. The key to catch here is that in the present time there is no law and any issue arises on the said aspect the discretion is on the judiciary to interpret Article 19 but if the proposed amendment comes into effect, then the criticism of the army is a crime and it curbs freedom of speech which violates Article 19 of the constitution as it is not a reasonable exception provided therein in Article 19. The ridiculous step of legislature once again a cause of mockery and high trolling of Pakistan in their won country as well as in the global arena. The law is for the society and not supposed to against the society but there is an exception which is Pakistan as in past also we have seen some absurd and shocking developments.

The proposed amendment is also violating the International law norms and conventions as it is violating the Universal Declaration of Human Rights Article 19 that envisaged the concept of Freedom of speech and expression The only contention to justify the proposed amendment is that it is a reasonable exception to Article 19 of Constitution of Pakistan but the case is it is not the reasonable one. So here, what legislatures have done simply forcing their justification to uphold their will over the choice of the people of Pakistan. Pakistan is known for this democratic setup has witness arrest in past when the military coup was there in the nation so it is not a very abnormal step but it is an unacceptable and unfavourable step of the current regime of the nation. But what the people can do there, simply nothing if you raise the voice you will be killed or if you survive then you need to exile from there. Simply it is a life without freedom but the nation portrayed itself as a life full of freedom. There is an urgent need to ponder upon it.

One of the basic universal human rights is freedom of speech and expression that is available to all of us. Free speech is a necessary precondition to the enjoyment of other rights, such as the right to vote, free assembly and freedom of association, and is essential to ensure press freedom. The newest development in Pakistan is completely a shocking one but these abnormal things are normal in Pakistan. A Parliamentarian from the ruling party in Pakistan introduced legislation that would punish criticisms of the military in the country. With the advent of the new development in Pakistan, it is clear that the democratic setup in-country is just a rubber stamp but the actual power vests in the hand of the Army. According to the report, the bill is proposed to prevent hatred and disrespectful behaviour against the armed forces. It is pertinent to note here that already military in Pakistan has accused of different allegations against everyone who worked opposite to their interest. According to the 2020 World Press Freedom Index, the country ranked 144 out of 180. Pakistan’s military has been accused of pursuing journalists and other members of Pakistan’s civil society who are thought to be acting against them in any way. Reporters Sans Frontieres (RSF), the international organization that publishes the annual World Press Freedom Index (WPFI), commented on the state of press freedom in Pakistan and the role played by the country’s military in curtailing it. RSF noted, “[t]he influence of this military ‘establishment,’ which cannot stand independent journalism, has increased dramatically since Imran Khan became prime minister in July 2018.” Different instances depict where the country stands in terms of freedom to free speech and why the proposed law is just unreasonable. The murder of journalist Daniel Pearl, the killing of activist Karima Baloch, turned Balochistan into the land of missing people and a hotspot for every plausible crime ranging from murder, extortion to rape and many more instances. The list is continuous and so long if I need to put it up but the crux is that behind all this the reason for murders is directly or indirectly has a nexus with raising the voice against atrocities of the Pakistani military. The new legislation is a tool for adding more fuel and ammunition legally in the hands of the Pakistani Army. It is already too strong in the Pakistani setup.

FINAL WORDS

In summation, the proposed amendment is new ammunition in hands of the Army to curb down the expression, voices, dissents and even constructive criticism by anyone including journalists as well. It needs to be noted that the only justification given by the legislature behind this amendment is to curb down the incidents of defamation against the armed force but is for curbing down the right to free speech. This amendment would make it illegal to ask reasonable questions about the military’s alleged involvement in civilian affairs, which is important in Pakistan because the threat of the democratic project being derailed is still present. The proposed amendment is already heavily criticised in Pakistan as the Minister of the ruling party indirectly passed a criticism as “Absolutely ridiculous to criminalise criticism.’

The finality as if the bill converts into law will depend on the subject to approval by the National Assembly and the Senate (upper house of the Parliament). If it gets passed by the upper house then once again free speech gets curbed by the red tape in Pakistan and the seldom exercised right will just turn into a new misnomer in the nation. Parliament must ensure that this bill is either abandoned or dismissed in the interests of democracy.  It is imperative that civil societies across the globe are vigilant in defending the freedom of expression. This is necessary for the enhancement of people’s lives and the creation and maintenance of strong, healthy democratic societies. But in Pakistan all these are just words, it is a hub of global terrorism as proved by UN report.

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Specious jury of social media

Our generation has got a new instrument in its hands: The instrument goes by many names and gets a new name every few years. That instrument drives its life from the majestic power of the Internet, and it has no brain of its own; it works as per the command of the user’s brain. Whenever a piece of news comes out, without verifying the veracity of the same, that user is either fuelled by rage or becomes a part of the herd being led by some learned jurymen of social media.

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It is very often that the so-called learned, educated, liberal jury of social media comes to the rescue of oppressed, who at the end of the proper trial comes out to be a perpetrator in the best-case scenario. This article which I am writing may attract undue criticism from self-acclaimed crusaders of liberalism but I must write in contempt of this jury of social media working behind screens, destroying reputations since its inception. To every coin, there are two sides: one is to be praised while the other should be buried fathoms below the ground.

Our generation has got a new instrument in our hands from an early age; the instrument goes by many names and gets a new name every few years. That instrument drives its life from the majestic power of internet, and it has no brain of its own; it works as per the command of the user’s brain. Whenever a piece of news comes out; without verifying the veracity of the same, that user is either fuelled by rage or becomes a part of the herd being led by some learned jurymen of social media.

There have been countless posts which went viral on the internet. Many of them have led to reforms and are to be applauded, they form the bright side of the coin. The other side of the coin, which is not so bright, is run by the learned jurymen of social media and is committed towards spreading either hatred or misrepresenting the facts to catalyse a conclusion which would not have reached if the facts were analysed in toto with an application of mind.

One of the fresh examples of misadventures of this brigade is Sarvjeet Singh Bedi, who was falsely accused by a Jasleen Kaur of molesting him at a traffic signal in Tilak Nagar, Delhi in August 2015; trial went on for 4 years during which she migrated to Canada while accused suffered the wrath of social media which inevitably led to social boycott however some people came forward to his rescue once trial commenced. Thankfully, in the October of 2019, he was acquitted of those charges. The fallibility of social media verdicts is that those people who shared such unverified claim of harassment suffer no consequences, and neither the one who made false accusations with the intent to harm his reputation through the massive reach of social media.

There is another recent case where a 17-year-old boy committed suicide in Gurugram after a girl made serious allegations against him on Instagram. When they checked his Instagram account, they were surprised to see that the minor girl had made serious allegations against him without any evidence. The girl had levelled false allegations against him due to which he faced social ostracization and was trolled by several others with a mammoth of hate messages. He probably unable to deal with them and went under depression, the father has alleged in his complaint.

This has now been a trend on social media, where many start sharing unverified or unproved bits of information; this inevitably leads to the defamation of the accused, who may even not be guilty. This is a disrespect of law and courts, but things haven’t stopped at it. Those social media jurymen are now at the throat of the judiciary, trying to mount pressure upon the Hon’ble Courts to bend down to their demands and their definition of justice, which I without any hesitation say, is flawed at its every corner.

Latest attempt to demean the judiciary can be seen at various social media platforms where it is being discussed that the Hon’ble Gauhati High Court granted divorce in Bhaskar Das v. Renu Das; Mat.App. 20/2019 just because women refused to wear ‘sakha and sindoor’. Those who are sharing or commenting upon this, have they even bothered to go through the text of the judgment? Judgments are not read or analysed in pieces, they are to be gone through in whole to understand the context and meaning of every word.

Let me assist the jurymen of social media on the text of the judgment, as an amicus.

Firstly, the women had filed a fake against her husband, his widowed step-mother and his sisters under section Section 498(A) of Indian Penal Code. The husband and his family members were compelled to apply for pre-arrest bail because of the said criminal case filed by the wife. He along with his family members were acquitted by the trial court. At this juncture, it is pertinent to mention that the Hon’ble Supreme Court in a recent judgment being Rani Narasimha Sastri vs. Rani Suneela Rani, 2019 SCC Online SC 1595 has held that filing of criminal cases like case under Sections 498(A) IPC etc. against the husband and the family members and which are subsequently dismissed/rejected by the Family Court, is sufficient to be construed as an act of cruelty by the wife. The fake complaint, even if considered in isolation, is a very valid ground for the decree of divorce to be passed.

In the background of the complaint filed under section 498(A), the husband contended that the wife compelled him to execute a written agreement to the effect that the couple will stay in a separate rental house together away family members were not to be permitted to come and visit them. The wife categorically admitted in her cross-examination about the presence of the said clause in the said agreement (It is shown below in cross-examination).

Secondly, let us see what the women said in her cross-examination. I’ll mention the relevant piece for the sake of brevity:

-That I am not wearing/putting sindoor right now because I don’t consider him as my husband.

– That it is not a fact that we entered into an agreement after the F.I.R.

-That I have objection regarding divorce in this case as because either he come to Dibrugarh to live with me or otherwise fulfil my demand i.e. monetary demand, only then I will divorce him.”

This shows that she removed her sakha and sindoor as a mark for her desire to end the marriage.

From the last point which I mentioned in cross-examination para, it looks like extortion is going on through filing of fake cases against her husband. When she in her cross-examination, and evidence states it clearly that her removing sakha and sindoor is the symbol of her unwillingness to continue in a marital relation with her husband; there remain no gaps in her intention of getting separated from her husband, and the same was considered was the court as a corroborating evidence not as the primary evidence for granting of the divorce. A fake case under Section 498(A) of Indian Penal Code is enough for the divorce to be granted.

Further perusal of the judgment will inform you of her conduct of separating her husband from his family and not even allowing them to visit him, which she has categorically admitted. It is noteworthy that the widowed step-mother of her husband has no personal source of income and she is a senior citizen and is dependent; therefore, the husband is bound by Maintenance and Welfare of Parents and Senior Citizens Act, 2007 to provide for his mother, and the attempt to keep her away from him with no visitation rights is cruelty, at the very least even if we ignore her stopping her husband to perform his statutory obligations.

She has also filed a case against him under Sections 471/420 of Indian Penal Code, 1860, which are still pending before the court.

She appears to be determined, armed with legal counsel, to extort money out of her husband and make him suffer unreasonably, her evidence and cross-examination stands tall proof of her wicked conduct.

When she herself is admitting in cross-examination that she took off her sakha and sindoor as she no longer considers him her husband, there is no space for the interpretation in that statement for courts. Hon’ble High Court simply referred to this statement of hers in order to corroborate their decision of allowing the appeal.

This is a classic case of misuse of laws by disgruntled wife against the husband; and the social media jury’s reaction of condemning the Hon’ble Judges is a classic example of ‘scandalising of court’, by bringing down the courts respect in eyes of common men and women.

Rhea Chakraborty’s media trial is another example of negative examples of over-active jury of social media. The actress has not yet even been tried by the Hon’ble Court let alone convicted and the whole social media led by a few jurymen went on to assail the reputation of actress and subjected her to mental stress and trauma. This cannot be allowed to happen; people must understand that there is no absolute right of freedom of speech and expression, it is subject to just and reasonable restrictions. The matter is currently sub-judice so it would not be proper for me to comment anymore on it.

I can only hope that this practice of social media will be depreciated in future, and learned jurymen of social media are sacked from their self-claimed judicial roles.

Social media is a place which can be used for much more than spreading hate and misinformation against the Hon’ble Court or some innocent person.

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Legally Speaking

Analysis of Insurance (Amendment) Act 2021: Effects and implications

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INTRODUCTION

On 1st of February when the Union Budget was presented by Hon’ble Finance Minister, it was made official that the Foreign Direct Investment in the insurance sector will increase to 74% from 49%. While concluding the speech respected finance minister also mentioned that it is proposed to amend the Insurance Act of 1938. This was indicative that such changes were to be brought by the way of amendment only. The said was complied with when on 18th March the Insurance (Amendment) Act 2021 (which was a bill then) got a nod from the Rajya Sabha and has been in effect from the 1st April, 2021.

With the change in composition of FDI limit certain additional regulatory changes were also announced under the new framework which includes A. Foreign ownership and control would be allowed with safeguards; B. The majority of directors on the Board and key management persons would be required to be resident Indians; C. 50% of directors would need to be independent directors; D. a specified percentage of profits of the insurance company would have to be retained as a general reserve.

HISTORY OF ADVENT OF FDI IN INSURANCE SECTOR

India first opened up the insurance sector in the year 2000 under the Atal Bihari Vajpayee government when it allowed private sector firms to set up insurance companies and allowed FDI of 26 per cent. After that, for a long time, there were demands from the industry to further increase this cap to 49 per cent. After many deliberations the amendment of 2015 raised the cap from 26 per cent to 49 per cent.

The amendments of 2015 and 2021 are an enabling amendment that gives companies access to foreign capital if they need it. It is an important shift in stance as the increase in the FDI cap means insurance companies can now be foreign owned and controlled as against the current situation wherein they are only Indian owned and controlled. This will give a foreign company the right to appoint a majority of directors, control the management and the policy decisions taken.

This decision is also a result of COVID-19 Impact on the GDP, and by increasing the FDI in insurance sector government aims at getting a influx of foreign capital in the economy in order to uplift the GDP of the country.

CHANGES BROUGHT BY THE AMENDMENT

The amendments introduced by the 2021 Amendment Act are as follows:

• Firstly, change is brought in section 2, clause (7A), for sub-clause (b) which has been substituted as:

“(b) in which the aggregate holdings of equity shares by foreign investors including portfolio investors, do not exceed seventy-four per cent. of the paid-up equity capital of such Indian insurance company, and the foreign investment in which shall be subject to such conditions and manner, as may be prescribed;”

The amended provision states that limit of foreign investment allowed in Indian insurance companies shall not exceed 74% (previously 49%), and foreign investment in insurance companies shall be “subject to such conditions and manner, as may be prescribed.”

• Secondly, the explanation to Section 27 clause 7 which states the provision which stipulated the requirement for an insurance company incorporated in India to hold assets in trust where at least: (i) 33% capital is owned by investors domiciled outside India, or (ii) 33% of the members of the governing body are domiciled outside India, now stands omitted;

• Thirdly, In section 114 of the principal Act, in sub-section (2), for clause (aaa), the following clause shall be substituted, namely:

“(aaa) the conditions and manner of foreign investment under sub-clause (b) of clause (7A) of section 2;”.

The requirement for the insurance company to be Indian owned and controlled has been omitted, and it has been stipulated that the conditions and manner of foreign investment shall be as prescribed.

IMPACT ON INDIAN INSURANCE COMPANIES

India has more than 60 insurance companies specialising in life insurance, non-life insurance and health insurance. The number of state-owned firms are only six and the remaining are in the private sector. A higher FDI limit will help insurance companies access foreign capital to meet their growth requirements. Insurance is a capital intensive business. Simply put, as an insurance company sells more policies and collects premiums from policy holders, it needs higher capital to ensure that it is able to meet the future claims.

The insurance regulator, Insurance Regulatory and Development Authority of India (IRDAI), mandates that insurers should maintain a solvency ratio of at least 150 per cent. Solvency ratio is the excess of assets over liabilities. Insurance is a long gestation business. It takes companies 7-10 years to breakeven and start becoming profitable. Allowing FDI upto 74 per cent could see more interest from foreign insurance companies who specialise in this business and who bring the so-called ‘patient’ capital.

In addition, the government will prescribe a specific percentage of the profits that will have to be treated as general reserve.

This will ensure that reserves will be available to meet the claims of policy holders regardless of a foreign investors’ own financial condition, Finance Minister Nirmala Sitharaman said Thursday in her reply to the debate on the bill in Rajya Sabha. It will also mean that the government will ensure that only a part of the profit can be repatriated to the foreign promoter and there is sufficient money available with the insurance company to pay every claim.

The government has also reiterated that the provision of Section 27E of the insurance act will continue to be applicable. This means that no insurance company, irrespective of its foreign shareholding, can directly or indirectly invest the money of the policy holders outside India. The insurance companies will also have to ensure that 50 per cent of the directors are independent directors so that insurance companies follow all Indian laws.

WAY FORWARD

The Amendment Act of 2021 has been introduced with the sole motive to increase FDI per cent in the insurance sector for this the Insurance Act, 1938 was amended accordingly, however the onus now lies upon the Regulator which is IRDA. The IRDAI may also prescribe conditions/restrictions with respect to matters such as related party transactions, and payment of dividend by an insurance company having majority foreign investment. However, the extent to which these conditions will be made applicable to insurance companies remains to be seen.

In generally, Higher FDI limits could see more global insurance firms and their best practices entering India. This could mean higher competition and better pricing of insurance products. Policy holders will get a wide choice, access to more innovative products and a better customer service and claims settlement experience. Therefore the amendment brings the new horizons in the insurance sector which the companies will thrive to achieve and benefit the economy.

The government will prescribe a specific percentage of the profits that will have to be treated as general reserve.

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