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All India Bar Examination
Preparatory Material
Book 2 of 2
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All India Bar Examination:
Preparatory Materials, Book 2
Table of Contents
12 Administrative Law 1
13 Company Law 22
14 Environmental Law 41
15 Family Law 63
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In India, however, despite some judgments The rationale for delegating legislative power
bypassing the classificatory approach (S. C. & has been explained by the Supreme Court:
30 Weaker Section Welfare Association v. State of 30
Karnataka, (1999) 2 SCC 604: In a challenge to • Technical complexity of the subject matter
the rescinding of a prior notification, the which may make it impossible for the
Supreme Court ignored the legislative nature legislature to plan for all eventualities;
of an administrative action, and applied the • Executive may require time to experiment,
35 test of fair hearing and natural justice and then fill gaps left by original 35
normally reserved for actions of quasi-judicial legislation;
nature), the predominant approach remains • Time saving by passing skeletal legislation
the classificatory one. and leaving details to be worked out by
local authorities on the ground.
40 As each of these functions involve their own (Agriculture Market Committee v. Shalimar 40
effects and characteristics, classification Chemical Works Ltd., (1997) 5 SCC 516)
assumes practical significance for the
following reasons, which are illustrative but In practice, the term ‘delegated legislation’ is
not exhaustive: used in two senses:
45 45
• Publication: Legislative orders need to be • The exercise by a subordinate agency or its
published in Official Gazettes as they are of further sub-delegate, of legislative power
general application, whereas quasi-judicial delegated to it by the legislature;
50 and administrative orders being specific, • The subsidiary rules themselves made by 50
need only to be communicated to the the subordinate agency pursuant to clause
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Delegated legislation can take various forms, Essential Legislative Function and Excessive
such as Rules, Regulations, Bye-Laws, and Delegation
10 Orders. These expressions are sometimes used 10
interchangeably. In a reply to the Committee “Essential Legislative Function” means the
on Subordinate Legislation, the Ministry of determination of legislative policy and legal
Law explained the difference between these principles which are to control given cases,
terms as follows: “Generally, statutes provide and which must provide a standard to guide
15 for power to make Rules where the general delegated officials who implement the law 15
policy has been specified in the statute but the (Harishankar Bagla v. State of M.P., AIR 1954 SC
details have been left to be specified by the 465, 468). The delegated authority must only
Rules. Usually, technical or other matters, implement stated policy, but if there is
which do not affect the policy of the abdication of legislative power by transferring
20 legislation, are included in Regulations. Bye- policy formulation role to the delegate, then 20
laws are usually matters of local importance, there is excessive delegation, which will be
and the power to make bye-laws is generally invalidated by the court. (Mahe Beach Trading
given to the local authorities.” (7th Report VI Co. v. Union Territory of Pondicherry, (1996) 3
Lok Sabha p.3) It has been opined that ‘Rules’ SCC 741)
denote delegated legislation generated by
25 government departments, whereas Put simply, the test is to examine whether the 25
‘Regulations’ and ‘Bye-Laws’ denote policy has been fixed by the legislature, and
delegated legislation framed by statutory the delegated authority has been given
corporations. (M.P. Jain and S.N. Jain, sufficient guidance and channeliation for
Principles of Administrative Law, Vol.1, 6th Edn., exercise of power of delegated legislation
p.53) (Consumer Action Group v. State of Tamil Nadu,
30 (2002) 7 SC 425). This guidance may be found 30
Delegated Legislation: Origin and Principles in the enabling provision which permits
delegation, subject-matter, scheme, other
Prior to Independence, delegated legislation in provisions of the Statute including its
India was on an unsure legal footing. preamble, and the facts and circumstances in
35 Although upheld by the Privy Council (Queen the background of which the Statute is 35
v. Burah, (1878) 5 IA 178), the Federal Court of enacted.
India narrowed the scope of delegated
legislation (Jatindra Nath v. Province of Bihar, Illustration: S.5(2)(b), Gold Control Act, 1968
AIR 1949 FC 175; Emperor v. Benorilal Sharma, which authorised the Administrator to
40 AIR 1943 FC 36). This narrow interpretation regulate various activities related to gold “so 40
created practical problems in administration far as it appeared to him necessary and
and required correction upon attaining expedient for carrying out the provisions of
Independence and the coming into force of the the Act” was held invalid for excessive
Constitution. delegation, as power delegated was
45 ‘legislative’ in nature and was controlled by 45
The President of India by reference under A. no guidance or canalization in scheme,
143 sought the opinion of the Supreme Court context or other sections of the Act.
on this issue. The Supreme Court firmly (Harakchand v. Union of India, AIR 1970 SC
50 established the validity of delegated 1453) 50
legislation in In Re Delhi Laws Act (1912), AIR
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The concept of Excessive Delegation will now clause was upheld, subject to the safeguards
be examined in the context of some typical that no power to modify the Act would be
instances of delegated legislation: exercised and it would be subject to judicial
review as to its consistency with the parent
5 • Power to modify an Act: Power to modify an policy. (Gammon India Ltd. v. Union of India, 5
Act can be delegated, subject to the AIR 1974 SC 960)
safeguards that the parent Act lays down
the policy according to which the power is • Power to Exempt and Include: In this form of
to be exercised. The delegate cannot use the delegation, the parent Act lays down the
10 power to change the policy provided by the policy and indicates the spheres of 10
statute itself. operation, but gives power to the
administration to subsequently include or
Illustration: A local government Act stated exclude people from its operation. Such
that no municipal tax could be imposed clauses are justified as providing flexibility
15 upon a locality without giving residents a to adapt to changing circumstances, so long 15
hearing. By a notification under this Act, the as the inclusion or exemption is done in
Governor subjected residents to municipal furtherance of purpose of the parent Act.
taxation, but excluded the operation of
provisions providing for hearing. The Illustration: S.27, Minimum Wages Act
20 notification was invalidated as it modified an authorises the addition of categories of 20
essential feature of the Act, namely the right industries to which the provisions of the Act
of hearing before decision. (Raj Narain Singh will apply. A challenge to this section on the
v. Patna Administration Committee, AIR 1954 ground of excessive delegation was repelled
SC 569) as it provided flexibility and advanced social
purpose of the Act. (Edward Mills Co. v.
25 • Power to Repeal: In In Re Delhi Laws Act, the Ajmer, AIR 1955 SC 25) However, S.16(2)(9), 25
Supreme Court held that power to repeal Drugs and Magic Remedies (Objectionable
an Act could not be delegated as it was an Advertisements) Act, 1954 which
essential legislative function. However, a empowered the Central Government to add
virtually identical provision in the Life to the list of diseases and conditions to
Insurance Corporation Act which which the Act would apply was held to be
30 authorised the Central Government to excessive delegation, as the parent Act 30
make Rules to carry out the purposes of the prescribed no criteria or guidance on the
Act “notwithstanding the Industrial basis of which new diseases could be added.
Disputes Act” and other laws in force, was (Hamdard Dawakhana v. Union of India, AIR
upheld despite the delegated legislation 1960 SC 554)
35 impliedly repealing the other Acts in its 35
sphere of operation. (A. V. Nachane v. Union • Delegation of Fiscal Power: While the power
of India, (1982) 1 SCC 205) to tax is an essential legislative function (A.
• Power to Remove Difficulties: Such clauses, 265, Constitution), it is impossible to
also called ‘Henry VIII clauses’, typically legislate on all aspects of taxation and some
40 confer wide powers upon the delegated amount of delegation is inevitable. It has 40
authority to make Orders to remove been held permissible to delegate the
difficulties in implementing the parent Act, power to select persons on whom, or goods
but in practice are upheld only when used and transactions on which the tax is to be
for making minor changes not affecting levied, or even rates of taxation, provided
45 policy. the parent Act gives intelligible guidelines 45
for the exercise of such power. However,
Illustration: S.34, Contract Labour (Regulation courts normally do a stricter scrutiny of
& Abolition) Act, 1970 contained a clause delegated legislation when it involves a
50 authorising the making of provisions to taxation or fiscal element. 50
remove difficulties in implementation. The • Skeletal Legislation: ‘Skeletal legislation’
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that the specificity in the second clause is only the policy objectives of the Act. (State of
illustrative, and does not restrict the generality Tamil Nadu v. Hind Stone, (1981) 2 SCC 205)
of the Rule-making power. So if a Rule does • Rule 41-A of the Karnataka Cinema
not fall under a specific head, but can be (Regulation) Rules imposed a restriction on
5 justified under the general Rule-making cinemas on only showing four shows in a 5
power, it will be upheld. (Emperor v. Sibnath day. S.19 of the parent Act conferred a
Banerji, AIR 1945 PC 156, 160) However, the power to frame Rules to carry out the
reverse is not true, so if the specific head itself purposes of the Act. The Rule was upheld
does not relate to the general power conferred as covered by S.19, as the power was wide
10 by the Act, such delegation will be ultra vires. enough to cover all aspects related to film 10
(Regina v. St Aloysius Higher Elementary School, exhibition, including the number of hours
AIR 1971 SC 1920) films could be exhibited. (Minerva Talkies v.
State of Karnataka, (1988) Supp SCC 176)
Keeping these principles in mind, the
15 following are some illustrations of operation Procedural Ultra Vires 15
of this principle:
There are various procedures to be followed
Cases where delegated legislation held Ultra Vires: in the process of rule-making, some of which
are mandatory and some of which are merely
20 • Licensing power under the Cinematograph directory. Directory procedural norms can be 20
Act was given to District Magistrates, who substantially complied with, but mandatory
could grant licenses “subject to control of norms must be strictly observed, failing which
the Government”. The Government framed delegated legislation will be held bad for
Rules in effect transferring the licensing procedural ultra vires. While exhaustive
power to itself and rendering the instances of procedural ultra vires cannot be
25 Magistrate virtually redundant. Such a Rule given, and each case must be considered on its 25
was ultra vires as the Act contemplated a own merits to determine whether the specific
licensing authority distinct from the procedure concerned is mandatory or
Government. (State of Gujarat v. Krishna directory, some recurring examples may be
Cinema, AIR 1971 SC 1650) examined:
• Under the Land Ceiling Act, a State
30 government framed Rules prohibiting • Publication 30
transfer of any land subservient to tea
plantations. This Rule held ultra vires as the Unlike the Statutory Instruments Act, 1946
Act did not delegate any power to enact in the U.K., there is no general statute in
prohibition on transfers of land, nor did India regulating publication of delegated
35 such prohibition advance any purpose of legislation. Many statutes, however, require 35
the Act. (Kunj Behari Lal Butail v. State of publication of rules in the Official Gazette,
Himachal Pradesh, (2000) 3 SCC 40) and even otherwise rules are published as a
matter of practice. The Supreme Court has
Cases where delegated legislation held Intra Vires: settled the issue by holding that publication
40 in Official Gazette is a mandatory 40
• Rule 8-C of the Tamil Nadu Mines and requirement in Harla v. State of Rajasthan,
Minerals Rules banned mining leases in AIR 1951 SC 467. Further, in case of
favour of private persons and conferred a delegation by the Central Government, Rule
monopoly on government corporations. It 319 of the Lok Sabha Rules of Procedure
45 was contended that Act only gave power to requires all delegated legislation created as a 45
regulate, not prohibit, and grant of result of delegation by Parliament to be
monopoly being a legislative function, the numbered centrally and published
same could not be achieved through immediately.
50 subordinate legislation. The Court upheld 50
the Rules on the ground that it furthered If no mode of publication is prescribed then
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25 Directions are sometimes treated by courts as Having considered various aspects of the 25
enforceable when they contain a statement of legislative function of the administration, we
administrative policy and are not repugnant to will now consider the non-legislative aspects.
any statutory provision, or when they have
been continuously acted upon by the Natural Justice
government and it would be unfair not to give
30 a citizen the benefit of estoppel based on such Rules of Natural Justice are essentially 30
directions. procedural rules that ensure fairness in the
process of exercise of governmental power. As
Illustration: (i) Where a Memorandum stated by the United States Supreme Court,
promised certain benefits to ex-servicemen “the history of liberty has largely been the
35 who accepted re-employment, the history of observance of procedural 35
Respondent, who was re-employed safeguards” (Per Jackson, J, in Shaughnessy v.
thereunder, was entitled to claim salary United States, 345 US 206 (1953)).
fixation according to the Memorandum, even In Administrative Law, natural justice is a well
though it was in the nature of administrative defined concept that embraces two
40 instruction only. (Union of India v. K. P. Joseph, fundamental rules of fair procedure: (i) Every 40
AIR 1973 SC 303); and (ii) Rights acquired by man has the right to be heard in his defence,
employees over a period of 20 years, though or ‘audi alteram partem’; and (ii) No man shall
under Directions only, cannot be withdrawn be a judge in his own cause, or ‘nemo debit esse
by the Government, which is estopped from judex in propria causa’.
45 doing so. (P. Tulsi Das v. Government of Andhra 45
Pradesh, (2003) 1 SCC 364) While earlier the tendency was to confine
applicability of the rules of natural justice to
Sub-Delegation of Legislative Powers administrative actions classified as “quasi-
50 judicial”, since the decision in Ridge v. 50
Sub-delegation is the further delegation of Baldwin, [1964] AC 40, the need to restrict
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accused person to rebut the charges made they must give adequate right of personal
against her. Such opportunity may be given hearing so that the assessee can fully object to
through personal hearing, or through written the proposed assessment. (Dhakeshwari Cotton
representation. Administrative authorities are Mills Ltd. v. C. I. T., AIR 1955 SC 65)
5 required to give reasonable opportunity of 5
being heard, but what constitutes reasonable Disclosure of Materials
opportunity in a given circumstance is a
flexible concept, and the same will be An adjudicatory body must decide a case only
adjudged by courts depending upon the on the basis of relevant materials placed
10 context, facts, and circumstances of the case. before it, and the affected person should be 10
apprised of such materials and given an
There is no right of oral hearing in all opportunity to rebut and explain the same.
circumstances, and in many cases courts have Whether copies of the material relied upon
held that the submission of a written must be supplied, or whether it is sufficient to
15 representation is sufficient compliance of convey the gist or allow inspection of the 15
natural justice. (Union of India v. Jesus Sales material, will depend on the facts of the case.
Corporation, (1996) 4 SCC 69) The necessity of For example, in disciplinary proceedings
oral hearing would depend on the nature of against civil servants, the relevant material
the enquiry, the nature of facts involved, the and even a preliminary inquiry report must be
20 circumstances of the case, and the nature of supplied to the accused officer if relied upon 20
the deciding authority. For example, where by the disciplinary authority. (Union of India v.
complex questions of fact involving technical Mohd. Ramzan Khan, (1991) 1 SCC 588)
problems arise, or when detailed evidence is However, the principle of disclosure is limited
required to be taken from witnesses, an oral to relevant and material documents alone, and
hearing may become necessary. Some documents not relied upon by the
25 instances where oral hearing were required adjudicating body need not be supplied to the 25
are given as follows: (i) When excise duty was affected person. (Krishna Chandra Tandon v.
imposed on a company on the ground that it Union of India, (1974) 4 SCC 374) Natural
manufactured a particular chemical justice is also infringed if the adjudicatory
composition, and the company disputed the body decides a matter on the basis of
same, but the government did not give an confidential information not disclosed to the
30 opportunity for personal hearing before affected party (Officer denied a senior certain 30
upholding levy of duty, such action was information, on the basis of a confidential
quashed, inter alia, as it raised technical report which was not supplied to him, while
questions which should have been decided juniors were given that information. The
after taking expert evidence. (Travancore Court quashed the order for non-disclosure of
35 Rayons v. Union of India, AIR 1971 SC 862); (ii) relevant material. (Vijay Kumar v. State of 35
When determining the question of Indian Maharashtra, AIR 1988 SC 2060)
citizenship of a person and passing a
deportation order against her, a personal Right of Cross-Examination
hearing is necessary. (Union of India v. Chand
40 Putli, AIR 1973 All 362); (iii) Disciplinary Whether this right is available to a person 40
proceedings against civil servants normally undergoing an administrative adjudication
require a personal hearing. (Chandra Kanti Das will depend on the facts and circumstances of
v. State of Uttar Pradesh, (1981) 2 SCC 704); (iv) each individual case. In general, the right to
Personal hearing is normally insisted upon in cross examine has been given in the following
45 disciplinary actions against professionals by cases: (i) Inquiry by employer for taking 45
their concerned association. (In Re: An disciplinary action against employees in
Advocate, AIR 1989 SC 245); Institute of labour matters (Rohtas Industries v. Workmen,
Chartered Accountants of India v. L. K. Ratna, (1977) 2 SCC 153); (ii) Disciplinary
50 AIR 1987 SC 71); and (v) In tax matters, since proceedings against government servants; (iii) 50
tribunals discharge quasi-judicial functions, Disciplinary proceedings by a statutory
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! All India Bar Examination: Preparatory Materials! 12
corporation against its employees; and (iv) Tax either explicitly by statute, or impliedly by
cases. If the adjudicatory authority allowed surrounding circumstances.
taking of oral evidence, right of cross- Illustration: In cases of review of an
examination would be available to the externment order, reviewing authorities will
5 opposite party. not insist on reasons for rejecting an appeal, as 5
that would involve a discussion of evidence
Right to Legal Representation which may lead to danger to witnesses. (State
of Maharashtra v. Salem Hasan Khan, (1989) 2
In general, the right to counsel is not SCC 316) Similarly, a Court Martial is not
10 considered a mandatory part of the right to required to give reasons under the Army Act 10
fair hearing. (H. C. Sarin v. Union of India, AIR (Som Datt Datta v. Union of India, AIR 1969 SC
1976 SC 1686) Where complicated questions of 414), and in certain cases, it has been held that
fact and law arise in an adjudicatory the disciplinary authority, if it agrees with
proceeding, however, denial of counsel may reasons given by the Inquiry Officer, need not
15 result in the party being unable to fully defend separately give reasons (Tara Chand Khatri v. 15
she, and this will be violative of natural Municipal Corporation of Delhi, (1977) 1 SCC
justice. (Zonal Manager, Life Insurance 472).
Corporation v. City Munsif, Meerut, AIR 1968
All 270) There are several statutory provisions Administrative and adjudicatory bodies are
20 prohibiting the presence of lawyers at not expected to write judgments like courts of 20
adjudicatory proceedings: Ss.36(2)(a), (b), and law and courts will not intensely scrutinise
36(4), of the Industrial Disputes Act restrict the the adequacy of reasons, but will look for an
conditions under which a lawyer can appear outline of reasoning from which the logic of
before an Industrial Tribunal; Rule 15(5) of the the decision-maker can be understood.
Central Civil Service (Classification, Control & Mechanical or stereotyped reasons, or a mere
25 Appeal) Rules 1957 provides that government repetition of statutory language will not make 25
servants cannot appoint lawyers unless the order a reasoned one.
permitted by the disciplinary authority; A.22
(3)(b) of the Constitution prohibits detenues in Illustration: (i) An application for registration
preventive detention cases from engaging of a trademark was refused on the grounds of
counsel, although the Advisory Board may public interest and development of
30 permit the same. If the government or indigenous industry; this was held as 30
adjudicating authority is represented through insufficient reasoning as it merely repeated
a lawyer, then the concerned person or detenu the words of the statute. (Imperial Chemical
will have the right of legal representation. Industries Ltd. v. Registrar of Trademarks,
(Nand Lal Bajaj v. State of Punjab, (1981) 4 SCC Bombay, AIR 1981 Del 190); (ii) “Reply found
35 327) to be unsatisfactory” was held not to be 35
sufficient reason for cancelling a factory
Reasoned Decisions license, even though grounds were stated in
the show cause notice. (Cycle Equipments Ltd.
Decisions of administrative bodies must v. Municipal Corporation of Delhi, (1982) 21 DLT
40 disclose reasons, so that reviewing authorities 445) 40
can examine whether they were taken on basis
of relevant considerations or suffer from Rule against Bias
erroneous factual or legal foundations. This is
an important check on the abuse of The second limb of natural justice is the rule
45 administrative discretion, and promotes against bias. This principle, first stated by 45
transparency and public confidence in the Lord Coke in Dr. Bonham’s Case, (1610) 8 Co
administrative process. (S. N. Mukherjee v. Rep 1142, means that no man shall be a judge
Union of India, AIR 1990 SC 1984) in his own cause, and guarantees the
50 In some limited cases, however, the impartiality of the adjudicator. This rule 50
requirement to give reasons can be excluded applies not only when the decision-maker is
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! All India Bar Examination: Preparatory Materials! 13
she party to the dispute, but also when she has argument that no man can be a judge in his
some pecuniary, personal, or other interest in own cause was rejected as natural justice
the dispute. cannot override statute. (B. K. Mehra v. Life
Insurance Corporation, AIR 1991 Cal 86)
5 Pecuniary Bias 5
The Doctrine of Necessity is an important
Pecuniary interest in the outcome of a dispute, exception to the rule of bias. Necessity is a
no matter how small or insignificant, will rule of last resort where law permits certain
disqualify the decision-maker from things to be done which it would otherwise
10 adjudication. Actual bias need not be shown; not countenance. An adjudicator, otherwise 10
the mere likelihood of bias is sufficient as it is disqualified for bias, may nevertheless have to
a cardinal principle that justice should not adjudicate if: (i) no other person competent to
only be done but also seen to be done. adjudicate is available; (ii) quorum cannot be
formed without her; (iii) no other competent
15 Personal Bias tribunal can be formed. While upon an 15
application of the doctrine of necessity, the
If the adjudicator is a friend, relative, or rule of bias is given a go by, if it is not applied
business associate of some party to the it would result in a situation of deadlock
dispute, or if he has prior animosity towards where adjudication will be stalled and the
20 such person, this personal bias will operate to defaulting party would benefit. Where 20
disqualify the adjudicator from hearing the alternative arrangements can be made,
dispute. however, the doctrine of necessity will not be
applied.
The standard upon which to adjudge claim of
bias is that of “reasonable likelihood” laid Illustration: In a challenge to adjudication of
25 down in A. K. Kraipak v. Union of India, AIR disqualification of a member of a legislature, 25
1970 SC 150, that is, a standard above mere when bias was alleged against the Chief
unfounded suspicion. In some cases, however, Election Commissioner on the ground that he
even if the court finds no “reasonable was close to the complainant, the court held
likelihood” of bias, it may still disqualify the that as there was a suspicion of bias, the Chief
adjudicator on the principle that justice should Election Commissioner should excuse himself
30 be seen to be done. from participating in the decision in the first 30
instance, and let the other two Election
Illustration: In a disciplinary proceeding before Commissioners decide the point. If, however,
the Bar Council of India, the Chairman of the there were to be a difference of opinion
disciplinary committee had earlier represented between the two Election Commissioners,
35 the Respondent in a case. Even though the then the Chief Election Commissioner would 35
Chairman had no recollection of the have to participate on the ground of necessity.
Respondent, and it was held there was no (Election Commission of India v. Subramaniam
reasonable likelihood of bias, Chairman was Swamy, (1996) 4 SCC 104)
nonetheless disqualified. (Manak Lal v. Prem
40 Chand, AIR 1975 SC 425) A person may also waive her objections to an 40
adjudicator on the ground of bias, but such
Exclusion of Bias waiver should be explicit and with knowledge
of consequences, and it should not be inferred
A statute may exclude the rule of bias and lightly. (King v. Essex Justices, (1927) 2 KB 475)
45 obligate an official to adjudicate upon a matter But after private waiver, if the authority acts 45
irrespective of her own interest therein. in a patently biased manner, it may still be
disqualified on the ground of public interest
Illustration: When a statutory provision in clean administration. (Rattan Lal Sharma v.
50 required the complainant-management itself Managing Committee, Hari Ram Higher 50
to enquire and take disciplinary action, the Secondary School, (1993) 4 SCC 10)
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hearing was given to the party whose rights land owners under S.5-A, and imposes a
were affected. (Chingleput Bottlers v. Majestic duty upon the Collector to hear and
Bottling Co., (1984) 3 SCC 258) However, the adjudicate these judicially. (H. P. C. L. v.
power of the transport authorities to limit Darius Shapur Chenai, AIR 2005 SC 3520)
5 the number of carriages under the Motor 5
Vehicles Act, 1939, was held not to be quasi- • Powers of Search and Seizure: Search and
judicial, and was held to be a matter of seizure are drastic instances of sovereign
policy, thereby denying the operators any policing power, and constitute a grave
right of hearing. (Mohd. Ibrahim v. S. T. A. invasion of personal property and the
10 Tribunal, (1970) 2 SCC 233) This decision, reputational rights of a person. On account 10
which appears constrained by the pre-Ridge of a need for prompt action, the power to
v. Baldwin classificatory approach, may be search can be exercised without following
contrasted with R v. Liverpool Corporation, the rules of natural justice, but power to
(1972) 2 QB 299, wherein a decision of a local confiscate cannot be exercised without
15 authority to increase the number of taxicabs observance of such rules. 15
without giving the local taxicab association a
right of hearing was quashed by Denning, Illustration: Under S.110, Customs Act,
M. R. for non-compliance with natural customs officials may search and seize
justice. imported goods if they have “reason to
20 believe” they were illegally imported. 20
• Blacklisting: Blacklisting means However, if no notice of confiscation is
disqualifying a person guilty of some served upon the owner within six months,
wrongdoing for certain future purposes. As the goods must be returned. This six-month
blacklisting has severe civil consequences period can be extended “on sufficient cause”
for the future business of the affected being shown, and the power to extend time
25 person, the prevailing judicial view is that is to be exercised quasi-judicially with due 25
she must get a right of hearing before a final regard for the principles of natural justice.
decision is taken. (Eurasian Equipment Co. Assistant Collector of Customs, Calcutta v.
Ltd. v. State of West Bengal, (1975) 1 SCC 70) Charan Das Malhotra, AIR 1972 SC 689)
• Property Rights: Property rights being
constitutional rights under A.300-A, natural Judicial Control of Administrative
30 justice must be afforded to persons whose Adjudication 30
property rights are affected by
administrative action, such as land Administrative adjudication means the
acquisition notifications or property system of deciding disputes by bodies other
demolition orders. than regular courts. This alternative form of
35 adjudication can take the form of tribunals, or 35
Illustration: Notifications were issued under a even administrative officers exercising quasi-
Slum Area Improvement Act, upon issuance judicial powers. ‘Tribunal’ has been given a
of which residents of that area were wide interpretation, and it has been held to
subjected to severe restrictions on property include any body displaying the following
40 rights. The notifications and vires of the Act three characteristics: (i) it should have the 40
were challenged, and the Supreme Court trappings of a court; (ii) it should be
upheld the Act subject to an implied constituted by the State; and (iii) it should be
condition that residents would be given invested with the State’s inherent judicial
hearing before any such notification was power (Per Gajendragadkar, CJ in Engineering
45 issued. (Government of Mysore v. J. V. Bhat, Mazdoor Sabha v. Hind Cycles, AIR 1963 SC 874) 45
AIR 1975 SC 596) Tribunals can be of the following types:
Illustration: The Land Acquisition Act, 1894 • Tribunals constituted under A.323A of the
50 gives a right of hearing and filing of Constitution to decide disputes pertaining 50
objections against proposed acquisition to to recruitment and conditions of service of
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! All India Bar Examination: Preparatory Materials! 16
government servants, such as the Central Court under A.136. Thus, the Court took the
and State Administrative Tribunals; view that tribunals could not be a complete
• Tribunals constituted under A.323B of the substitute for High Courts, and their decisions
Constitution to decide disputes pertaining would remain reviewable in writ jurisdiction.
5 to taxes, foreign exchange, customs, 5
industrial and labour disputes, land Some principles of judicial review of decisions
reforms, urban land ceiling, election of of tribunals and administrative adjudicatory
legislators, foodstuffs and incidental bodies, emerging from judicial dicta can be
matters; and summarised as follows:
10 • Other tribunals established by statutes such 10
as the Competition Commission, the • The fundamental principle of judicial
National Company Law Tribunal, and the review of tribunals and administrative
Consumer Disputes Redressal Commission. officials acting quasi-judicially, is that
review power is not akin to appellate
15 These tribunals and administrative officers power. Courts do not re-examine the 15
must act judicially in the discharge of their findings of fact reached on an appreciation
duties. They are bound by the same principles of evidence, and it has been said that
of natural justice, fair hearing, lack of bias, and tribunals have the power to decide rightly
reasonableness in action as other as well as wrongly.
20 administrative agencies, only with greater • However, a writ of certiorari can be issued 20
judicial scrutiny thereof. Their constituent to correct errors of jurisdiction committed
enactments may lay down certain procedural by inferior courts or tribunals; these are
guidelines, but apart from these they are also cases where orders are passed by inferior
bound to follow the principles of the Evidence courts or tribunals wrongly assuming
Act and the Civil Procedure Code and the jurisdiction where they have none, or
25 normal judicial canons of res judicata and stare acting in excess of jurisdiction conferred, or 25
decisis to ensure uniformity. as a result of failure to exercise jurisdiction.
Although tribunals enjoy the same status as Illustration: Where an industrial tribunal
that of a High Court and comprise a mix of entertained a dispute which was not
judicial and administrative persons, the industrial, it was held to act in excess of its
30 question arises whether tribunals are a jurisdiction. (Newspapers Ltd. v. State 30
substitute for High Courts. In S. P. Sampath Industrial Tribunal, AIR 1957 SC 532)
Kumar v. Union of India, (1987) 1 SCC 124, A.
323-A was assailed as violative of the basic • In order to determine whether a tribunal
structure of the Constitution on the ground has committed an error of jurisdiction, it is
35 that it took away judicial review by High essential for reviewing courts to determine 35
Courts under Aa.226 and 227. A division the scope of its jurisdiction. Jurisdiction
bench of the Supreme Court held that may be dependent on the existence of
tribunals were intended as a substitute for certain facts, which are called
High Courts, and therefore judicial review “jurisdictional facts”, or may be dependent
40 was not being denied. As this decision caused on the interpretation of a legal provision, 40
some disquiet, the question came up again an error in construing which is referred to
before a Constitution Bench of the Supreme as “error of law going to jurisdiction”.
Court in L. Chandra Kumar v. Union of India, • If a tribunal wrongly decides a
(1997) 3 SCC 261. It was held that the portion jurisdictional fact, then it would be
45 of A.323-A that excluded the jurisdiction of assuming a jurisdiction not vested in it and 45
High Courts under A.226 was its actions will be quashed in judicial
unconstitutional, and that writs and appeals review.
would lie against decisions of a tribunal to the
50 High Court concerned, from which appeal Illustration: Where a rent tribunal having 50
could further be preferred to the Supreme power to reduce rents of dwelling houses
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! All India Bar Examination: Preparatory Materials! 17
mistakenly makes a factual finding that a and errors of law within jurisdiction, and to
property is a dwelling house whereas it is make all errors of law by tribunals subject to
actually let for commercial purposes, its judicial review. This approach was first
orders will be void as it has wrongly adopted in Anisminic Ltd. v. Foreign
5 assumed jurisdiction by incorrectly deciding Compensation Commission, [1969] 2 AC 147, 5
a jurisdictional fact. R v. Hackney Rent which has now become firmly entrenched in
Tribunal Ex p. Keats, [1951] 2 KB 15) the U.K. (Boddington v. British Transport
Police, [1999] 2 AC 143; Pearlman v. Harrow
• If a tribunal commits an error of law which School Governors, [1979] QB 56) and has been
10 goes to its jurisdiction, courts will judicially cited by our Supreme Court as well (Mukand 10
review and quash the action. Ltd. v. Mukand Staff & Officers Association,
AIR 2004 SC 3905).
Illustration: Where a rent tribunal had power
to reduce rent in cases where premium had • With regard to non-jurisdictional facts, in
15 been paid, but payments made to a landlord general, incorrect findings by tribunals will 15
were on account of work done by her, which not be interfered with as they have the
in the eyes of law were not premium, then liberty to decide rightly and wrongly.
the treatment of such amounts as premium However, if the error of fact is wholly
for purpose of rent reduction was an error of perverse, or if the tribunal had erroneously
20 law going to jurisdiction, and the order was refused to admit admissible and material 20
quashed. (R v. Fulham Rent Tribunal Ex p. evidence, or had erroneously admitted
Phillipe, [1950] 2 All ER 211) inadmissible evidence which has
influenced the impugned finding (Syed
• A tribunal may also commit errors of law Yakoob v. K. S. Radhakrishnan, AIR 1964 SC
that are “within its jurisdiction”, that is, 477), or if its finding is based on no
25 which do not vitiate jurisdiction. The evidence (Gopala Genu Wagaley v. 25
traditional approach to such errors of law Nageshwardeo, (1978) 2 SCC 47), then such
within jurisdiction was that they were errors of non-jurisdictional fact will be
judicially reviewable only if they were corrected in judicial review. It must be
“apparent on the face of the record”. This borne in mind that the adequacy or
phrase is hard to define, but it may be said sufficiency of evidence led on a point and
30 to include such errors as are self-evident the inference of fact to be drawn from the 30
and demonstrable from the record before said finding are within the exclusive
the court, which do not require detailed jurisdiction of the tribunal, and these
examination to unearth and which cause cannot be agitated before a court.
prejudice to the affected party.
35 Judicial Control of Administrative 35
Illustration: When the transport authority Discretion
rejected an application for issuance of a stage
permit on the ground that the applicant Administrative action is inevitably
company had a branch office at another discretionary to some extent, but discretionary
40 place, but having a branch office at another power has the potential of being abused. 40
place was not made a disabling condition by There are two grounds on which discretionary
the statute, the decision was vitiated by an power may be invalidated: (i) abuse of
error apparent on the face of the record and discretionary power, and (ii) failure to exercise
quashed. (K. M. Shanmugam v. SVS (P.) Ltd., discretionary power.
45 AIR 1963 SC 1626) 45
Abuse of Discretionary Power
The modern trend, however, firmly
established in the U.K. and gaining currency The classical statement of the grounds of
50 in India, is to eliminate the distinction judicial review of abuse of discretion was 50
between errors of law going to jurisdiction made in Council of Civil Service Unions v.
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Minister for Civil Service, [1985] AC 374 (also in reviewing administrative action. Some
called the G. C. H. Q. case), which has been illustrations of abuse of discretion are as
adopted by our Supreme Court in a number of follows:
cases (Tata Cellular v. Union of India, (1994) 6
5 SCC 651; Siemens Public Communication v. Mala Fides 5
Union of India, AIR 2009 SC 1204):
An authority acts mala fide when it is
• Illegality: The decision-maker should motivated by bias, malice, or bad faith. As
correctly understand the scope of her there is normally a presumption of good faith
10 power given by law, and must not exceed in governmental actions, the onus of 10
those limits; establishing mala fides is on the person who
• Irrationality: or ‘Wednesbury asserts it.
unreasonableness’, which will be discussed
subsequently; and Illustration: A chargesheet served on a
15 • Procedural Irregularity: Failure to act with government servant was found to be vitiated 15
procedural fairness or against natural by bias, malice, and mala fide, and was struck
justice. down. (State of Punjab v. K. K. Khanna, AIR
2001 SC 343)
The first and third grounds above are
20 governed by the same principles that have Colourable Exercise Of Power 20
already been discussed under the heads of
excessive delegation and substantive ultra Exercise of discretion for a purpose not
vires, and procedural ultra vires respectively. authorised by law is colourable exercise of
The second ground, that is, irrationality or power. This form of abuse of discretion
unreasonableness, is discussed hereinafter. overlaps with mala fide and improper use of
25 power. 25
Irrationality or ‘Wednesbury’ Unreasonableness
Illustration: (i) If the power of detention is
The standard of unreasonableness as a ground used as a substitute for criminal prosecution,
for judicial review is one of the most this is colourable exercise of power (Lal Kamal
important substantive rules of Administrative Das v. State of West Bengal, AIR 1975 SC 753);
30 Law. It gained currency in the case of and (ii) Where a statute authorises land 30
Associated Provincial Picture Houses Ltd. v. acquisition for ‘public purpose’, but the
Wednesbury Corporation, [1948] 1 KB 223, 229, authority exercises power motivated by
and was stated as ground (ii) for judicial ‘private purpose’, such exercise of discretion
review in the G. C. H. Q. case cited above, is for a purpose not authorised by law (R. K.
35 albeit using the term ‘irrationality’, which is Agarwalla v. State of West Bengal, AIR 1965 SC 35
synonymous with unreasonableness. Today, 995).
‘Wednesbury unreasonableness’ has become
accepted legal shorthand which includes in its Relevant and Irrelevant Considerations
scope a number of specific types of abuses of
40 discretion which are used interchangeably. Discretion must be exercised only on relevant 40
grounds, reasons and considerations. If all
Before examining some instances of abuse of relevant factors are not considered, or
discretion leading to a finding of irrelevant factors are considered, then the
unreasonableness, it is important to note that decision will be quashed in judicial review.
45 courts do not interfere with the merits of an Illustration: (i) Under the Industrial Disputes 45
administrative decision; they are only Act, the government has power to refuse to
concerned with examining the decision- refer an industrial dispute to the tribunal for
making process (Sterling Computers Ltd. v. M. N. adjudication. Where the government refused
50 Publications Ltd., (1993) 1 SCC 445). In practice, to refer a bonus-related dispute in order to 50
courts also adopt a policy of judicial restraint discipline workmen who had resorted to go-
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5 Administrative authorities illegally fetter their When a High Court considers a violation of 5
own discretion when they impose policies on fundamental rights, the subject of the writ
themselves to regulate their exercise of must be ‘State’ as understood for the purposes
discretion and seek to apply such policies of Part III of the Constitution. But while
rigidly to all cases, irrespective of the merits of considering an infraction of any other legal
10 individual cases. This principle does not right, the jurisdiction of the High Court is 10
preclude the government from issuing general more expansive and writs will lie against
policies to guide discretion, particularly when private bodies providing public utility service
it has to process multiple cases, but such a or other public function, or to private persons
policy should be reasonable, just, and non- or companies when they discharge some duty
15 arbitrary, and should provide flexibility to under a statute. 15
consider individual cases if required.
Illustration: When a college principal adopted High Courts are also bound by the normal
an inflexible rule to only consider those rules of writ jurisdiction, such as res judicata,
medical certificates submitted exhaustion of remedies, locus standi, laches,
20 contemporaneously with illness for the and question of fact. 20
purpose of exemption from attendance, it was
held that she had fettered her discretion. Writ and Appellate Jurisdiction of the Supreme
(Kumkum Khanna v. Mother Aquinas, Principal, Court
Jesus & Mary College, AIR 1976 Del 35)
The power of the Supreme Court under A.32
25 Remedies to protect fundamental rights through its writ 25
jurisdiction are plenary and not fettered by
Having discussed the rules of Administrative legal restraints. A.142 empowers the Supreme
Law, judicial remedies for redressal of breach Court to do complete justice in all cases, and it
of these rules are briefly outlined: can adopt any procedure to protect
fundamental rights.
30 Writ Jurisdiction of High Courts 30
The distinction from High Courts is that the
Under A.226 of the Constitution, every High Supreme Court’s jurisdiction is restricted to
Court has the power throughout the territories cases of violations of fundamental rights,
where it exercises jurisdiction, to issue to any which can only be filed against parties coming
35 person, administrative authority or within the expanded definition of State and its 35
Government, appropriate directions, orders or instrumentalities under A.12 of the
writs, including writs in the nature of Constitution, but within this jurisdiction, the
mandamus, certiorari, habeas corpus, quo power of the Supreme Court to hear matters
warranto, and prohibition, for the enforcement and mould relief is untrammelled.
40 of rights or for any other purpose. Apart from its extraordinary original writ 40
High Courts have expansive powers to correct jurisdiction, the Supreme Court has appellate
errors in administrative action, and unlike the jurisdiction under A.136, wherein special
Supreme Court, which can only be leave to appeal against decisions of the High
approached against violations of fundamental Courts can be sought.
45 rights, High Courts can be approached for 45
violations of all legal rights. (Bengal Immunity The salient features of typical prerogative
Co. v. State of Bihar, AIR 1955 SC 661) writs are as follows:
Writ jurisdiction, however, is discretionary
50 jurisdiction, and unlike an appellate court, a • Habeas Corpus: This writ is used to secure 50
writ court has discretion to refuse to grant the release of a person unlawfully detained
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x-x
30 30
35 35
40 40
45 45
50 50
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1RWHV
! All India Bar Examination: Preparatory Materials! 22
All India Bar Examination identity from the members who compose it.
Preparatory Materials
Illustration: S owned 99.9% shares of a
Subject 13: Company Law company X, and the remaining shares of the
5 company were owned by the family members 5
The Indian Companies Act, 1956, as amended of S. Upon liquidation, the creditors of the
(“the Act”), together with the rules and company claimed that S and X were the same
regulations framed thereunder, is the principal entity. The court held that, upon
legislation regulating matters relating to incorporation, X would have a separate
10 companies in India. identity distinct from S, who was the owner of 10
company X. Due to this, S would not be liable
Chapter 1: Introduction for debts incurred by X. (Salomon v. Salomon,
1897 AC 22)
Definition of a Company
15 In certain exceptional circumstances, however, 15
The word “company” has no strictly technical the courts ignore the separate identity of the
or legal meaning. (Stanley, Re, [1906] 1 Ch 131) company and impose liability on the members
or managers who are responsible for the
In general, “company” refers to a group of actions of the company. This is known as the
20 persons who have incorporated themselves doctrine of “lifting of the corporate veil”. 20
into a distinct legal entity for purposes of
achieving identified common targets. Certain instances where courts have applied
the doctrine of lifting of the corporate veil are:
The Act defines the term ‘company’ to mean a
company formed and registered under the • If there is a danger to public interest.
25 Act. (S.3(1)) 25
Illustration: A company, X, was incorporated
Features of a Company in England to sell tyres manufactured in
Germany by a German company. The shares
Upon incorporation, a company has an of X were held by the German company and
independent corporate existence. A company all the directors of X were German nationals,
30 is a ‘legal person’ and is capable of having its resident in Germany. During the First World 30
own assets and liabilities. A company has the War, X instituted a suit for recovery of trade
capacity to own property, to sue and be sued, debts from an English customer. The court
borrow money, have a bank account and enter held that though X was incorporated in
into contracts in its own name. England, it was controlled by residents of an
35 enemy nation. Allowing X to recover trade 35
A company has perpetual succession; that is, debts would amount to transferring money
even if the membership of a company changes to an enemy nation which would be against
from time to time, such changes will not affect the public policy. (Daimler Co. Ltd. v.
the company’s continuity. Continental Tyre & Rubber Co. Ltd., [1916] 2
40 AC 307) 40
Illustration: X, a company, has three
shareholders. Upon the death of one of the • To avoid tax evasion or circumvention of
shareholders named A, the shares held by A tax obligation.
were inherited by her son. The change in
45 shareholding structure will not have any Illustration: D, a wealthy person, held her 45
impact on the existence of company. investments through various companies for
purposes of avoiding tax liabilities. The
Lifting of the Corporate Veil companies had no business apart from
50 holding investments on D’s behalf. The 50
A company has a separate and distinct legal court disregarded the corporate identity of
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! All India Bar Examination: Preparatory Materials! 23
the companies and imposed a tax liability on deposits from any persons other than its
D. (Dinshaw Maneckjee Petit, Re., AIR 1927 members, directors, or their relatives.
Bom 371).
A private company must have a minimum of
5 • In case of fraud or improper conduct. two members. 5
The Act defines a public company to mean a
Illustration: L agreed to sell a certain land to J.
company which is not a private company. (S.3
Subsequently L changed her mind. To avoid
(1)(iv))
selling the land to J, L incorporated a
10 company and transferred the land to the 10
A public company must have a minimum of
company. In a suit for specific performance,
seven members. There is no limit to the
the court disregarded the corporate identity
maximum number of members that a public
of the company and ordered the company to
company may have. Moreover, a public
transfer the land to J. (Jones v. Lipman, (1962)
company is required to have a minimum
15 All ER 342) 15
paid-up capital of five lakh rupees or such
higher amount as may be prescribed;
• If the statute itself contemplates lifting of
furthermore, the term ‘public company’
the corporate veil.
includes a private company which is a
subsidiary of a company other than a private
20 Illustration: Provisions of the Foreign 20
company.
Exchange Regulation Act, 1973 (“the FERA”)
permitted non-resident Indians to hold up to
Limited and Unlimited Company
1% shares of Indian companies. S, a non-
resident Indian, incorporated 13 companies
A limited company may be of two kinds: (a)
and used the companies to purchase shares
company limited by shares; or (b) company
25 of an Indian company beyond the 25
limited by guarantee.
permissible limit of 1%. The court ignored
the corporate identity of the companies and
In companies limited by shares, the liability of
held the transactions to be in violation of the
the members of the company is restricted to
provisions of the FERA. (Life Insurance
the amount of share capital unpaid by the
Corporation v. Escorts Ltd., [1986] 1 SCC 264)
members. Members have no liability when
30 30
they hold fully paid-up shares. Note that most
Chapter 2: Kinds Of Companies
companies are incorporated as a company
limited by shares.
Private Company and Public Company
In companies limited by guarantee, the
35 S.3(1)(iii) of the Act defines a private company 35
liability of the members of the company is
to mean a company which has a minimum
limited to the fixed amount, as prescribed in
paid-up capital of one lakh rupees or such
the Memorandum of Association of the
higher amount as may be prescribed, and
company, which the members of the company
which, by its articles of association:
undertake to pay upon liquidation of the
40 40
company. The liability of the members to pay
• Restricts the right of members to transfer its
the guaranteed amount as specified in the
shares;
Memorandum of Association arises only
• Limits the number of its members to fifty. In
when the company goes into liquidation.
determining this number of fifty, employee-
45 members and ex-employee members are 45
In unlimited companies, the liability of its
not considered;
members in unlimited.
• Prohibits an invitation to the public to
subscribe to its shares or the debentures;
50 and 50
• Prohibits any invitation or acceptance of
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Government Company
If Company B is a subsidiary of Company A,
A government company is a company in and Company C is a subsidiary of Company
which at least 51 percent of the total paid-up B, then Company C and Company B are both
5 share capital is held by the Central subsidiaries of Company A. 5
Government, one or more State Government
(s) or jointly by the Central Government and Listed Company
one or more State Governments. (S.617)
A listed company is a public company whose
10 Illustration: The following are some examples shares or other securities (like debentures) are 10
of ‘government companies’: Bharat Heavy listed on a stock exchange in India and can be
Electricals Limited, Coal India Limited, Food freely traded through the stock exchange on
Corporation of India, National Aviation which they are listed.
Company of India Limited, Oil and Natural
15 Gas Corporation, and Steel Authority of India. Illustration: The following are examples of 15
listed companies: Reliance Industries Limited,
In the recent past, several government whose shares are listed on the Bombay Stock
companies have been in the news due to the Exchange Limited (“BSE”) and the National
efforts of the Central Government to reduce its Stock Exchange Limited (“NSE”), and the
20 shareholding in such companies (generally State Bank of India Limited, whose shares are 20
referred to as “disinvestment”). listed on the BSE and the NSE.
To obtain registration of a company, its • Registered Office: The second clause of the
10 founding members must file an application, MoA must specify the State in which the 10
along with the prescribed documents, with the registered office of the company will be
relevant RoC. Upon satisfaction of all situated.
conditions, the RoC issues a Certificate of
Incorporation to the Company. In the A company may change its registered office
15 Certificate of Incorporation, the RoC certifies within a State upon approval from its 15
that the company is incorporated and, in case shareholders. Shifting of the registered office
of a limited company, that the company is from one State to another requires approval
limited. (S.34(1)) from the shareholders of the company and
the Company Law Board. (S.17)
20 The Certificate of Incorporation is conclusive 20
evidence of the fact that all the requirements • Objects: In the third clause, the MoA must
of the Act have been complied with in respect state the objects for which the company is
of the company’s registration. (S.35) proposed to be established. The Objects
clause must be divided into three sub-
A private company can commence business clauses, namely: the main objects, the other
25 from the date of its incorporation. (S.149(7)) objects, and the States to which the objects 25
extend.
A public company can commence business
only upon receipt of a Certificate for A company can change its objects only in so
Commencement of Business from the RoC. (S. far as the change is necessary to (S.17(1)):
149(4))
30 • Carry on the business of the company in 30
Memorandum of Association (“MoA”): a more economically or efficient
manner;
The MoA of the company contains the
fundamental conditions upon which the Illustration: A company sought to amend
35 company is allowed to be incorporated. It sets its MoA to enable it to pay remuneration 35
forth the area of operation of the company. to its managers. The court allowed such an
amendment on the ground that it was
The Act prescribes that the MoA of the necessary for efficient management of the
Company must contain the following company. (Scientific Poultry Breeders
40 provisions: Association, Re, 1933 Ch 227) 40
• Name: The first clause of the MoA must • Attain the main purpose of the company
state the name of the company. The Act by new or improved means;
prescribes that the last word of the name of • Enlarge or change the local area of
45 a limited company must be “Limited” and operation of the company; 45
the last words of the name of a private • Carry some business which, under the
company must be “Private Limited”. existing circumstances, may be
combined with the company’s business;
50 Illustration: The name “XYZ Industries the new business must not be 50
Limited” suggests that it is a limited inconsistent with the existing business.
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• Liability: The fourth clause must state the Illustration: A and B are members of a
nature of liability that the members of the company named ABC Pvt. Ltd. A and B have
company will incur; for instance, whether disputes regarding (i) transfer of the shares of
or not the members of the company have ABC Pvt. Ltd.; and (ii) transfer of a
30 limited liability, and whether the liability is commercial land owned by A to a third party. 30
limited by contribution towards share The dispute regarding the transfer of shares
capital or guarantee. (S.13) will be governed by the provisions of the
• Capital: The last clause of the MoA must Articles. The dispute over transfer of land,
state the amount of nominal capital of the however, will not be governed by the Articles
35 company and the number and value of the since it does not concern the rights of A and B 35
shares into which the capital is divided. (S. with respect to the company ABC Pvt. Ltd.
13)
The Articles may be amended upon approval
The capital clause of the MoA may be of the shareholders of the Company. (S.31)
40 changed upon approval of the shareholders 40
of the company. Doctrine of Constructive Notice
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Illustration: The Articles of a company debentures only with the approval of the
stipulated that all deeds of the company must shareholders of the company by way of a
be signed by the managing director, the shareholders’ resolution. The directors of the
secretary and a working director of the company issued debentures to themselves
5 company. The plaintiff accepted a deed from without obtaining the sanction of the 5
the company that was signed only by the shareholders. The court held that the directors
secretary and a working director and was not could not claim remedy pursuant to the
signed by the managing director. The court doctrine of indoor management because as
held that the deed was invalid and the directors of the company, they had the
10 plaintiff had no remedy, because had the knowledge about restrictions on the 10
plaintiff consulted the Articles of the company, borrowing powers of the company. (Howard v.
the plaintiff would have detected the defect in Patent Manufacturing Co., (1888) 38 Ch D 156)
the deed. (Kotla Venkataswamy v. Rammurthy,
AIR 1934 Mad 597) Chapter 4: Share Capital
15 15
Doctrine of Indoor Management A company’s Capital must be divided into
shares of a fixed amount. The Act permits
The doctrine of indoor management is an issuance of two kinds of shares, namely
exception to the doctrine of constructive “equity shares” and “preference shares”.
20 notice. As per this doctrine, an outsider 20
dealing with a company is entitled to presume Every person holding share(s) in a company is
that the internal working of the company is in entitled to receive a Share Certificate from the
conformity with the provisions of the public company certifying the number of share(s)
documents of the company. (Royal British Bank held by such person in the company. A Share
v. Turquand, [1856] 119 ER 886) Certificate is issued under the common seal of
25 the company and is prima facie evidence of the 25
Illustration: The Articles of a company title of the member to such shares. (S.84)
provided that its directors may borrow funds
from time to time, subject to authorisation by In accordance with the provisions of the
the shareholders of the company. The directors [Indian] Depositories Act, 1996, as amended,
of the company borrowed funds from the companies have the option of issuing shares
30 plaintiff without obtaining proper sanction in “dematerialised form”. Dematerialisation 30
from the shareholders. The shareholders of the refers to the process under which Share
company challenged the borrowing Certificates of the shareholders are converted
transaction. The court held that since the into electronic form and credited to the
Articles authorised the directors to borrow shareholder’s account that is maintained with
35 funds, the plaintiff had the right to infer that a depository participant. Thus, no Share 35
the directors were acting within their Certificate is issued to the shareholder in case
authority and had approval of the of dematerialised shares. Such shares exist in
shareholders. The transaction was held to be the form of entries in the books of the relevant
binding on the company. (Royal British Bank v. depository.
40 Turquand, (1856) 119 ER 886) 40
Equity Shares
This doctrine does not provide protection in
certain cases, such as where the affected party Equity share capital is defined under the Act
had knowledge of irregularity, where the act as meaning all share capital which is not
45 of an officer of a company is clearly outside preference share capital. (S.85(2)) 45
the powers of such an officer, or in case of
forgery. Equity shares are also referred to as “ordinary
shares”. Companies also have the right to
50 Illustration: The Articles of a company issue different classes of equity shares with 50
stipulated that the company could issue differential rights as to dividend or voting,
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The Act prohibits issuance of irredeemable Shares of a company are movable property
preference shares or shares that are and are capable of being transferred in the
redeemable after expiry of a period of 20 years manner provided by the Articles of the
40 from the date of their issue. (S.80-A) company. (S.82) 40
The terms of issue of the preference shares In a private company, the Articles may impose
may stipulate when the preference shares will restrictions on the rights of the members of
be redeemable and whether they will be the company to transfer shares. A private
45 redeemable at the option of the shareholder or agreement between the shareholders of a 45
the company. Prior to redemption of the private company, that imposes restrictions on
preference shares, the following conditions the members’ right to transfer shares, is
must be satisfied: binding on the company only if the provisions
50 of the agreement are incorporated in the 50
• The preference shares to be redeemed must Articles. (V. B. Rangaraj v. V. B. Gopalakrishnan,
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it on the date due, or redeem its debentures director, then at least one-third of the board
on the date due, or pay dividends, and of directors must comprise of independent
such failure continues for more than one directors.
year.
5 The Listing Agreements specify the criterion 5
A private company must have a minimum of that must be satisfied for a person to be
two directors and a public company must deemed as an independent director.
have a minimum of three directors.
• Managing Director: A managing director is a
10 Term of Appointment whole-time director who is entrusted with 10
substantial powers of management of the
In private companies, the term of appointment company which would not otherwise be
of the directors may be fixed by the exercisable by her. (S.2(26))
shareholders at the time of appointment or it
15 may be specified in the Articles. Unless A managing director can be appointed only 15
specified otherwise in the Articles, directors of if the Articles of the company provide for
private companies are not liable to retire by such appointment. The powers and duties of
rotation. In public companies, only one-third a managing director may be enumerated in
of the total number of directors can be the Articles of the company, the board
20 appointed on permanent basis. The remaining resolution pursuant to which the managing 20
directors are liable to retire on rotational basis. director is appointed, or in the agreement
(S.255) executed by the company in relation to the
appointment of the managing director.
The shareholders of a company have the right
to remove a director from her office prior to Powers of Directors
25 expiration of her period of office. (S.284) 25
The Act authorises the board of directors to
Kinds of Directors exercise all such powers and to do all such
acts and things as the company is authorised
• Whole-time Director: Whole-time directors to exercise and do. (S.291)
are directors who are in whole-time
30 employment of the company. The directors have wide powers over the 30
• Independent Directors: Independent directors operation and management of the company,
are directors who, apart from receiving subject only to such restrictions as are
director’s remuneration, do not have any contained in the Act and the MoA or the
material pecuniary relationship or Articles of the company.
35 transaction with the company, its 35
management or its subsidiaries which may The Act prescribes that the following powers
affect their independence of judgment. can be exercised by the directors only by
means of a board resolution, approved at a
The Listing Agreements of the stock meeting of the board of directors:
40 exchanges in India mandate that every listed 40
company in India must have a certain • To make “calls” on shareholders in
minimum number of independent directors respect of money unpaid on their shares.
on its board of directors. (Clause 49 of the • To authorise buy-back of securities.
Listing Agreement) • To issue debentures.
45 • To borrow moneys otherwise than on 45
The Listing Agreement provides that if the debentures.
chairman of the board is an executive • To invest the funds of the company.
director, then at least half of the directors on • To make loans.
50 the board must be independent directors. If 50
the chairman of the board is a non-executive The Act imposes certain restrictions on the
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powers of the board of directors of a public has a fiduciary obligation towards the
company. company and is under a duty to act in the
best interest of the company. Duty of good
The board of directors of a public company faith implies that all the actions of the
5 cannot exercise the following powers unless directors must be for the benefit of the 5
specifically authorised by the shareholders of company and the shareholders of the
the company in a general meeting: company.
• Sell, lease or otherwise dispose of the If a director takes an action which is not
10 whole, or substantially the whole, of the beneficial for the company or its members, 10
undertaking of the company. the director can be held liable for breach of
• Remit, or give time for the re-payment of, her fiduciary duty towards the company.
any debt due by a director.
• Invest the amount of compensation Illustration: X, a director of a company, was
15 received by the company in respect of aware that the value of the assets of the 15
compulsory acquisition in securities other company was 650,000 Pounds. She,
than trust securities. however, allowed the assets of the company
• Borrow moneys, where the moneys to be to be sold for a consideration of 350,000
borrowed together with the moneys already Pounds. Thus, the assets of the company
20 borrowed by the company, will exceed the were sold at lesser value and the company 20
aggregate of the paid-up capital of the incurred a loss. X was held liable for breach
company and its free reserves. This of fiduciary duty towards the company.
excludes temporary loans obtained from (Aviling Barford Ltd. v. Perion Ltd., 1989 BCLC
the company's bankers in the ordinary 626 Ch D)
course of business.
25 • Contribute, to charitable and other funds, • Duty of Care, Diligence and Skill: A director 25
not directly relating to the business of the is under an obligation to perform her
company or the welfare of its employees, duties with reasonable care, skill and
any amount exceeding Rupees Fifty diligence. The courts have held that a
Thousand Only in one financial year. director is not expected to exhibit
extraordinary skill or diligence. The
30 Duties and Liabilities of Directors director, however, is expected to exhibit 30
such “skill as may reasonably be expected
The Act prescribes various statutory from a person of his knowledge and
obligations that must be performed by the experience”.
directors of a company. Such statutory
35 obligations include the duty to make statutory A director can be held liable for negligence if 35
filings within the time prescribed by the Act, she fails to discharge her duties with
duty to attend board meetings (S.283(1)(g)), reasonable diligence.
duty to convene shareholders meetings (Ss.
165, 166 and 169), duty to approve the annual Illustration: The directors of a company
40 financial statement of the company (S.215), released funds of the company to pay the 40
and the duty to appoint auditors of the company’s debts without ascertaining
company (S.233B). The Act imposes liability whether or not the company was under any
on the directors in case they fail to comply obligation to pay any debts. The directors
with their obligations stipulated under the were held liable for negligence. (Selanjor
45 Act. United Rubber Estates Ltd. v. Cradock, (1968) 2 45
All ER 1073)
Apart from the statutory obligations, the
duties of directors include: • Duty to disclose interest: A director is under
50 an obligation to ensure that she does not 50
• Duty of Good Faith: A director of a company place she in a situation where her personal
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! All India Bar Examination: Preparatory Materials! 32
interests may conflict with her duties entered into certain transactions on behalf of
towards the company. the company despite having the knowledge
that such transactions were not authorised by
A director who is interested in any matter the Articles of the Company. Upon being
5 that is being discussed by the board of challenged by the shareholders, the court 5
directors, must disclose her interest to the directed the directors to restore the funds of
other directors on the board. The interested the company. (Jehangir R. Modi v. Shamji Ladha,
director must not take part in any discussion [1866-67] 4 Bom HCR 185)
pertaining to such matters and must refrain
10 from voting on the same. (Ss.299 and 300) A director may also be held criminally liable 10
for offences committed by the company, if it
Illustration: X was a director in Company A. can be proved that the directors actively aided
X was also the chairman of Company B. The in commission of the offence.
board of directors of Company A considered
15 and approved a resolution for purchasing Illustration: The directors of Company X 15
office furniture for Company A. During the issued cheques for payments to the customers
board meeting, X did not disclose that she of the company despite having the knowledge
was the chairman of Company B and thus, that the company did not have funds in its
had substantial interest in the purchase bank accounts. In a case for dishonour of
20 contract being awarded to Company B. cheques, the directors shall be liable and may 20
Upon being challenged, the court set aside be prosecuted under the relevant provisions
the purchase contract and held that X had of the Negotiable Instruments Act, 1881.
breached her duty to disclose her interest in
the matter. (Aberdeen Railway Ltd. v. Blaikie, Chapter 6: Management of a Company
(1854) 1 Mcy 461)
25 Meeting of the Board of Directors of the Company 25
S.201 of the Act provides that any provision in
the Articles of a company that seeks to exclude A meeting of the board of directors of the
the liability of the directors for negligence, company must be held at least once in every
default, misfeasance, breach of duty or breach three months and at least four such meetings
of trust, is void. must be held in each year. The Articles govern
30 the manner in which a board meeting must be 30
At the same time, S.633 of the Act provides called and conducted.
statutory protection to the directors against
liability of actions taken in good faith. The Act authorises companies to hold board
meetings at any location as the directors may
35 Illustration: The managing director of a deem fit, including outside India. The Act 35
company failed to file the cost audit report of provides that the physical presence of at least
the company within the prescribed time. The two directors or one-third of the total strength
delay of 24 days was, however, attributable to of the board, whichever is higher, is
labour problems within the company. The compulsory to constitute a quorum for a
40 managing director was not held liable for the Board meeting. (S.287) 40
delay in filing the report. (G. Ramesh v.
Registrar of Companies, (2007) 112 Comp Cases The Act does not authorise conducting of
450 (Mad)) board meeting by way of teleconferencing or
video conferencing.
45 The directors can be held personally liable for 45
their actions that are ultra vires; that is, beyond Unless the Articles specify otherwise,
the scope of the Act or the Articles and MoA of decisions at board meetings are taken by a
the company. majority vote.
50 50
Illustration: The directors of Company X The Act specifies that minutes of all meetings
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! All India Bar Examination: Preparatory Materials! 33
of the board of directors must be duly meeting will be held, the businesses that
recorded in the books of the company. are proposed to be transacted at the
meeting and a statement setting forth all
Shareholders’ Meeting material facts regarding, and the rationale
5 for, each of the businesses proposed to be 5
Shareholders’ meetings are also referred to as transacted at the meeting.
“general meetings”. • The Act specifies that in case of a public
company, at least five members, and in the
Every company is under an obligation to hold case of a private company, at least two
10 at least one meeting of its shareholders every members of the company, must be 10
year, in which meeting the annual financial physically present to constitute a valid
statement of the company is placed before the quorum.
shareholders. This meeting is known as the
“annual general meeting” or “AGM”. The Act Illustration: In a shareholders’ meeting, only
15 prescribes that the gap between two AGMs one member was physically present. The 15
must not exceed fifteen months. The AGM member, however, held valid proxies for
must be held during business hours on a day other members of the company. The court
which is not a public holiday, and at the held that a valid quorum was not present for
registered office of the company or at a place the shareholders’ meeting. (Sharp v. Dawes,
20 within the city where the registered office of 36 LT 188) 20
the company is located.
Voting at a Shareholders’ Meeting
All shareholder meetings, other than an AGM,
are known as “extra-ordinary general Shareholders are entitled to discuss each
meetings” or “EGMs”. An EGM may be called proposed resolution and suggest amendments
25 at any time as the board of directors may to it, prior to it being put to vote. 25
deem fit.
Every equity shareholder is entitled to vote on
Requisites of a Valid Shareholders’ Meeting all shareholder resolutions. To begin with,
voting on resolutions takes place by show of
• A shareholders’ meeting must be called by hands. Upon show of hands, each member
30 proper authority. has one vote. 30
Illustration: The Articles of Company A If the shareholders are not satisfied by the
provide that every shareholders’ meeting results of the voting by show of hands, then a
must be called by way of a board resolution. requisite number of shareholders may
35 If valid quorum was not present at the board demand a “poll”; the number of votes cast for 35
meeting at which the resolution to call the and against a resolution must be recorded. In
shareholders meeting was approved, then case of a poll, the voting right of shareholders
the shareholders meeting would be deemed is proportionate to the respective paid-up
to be improperly convened. shares held by them.
40 40
• Due notice of the proposed shareholders’ A member may vote either in person or
meeting must be given to all the members through a proxy. (S.176)
of the company. The Act stipulates that the
notice must be in writing and, unless Ordinary and Special Resolutions
45 specifically waived by the shareholders by 45
way of a resolution or a provision in the A resolution is said to be an ordinary
Articles, must be given at least 21 day’s resolution when the total number of votes cast
prior to the date of meeting. in favour of the resolution, is more than the
50 • The notice must clearly specify the number of votes cast against the resolution. 50
following: the time and place where the
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The scheme must then be approved by a informed the depositors that the companies
majority representing three-fourths in value of were running at a loss. A scheme of
the creditors or members, as the case may be, arrangement was drawn up which envisaged
of the company and, thereupon, sanctioned by payment to depositors at lesser interest. The
5 the court. (S.391(2)) Such an order of the court depositors approved the scheme. The court, 5
sanctioning the scheme is binding on all the however, held that the approval of the
creditors or class of creditors, all the members depositors was obtained by giving inadequate
or class or members, as the case may be, and information. The court further held that the
also on the company, or, in the case of a scheme was unreasonable, and was intended
10 company which is being wound up, on the to defraud the depositors. Consequently, the 10
liquidator and contributories of the company. court did not sanction the scheme. (Premier
(S.391(2)) Motors (P.) Ltd. v. Ashok Tandon, (1971) 41
Comp Cases 656 All)
A scheme sanctioned by the court does not
15 operate as a mere agreement between the Reconstruction refers to a process where a 15
parties; it becomes binding on the company, company’s business and undertaking are
the creditors and the shareholders, and has transferred to another company, formed for
statutory force. It cannot be altered except that purpose, such that the new company
with the sanction of the court, even if the carries substantially the same business as the
20 shareholders and creditors acquiesce in such old company, and the same persons are 20
alteration. (J. K. (Bombay) Pvt. Ltd. v. New interested in it as in the case of the old
Kaiser-I-Hind Spinning and Weaving Co. Ltd., company.
1970 (40) Comp. Cas 689)
A company may decide to undergo
The Act gives wide discretionary powers to reconstruction for various reasons, such as, to
25 the court in sanctioning of a scheme of extend its operations, reorganise the rights of 25
compromise or arrangement, including the its members or creditors, amalgamation with
power to convene meetings of members or one or more companies.
creditors, to examine the reasonableness of the
scheme, to request for further information or Amalgamation refers to the process where
documents, and to enforce the scheme. two or more companies are joined to form a
30 third entity, or one is absorbed into or blended 30
As a summary, S.391 provides the method with another company. (Somayajula v. Hope
which has to be followed to put a scheme Prudhomme & Co. Ltd., [1963] 2 Comp LJ 61)
between a company and its creditors or any
class of creditors, or its members or any class Upon completion of the amalgamation, the
35 of members, or, in the case of a company being assets and liabilities of the amalgamating 35
wound up, its liquidator, into effect. The company are transferred to and vested in the
courts have wide discretion in deciding amalgamated company in accordance with
whether or not to allow a scheme under S.391, the terms of the scheme.
since this is necessary to protect the minority’s
40 interests and to ensure that the scheme is Illustration: Company A owed Company X 40
otherwise fair and legal, and that it is not Rupees Ten lakhs. Company X amalgamated
motivated by some illegitimate or unfair into Company Y. Upon amalgamation,
reasons. Once the court sanctions the scheme, Company X ceased to exist, and all the rights
and the order of the court is filed with the and liabilities of Company X were transferred
45 Registrar of Companies, the scheme is given to Company Y. Pursuant to the amalgamation, 45
effect from the date it was arrived at. Company Y will have the right to recover
Rupees Ten lakhs from Company A.
Illustration: Two companies took deposits from
50 the public at an interest rate of 12%. When the Wide powers are given to the courts under S. 50
deposits began to mature the companies 394 to facilitate the reconstruction and
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amalgamation of companies. This Section acts “Unpaid Dividend Account” of the company.
as the ‘Single-Window Clearance’ for merger
and amalgamation activities, rather than have If the dividend amount remains unclaimed for
parties making a number of different seven years, it is transferred to the Investor
5 applications before the courts for the purposes Education and Protection Fund established by 5
of each different activity. S.394 relieves the the Central Government. Amounts accrued in
burden upon the parties to a scheme of having this Fund are utilised by the Government to
to make a number of different applications promote investor awareness, and to protect
before the court. The court may, however, the interests of investors.
10 enquire into the various circumstances 10
surrounding the scheme, to ensure that Illustration: Funds from the Investor Education
nothing that is being done through the scheme and Protection Fund are being utilised to
is against public interest. support a case filed on behalf of the public
shareholders of Satyam Computer Services
15 Chapter 8: Dividends, Accounts and Audit Ltd., who are seeking damages for loss 15
incurred, due to the financial fraud committed
Dividends by the promoters of Satyam Computer
Services Ltd.
Dividend refers to that portion of the
20 corporate profit that is set aside by the Accounts and Audit 20
company, and declared as liable to be
distributed amongst the shareholders of the Every company is under an obligation to keep
company. (Bacha F. Guzdar v. Commissioner of proper books of account at its registered
Income Taxes, AIR 1955 SC 74) office. (S.209)
25 Dividends can be paid only out of the profits The books of account of the company must 25
of the company. The Act provides that explain the transactions and the financial
dividends may be paid out of the following position of the company, in a true and fair
sources: manner.
• Profits of the company, for the year for The auditors of a company have an obligation
30 which dividends are to be paid; to examine the books and accounts of the 30
• Undistributed profits of the company, of the company and issue a report stating whether
previous financial years; and or not the accounts have been kept in
• Money provided by the Central or State accordance with the provisions of the Act and
Government for payment of dividends, whether or not they give a true picture of the
35 pursuant to a guarantee. affairs of the company. 35
long as they are acting within the powers to company’s statutory records, is
conferred on them under the Articles”. (Foss v. infringed.
Harbottle, (1843) 67 ER 189)
The Act provides for special provisions to
5 Illustration: Company A made a profit in a safeguard the interests of minority 5
year. The directors of the company, however, shareholders and prevent mismanagement of
decided to invest the profits for the benefit of a company.
the company, instead of paying dividends to
the shareholders. The minority shareholders Prevention of Oppression
10 challenged this action. The court refused to 10
intervene in the matter. (Burland v. Earle, (1902) If the affairs of the company are being
AC 83) conducted in a manner prejudicial to the
public interest or in a manner oppressive to
There are the certain exceptions to the rule of any member(s), then the minority
15 majority supremacy, and shareholders can shareholders may seek appropriate remedy 15
bring a suit against the company and its from the court. (S.397)
officers in the following circumstances:
Illustration: The life insurance business of
• When the acts of the officers are ultra vires Company A was acquired by Company B on
20 the Act, the Articles, or the MoA. payment of compensation. The majority 20
shareholders of Company A refused to
Illustration: The directors of Company A distribute the compensation to all the
invested the funds of the company in a shareholders and passed a new shareholders
manner that was contrary to the provisions resolution approving investment of the
of the MoA. A, a shareholder, brought a suit compensation funds into new business of
25 against the directors, challenging their Company A. Upon being challenged, the 25
actions. The suit was decreed in the favour of court held the actions of the majority
the plaintiff. (Bharat Insurance Co. Ltd. v. shareholders of Company A to be
Kanhaiya Lal, AIR 1935 Lah 792) “oppression”. (Mohan Lal Chandumall v. Punjab
Co. Ltd., AIR 1961 Punj 485)
• When the majority shareholders act in a
30 fraudulent manner. Minor acts of mismanagement are not 30
regarded as “oppression”.
Illustration: The majority of the members of
Company A were substantial shareholders in Illustration: The minority shareholders of
Company B. In a general meeting of Company A filed a case against the directors
35 Company A, the majority shareholders and majority shareholders of the company on 35
approved a resolution authorising the ground that petrol consumption was not
compromise of an action against Company being checked properly. The court held that
B. The resolution approved by the majority this could not be a ground for “oppression”.
shareholders was prejudicial to Company A, (Lalita Rajya Lakshmi v. Indian Motors Co., AIR
40 and favourable to Company B. Upon being 1962 Cal 127) 40
challenged by the minority shareholders of
Company A, the court set aside the actions of Prevention of Mismanagement
majority shareholders. (Menier v. Hooper’s
Telegraph Works Ltd., (1874) 9 Ch App 350) S.398 of the Act provides relief in cases of
45 “mismanagement” of the company. In an 45
• When an act that requires a special action for “mismanagement”, the petitioner
resolution as per the Articles is done on the must establish that the affairs of the company
basis of a mere ordinary resolution. are being conducted in a manner prejudicial
50 • When the rights of a shareholder, such as to the interests of the company, or to public 50
the right to vote, or the right to have access interest.
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! All India Bar Examination: Preparatory Materials! 38
A company, being an artificial person, cannot • There is a deadlock amidst the members of
die. A company can, however, be dissolved the management of the company.
35 and struck off the Register of Companies. The 35
proceeding by which a company is dissolved Illustration: A company had two directors
is known as “winding up”. and shareholders with equal management
and voting rights. The two directors became
A company may be wound up in any of the hostile to each other and disagreed on all the
40 following manners: decisions pertaining to the company. The 40
court held that there was a complete
Compulsory Winding Up by the Court deadlock in the management and the
company must be wound-up. (Yenidje
A process where a company is wound up, Tobacco Co. Ltd., Re, (1916) 2 Ch 426)
45 upon an order of the court, is known as 45
‘compulsory winding up’. An application for • When the object for which a company was
compulsory winding up of a company may be incorporated, has failed.
brought by the company, its creditors, its
50 members, the RoC, Central Government or the Illustration: A company was incorporated for 50
State Government on any of the following purposes of manufacturing coffee from
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! All India Bar Examination: Preparatory Materials! 39
• When it has been proved that carrying on If the Articles of a company prescribe a
10 the business of the company will lead to duration for operation of the company, or if 10
further losses. the Articles provide that the company shall be
• When the company was formed to carry a dissolved upon occurrence of an event, then
fraudulent activity. upon satisfaction of such a condition, only an
ordinary shareholders’ resolution will be
15 Illustration: Company X was engaged in the required for commencing the winding up 15
business of purchasing and developing land proceedings. In all other cases a special
and selling the same as plots. Upon resolution of the shareholders is required to
investigation, it was discovered that the commence voluntary winding up.
company was involved in fraudulent
20 transactions and was selling plots over The primary difference between voluntary 20
which it did not have valid title. The court and compulsory winding up is that almost the
ordered winding up of Company X on the entire process in the case of voluntary
ground that since it was involved in large- winding up does not require court
scale public deception, it had no right to supervision. Only the relevant documents are
exist. required to be filed with the court to obtain an
25 order of dissolution when the winding up is 25
• When “oppression” or “mismanagement” complete.
has been established.
• When it is important to do so, in public Illustration: The Articles of Company A
interest. provide that the company shall be dissolved
upon termination of the shareholders’
30 Illustration: Company X was engaged in the agreement between the shareholders of the 30
business of purchasing and developing land, company. Upon termination of the
and selling the purchased land as plots. shareholders’ agreement, voluntary winding
Upon investigation, it was discovered that up proceedings may be initiated by the
the company was involved in fraudulent shareholders following an ordinary resolution
35 transactions, and was selling plots of land in this regard. 35
over which it did not have valid title. The
court ordered winding up of Company X on Voluntary winding up is of two kinds:
the ground that since it was involved in members’ winding up, and creditors’ winding
large-scale public deception, it had no right up.
40 to exist. 40
If, at the time of commencing winding up
In case of compulsory winding up, the court proceedings, the board of directors of the
appoints an official liquidator for carrying the company gives a declaration certifying that
winding up proceedings. The official the company shall be able to pay its debts
45 liquidator is an officer of the court and is within a specified time, then such a winding 45
entrusted with the responsibility of realising up proceeding is known as ‘members’
money from the properties of the company winding up’. If the board of directors is
and discharging the liability of the company unable to give such a declaration, then the
50 towards such stakeholders as workmen, proceedings are known as ‘creditors’ winding 50
creditors, and the Government. up’.
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! All India Bar Examination: Preparatory Materials! 40
Payment of Liabilities
x-x
20 20
25 25
30 30
35 35
40 40
45 45
50 50
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1RWHV
! All India Bar Examination: Preparatory Materials! 41
All India Bar Examination The right to life includes the right to
Preparatory Material livelihood. This right has been used to check
governmental actions with an environmental
Subject 14: Environmental Law impact that threaten to dislocate poor people
5 and disrupt their lifestyle. 5
Chapter I: Constitutional Provisions and the
Environment Illustration: Certain tribal forest dwellers were
ousted from their forestland by a government
Directive Principles of State Policy and agency in order to implement a power project.
10 Fundamental Duties The court permitted the acquisition of the 10
land only after that agency agreed to provide
Courts in India have developed the concept of certain court-approved facilities to the ousted
environmental rights, to ensure that the forest dwellers. (Banawasi Seva Ashram v. State
Directive Principles of State Policy, and the of Uttar Pradesh, AIR 1987 SC 374)
15 fundamental right to life, as enshrined in the 15
Constitution of India (“the Constitution”), are The Constitution provides protection against
enforced. A.21 confers the right to life as a arbitrary permissions, granted by the
fundamental right; this has been interpreted Government, that do not provide an adequate
by the Supreme Court to include the right to a consideration of environmental impact. (A.14
20 wholesome environment. of what law-Article 14 of the Constitution is 20
with regard to Equality before the law)
Enjoyment of life, including the right to live
with human dignity, encompasses within its The Constitution (Forty Second Amendment)
ambit the protection and preservation of the Act, 1976, added A.48A to the Directive
environment, ecological balance free from Principles of State Policy and A.51A(g) to the
25 pollution of air and water, and sanitation, fundamental duties for protection and 25
without which life cannot be enjoyed. improvement of the environment:
(Virender Gaur v. State of Haryana, 1995 (2) SCC
577) • A.48A declares; “The State shall endeavour
to protect and improve the environment
Illustration: Certain companies obtained and to safeguard the forests and wildlife of
30 mining leases for the excavation of limestone. the country”. 30
The operation of these mines and • A.51A(g) imposes a responsibility on every
uncontrolled quarrying were causing danger citizen to protect and improve the natural
to the adjoining lands, water resources, environment including forests, lakes, rivers
forests, wildlife, ecology, environment, and and wildlife, and to have compassion for
35 inhabitants of the area. The lessees of the living creatures. 35
limestone quarries were directed to close
down operations permanently, after the Illustration: X, an individual, ran a factory
consideration of the review committee. The which discharged effluent water on roads
court held that the lessees had invested large and/or into the public drainage system. The
40 sums of money and expended time and effort, municipal commission sent a notice to remind 40
but that heed had to be paid to protecting and X of her fundamental duty to protect the
safeguarding the right of the people to live in environment. X cannot assert her right to
a healthy environment, with minimal carry on business without any regard to her
disturbance of ecological balance and undue fundamental duty. Such restriction placed on
45 affectation of air, water, and environment. The fundamental rights under A.19(1)(g), to carry 45
directions to close operations were valid. on trade or business, are in the interest of the
(Rural Litigation and Entitlement Kendra v. State general public, and are constitutionally valid
of Uttar Pradesh, AIR 1988 SC 2187 (Dehradun and no citizen can claim an absolute right to
50 Quarrying case)) carry on business, without complying with 50
the restrictions placed in this way. (Abhilash
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Textile v. Rajkot Municipal Corporation, AIR prevent, and attack the causes of
1988 Guj 57) environmental pollution.
The 42nd Amendment also moved ‘forest’ and Illustration: The land in a particular area
5 ‘protection of wildlife and birds’ from the became unfit for cultivation and agriculture 5
State List to the Concurrent List. because of the operation of tanneries in that
area. A forum filed an action to stop tanneries
There is both, a constitutional indicator to the from discharging untreated effluents into
state and a constitutional duty of its citizens, agricultural fields. The Supreme Court of
10 not only to protect but also to improve the India strongly supported the application of 10
environment, and to preserve and safeguard the precautionary principle as a part of
forests, flora, and fauna, and rivers, lakes, and international customary law. The court held
other water resources in the country. that the Central Government, vested with
powers and authority to control pollution and
15 Fundamental norms, recognised by the protect the environment, had failed to exercise 15
Supreme Court to guide the development of these powers, and directed that the Central
environmental jurisprudence, include: Government ensure that all tanneries set up
common effluent treatment plants, or
• Environmental laws must be strictly individual pollution control devices, and that
20 enforced by the enforcement agencies. failure to do so would authorise the 20
(Indian Council for Enviro-Legal Action v. Superintendent of Police and the Collector /
Union of India, 1996 (5) SCC 281, 294, 301) District Magistrate / Deputy Commissioner in
• The polluter pays principle: a polluter bears each of the respective districts to close the
the remedial or cleanup cost as well as the plants down. No new industries were to be
amount payable to compensate the victims permitted within listed prohibited areas.
25 of pollution. Reversing the burden of proof, the court 25
directed that the proponents of the activity
Illustration: A, a private company, which demonstrate that such activity is
operated as a chemical company, was environmentally benign. (Vellore Citizens
releasing hazardous wastes into the soil, Welfare Forum v. Union of India, AIR 1996 SC
thereby polluting a nearby village. The 2715, 2721)
30 company was being run without licenses. On 30
a motion initiated by B against A, the court Government development agencies charged
found the activity to be hazardous or with decision making ought to give due
inherently dangerous, and ordered the person regard to ecological factors including: (a) the
carrying on such activity to make good the environmental policy of the Central and state
35 loss caused to any other person by the government; (b) the sustainable development 35
activity, irrespective of whether or not she and utilisation of natural resources; and (c) the
took reasonable care in carrying on the said obligation of the present generation to
activity. preserve natural resources and pass on to
future generations an environment as intact as
40 Polluting industries are absolutely liable to the one we have inherited from the previous 40
compensate villagers in affected areas, for the generation. (State of Himachal Pradesh v. Ganesh
harm caused by these industries to soil and Wood Products, AIR 1996 SC 149, 159, 163)
underground water and hence, are bound to
take all necessary measures to remove sludge Implementation of India’s International
45 and other pollutants lying in affected areas. Obligations in Domestic Law 45
(Indian Council for Enviro-Legal Action v. Union
of India, AIR 1996 SC 1446) A.253 of the Constitution empowers
Parliament to make laws implementing
50 • The Precautionary Principle: This requires India’s international obligations, as well as 50
government authorities to anticipate, any decision made at an international
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conference, association, or other body. result of which, dirty water from houses and
rainwater was accumalating in its lanes.
Entry 13 of the Union List covers participation Growth of moss and insects in the area
in international conferences, associations, and increased the possibility of an epidemic. Y, a
5 other bodies, and implementing decisions local resident, filed a writ of mandamus to 5
made thereat. A.253 read with Entry 13 would enforce the municipal corporation’s function
thus empower Parliament to enact laws on of constructing sewers and drains for
virtually any entry contained in the State List. discharge of water. The writ petition was
allowed and the municipal corporation was
10 Parliament, under A.253 read with Entry 13, directed to remove the water and filth 10
has enacted the Air (Prevention, Control, and collected in the locality by constructing sewers
Abatement of Pollution) Act, 1981, and the and drains, within three months. (Rampal v.
Environmental (Protection) Act, 1986. The State of Rajasthan, AIR 1981 Raj 121)
preamble to each of these provides that these
15 Acts were passed to implement the decisions Illustration: A writ of certiorari will lie against a 15
reached at the United Nations Conference on municipal authority that permits construction
the Human Environment held at Stockholm in contrary to development rules, or acts in
1972. excess of jurisdiction or in violation of rules of
natural justice, for instance, wrongly
20 Illustration: State laws proved inadequate to sanctioning an office building in an area 20
protect coastal ecology. The Central reserved for a garden.
Government used the power vested in it by A.
253 read with Entry 13, List I, to impose When a fundamental right, which includes the
stringent national coastal development right to a wholesome environment, is
norms. The norm restricted the nature of violated, Aa.32 and 226 provide an
25 development on 3000 sq.km. of land along the appropriate remedy. A.21, which guarantees 25
entire Indian coast. The affected states the fundamental right to life, includes the
questioned such assumption of power by the right to a wholesome environment. A litigant’s
Centre, since the subject was part of delegated right to a healthful environment may be
legislation. The Centre’s norms were upheld enforced by a writ petition to the Supreme
and the ruling further recognised that the Court or to a high court.
30 coastal regulations would have overriding 30
effect, and would prevail over the law made Illustration: A, an individual, was troubled by
by the legislatures of states. (S. Jagannath v. the excessive noise pollution and vibrations
Union of India, AIR 1997 SC 811, 846, (Shrimp caused by electrical motors, diesel engines,
culture case)) and generators used by a hotel, B. The high
35 court held that an affected person can 35
Constitutional Remedies maintain a writ petition, while rejecting B’s
plea that a civil suit would be a proper
Writ Jurisdiction remedy. Further, it issued several directions to
abate nuisance, with directions to the
40 Aa.32 and 226 of the Constitution empower authorities to periodically inspect B. (E. 40
the Supreme Court as well as the high courts Sampath Kumar v. Government of Tamil Nadu,
to issue writs, directions, or orders. Any 1998 AIHC 4498)
person complaining of an infringement of
fundamental rights may seek redress in either Courts have decided cases, including M. C.
45 forum. Writs of mandamus, certiorari, and Mehta v. Union of India and Others, 1988 SCR 45
prohibition are generally resorted to in (2) 530 (the Ganga Pollution case), M. C. Mehta v.
environmental matters. Union of India, AIR 1987 SC 1086 (the Shriram
Gas Leak Case), and the Bhopal Gas Leak case,
50 Illustration: A certain locality lacked a proper under writ jurisdiction. 50
drainage system for discharge of water, as a
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of Goa, 1989 (1) Goa Law Times 276, 302) international conferences on environmental
protection resulted in Parliament enacting
Illustration: In pollution cases, the Supreme comprehensive laws on matters related to
Court frequently relies on the National forest, wildlife, environmental protection, and
5 Environment Engineering Research Institute, water, air, and land pollution. 5
Nagpur (“NEERI”), to submit its field report.
The Nilay Choudhary Committee was requested Environmental statutes are regarded as
to advise the court on whether Shriram’s ‘beneficial’ legislation, enacted to advance the
hazardous chemical plant should be allowed Directive Principles of State Policy, contained
10 to recommence operations in Delhi. in A.48A of the Constitution. 10
A monitoring committee was set up in the The Water (Prevention and Control of
Dehradun Quarrying case to oversee the Pollution) Act, 1974 (“the Water Act”)
running of three limestone mines that had
15 been allowed to continue operations, and to The enactment of the Water Act was India’s 15
monitor reforestation measures. first attempt at dealing with an environmental
issue. The Act prohibits the discharge of
Relief in most P.I.L. cases is obtained through pollutants into water bodies beyond a given
interim orders until a final decision is reached standard, and lays down penalties for non-
20 for redressing public grievances. compliance with its provisions. 20
The courts do not encourage all public The Water Act was amended in 1988 to
interest litigation. The Supreme Court in State conform with the provisions of the EPA, 1986.
of Uttaranchal v. Balwant Singh Chaufal, (Civil It set up the Central Pollution Control Board
Appeal No 1132 -1134 of 2002) in its judgment (“the C.P.C.B.”), which lays down standards
25 dated January 18, 2010, issued the following for the prevention and control of water 25
guidelines: pollution. At the state level, the State Pollution
Control Board (“the S.P.C.B.”) functions
• Courts must encourage genuine and bona under the direction of the C.P.C.B. and the
fide P.I.L. and effectively discourage and state government.
curb those filed for extraneous
30 considerations. The preamble to the Water Act lays down its 30
• Courts must, before entertaining a P.I.L., objectives, which include the prevention and
prima facie verify the credentials of a control of water pollution, the maintaining of
petitioner and the correctness of the wholesome water, and the establishment of
contents of the petition. Boards to carry out its objectives.
35 • Courts entertaining a P.I.L. must ensure 35
that the P.I.L. is aimed to redress genuine Illustration: A river supports an overwhelming
public harm or public injury, and that there majority of people in a town. Some industries,
is no personal gain, or private or oblique through the discharge of sewage in the river,
motive behind filing the P.I.L. were ruining the quality of water. The court
40 • Courts must also ensure that petitions filed prohibited the discharge of industrial effluents 40
by busybodies for extraneous and ulterior into the river, and directed the establishment
motives are discouraged by imposition of of monitoring stations on each of the drains
exemplary costs or by adopting similar leading to the river, and also directed the
novel methods to curb frivolous petitions administration to take effective measures
45 and petitions filed for extraneous against such industries. (News item, 45
considerations. ‘Hindustan Times,’ A. Q. F. M.; Yamuna v. C. P.
C. B., 1999 (5) SCALE 418, 419)
Chapter II: Environmental Laws in India
50 S.2(a) defines the Board to mean the Central 50
Spreading awareness and consciousness, and Board or the State Board.
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S.25 is an important section; it imposes industry under S.33A of the Water Act. Prior
restrictions on new outlets and new to the adoption of S.33A, a state board could
discharges. A person must obtain consent issue direct orders to polluters under S.32 of
from the state board before taking steps to the Act. A state board can exercise this power
5 establish any industry, operation, or process, if the pollution arose from any accident or 5
any treatment and disposal system, or any other unforeseen act or event.
extension or addition to such a system, which
might result in the discharge of sewage or Illustration: The S.P.C.B. issued directions to
trade effluent into a stream, well, or sewer, or Z, an industry, to ensure proper treatment and
10 onto land. storage of effluents in lagoons. Z did not 10
comply with some of the directions, and as a
Illustration: P, a company, was charged with result, some effluent reached the river
releasing untreated effluents into a nearby Yamuna and polluted the water. Despite
canal. The state board consented to the enough time given by the S.P.C.B., Z did not
15 operation on condition that P set up effluent take any remedial steps, and the S.P.C.B. 15
treatment plants within a prescribed time directed the closure of the industry under S.
limit. However, mere consent orders obtained 33A of the Water Act.
by P cannot insulate it against the
requirement of putting up the effluent The reluctance of courts to exercise broad
20 treatment plants and complying with the injunctive power under S.33 may be one 20
standards of tolerance limits prescribed. reason for granting state boards the authority
(Narula Dyeing and Printing Works v. Union of to issue directions under S.33.
India, AIR 1995 Guj 185, 191)
The state board can also apply to the courts
S.26 is with regard to existing discharge of for injunctions to prevent water pollution
25 sewage or trade effluents. under S.33 of the Act. 25
Contravention of S.25 or S.26 of the Water Act Under S.41, the penalty for failure to comply
shall be punishable with imprisonment for a with a court order under S.33, or a direction
term, which shall not be less than one and from the board under S.33A, is punishable by
half year, but which may extend to six years fines and imprisonment.
30 with a fine under S.44 of the Water Act. 30
Illustration: The S.P.C.B. directed closure of an
S.27 empowers the state board to decide on industry under S.33A. The industry refused to
whether or not to grant its consent to the obey its closure order. The state board
bringing into use of a new or altered outlet, directed the deputy commissioner to seize the
35 unless the outlet is so constructed as to unit and secure compliance. The 35
comply with any conditions imposed by the commissioner’s office moved the magistrate,
board to enable it to exercise its right to take who ordered closure. In revision, the high
samples of the effluent. court quashed the magistrate’s order holding
that the board had no power to get its closure
40 S.28 gives a remedy to any person aggrieved orders executed through the Deputy 40
by orders issued by the state board under Ss. Commissioner, but that it could initiate
25, 26, and 27. An appeal is provided against penalty proceedings under S.41. (Executive
the order under S.28, and S.58 bars the Apparel Processors v. Taluka Executive
jurisdiction of civil courts to entertain any suit Magistrate, ILR 1997 Kar 2020)
45 or proceeding against an order passed by the 45
appellate authority. Amendments in 1988 modified S.49 to allow
citizens to bring actions under the Water Act.
The Board can issue directions for closure of A complaint under the Act can be made by a
50 an industry and disconnection of electricity in board, or by any person authorised on its 50
case of persistent defiance by any polluting behalf, or by any person who has given a
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Courts are still involved in enforcing S.33A as Pollution of water of a spring is punishable
the boards have no direct power to exact under S.277 of the I.P.C., whereas, pollution of
fines, order imprisonment, or otherwise waters other than springs or reservoirs will be
10 compel compliance with their directions. covered by S.290. The offence of water 10
pollution also comes within the purview of
The use of water in a manner detrimental to mischief punishable under S.426 of the I.P.C..
others creates a cause of action, which is Mischief, as defined in S.425 of the I.P.C., is
challengeable in a court of law. Regulation causing destruction of any property or any
15 and control of water by the state creates rights change in the property, destroying or 15
and obligations between states inter se. Any diminishing its value or utility, or affecting it
violation of such rights gives rise to a variety injuriously.
of litigation – civil and criminal.
S.47 of the Water Act pins liability on persons
20 Civil and Criminal Liability responsible for a company and the conduct of 20
its business, where such company has
The Water Act establishes criminal penalties committed any offence under the Water Act.
of fines and imprisonment for noncompliance
with S.33 orders, S.20 directions concerning Illustration: A, a manager of a company, was
information, S.32 emergency orders, and S. prosecuted for violation of Ss.25 and 26 of the
25 33A directions issued by a state board. Water Act. The manager argued that the 25
complaint was defective and that she was not
The Supreme Court, in Uttar Pradesh Pollution responsible for operation of the plant. The
Control Board v. Mohan Meakins Ltd., 2000 (2) court observed that a person designated as
SCALE 532, held that those who discharge manager of a company is prima facie liable
noxious polluting effluents into streams, may under S.47 whether or not the person
30 be unconcerned about the enormity of the designated as ‘manager’ was in fact overall in 30
injury they inflict on public health at large, the charge of the affairs of the factory or whether
irreparable impairment they cause on the or not the manager had any knowledge of the
aquatic organisms, and the deleteriousness violations of the Water Act.
they impose on the life and health of animals,
35 but that courts must deal with the prosecution The Act extends liability to heads of 35
for offences in such cases, in a strict manner. government departments, unless the
departmental head can prove that the offence
The statutory remedies for violation of water was committed without her knowledge or
rights are found in the EPA, the Water Act, the that she exercised due diligence to prevent the
40 Indian Penal Code, 1860 (“the I.P.C.”), and the commission of the offence. 40
Criminal Procedure Code, 1973 (“the
Cr.P.C.”). The Air (Prevention and Control of
Pollution) Act, 1981 (“the Air Act”)
Injunctive relief can be obtained under S.133
45 of the Cr.P.C. against public nuisance caused To implement the decisions taken at the 45
due to water pollution, so long as it does not United Nations Conference on the Human
interfere with an order of a state pollution Environment held in 1972 (also known as “the
control board issued under the Water Act. Stockholm Conference”), and to counter the
50 (Nagarjuna Paper Mills Ltd. v. Sub-divisional problems associated with air pollution, 50
Magistrate, AIR 1980 SC 1622) Parliament enacted the Air Act under A.253 of
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the Constitution. The Act provides means for S.P.C.B. is vested with power to declare an
the control and abatement of air pollution, area as an ‘Air Pollution Control Area’, in
and establishes air quality standards. which provisions of the Air Act shall be
applicable. The board must notify such
5 Air Pollutants are defined under S.2(a) as any declaration in the Official Gazette. 5
solid, liquid, or gaseous substance (including Currently the whole state of Uttar Pradesh
noise) present in the atmosphere in such has been declared an ‘Air Pollution Control
concentrations as may be or tend to be Area.’
injurious to human beings or other living
10 creatures or plants or to the environment. Illustration: A company cannot be prosecuted 10
under the Air Act if the state board fails to
S.2(b) defines air pollution as the presence in produce before the court the Official Gazette
the atmosphere of any air pollutants. declaring the concerned area an ‘Air Pollution
Control Area’ and is unable to produce the
15 The Air Act follows the basic structure of the newspaper notifying the declaration. 15
Water Act with a Central Board and state (Dahyabhai Solanki v. N. J. Industries, 1996 (1)
boards monitoring activities and enforcing the GLH 466)
Act. Central and state boards are constituted
under Ss.3 and 4 of the Act. They were • Every industrial operator, within a
20 deemed Central and state boards for declared air pollution control area, must 20
prevention and control of air pollution. obtain a permit (consent order) from the
state board. (Ss.21(1) and (2))
The salient features of the Air Act: • The board has power to grant or refuse
consent, yet it cannot apply discretion to
• The Central Board and the state boards are exempt any industrial plant emitting
25 to perform the functions set out in Ss.16 pollutants. The state government or the 25
and 17 of the Air Act. S.17(1)(g) empowers state board cannot keep such industry out
the state boards to independently notify of the purview of the Air Act. The court can
emission standards. However, by operation review the board’s decision for consent
of S.24 of the EPA, the Environment when the interest of the community at
Protection Rule norms take precedence large is at stake. (Sugarcane G. & S.S.
30 over standards laid down by state boards. Association v. Tamil Nadu Pollution Control 30
Board, AIR 1998 SC 2614)
Illustration: X, a company, was operating in an • Within a period of four months from the
air pollution control area. The state board date of application for the permit, the
found that anti-pollution devices installed in board must complete the formalities to
35 X’s plant were ineffective and directed closure either grant, or refuse consent. During the 35
of the plant under S.31A of the Act. XYZ course of processing a consent application,
argued that the state board had failed to the board may seek any information about
prescribe any standards for emission. The the industry after giving notice in Form II.
high court found that the state board had not • Central and state boards are empowered to
40 prescribed emission standards as required give directions to industries, which, if not 40
under S.17(1)(g) of the Air Act. The court held followed, can be enforced under S.31A by
that in the absence of any such standards, no the board closing down the industry or
fault could be found in X’s operation. The withdrawing its supply of water and
standards have to be prescribed so that power. (S.22)
45 industries may ensure necessary safeguards. 45
(Mahabir Coke Industry v. Pollution Control Illustration: A ran an iron-casting unit in
Board, AIR 1998 Gau 10) residential premises without obtaining
consent under the Air Act. The matter came to
50 • Under S.19 of the Air Act, the State the knowledge of the state board. The state 50
Government in consultation with the board directed the magistrate to seal the unit.
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Mr. A challenged the order in an appeal under extending up to 6 years, and with fine, in case
S.31. The court held that though S.31A enables the failure continues, and an additional fine
the state board to direct closure or extending to five thousand rupees for every
discontinuance of the objectionable activity, day during which such failure continues. The
5 sealing the unit and preventing access is above terms of imprisonment in an extreme 5
unauthorised. (Gopi Nath Pvt. Ltd. v. case may extend to seven years with fine. (S.
Department of Environment, 1998 (72) DLT 536) 37)
Powers of the State Board Penalty shall also be imposed in the following
10 cases: 10
Besides providing consultation to the State
Government for declaring or restricting an • Tampering with the Board’s notice;
area as an ‘Air Pollution Control Area,’ a State • Obstructing the act of the person
Board is vested with the following powers: authorised by the Board;
15 • Damaging any work or property of the 15
• Power of entry and inspection: Any person Board;
empowered by the State Board shall have • Failure to intimate emission of air pollutant
the right to enter the industry premises for in excess of prescribed norms; and
determining the status of pollution control • Making false statements.
20 equipment or if otherwise necessary for 20
compliance with the Act, and the person Appeals
concerned from the industry shall be
bound to render assistance as deemed Any person aggrieved by an order made by a
necessary for ensuring measures, and state board under the Air Act may appeal
carrying out functions laid down in the within 30 days of receipt of the order. The
25 Act. (S.24) appeal shall be made to an appellate authority 25
• Power to take samples: The State Board or constituted by the state government. On
any person empowered by it shall have the receipt of an appeal, its disposal shall be
power to take samples of air or emission ensured as expeditiously as possible. The
from any chimney, flue, any duct, or any rules made under the Air Act provide
other outlet in such manner as may be procedures for filing an appeal.
30 prescribed. (S.26) 30
• Power to give direction: The State Board may In M. C. Mehta v. Union of India, AIR 1997 SC
issue any direction to any person, authority 734 (the Taj Trapezium case), air pollution
including closure, prohibition, or studies were conducted. The studies
regulation of any industry, and can also contained the status of ambient air quality,
35 issue directives for the stoppage or current emission scenarios, and the predicted 35
regulation of the supply of electricity, ambient air pollutant concentrations in and
water, or any other services. The direction around the growth centres in the region, along
should however be preceded by a with an effective air quality management plan
proposed directive in writing giving the to protect all sensitive receptors within the
40 opportunity of being heard unless grave redefined trapezium, including the Taj Mahal. 40
injury to the environment is likely, in which The case brought to notice such preventive
case a proposed directive may be avoided. measures as are necessary for controlling air
(S.31A) pollution, including:
45 Civil and Criminal Penalties • The introduction of the use of natural gas 45
in the replacement of dirtier fuels such as
Whoever fails to comply with provisions of coke and coal to clean the air;
Ss.21 and 22, or with directions as per S.31(A), • The lessening of the use of diesel
50 shall be punishable with minimum generators, and requiring the state to 50
imprisonment of one-and-a-half years and improve power supply to the city; and
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authority or authorities for the purpose of mandate provided by S.7 of the EPA. S.7
exercising and performing such of the powers prohibits any industry, operation, or process
and functions (including the power to issue which discharges or emits any environmental
directions under S.5) of the Central pollution in excess of the standards
5 Government under the EPA, and for taking prescribed. The EPR provides such standards 5
measures in respect of the matters mentioned which restrict the source from emitting or
above. The delegation of functions to such discharging environmental pollutants, fixes
authorities, however, is subject to the the pollution norms for product
supervision and control of the Central manufacturing units, and guides maintenance
10 Government. of environmental quality. 10
Illustration: Ss.5 and 3 of the EPA confer on the The schedules to the EPR lay down the
Central Government all such powers as are specific industry standards with which
necessary or expedient for the purpose of compliance is mandatory for the listed
15 protecting and improving the quality of the industries. 15
environment like issuing directions,
undertaking remedial measures, and also Illustration: Schedule I lists 89 industries, and
imposing the cost of sponsoring remedial the effluent discharge and emission standards
measures on the offender. If the government for them. Schedule IV lays down emission
20 is reluctant to perform its task in a given case, standards and noise limits for motor vehicles. 20
the court can give directions to take such Schedules III and VII prescribe national
directions as are necessary, such as setting up ambient air quality standards (“NAAQS”) in
an authority under S.3(3) to implement the respect of noise and air pollutants.
provision of the Act. (Indian Council for Enviro-
Legal Action v. Union of India, 1996 (5) SCC 281, The Central Government has the power to
25 296) impose prohibition or restriction on the 25
location of industries and the carrying on of
The Central Government may, in the exercise processes and operations in different areas.
of its powers and in the performance of its (Rule 5(3)(d) of the EPR)
functions under this Act, issue directions in
writing to any person, officer, or any The EPR are supplemented by Noise Pollution
30 authority. The power to issue directions under (Regulation and Control) Rules, which 30
this section includes the power to direct the prescribe standards in respect of noise for
closure, prohibition, or regulation of any industry, commercial, and residential areas, as
industry, or the stoppage of the supply of well as for silence zones.
electricity, water, or any other service. (S.5,
35 EPA) Hazardous Substance Regulation 35
The Environment (Protection) Rules, 1986 S.8 of the EPA necessitates compliance with
(“the EPR”) procedures and safeguards prescribed under
the rules regarding hazardous substances.
40 To implement the provisions of the EPA, the 40
Central Government is empowered under Ss. The Hazardous Waste (Management and
6 and 25 of the EPA to make rules in respect of Handling) Rules, 1989, fix responsibility for
a variety of things including pollution control, the proper handling, storage, and disposal of
emissions or discharge standards, hazardous hazardous waste on the person generating
45 waste, and procedural safeguards. The central such waste. 45
government, by notification in the Official
Gazette, has made the EPR for the betterment The Manufacture, Storage, and Import of
of the environment. Hazardous Chemicals Rules, 1989, cast a
50 responsibility on industries handling 50
The EPR were framed to implement the hazardous substances (other hazardous
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! All India Bar Examination: Preparatory Materials! 53
wilful delay or obstruction by such person offence and be liable to be proceeded against
shall be punishable under legislation. and punished accordingly. (S.16, EPA)
S.11 of the EPA empowers the Central Where an offence under the EPA has been
5 Government or an officer empowered by it, to committed by any Department of 5
take samples of air, water, soil, or other Government, the Head of the Department
substance from any premises in such manner shall be deemed to be guilty of the offence and
as may be prescribed for the purpose of shall be liable to be proceeded against and
analysis. The result of such analysis is punished accordingly. (S.17, EPA)
10 admissible in legal proceedings provided the 10
sample is taken in the manner prescribed in Courts shall take cognizance of any offence
the Act. under this Act only when a complaint is made
by:
S.23 of the EPA empowers the Central
15 Government to delegate, by notification, such • The Central Government or any authority 15
functions as it may deem necessary or or officer authorised in this behalf by that
expedient. Government; or
• Any person who has given notice of not
Illustration: The state government gave less than sixty days, in the manner
20 direction under S.5 of the EPA to an industrial prescribed, of the alleged offence and of 20
unit A to shut down operation and take her intention to make a complaint, to the
necessary steps to conform to standards Central Government or the authority or
specified by the state pollution control board. officer authorised as aforesaid.
A challenged these directions A on the ground
that the directions were issued without giving The National Environment Appellate
25 A any opportunity of being heard. It was Authority Act, 1997 (“NEAA”) 25
observed by the court that the right to file
objections or to be heard can be dispensed The NEAA requires the Union Government to
with if the Central Government is of the establish a body known as the National
opinion that continuance of the activity in Environment Appellant Authority to hear
question would cause grave injury to the appeals against orders granting
30 environment. By a notification, the Central environmental clearance in designated areas 30
Government had delegated its power to the where industry activity is proscribed or
state government. Therefore, the state restricted by regulations framed under the
government has not over stepped its EPA.
jurisdiction in giving directions to A. (Narula
35 Dyeing & Printing Works v. Union of India, AIR S.11 of the NEAA requires an appeal to be 35
1995 Guj 185) filed within 30 days of the impugned order
granting conditional or unconditional
Penalty for Contravention of the Provisions of the environmental clearance or within 90 days
Act and the Rules, Orders, and Directions where the delay is explained.
40 40
S.15 of the EPA provides that whoever fails to The appellate jurisdiction is restricted to cases
comply with or contravenes the provisions of where clearance is granted and does not
the Act, shall be punishable with extend to cases where clearance is refused.
imprisonment for a term which may extend to
45 five years with fine which may extend to one The category of aggrieved persons includes a 45
lakh rupees, or with both. person likely to be affected by the
environmental clearance and an association of
For any offence committed by a company, the persons likely to be affected by such order.
50 person in charge of the business of such 50
company shall be deemed to be guilty of the S.15 limits the jurisdiction of civil courts such
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! All India Bar Examination: Preparatory Materials! 55
that they cannot entertain any appeal in which the village community is provided with
matters falling within the jurisdiction of the timber, other forest products, and pastures.
Appellate Authority. The rules may assign duties to the village for
the protection and improvement of the forest.
5 The Indian Forest Act, 1927 (“the Forest Act”) 5
Protected Forests
The Forest Act was enacted to preserve and
safeguard the forests in India. The Forest Act Under S.29 of the Forest Act, the state
deals with four categories of forests: government may designate any forest or
10 wasteland as a protected forest in which the 10
• Reserved Forests; government has proprietary right or rights to
• Village Forests; any part of the forest’s products. Protected
• Protected Forests; and forests cannot be created from reserve forests.
• Non-Government Forests.
15 There are fewer restrictions in a protected 15
The first three categories deal with forests forest and a village community is provided
which are governmental property, while the with timber or other forest products.
last category refers to control over forests and
lands which are not governmental property. S.31 of the Forest Act empowers the state
20 government to regulate all rights and 20
Reserved Forests privileges relating to use of the protected
forest.
S.3 of the Forest Act empowers the state
government to constitute any forest land and Non-Governmental Forests
waste land, which is property of the
25 government, as a reserve forest by making a Under S.35 of the Forest Act, the state 25
notification in the Official Gazette. government may regulate or prohibit the use
of such land or forests for activities including
In addition to notification under S.4, a timber cutting, cultivation, grazing, and
notification under S.20(1) of the Forest Act is preservation of soil.
essential for the purpose of declaring a forest
30 a reserved forest, and such notification must The Forest (Conservation) Act, 1980 (“the 30
specify the limits of a forest and the date from FCA”)
which the forest constitutes a reserved forest.
(Mansed Oraon v. King, AIR 1951 Nag 288) In the last decade, the Supreme Court has
played a major role in bolstering activism for
35 Access to forests declared reserved forests forest conservation. In T. N.Godavarman v. 35
becomes a matter of privilege, subject to Union of India, AIR 1997 SC 1228, the Apex
permission of forest officials. Ss.6, 7, 9, and 10 court dealt with forest conservation and
of the Forest Act provide procedures for management. In this case, the specific instance
persons having right and title over land in the of tree felling was enlarged in its scope to
40 notified forest to make claims for include all states and union territories. 40
compensation. Through a series of directions, orders, and
judgments, the Supreme Court, under its writ
Village Forests jurisdiction, has interpreted the FCA to ensure
implementation in its true letter and spirit.
45 Under S.28 of the Forest Act, village forests Through the Godavarman case, the court has 45
are established when a state assigns to a provided a forum to address a range of
village community the rights over any land environmental issues, unparalleled in any
which has been constituted a reserve forest. earlier environmental litigation.
50 State governments make rules for managing 50
village forests and prescribe conditions under The courts have endeavoured to balance the
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! All India Bar Examination: Preparatory Materials! 56
call for mining, infrastructure activities, and • Any purpose other than re-afforestation.
the genuine and bona fide needs of local
inhabitants with the necessity of forest ““Non-forest purpose” does not include any
conservation. For example, wood-based work relating or ancillary to conservation, or
5 industries, despite being the major cause of development and management of forests and 5
depletion of forests in the northeast states, wildlife, namely, the establishment of check-
were allowed, considering the dependence of posts, fire lines, wireless communications, and
local people. construction of fencing, bridges, and culverts,
dams, waterholes, trench marks, boundary
10 The FCA was enacted to protect and conserve marks, pipelines, or other like purposes.” 10
forests. The Act restricts the powers of the
state in respect of de-reservation of forests The Central Government framed the Forest
and use of forestland for non-forest purposes. (Conservation) Rules, 1981 (“the FCR”), to
The term ‘non-forest purpose’ includes carry out the provisions of the FCA under the
15 clearing any forestland for cultivation of cash exercise of powers conferred by S.4 of the 15
crops, plantation crops, horticulture, or any FCA.
purpose other than re-afforestation.
Interpretation of FCA by Supreme Court in T. N.
S.2, which forms the core of the FCA, reads Godavarman Case
20 thus: 20
The Supreme Court undertook a purposive
“Notwithstanding anything contained in any interpretation of the FCA, and held that:
other law for the time being in force in a State,
no State Government or other authority shall • The word “forest” must be understood
make, except with the prior approval of the according to the dictionary meaning. The
25 Central Government, any order directing: court clarified that this description covers 25
all statutorily recognised forests, whether
• That any reserved forest (within the designated as reserved, protected or
meaning of the expression “reserved otherwise for the purpose of S.2(i) of the
forest” in any law for the time being in Act.
force in that State) or any portion thereof, • The term “forest land” as occurring in S.2
30 shall cease to be reserved; will not only include “forest” as 30
• That any forest land or any portion thereof understood in the dictionary sense, but
may be used for any non-forest purposes; also any area recorded as forest in the
• That any forest land or any portion thereof government record, irrespective of
may be assigned by way of lease or ownership.
35 otherwise to any private person or to any • The provisions enacted in the Act for the 35
authority, corporation, agency, or any other conservation of forests must apply clearly
Organisation not owned, managed, or to all forests so understood, irrespective of
controlled by Government. the ownership of classification thereof.
• That any forest land or any portion thereof
40 may be cleared of trees which have grown The court directed each state government to 40
naturally in that land or portion, for the constitute an expert committee to:
purpose of using it for afforestation.
• Identify areas which are ‘forests’
For the purpose of this section, “non-forest irrespective of whether they are so notified,
45 purpose” means the breaking or clearing of recognised, or classified under any law, 45
any forest land or portion thereof for: and irrespective of the ownership of the
land of such forest;
• The cultivation of tea, coffee, spices, rubber, • Identify areas which were earlier forests
50 palms, oil-bearing plants, and horticultural but stand degraded, denuded, or cleared; 50
crops of medicinal plants; and
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! All India Bar Examination: Preparatory Materials! 57
• Identify areas covered by plantation trees person can enter a sanctuary or national park
belonging to the government and those only upon grant of permit for purpose of
belonging to private persons. investigation, photography, scientific research,
tourism, and transaction of lawful business.
5 Combined implications of the Godavarman 5
and Centre for Environmental Laws cases can be Illustration: An area was notified by the
summarised as follows: government of Mizoram to be a wildlife
sanctuary, but the provisions of Chapter IV of
• All state governments are restrained from the WPA were not followed. It was held that
10 using forest land for non forest purposes the authorities could not take follow-up action 10
without the prior approval of the Central to evict the persons from an area declared a
Government in accordance with the sanctuary, without adherence to the
provision of S.2(ii) of the Forest provisions of Chapter IV. (Jaladhar Chakma v.
Conservation Act, 1980; and Deputy Commissioner, Aizwal, AIR 1983 Gau
15 • Restraint on the de-reservation of any 18) 15
National Park, Sanctuary, and forest. S.27
of the Indian Forest Act vests the state National parks enjoy a higher degree of
Government with the power to de-reserve protection than sanctuaries. For instance,
a reserve forest but only after prior grazing of live stock is prohibited within a
20 approval of the Central Government. national park (S.35(7), WPA) but permissible 20
in a sanctuary (S.33, WPA).
The Wildlife (Protection Act), 1972 (“the
WPA”) The Central Government’s national wildlife
policy is given form in the National Wildlife
In 1972, India adopted a comprehensive Action Plan, 1982, for the conservation of
25 national law, the WPA to protect wild animals, wildlife, including the flora of our country. 25
birds, and their habitat. The Act adopts a two-
fold strategy of protecting: Wildlife Offences
1.Endangered species regardless of their S.9 of the WPA prohibits hunting of wild
location; and animals specified in Schedule I, II, III, or IV.
30 2.All species in designated areas such as in 30
national parks and sanctuaries. Illustration: Y went to a forest, sighted a bison,
shot it down, extracted its meat, and sold it in
The policy and object of laws of protection of the open bazaar. The remaining carcass was
wild life are the cumulative result of an buried in the ground. On receiving
35 increasing awareness of the compelling need information about the incident and upon 35
to preserve fauna and flora, some species of interrogation, Y admitted to killing of the
which are becoming extinct at an alarming bison, and was convicted for the offence of
rate due to human intervention. (State of Bihar hunting under S.9 of the WPA. (Forest Range
v. Murad Ali Khan, AIR 1989 SC 1) Officer v. Aboobacker, 1990 FLT 22 Ker HC)
40 40
The 42nd Constitutional Amendment in 1976 The Chief Wildlife Warden may permit
moved wildlife and forest from the State List hunting in certain cases given under Ss.11 and
to the Concurrent List. 12 of the WPA.
45 In order to protect wildlife and its habitat, the Similarly, S.17 of the WPA provides protection 45
State government can declare any area of to specified plants. It imposes such restrictions
adequate ecological, faunal, floral, as are necessary for protection of any specified
geomorphological, natural, or zoological plant in a forest area.
50 significance as a sanctuary under S.18 of the 50
WPA, and as a national park under S.35. A S.27 of the WPA provides that no person shall
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! All India Bar Examination: Preparatory Materials! 58
cause any damage in a sanctuary or tease or ecology cannot be permitted. Even the
molest any wildlife animal. Entry with a international ban on the trade of ivory of the
weapon, causing fire, or using injurious African elephants was likely to exert pressure
substances are all prohibited in a sanctuary or on the Indian elephant. (Ivory Traders and
5 national park. (Ss.27 and 35(8), WPA) Manufactures Association v. Union of India, AIR 5
1997 Del 267)
S.40 of the WPA prohibits possession of
wildlife and/or derivatives without valid Illustration: The Bombay High Court was
authorisation. Thus, all animal articles, and approached to prevent trafficking and cruel
10 trophy or uncured trophy, derived from any treatment of wild birds. The petition named 10
animal specified in Schedule I, or Part II of places where the illegal market flourished.
Schedule II, can only be kept if a written The court constituted a committee to ensure
permission to do so has been obtained. compliance with the Wildlife Act and directed
police to take immediate steps to prevent
15 Illustration: The Range Officers of a wildlife trade in birds and animals. (Viniyog Parivar 15
sanctuary seized a number of captive animals, Trust v. Union of India, AIR 1998 Bom 71)
including a hyena and a leopard from the
custody of H. H claimed that she was Where an offence against this Act has been
operating a zoo and was therefore entitled to committed by a company under S.58, every
20 possess the animals. H failed to establish that person who, at the time the offence was 20
she acquired animals from an authorised committed, was in charge of, and was
person or another zoo. Therefore, the responsible to, the company for the conduct of
presumption under S.57 of the Act was that H the business of the company as well as the
was in unlawful possession. (Jaydev Kundu v. company, would be deemed to be guilty of the
State of West Bengal, 97 CWN 403) offence, and would be liable to be proceeded
25 against and punished accordingly, unless she 25
S.49 of the WPA imposes a prohibition on proves that the offence was committed
trade or commerce in scheduled species or without her knowledge or that she exercised
derivatives. all due diligence to prevent the commission of
such offence.
Illustration: D was exhibiting for sale, articles
30 made of snake and lizard skins. D could not S.39 of the WPA provides that every wild 30
produce a licence for dealing in such articles animal, animal article, trophy or ivory in
and admitted the recovery. It was found that respect of which an offence is committed, and
the Act does not extend to all types of lizards vehicle, vessel, weapon, or tool that has been
and snakes but applies only to scheduled used for committing an offence and that has
35 species. D was acquitted, since the articles been seized, shall be the property of the 35
were not made from the skins of scheduled Government.
species.
Penalties
Illustration: Some petitioners challenged the
40 provision banning trade in imported ivory General penalties for violation of the WPA, 40
and articles on the grounds that it violated and for trade and offence committed in
their fundamental right to carry on trade respect of animals in Schedule I, or Part II of
guaranteed under A.19(1)(g) of the Schedule I, include imprisonment of three to
Constitution. The court held that the seven years with fine. The wildlife offences
45 prohibition was justified since the sale of that involve species listed in the Schedule are 45
ivory by the dealers would encourage non-bailable and cognizable.
poaching and killing of elephants to replenish
the stocks held by petitioners. Trade and The provision to eliminate human
50 business at the cost of disrupting life forms intervention within national parks and 50
and linkages necessary for biodiversity and sanctuaries operates harshly against forest
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! All India Bar Examination: Preparatory Materials! 59
Facts: On December 1984, highly toxic Methyl In Keshub Mahindra v. State of Madhya Pradesh
45 Iso-Cyanate (“MIC”), which had been J.T., 1996 (8) SCC 136, criminal charges were 45
manufactured and stored in Union Carbide brought against former Union Carbide India
Corporation’s (“U.C.C.”) chemical plant in Limited employees for causing death by
Bhopal, escaped into the atmosphere, and negligence. On June 7, 2010, eight officials of
50 killed over 3,500 people and seriously injured Union Carbide India Limited were convicted 50
about 2 lakh others. for the 1984 Bhopal gas disaster only for
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! All India Bar Examination: Preparatory Materials! 60
5 The Bhopal disaster raised complex legal, The word ‘accident’ as defined in the PLIA 5
moral, and ethical questions about the includes an accident involving a fortuitous,
liability of parent companies for their sudden, or unintentional occurrence while
subsidiaries, of transnational companies handling any hazardous substance resulting
engaged in hazardous activities, and of the in continuous, intermittent, or repeated
10 government caught between attracting exposure to death of or injury to any person, 10
industry to invest in business development or damage to any property, but does not
while simultaneously protecting the include an accident by reason only of war or
environment and citizens. radioactivity.
15 Parliament enacted the EPA in the wake of the Along with the insurance premium, every 15
Bhopal tragedy. The EPA confers the power to owner must make a contribution to the
strengthen and regulate the operation of Environmental Relief Fund established by the
hazardous industries and to control pollution. Central Government. The PLIA was amended
The Public Liability Insurance Act, 1991, was in 1992, and the Central Government was
20 also enacted to ensure that immediate relief is authorised to establish the Environmental 20
given through compensation to victims of Relief Fund to make relief payments.
industrial accidents.
Chapter III: Judicial Remedies and
Public Liability Insurance Act, 1991 (“the Procedures
PLIA”)
25 Citizens have three civil remedies to obtain 25
The Act covers accidents involving hazardous redressal:
substances, insurance coverage for the
persons affected by accidents occurring while • A common law tort action against the
handling any hazardous substances, and for polluter;
matters connected therewith or incidental • A writ petition under Aa.2 and 226 of the
30 thereto. Constitution of India; and 30
• In the event of damage from a hazardous
The EPA defines ‘hazardous substance’ as any industry accident, an application for
substance or preparation which, by reason of compensation under the Public Liability
its chemical or physico-chemical properties or Insurance Act, 1991, or the National
35 handling, is liable to cause harm to human Environment Tribunal Act, 1995. 35
beings, other living creatures, plants, micro-
organisms, property, or the environment. The Law of torts provides for the oldest of the
legal remedies to abate pollution. The
To achieve this object, the act imposes no-fault majority of the cases under the law of torts are
40 liability upon the owner of the hazardous classified under the categories of: 40
substance and requires the owner to
compensate the victims irrespective of any • Nuisance: Remedy for private nuisance is
default or neglect on the owner’s part. by way of bringing an action for injunctive
relief as well as damages.
45 The maximum relief under the PLIA act for 45
injury or death is Rs. 25,000/- and the limits Illustration: The smoke and fumes from Z’s
for compensation in respect of damage to chimney, which were interfering with the
private property is Rs.6,000/-. A victim comfort of Y (Z’ s neighbour) were enough
50 reserves the right, however, to claim to constitute private nuisance. Z’s defence 50
additional relief under any other law. that the nuisance existed long before Y came
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! All India Bar Examination: Preparatory Materials! 61
to live in the neighbourhood, does not from pursuing such acts. Injunctions are of
relieve the offender. The court ordered Z to two types:
seal the holes of the chimney facing Y’s
property. (B. Venkatappa v. B. Lovis, AIR 1986 • Temporary; and
5 AP 239) • Perpetual. 5
x-x
30 30
35 35
40 40
45 45
50 50
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1RWHV
! All India Bar Examination: Preparatory Materials! 63
Hindu law in India is the set of personal laws • Second, if, at the time of the performance of
that are applicable to Hindus. The term the marriage rites, either of the parties has
10 ‘Hindu’ has been defined broadly, and a spouse living and the earlier marriage 10
includes Buddhists, Jains, and Sikhs. It also had not already been set aside, the later
applies, unless proved otherwise, to people marriage is void ab initio.
domiciled in India who are not Muslim, • Third, the parties should be mentally
Christian, Parsi, or Jewish by religion. sound. This is important to ensure that
15 parties are capable of giving consent to the 15
The Hindu Marriage Act, 1955 marriage. There may arise situations,
however, wherein a person may have been
The Hindu Marriage Act, 1955 (“the HMA”) capable of consenting to the marriage but
was enacted to amend and codify the laws subsequently suffers from a mental
20 relating to marriage among Hindus. The disorder, thereby rendering that person 20
HMA does not apply to the Scheduled Tribes unfit for marriage and procreation.
that are included within the meaning of A.366
of the Constitution of India (“the Illustration: A married B as per Hindu laws
Constitution”). and customs. Subsequently, A has recurrent
bouts of epilepsy. This marriage is now
25 S.4 of the HMA gives overriding application to voidable at B’s instance. 25
the provisions of the HMA in respect of any of
the matters dealt with therein. It is a codifying • Fourth, the bridegroom and bride should
enactment that supersedes all prior law and have completed the ages of 21 and 18,
lays down the law relating to marriage. Thus, respectively. Marriages not satisfying this
in matters governed by the enactment, appeal requirement may be annulled by a decree
30 to any rule of law previously applicable to of nullity under S.12(1)(c). A marriage 30
Hindus is now permissible only if no solemnised in violation of this requirement
provision for the same is made in the HMA. is not void or even voidable, but is
(Rohini Kumari v. Narendra Singh, AIR 1972 SC punishable as an offence under S.18 of the
459) HMA.
35 Ss.5 and 7 of the HMA lay down the • Fifth, no marriage is valid if it is made 35
conditions and ceremonial requirements of a between parties related to each other
Hindu marriage: within the prohibited degrees of
relationship (defined in S.2(g)) or by a
• First, the marriage must be solemnised in sapinda relationship (defined in S.2(f))
40 accordance with the customary rites and unless such marriage is sanctioned by the 40
ceremonies of either party. Unless the custom or usage governing both the
marriage is celebrated or performed with parties. The custom which permits a
proper ceremonies and due form, it is not marriage between persons who are within
considered ‘solemnised’. (Priya Bala v. the degrees of prohibited relationship must
45 Suresh Chandra, AIR 1971 SC 1153) There fulfil the requirements of a valid custom. 45
must be substantial compliance with those (defined in S.3(a)) (Shakuntala Devi v. Amar
rites and ceremonies of marriage in the Nath, AIR 1982 P&H 221)
customary law of either party that are
50 deemed absolutely necessary. There is an extremely strong presumption in 50
favour of the validity of a marriage and the
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! All India Bar Examination: Preparatory Materials! 64
1534) To amount to cruelty, the acts must be Hindu merely because she professes a
of a more serious nature than mere wear theoretical allegiance to another faith, or is
and tear of married life. (Savitri Pandey v. an ardent admirer and advocate of such
Prem Chandra Pandey, AIR 2002 SC 591) religion and its practices. If, however, she
5 renounces her religion by a clear act of 5
Illustration: A and B have been married for 10 renunciation and adopts the other religion
years. For the past 8 years, B has exhibited by undergoing a formal conversion, she
indifference to A’s health in addition to would cease to be a Hindu within the
treating her with callous neglect and extreme meaning of S.13(1)(ii) of the HMA.
10 boorishness. B also uses every opportunity to • Fifth, the respondent spouse has been of 10
harass A, sometimes even in public. B also incurably unsound mind or suffering from
ill-treats their children. A will be granted a a mental disorder as set out in S.13(1)(iii).
decree of divorce on the ground of cruelty as The mental disorder must be of such a
the cumulative effect of these acts results in degree that it mitigates against the
15 the reasonable apprehension in A’s mind that continuance of marriage. (B. N. Panduranga 15
cohabitation with B is detrimental to her. Shet v. S. N. Vijayalakshmi, AIR 2003 Kant
357) The onus of proving incurable
Illustration: A and B are married. A wants to unsoundness of mind rests with the
have children. The fact that B deliberately petitioner. To bring a case within the ambit
20 and consistently refuses to fulfil this wish of this clause, it is not necessary that the 20
amounts to cruelty. (Forbes v. Forbes, [1955] 2 mental disorder be incurable. It should,
All ER 774) however, be of such magnitude and type
that the petitioner cannot reasonably be
Illustration: A and B are married. B enjoys expected to live with the respondent.
drinking with friends and gets inebriated Decisions on this topic turn on the peculiar
25 twice a month. A will not be granted a facts and circumstances of each case. 25
divorce on grounds of cruelty as mere • Sixth, the respondent spouse has been
drunkenness does not amount to cruelty. suffering from a virulent and incurable
(Harjit Kaur v. Roop Lal, AIR 2004 P&H 22) form of leprosy.
But, persistent drunkenness even after • Seventh, the respondent spouse has been
warnings that such action causes pain and suffering from a communicable venereal
30 misery on the other spouse may amount to disease. It is not a defence to urge that the 30
cruelty. disease was innocently contracted or that it
is curable. The ground is satisfied if it is
• Third, the respondent spouse has deserted shown that the disease is in a
the petitioner for a continuous period of communicable form and it is not necessary
35 two years. The essence of desertion is the that it should have been communicated to 35
unilateral, intentional, and permanent the petitioner.
abandonment of one spouse by the other • Eighth, the respondent spouse has
without reasonable cause. The deserting renounced the world by entering any
spouse must prove factum of separation and religious order. Under Hindu law, this
40 the deserted spouse must show absence of action is tantamount to civil death. The 40
conduct giving reasonable cause and respondent spouse must have performed
absence of consent. The petitioner must the requisite rituals and formalities for
prove the offence of desertion beyond all entering that religious order.
reasonable doubt. It is essential that the • Ninth, the respondent spouse has not been
45 deserted spouse should, at all times, affirm heard of as being alive for a period of seven 45
the marriage; otherwise desertion ceases years or more. S.108 of the Indian Evidence
and becomes separation by consent. Act, 1872, lays down that in the absence of
• Fourth, the respondent spouse has ceased evidence to the contrary, a person is
50 to be a Hindu by conversion to another deemed to be dead if she has not been seen 50
religion. A person does not cease to be a nor heard from for a period of seven years
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! All India Bar Examination: Preparatory Materials! 66
or more by people who would have decisions to divorce are not taken rashly. The
ordinarily seen or heard from her. proviso to S.14, however, confers discretion on
• Tenth, there has been an irretrievable the court to entertain a petition for divorce
breakdown of the marriage between the prior to the completion of one year of
5 parties. Pursuant to the Supreme Court’s marriage. 5
direction to the Central Government in
Naveen Kohli v. Neelu Kohli, AIR 2006 SC The obligation of the husband to provide for
1675, the Marriage Laws (Amendment) Bill, his wife’s maintenance and support does not
2010, amended the HMA to include end with the passing of a decree for divorce. S.
10 ‘irretrievable breakdown of marriage’ as a 25 of the HMA confers power upon the court 10
ground for divorce in Hindu law. to grant a right to either spouse to claim
permanent alimony and maintenance under
In cases of court-ordered judicial separation, it. This right is statutory and cannot be
either party may apply to the court for a contracted away, for example, through
15 decree of divorce by showing that there has prenuptial agreements. 15
been no resumption of cohabitation between
the parties for a period of one year or upwards Hindu Succession Act, 1956
after the passing of the decree for judicial
separation. (S.13(1A)(i), HMA) The Hindu Succession Act, 1956 (“the HSA"),
20 lays down a uniform and comprehensive 20
In cases of restitution of conjugal rights, either system of intestate succession and applies,
party may apply to the court for a decree for inter alia, to persons governed by the
divorce by showing that there has been no Mitakshara and Dayabhaga schools, as also to
restitution of conjugal rights as between the those previously governed by the
parties to the marriage for a period of one year Marumakkattayam, Alyasantana, and Nambudri
25 or upwards after the passing of the decree. systems of Hindu law. 25
(S13(1A)(ii), HMA)
S.4 of the HSA gives overriding effect to the
In addition to the grounds mentioned above, a provisions of the Act. It abrogates all the rules
wife can seek divorce on the ground that the of the law of succession applicable to Hindus,
husband has, since the solemnisation of whether by virtue of any text or custom, in
30 marriage, been guilty of rape, sodomy, or respect of all matters governed by the HSA. 30
bestiality. It is not necessary that the husband The HSA also supersedes any other law
be convicted of these offences; the wife may contained in any legislation in force
file for divorce at any time that the husband immediately before it came into force.
faces trial for such ofeences. However if the
35 husband has been charged with, or convicted Succession to a Hindu’s property is governed 35
of, an attempt to commit these offences, that by the provisions in Chapter II of the HSA. On
would not b ea ground for divorce. the death of a Hindu, the people who are her
nearest heirs succeed and become entitled at
S.13B of the HMA allows for divorce by once to her property and may succeed
40 mutual consent if the petition for divorce is simultaneously to it. 40
jointly presented to the court by both parties
to the marriage. This petition must clearly S.5 declares that the HSA cannot be applied to
show that the parties have been living parties married under the Special Marriage
separately for a period of at least one year, that Act, 1954. Succession, in such cases, is
45 they have not been able to live together, and regulated by the Indian Succession Act, 1925. 45
that they have mutually agreed that their As per S.6 of the HSA, a daughter of a
marriage be dissolved. coparcener in a joint Hindu family governed
by Mitakshara law is a coparcener in her own
50 There can be no petition for divorce within right and enjoys rights equal to the son of 50
one year of marriage. This is to ensure that such coparcener. Thus, a woman can now be
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! All India Bar Examination: Preparatory Materials! 67
karta of her joint Hindu family. She may succeed in order of the nine entries in which
dispose of any property that she is entitled to they are grouped and in accordance with the
in this manner by testamentary disposition. S. rule laid down in S.11 of the Act. No question
6(3) stipulates that on the death of a of computation of the shares of the heirs so
5 coparcener, there shall be a deemed division listed can arise when there is only one heir 5
(notional partition) of the property to which who is entitled to take the property by virtue
such coparcener is entitled, as if a partition of her belonging to a prior Entry than any heir
had taken place. As per S.6(4), the doctrine of specified in a subsequent Entry. But, where
pious obligation is abrogated to the extent that there is more than one heir of the intestate (all
10 the specified heirs are not liable to satisfy listed in the same Entry) entitled to take the 10
debts solely on that ground. property, the computation of their shares is in
accordance with the simple rule of equal
S.8 of the HSA lays down the general rules of distribution of the property among them.
succession in the case of males. Legal heirs of
15 deceased males, under the Act, are divided Illustration: A dies, leaving a brother’s son and 15
into four categories: a sister’s sons and daughters. They are all
heirs in Entry IV of Class II and will take A’s
• Heirs in Class I of the Schedule or property simultaneously and in equal shares.
‘simultaneous heirs’;
20 • Heirs in Class II of the Schedule; Illustration: A dies, leaving three daughter’s 20
• Agnates defined in S. 2(a); and daughter’s daughters and a daughter’s son’s
• Cognates defined in S. 2(c). son, the former being the granddaughters of
his predeceased daughter D, and the latter
Property first devolves on the 12 preferential being the grandson of another predeceased
heirs mentioned in Class I of the Schedule to daughter, D1. The distribution will not be
25 the Act, and failing such heirs, upon the according to the branches of the daughters D 25
second set of heirs, and failing such heirs, and D1 but all four heirs will share equally,
upon agnates and then cognates. The that is, each of them will take one-fourth of
expression ‘property’ in this section includes the property of the intestate.
self-acquired property, interest in a Mitakshara
coparcenary property, ancestral property, and S.8(c) of the HSA explicitly declares that
30 agricultural land. failing all Class I and II heirs of the intestate, 30
her property devolves upon agnates and
The distribution of property among the first cognates. The order of succession is to be
set of preferential heirs is to be in accordance worked out in accordance with the rules laid
with the rules laid down in S.10 of the HSA. down in Ss.12 and 13. S.12 of the HSA lays
35 Male and female heirs are treated as equal. down three rules of preference, which govern 35
the order of succession among agnates and
Illustration: A dies leaving his widow W, a cognates. S.13 states the rules in accordance
daughter D, a son S1, and the two sons (SS1 with which degrees of relationship between
and SS2) and daughter (SD) of a predeceased the intestate and her agnates or cognates are
40 son. W, D, and S1 will each take one share, to be computed. The degree of relationship 40
that is, one-fourth each; and SS1, SS2, and SD may be of ascent or descent or both.
will together take one-fourth. The portion for
each of them will be one-twelfth the property Illustration: The competing heirs are two
left by A. agnates, for example, brother’s son’s daughter
45 and paternal uncle’s son. The former, who 45
Failing all heirs of the intestate specified in only has two degrees of ascent, is preferred to
Class I of the Schedule, property devolves the latter, who has three degrees of ascent.
upon the heirs specified in the nine Entries in
50 Class II of the Schedule. Class II heirs do not Illustration: The competing heirs are two 50
succeed simultaneously, but rather, they collateral cognates, for example, brother’s
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! All India Bar Examination: Preparatory Materials! 68
daughter’s daughter; and mother’s sister’s simultaneously with the intestate’s husband,
son. The former, who has only two degrees of if alive.
ascent, is preferred to the latter that has three
degrees of ascent, regardless of the fact that Illustration: A dies leaving her husband H; her
5 she is female. sons S1 and S2; her grandson SS (son of 5
predeceased son S); WS3, the widow of S3, a
Any property possessed by a female Hindu, predeceased son; two daughters D1 and D2;
howsoever acquired, is now held by her as her DD, the daughter of D, a predeceased
absolute property and she has full power to daughter; and B her brother. All of them,
10 deal with it or dispose of it by will as she likes. except WS3 and B will succeed to A’s 10
(S.14, HSA). property, howsoever acquired as heirs
included in Entry (a) of S.15(1). They will take
S.15 provides a definite and uniform scheme simultaneously and to the exclusion of WS3
of succession to the property of a female and B. WS3, who is an heir under Entry (b),
15 Hindu who dies intestate. This section groups and B, an heir under Entry (d), are not entitled 15
heirs of a female intestate into five categories: to succeed as there are Entry(a) heirs.
• Sons, daughters, children of any Thus, S1, S2, SS, D1, D2, DD, and H who
predeceased son or predeceased daughter succeed simultaneously, will each take one-
20 and her husband. They take seventh share. If S had more children, they 20
simultaneously. Failing all heirs in this would have only taken one share between
category, her property devolves upon the themselves and could not have claimed an
heirs of her husband. equal share with S1 and the others. In their
• Heirs of her husband. case, the distribution would have been per
• Mother and father of the intestate. stirpes and not per capita. (S.19)
25 • Heirs of the intestate’s father 25
• Heirs of the intestate’s mother Illustration: A dies leaving her son S by her
first husband and property that she inherited
The basis of inheritance of a female Hindu’s from her second husband B. The property will
property who dies intestate is the source from devolve upon S under Entry (a) and not upon
which she came into possession of the the heirs of B. (Rama Ananda v. Bhima, AIR
30 property. This informs the manner of 1969 Bom 205) 30
inheritance and devolution of that property.
(Bhagat Ram v. Teja Singh, AIR 2002 SC 1) Illustration: A dies leaving SSS, the son of a
predeceased son of a predeceased son and
In the case of a female dying intestate and SDS, the son of a predeceased daughter of a
35 without issue, the property inherited by her predeceased son, and HB the brother of her 35
from her father or mother will revert to the husband H. A’s property will devolve on SSS
heirs of the father in existence at the time of alone as the heir of her husband under Entry
her death and not upon the husband or the (b) of S.15(1). SSS is the heir of H as specified
heirs of the husband as per the general order in Class I of the Schedule to S.8, and SDS and
40 of succession. Similarly, property inherited HB are H’s heirs specified in Class II of the 40
from her husband or father-in-law will revert Schedule. Thus, SSS will exclude SDS and HB.
to the heirs of the husband in existence at the
time of her death and not upon the heirs of the S.18 provides that full blood heirs are
father or mother. preferred to those related by half-blood. S.19
45 goes on to provide that if two or more heirs 45
If, however, the female dies leaving a son or a succeed together to the property of an
daughter or a child, male or female, of a intestate, they take the property per capita.
predeceased son or daughter, then all her And S.20 states that a child who is born after
50 property, howsoever acquired, devolves upon the death of its mother has the same right to 50
such issue, and such issue takes the property inherit property as if it had been born before
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the death of the intestate. property for more than five years, or lease the
property for more than one year after the
The Hindu Inheritance (Removal of child turns 18.
Disabilities) Act, 1928, provides that no
5 person, other than a person who is and has Hindu Adoption and Maintenance Act, 1956 5
been from birth, a lunatic or idiot, shall be (“the HAMA”)
excluded from inheritance or any share of joint
family property by reason of any disease, The HAMA applies to Hindus, including
deformity, or physical or mental defect. Buddhists, Jains, and Sikhs. It amends and
10 codifies the law relating to adoptions and 10
Any Hindu, male or female, may dispose off, maintenance. It also gives an overriding
by will or other testamentary disposition, any application to the provisions on the two
property in accordance with the provisions of subjects.
the Indian Succession Act, 1925. This power of
15 testamentary disposition is, however, subject The requirements of a valid adoption under 15
to the rights of maintenance of persons who the HAMA are:
are entitled to claim maintenance as
dependants of the testator or testatrix. (S.30) • The person adopting must have the right to
take and be lawfully capable of taking a
20 Hindu Minority and Guardianship Act, 1956 son or daughter in adoption. (Ss.7 and 8, 20
(“the HMGA”) HAMA);
• The person giving in adoption must be
The HMGA defines a minor as a person under lawfully capable of doing so. (S.9, HAMA);
the age of 18. (S.4(a)) A guardian is the • The person adopted must be lawfully
caretaker of a minor, her property, or both. capable of being taken in adoption. (S.10,
25 Categories of guardians include a natural HAMA); and 25
guardian, a guardian appointed by way of a • The conditions relating to adoption
will by the mother or father, a guardian including actual giving and taking of a
appointed by the court, and a person who child with the intention of transferring the
qualifies as a guardian according to the Court child from the family of its birth must be
of Wards. (S.4(b), HMGA) complied with. (S.11, HAMA)
30 30
If the father is alive, he is the natural guardian Failure to comply with S.11 will render the
of his minor son and unmarried daughter. It is adoption null and void.
only after his death that the mother becomes
the natural guardian. If, however, the minor is Every male Hindu who is of sound mind, and
35 below the age of five, the mother will be the has attained majority may lawfully take a son 35
natural guardian in her lifetime, followed by or daughter in adoption provided he has no
the father after her death. In the case of Hindu son or daughter, grandson or
illegitimate children, the mother is the natural granddaughter, or great-grandson or great-
guardian in her lifetime, followed by the granddaughter, natural or adopted living at
40 father. (S.6, HMGA) the time of adoption; and if he has a wife 40
living, he can adopt only with her consent. (S.
The powers of a natural guardian are listed in 7 read with S.11)
S.8 of the HMGA. A natural guardian can
acquire property for the benefit of the minor. A female Hindu who is of sound mind, and
45 The natural guardian can take actions that will has attained the age of majority may take a 45
benefit and protect the minor and the minor’s son or daughter in adoption to herself and in
property. However, the guardian cannot sign a her own right. If she is married, she cannot
personal covenant for the minor. The guardian adopt a son or daughter during the lifetime of
50 cannot sell, mortgage, or give away any part her husband, unless the husband is of 50
of the minor’s immovable property, lease the unsound mind or has renounced the world. A
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! All India Bar Examination: Preparatory Materials! 70
An adopted child is deemed to be the child of Chapter III of the HAMA codifies the law of
her adoptive parents for all purposes with maintenance applicable to Hindus. A wife is
effect from the date of adoption. Thus, the entitled to live separately from her husband
40 adoptee can no longer claim any right to and claim maintenance from him: 40
succeed in the property of her natural father
or mother or any of the relations in the family • If he is guilty of desertion (as under the
of birth. From the date of adoption, all the ties HMA);
of the child in her birth family become • If he has treated her with cruelty (as under
45 severed, and are replaced by the ties created in the HMA); 45
the adoptive family. (S.12, HAMA) There are, • If he is suffering from a virulent form of
however, three qualifications to this rule: leprosy;
• If he has any other wife living;
50 • The adopted child is not divested of any • If he keeps a concubine in the same house 50
property already vested in her before the in which his wife is living or habitually
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! All India Bar Examination: Preparatory Materials! 71
same legal status as other codified statutes. A converted to Islam and married C, a
The development of the law is largely on the Muslim. On A’s death, property will only pass
basis of judicial precedent, which in recent to C and not to B. (Chedabaram v. Ma Nyien,
times has been subject to review by the courts. ILR (1928) 6 Ran 243)
5 S.2 of the Muslim Personal Law (Shariat) 5
Application Act, 1937, provides that all If a Muslim husband renounces Islam, his
questions regarding intestate succession, marriage with his Muslim wife is dissolved
personal property inherited or obtained under ipso facto. This is not the case if a Muslim wife
contract or gift, or any other provision of renounces Islam. The Muslim wife’s marriage
10 personal law, marriage, dissolution of is dissolved by apostasy only if the wife had 10
marriage, maintenance, dower, guardianship, been converted to Islam from some other faith
gifts, trusts and trust properties and wakfs, and then subsequently she renounces Islam.
applicable to Muslims in India, shall be
governed by the Muslim Personal Law, or Schools of Muslim Law
15 Sharia. This Act, therefore, provided statutory 15
recognition to certain Islamic laws and makes There are two schools of Muslim law, that is,
it applicable to all Muslims in India. Sunni and Shia. The four sub-schools of Sunni
A person is a Muslim either by birth or law are: the Hanafi school; the Maliki school;
conversion. A person who is born a Muslim the Shafei school; and the Hanbali school, each
20 remains so until she renounces the religion by named after the imams that founded them. 20
an unequivocal renunciation of Islam. It is not Though these schools differ in detail, their
necessary for such a person to observe any basic doctrines are essentially the same. In
particular rites or ceremonies. On conversion India, there is a presumption that parties are
to Islam, converts, regardless of what their Sunni belonging to the Hanafi school, since
previous religion was, are presumed to have, this is the case with most Indian Muslims.
25 from the moment of conversion, renounced (Bafatun v. Bilaiti Khanum, 1903 30 Cal. 683) 25
their earlier religion and substituted Islam in The three sub-schools of Shia law are: the
its place. However, conversion must be bona Ithna-Ashari school; the Ismaili school; and the
fide, and not a conversion with the purpose of Zaidy school. As most Shias are Ithna-Asharis,
evading any unfavourable personal law that the presumption is that a Shia is governed by
would have been applicable otherwise. the Ithna-Ashari exposition of the law.
30 (Akbarally v. Mahomedally, (1932) 34 Bom LR 30
Conversion from Islam 655)
Conversion or apostasy from Islam may be Applicability of the law of the different
express, by the utterance of the phrase ‘I schools is decided as follows:
35 hereby renounce Islam’ or by conduct, for 35
example, using grossly disrespectful language • When the parties to a suit are Muslims of
against the Prophet Mohammad or joining the same school, the law of that school will
enemies that are at war with Muslims. apply;
According to traditional Muslim law, if a • If they do not belong to the same school,
40 Muslim converts to another religion, she is the law of the defendant will apply; 40
barred from inheriting from her Muslim • If a Muslim changes her school of law in
relatives. By application of the Freedom of Islam, in good faith, the law of the new
Religion Act, 1850, however, and school will apply with immediate effect;
subsequently, the Constitution, a convert from and
45 Islam does not lose the right of inheritance. • When a person, who has changed her 45
Further, a Hindu cannot succeed to the estate school of law in Islam dies, the law of the
of a Muslim. school which she professed at the time of
her death will be applicable as regards
50 Illustration: A and B, both Hindus, were succession. 50
married as per Hindu customs. Subsequently
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! All India Bar Examination: Preparatory Materials! 73
For the sake of brevity, only the law of Sunnis If consent to a contract of marriage is obtained
of the Hanafi school will be discussed in this by force or fraud, such marriage is invalid
section on Muslim Law. unless ratified.
intercourse are illegitimate even if the ! Where the minor has no other
father establishes paternity. property and its sale is absolutely
necessary for her maintenance;
Muslim Women (Protection of Rights on Divorce) ! Where the debts of the deceased
5 Act, 1986 owner cannot otherwise be 5
liquidated;
This enactment protects the rights of Muslim ! Where there are legacies to be paid
women who have been divorced by, or have and no other means of paying them;
obtained divorce from, their husbands. It ! Where the produce of the property is
10 provides for the return of a Muslim woman’s not sufficient to defray the expenses 10
dower and other properties to her at the time of keeping it;
of the divorce. ! Where the property is in danger of
being destroyed; and
It also provides for courts to make provision ! Where the property has been
15 for the payment of maintenance to her. usurped, and the guardian has 15
Further, it allows her the option of being reason to fear that there is no chance
governed by S.125 of the Code of Criminal of fair restitution.
Procedure, 1973. "
Illustration: A, a Muslim, raises a loan from
20 Guardianship B. A mortgages the house belonging to C, 20
her minor ward. In case of a default, B
There is no concept of adoption under Muslim cannot proceed against the mortgaged
law. It does, however, recognise four kinds of house.
guardianship, which are especially relevant,
inter alia, to determine custody upon divorce: • Court-appointed guardian: The court
25 may appoint a guardian of the person 25
• Guardianship in marriage: This is discussed or property of a Muslim minor, if it is
in the section on ‘Marriage’. for the minor’s welfare. Such a
• Guardianship of minor for education: The right guardian may alienate the movable
to the custody of a male child until he and immovable property of her ward
completes the age of seven years and of a with the prior permission of the
30 female child until she attains puberty, court. However, she may lease the 30
belong to the mother. This holds true even property without the Court’s
after the mother is divorced. (Enamul Haque permission.
v. Bibi Taimunnisa, (1967) AP 344) Failing the • De facto guardian: A person is the de
mother, it goes to the following female facto guardian when she is neither the
35 relatives: mother’s mother howsoever high; de jure guardian nor a court- 35
father’s mother howsoever high; full sister; appointed guardian and yet she
uterine sister; consanguine sister; full voluntarily places she in charge of
sister’s daughter; uterine sister’s daughter; the minor’s person and property. All
and consanguine sister’s daughter. relations, except the father and the
40 • Guardianship of minor’s property: A minor’s paternal grandfather, and unrelated 40
property may be taken care of by three strangers can be de facto guardians.
types of guardians: Such guardians may alienate only the
minor’s movable property. Any
! Legal guardian: These guardians may alienation of the minor’s immovable
45 alienate the movable property of a minor property, without the Court’s 45
in cases of urgent necessity. They may consent, is void.
also alienate the minor’s immovable
property in the following situations: Illustration: A, a Muslim, was a member
50 of a partnership firm. A died, leaving 50
! Where double the value is obtained; behind B, his widow, and C, his minor
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! All India Bar Examination: Preparatory Materials! 77
25 A will under Muslim law may be made either • Sharers (Quranic heirs): They are entitled to 25
orally or in writing. No particular form is a prescribed share of the inheritance.
prescribed. It need not be signed or attested. • Residuaries (Agantic heirs): They take no
The person making the will may revoke it at prescribed share but succeed to the residue
any time either orally or in writing. after the claims of the Sharers are satisfied.
If there are no Sharers, the entire
30 But, if the marriage of a Muslim has been held inheritance devolves upon this class of 30
under the Special Marriages Act, 1954, then heirs. Note that Sunni laws and Shia laws
such a Muslim cannot execute a will under the differ in this regard.
Muslim law as the provisions of the Indian • Distant kindred (Uterine heirs): They are
Succession Act, 1925, shall be applicable in blood relatives who are neither Sharers nor
35 such cases. Residuaries. They include the ascendants 35
and descendants of the deceased;
There are, however, certain restrictions laid descendants of parents; and descendants of
down in making the will. A Muslim cannot grandparents.
bequeath her property in favour of someone
40 who is an heir at the time of the death of the Illustration: A Muslim man dies leaving 40
testator, unless the other heirs consent to the behind his father F, mother M, father’s father
bequest after the death of the testator. FF, mother’s mother MM, two daughters D1
and D2, and son’s daughter SD. Thus, F gets
If the heirs do not question the will for a very 1/6 as sharer since the deceased has children
45 long time and the legatees take and enjoy the surviving him. FF does not get anything as he 45
property, the conduct of such heirs will is excluded by F. M also gets 1/6 as the
amount to consent. Once an heir gives her deceased has children. MM is excluded by M.
consent to the bequest, she cannot rescind it Both D1 and D2 get 2/3 as sharers while SD is
50 later on. excluded by D1 and D2. 50
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! All India Bar Examination: Preparatory Materials! 78
Illustration: A Muslim woman dies leaving have been solemnised in accordance with the
behind her mother, father, and husband. The provisions of S.5 of the CMA by a person duly
husband is entitled to ½ as sharer whereas the authorised to do so.
father gets 1/3 and the mother gets 1/6.
5 The State Government concerned has the 5
Illustration: A Sunni man dies leaving behind authority to grant and revoke licences granted
his widow W, a daughter D, and his mother. in favour of certain persons for the
W gets 1/8, the mother would get 1/6 but this solemnisation of marriages under the CMA.
is increased to 7/32 (as residuary), and the (S.5(5), CMA) As per the provisions contained
10 daughter’s share ½ is increased to 21/32 (as in the CMA, the marriage must be performed 10
residuary). in a particular form duly entered in the
Marriage Register, maintained for this
Illustration: A Sunni woman dies leaving purpose. The factum of marriage can be
husband, H, and daughter, D. H gets ¼ as proved by producing the entries from this
15 sharer while D gets ¾ (1/2 as sharer and ¼ by register. Other evidence can also be produced 15
return). for this purpose and may include eye-witness
accounts, subsequent conduct of the couple
Note that step-children do not inherit from living as husband and wife, and admission of
step-parents, and vice-versa. either spouse to marriage.
20 20
Christian Law Conditions for marriage: For marriages among
Indian Christians, it must be proved that the
The Indian Christian Marriage Act, 1872 (“the age of the bridegroom is not below 18 years
CMA”), defines the term ‘Christian’ as a and that of the bride is not below 15 years.
person professing the Christian religion. The Neither party should have a wife or husband
25 term ‘Indian Christian’ includes Christian living. The parties to the marriage have to 25
descendants of native Indians converted to take oath in the name of “Almighty God” and
Christianity, as well as ordinary converts. (S. 3, in the name of “Lord Jesus Christ” before the
CMA) Marriage Officer and at least two witnesses.
(S. 60, CMA)
Illustration: A, born to Hindu parents was
30 baptised at birth and attended a Christian Time and place of marriage: As a general rule, 30
school but did not profess the Christian faith. every Christian marriage must be solemnised
He got married as per Hindu ceremonies and between 6:00 A.M. and 7:00 P.M. at a Church
rites. He is not a Christian because baptism by (Ss. 10 and 11, CMA). S.69 of the CMA
itself does not amount to conversion. punishes any person, who is not licensed and
35 who solemnises a marriage beyond these 35
Illustration: A, a person born to Christian hours, outside the Church in the absence of
parents, is Christian regardless of whether she the witnesses, with up to three years
professes the Christian faith. She continues to imprisonment. There are, however, special
be Christian until she converts to another licences granted by each State Government
40 religion by following that religion’s that may permit a clergyman of the Church to 40
procedures for conversion. solemnise a Christian marriage in
contravention of these sections. (S. 11, CMA)
Marriage
Marriages solemnised by licensed Ministers of
45 The Christian law of marriage in India is Religion: Under Part III, one of the persons 45
governed by the CMA. Certain conditions intending marriage must give notice in
have been laid down for a marriage to be valid writing to the Minister of Religion who she
under the CMA. The parties to the marriage desires to solemnise the marriage. (S. 12,
50 should be Christian or at least one of them CMA) 50
must be a Christian and the marriage should
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! All India Bar Examination: Preparatory Materials! 79
D’Souza v. Blanche Agnela Piedade, (1999) Court under the provisions of the Guardians
DMC 22) and Wards Act, 1890, to obtain an order of
guardianship for the minor child. Orders
Illustration: A and B were married in under that Act, however, would not apply
5 accordance with Christian laws. once the child became a major, thereby 5
Subsequently, B converted to Islam and disentitling the child from the benefits
invited A to convert with him. A can file for enjoyed by an adopted son or daughter.
divorce.
Thus, Christians in India can now adopt
10 • A wife may also present a petition for the children by resort to S.41 of the Juvenile 10
dissolution of her marriage on the ground Justice (Care and Protection of Children) Act,
that the husband has, since the 2006, read with the Guidelines and Rules
solemnisation of the marriage, been guilty issued by various State Governments.
of rape, sodomy, or bestiality.
15 • S.10A inserted by the Indian Divorce Succession 15
(Amendment) Act, 2001, allows for divorce
by mutual consent. The Indian Succession Act, 1925 (“the
• A husband or a wife may present a petition Succession Act”), is the law relating to
to the court to declare their marriage null succession applicable to the great majority of
20 and void on the following grounds (S.19, Christians in India. 20
Divorce Act):
By virtue of the provisions of the Goa, Daman
• Impotence; and Diu (Administration) Act, 1962, the
• That the parties are within the Portuguese Civil Code is applicable in Goa. In
prohibited degrees of consanguinity or Pondicherry, the French Civil Code still
25 affinity (Chapter IV of the Indian survives as per the provisions of the Treaty of 25
Succession Act, 1925); Cession. Further, the Garos of Meghalaya are
• That either party was a lunatic or idiot at also not subject to the provisions of the Indian
the time of marriage; or Succession Act and they follow their
• That there was a valid marriage in customary matrilineal system of inheritance.
existence with a previous spouse who This protection is granted by the Constitution
30 was living at the time of marriage. and also by S.29(2) of the Succession Act. 30
If a person has not made a testamentary
Children of such annulled marriages are disposition of her property which is capable
treated as legitimate children for the purposes of taking effect, she is deemed to have died
of succession. intestate in respect of her entire estate. (S.30,
35 Succession Act) 35
In any suit for divorce or nullity, the wife may
apply to the court for alimony pending the Ss.31 to 49 of the Succession Act lay down the
decree of the suit (S.36, Divorce Act). On such rules for distribution of property belonging to
decree, the Court has the power to order Christians and Jews.
40 permanent alimony (S.37, Divorce Act). Courts 40
are also granted the power under Chapter XI The property of an intestate primarily
to make provision regarding the custody of devolves upon the spouse, or upon those who
the children of divorcees. are kindred of the deceased, in accordance
with Chapter II of the Succession Act.
45 Adoption 45
Illustration: A left no children, but left eight
There is no specific statute enabling or grandchildren and two children of a deceased
regulating adoption among Christians in grandchild. The property is divided into nine
50 India. In the past, persons who wished to parts, one of which is allotted to each 50
adopt a minor child usually approached the grandchild and the remaining one-ninth is
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! All India Bar Examination: Preparatory Materials! 81
divided equally between the two great- months or fine up to Rs.200/-, or both.
grandchildren.
Illustration: A married C, the mother of his
Illustration: A dies intestate leaving his mother son’s wife, as per Parsi law. This marriage is
5 and two brothers of full blood and a half- invalid as A and C are within the prohibited 5
sister. The mother takes one-fourth, each degrees of relationship set forth in Schedule I
brother takes one-fourth and the half-sister of the PMDA. The priest who solemnised this
(uterine) takes one-fourth. marriage is also liable to punishment under
the PMDa.
10 Illustration: A dies intestate leaving his great- 10
grandfather, uncles and aunts, and no other Every marriage must be certified and
relatives. They all take equal shares. registered in accordance with S.6.
The following are some of the grounds for
Other Personal Laws divorce available to married Parsis (S.32,
15 PMDA): 15
Parsi Zoroastrians
• Adultery;
The word ‘Parsi’ has been defined to mean • Bigamy, rape or any unnatural offence
Parsi Zoroastrian. The children of a Parsi under S.377 of the Indian Penal Code, 1860;
20 father and a non-Parsi mother are Parsi • Causing grievous hurt to the plaintiff; 20
provided they are admitted to the Parsi • Cruelty;
religion and profess the Zoroastrian faith. The • Defendant has been imprisoned for a
children of a Parsi mother and non-Parsi period of seven years or more;
father, however, would not be Parsi. (Sir • Desertion for at least two years;
Dinshaw Maneckji v. Sir Jamshedji, 33 ILR Bom • Incurable unsound mind for at least two
25 509) years; 25
• Infecting the plaintiff with a venereal
Indian Parsis are governed by the Parsi disease;
Marriage and Divorce Act, 1937 (“the • The bride was pregnant by some other
PMDA”), in matters relating to marriage and person at the time of marriage;
divorce. • Unsound mind that the petitioner was
30 unaware of at the time of marriage; 30
A Parsi marriage is invalid if: • Wilful non-consummation of marriage
within one year of marriage; or
• The contracting parties are related to each • Conversion to another religion.
other in any of the degrees of consanguinity
35 or affinity set forth in Schedule I of the Illustration: A and B were married in 35
PMDA; accordance with Parsi law. After their
• The marriage is not solemnised according marriage, A alleged that B was neglecting her
to the Parsi ceremony of ‘Ashirvad’ by a and spending all of his money on unnecessary
priest in the presence of two Parsi luxury and vices. They also quarrelled a lot.
40 witnesses; or There is no ground for divorce that is 40
• If the contracting parties are underage, that satisfied. (Pestonji Kekobad Bharucha v. Aloo,
is, the male has not completed 21 years of AIR 1983 Bom 117)
age, and the female has not completed 18
years of age. If consummation of the marriage is impossible
45 due to natural causes, the marriage may be 45
The children of an invalid marriage are declared null and void at the instance of either
legitimate. party. If a husband or wife has been
continually absent from the other for seven
50 A Parsi priest who solemnises an invalid years and no one has seen or heard from the 50
marriage is liable to imprisonment up to six missing spouse in that period, the marriage
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! All India Bar Examination: Preparatory Materials! 82
shall, at the instance of either party, be Muslim women, there is also no statute
dissolved. Under Parsi law, both the husband providing for any matrimonial relief to an
and the wife are entitled to alimony pendent aggrieved party to a Jewish marriage. The
lite if unable to support himself/herself. nature and the incidence of a Jewish marriage
5 There is no provision for adoption under Parsi and the matrimonial relief to which a Jewish 5
law. Therefore, Parsi couples wishing to adopt husband or wife would be entitled, must
must do so under S.41 of the Juvenile Justice therefore be ascertained from their personal
(Care and Protection of Children) Act, 2000. law. (Mozelle Robin Solomon v. Lt. Col. R. J.
Solomon, (1979) 81 Bom LR 578)
10 Intestate succession is governed by Chapter III Courts have jurisdiction to entertain suits for 10
of the Succession Act: divorce between Jews. The law to be applied
in such cases is the Jewish law with such
• For the purposes of succession, there is no adaptation to the circumstances of the case as
distinction between those who are actually justice may require. In the event of any
15 born in the lifetime of the deceased and dispute, the custom of the Jewish community 15
those who, at the date of her death were in will be considered before any ruling on the
utero. (S.50(a), Succession Act) matter may be pronounced. (Bachel Benjamin v.
• A lineal descendant of an intestate who has Benjamin Solomon Benjamin, AIR 1926 Bom
died in the lifetime of the intestate, without 169)
20 leaving a widow or widower or any lineal 20
descendants, is not to be taken into account x-x
when determining succession to the
property of the intestate. (S.50(b),
Succession Act)
• Where a widow or widower of any relative
25 of an intestate has remarried in the lifetime 25
of that intestate, she/he is not entitled to
receive the intestate’s property. (S.50(c),
Succession Act)
• If a Parsi dies intestate leaving behind:
45 Jews 45
right to development, the right to a healthy respect for international law and treaty
environment, and collective rights are obligations… ” Further, A.253 vests Parliament
bracketed as third generation rights. While with the power to make laws to implement
civil and political rights are mostly negative international treaties or conventions.
5 rights, in that they require the State to refrain International law can be incorporated within 5
from curtailing rights, economic, social, and domestic law through automatic
cultural rights are positive rights as they incorporation or transformation. If there is no
require the State to take active steps to conflict between the domestic law and
implement the rights. obligations under a treaty, the latter
10 automatically becomes a part of domestic law. 10
Such a classification of human rights militates In the case of transformation, domestic
against the indivisibility and interdependence legislation must be enacted to give effect to
of human rights. The Vienna Declaration and the obligations.
Programme of Action, 1993, urged the
15 international community to “treat human rights These constitutional provisions indicate that 15
globally in a fair and equal manner, on the same international law can be incorporated into
footing, and with the same emphasis.” The right Indian law by transformation, and the
to education, which is regarded as both a civil Supreme Court of India (“the Supreme
and political right, and as an economic, social, Court”) has ruled that the “making of law…is
20 and cultural right, illustrates the indivisibility necessary when the treaty or agreement operates to 20
of rights. restrict the rights of citizens or others or modifies
the laws of the State. If the rights of the citizen and
Implementation of International Human others which are justiciable are not affected, no
Rights Law under the Constitution of India legislative measure is needed to give effect to the
agreement or treaty.” (Maganbhai Ishwarbhai
25 As of June 2010, India has ratified the Patel v. Union of India, (1970) 3 SCC 400) 25
following six international human rights law
covenants: In the event of a conflict between domestic
law and international conventions, the former
• The Convention on the Elimination of All shall prevail. (Gramophone Company of India
Forms of Racial Discrimination (“the Ltd. v. Birendra Bahadur Pandey, AIR 1984 SC
30 CERD”); 667) Courts should interpret domestic 30
• The ICCPR; legislation in light of international obligations.
• The ICESCR; (Jolly George Verghese v. Bank of Cochin, AIR
• The Convention on the Elimination of All 1980 SC 470)
forms of Discrimination against Women,
35 1979 (“the CEDAW”); In Vishaka v. State of Rajasthan, AIR 1997 SC 35
• The Convention on the Rights of the Child, 3011, the Supreme Court held that if there is a
1989 (“the CRC”); and void in domestic law, international
• The Convention on the Rights of Persons conventions can be relied on to fill the gap,
with Disabilities (“the CPRD”). provided that they are not inconsistent with
40 the Indian Constitution or with domestic law. 40
India has also ratified the two optional The Supreme Court placed reliance on the
protocols to the CRC, and is a signatory to the CEDAW and proceeded to lay down
Convention against Torture and other Cruel, guidelines to prevent the sexual harassment of
Inhuman or Degrading Treatment or women at the workplace.
45 Punishment, 1984 and the International 45
Convention for the Protection of All Persons Illustration: A young man who was picked up
from Enforced Disappearance, 1992. by the police for questioning in connection
with a theft was later found dead near a
50 A.51(c) of the Constitution of India (“the railway track. The victim’s mother 50
Constitution”) requires the State to “foster approached the courts claiming compensation
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! All India Bar Examination: Preparatory Materials! 85
for the violation of the right to life under A.21 and untouchability, which are enforceable
of the Constitution. A.9(5) of the ICCPR against private individuals and the State.
entitles victims of unlawful arrest or detention
to an enforceable right to compensation. The violation of fundamental rights can be
5 Relying on this provision, the court arrived at remedied by filing a writ petition before the 5
the position that monetary compensation can Supreme Court and High Courts under Aa.32
be ordered under Aa.32 and 226 of the and 226, respectively. Remedies for the
Constitution for contravention of a enforcement of fundamental rights and
fundamental right. (Nilabati Behera v. State of judicial review form an essential component
10 Orissa, AIR 1993 SC 1960) of the Indian Constitution. 10
Human Rights and the Constitution Fundamental rights are not, however, absolute
in nature, and are subject to well-defined
The fundamental rights enshrined in Part III ‘reasonable restrictions’. With the exception of
15 of the Constitution have been described as the the right to life and the protection with respect 15
basic human rights by the Supreme Court of to conviction for offences, all other rights may
India. The rights have been categorised as be suspended when a proclmation of
right to equality, right to fundamental emergency is in effect. (A.359 of the
freedoms, right against exploitation, right to Constitution of India)
20 freedom of religion, cultural and educational 20
rights, and right to constitutional remedies. Right to Equality
Fundamental rights, which, with some
exceptions, are primarily enforceable against The right to equality and non-discrimination
the State, however, are not merely confined to is contained in Aa.14, 15, and 16 of the
the rights expressly stipulated in Part III of the Constitution. These provisions are
25 Constitution. (Unni Krishnan, J. P. v. State of supplementary to each other. A.14, which 25
Andhra Pradesh, 1993 AIR SC 217) The guarantees equality before the law and the
Supreme Court has creatively interpreted equal protection of the law to all persons
several rights, such as the right to education within India, is also available to non-citizens.
(prior to the 86th Amendment to the The principle of equality, however, does not
Constitution), the right to health, the right to imply that every law must have a universal
30 information, the right to food, privacy, and application for all, despite the different 30
others, within the paradigm of fundamental situations, positions, and needs of persons.
rights. The law acknowledges that certain classes of
persons require separate treatment. The State
A.13 of the Constitution ensures the is permitted to make reasonable classifications
35 justiciability and enforceability of the of persons provided that the classification is 35
fundamental rights. The Article declares all “…based upon some real and substantial
pre-Constitutional laws that are inconsistent distinction bearing a reasonable and just relation
with fundamental rights to be void. A.13(2) to the object sought to be attained, and the
further enumerates that the State will “not classification cannot be made arbitrarily and
40 make any law which takes away or abridges without any substantial basis.” (State of Bombay 40
the rights conferred” by Part III. It further v. F. N. Balsara, AIR 1951 SC 318)
adds that any such law, which is in
contravention of the Constitution, will be Formal and Substantive Equality
declared void.
45 The Constitution of India recognises both 45
Fundamental rights, which are enforceable formal and substantive equality. Formal
against the State and its instrumentalities, are equality is based on the Aristotelian concept
understood as vertical in nature. These are as that likes must be treated alike. Equal
50 opposed to horizontal rights, such as the treatment of persons not similarly placed 50
prohibition against child labour, exploitation, results in greater discrimination and
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! All India Bar Examination: Preparatory Materials! 86
inequality. For instance, a racially neutral law down by the Supreme Court or the High
could have an unequal impact on a certain Courts. Despite this stipulation, courts have
class of persons. Substantive equality thus refrained from striking down or declaring any
focuses on the equality of results, which takes provision of personal law unconstitutional.
5 into perspective the differing social and Instead, the Courts have read down and 5
economic status of persons. Protective interpreted the provision allegedly in conflict
discrimination, like the prohibition on women with fundamental rights, in a manner that it
working at night or in bars, though it appears ceases to be in conflict with the fundamental
to be a positive or a protective step, invariably rights. In John Vallamattom v. Union of India,
10 causes greater hardship and discrimination AIR 2003 SC 2902, however, the court declared 10
against women by denying them their right to S.118 of the Indian Succession Act, 1925,
livelihood. which restricted Indian Christians from
bequeathing property for charitable or
Illustration: The Punjab Excise Act, 1914, religious purposes, as being arbitrary,
15 prohibited women from being employed in unreasonable, discriminatory, and therefore 15
any part of the premises in which liquor or an unconstitutional and violative of A.14 of the
intoxicating drug was being consumed by the Constitution.
public. Although the objective of the law was
to ensure the safety of women in public Illustration: AYZ filed a petition to strike down
20 spaces, it reflected gender stereotyping and S.6(a) of the Hindu Minority and 20
resulted in “invidious discrimination Guardianship Act, 1956, and S.19(b) of the
perpetrating sexual differences.” The court Guardian and Wards Act, 1890, as violative of
struck down the impugned section of the Act Aa.14 and 15 of the Constitution. Under Ss.6
as being violative of Aa.19(1)(g), 14, and 15 of (a) and 19(b), only the father of a Hindu minor
the Constitution. The Court observed, “Instead could be the natural guardian. The mother
25 of prohibiting women’s employment in the bars could become the natural guardian only 25
altogether the state should focus on factoring in ‘after’ the lifetime of the father. The petitioner
ways through which unequal consequences of sex argued that the provision was discriminatory
differences can be eliminated. It is the State's duty towards women and deprived mothers’
to ensure circumstances of safety which inspire guardianship rights, responsibilities, and
confidence in women to discharge the duty freely in authority in relation to her own children
30 accordance to the requirements of the profession during the lifetime of the father. The court 30
they choose to follow.”(Anuj Garg v. Hotel agreed that “…gender equality is one of the basic
Association of India, AIR 2008 SC 663) principles of the Constitution and in the event the
word 'after' is to be read to mean a disqualification
Non-Discrimination of a mother to act as a guardian during the lifetime
35 of the father, the same would definitely run counter 35
A.15(1) of the Constitution prohibits the State to the basic requirement of the constitutional
from discriminating against any citizen on the mandate and would lead to a differentiation
grounds of religion, race, caste, sex, place of between male and female.” The court interpreted
birth, or any of them. A.15(2) further prohibits the word 'after' to mean not after the death of
40 individuals and the State from discriminating the father, but in his absence, temporary or 40
on the grounds only of religion, race, caste, otherwise, or total apathy of the father
sex, place of birth, or any of them, with regard towards the child, or inability of the father by
to access to shops, hotels, and places of public reason of ailment to act as a natural guardian.
entertainment, use of wells, tanks, bathing (Githa Hariharan v. Reserve Bank of India, AIR
45 ghats, roads, and places of public resort 1999 SC 1149) 45
maintained wholly or partly out of State funds
or dedicated to the use of the general public. Constitutional Safeguards for Women, Children,
Scheduled Castes, Scheduled Tribes, and Socially
50 The Constitution provides that any law which and Educationally Backward Classes 50
violates any fundamental right can be struck
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! All India Bar Examination: Preparatory Materials! 87
Whereas the right to equality prohibits Scheduled Castes and the Scheduled Tribes
discrimination on the basis of sex or caste, Aa. who were promoted, though they had not
15(3), 15(4), and 15(5) empower the State to passed the prescribed tests. XYZ filed a
make special provisions for women and petition challenging the constitutionality of
5 children, socially and educationally backward Rule 13AA on the ground that it was violative 5
classes of citizens, and the Scheduled Castes of A.16 of the Constitution. The apex court
and the Scheduled Tribes. These provisions held that Aa.14 and 16 permit reasonable
seek to eliminate the socio-economic classification having a nexus to the objects to
backwardness of these classes and are a form be achieved. The court remarked, “[t]he
10 of positive discrimination. A.16 ensures guarantee of equality before the law or the 10
equality of opportunity for all citizens in equal opportunity in matters of employment
employment or appointment to any office is a guarantee of something more than what is
under the State. The Article enables the State required by formal equality. It implies
to make employment reservations in differential treatment of persons who are
15 government jobs in favour of any backward unequal.” The Supreme Court upheld the 15
classes which have not been adequately validity of Rule 13AA justified under A.16(1)
represented by the State. In Indra Sawhney v. of the Constitution and within the purview of
Union of India, AIR 1993 SC 477 (Mandal A.16(4). The Court reiterated the necessity of
Commission case), the court addressed the substantive equality as opposed to formal
20 constitutional validity of 27% reservation for equality. It observed that equality of 20
socially and educationally backward classes in opportunity implies fair opportunity to all
civil posts and services in the Government of sections of society by eradicating the
India. The court laid down essential rules and handicaps of a particular section of the society.
limitations on reservations, such as: What A.14 or A.16 forbids is hostile
discrimination and not reasonable
25 • Reservation measures can be made by the classification. Classification is implicit in the 25
Legislature by law or by the executive; concept of equality because equality means
• A.16(4) is not an exception to A.16(1), and equality to all and not merely to the advanced
reservation of posts for a certain class is in and educated sections of the society. (State of
the nature of a reasonable classification for Kerala & Another v. N. M. Thomas, AIR 1976 SC
ensuring equality of opportunity; 490)
30 • Backwardness under A.16(4) is mainly 30
social and need not be both social and Right to Fundamental Freedoms
educational;
• The socially advanced members of A.19 guarantees Indian citizens six rights: the
backward classes, identified as the creamy right to freedom of speech and expression; the
35 layer, should be excluded from the right to peaceful assembly; the right to form 35
reservations and reservations should not associations or unions; the right to move
exceed 50% in any one year; and freely thoroughout the country; the right to
• Reservations cannot be applied to reside and settle in any part of the country;
promotions and merit alone would be and the right to practise any profession and
40 considered for certain posts and services. carry on any occupation or business. These 40
freedoms that are a testament to the
Illustration: Rule 13A of the Kerala State democratic values of India are subject to
Subordinate Services Rules, 1958, made it certain limitations. For instance, the
obligatory for an employee to pass Parliament or the State legislatures can
45 departmental tests for promotion. On request, impose restrictions on the right to freedom of 45
the State introduced Rule 13AA, which further speech and expression, on account of security
exempted the Scheduled Castes and the of the State, the sovereignty and integrity of
Scheduled Tribes from passing the tests for a India, friendly relations within foreign states,
50 period of two years. XYZ was not promoted public order, decency, or morality, or in 50
despite passing the said test, as opposed to the relation to contempt of court, defamation or
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! All India Bar Examination: Preparatory Materials! 88
with fellow human beings.” The court upheld the Girls Act, 1956), to suppress trafficking of
right of the detainee to meet her family and women for the purpose of prostitution, the
friends. It held the said clauses to be violative Bonded Labour System (Abolition) Act, 1976,
of Aa.14 and 21 and unconstitutional and void to prevent the economic exploitation of the
5 as they permitted only one interview in a vulnerable, and the Child Labour (Prohibition 5
month to a detainee and regulated the right of and Regulation Act), 1986, to prohibit the
a detainee to have an interview with a legal employment of children in specified
adviser of her choice. (Francis Coralie Mullin v. occupations.
Union Territory of Delhi, AIR 1981 SC 746)
10 Illustration: M was working as a construction 10
Illustration: Right to Health labourer and was being paid remuneration
below the minimum wage. This amounts to
D suffered serious injuries after falling off a ‘forced labour’ under A.23, and M has the
train. D was denied treatment in six hospitals right to approach the court under A.32 or A.
15 on account of either non-availability of a 226. (People’s Union for Democratic Rights v. 15
vacant bed or lack of medical facilities Union of India, AIR 1982 SC 1473 (Asiad case))
required for the treatment. D contended that
the non-availability of medical facilities had Freedom of Religion
resulted in the denial of D’s fundamental right "
20 guaranteed under A.21. The court declared Aa.25 - 28 of the Constitution govern the right 20
that A.21 imposes an obligation on the State to to freedom of religion. A.25 guarantees to
safeguard the right to life of every person. The every person the freedom of conscience and
hospitals run by the State and the medical the right to profess, practise, and propagate
staff are duty bound to provide medical religion freely. This right is subject to public
treatment to preserve life. The failure to order, morality, and health. This right does not
25 provide timely medical treatment to a person prevent the State from enacting laws to 25
in need of such treatment results in violation regulate or restrict any economic, financial,
of the right to life guaranteed under A.21. The political, or secular activity associated with
court ordered the State to compensate the religious practice or laws to provide for social
petitioner for the breach of the right welfare and reform.
guaranteed under A.21 of the Constitution. It
30 further directed the State to formulate a plan The right to propagate religion does not 30
for providing services to ensure availability of include the right to convert and forceful
medical care, and the implementation of the conversion interferes with an individual’s
plan. (Paschim Banga Khet Mazdoor Samity & ‘freedom of conscience’. (Rev. Stainislaus v.
Others v. State of West Bengal & Another, AIR State of Madhya Pradesh, AIR 1977 SC 908)
35 1996 SC 2426) 35
Illustration: P, Q, and R, who belonged to the
Right Against Exploitation sect of Jehovah’s Witnesses, were expelled
from school because they refused to sing the
Aa.23 and 24 protect the vulnerable from National Anthem at school. They, however,
40 exploitation by the State and by private would stand respectfully when the Anthem 40
individuals. A.23 prohibits trafficking of was being sung. The court held that
human beings and other forms of forced compelling students to sing the National
labour. A.24 prohibits employment of children Anthem would contravene their right to
below 14 years of age in factories, mines or freedom of religion and the right to freedom
45 any other hazardous employment. of speech and expression. (Bijoe Emmanuel v. 45
State of Kerala, AIR 1987 SC 748)
In furtherance of the above prohibitions,
Parliament enacted laws such as the Immoral Cultural and Educational Rights
50 Traffic (Prevention) Act, 1956 (replaced the 50
Suppression of Immoral Traffic in Women and A.29(1) recognises the right of a section of
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! All India Bar Examination: Preparatory Materials! 92
The JJ Act sets out a “child-friendly” Welfare Committee, which can pass orders to
procedure to be followed while dealing with place the child in a children’s home or shelter
juveniles in conflict with the law and children home to secure her safety and well-being.
in need of care and protection. The former has
5 been defined to mean, “A juvenile who is alleged The JJ Act is a secular legislation, and 5
to have committed an offence and has not provides for adoption, foster care,
completed the eighteenth year of age as on the date sponsorship, or placement at an after-care
of commission of such offence”. organisation with the aim of securing the
rehabilitation and social integration of
10 The JJ Act stipulates the orders that can be children residing in children’s or special 10
passed by the Juvenile Justice Board (“the homes.
JJB”). No order sentencing the juvenile to
death or imprisonment can be passed. Illustration: Mr. and Mrs. V, a Hindu couple
wished to adopt S, a girl child who had been
15 It is notable that the claim of juvenility can be surrendered to a nursing home by her parents 15
raised “at any stage, even after final disposal at birth. They also had a daughter of their
of the case” (S.7A, JJ Act). Furthermore, in own. The adoption was challenged as being in
cases pending before the JJ Act, 2000, came contravention of the Hindu Adoption and
into effect, courts can continue with the Maintenance Act, 1956 (“the HAMA”), which
20 proceedings and upon arriving at the prohibits a person having a living daughter 20
conclusion that the offence has been from adopting a daughter. Unlike the HAMA,
committed, should forward the juvenile to the under S.41(6)(b) of the JJ Act, a person having
JJB for orders (S.20, JJ Act). a biological son or daughter can adopt a child
of the same sex. The court adopted a
Illustration: D was 16 years, 10 months, and 20 harmonious construction of these two laws
25 days old when he allegedly kidnapped and and held that where a child falls within the 25
murdered a person. The offence was description of “orphaned, abandoned or
committed in 1995 when the Juvenile Justice surrendered child,” the provisions of the JJ
Act, 1986, was in force. This Act defined Act would apply. (In re: Adoption of Payal, 2009
“juvenile” to mean “a boy who has not (111) BomLR 3816)
attained the age of sixteen years…” In 2003, D
30 was convicted and sentenced to life The Juvenile Justice (Care and Protection) 30
imprisonment. In his appeal, D claimed that Rules, 2007, (“the Rules”) set out 14
since he was a “juvenile in conflict with law”, principles, which the Child Welfare
the sentencing would have to be in accordance Committee and Juvenile Justice Board must
with the 2000 Act (the JJ Act). The court held abide by while implementing the Rules. Some
35 that on a combined reading of Ss. 7 and 20 of of the key principles are the presumption of 35
the JJ Act, it was clear that if a person was innocence, right to be heard, best interest,
below the age of 18 years on the date of the safety, family responsibility, equality and non-
commission of the offence, the JJ Act, would discrimination, right to privacy and
apply. (Imtiyaz Hussain v. State of Maharashtra, confidentiality, institutionalisation to be a step
40 (2008) 110 BomLR 1645) of last resort, repatriation and restoration, and 40
a fresh start.
“Child in need of care and protection” has
been broadly defined to include orphaned, Principle of Best Interest of the Child
abandoned, or surrendered child; child who is
45 or is likely to be subjected to abuse, neglect, The key principles entrenched in the CRC are 45
sexual abuse, or trafficking; a child who is the principles of non-discrimination, best
terminally ill or child with disabilities and no interest, child participation, and the right to
caregiver; or a child who is a victim of armed life. The principle of best interest of the child
50 conflict, civil commotion or natural disaster. is also contained in the Hindu Minority and 50
Such a child can be brought before the Child Guardianship Act, 1956, and the Guardians
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! All India Bar Examination: Preparatory Materials! 96
and Wards Act, 1890, and has been regularly modesty of a woman (S. 345, IPC) and
relied on by courts while deciding on custody unnatural sexual offences (S.377, IPC) shall be
matters. held in-camera. Further, while holding the
trial of child sexual abuse or rape, a screen
5 Illustration: A filed a habeas corpus petition should be placed so that the victim cannot see 5
before the court seeking custody of his the accused and the victim should be allowed
daughter, claiming that she had been sufficient breaks while giving testimony.
abducted by B, his wife, and her parents. A Questions relating to the incident must be
also alleged that B was suffering from a given in writing to the Presiding Officer who
10 mental ailment which rendered her unsuitable must then put it to the victim, “in a language 10
for custody. The court observed that “in case of which is clear and is not embarrassing.” (Sakshi v.
dispute between the mother and father regarding Union of India, AIR 2004 SC 3566)
the custody of their child, the paramount
consideration is welfare of the child and not the Applicability and Enforcement of Human
15 legal right of either of the parties.” Applying this Rights 15
principle, the court allowed B to retain the
custody of the child. (Rajesh K. Gupta v. Ram Right to Constitutional Remedies
Gopal Agarwala, AIR 2005 SC 2426)
A.32 of the Constitution encompasses the
20 Protection Against Violence critical right to a remedy for violation of 20
fundamental rights. A.32(1) guarantees the
The provisions of the CRC require India to right to approach the Supreme Court directly
enact laws and take other appropriate and A.32(2) empowers the court to issue
measures to protect children from “all forms of directions or orders or writs such as habeas
physical or mental violence, injury or abuse, corpus, mandamus, certiorari, quo warranto, and
25 neglect or negligent treatment, maltreatment or prohibition. The High Court can also be 25
exploitation including sexual abuse…” Further, approached under A.226. This right may,
the CRC expressly prohibits a child from however, be suspended by way of a
being subjected to torture or inhuman presidential order when a proclamation of
treatment. The dignity of the child must be emergency under A.352 of the Constitution is
respected and secured. in effect.
30 30
Illustration: S, an eleven-year-old girl, was A petition may be filed by the person whose
made to crouch in an uncomfortable position rights have been violated or any public
under the hot sun for two consecutive days in spirited individual. The court may also
school as punishment for failure to recite exercise its suo motu powers and take
35 alphabets. She later slipped into a coma and cognizance of a violation. 35
passed away. Corporal punishment in schools
is an affront to the dignity of a child and Public Interest Litigation
interferes with the right to education flowing
from the right to life. (Parent’s Forums for In cases where the enforcement of a
40 Meaningful Education v. Union of India, AIR fundamental right is involved, a public 40
2001 Del 212) interest litigation (“a PIL”) can be filed in the
Supreme Court under A.32. A writ petition
The Indian legal framework does not provide can be filed in the High Court under A.226 on
for child sexual abuse as a distinct offence. It is many grounds, aside from the violation of a
45 dealt with under provisions relating to rape, Fundamental Right. 45
hurt, and outraging the modesty of a woman.
Taking into account the unease and discomfort PILs, which have been used to protect the
faced by a child victim of sexual abuse, the rights of the disadvantaged and to ensure
50 apex court has laid down that along with rape access to justice, relax the traditional concept 50
trials, the trial of the offences of outraging the of locus standi, which permits only persons
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! All India Bar Examination: Preparatory Materials! 97
whose rights have been affected to approach had been violated and that “[w]here public
the Court. Following the Emergency of functionaries are involved and the matter relates to
1975-1977, non-adversarial litigation has the violation of the fundamental rights or the
emerged as a custodian of the basic human enforcement of public duties, the remedy would
5 rights of the people. From upholding the still be available under the Public Law 5
personal liberty of undertrials (Hussainara notwithstanding that a suit could be filed for
Khatoon & Others v. Home Secretary, State of damages under Private Law.” (Chairman, Railway
Bihar, 1979 AIR 1819), rehabilitation of child Board v. Chandrima Das, AIR 2000 SC 988)
prostitutes (Gaurav Jain v. Union of India, AIR
10 1997 SC 3019), to the release of bonded labour Compensation is not, however, ordered in 10
(Bandhua Mukti Morcha v. Union of India, (1984) every case of violation of fundamental rights.
2 SCR 67), the PIL has served as a “strategic For instance, in cases involving custodial
arm of the legal aid movement.” (People’s violence or death, compensation can be
Union for Democratic Rights v. Union of India, ordered if the violation of A.21 is “patent and
15 AIR 1982 SC 1473) The Supreme Court further incontrovertible”, is “gross and of a magnitude to 15
relaxed rules of procedure by treating letters shock the conscience of the court”, and has
reporting the violation of fundamental rights resulted in death or is supported by medical
as writ petitions. report, disability, or scars.” (Sube Singh v. State
of Haryana, (2006) 3 SCC 178)
20 Right to Compensation for Violation of 20
Fundamental Rights Quasi-Judicial Bodies And Remedies
While the Constitution does not expressly India established the National Human Rights
provide for the right to compensation for Commission (“the NHRC”) in 1993 under the
violation of fundamental rights, the Supreme Protection of Human Rights Act, 1993. The
25 Court has, in pursuance of its powers under establishment of an impartial and 25
A.32, ordered compensation to redress autonomous body for protection and
violations, especially civil and political rights fulfilment of human rights was a consequence
violations. of growing human rights violence and
domestic and international pressure. The
Illustration: R was detained for more than 14 NHRC has been vested with the power to
30 years in jail after he had been acquitted. R investigate cases of human rights violations, 30
filed a habeas corpus petition seeking his to inspect existing mechanisms to protect
release and claimed compensation for the human rights, to sensitise the government to
illegal detention. Ordering compensation, the its domestic and international obligations, to
court observed, “the refusal of this Court to spread human rights awareness, and to work
35 pass an order of compensation in favour of the with civil society organisations and intervene 35
petitioner will be doing mere lip-service to his in court proceedings. In the Gujarat Best
fundamental right to liberty which the State Bakery case, the NHRC proactively filed a
Government has so grossly violated. A.21 petition before the Supreme Court to transfer
which guarantees the right to life and liberty riot cases outside Gujarat for a fair and
40 will be denuded of its significant content if the impartial trial and to ensure safety of 40
power of this Court were limited to passing witnesses. It further prayed for the setting
orders to release from illegal aside of the trial court order in the Best Bakery
detention.” (Rudul Sah v. State of Bihar, AIR case, which had wrongly acquitted all the
1983 SC 1086) accused in the case, and sought directions for
45 further investigation by an independent 45
Illustration: Ms. C, a citizen of Bangladesh, was agency and also retrial of the case in a court
gang-raped by employees of the Indian located outside Gujarat. The NHRC can take
Railways. A petition was filed under A.226 suo motu action and is vested with the power
50 claiming compensation. The court held that A. to intervene in court proceedings. 50
21, which is available to non-citizens as well,
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! All India Bar Examination: Preparatory Materials! 98
Complaints can be registered with the NHRC ratified the relevant instruments that make it
by or on behalf of any person whose human permissible for individuals to access the
rights have been violated. The complaint can complaints’ mechanisms of treaty bodies.
be filed free of cost, thus eradicating any
5 economic barriers to access to justice. In 2006, the United Nations General Assembly 5
adopted a resolution under which the Human
In addition to the NHRC, States are under a Rights Council was constituted as a
duty to set up State Human Rights subsidiary organ of the General Assembly.
Commissions, which would work in The Council has been vested with the
10 conjunction with the NHRC and provide relief responsibility of promoting and protecting 10
in different States with regard to human rights human rights and fundamental freedoms. The
violations. Council has been empowered to examine
gross and systematic violations and make
In addition to the NHRC, there is the National recommendations thereon. Significantly,
15 Commission for Women (“the NCW”), the through the Universal Periodic Review 15
National Minorities Commissions (“the mechanism, the Council can undertake a
NCM”), the National Commission for review of the human rights record of all
Protection of Child Rights (“the NCPCR”), the countries that are members of the United
National Commission for Scheduled Castes Nations.
20 (“the NCSC”), the National Commission for 20
Scheduled Tribes (“the NCST”), and the x-x
National Commission for Backward Classes
(“the NCBC”). There are similar bodies at the
state level.
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1RWHV
! All India Bar Examination: Preparatory Materials! 99
S.22(1) of the Industrial Disputes Act provides Illustration: The workmen of an industrial
that no person employed in a public utility establishment and their employer enter into
service shall go on strike in breach of contract: conciliation proceedings before a
45 cConciliation oOfficer, and during these 45
! Without giving the employer notice of proceedings, the workmen strike work. This
strike within six weeks before striking; or strike is not illegal, as the conciliation
! Within fourteen days of giving such notice; proceedings are before a cConciliation
50 or oOfficer and not a Board of Conciliation. 50
! Before the expiry of the date of strike
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! All India Bar Examination: Preparatory Materials! 101
S.24 of the Industrial Disputes Act provides the conclusion of proceedings before a
that a strike in contravention of Ss.22 or 23, or Labour Court, Tribunal, or National
in contravention of an order made under Ss.10 Tribunal;
or 10-A is illegal. S.26 provides for ! During the pendency and 2 months after
5 imprisonment up to one month and the levy the conclusion of arbitral proceedings, 5
of fines up to Rs.50/- on workmen guilty of when a notification has been issued by the
involvement in illegal strikes. Appropriate Government under S.10-A; or
! During any period in which a settlement or
Illustration: The workmen of an industrial award is in operation in respect of any of
10 establishment strike work illegally, and the the matter covered by the settlement or 10
employer seeks damages as compensation award.
from the workmen. A suit for damages will
not lie, as the remedies for illegal strikes are S.24 of the Industrial Disputes Act provides
found exclusively in S.26 of the Industrial that a lock-out in contravention of Ss.22 or 23,
15 Disputes Act. (Rothas Industries Limited v. or in contravention of an order made under 15
Rothas Industries Staff Union, (1976) 1 LLN 165) Ss.10 or 10-A is illegal. S.26 provides for
imprisonment up to one month and the levy
Lockouts of fines up to Rs.1,000/- on employers guilty
of involvement in illegal lock-outs.
20 S.2(l) of the Industrial Disputes Act defines the 20
term “lock-out” as “the temporary closing of a Lay-offs, Retrenchment, and Closure
place of employment or the suspension of
work, or the refusal by an employer to There are conditions and restrictions imposed
continue to employ any number of persons by the Industrial Disputes Act on industrial
employed by him” establishments with respect to lay-offs,
25 retrenchment and closure. 25
S.22(2) of the Industrial Disputes Act provides
that no employer carrying on any public Lay-Offs
utility service shall lock out any workmen:
“Lay-off” is defined under S.2(kkk) of the
! Without giving the workmen notice of lock- Industrial Disputes Act as the failure, refusal
30 out within six weeks before locking out; or or inability of an employer on account of 30
! Within fourteen days of giving such notice; shortage of power, raw materials,
or accumulation of stocks or breakdown of
! Before the expiry of the date of lock-out machinery, to give employment to a workman
specified in any such notice; or whose name is borne on the muster rolls of
35 ! When any conciliation proceedings are the employer’s industrial establishment, and 35
pending before a conciliation who has not been retrenched. A lay-off is a
officerConciliation Officer, and seven days temporary act (as opposed to permanent acts
after the conclusion of such proceedings. such as retrenchment and closure) arising out
of situations out of the control of the
40 While S.22(2) of the Industrial Disputes Act employer. Employees must be restored to 40
imposes restrictions on lock-outs in public their full position as employees as soon as the
utility services, S.23 prohibits lock-out in any reasons for the emergency have ended.
industrial establishment in the following
circumstances: Illustration: A is employed by industry B as a
45 workman. Industry B faces a shortage of 45
! When conciliation proceedings are pending supplies and lays off some workmen (but not
before a Board of Conciliation and till the A) for a week. A meets with an accident
expiry of 7 days after the conclusion of such during that week and does not report to work.
50 proceedings; A cannot be said to have been laid off, as a 50
! During the pendency and 2 months after lay-off implies unemployment on account of a
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! All India Bar Examination: Preparatory Materials! 102
cause which is independent of any action or intermittent nature) are required to seek prior
inaction on the part of the workmen. (Central permission of the appropriate Government
India Spinning, Weaving and Manufacturing before effecting any lay-offs.
Company Limited v. State Industrial Court at
5 Nagpur and Another, (1959) I LLJ 468 (Bom)) The powers of the appropriate Government to 5
give prior permission are quasi-judicial in
Chapter V-A of the Industrial Disputes Act nature, and hence the principles of natural
applies to industrial establishments justice must be applied. (Workmen v.
employing more than 50 but less than 100 Meenakshi Mills Limited, AIR 1994 SC 2696)
10 workmen on an average per working day in 10
the previous calendar year, and to industrial Retrenchment
establishments which are of seasonal character
or where work is performed intermittently. S.2(oo) of the Industrial Disputes Act
defines“retrenchment” as termination by the
15 S.25C of the Industrial Disputes Act provides employer of service of a workman for any 15
that such employers can lay off workmen who reason other than:
have completed one year of continuous
service only upon payment of compensation ! Termination as a punishment inflicted by a
equal to 50% of basic wages and dearness disciplinary action;
20 allowance. S.25E of the Industrial Disputes ! Voluntary retirement or retirement on 20
Act, provides, however, that lay off reaching age of superannuation;
compensation will not be payable if such a ! Termination on account of non-renewal of
workman refuses to accept alternate contract upon expiry;
employment offered by the employer, or if the ! Termination on grounds stipulated in the
workman does not report to the establishment contract of employment; or
25 at the appointed time, or if the laying-off is ! Termination on account of the continued ill 25
due to a strike or slowing down of production health of a workman.
by workmen in another part of the
establishment. Thus, the term ordinarily implies discharge of
surplus labour or staff, and therefore,
Illustration: A has been employed as a retrenchment is mandated by S.25G of the
30 shipyard worker by an industrial Industrial Disputes Act to be on the principle 30
establishment for the last twelve months. For of ‘last in first out’ in respect of each category
seven weeks in that period, however, due to of workman. Furthermore, if the employer
stormy weather, no shipyard work was wishes to re-employ persons post any act of
possible, and therefore, A did not perform any retrenchment, S.25H mandates that first
35 work. A must be considered to have been in preference must be given to retrenched 35
continuous service for those twelve months, as workmen.
regardless of whether any work is physically
done, A is deemed to have actually worked on S.25F of the Industrial Disputes Act provides
all those days during which A was in the that in any industrial establishment, no
40 employment of the employer and for which A workman in continuous service for at least a 40
has been paid wages either under contract or year may be retrenched until: (a) the workman
by compulsion of law. (Workmen v. has been given one month’s notice in writing
Management of American Express, AIR 1986 SC or has been paid wages in lieu of such notice;
548) (b) the workman has been paid, at the time of
45 retrenchment, compensation which must be 45
Chapter V-B of the Industrial Disputes Act equivalent to fifteen days' average pay for
provides that industrial establishments every completed year of continuous service or
employing 100 workmen or more on an any part thereof in excess of six months; and
50 average per working day in the previous (c) notice is served on the appropriate 50
calendar year (not being work of seasonal or Government. S.25B excludes from the term
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! All India Bar Examination: Preparatory Materials! 103
Additionally, under Chapter V-B of the Industrial Tribunals are constituted by State
Industrial Disputes Act, industrial Governments under S.7A of the Industrial
20 establishments employing 100 workmen or Disputes Act, and have jurisdiction over: 20
more on an average per working day in the
previous calendar year (not being work of • Wages, including period and mode of
seasonal or intermittent nature) are required payment;
to seek prior permission of the appropriate • Compensatory and other allowances;
Government before effecting any • Hours of work and rest intervals;
25 retrenchment. • Leave with wages and holidays; 25
• Bonus, profit sharing, provident fund, and
Closure gratuity;
• Shift working changes;
“Closure”is defined under S.2(cc) of the • Classification by grades;
Industrial Disputes Act as the permanent • Rules of discipline; and
30 closing down of a place of employment or part • Rationalisation and retrenchment of 30
thereof. workmen.
trade or industry whether or not in the also operates electricity and water
employment of the employer with whom the departments. Since these departments would
trade dispute arises.”#The expression "trade or be an industry or analogous to an industry,
industry" is not defined in the Trade Unions the employees in those departments would be
5 Act. In the absence of any definition of workmen within the meaning of the Trade 5
"industry" in the Trade Unions Act, the same Unions Act and they will be entitled to
considerations which have been held to be register themselves as a trade union. (Tirumala
relevant for the purpose of holding whether Tirupati Devasthanam v. Commissioner Of
an institution is an industry or not under the Labour, (1979) ILLJ 448 AP)
10 Industrial Disputes Act, would be equally 10
relevant for the purposes of the Trade Unions Trade Dispute
Act.
The definition of the term “trade dispute”
Accordingly, an activity can be regarded as an closely mirrors the definition of the term
15 industry, if there is a relationship of employer “industrial dispute” under the Industrial 15
and employees, and the employer is engaged Disputes Act. Therefore, as in the case of
in any business, trade, undertaking, industrial disputes, any party seeking to raise
manufacture or calling, and the employees, in a trade dispute must have a direct interest in
any calling, service, employment, handicraft, the subject matter of the dispute.
20 or industrial occupation or avocation. In order 20
that an activity may be regarded as an Immunity
undertaking analogous to trade or business, it
must be organised or arranged in a manner in Under certain conditions, the Trade Unions
which trade or business is generally organised Act confers immunity to the registered trade
or arranged. It must rest on co-operation unions, their members and office-bearers
25 between employer and employees who against certain civil and criminal actions. 25
associate together with a view to production,
sale or distribution of material goods or Immunity: Criminal Conspiracy in Trade
material services. It is entirely irrelevant Disputes
whether or not there is a profit motive or
investment of capital in such activity. It is also Under S.17 of the Trade Unions Act, no office-
30 immaterial whether its objects are charitable bearer or member of a registered trade union 30
or that it does not make profits. (Workmen of is liable to punishment under S.120B (2) of the
Indian Standards Institution v. Management of Indian Penal Code, 1860 in respect of any
Indian Standards Institution, AIR 1976 SC 145) agreement made between the members for the
purpose of furthering any object of the trade
35 Illustration: A is a religious institution whose union as set out in S.15 of the Trade Unions 35
main function is to manage the affairs of a few Act. If, however, such an agreement is in itself
places of worship, and to enable pilgrims to an agreement to commit an offence, no
visit places of worship and offer their prayers. immunity is available.
Although A derives enormous income from its
40 activities, which it utilises for various Illustration: Company A, an industry, 40
educational and religious purposes, the retrenches a number of its workmen, who
essential character of A is that of a religious allege that the retrenchment was illegal. As a
institution. It is not an institution where result, the retrenched workmen and members
material human needs are met. It is primarily of the trade union representing them
45 a spiritual institution. Therefore, A cannot be blockaded Company A’s premises, wrongfully 45
regarded as a trade or industry within the confining certain persons therein for an
meaning of the Trade Unions Act, 1926. extended period of time. No immunity would
Therefore, the persons employed by it are not be available to the workmen and the trade
50 workmen and cannot consequently register union members for the offence of wrongful 50
themselves into a trade union. However, A confinement under S.340 of the Indian Penal
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! All India Bar Examination: Preparatory Materials! 106
Code, 1860, as the act itself is illegal. S.17 of members of a trade union are immune from
the Trade Unions Act grants limited immunity the application of S.27 of the Indian Contract
to members of a trade union, but there is no Act, 1872, which otherwise renders all
immunity against prosecution for either an agreements in restraint of trade void.
5 agreement to commit an offence or 5
intimidation, molestation or violence, where Appropriate Government
they amount to an offence. (Jay Engineering
Works Limited and Others v. State Of West Bengal "Appropriate Government” for all purposes
and Others, AIR 1968 Cal 407) under the Trade Unions Act means: (i) the
10 Central Government in case of trade unions 10
Immunity: Immunity from Civil Suit in Certain whose objects are not confined to one state,
Cases and (ii) the State Governments in case of all
other trade unions. The Appropriate
Registered trade unions and their office- Government is empowered to make
15 bearers and members enjoy immunity from regulations in respect of certain prescribed 15
suits and other legal proceeding in Civil matters.
Courts in respect of any act done in
contemplation or furtherance of a trade Industrial Relations: The Industrial
dispute to which a member of the Trade Union Employment (Standing Orders) Act, 1946
20 is a party on the ground only that such act 20
induces some other person to break a contract The Industrial Employment (Standing Orders)
of employment, or that it is in interference Act, 1946 (“the Standing Orders Act”) was
with the trade, business or employment of enacted to require employers in industrial
some other person or with the right of some establishments to precisely define and make
other person to dispose of her capital or of his known to workmen the conditions of
25 labour as she wills. employment. 25
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! All India Bar Examination: Preparatory Materials! 107
the Minimum Wages Act to all shops and time work basis; and / or
establishments that are covered by such Shops • A minimum rate (whether a time rate or a
and Establishment Acts. piece rate) to apply in substitution for the
minimum rate which would otherwise be
5 Upon applicability, the employer is generally applicable, in respect of overtime work 5
bound to ensure that the minimum prescribed done by employees.
wages are paid, overtime is provided for, that
the prescribed registers are maintained, and Wages: The Payment of Wages Act, 1936
that the prescribed notices are displayed at the
10 premises. The Payment of Wages Act, 1936 was enacted 10
to regulate the payment of wages to workers
Wages and to protect them against illegal deductions
or delays in the payment of wages. It is
S.2(h) of Minimum Wages Act defines "wages" applicable to all industrial establishments,
15 as all remuneration, capable of being factories, and other establishments, but does 15
expressed in terms of money, which would, if not apply to persons earning in excess of Rs.
the terms of the contract of employment, 10,000/- per month. Upon applicability, the
express or implied, were fulfilled, be payable employer is bound to ensure that the wages
to a person employed in respect of her are paid to employees, overtime is provided
20 employment or of work done in such for, the prescribed registers are maintained 20
employment, and includes house rent and that the prescribed notices are displayed
allowance, but does not include: at the premises.
25 ! Any house-accommodation, supply of The Payment of Bonus Act, 1965 (“the Bonus 25
light, water, medical attendance, or Act”) provides for the payment of bonus to
! Any other amenity or any service persons employed in certain establishments,
excluded by general or special order of employing 20 or more persons, on the basis of
the appropriate Government; profits or on the basis of production or
productivity and for matters connected
30 ! Any contribution paid by the employer to therewith. Once the Bonus Act is applicable, 30
any Pension Fund or Provident Fund or it continues to apply even if the number of
under any scheme of social insurance; employees falls below 20. The Bonus Act does
! Any travelling allowance or the value of not apply to any institution established not for
any travelling concession; purposes of profit. A minimum bonus of
35 ! Any sum paid to the person employed to 8.33% is payable by every industry and 35
defray special expenses entailed on her by establishment under S.10 of the Payment of
the nature of her employment; or Bonus Act, 1965. Persons drawing salary or
! Any gratuity payable on discharge. wages not exceeding Rs.10,000/- per month in
any industry to do any skilled or unskilled,
40 Wage Rates manual, supervisory, managerial, 40
administrative, technical or clerical work for
The Minimum Wages Act provides for the hire or reward are eligible for payment of
fixing by the appropriate Government of: bonus.
benefits either solely at the cost of employers, medical care and cash benefits in the case of
or on the basis of joint contribution of sickness, maternity and employment injuries.
employers and the employees. While
protective entitlements accrue to the Applicability
5 employees, the responsibilities for compliance 5
largely rest with the employers. The ESI Act is applicable to all factories
(including factories belonging to the
Social Security: The Payment of Gratuity government) other than seasonal factories,
Act, 1972 where:
10 10
The Payment of Gratuity Act, 1972 (“the ! Ten or more persons are or were employed
Gratuity Act”) provides for a scheme of for wages on any day of the preceding
compulsory payment of gratuity to employees twelve months, and in any part of which a
with at least 5 years of continuous service manufacturing process is being carried on
15 working in factories, mines, oil-fields, with the aid of power, or is ordinarily so 15
plantations, ports, railway companies, motor carried on, or
transport undertakings, shops and ! Wherein 20 or more persons are or were
establishments in which ten or more persons employed for wages, on any day of the
are employed or were employed on any day of preceding twelve months, and in any part
20 the preceding twelve months. of which a manufacturing process is being 20
carried on without the aid of power, or is
The employer would be required to pay ordinarily so carried on.
gratuity, at the rate of 15 days’ wages for every
completed year of service in excess of 6 The ESI Act does not apply to mines which
months, to every employee (other than an are subject to the operation of the Mines Act,
25 apprentice) with 5 years continuous service, 1952, or railway running sheds, or to factories 25
subject to a maximum amount of Rs. or establishments belonging to or under the
3,50,000/-. Gratuity is payable at the time of control of the government whose employees
termination of the employee’s service are otherwise in receipt of benefits
(including retrenchment) either (i) on substantially similar or superior to the
superannuation; or (ii) on retirement or benefits provided under the ESI Act.
30 resignation; or (iii) on death or disablement 30
due to accident or disease. The ESI Act authorises the appropriate
government to extend the application of the
The employer is also required to obtain ESI Act to any other establishment or class of
insurance from the Life Insurance Corporation establishments, industrial, commercial,
35 of India and to notify an abstract of the agricultural or otherwise.S.2(1) of the ESI Act 35
Gratuity Act in its premises. defines “Appropriate Government" to mean,
in respect of establishments under the control
The Gratuity Act is administered by the of the Central Government or a railway
Central Government in establishments under administration, or a major port or a mine or
40 its control, establishments having branches in oilfield, the Central Government, and in all 40
more than one State, major ports, mines, oil- other cases, the state government.
fields and railway companies and by the state
governments and Union Territory Accordingly, several States have so extended
administrations in all other cases. the application of the ESI Act, in most cases to
45 shops, hotels, restaurants, cinemas including 45
Social Security: The Employees' State preview theatres, road motor transport
Insurance Act, 1948 undertakings, and newspaper establishments
employing 20 or more persons.
50 The Employees' State Insurance Act, 1948 50
(“the ESI Act”) was enacted to provide
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! All India Bar Examination: Preparatory Materials! 110
Cash benefits under the ESI Act are S.38 of the ESI Act provides that all employees
5 administered by the Central Government in factories or establishments to which the ESI 5
through the Employees' State Insurance Act applies shall be insured in the manner
Corporation, whereas the State Governments provided in the ESI Act.
and Union Territory Administrations
administer medical care. S.46 of the ESI Act provides for the benefits
10 which the insured persons, their dependants 10
Contribution and the persons mentioned therein shall be
entitled to get on happening of the events
The contribution payable to the Employees' mentioned therein, and envisages the
State Insurance Corporation in respect of an following social security benefits to affected
15 employee shall comprise of employer’s employees: 15
contribution and employee’s contribution at a
specified rate. The rates are revised from time ! Medical Benefit
to time, and presently, the employee’s ! Sickness Benefit
contribution rate is 1.75% of the wages and the ! Maternity Benefit
20 employer’s is 4.75% of the wages paid/ ! Disablement Benefit 20
payable in respect of the employees in every ! Dependants’ Benefit
wage period. Employees in receipt of a daily ! Funeral Expenses
average wage up to Rs.50/- are exempt from
payment of contribution, although their “Insured person” is defined by S.2(14) of the
employers must contribute their own share in ESI Act to mean a person who is or was an
25 respect of these employees. employee in respect of whom contributions 25
are or were payable under the ESI Act and
Under S.39 of the ESI Act, an employer is who is by reason thereof, entitled to any of the
liable to pay her contribution in respect of benefits provided by the Employees’ State
every employee, deduct employees’ Insurance Act, 1948.
contributions from wages and pay these
30 contributions at the specified rates to the Employment Injury Benefits 30
Employees' State Insurance Corporation
within 21 days of the last day of the calendar Employment injury, including occupational
month in which the contributions fall due. disease, is compensated according to a
schedule of rates proportionate to the extent
35 It is essential for an employer to make the of injury and loss of earning capacity. 35
contributions in order for the employees to
obtain benefits from the Employees' State Employment injury is defined under S.2(8) of
Insurance Corporation. Merely because a the ESI Act to mean a personal injury to an
factory or an establishment is registered with employee caused by accident or an
40 the Employees' State Insurance Corporation occupational disease arising out of and in the 40
would not ipso facto impose a duty on the course of her employment, being an insurable
Corporation to grant medical benefits to the employment, whether the accident occurs or
employee. Unless the employer fulfils its part the occupational disease is contracted within
of the legal duties imposed by the ESI Act, the or outside the territorial limits of India.
45 Employees' State Insurance Corporation 45
cannot be held liable to pay the benefits under The important condition for constituting an
the ESI Act. (Allied Industries v. Mool Chand and employment injury for claiming
Another, RLW 2007 (4) Raj 2937) compensation under the ESI Act, in respect of
50 the injury caused, is that it should arise out of 50
and in the course of employment, and the
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! All India Bar Examination: Preparatory Materials! 111
injury must be personal to the employee and it valid claim to the Employees State Insurance
must be caused by an accident resulting in her Corporation for disablement benefits, as A’s
disablement, whether temporarily or injuries are not “employment” injuries,
permanently, or fully or partially to attend her because they were not sustained in the course
5 work. (General Manager, B. E. S. T. Undertaking, of employment. (Rajappa v. Employees State 5
Bombay v. Mrs. Agnes, AIR 1964 SC 193) Insurance Corporation, ILR 1992 KAR 284)
Courts have considered the term “in the The Second Schedule to the ESI Act specifies
course of employment”, and the “doctrine of the injuries deemed to result in permanent
10 notional extension of employer’s premises” total disablement or permanent partial 10
has developed so as to include in those disablement. Rule 54 of the Employees' State
premises, an area which the workman passes Insurance (Central) Rules, 1950 provides the
and repasses in going to and in leaving the daily rate of benefit which an employee
actual place of work. Thus, there may be some would get if she suffers an employment injury.
15 reasonable extension in both time and place Rule 57 provides for disablement benefits. 15
and a workman may be regarded as in the Rule 58 provides for dependant’s benefits in
course of her employment, even though she case the injured person dies as a result of an
had not reached or had left her employer’s employment injury. Rule 60 provides for the
premises. (S. S. Manufacturing Co. v. B. V. Raja, medical benefits to an insured person who
20 1958 II LLJ 249) It is also well settled, however, ceases to be in an insured employment on 20
that when a workman is on a public road or account of permanent disablement.
public place or using public transport, she is
there as any other member of the public and is Employee!
not there in the course of her employment,
unless the very nature of her employment S.2(9) defines “employee” to mean:
25 makes it necessary for her to be there. 25
! Any person employed for wages in or in
Thus, under the doctrine of notional connection with the work of a factory or
extension, where an obligation is present on a establishment to which the ESI Act applies
worker to discharge her duty, and she meets and:
with an accident, it is an accident in the course
30 of employment. ! Who is directly employed by the 30
principal employer on any work of, or
Illustration: A is obliged by her employers to incidental or preliminary to or
travel by a particular means of transport to connected with the work of, the factory
reach and to leave her place of work. A meets or establishment, whether such work is
35 with an accident while so travelling. If the done by the employee in the factory or 35
presence of the workman concerned at the establishment or elsewhere; or
particular point was so related to the ! Who is employed by or through an
employment, so as to come to the conclusion immediate employer on the premises of
that she was acting within the scope of the the factory or establishment or under
40 employment that would be sufficient to deem the supervision of the principal 40
the accident as having occurred in the course employer or her agent on work which is
of employment. (Chairman, Cochin Dock Labour ordinarily part of the work of the factory
Board v. P. J. George, 1976 II LLJ 65) or establishment, or which is
preliminary to the work carried on in, or
45 Illustration: A works as a helper in a factory incidental to, the purpose of the factory 45
covered by the Employees' State Insurance or establishment; or
Act, 1948. One day, while returning home ! Whose services are temporarily lent or
directly from the factory, A is attacked by let on hire to the principal employer by
50 assailants over a land dispute, which leaves A the person with whom the person 50
permanently disabled. A may not make a whose services are so lent or let on hire
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! All India Bar Examination: Preparatory Materials! 112
has entered into a contract of service; "Wages" is defined under S.2 of the ESI Act as
and all remuneration paid or payable, in cash to an
employee, if the terms of the contract of
! Any person employed for wages on any employment, express or implied, were
5 work connected with the administration of fulfilled and includes any payment to an 5
the factory or establishment or any part, employee in respect of any period of
department or branch thereof or with the authorised leave, lock- out, strike which is not
purchase of raw materials for, or the illegal or lay-off and other additional
distribution or sale of the products of, the remuneration, if any, paid at intervals not
10 factory or establishment or any person exceeding two months, but does not include: 10
engaged as an apprentice, not being an
apprentice engaged under the Apprentices ! Any contribution paid by the employer to
Act, 1961, or under the standing orders of any pension fund or provident fund, or
the establishment under the ESI Act;
15 ! Any travelling allowance or the value of 15
This definition does not, however, include: any travelling concession;
! Any sum paid to the person employed to
! Any member of the Indian naval, military defray special expenses entailed on her by
or air forces; or the nature of her employment; or
20 ! Any person so employed whose wages ! Any gratuity payable on discharge. 20
(excluding remuneration for overtime
work) exceed such wages as may be Records to be Maintained by the Employer
prescribed by the Central Government. This
limit is presently Rs.10,000/- per month. ! Attendance Register/Muster Roll;
! Salary/Wage Register/Payroll;
25 The definition is very wide, and courts have ! Employees’ and Employer’s Contribution 25
construed the term very liberally. All that is Statement;
required for a person to qualify as an ! Employees’ Register;
employee is that the work undertaken by the ! Accident Register;
employee should not be irrelevant to the ! All Returns of Contribution;
purpose of the establishment and it is ! All Returns of Declaration Forms;
30 sufficient if it is incidental to it. (Royal Talkies ! Copies of Challans; and 30
Hyderabad and Others v. Employees' State ! Books of Account with supporting bills and
Insurance Corporation, AIR 1978 SC 1478) vouchers.
Act, 1961 (52 of 1961), or under the employee while on duty or on leave or on
Standing Orders of the establishment. holidays with wages in either case in
accordance with the terms of the contract of
The term “employee” must be construed employment and which are paid or payable in
5 liberally, as the EPF Act is intended for social cash to her, but do not include: 5
welfare. For instance, employees of a company
that have retired, and then re-engaged on ! The cash value of any food concession;
contract, have been held to be employees for ! Any dearness allowance, house-rent
the purposes of the EPF Act. (Central Provident allowance, overtime allowance, bonus,
10 Fund Commissioner and Another v. Modern commission or any other similar allowance 10
Transportation Consultancy Service Private payable to the employee in respect of her
Limited and Others, AIR 1998 Cal) However, employment or of work done in such
temporary workers would not be counted to employment; or
ascertain the applicability of the EPF Act. ! Any presents made by the employer.
15 (Regional Provident Fund Commissioner v. T S 15
Hariharan, 1971 Lab IC 951 (SC)) Social Security: The Workmen’s
Compensation Act, 1923
Dispute Resolution
The main objective of the Workmen’s
20 Dispute Resolution: Determination of Moneys due Compensation Act, 1923 (“the Workmen’s 20
from Employees Compensation Act”) is to impose an
obligation upon the employers to pay
In cases where a dispute arises as to the compensation to workers for diseases and
applicability of the EPF Act to an accidents arising out of and in the course of
establishment, or where the amount due from employment. The injured person or the
25 any employer under any provision of the EPF dependent (in case of death) can claim the 25
Act is in dispute, the Central Provident Fund compensation.
Commissioner, any Additional Central
Provident Fund Commissioner, any Deputy Applicability
Provident Fund Commissioner, any Regional
Provident Fund Commissioner or any The Workmen’s Compensation Act applies to
30 Assistant Provident Fund Commissioner may, any person who is employed otherwise than 30
by order decide the dispute, and shall, for the in a clerical capacity, in hazardous
purposes of such inquiry, have the same occupations, and other employments specified
powers as are vested in a court under the in Schedule II to the Workmen’s
Code of Civil Procedure, 1908, for trying a suit Compensation Act. This includes factories,
35 in respect of certain matters. Applications for mines, plantations, mechanically propelled 35
review of such orders shall also lie to the same vehicles, construction work and certain other
officer to passed the order. hazardous occupations and specified
categories of railway servants. S.2(3) of the
Dispute Resolution: Employees' Provident Funds Workmen’s Compensation Act, however,
40 Appellate Tribunal empowers State Governments to extend the 40
scope of the Workmen’s Compensation Act to
Appeals against any notifications or orders any class of persons whose occupations are
under the EPF Act lie to one-person tribunals considered hazardous after giving three
termed “The Employees' Provident Funds months' notice in the Official Gazette. The
45 Appellate Tribunal”. Workmen’s Compensation Act, does not, 45
however, apply to persons serving in the
Basic Wages Armed Forces, and employees covered under
the provisions of the Employees' State
50 “Basic wages" have been defined in S.2 of the Insurance Act, 1948. 50
EPF Act to mean all emoluments earned by an
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! All India Bar Examination: Preparatory Materials! 115
drugs; or
Implementation ! The wilful disobedience of the workman
to an order expressly given, or to a rule
Under the Workmen’s Compensation Act, the expressly framed, for the purpose of
5 State Governments are empowered to appoint securing the safety of workmen; or 5
Commissioners for Workmen’s Compensation ! The wilful removal or disregard by the
for (i) settlement of disputed claims, (ii) workman of any safety guard or other
disposal of cases of injuries involving death, device which she knew to have been
and (iii) revision of periodical payments. The provided for the purpose of securing the
10 Workmen’s Compensation Act also empowers safety of workmen. 10
state governments to extend the scope of the
Workmen’s Compensation Act to any class of Compensation
persons whose occupations are considered
hazardous after giving three months notice to The rate of compensation to be is determined
15 be published in the Official Gazette. Similarly, by a schedule proportionate to the extent of 15
under S.3(3) of the Workmen’s Compensation injury and the loss of earning capacity. In case
Act, the state governments are also of death, the minimum amount of
empowered to add any other disease to the list compensation payable is Rs.80,000/- and the
mentioned in Parts A and B of Schedule – II, maximum amount of compensation payable is
20 and the Central Government may do the same Rs.4,57,580/- (including funeral costs). In case 20
in case of employment specified in Part C of of permanent disablement, the minimum
Schedule III of the Workmen’s Compensation amount of compensation is Rs.90,000/- and
Act. the maximum compensation is Rs.5,48,496/-
in case of permanent total disablement. The
Employer’s Liability existing wage ceiling for computation of
25 maximum amount of compensation is Rs. 25
An employer is liable to pay compensation if: 4,000/-.
operating cumulatively to produce the final evidence shows a greater probability which
condition of injury, would constitute together satisfies a reasonable man that the work
an accident for the purposes of the Workmen’s contributed to the causing of the personal
Compensation Act. (Bai Shakri w/o Naraindas injury, it would be enough for the
5 Maganlal v. New Manekchowk Mills Company workman to succeed. (Bai Shakri w/o 5
Limited, (1961) ILLJ 585 Guj) Naraindas Maganlal v. New Manekchowk
Mills Company Limited, (1961) ILLJ 585 Guj)
Illustration: A is a workman who works at a
furnace in a factory. A has a history of Illustration: A is employed as a night
10 previous eye disorders, but despite knowing watchman at a pumping station where a 10
that, continues to work in an employment, process was carried on for pumping water by
which by the very nature of work might cause more than ten persons. One night when A is
further strain on her eyes and might thereby on duty, A complains of pain in the chest. A’s
suffer a permanent injury to A’s eyes. A will be condition deteriorates and A dies after a few
15 held to have suffered from injury arising out hours. The medical evidence showed that A 15
of an accident. The fact that A continued in was suffering from heart disease and that
employment against the advice of a doctor death was brought about by the strain caused
and also knowing that her work would cause upon A’s heart by the particular work that A
strain on her eyes, and precipitated the was doing, that is, having to stand and move
20 permanent injury is irrelevant. Once it is about as a watchman. A will be held to have 20
found that the work which A has been doing died of an injury by an accident falling within
is to be within the scope of A’s employment, the scope of S.3 of the Workmen’s
the question of negligence, great or small on Compensation Act. If a workman suffers from
A’s part is irrelevant. (Harris v. Associated a particular disease and as a result of wear
Portland Cement Manufacturers, Limited, (1939 and tear of her employment, she dies of that
25 A.C. 71)) disease, no liability would be fixed upon the 25
employers. If, however, the employment is a
“arising out of and in the course of employment” contributory cause, or if the employment has
accelerated her death, or if it would be said
Since S.3 of the Workmen’s Compensation Act that death was due not only to the disease but
provides that the accident must arise out of the disease coupled with the employment,
30 and in the course of the workman’s then the employer would be liable and it 30
employment, the accident, in order to give rise could then be said that death arose out of the
to a claim for compensation, must have some employment of the deceased. (Laxmibai v.
causal relation to the workman’s employment Chairman and Trustees, Bombay Port Trust (1954)
and must be due to a risk incidental to that ILLJ 614)
35 employment. The principles that courts 35
generally adopt in ascertaining this are: Social Security: The Maternity Benefit Act,
1961
! There must be a causal connection between
the injury and the accident and the accident The Maternity Benefit Act, 1961 was enacted
40 and the work done in the course of to promote the welfare of working women, 40
employment. and prohibits the working of pregnant women
! The onus is upon the workman to show for a specified period before and after
that it was the work and the resulting strain delivery. It also provides for maternity leave
which contributed to or aggravated the and payment of certain monetary benefits to
45 injury. female employees / workers subject to 45
! It is not necessary that the workman must fulfilment of certain conditions during the
be actually working at the time of her death period when they are out of employment on
or that death must occur while she is account of their pregnancy. The services of a
50 working or had just ceased work. woman worker cannot be terminated during 50
! Where the evidence is balanced, if the the period of her absence on account of
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! All India Bar Examination: Preparatory Materials! 117
absorbed in the employment of the company, Employment) Act, 1966, the Plantation Labour
if the contract was genuine. If, however, the Act, 1951, and the Contract Labour Act) make
contract was not genuine but a mere specific provisions for the welfare of female
camouflage, the so-called contract labourers employees / workers, such as provisions
5 would be deemed to be employees of the mandating the availability of crèches, and 5
principal employer. (Steel Authority of India v. regulating working hours for female
National Union Water Front, AIR 2001 3574 SC) employees / workers.
Every establishment and contractor, to whom The Child Labour (Prohibition and
10 the Contract Labour Act applies, has to Regulation) Act, 1986, is applicable to all 10
register or obtain a license for execution of the establishments and workshops, and prohibits
contract work. The interests of contract the employment of children below the age of
workers are protected in terms of wages, 14 years in notified hazardous occupations
hours of work, welfare, health and social and processes. It also regulates the
15 security. The amenities to be provided to employment of children in nonhazardous 15
contract labour include canteens, rest rooms, occupations and processes.
first aid facilities, and other basic necessities at
the work place, such as the availability of x-x
drinking water. The responsibility to ensure
20 payment of wages and other benefits is 20
primarily that of the contractor, and, in case of
default, that of the principal employer.
All India Bar Examination 1988, the Workmen’s Compensation Act, 1923,
Preparatory Materials and the Public Liability Insurance Act, 1992.
Therefore, the sources of tort law in India are
Subject 18: Law of Torts, Including Motor both common law and statute.
5 Vehicle Accidents and Consumer Protection 5
A major part of the tort law in India
Law of Torts, including Motor Vehicles originated from the Indian judiciary’s
Accidents, and Consumer Protection acceptance and explicit endorsement of
relevant decisions of the English courts on
10 Chapter 1: Nature of a Tort" similar issues. However, the Supreme Court of 10
India has stated that “[w]e have to evolve new
A tort is a legal wrong. Tort law is a branch of principles and lay down new norms which would
the civil law (as distinguished from criminal adequately deal with the new problems which arise
law or public law). In civil law, the dispute is in a highly industrialised economy. We cannot
15 typically between private parties (though the allow our judicial thinking to be constricted by 15
government can also sue and be sued in a civil reference to the law as it prevails in England or for
action in court). The person who commits a that matter in any other foreign legal order. We are
tortious act is called a tortfeasor while the certainly prepared to receive light from whatever
victim of a tortious act is the plaintiff in a tort source it comes but we have to build up our own
20 case. jurisprudence…..[w]e in India cannot hold our 20
hands back and I venture to evolve a new principle
While tort law does involve the idea of of liability which English Courts have not
obligation, tThe duties and obligations done.” (Chief Justice Bhagwati in M. C. Mehta
imposed by the law of torts apply to everyone v. Union of India, AIR 1987 SC 1086 (Oleum Gas
subject to the law of the relevant jurisdiction, Leak Case))
25 unlike other and are not voluntarily assumed 25
obligations, (such as those under a of contract. Tort law only provides an avenue of redress
or trust). for the injured person - it does not provide a
guarantee of recovery. Several commentators
It is critical to note that while India’s tort law have pointed out that most injured persons in
traces its historical origin to the writ system India just bear the loss suffered and move on
30 and common law decisions of the English with their lives rather than investing the time, 30
courts, the sources of modern tort law in India effort, and cost involved in pursuing an
can be found both in judicial decisions and in uncertain remedy through tort law and the
statutes. In doctrinal contrast, the tort (délit) courts.
law of France, for example, is entirely codified,
35 and Article 1382 of the Civil Code of France Etymologically, the word tort derives from the 35
simply states that “[a]ny act whatever of man, Latin words ‘torquere’, ‘tortum’ and ‘tortus’ that
which causes damage to another, obliges the convey a meaning of ‘twisted’, and thereby
one by whose fault it occurred, to compensate linguistically connote a sense of a wrong or
it.” deviation from what is right.
40 40
Illustration: The tort of negligence has become Examples of torts include trespass to land,
a part of the applicable tort law in India trespass to chattels, conversion, detinue, false
through judicial decisions that endorsed the imprisonment and wrongful confinement,
principles of negligence laid down by the assault, battery, fraud and deceit, defamation,
45 English courts. Negligence, therefore, is a negligent misstatement, nuisance, invasion of 45
common law tort in India. In contrast, privacy, intentional infliction of emotional
remedies for statutory torts have been distress, nervous shock, and of course,
established in Indian law through provisions negligence.
50 in various laws, including in the Consumer 50
Protection Act, 1986, the Motor Vehicles Act, Legal scholars have attempted to provide a
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! All India Bar Examination: Preparatory Materials! 120
corrective justice in the Nicomachean Ethics. on the case (most probably owing its origin to
The publication, in 1881, of Oliver Wendell the well known in consimili casu clause of
Holmes, Jr.’s The Common Law represents, Edward I’s Statute of 1285, Westminster II,
arguably, one of the first relatively modern Chapter 24) that enabled a remedy for all
5 efforts to analyse the fundamental problems of other cases not involving violence (by force or 5
the common law, including tort law, in broad arms) but nonetheless causing injury or loss to
historic-philosophical terms. the plaintiff.
For our purposes here, it is useful to briefly Together, the actions (or writs) of trespass and
10 highlight the connection between modern tort trespass on the case covered the whole field of 10
law and the history of the action of trespass, tortious liability.
and then comment briefly on the origins of
tort law in India. Illustration: The difference between trespass
and trespass on the case is illustrated by the
15 Early English law did not distinguish between classic example provided by the English case 15
torts and crimes, and the early remedies for of Leame v. Bray, (1803) 3 East 593. A throws a
supposed wrongs included waging private heavy wooden log onto the road. If B is struck
wars known as feuds. The early history of the by the rolling log, B could seek remedy
law of torts, after its separation from the ideas through a trespass action against A since the
20 of crime and criminal law, is intricately injury was direct and immediate. If, however, 20
connected with the history of the action of B comes along later and is hurt by stumbling
early trespass (that originated as a personal over the stationary log on the road, B could
remedy in the English courts during the 13th only maintain an action of trespass on the
century). case.
pertinent to note that the total number of tort however, it is possible to say that tort is
cases adjudicated in independent India is concerned with the allocation or prevention of
surprisingly low. Over the last three decades, losses, which are bound to occur in society. In
however, the Indian judiciary has steadily most tort actions coming before courts, the
5 developed the jurisprudence of tort law in plaintiff is seeking monetary compensation 5
India. (damages) for the injury she has suffered, and
this fact strongly emphasises the function and
It is also important to reiterate that it is aim of tort law in allocating or redistributing
entirely up to the Indian courts to decide loss.
10 whether to apply an English tort principle if 10
justice demands it in a certain situation, either Illustration: A suffers serious physical injury
entirely, or with appropriate modifications. due to the negligent driving of B. As a result
of this injury, A will be unable to work until
Illustration: The Indian Supreme Court devised she recovers. A will also have to spend money
15 the absolute liability standard by modifying on medical treatment of the injury. In the 15
the strict liability standard as laid down by the absence of tort law, these monetary losses
English courts. Another example pertains to would belong entirely to A. A’s tort claim
the tort of slander, which is not always against B for damages allows A to transfer,
actionable per se (without proof of damage) allocate, or redistribute these losses to B who
20 under English law, but is actionable per se was responsible for the injury in the first 20
under Indian law. Slander is the transitory place.
form of the tort of defamation. Defamation is a
tortious act of communication that causes In cases where the plaintiff is seeking an
someone to be shamed, ridiculed, held in injunction to prevent the occurrence of harm
contempt, lowered in the estimation of the in the future, the “preventive” function and
25 community, or to lose employment status or aim of tort law predominates. 25
earnings, or to otherwise suffer a damaged
reputation. Illustration: A files a suit for private nuisance
against B who operates a highly polluting
Chapter 3: Aims of Tort Law chemical factory with extremely noisy
machinery right next to A’s house in a
30 Commentators have suggested, and residential area. The remedy that A seeks 30
argueddebated about, a number ofthe aims of through her tort claim is an injunction that
tort law. These aims include corrective justice, forbids or prevents B from continuing with B’s
distributive justice, economic efficiency, chemical factory at its current location.
avoidance of future costs, fairness and equity,
35 a rationalised system for treatment of bad Chapter 4: Conceptions of Tortious Liability 35
luck, and so on. While a detailed discussion of
these accounts is not necessary for our present Elements of a Tort that Create Liability
purposes, it is useful to note the learned
observations of Winfield in this regard when Analytically, a tort is constituted of three basic
40 she states that it is not possible to assign any elements: wrong, harm, and an appropriate 40
one aim to the law of tort, especially when one relationship between the injurer's wrong and
considers that the subject comprehends the harm to the victim. Once these conditions
situations as disparate as A carelessly running are met in any specific case, tort law enables
B down in the street (negligence), C calling D the victim-plaintiff to shift her losses to the
45 a thief (defamation), E giving bad investment injurer-defendant. The conditions for shifting 45
advice to F (negligent misstatement), and G losses from victim-plaintiffs to injurer-
selling H’s car when she has no authority to defendants are expressed through “liability
do so (conversion). rules” that vary from one tort to another and
50 also from one legal jurisdiction to another. 50
Winfield asserts that at a very general level,
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! All India Bar Examination: Preparatory Materials! 124
Illustration: A hits and badly injures B with her buying the strongest available leash and
car while driving negligently. The wrong here constructing a high wall around her house,
is A’s driving negligently. The harm is the and therefore not acting negligently. A is
serious injury to B. The appropriate strictly liable to B for the injury B suffers.
5 relationship between the injurer's wrong and 5
the harm to the victim is borne out by the fact We will return to the crucial ideas of fault
that it was A’s negligent driving that caused or liability and strict liability in greater detail in
resulted in the injury to B. The law of the final section of this module.
negligence enables victim-plaintiff B to
10 recover compensatory damages from injurer- Vicarious Liability 10
defendant A on account of A being liable for
the tort of negligence. A unique form of liability that deserves
mention here is the concept of vicarious
Winfield’s definition of tortious liability is liability wherein a person can be held liable
15 useful here: “tortious liability arises from the for the conduct of another person. Vicarious 15
breach of a duty primarily fixed by law; this duty is liability may be defined as the liability that a
towards persons generally and its breach is supervisory party (such as an employer) bears
redressible by an action or unliquidated damages.” for the actionable conduct of a subordinate or
associate (such as an employee) based on the
20 It is important to note that the liability rules relationship between the two parties. 20
(for each of the torts) constitute the main
substantive content of tort law. Vicarious liability is a form of strict (and
secondary) liability originating from the
Distinguishing Fault Liability and Strict Liability common law doctrine of agency that broadly
states that the superior is responsible for the
25 Tort law distinguishes between two basic acts of the subordinate. This type of liability 25
kinds of liability: fault liability and strict can also be traced to the old Latin doctrine of
liability. Conventionally, under fault liability, ‘respondeat superior’, which roughly translates
the plaintiff establishes fault by showing that to ‘let the master / superior answer’.
she was wronged by the defendant and that in
doing so the defendant acted wrongfully, that Illustration: A’s servant B negligently injures
30 is, without justification or excuse. visitor C while cleaning A’s house. A is 30
vicariously liable to C for the tortious act of
Illustration: A punches B in the face and badly her servant B.
injures her. A is liable to B for her fault in
committing the tort of battery. For the A few terms that prominently feature in cases
35 intentional tort of battery to be established, it involving vicarious liability that require a 35
is necessary that the defendant has the intent brief explanation are:
to cause a harmful or offensive touching of the
plaintiff’s person, and that the defendant does • Principal or Employer: One who retains the
cause a harmful or offensive touching of the services of others (Agents or Employees) to
40 plaintiff’s person. carry out her work. 40
• Agent: One retained to carry out the work
Conversely, under strict liability, the person of a Principal.
does not have to establish the fault of the • Independent Contractor: A subordinate
defendant, though a judgment of strict who is usually subject to less oversight or
45 liability does not necessarily mean that the monitoring than an Agent. 45
defendant has acted innocently or justifiably. • Employee: A subordinate who is usually
subject to less oversight than an Agent and
Illustration: A’s dangerous dog somehow more oversight than an Independent
50 breaks its leash and bites her neighbour, B, Contractor. 50
despite A taking the necessary precautions of
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To establish vicarious liability, the courts must negligently and injures several people on the
find first that there exists a relationship of road. B will not be vicariously liable for A’s
employee and employer. It is important to negligence since the tortious act did not occur
note that the torts of independent contractors during the course of A’s employment (which
5 generally do not impose vicarious liability on was that of a bus conductor and not that of a 5
employers, with some exceptions in the case bus driver).
of non-delegable duties and also inherently
dangerous activities. (Honeywill and Stein Ltd v. The vicarious liability of an employer for torts
Larkin Brothers Ltd., (1934) 1 KB 191) committed by employees should not be
10 confused with the liability an employer has 10
Illustration: A hires an independent contractor for her own torts. An employer whose
B to erect a fence around her property. B employee commits a tort may be herself liable
negligently injures C while erecting the fence. for negligence in hiring or supervising the
A is not vicariously liable to C for the tortious employee. But, an employer, who was not
15 act of B. negligent in hiring or supervising the 15
employee, may still be held vicariously liable
While no one test can cover all types of for the injury to a third party caused by her
employment, historically, the test for employee’s negligence.
establishing a relationship of employer and
20 employee has centred on identifying the Some classic categories of vicarious liability 20
existence of control between the supposed include:
employer and the employee in a form of
master and servant relationship. (Yewens v. • Liability of the principal for the tortious act of
Noakes, (1880) 6 QBD 530) The control test the agent: When a principal authorises her
imposed liability on the employer when the agent to perform any act, the principal
25 employer ordered or dictated what work was becomes liable for the tortious act of such 25
to be done and how it was to be done. agent, provided that such act occurs in the
course of performance of the agent’s
Illustration: A hires B to get rid of all the duties.
monkeys that have begun to invade her large • Liability of firm partners for the tortious act of
farm property without any further directions one partner: Partners of a firm are
30 on how this is to be done. B is not A’s responsible to the same extent as the 30
employee but only an independent contractor defaulting partner when the tortious act
since A does not have control over how the occurs in the normal course of business of
work is to be done. that partnership. The liability thus arising
will be joint and several.
35 An employer is normally held vicariously • Liability of the master for the tortious act of the 35
liable for the acts of the employee only when servant: The master is liable for the tortious
the tort is committed by the employee in the act of her servant provided that such
course of her employment. A preferred test of wrongful act occurs within the course of
the courts for connecting torts to the course of the servant’s performance of the master’s
40 employment (formulated by Salmond), states business or orders. 40
that an employer will be held liable for either
a wrongful act that they have authorised, or While historically most actions alleging
for a wrongful and unauthorised mode of vicarious liability for intentional torts have
performing an act that was authorised. failed, English law has relatively recently
45 (Limpus v. London General Omnibus Co., (1862) 1 recognised (in a case involving vicarious 45
H & C 526; Century Insurance Co v. Northern liability for sexual abuse) that where an
Ireland Road Transport Board, (1942) AC 509) intentional tort committed by an employee is
closely connected to her duties, her employer
50 Illustration: A is the conductor of a bus owned may be found vicariously liable. (Lister v. 50
by B in Lucknow. One day, A drives the bus Hesley Hall Ltd, (2001) UKHL 22)
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The categories of torts could include cages. This absolute liability tort is also an
intentional torts, unintentional torts, physical example of an unintentional tort, since A had
torts, abstract torts, property torts, no intention to cause a tiger to escape from
constitutional torts, statutory torts, economic her centre and attack B.
5 torts, mass torts, and torts in international 5
human rights law. Please note that these are Physical Torts
not strict legal categories but rather a
convenient way of understanding the diverse Denote all those torts that cause physical hurt
kinds of torts that the law encounters. to the body of one or more other persons.
10 Physical torts can include both intentional 10
Intentional Torts torts and unintentional torts that involve
physical hurt to one or more persons. Classic
Denote intentional acts that can reasonably be examples of physical torts would be battery,
foreseen to cause harm to one or more false imprisonment, and negligence involving
15 individuals, and that indeed do so. physical hurt to another person. 15
Intentional torts in India include torts against Illustration: A intentionally punches B in the
the person such as assault, battery, false face and breaks her nose. A is liable for the
imprisonment and wrongful confinement, physical tort of battery.
20 intentional infliction of emotional distress, and 20
fraud, and also torts against property such as Illustration: A locks B in her room and refuses
trespass to land, trespass to chattels, and to open the door for several hours even when
conversion. B pleads to be released. A is liable for the
physical tort of false imprisonment. For the
Illustration: A intentionally punches B in the physical/intentional tort of false
25 face and breaks her nose. A is liable for the imprisonment to be established, it is necessary 25
intentional tort of battery. that the defendant intentionally causes the
total restraint on the freedom of movement of
Unintentional Torts the plaintiff without any lawful justification.
(See Davidson v. Chief Constable of North Wales
Denote all those torts that are not intentionally & Another, (1994) 2 All ER 597)
30 committed by the tortfeasor. Most 30
unintentional torts are therefore accidents Abstract Torts
(usually cases of negligence), but this category
also includes torts falling under the rubric of ‘Abstract Torts’ denote torts that cause
‘strict liability’ or ‘absolute liability’. damage to the mind or to reputation.
35 35
Illustration: On learning that she has passed Examples of abstract torts include defamation,
the bar examination, A joyfully but carelessly copyright infringement, and restriction of
swings her arms around and in the process competition. In most jurisdictions, abstract
accidentally hits B in the face and breaks B’s torts usually have a requirement of intention
40 nose. A is liable for the unintentional tort of to commit the tortious act. 40
negligence.
Illustration: A writes an article in a leading
Illustration: A is the owner of a tiger national newspaper that B has been constantly
rehabilitation centre near the outskirts of cheating on her husband and is also infected
45 Trivandrum. If a particularly strong tiger with several sexually transmitted diseases. 45
escapes from the centre and attacks a passerby These allegations are not true and A spreads
B, A will be absolutely liable to B under Indian this misinformation purely because she hates
tort law even if A was as careful as she could B for personal reasons. A is liable for the
50 have been, and was not negligent in planning abstract tort of defamation (specifically libel). 50
the safety measures and the strength of the
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put into statutes so as to clarify their content (also referred to as causing loss by unlawful
or to emphasise their importance. means), and negligent misstatement.
Statutory torts can be found in legislation and Certain torts of negligence in economic
5 regulations dealing with a variety of things contexts are also sometimes included by 5
including consumer protection and product commentators under the category of economic
liability, occupiers’ liability, food safety, health torts.
and environmental protection, and railways
accident liability. Following the House of Lords decision in
10 OBG Limited v. Allan, (2007) UK HL 21, 10
One notable example from Indian law is the liability for economic torts (under English
Consumer Protection Act, 1986 (“the law) arises when a person intends to do a
Consumer Protection Act”), that creates a wrongful act.
framework for remedies against deficiency in
15 goods or services. S.14(1)(d) of the Consumer Illustration: A tells B that a third party C is 15
Protection Act enables the District Forum to creditworthy and emphatically encourages B
issue an order to the product manufacturer or to lend money to C despite knowing very well
service provider “to pay such amount as may that C is actually broke and already heavily in
be awarded by it as compensation to the debt. Relying on A’s statements, B loans a
20 consumer for any loss or injury suffered by the large sum of money to C and consequently 20
consumer.” loses it with no possibility of recovering the
same from C. Here, A is liable for the
Statutory torts could be intentional torts or economic torts of deceit and malicious
unintentional torts depending on the statute in falsehood.
question.
25 Illustration: A knows that B owes a contractual 25
Illustration: A buys a new pair of shoes from obligation to C, and procures or induces B to
the manufacturer B’s factory outlet in Jaipur. breach the said obligation such that C incurs
However, the shoes still have some harmful damage as a result. A is liable to C for the
chemical on them and A’s feet develop a economic tort of inducing breach of contract.
painful rash that eventually results in A’s left
30 foot getting paralyzed. B is liable to A for the Illustration: A and B have an agreement that 30
injury and loss under the statutory tort regime B’s truck company will transport freshly
developed through the Consumer Protection harvested vegetables from A’s farm to the
Act. vegetable market in Gangtok every Sunday. A
third party C threatens B that she will stop
35 Economic Torts and burn B’s trucks if any of them are found 35
to be transporting A’s goods. B is frightened
Denote civil wrongs that involve interference and consequently refuses to transport any of
with a person’s trade, business, or economic A’s vegetables, which results in huge losses to
interests. A. Here, C is liable to A for the economic tort
40 of intimidation. 40
Economic torts feature in the doctrine of
restraint of trade, and in competition law and Illustration: A and B are rival airplane
anti-trust law. manufacturers. On the day before an
important international air exhibition in
45 Examples of economic torts include civil which B’s new airplane model is to be 45
conspiracy (simple or unlawful) in an launched, A illegally enters B’s factory and
economic or business context, deceit, replaces the engine in B’s new airplane model
malicious falsehood, inducing breach of with an older and less efficient one. As a
50 contract, intimidation (in an economic result, B’s airplane under-performs at the 50
context), unlawful interference with trade exhibition, and many orders for the airplane
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are consequently cancelled. A is liable for the Importantly, the domain of tort law is in no
economic tort of unlawful interference with way clearly circumscribed or defined and
trade or causing loss by unlawful means. continues to remain highly debated and in
considerable flux. For example, the tort of
5 Mass Torts trespass retains considerable antiquity going 5
back several centuries while legislators,
Denote civil actions involving numerous courts, and scholars continue to deliberate
victim-plaintiffs against one or more (usually about relatively modern (and disputed) torts
corporate or state) defendants. Mass torts such as the invasion of privacy, torture, sexual
10 include mass disaster torts, mass toxic torts, harassment, and cyber-damage. 10
and mass product liability torts.
Modern developments in science and
Illustration: The Bhopal chemical plant of a technology, changing perceptions of morality
multinational chemical company D develops a and culture, and complex advances in
15 leak (due to negligent safety standards) that economic and social policy necessitate that 15
releases poisonous chemicals into the tort law too constantly evolve and re-define
atmosphere, groundwater, and soil, and that itself to adequately deal with the full
consequently results in thousands of deaths spectrum of losses and misfortunes arising
and many more injuries to the residents (then from legal wrongs.
20 and future) of Bhopal. D is absolutely liable in 20
the mass tort litigations that follow. “Truly speaking the entire law of torts is founded
and structured on morality. Therefore, it would be
Illustration: G is a major pharmaceutical primitive to close strictly or close finally the ever
company that develops a sedative drug that is expanding and growing horizon of tortuous
sold on the marketplace for three years. It is liability.” (Jay Laxmi Salt Works (P.) Ltd. v. State
25 soon discovered that G’s sedative drug results of Gujarat, (1994) 4 SCC 1) 25
in severe birth defects in newborn children
whose mothers had consumed the drug "The categories of negligence are never
during pregnancy. The tragic side-effects of closed." (Lord Macmillan in Donoghue v.
the drug were not discovered during field Stevenson, [1932] AC 532)
trials because of G’s negligent safety
30 standards. G is liable in the mass tort Chapter 6: Strict / Absolute Liability 30
litigations that follow.
Strict Liability: The Rule in Rylands v. Fletcher
Torts in International Human Rights
The landmark case of Rylands v. Fletcher, 1868
35 These denote those wrongs that international (19) LT 220, established the strict liability 35
human rights instruments and policies standard that continues to hold sway in
provide civil redress for. Examples of these Anglo-American tort law.
kinds of international tortious claims include
demands for reparations for torture, war The rule in Rylands v. Fletcher provides that a
40 crimes, genocide, illegal renditions, and person, who for her own purpose brings on to 40
environmental pollution. her land and collects and keeps there anything
likely to do mischief, must keep it at her peril
Another important instrument worth and, if she fails to do so and it escapes, is
mentioning here is an American legislation – prima facie liable for the damage which is the
45 the Alien Tort Claims Act, 1789, which grants natural consequence of its escape. 45
jurisdiction to US Federal Courts over "any
civil action by an alien for a tort only, The liability under this rule is strict and it is
committed in violation of the law of nations or no defence that the thing escaped without that
50 a treaty of the United States." person’s wilful act, default, or neglect, or even 50
that she had no knowledge of its existence.
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• Proximate cause: There must be a sufficiently in the plaintiff’s injury. The plaintiff must
close causal link between the defendant’s show that the defendant’s conduct, viewed
negligent act and the plaintiff’s injury and as of the time it occurred, imposed an
resulting harm. unreasonable risk of harm.
5 • Actual damage: The plaintiff must actually 5
suffer a loss or damage of a legally The Doctrine of Res Ipsa Loquitur
recognised kind.
The doctrine of res ipsa loquitur (translated as
Illustration: A is driving her car but keeps “the thing speaks for itself”) creates a strong
10 looking at her mobile phone or the car stereo inference in favour of the plaintiff that 10
and does not pay adequate attention to the negligence has indeed taken place. Once the
road. A’s car hits and injures a pedestrian B. doctrine of res ipsa loquitur applies, it requires
The requirements of the tort of negligence are no further showing of how exactly the
satisfied because A (while driving) owes a defendant was responsible for the negligence
15 duty of care to pedestrians on the road. A’s because the elements of duty of care and 15
failure to pay attention to the road is a failure breach can be inferred from the very nature of
to confirm to the duty of care, which is the the accident.
proximate cause of a legally recognised injury
to B. Finally, B has been injured and therefore Illustration: A goes to her doctor after an
20 there is actual damage. appendectomy (removal of appendix) 20
complaining of a pain in her stomach and
Standard of Care in Negligence abdominal area. The X-ray shows that a
metallic object of the size and shape of a
In tort law, the standard of care is the degree medical scalpel is in her abdomen. The thing
of prudence and caution that a reasonable speaks for itself and it shows that the doctor
25 individual must display when discharging a who carried out the appendectomy was 25
duty of care under similar circumstances. It is negligent.
important to note that the reasonable person
standard is an objective standard that is Res ipsa loquitur does not usually fully reverse
different from the average person standard. the burden of proof under English law or
The key question involved in determining the Indian law. For the doctrine to apply, three
30 standard of care in tort cases is: “What is it to conditions are usually required to be met: 30
be a reasonable person of ordinary prudence?”
• The injury or accident in question is of a
Illustration: A starts a fire at her campsite in the kind that ordinarily does not occur without
forest. She then packs and leaves her camp- negligence.
35 site without putting out the fire, which in turn 35
leads to a major forest fire causing a lot of Illustration: Doctor B carries out a surgery
damage. A will be liable for her negligent on patient A’s brain when the patient has
action because a reasonable person under complained of a pain in her right foot.
similar circumstances would have put out the
40 fire before leaving the area. • The injury or loss is caused by an 40
instrumentality within the exclusive
Two important points to note while control of the defendant.
determining or analysing the requisite
standard of care in a particular instance: Illustration: A, a railway guard posted at a
45 train crossing, neglects to switch the signals 45
• The plaintiff must show that the or close the gate. As a result, two trains
defendant’s conduct imposed an crash, causing considerable damage. Res ipsa
unreasonable risk of harm on the plaintiff. loquitur applies as the injury was caused by
50 • It is not enough for the plaintiff to merely an instrumentality within the exclusive 50
show that the defendant’s conduct resulted control of the defendant railway.
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in question include:
• The injury is not due to any voluntary
action or contribution from the injured • Consent of the victim-plaintiff (including
party both express consent and implied consent):
5 The law usually does not provide 5
Illustration: The elevator in A’s building is redress to plaintiffs who expressly or
maintained by B’s company. B places a notice impliedly consent or permit someone to
on the door of the elevator that the elevator injure them. This defence is also
is malfunctioning and residents should use sometimes expressed as the plaintiff’s
10 the steps instead. A removes the notice from assumption of risk or through the 10
the door. Later that day, on returning home maxim “volenti non fit
late at night, A steps into the elevator injuria” (translated as “to the willing, no
forgetting about the notice that she earlier injury is done”).
removed. A is consequently injured due to
15 the malfunction. The res ipsa loquitur doctrine Illustration: A is a regular spectator at 15
will not apply because of A’s contribution. cricket matches and is injured by the
cricket ball in the spectators’ area of the
Chapter 8: Analysing a Tort Case stadium when a batsman strikes the ball
out of the ground and scores six runs.
20 A simple three-step process in analysing any Since this is a foreseeable event, and 20
case involving tort law involves the regular spectators are assumed to accept
consideration of: that possible risk of injury when buying a
ticket to watch a cricket match, A’s claim
• Whether a prima facie case for a tort exists or will not succeed due to the defendant’s
whether the facts are more properly suited defence of consent or volenti non fit injuria.
25 for another branch of the law like contracts, 25
crime, or insurance. • Self-defence: The law may not attribute
liability to the defendant who carries
This step involves an analysis of the key out the tortious act in furtherance of
elements of a tort in light of the facts self-defence. It is important to note that
available for consideration. A lawyer ought the decision to resort to self-defence
30 to ask and answer questions relating to: must be a reasonable one. 30
• The Implicated Duty: Who owes a duty to Illustration: A brandishes a large knife and
whom? What is the content of this duty? rushes towards B while screaming that she
• The Breach: Was the duty breached? By will kill B. B strikes A to prevent her from
35 whom? In what manner? Who has the stabbing her. B will be able to successfully 35
burden of proving the breach? use the defence of self-defence against A’s
• The Harm: Did the breach of the duty tort claim for battery.
result in harm? To whom? In what
manner? • Defence of others: The law may not
40 • Ownership of the Harm: Who can be said attribute liability to the defendant who 40
to own the harm in question? Was the carries out the tortious act while
harm foreseeable? Was the harm defending some other third-person
avoidable? What was the cause-in-fact of against a real threat. It is important to
the harm? What was the proximate cause note that the decision to defend the
45 of the harm? other person must be a reasonable one. 45
• If a prima facie case for tort does exist, what Illustration: A brandishes a large knife and
are the defences available (to the injurer- rushes towards B’s infant son C while
50 defendant) for the tort in question? screaming that she will kill C. B strikes A 50
Defences that might be available for the tort to prevent her from stabbing C. B will be
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the defence that the squatters’ actions salary in lieu of proper notice. B might be
amounted to a novus actus interveniens liable for punitive damages in A’s claim for
(between the negligent breaking of the tortious intimidation involving unlawful
water main and the final damage) to means to terminate an employment contract.
5 escape liability for the damage caused by 5
the squatters. • Injunctive relief: Usually an order by the
court restraining the continuance or threat
If none of the available defences validly apply of harm.
in the instant case, what factors determine the
10 damages payable by the defendant and/or Illustration: A files a suit for private nuisance 10
other remedies available to the plaintiff? The against B who operates a highly polluting
remedies available to the plaintiff could chemical factory with extremely noisy
include: machinery right next to A’s house in a
residential area. The remedy that A seeks
15 • Compensatory damages: An award of money through her tort claim is injunctive relief 15
paid to the plaintiff as compensation for that forbids or prevents B from continuing
loss or injury suffered. with B’s chemical factory at its current
location.
Illustration: A suffers serious physical injury
20 due to the negligent driving of B. As a result Criteria for Tort Claims 20
of this injury, A will be unable to work until
she recovers. A will also have to spend A useful checklist for a (plaintiff or defendant
money on medical treatment of the injury. side) lawyer addressing tort claims would
A’s tort claim against B for compensatory include taking note of the following criteria
damages allows A to transfer, allocate, or for tort claims:
25 redistribute these losses to B. 25
• The burden of proof is usually on the
• Punitive damages (also known as exemplary plaintiff;
damages): Awarded only in special • The plaintiff must prove that the defendant
egregious cases, over and above owes the plaintiff a legal duty;
compensatory damages, in order to reform • The plaintiff must prove that the requisite
30 or deter the defendant and similar persons standard of care has been breached; 30
from pursuing a course of action such as • The plaintiff must establish the causation
that which injured the plaintiff. (Rookes v. involved:
Barnard, (1964) 1 All ER 367) The only three
situations in which punitive damages are • Causation in fact;
35 allowed involve: Oppressive, arbitrary, or • Proximate cause; 35
unconstitutional actions by the servants of
government; Where the defendant's • The plaintiff must establish legally
conduct was ‘calculated’ to make a profit cognizable damage; and
for she; and Where a statute expressly • The plaintiff must counter the defences to
40 authorises the same. tort liability that the defendant makes use 40
of .
Illustration: A is an employee of a
government organisation and a member of a An Overview of the Causation Doctrine
workers’ union B. A resigns from the union
45 on account of ideological differences. The Causation must be established for a successful 45
union B threatens an indefinite strike unless tort claim. The two branches of the causation
A resigns from her job or is fired. B also uses doctrine are:
unlawful means to force A’s employer to
50 suspend her from her job. A few days later, • The "but for" cause: This is also known as 50
A is dismissed from her job with a week’s causation-in-fact and represents the
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indispensable condition without which the disregard of a substantial risk of real harm
accident / harm would not have occurred. to the plaintiff.
This is expressed by the statement “but for • Negligence involves conduct that creates
X no Y” where X represents the cause being liability because it falls short of what a
5 analysed and Y represents the harm or reasonable person would do to protect 5
injury to the plaintiff. For the defendant to another person from the foreseeable risks
be held liable, the plaintiff must establish of harm.
that but for the defendant's conduct or
activity, the plaintiff would not have been Chapter 9: The Consumer Protection Act,
10 injured. (Barnett v. Chelsea & Kensington 1986 10
Hospital, (1969) 1 QB 428)
The Consumer Protection Act is an example of
Illustration: A negligently forgets to replace legislation that creates a statutory regime for
the cover over a large drain on the pavement redress of legal injury caused to consumers of
15 of the road. B falls into the drain and injures goods and services in India. 15
herself. A’s action is the cause-in-fact of B’s
injury and satisfies the “but for” test. S.2(d) of the Consumer Protection Act defines
a “consumer” as any person who:
• The proximate cause: This represents one of
20 several but-for causes that is so proximate • Buys any goods for a consideration which 20
or closely responsible for the injury that the has been paid or promised or partly paid
author(s) of such a proximate cause ought and partly promised, or under any system
to be held responsible in tort. The of deferred payment and includes any user
proximate cause test is a useful way of of such goods other than the person who
establishing causation when several causes buys such goods for consideration paid or
25 satisfy the but-for test. promised or partly paid or partly 25
promised, or under any system of deferred
Illustration: A, as a prank, pulls the chair payment when such use is made with the
from under B as B is about to sit down. approval of such person, but does not
When B hits the floor, a rare expensive include a person who obtains such goods
painting falls from the wall and gets badly for resale or for any commercial purpose;
30 damaged. Both A’s action and B’s hitting the or 30
floor are but-for causes of the damage to the • Hires or avails of any services for a
painting. The court must now examine consideration which has been paid or
whether A’s action represents a proximate promised or partly paid and partly
cause of the painting’s damage or not. This promised, or under any system of deferred
35 will involve considerations of such things payment and includes any beneficiary of 35
including foreseeability, possibility of such services other than the person who
prevention, and the natural course of events. 'hires or avails of the services for
consideration paid or promised, or partly
An Overview of when Fault Liability Applies paid and partly promised, or under any
40 system of deferred payment, when such 40
Fault liability in tort arises from the breach of services are availed of with the approval of
a duty not to harm faultily. Fault liability the first mentioned person but does not
under common law arises in the following include a person who avails of such
three scenarios: services for any commercial purposes.
45 45
• Intentional torts (also called wilful torts in Illustration: A buys a laptop from the
some jurisdictions) are torts committed manufacturer B for Rs.25,000/-. C avails of a
with a general or specific intent. home-cleaning service from D’s company for
50 • Recklessness in tort law involves those acts Rs.7,000/- a month. A and C are ‘consumers’ 50
(of the defendant) that evidence a conscious within the meaning of S.2(d) of the Consumer
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! All India Bar Examination: Preparatory Materials! 137
The Consumer Protection Act provides a Illustration: A buys a car from manufacturer B
mechanism through which consumers can for Rs.15 lakh. Any consumer complaint
5 obtain a remedy for any defect in good, relating to the car should be appropriately 5
deficiency in services, or any other unfair pursued in the District Forum that has a
trade practice that has resulted in a legal jurisdiction to entertain complaints where the
injury to them. S.2(f) defines a ‘defect’ as “any value of the goods or services and the
fault, imperfection or shortcoming in the compensation claimed does not exceed Rs.20
10 quality, quantity, potency, purity or standard lakh. 10
which is required to be maintained by or
under any law for the time being in force Illustration: A buys a car from manufacturer B
under any contract, express or implied or as is for Rs.25 lakh. Any consumer complaint
claimed by the trader in any manner relating to the car should be pursued in the
15 whatsoever in relation to any goods.” S.2(g) State Forum that has a jurisdiction to entertain 15
defines ‘deficiency’ as “any fault, complaints where the value of the goods or
imperfection, shortcoming or inadequacy in services and the compensation claimed
the quality, nature and manner of performance exceeds Rs.20 lakh but does not exceed
which is required to be maintained by or Rupees 1 crore.
20 under any law for the time being in force or 20
has been undertaken to be performed by a Illustration: A buys a customised car from
person in pursuance of a contract or otherwise manufacturer B for Rs.1 crore 5 lakh. Any
in relation to any service.” S.2(r) defines the consumer complaint relating to the car should
term ‘unfair trade practice’. be pursued in the National Forum that has a
jurisdiction to entertain complaints where the
25 Illustration: A buys a kilogram of rice from B value of the goods or services and the 25
for Rs.20/-. The rice sold to A is rotten and full compensation exceeds Rupees 1 crore.
of insects. The rice sold by B to A is defective.
From the perspective of tort law, the most
Illustration: A hires B to manage the important provision is contained in S.14(1)(d)
information technology system in her of the Consumer Protection Act, which
30 company (including protecting the system enables the District Forum to issue an order to 30
from any unauthorised access and virus). B the product manufacturer or service provider
does not install any protective software and “to pay such amount as may be awarded by it
soon all computers in A’s office crash. B’s as compensation to the consumer for any loss
service to A is deficient. or injury suffered by the consumer.”
35 35
The agencies established by the Consumer Illustration: A buys a laptop from B for Rs.
Protection Act include a Consumer Disputes 40,000/-. A week later, the laptop explodes
Redressal Forum to be known as the "District while A is using it and causes severe burns to
Forum" established by the State Government A. B will be liable to A for the loss suffered by
40 in each district of the State, a Consumer A. 40
Disputes Redressal Commission to be known
as the "State Commission" established by the S.15 of the Consumer Protection Act provides
State Government in the State, and a National that any person aggrieved by an order made
Consumer Disputes Redressal Commission to by the District Forum may prefer an appeal
45 be known as the “National Commission” against such order to the State Commission 45
established by the Central Government. The within a period of thirty days from the date of
jurisdiction of the District Forum, the State the order. S.19 provides that any person
Commission, and the Nation Commission, is aggrieved by an order made by the State
50 pecuniary jurisdiction as per the limits Commission may prefer an appeal against 50
provided in Ss.11, 17, and 21 of the Consumer such order to the National Commission within
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! All India Bar Examination: Preparatory Materials! 138
10 Taxation, in its basic form, is a compulsory Direct taxes are taxes that are imposed on 10
exaction from individuals and entities by the persons, usually based on their ability to pay,
Government to raise finances. It is often used and calculated on their income, expenditure
as a policy tool to influence manufacture, or net wealth (for example, Income-tax,
provision, and consumption of goods and Wealth-tax, Gift-tax).
15 services. Taxes are characterised by their 15
mandatory nature and the lack of any need for Indirect taxes, on the other hand, are taxes
correlation between the amount paid and the imposed on goods, services, transactions, or
value of the public services financed by the activities. They are usually collected by an
tax. intermediary, such as the seller or service
20 provider, from the person on whom the tax 20
Under the Constitution, taxes are levied by the burden finally falls. Examples of indirect taxes
Union or the States, depending on the entries include sales tax, excise duty, and customs
in the Seventh Schedule. Further, A.265 states, duty.
“No tax shall be levied or collected except by
authority of law.” Here, ‘law’ means a law Proportional, Progressive, and Regressive Taxation
25 enacted by a legislature. (Ghulam Hussain v. 25
State of Rajasthan, AIR 1963 SC 379) An Proportional taxation is where the quantum of
executive order, a rule that goes beyond the tax is a proportion of the sum sought to be
powers under the statute, or a custom, are not taxed, where such proportion remains
‘law’. constant despite the sum.
30 Tax is imposed on the occurrence of a “taxable Progressive taxation is where the tax rate 30
event”. The taxable event for income tax, for increases with the sum taxed, so that as the
instance, is the earning of income; the taxable sum taxed increases, a larger portion of each
event for excise duty is manufacture; and the additional unit taxed is to be paid as tax.
taxable event for service tax is the provision of
35 service. Regressive taxation is where the tax rate 35
decreases as the sum becomes larger.
Taxing statutes typically have a “charging
provision” that identifies the taxable event, and In some cases, like professional tax, the tax
related provisions regarding computation. rate is a fixed amount payable each year. Such
40 These provisions are to be interpreted strictly. a tax is not proportional, progressive, or 40
If a person has not been brought within the regressive, but is known as a flat tax.
ambit of the provision strictly, she cannot be
taxed at all. (I. R. v. Countess of Longford, 13 Chapter 3: Direct Taxes
T.C. 573 (HL)) There are also machinery
45 provisions that provide for assessment, Income Tax 45
collection, adjudication, and appeals. These
are to be interpreted so as to make the Legislation
machinery workable. (United Provinces v. C. I.
50 T., 204 ITR 794) Income-tax is levied under the Income-Tax 50
Act, 1961 (“the IT Act”), that replaced the
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! All India Bar Examination: Preparatory Materials! 140
Indian Income-Tax Act, 1922. It has been provision. The classic definition of “income”
passed under Entry 82 of List I of the Seventh is:
Schedule to the Constitution, which provides
for “Taxes on income other than agricultural “Income… connotes a periodical monetary
5 income”. This exemption for “agricultural return ‘coming in’ with some sort of 5
income” is reflected in S.10(1) of the IT Act. regularity, or expected regularity, from
definite sources… excluding anything in the
Charging Provision nature of a mere windfall… Thus income has
been linked pictorially to the fruit of a tree, or
10 Income-tax is charged under S.4 of the IT Act: the crop of a field. It is the produce of 10
something which is loosely spoken of as
“(1) Where any Central Act enacts that income- ‘capital’.” (C. I. T. v. Shaw Wallace, 59 I.A. 206)
tax shall be charged for any assessment year at
any rate or rates, income-tax at that rate or those This dictum, however, has been whittled
15 rates shall be charged for that year in accordance down in a variety of judgments, and it is 15
with, and subject to the provisions (including accepted today that anything which can be
provisions for the levy of additional income- properly described as income and taxed under
tax) of, this Act in respect of the total income of the IT Act, unless expressly exempted, is
the previous year of every person:” “income”. (Emil Webber v. C. I. T., 200 ITR 483
20 (SC)). The term is wide enough to include 20
The key terms in this section are: income from unlawful businesses also.
(Minister of Finance v. Smith, 1927 A.C. 193)
• “Central Act”: This refers to the custom that
it is the Finance Act, passed pursuant to the The Court has held in many judgments that
budget, that sets out the rate of income-tax only “real income” of a person can be taxed
25 payable that year. under the IT Act. If it is not income of the 25
• “Every person”: includes persons that are assessee at all, no income-tax liability arises.
defined in S.2(31) - “A person, an (Godhra Electric Company v. C. I. T., (1997) 4
individual, a company, a firm, an SCC 530)
association of persons, a local authority, and
every artificial juridical person not falling Illustration: An electricity company, P Ltd.,
30 within any of the above categories.” receives amounts from its customers and 30
• The income taxed is the income of the makes profits. Under a particular legislation,
“previous year” (defined in S.3) and not of there is an obligation to refund ⅓ rd of excess
the assessment year. The tax is ‘assessed profit to the consumers. The liability to refund
and paid in the next succeeding year upon ⅓ rd was set apart to a “Consumer Benefit
35 the results of the year before’. (Indian Iron v. Reserve Account”. Even though it was part of 35
C. I. T., 11 ITR 328). However, the law to be such a reserve account, it was liable to be
applied is the law in force during the returned to the consumers and therefore did
assessment year. (Reliance v. C. I. T., 120 ITR not form part of P Ltd.’s real profits, and
921). Therefore, the liability to tax arises by cannot be brought to tax. (Poona Electric Supply
40 virtue of the charging section, when the v. C. I. T., 57 ITR 521) 40
previous year closes, although the
quantification of the amount is done later.
(Wallace Bros. v. C. W. T., 16 ITR 240) Capital and Revenue Receipts
• The “total income” (defined in S.5) of the
45 person is brought to tax. Receipts that arise out of the normal course of 45
an assessee’s business are called “revenue
Income receipts” and the receipts that are not from the
assessee’s regular course of business are
50 Income is defined under S.2(24) of the IT Act, “capital receipts”. Under the IT Act, broadly, 50
and has a wide definition under that only revenue receipts are taxed as income,
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! All India Bar Examination: Preparatory Materials! 141
unless the capital receipts are chargeable as Co., an automobile manufacturer, buys
“capital gains”. machinery from W Co. For Z Co., the
expenditure is a capital expenditure, while for
Illustration: A, a teacher in a school, receives a W Co., the receipt is a revenue receipt.
5 salary each month. It is a revenue receipt. A 5
receives a large sum of money under a will Profits and gains that arise from transactions
from her uncle. That is a capital receipt. that are incidental to, or closely associated
with the business of an assessee, are revenue
Illustration: B Co. engages in the stationery receipts.
10 business. It receives money for the sale of 10
property. That is a capital receipt. Illustration: The sale and purchase of shares by
a stock-broker on her own account, profits
If B Co. was in the real estate business, the sale from foreign exchange transactions of a bank,
of land would amount to a revenue receipt. If and income to a company from letting out its
15 B Co. sold its office premises and made a gain, houses to its employees, are all revenue 15
it would be a capital receipt, since the land receipts.
was held and dealt with as a capital
investment outside its trade. The recurring or lump-sum nature of the
receipt is irrelevant to determining the nature
20 Illustration: C Co., which engaged in the of receipt. Advances against royalties received 20
business of being a selling agent for a colliery, by authors, for instance, would be a revenue
had to, in the course of its business, purchase receipt in their hands. If a payment is
wagons on behalf of its clients. Anticipating a measured by the estimated annual profit or
rise in prices due to war, it purchased a large yield, then it is revenue. Similarly, what is
number of wagons and sold them at a great relevant is the nature of the transaction, and
25 profit. This profit is revenue, since it is in the not the name given to it by the parties. 25
ordinary course of business. (Benyon and Co. v.
Ogg, 7 T.C. 125) Illustration: ABC Co. is the sole selling agent
for XYZ Co. Any compensation it receives for
As a broad rule, a receipt that is in the nature the termination of the agency is a capital
of a fixed capital is not taxable, but when it receipt. (Under S.28 of the IT Act, however, it
30 refers to circulating capital or stock-in-trade, it is made taxable.) If ABC Co. had many 30
is taxable. (John Smith v. Moore, 12 T.C. 266 agencies and one of them were terminated,
(HL)) the compensation received would be a
revenue receipt.
Illustration: A company manufactured fireclay
35 goods, and was a lessee of certain fireclay Illustration: A doctor, under her contract with 35
fields. This field was acquired by a railway a hospital, is restrained from practising in that
company under a statute, and compensation locality for five years and receives a
was paid. The receipt was held to be a capital compensation for this restraint. It is a capital
receipt since it was made for the loss of a receipt. Under the doctor’s employment
40 fireclay field, which was a capital asset. The agreement, however, the doctor is entitled to a 40
fact that such payment was calculated on the “non-practising allowance” for agreeing to
profits that could have been earned did not practice only in the hospital. That is a revenue
make it a revenue receipt. (Glenboig Fireclay Co. receipt.
v. I. R., 12 T.C. 427)
45 “Previous Year”, “Assessment Year”, “Financial 45
The nature of the receipt depends only on its Year”
character in the hands of the recipient and not
on its character in the hands of the payee. S.3 of the IT Act provides:
50 50
Illustration: W Co. is a dealer in machinery. Z “For the purposes of this act, “previous year”
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! All India Bar Examination: Preparatory Materials! 142
means the financial year immediately she fulfils one of the “resident” criterion, and
preceding the assessment year:” she has been a non-resident for nine out of the
last ten years preceding the relevant previous
S.2(9) defines assessment year as the period of year, or she has been in India for less than 729
5 twelve months beginning every April 1. days in the seven years preceding the relevant 5
previous year.
Finally, while the IT Act does not define
“financial year”, the Companies Act, 1956, If she does not fall within either of the above
defines it as the period in respect of which the categories, she is classified as a non-resident.
10 profit and loss account is laid by the company 10
before the annual general meeting. Such In the case of a company, an “Indian
period need not be exactly one year. The company”, as defined by S.2(26) of the IT Act,
General Clauses Act, 1897 defines it as the is always resident in India. In the case of a
period starting from April 1 and ending with foreign company, according to S.6(3), if the
15 March 31. However it does define assessment whole of the control and management of the 15
and previous year. “assessment year” means company is exercised from India during that
the period of twelve months commencing on previous year, it is resident in India.
the 1st day of April every year while previous
year is defined as the financial year Total Income
20 immediately preceding the assessment year. 20
The “total income” of a “resident” under S.5
In the case of businesses or professions that (1) of the IT Act includes income that is:
are newly set up, the assessment year or
[previous year is taken as between the date on • Received or deemed to be received in
which the business is set up, up to the date on India; or
25 which the financial year ends. • Accrues or arises to her in India; or 25
• Accrued or arises to her outside India.
Illustration: Y joins the Bar on December 4,
2009. Her previous year, for the assessment A person who is not ordinarily resident in
year 2010-11, will be between December 4, India would be taxed only on the first two
2009 and March 31, 2010. points above.
30 30
Illustration: Z Co. commences business on A non-resident is taxed only on income that is
December 26, 2008, and closes its account either received, deemed to be received, or
book for the financial year 2008-09 on accrues or is deemed to accrue in India.
December 31, 2009. .In the present case the
35 previous year will include period up to March Receipt, Accrual 35
31, 2010 and the assessment year will start
from April 1, 2010 for a period of twelve “Receipt” refers to the physical receipt of the
months thereafter. income in the hands of the assessee, or by
someone on behalf of the assessee. Two pieces
40 Resident, Not Ordinarily Resident and Non- of information need to be understood in the 40
Resident (S.6) case of receipt – the place of receipt, and the
time of receipt. The amount is received by the
A person is resident in India if she is in India assessee when it is put in her control.
for a period or periods aggregating to more Therefore, the place of receipt of a cheque by
45 than 182 days during the previous year, or she post would be the place where the cheque is 45
has been in India for more than 365 days in received by the assessee, and the time of
the four years preceding the previous year, receipt of such amount would be the time of
and at least sixty days in the previous year. receipt of the cheque and not the time of
50 encashment. 50
A person is not-ordinarily-resident in India if
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! All India Bar Examination: Preparatory Materials! 143
public utility. The expression ‘general public wages, annuity or pension, gratuity, and fees,
utility’ has been interpreted to mean even a commissions, perquisites or profits, in lieu of
segment of society and not necessarily the salary in addition to salary or wages, amongst
whole of mankind. As long as the object is not other sums. For an income under this head,
5 to benefit specified individuals, but a class of there must be an employer-employee 5
persons, it would come under this definition. relationship between the payer and the
Accordingly, a chamber of commerce (C. I. T. assessee. Therefore, a contract of service leads
v. Andhra Chamber of Commerce, 55 ITR 722) to a salary, but a contract for services does not
and State Bar Councils (C. I. T. v. Bar Council of lead to a salary.
10 Maharashtra, 130 ITR 28) have been held to 10
come within the definition of a “charitable Illustration: F is a Director in G Ltd. and
purpose”. Where some objects of a trust are receives remuneration for her services. If G is
charitable, and some are not, the dominant a full-time director and works under the
purpose of the trust is to be considered. control of the organisation, G’s remuneration
15 is a “salary”. (C. I. T. v. Navnitlal Sakarlal, 247 15
Chapters VI-A and VII of the IT Act list out ITR 70) However, if F is a Chartered
various incomes that are to be deducted from Accountant acting as an independent director
the total income. These are, in effect, incomes on the Board, the remuneration received by
that are not liable to tax. There is a distinction her is only “profits and gains of business or
20 between exemptions and deductions, though profession”. 20
the effect of both is to relieve a sum of tax. A
sum exempt from tax does not form part of Illustration: GS is the Advocate-General of
the total income at all, and is exempted from Tamil Nadu. GS is not an employee of the
the charge of tax. A deductible sum is allowed Government, but merely performing
to be deducted when computing taxable professional services for it. GS’ remuneration
25 income, but is not exempted from the charge as Advocate-General is not salary. (C. I. T. v. 25
of income tax. Govind Swaminathan, 233 ITR 264)
This is important for two reasons – first, the Salaries are chargeable to tax at the time when
rate of tax payable is determined by the total they are due or when they are received,
income, and second, in several cases, whichever is earlier.
30 calculations are to be made on the total 30
income. The “deductions” are used in Illustration: A Co. is unable to pay salaries to
computing the “total income” brought to tax, its employees in 2009-10. B Co. pays salaries
but the “exemptions” are completely in advance for six months in January 2010.
excluded. Both sums will be brought to tax in
35 Assessment Year 2010-11. 35
Heads of Income
“Perquisites” defined under S.17(2) are taxed
Under S.14, all incomes are classified into five under “salaries”, and so are “profits in lieu of
heads: salary”.
40 40
• Salaries (Ss.15 – 17) Income from House Property
• Income from House property (Ss.22 – 27)
• Profits and Gains of Business or Profession Even though the head uses the term “house
(Ss.28 - 44DA) property”, the tax is levied on the “annual
45 • Capital gains (Ss.45 – 55A) value” of a property consisting of a “building” 45
• Income from other sources (Ss.56 – 59) and “land appurtenant thereto” owned by the
assessee that is not occupied by her for the
Salaries purposes of a business or profession.
50 50
“Salaries” are defined under S.17 to include “Building” is a term that signifies some
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! All India Bar Examination: Preparatory Materials! 145
measure of permanence. Therefore, even huts devoting time, attention, and labour of a
may be buildings, but circus tents or person either on her own, or by employing
exhibition structures are not buildings. Lawns, other persons with a motive to make profits.
gardens, and parking lots attached to the The provision defines “business” as any trade,
5 buildings are covered within the meaning of commerce, or manufacture, or any adventure 5
“land appurtenant thereto”. A person is the in the nature of a trade.
“owner” of a property as long as that person is
entitled to receive income from it. There is no “Profession” is defined in S.2(36) to include a
need for a registered deed in that person’s vocation. Therefore, not only activities carried
10 favour. (C. I. T. v. Podar Cement Ltd., 266 ITR out by knowledge acquired through a 10
625) S.27 lists some special cases in which professed study, but also on account of inborn
persons are deemed to be owners of the talent or skill, would qualify as a
property. “profession”. For example, philosopher and
musician would be included within the
15 The “annual value” of the property is defined definition of profession. 15
in S.23 as the sum for which the property
might reasonably be expected to let from year Income under this head, according to S.145, is
to year. Whether the sum is actually earned computed using the method of accounting
from the property is irrelevant to this section. employed regularly by the assessee. Further,
20 Therefore, even a vacant property is subjected the guidelines given in the detailed provisions 20
to “income from house property”. of Ss.30 to 43D are followed.
However, the annual value of property that is Current Repairs and Capital Expenditure
occupied by the assessee herself, or which is
not occupied by her due to her employment in Subject to the conditions in S.30 and S.31,
25 another place, is considered as zero, in rents, insurance, and repairs of the premises 25
accordance with S.23, unless the assessee is of business or profession, or machinery, plant,
deriving some benefit from the property. and furniture are allowable deductions.
The taxes levied by a local authority are Only “current repairs”, however, and not
deducted from the annual value. Under S.24 “capital expenditure” is allowed as a
30 (a), a flat 30% is deducted. Subject to certain deduction under this provision. If an asset is 30
conditions, the interest payable on capital restored to its normal or original condition by
borrowed to buy or construct the property, incurring certain expenditure that does not
make repairs, or reconstructions on the enhance the efficiency beyond the normal
property is also deducted. These deductions efficiency, then such expenditure is “current
35 are also available when the annual value is repairs”. On the other hand, if a new and 35
zero under S.23, in which case the income enduring advantage ensues from an
from house property is taken as a loss. expenditure with respect to a building or
machinery, it would amount to a capital
Profits and Gains of Business or Profession expenditure.
40 40
Under S.28 of the IT Act, the profits and gains Illustration: V is a restaurant that is partially
of a business or profession are brought to tax. destroyed in a fire. Furniture and other
The other sub-sections of the provision list out equipment, including air-conditioning are
other incomes charged under this provision, replaced. This is within the definition of
45 such as the compensation received upon “current repairs”, since the object of the 45
termination and modification of certain expenditure is to regain the original efficiency.
contracts, and other sums. (C. I. T. v. Volga Restaurant, 253 ITR 405)
50 “Business”, defined in S.2(13), can be Illustration: The spare parts of a power loom in 50
understood as an activity that is carried out by a textile mill are faulty. The engineer suggests
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! All India Bar Examination: Preparatory Materials! 146
their replacement with a much more powerful business purpose. (See C. I. T. v. Prem
part. This expenditure would be capital Engineering, 285 ITR 554 and C. I. T. v. Abhishek
expenditure and not “current repairs”. Industries, 286 ITR 1)
Management. This expenditure is not of a company and so on, are not “transfers” under
revenue nature since it has nothing to do with Ss.46 and 47.
the business of the firm. (C. I. T. v. Hindustan
Hosiery, 209 ITR 383) Computation of Capital Gains
5 5
Under the explanation to S.37(1), an Computation of Capital Gains is done under
expenditure incurred by the assessee for any S.48 of the IT Act, which holds that the gains
purpose which is an offence, or which is from the transfer of the capital asset shall be
prohibited by law, is not deductible. It follows the full value derived from the transfer minus:
10 that interest for delayed payment of tax, 10
which is not penal, is deductible, whereas • The expenditure incurred for such transfer;
penalty for non-payment of tax is not • The cost of acquisition of the transfer; and
deductible, since that is a penal payment. • The cost of improvements to the capital
(Lakshmandas v. C. I. T., 254 ITR 799) asset.
15 15
Capital Gains Short-Term and Long-Term Capital Gains
S.45 imposes capital gains tax on any “profits If the capital asset is sold more than thirty-six
or gains” that arise from the “transfer” of a months after its acquisition, such a transfer
20 “capital asset” during the relevant previous results in a long-term capital gain. Else, the 20
year. gain is a short-term capital gain. These two
gains are taxed at different rates, and certain
“Capital asset” is defined in S.2(14) as procedural rules vary for the two classes of
property of any kind held by the assessee, gains.
whether or not connected with her profession
25 or business. Examples include certain kinds of Income from Other Sources 25
property, including stock-in-trade,
consumables, and raw materials used in the The incomes that are not covered under any of
business or profession, personal effects of the other heads, such as incomes from
movable nature held for personal use, dividends, from keyman insurance policies,
agricultural land in India (except that winnings from lotteries, interest on securities,
30 mentioned in S.2(1A)), and certain hiring out of a building with machinery, and 30
Government Bonds. so on, are covered under this head.
The term ‘manufacture’ implies the bringing Illustration: A company manufactured a turbo-
into existence of a new substance. It does not alternator that was made of a turbine and an
45 merely mean a change in the substance, alternator. But, as a turbo-alternator, it could 45
however small the change may be, but entails not be taken to the market as such, and
an element of marketability. The Supreme therefore, did not amount to ‘manufacture’.
Court in Union of India v. Delhi Cloth and (Triveni Engineering v. C. C. E., 120 ELT 273)
50 General Mills, 1 ELT 199, quoted with approval 50
the following definition:
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! All India Bar Examination: Preparatory Materials! 149
the goods.
Legislation
Service Tax
Customs duty is a tariff or tax imposed on the
5 Service Tax is levied by the Union on services import of goods. As in the case of excise, the 5
under its residuary powers under Entry 96 of tax is not imposed on the goods, but on the
List I of the Seventh Schedule of the activity of import. Customs duties are levied
Constitution of India. Although Entry 92-C of under the Customs Act, 1962, read with the
the List does mention “Taxes on services”, the Customs Tariff Act, 1975 (“CTA”).
10 Entry has not been notified till date. 10
Types of Customs Duties
Legislation
The types of customs duties imposed in India
Service Tax was introduced in India through are:
15 the Finance Act, 1994 (“the FA, 1994”), and 15
continues to be levied under that Act. No • Basic Customs Duty: Basic customs duty is
separate legislation exists, to this day, dealing leviable under S.12 of the Customs Act.
with service tax. Normally, it is levied on an ad-valorem
basis. In certain instances, the duty is
20 Taxable Event, Charging Provision prescribed on a “so many rupees per 20
kilogram” measure.
The taxable event in service tax is the • Additional duty: Any article imported into
provision of a ‘taxable service’. Under S.66, India, shall, in addition be subject to a
which is the charging provision, service tax is countervailing duty (“CVD”) equal to an
levied on any ‘taxable service’ as defined excise duty for the time being under S.3(1)
25 under S.65(105) of the FA, 1994. After the of the CTA. 25
introduction of S.66A, services that are • Additional Duty to balance the excise duty on
provided from outside India to a recipient in raw materials: Under S.3(3) of the CTA, in
India are taxable under the Act. Tax is addition to the CVD, on some special
calculated on the consideration paid for the items, an additional duty is imposed to
service. balance the excise duty paid on raw
30 materials and certain inputs. 30
Taxable Service • Additional duty in lieu of sales tax / VAT:
Under S.3(5) of the CTA, the Central
Only services that are listed in S.65(105) of the Government can impose an additional
FA, 1994, are liable to service tax. The section duty to counter-balance sales tax, VAT,
35 stipulates that any services that are “provided, local taxes, or other similar taxes. 35
or to be provided” in relation to a variety of • Protective Duty: In the interests of certain
items are taxed in India. industries, under S.6 of the CTA, the
Government can impose a protective duty
The Supreme Court has held in iMagic Creative on the good.
40 v. C. C. T., (2008) 2 SCC 614, that payments of • Safeguard Duty: If the Central Government, 40
sales tax and service tax are mutually after enquiries, feels that certain articles are
exclusive. If service tax is paid on a imported in quantities that are harmful to
transaction, then no sales tax can be imposed domestic industry, then a safeguard duty
on the same transaction. Many transactions, can be imposed on such articles under S.8B
45 however, especially financial leasing, hire of the CTA. 45
purchase, and certain software contracts, • Safeguard Duty on China: On certain goods
continue to be liable to both sales and service from China as above.
tax. • CVD on subsidised article: If an article is
50 subsidised in the country of its 50
Customs Duty manufacture, then the Government can
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All India Bar Examination rules that will bind all states that are parties to
Preparatory Materials them. A number of contemporary treaties,
such as the Geneva Conventions (1949) and
Subject 20: Public International Law the United Nations Convention on the Law of
5 the Sea (1982), have more than 150 parties to 5
International law is that body of law them, reflecting both their importance and the
composed of principles and rules of conduct evolution of the treaty as a method of general
which States recognise as binding, and legislation in international law. Other
therefore, commonly observe in their relations significant treaties include the Convention on
10 with each other. Note that ‘State’ in this the Prevention and Punishment of the Crime 10
module refers to a sovereign political entity, of Genocide (1948), the Vienna Convention on
or, as it are commonly referred to, a ‘country’. Diplomatic Relations (1961), the Antarctic
As such, international law may be referred to Treaty (1959), and the Rome Statute
as ‘public international law’ and is in contrast establishing the International Criminal Court
15 to ‘private international law.’ Public (1998). 15
international law refers to rules, laws, and
principles of general application that deal Countries that do not sign and ratify a treaty
with the conduct of States and international are not bound by its provisions. Treaty
organisations among themselves, as well as provisions can, however be the basis of
20 the relationships between States and international custom in certain circumstances, 20
international organisations with persons, provided that the provision is “of a
whether natural or juridical. Private fundamentally norm-creating character.” (North
international law, on the other hand, refers Sea Continental Shelf case, ICJ Reports, (1969),
primarily to the resolution of conflict of laws p. 3)
in the international setting and involves
25 determining the law of which State is Customary International Law: In international 25
applicable in specific situations. law, a rule of custom evolves from the practice
of States. There must be evidence of
Sources of International Law substantial uniformity of practice by a
substantial number of States.
A.38(1) of the 1946 Statute of the International
30 Court of Justice (“the Statute of the ICJ”) Illustration: The customary rule (now 30
identifies the sources of international law as: superseded), that States had the right to
exclusive fishing within a twelve nautical mile
• International conventions (treaties); zone, emerged from the practice of states.
• International custom, as evidence of a (Fisheries Jurisdiction cases (United Kingdom v.
35 general practice accepted as law; Iceland; Germany v. Iceland), ICJ Reports (1974), 35
• The general principles of law recognised by p. 3)
civilised nations;
• Judicial decisions and the teachings of the For a custom to be accepted and recognised,
most highly qualified publicists of the the other major powers in that field must
40 various nations as subsidiary means for the concur with it. Other countries may propose 40
determination of rules of law. ideas and institute pressure, but without the
concurrence of those most interested, it cannot
Conventions (also known as treaties): Those amount to a rule of customary law.
agreements whereby States establish their
45 position in international law on a particular Where a new rule is created, acquiescence is 45
topic or establish new rules to guide them for assumed from actual agreement or from lack
the future in their international conduct. Such of interest. But, if the new practice is not
law-making treaties require the participation consistent with an established customary rule,
50 of a large number of States, and may produce and a State is a persistent objector to the new 50
practice, the practice may either not be
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! All India Bar Examination: Preparatory Materials! 154
regarded as evidence of a new custom or the and practice of international law. Academic
persistent objector may be regarded as having writings play a useful role in stimulating
established an exception to the new customary thought about the values and aims of
rule. international law as well as pointing out the
5 defects that exist within the system, and 5
For the creation of a new rule of custom, in making suggestions for the future.
addition to practice, there must also be a
general recognition by States that the practice Other Sources of International Law: General
is settled enough to amount to an obligation Assembly Resolutions, even if they are not
10 binding on States under international law. binding, may sometimes have normative 10
This is known as opinio juris. This is the factor value. They can, in certain circumstances,
that turns usage into custom and renders it a provide evidence that is important for
part of international law. (Nicaragua v. United establishing the existence of a rule or the
States of America, ICJ Reports (1986), p. 14) emergence of an opinio juris. To establish
15 whether this is true of a General Assembly 15
General Principles of Law: International courts resolution, it is necessary to look at its content
and tribunals attempt to fill the gaps in and the conditions of its adoption; it is also
international law by borrowing concepts from necessary to see whether an opinio juris exists
domestic law if they can be applied to as to its normative character. A series of
20 relations between States. Such concepts are resolutions may show the gradual evolution 20
chiefly with regard to procedure and evidence, of the opinio juris required for the
(Corfu Channel case, ICJ Reports (1949), p. 4), or establishment of a new rule. (Legality of the
based on analogies drawn from private law, Threat or Use of Nuclear Weapons, ICJ Reports
such as good faith. (Nuclear Tests case, ICJ (1996), p. 70)
Reports (1974), p. 253), and estoppel (Temple
25 case, ICJ Reports (1962) p. 6) Non-binding instruments or documents such 25
as the Helsinki Accord of 1975, or non-binding
Judicial Decisions: A.38 of the ICJ Statute provisions in treaties form a special category
provides that the judgments of courts and termed ‘soft law’. While soft law may not
tribunals are a subsidiary source of have the ordinary force of law, it is still
international law. However, they are only considered a source of international law.
30 persuasive authority. Most cases involving 30
points of international law are often first Jurisdiction
presented in domestic courts. The effect of
such decisions of domestic courts on a A State may exercise jurisdiction and thereby
particular legal point can be evidence of override the interests of a competing state if
35 custom, although it is possible that domestic there is a close connection between the subject 35
courts may interpret international law matter and the State.
inaccurately.
Territorial Principle: A State is free to legislate
Teachings of the Most Highly-Qualified and enforce legislation within its territory,
40 WritersPublicists: The role played by except when that freedom is restricted by 40
writerpublicists on international law is also treaty. It can enforce its legislation on any
subsidiary, though in the formative days of person within its territory, including foreign
international law, their views may have been nationals. A State’s laws apply to ships flying
more influential than they are today. Treatises its flag or aircraft registered with it, and on
45 on international law are used as a method of persons on board these carriers. This is the 45
discovering what the law is on any particular primary basis for jurisdiction.
point. These textbooks are important as they
help to arrange and put into focus the Illustration: Scottish courts exercised
50 structure and form of international law. They jurisdiction over the bombers of the airplane 50
also help to understand the nature, history, that exploded over the Scottish town of
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materials shall attract all applicable civil and criminal law remedies.
! All India Bar Examination: Preparatory Materials! 155
Lockerbie. (Lockerbie case, ICJ Reports (1992) p. outside British territory. (Joyce v. Director of
12) Public Prosecutions, 15 ILR p. 91)
which are initialled but not signed. A approval, or accession. It may also be
Memorandum of Understanding (“MOU”) is expressed by previously agreed means. (Aa.11
distinguishable from a treaty based on the – 17, Vienna Convention, 1969)
language used in it. MOUs are preferred
5 because of confidentiality, especially in Illustration: India has not signed the 5
defence arrangements. Comprehensive Nuclear Test Ban Treaty (“the
CTBT”), although it was a party to the
Credentials and Full Powers: Treaties are made negotiations surrounding the CTBT. This
between subjects of international law – indicates that India does not agree with the
10 between states; between states and terms contained therein. 10
international organisations; and between
international organisations. Every state Illustration: India signed and ratified the
possesses the capacity to conclude treaties. (A. United Nations Convention on the Rights of
6, Vienna Convention, 1969) Persons with Disabilities (“the UNCRPD”).
15 This indicates that India intends to amend 15
Credentials are issued by a State, usually by domestic law to reflect the terms contained
the foreign minister, to a delegate to a within the UNCRPD. The United Kingdom
multilateral treaty conference, authorising her (“the UK”) has signed but not ratified this
to represent that State. It is then presented to treaty indicating agreement with the terms in
20 the host government or international the UNCRPD. The UK needs to make changes 20
organisation. These credentials grant the to domestic laws before ratifying the
delegate the authority to negotiate and adopt UNCRPD.
the text of the treaty and to sign the final act
only. A person is considered to be representing Illustration: India had signed and ratified the
a State for the purpose of adopting the text of Convention on the Elimination of all forms of
25 a treaty if she produces appropriate full Discrimination against Women (“the 25
powers. (A.7(1), Vienna Convention, 1969) CEDAW”). However, it was the Supreme
Court of India in Vishakha and Others v. State of
Adoption and Authentication: Once negotiations Rajasthan, AIR 1997 SC 3011, that utilised
are complete, it is necessary for the provisions in the CEDAW to create laws
negotiating States to adopt the text. The act of governing sexual harassment at the workplace
30 adoption does not amount to consent to be in India. 30
bound by the treaty. Adoption at an
international conference requires two-thirds Reservations: A.2(1)(d) defines a reservation as
vote of the States ‘present and voting’. (A.9(2), “a unilateral statement, however phrased or
Vienna Convention, 1969) named, made by a State, when signing,
35 ratifying, accepting, approving or acceding to 35
Initialling the text of a bilateral treaty amounts a treaty, whereby it purports to exclude or
to both adoption and authentication. Treaties modify the legal effect of certain provisions of
adopted within an international organisation the treaty in their application to that State.” A
are authenticated by the adoption of a reservation cannot be made to a bilateral
40 resolution by an organ of the organisation, treaty. All terms of such treaties must be 40
such as the assembly, or by the act of agreed to before it can bind the parties.
authentication performed by the president of
the assembly or the chief executive officer of
the organisation. A State may seek to fine-tune or adjust the
45 application of a multilateral treaty by using 45
Consent: There are a number of ways by which reservations. A State which has made and
a State may express its consent to an maintained a reservation which has been
international agreement. It may be signalled objected to by one or more parties to the
50 by signature, the exchange of instruments Convention but not by others, can be regarded 50
constituting a treaty, ratification, acceptance, as being a party to the Convention, if the
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! All India Bar Examination: Preparatory Materials! 157
reservation is compatible with the object and interpretation. Aa.31 lays down the
purpose of the Convention. (Reservations to the fundamental rules of interpretation and
Genocide Convention case, ICJ Reports (1951) p. reflects customary international law.
15)
5 The first duty of a tribunal which is called 5
A.19 permits reservations to be made when upon to interpret and apply the provisions of
signing, ratifying, accepting, approving, or a treaty is to give effect to them in their
acceding to a treaty, but not where prohibited natural and ordinary meaning in the context
by the treaty, or where only specified in which they occur. (Competence of the General
10 reservations may be made or where the Assembly for the Admission of a State to the 10
reservation is not compatible with the object United Nations case, 82 ILR, p. 590)
and purpose of the treaty.
If, however, there remains confusion
A.21(1) speaks of the legal effects of a regarding the interpretation according to the
15 reservation which has been established with provisions of A.31, the supplementary means 15
regard to another party. An effective of interpretation under A.32 may be relied
reservation operates reciprocally between a upon. This includes the preparatory works
party and any other party that has not (traveaux préparatoires) of the treaty and the
objected to the reservation, thereby modifying circumstances of its conclusion.
20 the treaty to the extent of the reservation for 20
them in their mutual relations. But, as A.33 of the Vienna Convention, 1969, deals
between the other parties, the treaty remains with the interpretation of treaties
unaffected. (A.21(2), Vienna Convention, 1969) authenticated in two or more languages.
Entry into Force: In the absence of any Invalidity of Treaties: A.44 of the Vienna
25 provision or agreement regarding when a Convention, 1969, provides that a State may 25
treaty will become operative, it will enter into only withdraw from or suspend the operation
force as soon as consent to be bound by the of a treaty in respect of the treaty as a whole.
treaty has been established for all the A.45 provides that a ground for invalidity,
negotiating States. (A.24, Vienna Convention, termination, withdrawal, or suspension may
1969) no longer be invoked by the State where after
30 becoming aware of the facts, it expressly 30
Illustration: The Geneva Convention on the agreed that the treaty is valid or remains in
High Seas, 1958, provides for entry into force force, or where by reason of its conduct, it
on the thirtieth day following the deposit of may be deemed to have acquiesced in the
the twenty-second instrument of ratification validity of the treaty or its continuance in
35 with the United Nations Secretary-General. force. 35
Treaties and Domestic Law: A.26 of the Vienna A State cannot plead a breach of its internal
Convention, 1969, contains the fundamental laws as to the making of treaties as a valid
principle of the law of treaties: every treaty in excuse for condemning a treaty. (Article 46,
40 force is binding upon the parties to it and Vienna Convention, 1969) 40
must be performed in good faith (pacta sunt
servanda). If new legislation or modifications A State may only invoke an error in a treaty as
to existing laws are necessary in order to invalidating its consent to be bound by the
comply with a new treaty, the State must treaty if the error relates to a fact or situation
45 ensure that this has been done by the time the which was assumed by that State to exist at 45
treaty enters into force for it. (A.27, the Vienna the time when the treaty was concluded and
Convention, 1969) which formed an essential basis of its consent
to be bound by the treaty (A.48, Vienna
50 Interpretation: Aa.31 to 33 of the Vienna Convention, 1969) 50
Convention, 1969, are concerned with
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materials shall attract all applicable civil and criminal law remedies.
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Agencies such as the United Nations A.24 of the UN Charter gives the Security
Environment Programme (“the UNEP”), the Council the primary responsibility for the
45 United Nations High Commissioner for maintenance of international peace and 45
Refugees (“the UNHCR”), and the United security. The Security Council has the power
Nations Children’s Fund (“the UNICEF”) are to impose legally binding measures on all UN
not specialised agencies of the UN, but are members. Most Council resolutions contain
50 bodies set up by the UN General Assembly, only recommendations and are informally 50
and lack separate international legal referred to as ‘Chapter VI resolutions’ as
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