Data Protection Board: Implications of Absence of Judicial Member

In today’s era, where the value of data stands next to be priceless, the Indian Parliament has enacted the Digital Personal Data Protection Act, 2023. Before the law was enacted, the Bill went through a turbulent series of discussions and revisions since the inception of the Justice B.N. Shrikrishna Committee in the year 2017. The previous versions of the Bill drew criticism from both the opposition and experts in the field. After the Digital Personal Data Protection Bill, 2023 was tabled by the Union Minister for Electronics & Information Technology, Ashwini Vaishnaw on August 3, 2023, in the Lok Sabha, the Bill received the approval of the Lower House and the Upper House. On August 11, 2023, the Hon’ble President, Droupadi Murmu granted assent to the Bill.

In the discussion that ensues, this article delves into an analysis of a facet that has not been given enough consideration relative to its possible consequences – the foundational principles and attributes that define the Data Protection Board. It also examines the critical question of whether the Board aligns with the concept of a tribunal, given its quasi-judicial role in data protection matters. Furthermore, the paper explores the constitutional implications of not mandating a judicial member within the Board, assessing potential conflicts with the doctrine of separation of powers. 

Establishment of a Data Protection Board

For the first time in India’s legal landscape, the Legislators have proposed the establishment of a Board which would be entrusted with overseeing and addressing multifaceted aspects of data protection – the Data Protection Board. On the face of it, the Board seems to be a strategic endeavour to alleviate the burden on the judiciary by facilitating the resolution of data-related disputes. 

Section 18[1] of the Act provides for the establishment of the Board, wherein it has been stated that this institution shall be a “body corporate”; this legal status grants the Board certain rights and powers, similar to a legal person, which enables it to function independently in legal and financial matters. The provision also grants the Board the authority to acquire, possess, and transfer both movable and immovable property. More importantly, the Board will have the capacity to initiate legal actions (sue) or be subject to legal actions (sued) in its own name.

Section 19(3)[2] sets forth the criteria for the selection of individuals who will serve as the Chairperson and Members of the Board. The Section outlines the qualifications required for individuals who are to be appointed as the Chairperson and other Members of the Board. According to the said clause, these individuals are expected to possess specific attributes and a background that encompasses specialised knowledge or practical experience in various areas. Especially, the provision mandates that at least one of the appointed individuals must be an expert in the “field of law”.

With an emphasis on leveraging technology, the Board is set to function as an independent entity, adopting a digital approach to its operations.  

Is the Data Protection Board Equivalent to a Tribunal?

The term “tribunal” has not been defined explicitly in any law in India, however, there are judgments wherein Courts have laid down the requisites or features of tribunals. The Law Commission of India in its 272nd report defined it as an administrative body created to carry out quasi-judicial functions. Additionally, an administrative tribunal is not an executive body or a court; it occupies a space in the middle between an administrative body and a court.

In Jaswant Sugar Mills Ltd., Meerut v. Lakshmichand[3], the primary criteria for identifying a tribunal was established – authority to determine matters, compel witness attendance, follow essential rules of evidence, and wield sanctioning powers.  The legal understanding of a tribunal extends beyond mere courtroom connotations. As elucidated in Durga Shankar Mehta v. Raghuraj Singh[4], the Apex Court held that the expression “tribunal” according to Article 136 of the Constitution does not mean “Court” but includes within it, all adjudicating bodies, provided they are constituted by the State to exercise judicial powers. In Virindar Kumar Satyawadi v. The State of Punjab[5], the court has emphasised that tribunals, akin to Courts, hold the responsibility to decide disputes judiciously, offering parties the right to be heard, adduce evidence, and obtain judgments based on sound legal reasoning.

The Board as envisaged under the Digital Personal Data Protection Act, 2023, bears a striking resemblance to the legal concept of a tribunal, serving as an institutional mechanism for adjudication. Section 27(1)[6] of the Act confers powers upon the Board, akin to those of a tribunal. It responds to various breaches, such as personal data breaches and violations by data fiduciaries, consent managers, and intermediaries. This proactive role mirrors the adjudicatory function of a tribunal, which often investigates alleged violations and imposes penalties. Furthermore, the Board’s process of inquiry, during which affected parties can present their case and respond to allegations, resonates with the principles of natural justice, an essential trait of tribunal proceedings.

The pivotal role of the Board becomes even more pronounced when considered in tandem with Section 28[7] of the Act. This section outlines the Board’s functioning as an independent body, which not only enhances efficiency but also resembles the autonomous nature of a tribunal. The ability of the Board to issue interim orders, a power typical of tribunals, underscores its capacity to intervene promptly and effectively in disputes. The said Section also specifies that the Board shall have the same power as that of a civil court under the Code of Civil Procedure, 1908 in discharging its functions.

In essence, the attributes and functions prescribed in the Digital Personal Data Protection Act, 2023 undeniably establish the Board as a tribunal, holding the central role of quasi-judicial adjudication in matters of data protection.

Absence of a Judicial Member in the Data Protection Board

The composition and qualifications for the appointment of the Chairperson and Members of the Board are outlined under Section 19(3)[8] of the Act. The provision mandates that the members possess expertise in various fields, including data governance, administration, etc. However, it does not explicitly require the presence of a judicial member, which contrasts with certain landmark judgments emphasising the importance of including judicial experts in tribunals.

In the case of L Chandra Kumar v. Union of India[9], the Supreme Court deliberated on the competence of members in administrative tribunals. It highlighted the significance of a balanced blend of judicial and administrative members to ensure efficient and specialised adjudication. The judgment acknowledged that purely judicial members might undermine the primary rationale behind tribunals’ creation, while a combination of legal and administrative expertise would provide the best framework for delivering speedy and effective justice.

The Administrative Tribunals Act, 1985, and the case of S.P. Sampath Kumar v. Union of India & Ors.[10] further underscore the importance of insulation of tribunals from executive interference. The Court observed that total independence of the judiciary from executive pressure is a fundamental constitutional feature. The appointment process of tribunal members should involve consultation with the Chief Justice of India or a high-powered selection committee to ensure meaningful and effective appointments, preserving the tribunals’ independence and integrity. In the Rojer Mathew v. South Indian Bank Limited & Ors[11] case, the Court highlighted the necessity of a judicial member’s presence within tribunals. It emphasised that the performance of judicial functions cannot be effectively carried out by technical members alone, and the absence of judicial input impairs the tribunals’ efficacy.

The absence of a requirement for a judicial member in the Data Protection Board raises pertinent concerns, not only from the perspective of tribunal expertise but also in the context of the separation of powers.

Repercussions

The doctrine of separation of powers is a foundational principle in a democratic system, aimed at preventing the concentration of unchecked power in any one branch of government. By omitting the necessity of a judicial member, the Act deviates from this principle, potentially jeopardising the independence and impartiality of the Data Protection Board. The Act’s provisions empower the Central Government to appoint members of the Board based on their expertise in various fields, without explicitly mandating judicial representation. This situation creates a potential avenue for exploitation, as the Central Government could theoretically appoint individuals who align with its interests, potentially undermining the impartiality of the Board in cases involving disputes between individuals and the government or government entities. Such a scenario could lead to a perceived lack of objectivity and raise concerns about the Board being utilised as a tool for the government’s advantage.

References:

[1] The Digital Personal Data Protection Act, No. 22 of 2023, § 18, Acts of Parliament, 1992 (India).

[2] The Digital Personal Data Protection Act, No. 22 of 2023, § 19(3), Acts of Parliament, 1992 (India).

[3] Jaswant Sugar Mills Ltd. v. Lakshmichand, AIR 1963 SC 677.

[4] Durga Shankar Mehta v. Raghuraj Singh, AIR 1954 SC 520.

[5] Virindar Kumar Satyawadi v. The State of Punjab, AIR 1956 SC 153.

[6] The Digital Personal Data Protection Act, No. 22 of 2023, § 27(1), Acts of Parliament, 1992 (India).

[7] The Digital Personal Data Protection Act, No. 22 of 2023, § 28, Acts of Parliament, 1992 (India).

[8] Supra note 2.

[9] L. Chandra Kumar v. The Union of India & Ors, (1997) 3 SCC 261.

[10] S.P. Sampath Kumar v. Union of India & Ors, 1987 SCC Supl. 734.

[11] Rojer Mathew v. South Indian Bank Ltd and Ors, (2020) 6 SCC 1.

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The doctrine of separation of powers is a foundational principle in a democratic system, aimed at preventing the concentration of unchecked power in any one branch of government. By omitting the necessity of a judicial member, the Act deviates from this principle, potentially jeopardising the independence and impartiality of the Data Protection Board. The Act’s provisions empower the Central Government to appoint members of the Board based on their expertise in various fields, without explicitly mandating judicial representation. This situation creates a potential avenue for exploitation, as the Central Government could theoretically appoint individuals who align with its interests, potentially undermining the impartiality of the Board in cases involving disputes between individuals and the government or government entities. Such a scenario could lead to a perceived lack of objectivity and raise concerns about the Board being utilised as a tool for the government’s advantage.

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Empowering Gender Neutrality: DPDP Act’s Use of Feminine Pronouns to Refer to All Genders

In a remarkable stride towards gender neutrality and inclusivity, the recently enacted Digital Personal Data Protection Act, 2023, has shattered conventional norms by adopting the pronouns “she/her” to address individuals of all genders.

This audacious linguistic shift signifies not only a modern legislative approach but also a subtle yet impactful gesture towards promoting and recognising the diversity of identities in today’s society. The Act received the President’s assent on August 11, 2023, thereby becoming a transformative law that safeguards digital privacy.

Gender Neutrality in Contemporary Legislative Approaches

The innovative use of gender-inclusive pronouns is reflective of a broader global trend where feminism is increasingly influencing legislative initiatives. The incorporation of gender-neutral language in the Digital Personal Data Protection Act, 2023, builds upon the foundation laid by various historical and contemporary feminist movements. This inclusionary language in the Act not only aligns with this legacy but also represents a proactive step towards erasing linguistic gender biases. The resonance of the gender-neutral approach taken in the Act finds a parallel in the Kerala Public Health Bill, 2023 passed by the Kerala State Assembly in March 2023, which also adopted feminine pronouns, albeit within the context of the State Legislation. This step highlights an emerging trend towards inclusivity and sensitivity in policy-making across India.

The trajectory of gender neutrality within the Digital Personal Data Protection Act, 2023, reverberates with the intricate threads of legal precedent. By weaving the principles set forth in the NALSA judgment[1], the Act elucidates a comprehensive vision of gender inclusivity. The Act’s recognition of gender beyond the binary reflects jurisprudential ethos that reverberates with constitutional principles. It epitomises the ethos of the NALSA judgment, where the Courts affirmed the right to self-identify gender, emphasising perception over biology.

It’s interesting to note the interpretation of the term “person” within the General Clauses Act, 1897 specifically under Section 3(42); the expansive definition encompasses entities beyond individual human beings, encapsulating companies, associations, and bodies of individuals, whether incorporated or not. Intriguingly, the Act refrains from providing an explicit definition of “person” but under Section 2(y) of the Act, it is specified that “’she’ in relation to an individual includes the reference to such individual irrespective of gender”. This astute approach seamlessly aligns with the broader legal canvas, showcasing a nuanced understanding of legal intricacies.

Conclusion

The Digital Personal Data Protection Act, 2023, stands as a testament to the symbiotic relationship between evolving jurisprudence and legislative evolution. Its endorsement of gender-neutral pronouns not only signifies a linguistic transformation but also echoes the judicial strides made in recognising the rights of transgender persons. As the Act navigates the legislative process, it underscores the metamorphosis of legal thought, harmonising constitutional ideals with contemporary societal nuances. It remains to be seen whether the pronouns “she/her” would be used more frequently in laws enacted in the future.

References:

[1] National Legal Services Authority (NALSA) Vs. Union of India, AIR 2014 SC 1863.

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It’s interesting to note the interpretation of the term “person” within the General Clauses Act, 1897 specifically under Section 3(42); the expansive definition encompasses entities beyond individual human beings, encapsulating companies, associations, and bodies of individuals, whether incorporated or not. Intriguingly, the Act refrains from providing an explicit definition of “person” but under Section 2(y) of the Act, it is specified that “’she’ in relation to an individual includes the reference to such individual irrespective of gender”. This astute approach seamlessly aligns with the broader legal canvas, showcasing a nuanced understanding of legal intricacies.

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Impleadment of Non-Signatories: Assessing the Arbitral Tribunal’s Authority

This article attempts to break down the issues surrounding the impleadment of non-signatories in arbitration proceedings. The same can be better explained by examining the recent decision rendered by the Delhi High Court in the case of M/s. Arupri Logistics Pvt. Ltd. v. Shri Vilas Gupta & Ors.[1] wherein the Court set aside the order of the Sole Arbitrator dated December 23, 2021, impleading the appellants, non-signatories to the agreement, in the arbitration proceedings. The issue at hand that many have found perplexing was simple – whether the arbitrator is vested with the power to implead a non-signatory into the proceedings in the post-referral stage.

Brief Facts

The respondents were engaged in a family business conducted through the agency of three companies, Taurus India Limited, Taurus Polymers Pvt. Ltd., and Taurus Englobe Ltd. The Memorandum of Family Settlement entered into by the respondents on April 28, 2007, provided for an arbitration clause. In light of the execution of this memorandum, the case pending before the Company Law Board regarding the alleged mismanagement and oppression in the affairs of Taurus India was disposed of.

When the Company Law Board was approached again, a facilitator was appointed for the due implementation of the memorandum’s terms, who came up with an interim arrangement. In the meantime, an agreement for the sale of an industrial plot in Mayapuri was executed for a consideration of Rs. 6.35 Cr., between the appellants, Taurus India Limited and M/s. Arupri Logistics Pvt. Ltd. on October 21, 2010. Later, a conveyance deed was executed on May 23, 2012. The same was done disregarding the terms of the memorandum which provided for the division of the said industrial plot between the respondents (who were categorised into Group I and Group II). However, the validity of the sale was confirmed by the facilitator in May 2013.

These events led to a petition being filed under Section 11 of the Arbitration and Conciliation Act, 1996, before the Delhi High Court following which a Sole Arbitrator was appointed. The said Sole Arbitrator entered upon reference on February 12, 2021. Subsequently, respondent no.1 filed an application for impleading the appellants in November 2021, and the Sole Arbitrator allowed this application on December 23, 2021. Aggrieved by this decision, the appellants approached the Delhi High Court.

Arbitral Tribunal Owes its Origin to Agreement, Institutional Rules and National Statutes

After hearing the parties, the Court expressed that through agreement, the parties cannot confer powers upon the arbitral tribunal “which are otherwise reserved to be exercised by Courts and judicial institutions created by the State”.

Further, the Single Judge Bench of Justice Yashwant Varma clarified that the power to rule on its jurisdiction under Section 16, the power to issue interim measures under Section 17, or the procedural flexibility accorded under Section 19 to not be bound by the provisions of the Civil Procedure Code, 1908, or the Indian Evidence Act, 1872 do not empower the arbitral tribunal to implead parties.

Court’s Power of Impleadment under the Civil Procedure Code

As per Order I Rule 10(2) of the Civil Procedure Code, 1908, the Court may strike out or add parties at any stage of the proceedings. Such an express provision is not contained in the Arbitration and Conciliation Act, 1996. In this context, the Court observed that the Sole Arbitrator overlooked the absence of a provision in the Act that expressly conferred the power to implead parties. Moreover, the hallmark of arbitration, or for that matter, any Alternative Dispute Resolution (ADR) mechanism, lies in the consent of the parties to the dispute. Therefore, the Arbitral Tribunal cannot act against the consent of the parties by impleading them against their will and forcefully subjecting them to its jurisdiction as it would defeat the purpose of arbitration.

Group of Companies and Alter Ego Doctrines

The Court expressed that if the arbitral tribunals had the authority to invoke the doctrines of alter ego or group of companies to implead non-signatories in the proceedings, the same would “not only result in the AT travelling far beyond the contours of the arbitration agreement but negate against the fundamental tenet of arbitration which is founded on consensus and agreement”.

Pertaining to the reliance placed by the respondents on the Court’s decision in GMR Energy Limited vs. Doosan Power Systems India Private Limited & Ors.[2] wherein it was held that the arbitral tribunal could rule on the issue of alter ego, the Court pointed out that the arbitration in the GMR Energy case was covered under Part II of the Act and was being conducted under the Singapore International Arbitration Centre (SIAC) Rules which expressly provided for the joinder of parties.

Analysis

The cyclical nature of proceedings that would arise from this decision of the Delhi High Court remains unaddressed; the aggrieved parties would have to continuously run from pillar to post to seek those remedies which have not been enshrined explicitly. The decision diminishes the power exercised by the arbitral tribunals as the Claimant would have to knock on the doors of the Court in pursuit of such remedies, which ultimately defeats the whole point of arbitration and access to speedier modes of justice. One hopes that the growing effectiveness of arbitration as the preferred mode of dispute resolution would not be affected by the Court’s ruling.

References:

[1] 2023 SCC OnLine Del 4297.

[2] 2017 SCC Online Del 1162.

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Photo by DG-Studio: Arbitration agreement. Legal resolution conflict – Photos by Canva 

The Court expressed that if the arbitral tribunals had the authority to invoke the doctrines of alter ego or group of companies to implead non-signatories in the proceedings, the same would “not only result in the AT travelling far beyond the contours of the arbitration agreement but negate against the fundamental tenet of arbitration which is founded on consensus and agreement”.

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Harmonizing Data Privacy and Mediation: A Progressive Outlook in India's Digital Personal Data Protection Bill, 2023

From inventing the bulb to defying possibilities with the touch of a button, mankind has come a long way in technology to reach where we are today. Globally, there are 5.19 billion internet users[1], and the tremendous volume of data exchanged over cyberspace emphasizes the need to protect sensitive private data from exploitation by institutions. According to UNCTAD[2], 137 out of 194 nations have legislation to protect the data and privacy of their citizens on the internet.

Having legislation and regulating bodies is essential to ensuring devious cyber activities are kept in check. The Indian Legislator has been expeditiously working on the drafting of the Data Protection Law. The recently unveiled Digital Personal Data Protection Bill, 2023, marks a significant milestone in India’s legislative journey, following numerous previous endeavours and extensive consultations with stakeholders from diverse domains, greatly influencing its formulation.

 

Right to Privacy vis-à-vis Puttaswamy Judgment

In the well-known Supreme Court decision of K.S. Puttaswamy v. Union of India[3], which recognized “privacy” as intrinsic to the right to life and liberty, guaranteed by Article 21 of the Indian Constitution, establishing “right to privacy” as a fundamental right, the groundwork for a single statute of legislation for the protection of data in India was laid down in 2017. The Puttaswamy Judgment touches on protections for people in the private realm while primarily addressing the range of rights of a citizen as opposed to the State. The Supreme Court found that the State had a positive burden of upholding and sustaining this dignity and connected the value of privacy to the value of individual dignity. The Puttaswamy Judgment serves as the basis for both establishing a prohibition against privacy-violating State activities and the State’s duty to regulate private contracts and private data sharing in order to protect individual privacy.

 

Timeline of the Bill

The first draft of the Personal Data Protection (PDP) Bill was proposed by the Justice Shrikrishna Committee in 2018. Since then, the legislative process has witnessed a series of turbulent turns, starting with the introduction of the PDP Bill 2019 in the Lok Sabha. The bill was subsequently sent to the Joint Committee for review but was eventually withdrawn in December 2021. The following year, the Ministry of Electronics and Information Technology (MeitY) released another Draft of the Digital Personal Data Protection Bill, (DPDP) 2022, which was made open for public comment in November 2022.[4] However, this version received several criticisms and businesses complained about onerous provisions on cross border data transfer.

Moving on to the present timeframe, the Union Communications, Electronics, and Information Technology Minister Ashwini Vaishnaw on 3rd August, 2023 introduced the new bill in the Lok Sabha during Monsoon session of Parliament.[5] The long journey of the Bill was foreseeable since it is arduous to strike the perfect balance between the Fundamental Right to privacy along with the permissible limitations linked to this entitlement, business feasibility, and the international criteria for being recognized as an appropriate jurisdiction for data processing.

 

The New Road: Mediation

In a progressive step towards strengthening India’s data protection framework, the Digital Personal Data Protection Bill 2023 reflects a notable emphasis on Mediation as an Alternate Dispute Resolution (ADR) mechanism. This emphasis signifies the legislature’s recognition of Mediation as an effective means to address data-related disputes while promoting fair and amicable resolutions.

Comparing the language between the 2022 and 2023 versions of the bill reveals a significant shift in focus. Section 23 of the 2022 bill provided the Board with the discretion to direct parties towards mediation or any other dispute resolution process if deemed appropriate. However, in the 2023 bill, the language has been further refined in Section 33, clearly stating that if the Board believes a complaint may be better resolved through mediation, it can direct the concerned parties to attempt mediation, leaving little room for ambiguity. This explicit inclusion of mediation in the text underlines its growing importance as a preferred ADR mechanism in data protection matters.

Furthermore, the recent passage of the Mediation Bill 2021 by the Rajya Sabha offers additional evidence of the legislature’s dedication to promoting mediation as an integral part of India’s legal landscape. The Mediation Bill seeks to provide a comprehensive regulatory framework for mediation, bolstering its credibility as a legitimate dispute resolution process. With the establishment of the Mediation Council of India and provisions for pre-litigation mediation and legally binding mediated settlement agreements, the Mediation Bill reinforces the government’s commitment to make mediation an acceptable and cost-effective means of resolving disputes.

 

The Balancing Act

The unveiling of the Digital Personal Data Protection Bill, 2023, marks a momentous step in India’s legislative journey towards protecting individuals’ data privacy rights. Drawing inspiration from the landmark Puttaswamy Judgment, which recognized the right to privacy as a fundamental right, the new bill brings redefined concepts and provisions that align with the evolving data protection landscape.

One striking feature of the 2023 bill is its strong emphasis on Mediation as an Alternate Dispute Resolution mechanism. The legislative shift from the 2022 version, coupled with the recent passage of the Mediation Bill 2021 by the Rajya Sabha, showcases the government’s earnest efforts to promote mediation as an effective means of resolving data-related disputes. With the explicit inclusion of mediation in the text and the establishment of the Mediation Council of India, the bill reinforces mediation’s credibility as a preferred method for fair and amicable resolutions.

As India progresses in the digital era, the new Digital Personal Data Protection Bill, 2023, stands as a testament to the nation’s commitment to safeguarding data privacy while actively embracing mediation as an instrumental tool for resolving data disputes. By creating a balance between individual privacy rights and business feasibility, this bill ushers in a new era of data protection in the country, inspiring confidence among its citizens and businesses alike. With the combined efforts of the legislative and mediation frameworks, India is poised to set new standards for data protection and dispute resolution in the global arena.

References:

[1] Internet and social media users in the world 2023, Statista (2023), https://www.statista.com/statistics/617136/digital-population-worldwide/#:~:text=Worldwide%20digital%20population%202023&text=As%20of%20April%202023%2C%20there,population%2C%20were%20social%20media%20users. 

[2] Data Protection and Privacy Legislation Worldwide, United Nations Conference on Trade and Development (2023), https://unctad.org/page/data-protection-and-privacy-legislation-worldwide 

[3] Justice K.S. Puttaswamy (Retd.) & Anr. vs. Union of India & Ors., AIR 2017 SC 4161.

[4] Ministry of Electronics and Information Technology, The Digital Personal Data Protection Bill, 2022,  https://www.meity.gov.in/writereaddata/files/The%20Digital%20Personal%20Data%20Potection%20Bill%2C%202022_0.pdf.

[5] IT Minister Ashwini Vaishnaw introduces Digital Personal Data Protection Bill, 2023 in Lok Sabha, Newsonair.gov.in (2023), https://newsonair.gov.in/Main-News-Details.aspx?id=465464

One striking feature of the 2023 bill is its strong emphasis on Mediation as an Alternate Dispute Resolution mechanism. The legislative shift from the 2022 version, coupled with the recent passage of the Mediation Bill 2021 by the Rajya Sabha, showcases the government’s earnest efforts to promote mediation as an effective means of resolving data-related disputes. 

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Under the Magnifying Glass: Dissecting the Mediation Bill, 2021

Mediation, though a very popular Alternative Dispute Resolution (ADR) technique, is to date, not codified. In December 2021, the Mediation Bill[1] was introduced in Parliament with an objective to promote and facilitate mediation, especially institutional mediation, for the resolution of disputes, commercial or otherwise.

The Bill seeks to enforce agreements providing for mediation and provides for a body for the registration of mediators. One of the main objectives of the Bill is to encourage community mediation and to make online mediation an acceptable and cost-effective process. This article delves into the intricacies of the Mediation Bill, 2021.

What makes the Mediation Bill, 2021 stand out from other ADR-related enactments is the intentional inclusion of “online mediation” under Chapter VII Section 32, thereby paving the way for Online Dispute Resolution (ODR) in the country.

The Bill also gives due importance to the geographical character of ADR mechanisms. Section 17(5) is a significant step towards the inclusivity of parties who prefer the use of their native or regional language. This is a core incentive for those litigants who are unaware or sceptical about trying out ADR to settle their claims. The Bill fosters a trust-building exercise by allowing parties to mediate in the language they feel comfortable enough to communicate in. Consent and comfort of the parties to the mediation remain the hallmark of the Bill.

In India, informal mediations often take place between adversaries to amicably settle claims before taking recourse to litigation. This is often true in cases where family disputes and business disputes involving close relations are at play. The most positive benefit that would arise from the enactment of the Mediation Bill, 2021, is the successful implementation of community mediation[2], which enables the settlement of any dispute likely to affect peace, harmony and tranquillity amongst the residents or families of any area or locality, with the prior mutual consent of the parties to the dispute. It allows a particular class of persons (as mentioned in sub-section 5 to Section 44) to determine the dispute and this model is very similar to that of gram panchayats. Thus, the Mediation Bill, 2021 retains the characteristics of pre-existing indigenous dispute settlement mechanisms.

Yet, all that glitters is not gold and some things are too good to be true. The Mediation Bill, 2021 falls short in numerous instances. The main reason why the Mediation Bill, 2021 is heralded as a revolutionary legislation is the fact that it would significantly reduce the burden on the courts. Parties would have to mandatorily opt for pre-litigation mediation prior to the institution of a suit under Section 6(1). It is to be noted that the proviso to Section 6 states that pre-litigation mediation in matters of commercial disputes of specified value shall be undertaken in accordance with the provisions of Section 12A of the Commercial Courts Act, 2015[3], and the rules made thereunder. This would permanently alter the procedural law in Indian jurisprudence.

One might argue that the mandatory nature of pre-litigation mediation in its essence undermines the voluntary nature of ADR and adds yet another step in the already cumbersome and tedious litigation process. Section 9(3) is testimony to this. It states that the parties shall not be under any obligation to come to a settlement in the mediation when referred by the court upon their consent. The exit route available to parties under Section 20(1) in case of failure of the parties to arrive at a settlement after the completion of the two minimum mandated mediation sittings makes the whole exercise a mere formality and puts mediation as an ADR mechanism on the back burner as compared to the other alternatives of arbitration, conciliation and Lok Adalat. The constitutional validity of the same in light of the fundamental right to have access to justice (under Article 21 of the Constitution) might turn out to be a dangling sword.

Moreover, the numerous powers granted to the Central Government under various provisions of the Bill ultimately fail to uphold one of the most significant pillars of ADR mechanisms: consent of the parties.

Section 2 which deals with the applicability of the Act, confines itself to three instances; (i) all or both parties habitually reside in or are incorporated in or have their place of business in India; or (ii) the mediation agreement provides that any dispute shall be resolved in accordance with the provisions of this Act; or (iii) there is an international mediation. It however restricts the application of the Bill to non-commercial disputes where one of the parties involved is the Central Government or a State Government, or agencies, public bodies, corporations and local bodies, including entities controlled or owned by such Government. How fair and just this exclusion is, remains to be determined.

Section 7(2) of the Bill provides the Central Government with the discretion to decide the matters fit for mediation. By vesting such power in the hands of the Government, the Bill enables a breach of the executive into the jurisdiction of the judiciary. The courts have time and again clarified which disputes can be settled through ADR and are fully entitled to determine the issues which are to be heard and settled by it. Various tests have been laid down in landmark cases such as Booz Allen & Hamilton Inc v. SBI Home Finance Ltd. & Ors.[4],  Vidya Drolia & Ors. v. Durga Trading Corporation[5], and Sukanya Holdings Private Ltd. v. Jayesh H. Pandya & Anr.[6] Whether a dispute is to be referred to ADR largely depends on the facts and circumstances of the case at hand and the discretion of the court. Section 7(2) and Schedule 1 disturb the delicate balance and separation of powers which form part of the basic structure doctrine.

Another aspect which needs to be considered is that in case the mediation fails, the parties would be incurring more costs, as they would be paying for the services of the mediator/mediation institution, along with the subsequent cost of initiating a suit. This defeats yet another characteristic of ADR: cost-effective mechanisms for dispute resolution. This would also result in the wastage of precious time and resources of the parties and would elongate the process unnecessarily.

Under Section 33(1), the Central Government is vested with the power to establish the Mediation Council of India (MCI). If Section 34(1) cl. (a) to (g) are perused carefully, it is apparent that the Central Government has the power to determine and heavily influence the composition of the MCI. Whether or not this would adversely affect the outcome of mediations wherein the Government of India is a party remains unanswered. The provision can be in future tested on the anvil of the Constitution.

In conclusion, the Mediation Bill, 2021 represents a significant step towards formalising mediation as an ADR technique in India. While it introduces commendable features such as community mediation and online dispute resolution, there are inherent challenges. The mandatory pre-litigation mediation may undermine the voluntary nature of ADR, and the extensive powers granted to the Central Government raise concerns about the delicate balance of powers.

References:

1] The Mediation Bill, 2021, Department of Legal Affairs, Ministry of Law and Justice, https://legalaffairs.gov.in/ actsrulespolicies/mediation-bill-2021.

[2] Mediation Bill, 2021, § 44, Bill No. XLIII of 2021 (India).

[3] Commercial Courts Act, 2015, § 12A, No. 4, Acts of Parliament, 2016 (India).

[4] Booz Allen & Hamilton Inc v. SBI Home Finance Ltd. & Others, (2011) 5 SCC 532.

[5] Vidya Drolia & Ors. v. Durga Trading Corporation, 2019 SCCOnLine SC 358.

[6] Sukanya Holdings Private Ltd. v. Jayesh H. Pandya & Anr., (2003) 5 SCC 531.

 

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Photo by Andrii Yalanskyi: Wooden blocks with word Mediator and conflict. Settlement of disputes. Conflict resolution and mediation. Third party, intermediary. Solution problem. – Photos by Canva

One might argue that the mandatory nature of pre-litigation mediation in its essence undermines the voluntary nature of ADR and adds yet another step in the already cumbersome and tedious litigation process. Section 9(3) is testimony to this. It states that the parties shall not be under any obligation to come to a settlement in the mediation when referred by the court upon their consent. The exit route available to parties under Section 20(1) in case of failure of the parties to arrive at a settlement after the completion of the two minimum mandated mediation sittings makes the whole exercise a mere formality and puts mediation as an ADR mechanism on the back burner as compared to the other alternatives of arbitration, conciliation and Lok Adalat. The constitutional validity of the same in light of the fundamental right to have access to justice (under Article 21 of the Constitution) might turn out to be a dangling sword.

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Sushant Singh Rajput’s Publicity Rights: Delving into the Order’s Reasoning

In an order dated July 11, 2023, the Delhi High Court in the case of Krishna Kishore Singh vs. Sarla A Saraogi & Ors. [IA 10551/2021 in CS(COMM) 187/2021] rejected the plea of the father of late actor Sushant Singh Rajput (SSR) seeking an injunction against the continued streaming of the film, “Nyay: The Justice” which is based on the late actor’s life.

Before diving deep into the Delhi High Court order, let us look at the status of publicity rights after an individual’s death.

In 1979, in a significant ruling, the California Supreme Court held that the name and likenesses of late actor Bela Lugosi were not heritable, and the right of publicity died with him. Thereafter, the Celebrities Rights Act was passed in the year 1985, which established that publicity rights survive the death of the individual. Similarly, in Washington and Indiana, the position is that publicity rights survive the individual’s death. However, the position is different in New York, where such a right exists only during a person’s life.

This can be better understood through a 2012 judgment of a US Federal Court, wherein the Court prevented Marilyn Monroe LLC from contending that the late actress, Marilyn Monroe, was domiciled in California at the time of her demise. With this contention, Monroe LLC wished to bank on California law (on the posthumous rights of publicity) to assert that the usage of Monroe’s image and likenesses by Milton Greene for commercial purposes was in violation of her publicity rights. Rejecting this stand, the Court applied the principle of judicial estoppel since Monroe’s legal representatives had earlier maintained that she was domiciled in New York at the time of death to avoid paying California estate taxes[1].

In India, there is no law which expressly recognises the publicity or personality rights of individuals yet; hence, the heritability of such rights after the individual’s death is a grey area. However, one can rely on case laws in this regard. For instance, the Madras High Court, in the case of Deepa Jayakumar vs. AL Vijay[2], held that the reputation, personality and privacy rights of a person come to an end after their lifetime and cannot be inherited by legal heirs, like movable or immovable property. Here, the niece of the late Dr. J Jayalalitha filed a suit seeking an injunction against the release of the film, “Thalaiva” and the web series, “Queen”, based on the life story of the former Chief Minister.

Brief Facts of the Present Case

In March 2021, when the movie, “Nyay: The Justice” was still in the making, the plaintiff approached the Delhi High Court seeking a decree of permanent injunction against the defendants to prevent them from using SSR’s name, caricature, lifestyle or likeness in any of the projects or films. The plaintiff’s contention was that his permission had to be obtained before doing so. He submitted that in the absence of Class 1 legal heirs, he was SSR’s sole surviving legal heir in Category 1 of Class 2 legal heirs in accordance with provisions of the Hindu Succession Act, 1956.

Film’s Disclaimer

The Court, after watching the impugned film and comparing its story with real-life events, came to the conclusion that its story is indeed a re-enactment of SSR’s life based on news reports and commented that “Hardly any independent inventive input has gone into the movie”.

Rejecting the defendants’ contentions, the Court held that the disclaimer added at the beginning of the film could not be relied upon to determine whether there was any resemblance between the events shown in the film and real-life events.

Publicly Available Information – No Violation of Rights

The Court pointed out that the film was based on news items that were available in the public domain and hence, no right of SSR was violated particularly since the reports were not refuted or challenged at the time of their publication. Even if “arguendo”, it was assumed that the film violated SSR’s publicity rights or defamed him, such a right was personal to SSR and died upon his demise. Similarly, the other rights referred to in the plaint, including the right to privacy, personality rights, etc., vested in SSR and were not heritable. In arriving at this conclusion, the Court relied on multiple case laws, including the Madras High Court judgment in Deepa Jayakumar vs. AL Vijay[3].

The Court reasoned that before making the film, the defendants were not obligated to secure the plaintiff’s consent, and since it was released on the Lapalap platform in 2021, an injunction could not be issued at this point.

Celebrity Rights as a Sub-species of Personality Rights

It was expressed by the Court that though individuals are entitled to rights arising from their personalities and persona, the concept of conferring additional rights on a person “merely because he, or she, is a ‘celebrity’” has not been accorded judicial recognition.

With this, the Single Judge Bench of Justice C Hari Shankar opined that celebrity rights were a sub-species of personality rights, and the same did not merit further deliberation (since it was already decided that SSR’s personality rights were not violated).

Right to Free Trial cannot be affected by Impugned Film

Coming to the petitioner’s contention that the investigation into the death of SSR was still underway and the impugned movie would be prejudicial to the right to a free and fair trial guaranteed under Article 21 of the Constitution, the Court remarked that the country’s “legal system is, fortunately, not so fickle as to justify any apprehension that the dispensers of justice, who constitute its ethos and backbone, would decide on the basis of the facts depicted in the impugned movie”.

Passing Off in Reverse

Explaining that the tort of passing off involves deception, in “portraying the unreal as the real”, the Court stated that the allegation made by the plaintiff was in reverse as the impugned film was “portraying real facts behind a façade of artificiality and fiction”.

The Outcome

The plaintiff’s application for an interlocutory injunction (IA 10551/2021) against the continued streaming of the impugned film was dismissed in the present case. However, it was clarified that the Court’s decision didn’t have any impact on the plaintiff’s right to claim damages from the defendants.

This decision has far-reaching implications on the country’s stand when it comes to posthumous rights of publicity. If publicity rights are considered part of an individual’s property, it would be equitable if the same were heritable for the benefit of the legal heirs. As depicted at the beginning of the article, the legal position in this matter depends mainly on the concerned jurisdiction. India has yet to develop specific legislation and fill the existing gaps.

References:

[1] https://www.theguardian.com/film/2012/sep/03/marilyn-monroe-estate-image-rights

[2] OSA No.75 of 2020 and CMP Nos.2945, 2946 and 9240 of 2020

[3] Supra 2

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Photo: Judge Gavel with Law Scale on the Background – Photos by Canva

The Court pointed out that the film was based on news items that were available in the public domain and hence, no right of SSR was violated particularly since the reports were not refuted or challenged at the time of their publication. Even if “arguendo”, it was assumed that the film violated SSR’s publicity rights or defamed him, such a right was personal to SSR and died upon his demise. Similarly, the other rights referred to in the plaint, including the right to privacy, personality rights, etc., vested in SSR and were not heritable. In arriving at this conclusion, the Court relied on multiple case laws, including the Madras High Court judgment in Deepa Jayakumar vs. AL Vijay[3].

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Online Dispute Resolution: A Game Changer

As a result of COVID-19’s influence, there had to be adjustments made to how arbitrations for conflict resolution are conducted and this is how Online Dispute Resolution (ODR) came into being. ODR is an extension of Alternative Dispute Resolution (ADR) that takes place through digital platforms. In essence, it denotes e-ADR and is an integration of technology with ADR. It typically consists of one or more of the following: negotiation, mediation, arbitration, or some combination of these.

As online commerce has grown, so has the necessity for a dispute resolution system to handle any disagreements that may arise. In 1996, researchers at the University of Massachusetts and the University of Maryland took the first steps towards developing ODR programmes. eBay’s online mediation model for buyer-seller disagreements was launched in the year 1999. To help its users work out their differences, eBay implemented a system of online mediation. In just two weeks, this project was able to settle 200 disagreements. In 2010, eBay’s online mediation process resolved more than 60 million conflicts, allowing the company to reach more equitable outcomes for all parties involved. The global success of these relatively small platforms has attracted the interest of governments throughout the world. In 2004, New York County was the first in the nation to use ODR. After seeing the success of ODR systems like Brazil’s Consumidor.gov and Europe’s European Online Disputes Resolution Platform, governments around the world began adopting similar systems.

In June 2020, Niti Aayog, in India, brought together key stakeholders, including senior judges of the Supreme Court, secretaries from key government ministries, and leaders of the industry, for advancing ODR in India. Thereafter, on June 10, 2021, a handbook was released containing rules, policies, and expectations from the system. India is in grave need of a system like ODR because the Indian judicial system is under tremendous pressure with over 4.7 million cases pending across different levels of the judiciary. Due to this, there is a huge backlog of cases that are pending for the past 30 years.

ODR is time and cost-effective, and this is a very important factor in delayed justice. The economic burden associated with dispute resolution can hinder a person’s access to justice. Anyone with the help of ODR can do the arbitration from anywhere, and ODR also has the potential to reduce legal costs. The system of ODR is quicker at giving awards and resolving issues than ADR. Since it’s conducted online, the synchronisation of schedules is also done with much ease. It also eliminates the bias made by human judgement as it is much more secure and strict and the proceedings are easily available, and any higher authority can review the whole process.

For any system to grow, the governance framework must encourage the growth of innovation both within the government and the private sector. Even though ODR is still in its development stages, it has already started to show great potential by reducing the load on overburdened courts and resolving matters more effectively. ODR is the future of dispute resolution. We should accept it rather than oppose it, as it delivers efficiency and is cost-effective. Overall, ODR has the potential to transform the Indian judicial system by being a more efficient and accessible system of dispute resolution. With the right support, ODR can become an integral part of India’s legal ecosystem and contribute to the country’s growth and development.

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Photo by Anna Shvets: https://www.pexels.com/photo/people-on-a-video-call-4226140/ 

ODR is time and cost-effective, and this is a very important factor in delayed justice. The economic burden associated with dispute resolution can hinder a person’s access to justice. Anyone with the help of ODR can do the arbitration from anywhere, and ODR also has the potential to reduce legal costs. The system of ODR is quicker at giving awards and resolving issues than ADR. Since it’s conducted online, the synchronisation of schedules is also done with much ease. It also eliminates the bias made by human judgement as it is much more secure and strict and the proceedings are easily available, and any higher authority can review the whole process.

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Validity of Unstamped Arbitration Agreements: A Scrutiny of Dissenting Opinions

A five-judge Bench of the Supreme Court comprising Justice K.M. Joseph, Justice Aniruddha Bose, Justice C.T. Ravikumar, Justice Hrishikesh Roy, and Justice Ajay Rastogi while deciding an appeal on 25th April 2023, held that an arbitration agreement in an unstamped contract which is liable to be stamped will not be considered valid in law. Until now, arbitration clauses were considered as separate agreements and this pronouncement will have a deep-rooted effect on the law of the land.

Introduction

Settling the long-standing debate around the validity and enforceability of an unstamped arbitration agreement and putting an end to contradictory judicial pronouncements surrounding the issue, the Apex Court delivered the judgment in N.N. Global Mercantile v. Indo Unique Ltd.[1] by a 3:2 majority, while Justice Ajay Rastogi and Justice Hrishikesh Roy dissented and were of the view that arbitration agreements are valid till the pre-referral stage. In this article, we analyse the majority and minority views while referring to the concepts of separability and Kompetenz-Kompetenz.

Background

The Petitioner and Respondent had entered into a subcontract which contained an arbitration clause. The case began when the Respondent approached the Commercial Court invoking arbitration proceedings against the Petitioner under Section 8 of the Arbitration and Conciliation Act, 1996 (the Act) when certain disputes arose between the two pertaining to the invocation of a bank guarantee furnished by the Petitioner. On rejection of the application by the Commercial Court, the Respondent filed a revision application before the Bombay High Court. Consequently, the Bombay High Court allowed the Respondent to withdraw the revision application and approach the Court by way of a writ petition[2], wherein the Court held that the Section 8 application was maintainable before it and the issue of unenforceability of the arbitration clause owing to the unstamped and unregistered subcontract can be raised before the Arbitral Tribunal under Section 11 of the Act. Aggrieved by the decision of the Bombay High Court, the Petitioner filed a Special Leave Petition before the Supreme Court which was heard by a three-judge Bench. When faced with this issue, the court, overturning the decision laid down in SMS Tea Estates (P) Ltd. v. Chandmari Tea Co.[3] and Garware Wall Ropes Ltd. v. Coastal Marine Constructions and Engg. Ltd. held that the independence of the arbitration clause will be deemed supreme and will not be vitiated owing to the insufficient stamping and thus cannot be a ground for refusing the arbitrator’s appointment[4].

The bone of contention, however, persisted regarding the enforceability of the arbitration clause in the unstamped subcontract and the Supreme Court referred the matter to a five-judge bench for the very reason that in the case of Vidya Drolia v. Durga Trading Corpn[5], a co-ordinate bench held differently.

The Majority View

Fast forward to 2023, the five-judge Bench held arbitration agreements in unstamped contracts as invalid by a majority. The Supreme Court held that an instrument containing an arbitration clause which is bound to be stamped and registered but is not, does not fit within the definition of a contract under Section 2(h) of the Indian Contract Act, 1872 and hence cannot be enforceable in law. The majority view reasoned that the doctrine of arbitration will be followed and that in case of an original agreement being produced which is unstamped, the Court under a Section 11 application is bound by law to proceed as per Sections 33 and 35 of the Indian Stamp Act, 1899 and impound such an agreement and the Courts must follow the law as per due procedure to ultimately remove the defect.

Prior to NN Global, the Supreme Court while examining the same issue in SMS Tea Estates, held that an arbitration clause in an unstamped arbitration agreement cannot be acted upon for the appointment of an arbitrator owing to the rationale that an instrument which mandatorily needs to be registered and is chargeable under the Stamp Act cannot be admitted into evidence and loses credibility.

A two-judge bench in Garware Wall Ropes also upheld the rationale in SMS Tea Estates while adding that the introduction of Section 11 (6-A) does not alter the position of law and the existence of the arbitration clause will survive only if the contract is stamped and registered, being duly valid in law as the arbitration clause cannot be culled out of the main contract and be considered a separate entity[6]. Recently in 2021, a three-judge bench in Vidya Drolia also affirmed the findings in SMS tea estates and Garware wall ropes.

Merit in Dissent

The objective of the Indian Stamp Act, 1899 is primarily to generate revenue for the State. In this regard, Section 33 of the Act empowers the Authority to examine and ascertain whether the stamp duty on an instrument presented before them has been duly paid. In case of a situation to the contrary, the Authority is to impound the document and direct the parties to pay the stamp duty with or without levying a penalty.

A perusal of Section 35 further reveals that no instrument can be admitted in evidence which does not carry the requisite stamp duty the instrument is liable for. However, the proviso to said Section further provides a cure in case of this defect by allowing its admission into evidence after payment of the requisite stamp duty and the penalty. Thereby revealing that such a defect can be cured even at a later stage and that an unstamped or insufficiently stamped instrument can be turned valid in law by fulfilling the criteria laid out in the proviso to Section 35. Justice Rastogi, on similar lines, noted his dissent by opining that the Stamp Act is not rigid in making the instrument invalid in law and provides for a mechanism to rectify and fulfil the criteria prescribed under Section 35 even at a later stage. Following this scheme, Section 42 of the Stamp Act further envisages that in case of an impoundment under Section 33, such an instrument can be endorsed by the Collector so authorized and then be admitted in evidence. Hence, the law clearly provides for the admissibility of such instruments which may lack or suffer from insufficient stamp duty and nowhere envisions their complete invalidity in law.

Moving on to the Arbitration and Conciliation Act, 1996, he further held that the legislative intent behind the enactment of the Act was to avoid arduous litigation procedures and hasten the dispute resolution processes. A harmonious interpretation of the Indian Stamp Act, 1899 and the Arbitration and Conciliation Act, 1996 needs to be adopted to provide an interplay between the two to meet the ends of justice. The applicability of Section 33 and 35 of the Indian Stamp Act, 1899 to a Section 11 application under the Arbitration and Conciliation Act, 1996 which deals with the appointment of an arbitrator essentially defeats the purpose of speedy disposal of cases by focusing on procedural irregularities which can be cured. Section 11, following the doctrine of Kompetenz-Kompetenz, provides that the Court may restrict its interference only to the “existence” of an arbitration agreement and leave subsequent issues such as validity and scope for the tribunal to adjudicate. It can be inferred that impounding and invalidity of the arbitration agreement at the pre-referral stage will only create more roadblocks and increase interference by courts thereby defeating even the purpose of the Arbitration and Conciliation Act, 1996 and will have no effect on the existence of the arbitration agreement.

Justice Roy in his dissenting opinion was also of the view that a non-stamped or an insufficiently stamped instrument would still be enforceable for the appointment of arbitrators under Section 11 and courts should restrict their scrutiny only to the existence of the agreement to keep judicial interference in check in order to meet the objective of the 2015 amendment.

The Gordian Knot

While arriving at the decision in N.N. Global, the well-established principle of separability[7] in arbitration jurisprudence has not been considered which puts India in a precarious position in its quest to become a hub for Commercial Arbitration. The principle of separability acknowledges that an arbitration agreement is autonomous from the commercial contract it forms a part of[8]. This autonomy is based on the concepts of separability and kompetenz-kompetenz. This doctrine further implies that the invalidity or ineffectiveness of the underlying commercial contract will not vitiate the arbitration agreement. This has also been embodied in Section 16 of the UNICITRAL Model Law which allows the Arbitral Tribunal to rule upon its own jurisdiction including matters regarding existence and validity[9].

Conclusion

The authors believe that this landmark ruling will have far-fetched consequences. The principle of separability of the arbitration agreement will have to see a complete metamorphosis to align itself with the ruling. The question of stamping is not related to the jurisdiction of the Arbitral Tribunal, but it relates to the issue of admissibility. At the pre-arbitral stage, the dissent of N.N Global intrigues the way in which the discourse of arbitration “should be”. It would be axiomatic to state that the majority has set the law of the land by laying down a parameter to be checked in a Section 11 petition.

References:

[1] N.N. Global Mercantile v. Indo Unique ltd, 2023 SCC OnLine SC 495.

[2] Article 226, The Indian Constitution, 1950.

[3] SMS Tea Estates (P) Ltd. v. Chandmari Tea Co. (2011) 14 SCC 66.

[4] N.N. Global Mercantile v. Indo Unique ltd, 2021 SCC OnLine SC 13

[5] Vidya Drolia v. Durga Trading Corpn, (2021) 2 SCC 1.

[6] Garware Wall Ropes Ltd. v. Coastal Marine Constructions and Engg. Ltd, (2019) 9 SCC 209.

[7] Heyman v. Darwins Ltd. 1942 AC 356 (HL).

[8] Ibid.

[9] §16(1), United Nations Commission on International Trade Law, UNCITRAL Model Law on International Commercial Arbitration 1985: with amendments as adopted in 2006 (Vienna: United Nations, 2008), available at www.uncitral.org/pdf/english/texts/arbitration/ml-arb/07-86998_Ebook.pdf.

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Photo by Motortion: https://www.canva.com/photos/MADqQhzGreg-arbitration-agreement-table-gavel-lying-on-sound-block-conflict-settlement/

While arriving at the decision in N.N. Global, the well-established principle of separability[7] in arbitration jurisprudence has not been considered which puts India in a precarious position in its quest to become a hub for Commercial Arbitration. The principle of separability acknowledges that an arbitration agreement is autonomous from the commercial contract it forms a part of[8]. This autonomy is based on the concepts of separability and kompetenz-kompetenz. This doctrine further implies that the invalidity or ineffectiveness of the underlying commercial contract will not vitiate the arbitration agreement. This has also been embodied in Section 16 of the UNICITRAL Model Law which allows the Arbitral Tribunal to rule upon its own jurisdiction including matters regarding existence and validity[9].

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Pending Cheque Dishonour Cases – The Way Forward

  • April 3, 2023
  • Apurupa Gundu
  • P Meghna

While cheques are preferred for their versatility of use, they often lead to defaults in payment or dishonour of cheques. The dishonour of cheques due to insufficiency of funds is dealt with under Section 138 of the Negotiable Instruments Act, 1881 (hereinafter referred to as “the Act”) which was introduced through the Banking, Public Financial Institutions and Negotiable Instruments Laws (Amendment) Act, 1988.

Introduction

Over the last few years, a notable rise in the number of financial transactions can be observed. This has certainly increased the occurrence of defaults in payments and given way to disputes. Though cash is still the preferred mode of payment in the country, there has been an upsurge in the use of digital payments in the last few years[1].  Traditionally, cheques have been used as an alternative to cash and have been a favoured mode of payment for people wanting to make cashless payments. According to a report published by the RBI in the year 2013, cheque-based payments constitute as high as half the total non-cash payments turnover[2]. 

Issue of Pending Cheque Dishonour Cases and Judiciary’s Response

Section 138 of the Act penalizes the drawer of the cheque when the same is dishonoured due to insufficient funds or if the amount exceeds the amount arranged (with the bank) to be paid from that account. Though the Act specifically provides for the summary trial of cheque dishonour cases, the process followed by the Magistrates has proven to be lengthy and tedious. As per a report filed by the amici curiae, Adv. Sidharth Luthra and Adv. K Parameshwar before the Hon’ble Supreme Court, cheque dishonour cases account for more than 8% of the total pending criminal cases with a total of 35.16 lakh pending cheque dishonour cases. The high number of pending cases can be attributed to the conversion of summary trials to summons trials by Magistrates in the exercise of discretionary power conferred under the Act[3]. This has not only frustrated the object of the Act but has also resulted in high expenditures.

The Metropolitan Courts and Judicial Magistrates have been burdened with cases under Section 138. In this regard, the Hon’ble Supreme Court has laid down certain guidelines in Indian Banks Association v. Union of India[4]. According to these guidelines, the Magistrates were required to scrutinize the complaint, affidavit and other documents on the day of the presentation of the complaint for cognizance of the complaint. For the purpose of examination-in-chief, the Magistrates were directed to complete them within 3 months. To do so, the Court was given the discretion to conduct an examination through affidavit.

In the case of Damodar S. Prabhu v. Sayed Babalal H[5], the Hon’ble Supreme Court laid down guidelines regarding the compounding of the offence under Section 138 of the Negotiable Instruments Act, 1881. For instance, it was decided that the Hon’ble Court may allow compounding of the offence of the Accused without imposing any costs if the application for compounding of the offence was made at the first or second hearing by the accused.

In the case of Meters and Instruments Private Limited v. Kanchan Mehta[6], the Hon’ble Supreme Court held that the Magistrate can at any stage stop the proceedings against the accused if the accused has adequately compensated the complainant and on this ground, the accused should be discharged as well.

Even though numerous directions have been given by the Hon’ble Courts to tackle the high volume of cheque dishonour cases, the issue was not altogether resolved, and it became a cause for urgent attention when a cheque dishonour case amounting to ₹1,70,000/- was found to have been pending for more than 16 years. Hence, the Hon’ble Supreme Court was propelled to take suo moto cognizance of the matter in the case of In Re: Expeditious Trial of Cases under Section 138 OF N.I. ACT 1881[7]. In this case, certain guidelines were laid down to ensure a speedy trial of cheque dishonour cases. After these guidelines were set down, the Hon’ble High Court for the State of Telangana came up with its own guidelines, some of which are listed below: –

  • All the Courts are required to follow the guidelines set forth by the Hon’ble Apex Court in the case of Indian Banks Association v. UOI[8]. Further, every case under Section 138 of the Act has to be registered as a summary trial case [Summary Trial Cases – Negotiable Instruments (STC – NI)]. The personal presence of the complainant need not be insisted on for registration; the same can be done through a power of attorney unless the attorney does not have personal knowledge of the transaction.
  • Assistance of police to be taken for the purpose of serving summons and warrants to the accused.
  • The capacity of the accused to engage a counsel to represent him in the Court proceedings has to be ascertained. If the accused is not in a position to afford legal representation, the Court has to appoint a legal aid counsel to represent the accused.
  • If the Court is satisfied that there is a scope for settlement, it may direct the parties to mediation or Lok Adalat. If a settlement is arrived at, then an execution application has to be filed. However, if the case is not settled, then the matter needs to be posted for framing charges or examination under Section 251 of CrPC.
  • Till the stage of filing of the defence statement, the Court has to treat it as a summary trial and the scope of converting it to a regular summons case can be considered only after examining all aspects of the case as prescribed in the guidelines.
  • Every cheque dishonour case has to be concluded within a period of 6 months and a judgment should be pronounced within 3 days from the day of the conclusion of final arguments.

Impact and Analysis

The guidelines issued by the Hon’ble Courts have proven to be effective in filling up the lacunae in the existing procedural law, accelerating the justice delivery process, and tackling the rising cheque dishonour cases. It was noticed that in the exercise of their discretionary powers, Magistrates proceeded with the conversion of cases under Section 138 of the Act to regular summons cases without even recording reasons for the same. By mandating that the case has to be treated as a summary trial in the initial stages, the guidelines ensure that the process involves fewer expenses and is time-saving and streamlined.

The said guidelines also provide for means of settlement, which encourage the use of Alternative Dispute Resolution (ADR) mechanisms. The compounding of offence in the trial’s initial stages has been incentivized as charges are imposed if the application for compounding is filed at later stages of the trial. In instances, where the accused lives outside the Court’s territorial jurisdiction, an inquiry needs to be held after which the Magistrate would decide whether to proceed with the case or not which saves the Court’s time to a considerable extent.

Coming to the concerns not addressed yet, the guidelines issued by the Hon’ble Apex Court specify that summons are to be sent through email and other electronic means and the same can be monitored through a Nodal Agency. However, there is ambiguity regarding the agency’s creation, functions, powers and regulation. Also, the guidelines laid down by the Hon’ble High Court for the State of Telangana do not make a reference to such an agency. The Courts also have not contemplated the technicalities involved such as the time that would be spent on inquiry, the possibility of a case not getting resolved through ADR mechanisms, etc.

Conclusion

Time and again, the Hon’ble Courts have taken up the initiative and issued guidelines to deal with the pending cheque dishonour cases and to ensure a speedy trial of such cases. However, it cannot be denied that the judiciary is overburdened with cases and there is a need to establish additional Courts and improve the already established infrastructure to deal with matters under the Negotiable Instruments Act, particularly pertaining to the dishonour of cheques. It is rightly said that “justice delayed is justice denied” and an overburdened Court will not be able to serve justice within a reasonable time. Such delays inevitably lead to the public losing trust in the justice mechanism and the judiciary. Therefore, setting up a sufficient number of Courts with well-trained judicial officers and staff is the need of the hour for the timely disposal of such cases.

References:

[1] Reserve Bank of India, Concept Note on Central Bank Digital Currency (Oct. 07, 2022) https://www.rbi.org.in/Scripts/PublicationReportDetails.aspx?UrlPage=&ID=1218

[2] Reserve Bank of India, Discussion Paper on Disincentivizing Issuance and Usage of Cheque (Jan. 31, 2013) https://www.rbi.org.in/scripts/PublicationReportDetails.aspx?UrlPage=&ID=698

[3] In Re: Expeditious Trial of Cases under Section 138 OF N.I. ACT, 1881

[4] (2014) 5 SCC 590

[5] (2010) 5 SCC 663

[6] AIR 2017 SC 4594

[7] SUO MOTU WRIT PETITION (CRL.) NO.2 OF 2020

[8] Supra 4

Image Credits:

Photo by cottonbro studio: https://www.pexels.com/photo/a-person-s-hand-holding-a-cheque-6862457/

Time and again, the Hon’ble Courts have taken up the initiative and issued guidelines to deal with the pending cheque dishonour cases and to ensure a speedy trial of such cases. However, it cannot be denied that the judiciary is overburdened with cases and there is a need to establish additional Courts and improve the already established infrastructure to deal with matters under the Negotiable Instruments Act, particularly pertaining to the dishonour of cheques. It is rightly said that “justice delayed is justice denied” and an overburdened Court will not be able to serve justice within a reasonable time. Such delays inevitably lead to the public losing trust in the justice mechanism and the judiciary. Therefore, setting up a sufficient number of Courts with well-trained judicial officers and staff is the need of the hour for the timely disposal of such cases.

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Child Abuse Laws in India: Fortifying the Formative Years

Child abuse is a pervasive and disturbing problem in India, with millions of children being subjected to physical, emotional, and sexual abuse every year. Between the years 2017-2020, there were 24 Lakhs Cases of child abuse that were reported, out of which 80% of the victims were girl below the age of 14.[1]  The Government of India has implemented several legal measures to protect children from abuse, and these measures are aimed at preventing, detecting, and punishing perpetrators of child abuse. The Juvenile Justice (Care and Protection of Children) Act, 2015[2] defines child abuse as any physical, sexual, emotional, or economic maltreatment of a child. This includes neglect, abandonment, exploitation, and any other form of harmful treatment.

Despite the high numbers of reported cases, many cases of child abuse go unreported, and the true extent of the problem is likely to be even greater. The effects of child abuse can be devastating, leading to long-term physical and mental health problems, as well as social and economic consequences. It is essential that the government and civil society organizations work together to prevent child abuse and support victims.

Historically, we have witnessed constructive changes in laws, policies and recognition of human rights and child rights. The Constitution of India guarantees children’s rights[1]

  • Article 21A guarantees the right to free and compulsory elementary for all children in the age group 6-14 years.
  • Article 24(a) secures the right to be protected from any hazardous employment until 14 years.
  • Children have equal rights as all other adult citizens of India, like, the Right to Equality (Article 14), Right to Personal Liberty and the process of law (Article 21), Right to being protected from being trafficked and forced into bonded labour (Article 23), etc.

Child Protection Laws in India are framed in line with constitutional provisions for safeguarding child rights. More than 250 statutes in India have been passed by the Union and State Governments. Some of the important legislations and their important provisions are as follows:

Indian Penal Code, 1860 (IPC)

  • Section 75 of the code provides for punishment for cruelty to a child, while Section 76 provides for punishment for abetment of suicide of a child.
  • The abandonment of a child below the age of twelve years is dealt under Section 317, Punishment for abandonment is imprisonment up to seven years or fine or both.
  • Inducing any minor girl to have sexual intercourse with another person is punishable under Section 366A. This crime shall be punishable with imprisonment up to ten years and a fine.
  • Section 372and Section 373 of the act penalises selling or buying minor girls for prostitution and illicit intercourse for any unlawful and immoral purpose, with imprisonment under, which may extend up to ten years and a fine. [2]

The Indian Evidence Act, 1872 (IEA)

As per Section 118 of the Indian Evidence Act, all persons, including a child or an aged except a tender year, extreme old age, disease – whether of body or mind or any other similar cause, are competent to be considered as a witness in the court of law if they are able to understand the questions put to them, or able to give rational answers to those questions.[3]

 

Criminal Procedure Code, 1973 (CrPC)

Also, after the Criminal Law (Amendment) Act, 2013, the punishment for rape of a minor girl has been aggravated (made more serious) under section 376(2)(i) of IPC. The punishment for rape of females below 16 years of age shall be minimum rigorous imprisonment of ten years which can extend up to life imprisonment. [4]

The list of the child protection laws passed by the Union Government includes the following:

Children Pledging of Labour Act, 1933 (CPLA)

CPLA prohibits the pledging of the labour of children by the parent and any other person who employs children who have been pledged for labour. [5]

Child Labour (Prohibition and Regulation) Act, 1986 (CLA)

Child Labour (Prohibition and Regulation) Act of 1986 [6] is a law for the protection of children from child labour in India. The act prohibits the employment of children in hazardous occupations and also sets the minimum age for employment in any kind of work.

The Immoral Traffic (Prevention) Act, 1987 (ITPA)

The act makes it illegal to procure, transport, or hire a person for the purpose of sexual exploitation or prostitution. This act also makes it illegal to traffic children for any purpose, regardless of their gender. [7]

Prohibition of Child Marriage Act, 2006 (POCMA):

POCMA [8] follows the basic premise

  1. to make a child go through marriage is an offence, and
  2. child or minor is a person up to 18 years of age in the case of girls and 21 years in the case of boys.

Right of Children to Free and Compulsory Education Act, 2009

The State were mandated to provide free and compulsory education within ten years under the Right to education. It was earlier a Directive Principles of State but now, the Right to Education is acknowledged under the fundamental rights, making it a justiciable right under Article 21A. The Right to Education Act, 2009, [9] also known as RTE Act describes modalities of the importance of free and compulsory education for children aged between 6-14 years in India.

The Protection of Children from Sexual Offences Act, 2012 (POCSOA):

The POSCOA [10] was enacted to address and/or prevent sexual harassment, exploitation, sexual assault, abuse pornography and immoral acts against children. Under the Act, sexual abuse of a child is defined as any act that involves physical contact with a child or causes the child to be in a state of sexual arousal or stimulation. This includes penetrative and non-penetrative sexual assault, sexual harassment, and sexual exploitation.

 Some of its key features are:

  • It is not gender-specific and penalises abetment of child abuse.
  • The Act holds that a child is any person below the age of 18 years.
  • It defines different forms of sexual abuse and makes provisions for creating a child-friendly atmosphere through all stages of the judicial process and avoid revictimization.
  • The act also provides for strict punishment for the perpetrators of child sexual abuse. The punishment for sexual assault on a child under the age of 12 years is imprisonment for a minimum of 20 years, which may extend to life imprisonment. For sexual assault on a child between the age of 12 to 18 years, the punishment is imprisonment for a minimum of 10 years, which may extend to life imprisonment.
  • It gives vital importance to the best interest of the child which can be seen incorporated in the statute as child-friendly mechanisms for reporting, recording of evidence, investigations, speedy trials of offences and in-camera trial without revealing the child’s identity through designated special courts.
  • It mandates the use of video-conferencing for recording the statements of the child victim, thus protecting them from the trauma of appearing in court.
  • Moreover, the law also requires mandatory reporting of child abuse. Any person who has knowledge of child abuse is required to report it to the police or a designated child protection agency. Failure to report child abuse is punishable with imprisonment for up to six months, or a fine, or both.

Juvenile Justice (Care and Protection of Children) Act, 2015 (JJA):

The Juvenile Justice (Care and Protection of Children) Act, 2015 [11] is a legislation in India that deals with the treatment of underage offenders. The Act, which came into force on January 15, 2016, replaces the previous Juvenile Justice (Care and Protection of Children) Act, 2000.

Under the Act, a child is defined as anyone who is below the age of 18 years. JJA classifies the term “child” into two categories:

  1. ‘child in conflict with law’ and
  2. ‘child in need of care and protection’

The Act provides for the establishment of Juvenile Justice Boards and Child Welfare Committees to deal with the issues of children in conflict with the law and children in need of care and protection. These bodies are responsible for ensuring that the rights of children are protected and that they are treated in a manner that is conducive to their overall development.

The Act also provides for the establishment of special homes and observation homes to provide shelter, care, and protection to children in need. One of the major changes introduced by the Act is the provision for trying certain juveniles between the ages of 16 and 18 years as adults if they are accused of committing heinous offenses. This has been a controversial provision, with some arguing that it goes against the principles of the Act and may lead to discrimination against certain juveniles.

The Act prescribes punishment for the various offences against children such as enhanced punishment for cruelty to children from six months to three years. The selling or buying of children will be a punishable offence with imprisonment of five years. Juvenile Justice (Care and Protection of Children) Amendment Act, 2021 was passed to amend various provisions of the Juvenile Justice Act, 2015.

The Ministry of Women and Child Development on 31st August, 2022 in New Delhi vide notification mentioned in exercise of the Powers conferred by sub-section (2) of section 1 of the Juvenile Justice (Care and Protection of Children) Amendment Act, 2021 (23 of 2021), the Central Government appoints the 1st day of September, 2022 as the date on which the said Act shall come into force.

 

National Commission for Protection of Child Rights

National Commission for Protection of Child Rights (NCPCR) [12], has been incorporated under the Ministry of Woman and Child Development by the central government, to regulate all laws and programmes with a child-centric approach. The commission can also take suo moto cognisance for violation of child rights.

Child Welfare Committee (CWC)

The Child Welfare Committee (CWC) [13] has been formed under the Woman and Child Development Department to tend to the children in need of care and protection. The Committee is to be informed about any child abuse within 24 hours by the police officer, then a person is appointed to support the child and be responsible for the psycho-social well-being of the child. The CWC person will keep the child’s family updated about the case. Any reporting of child abuse can be done by dialling the toll-free number 1098.

 

Conclusion:

While the world has made significant progress in education, nutrition and child health in the past decade, India has been ranked 118 on the End of Childhood Index [14]. Despite several child protection acts, we still witness various forms of child rights being violated, including denial and inability to access the right to food, right to education, right to health and right against exploitation. There are extensive laws to protect children, and child protection is increasingly accepted as a core component of social development. The challenge is in implementing the laws due to inadequate human resource capacity on the ground and quality prevention and rehabilitation services. As a result, millions of children are prone to violence, abuse and exploitation. 

Furthermore, the lack of awareness and understanding of the issue among the general public, as well as among law enforcement and judicial officials, makes it difficult to identify and prosecute perpetrators of child abuse. This lack of awareness also makes it difficult for victims to seek help and support.

To address the issue of child abuse in India, it is essential to implement effective laws and policies that provide adequate protection for children, and to educate the public about the issue. This can include measures such as strengthening the existing laws, increasing funding for child protection services, and implementing awareness campaigns to educate the public about the signs and effects of child abuse. Another effective method of dissemination of information could be through designing workshops to be given in schools, to educators, to caretakers and to the minors about the forms of abuse, the remedies and the rights.

References:

[1]  India reported over 24L online child abuse cases in 2017-20: Interpol | Business Standard News (business-standard.com)

[2] The Juvenile Justice (Care and Protection of Children) Act, 2015

[1] The Constitution of India

[2] Indian Penal Code, 1860

[3] The Indian Evidence Act, 1872 (IEA

[4] Criminal Procedure Code, 1973

[5] Children Pledging of Labour Act, 1933

[6] Child Labour (Prohibition and Regulation) Act, 1986

[7] The Immoral Traffic (Prevention) Act, 1987 (ITPA)

[8] Prohibition of Child Marriage Act, 2006 (POCMA)

[9] Right of Children to Free and Compulsory Education Act, 2009

[10] The Protection of Children from Sexual Offences Act, 2012

[11] Juvenile Justice (Care and Protection of Children) Act, 2015

[12] National Commission for Protection of Child Rights

[13] Child Welfare Committee

[14] 2021-global-childhood-report.pdf (childhealthtaskforce.org)

Image Credits: 

Photo by Towfiqu barbhuiya on Unsplash

Despite the high numbers of reported cases, many cases of child abuse go unreported, and the true extent of the problem is likely to be even greater. The effects of child abuse can be devastating, leading to long-term physical and mental health problems, as well as social and economic consequences. It is essential that the government and civil society organizations work together to prevent child abuse and support victims.

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