PUBLIC POLICY SETTING ASIDE ARBITRAL AWARD

Vivek Kerketta

Introduction

Public policy is an attempt by the government to address a public issue. The government, whether it is city, state, or federal, develops public policy in terms of laws, regulations, decisions, and actions. There are three parts to public policy-making: problems, players, and the policy.

The problem is the issue that needs to be addressed. The player is the individual or group that is influential in forming a plan to address the problem in question. Policy is the finalized course of action decided upon by the government.

It is this lack of definition and certainty of the concept which has led to judicial statements against the extension of public policy. The doctrine of public policy is somewhat open-textured and flexible, and this flexibility has been the cause of judicial censure of the doctrine. By far, the most famous expression of disapproval against public policy is its description as a ‘very unruly horse’ which ‘you never know where it will carry you’.

Other expressions of disdain include descriptions such as “a treacherous ground for legal decision” and “a very unstable and dangerous foundation on which to build until made safe by decision”. However, in the second half of the 20th century, the positive function of the court in matters of public policy increasingly gained recognition. In fact, Lord Denning stated, “With a good man in the saddle, the unruly horse can be kept in control. It can jump over obstacles. It can leap the fences put up by fictions and come down on the side of justice.”

The public policy in relation to international commercial arbitration is that The UNCITRAL Model Law Commission stated in its report that the term “public policy” comprises “fundamental principles of justice”. It was understood that the term public policy which was used in the 1958 New York Convention and many other treaties, covered fundamental principles of law and justice in substantive as well as procedural respects. Thus, instances such as corruption, bribery, or fraud and similar serious cases would constitute a ground for setting aside an award.

 Public Policy for India

Public Policy

“It is never argued at all, but when other points fail” said by Burrough. J

The 1996 Act S. 34(2) (b) (ii) provides that if the award is in conflict with public policy of India it can be set aside. However the term “public policy” has not been defined anywhere in the act. Simplistically speaking, the expression “public policy” connotes some matter which concerns the public good and public interest. An attempt to define public policy was made by Winfield when he identified it as “a principle of judicial legislation or interpretation founded on the current needs of the community”. However, current needs being a changing concept, it is impossible to pigeon hole the same.

There are two conflicting positions with respect to ‘public policy’ which is especially witnessed in English decisions, usually referred to as the ‘narrow view’ and the ‘broad view’. According to the ‘narrow view’, courts cannot create new heads of public policy while the ‘broad view’ permits judicial law making. Indian courts over the years, till the infamous ONGC verdict has been inclined towards a narrow interpretation of the term public policy.

Public Policy means the principles and standards regarded by the legislature or by the court as being of fundamental concern to the State the whole of the society. The Supreme Court attempted by the following explanation of the concept:

The phrase “public policy of India” occurring in section 24(2) (b) is not defined in the Arbitration Act. The concept ‘public policy’ is considered to be vague, susceptible to narrow or wider meaning in the context in which it is used. Hence, it should be given meaning in the context and also considering the purpose of the section.

According to section 23 Indian Contract Act state that- What considerations and objects are lawful and what not – “The consideration or object of an agreement is lawful, unless -It is forbidden by law or is of such nature that, if permitted it would defeat the provisions of any law or is fraudulent; of involves or implies, injury to the person or property of another; or the Court regards it as immoral, or opposed to public policy.”- In Gurmukh Singh v. Amar Singh , demonstrated that the agreement between appellant and the respondent was only to participate an action of evacuee property. There was no intention either to bring down the price or to defraud the government to sell the same at lower price. Therefore the object of the agreement was not opposed to public policy, a priori, it was not valid under section 23 of the Indian Contract Act.

The act does not define the expression ‘public policy’ opposed to public policy of a particular government. It connotes same matter which concerns public good and interest. The phrase ‘public policy of India used in section 34 in context is required to be given a wider meaning. The concept of public policy connotes some matter which concerns public good and public interest. What is for public good or interest or what would be injurious or harmful to public good or interest has varied from time to time. An award which is, on the face of it, patently in violation of statutory provision cannot be said to be public interest.

Setting Aside of Arbitral Award and Relation with Public policy

In the Arbitration and Conciliation Act, 1996, provides as:-

a. Section 34 (2) (b) (ii) states that arbitral award may be set aside or remitted to the arbitral tribunal for reconsideration by the country if it finds that Arbitral Award is in Conflict with public policy of India. It further explains that an award is conflict with public policy with Public Policy of India if the making of award was induced or affected by fraud, corruption or was violation of section 75 or 81

b. Section 48 (2) (b) enforcement of foreign arbitral award as defined article 44 of (New York Convention Award)may be refused if court finds enforcement would be contrary to the Public Policy of India. The provision also explains that an award is in conflict with Public Policy of India if it was induced or affected by fraud or corruption.

c. Section 57 (1) (e) also states that order that foreign award as defined article 53 (Geneva Convention Award) may be enforceable, it shall be necessary that the enforcement of is not contrary to Public Policy or Law of India.

The enforcement of an award as to be refused as being contrary to public policy if it is contrary to the fundamental policy of Indian law, country’s interest and its sense of justice and morality.

 Ground for aside Arbitral Award:

Fraud- The term ‘fraud’ has been defined in section 17 of the Indian Contract Act 1872, which reads as:

Fraud means and includes any of the following acts committed by a party to a contract, or with his connivance, or by his agent, which intent to deceive another party thereto or his agent, or to induce to enter into the contract-

– The suggestion, as to a fact, of that which is not true by one who does not believe it to be true.

– The active concealment of a fact by one having knowledge or belief of the fact.

– A promise made without any intention of performing it.

– Any other act fitted to deceive.

Explanation- Mere silence as to facts likely to affect the willingness of a person to enter into a contract is not fraud, unless the circumstances of the case are such that regard being had to them, it is the duty of the person keeping silence to speak, or unless his silence is in itself, equivalent to speech.

Fraud is a term that should be reserved for something dishonest and morally wrong and such wrong, and much mischief is done as well as much pain inflicted by its use where ‘illegally’ and ‘illegal’ are the real appropriate expression. Chief Justice Edward Coke said, ‘fraud avoids all judicial acts ecclesiastical or temporal. Fraud however is inconsistent with claim of right made in good faith to do the act complained of.

The decision of Supreme Court in SP Chengalvaraya Naidu v. Jagannth, provides an example where it set aside a decree obtained by a party concealing a vitally relevant document from trail court. Here, a plaintiff had obtained the preliminary decree for partition of property, without disclosing to the trail court the release deed with respect to the property executed by him in favour of his employer. The court held that non-disclosure of the release deed before the court was tantamount to plain fraud on the court vitiating the decree.

Corruption-

The Explanation to section 34(2) (b) (ii), clarifies that an award induced or affected by corruption in addition to fraud will be liable to be set aside as being in conflict with the public policy of India. The expression ‘corruption’ has been defined either in the Indian Contract Act, 1872. Corruption of an arbitrator means ‘moral obliquity’ it is a false and misleading metaphor to speak of an arbitrator honest mistake, whether it is of excess or defect, as ‘constructive corruption.’ There is a general principle of law that a domestic award or a foreign award which is induced or affected by corruption, is invalid as well as unenforceable and it cannot sanctioned by the courts.

It is not easy to define corruption, it is not necessary that the arbiter should have been bribed, nor is it necessary that there should be some other form of venality or gross immorality or flagitious conduct.

In Air Corporation Employees Union v. DV Vyas the high court pointed out that the hospitality of the Corporation accepted by the Chairman could not be considered to be formal or niggardly not merit attention. Chandrachud, J said that ‘courts have always zealously upheld the principles that it is not merely sufficient that justice is done but that justice must seem to be done. Though the word ‘corruption’ was not used, the award was quashed for the mere fact that this type of hospitality was accepted.

Confidentially-

Under section 75 of the Arbitration and Conciliation Act, 1996, this provides that ‘now standing anything contained in any other law for the time being in force on India, the conciliator and the parties shall keep confidential all matters relating to the conciliation proceedings.

The provision of this section extended to the application of public policy of India in section 34(2) (ii), the explanations to which for the Avoidance of any doubt, declares that without prejudice to the generally of the expression ‘public policy of India’, if an award inter alia, is in ‘violation of section 75 of the 34(2) (ii), the words ‘conciliator’ and ‘conciliation’ used in section 75 shall have to be substituted for the words ‘arbitrator’ and ‘arbitration.’

Domestic arbitration’ of international commercial arbitration’ is not a public affair; it is essentially a process of private nature. In the language of Stephen Bond, J said- ‘the users of international commercial arbitration, i.e. the companies governments and individuals who are parties in such case, places the highest value upon confidentially as a fundamental characteristic of international commercial arbitration. The features of international commercial arbitration which attracted parties to it, as opposed to litigitation, confidentially of the proceedings and the resulting award would not enter into the public domain were almost invariably mentioned’.

Inadmissibility of evidence in other proceedings-

The explanation to section 34(2) (b) (ii), by reference the provision of section 81 in it. The provision mandates; ‘the parties shall not rely on or introduce as evidence in arbitral or judicial proceedings, whether or not such proceedings relate to the dispute that is subject of the conciliation proceedings-

– Views expressed or suggestion made by the other party in respect of a possible settlement of the dispute.

– Admission made by the other party in the course of the conciliation proceedings.

– Proposals made by the conciliator.

– The fact that the other party had had indicated his willingness to accept a proposal for settlement made by the conciliator

Thus, without prejudice to the generally of the expression ‘public policy of India’ as used in section 34(2) (ii), an award is in conflict with the public policy of India’, if it is violation of the provision of section 81 of the Act.

Misconduct- Section 30 of the Arbitration Act, 1940 provided that an arbitral award was liable to set aside where ‘an arbitrator or umpire has misconduct himself or the proceedings’. Though the term ‘misconduct’ was not defined in that Act, nevertheless misconduct, as crystallized by the judicial decision, covered a wide range of errors on the parts of the arbitrator.

“An award can be set aside for misconduct if the arbitrator has received bribes, or if he is secretly interested in the subject matter of the dispute. Misconduct may exist where no improper motives are imputed to the arbitrator. It is misconduct, for example, to make an award on a illegal contract.”

Misconduct was before the Supreme Court in V.G.Gorege v. Indian Rare Earths Ltd, a case of misconduct exists where the amount awarded by the arbitrator is contrary to his findings.

“The arbitrator may be a most recpectable person, but even so, his conduct cannot be reconciled to general principles. A judge must not take upon himself to say whether evidence improperly admitted had or had not any effect upon his mind. The award may have done perfect justice, but upon general principles it cannot be supported.

Legislatative Perspective

The Principle of public policy has been stated by Lord Mansfield in Holman v.Johson in following language:

The principle of public policy is this: ex dolo malo non oritur actio. No court will lend its aid to a man who founds his cause of action upon immoral or illegal act. If from the plaintiff own stating or otherwise, the cause of action appear to arise ex trupi causa, or the transgression of positive law of country, there the court says he has no right to be assited.

Public policy targets protection and promotion of public welfare. It is the principle of, under which freedom for contract or private dealings is restricted by the law for the good of community.

The general concept of public policy comprehends a wide range of topics categorized under certain heads. Agreement may offend against public policy by tending to prejudice of state in time of war (trading with enemies, etc), by tending to the perversion or abuse of municipal justice or in private life by attempting to impose inconvenient and unreasonable restriction on free choice individual marriage or their liberty to exercise any lawful trade or calling.

In the Indian constitution also in preamble it is well said “WE, THE PEOPLE OF INDIA, having solemnly resolved to constitute India into a SOVEREIGN SOCIALIST SECULAR DEMOCRATIC REPUBLIC and to secure to all its citizens: JUSTICE, social, economic and political; LIBERTY of thought, expression, belief, faith and worship; EQUALITY of status and of opportunity; and to promote among them all FRATERNITY assuring the dignity of the individual and the unity and integrity of the Nation.”

The Sovereign, Socialist, Secular, Democratic, Republic all this status comes only when good policy is formed and its enacted by the Government. The American President George Washington said- By the people, for the people, of the people, the public policy should be made in such a way that it benefits or works for the people only. It must be made for interest of the society.

Under Indian Constitution the Fundamental Right in Right to Freedom article 19 (4) restrict the right of the individual if the any existing law in so far as it imposes, or prevent the State from making any law imposing, in the interests of the sovereignty and integrity of India or public order or morality, reasonable restrictions on the exercise of the right conferred by the said clause.

Thus fundamental right can also be restricting if the public policy is against the interest of the society or individual because it disturb and violates the sovereignty and integrity of a country. So the policy must be made by seeing or needs the rights and duties of the individual and society.

The section 23 says that the consideration or object of an agreement is lawful, unless- It is forbidden by law or is of such nature that, if permitted it would defeat the provisions of any law or is fraudulent, of involves or implies, injury to the person or property of another; or the Court regards it as immoral, or opposed to public policy.

Therefore, the contract i.e. (agreement) between the parties should be made in such way that it does not oppose the public policy which hampers the interest of the society and individual.

 

 Judicial Intervention

The Indian legislature and judiciary have a fundamental choice to make- to respect party autonomy and finality of arbitral awards as envisaged by the 1996 Act or impose judicial supervision on arbitration and revert to the days of the 1940 Act. This choice will shape the course of Indian arbitration for the next decade and beyond.

In recent years, all over the world, a shift has been encouraged from litigation to alternative methods of dispute resolution such as arbitration, mediation, and conciliation etc., in an attempt to overcome the problem of inordinate delay in disposal of cases that litigation entails. In India especially, the attempt of the parliament which aims to bringing about cost-effective and expeditious resolution of disputes and further preventing multiplicity of litigation by giving finality to an arbitral award.

Prior to the enactment of the 1996 Act there was widespread discontent over the excessive judicial intervention allowed by its predecessor, the 1940 Act. The 1940 Act permitted courts to set aside an arbitral award where “the award had been improperly procured or otherwise invalid.”

The 1996 act attempted to rectify this problem by limiting the basis on which awards could be challenged to a few narrow grounds (which mirrored those found in the UNCITRAL model law and New York Convention on the Recognition and enforcement of Foreign Arbitral Awards).

The recent decision of the Apex Court in ONGC vs. Saw Pipes where a broad interpretation was given to the expression ‘public policy’, has given an unexpectedly different dimension and direction to S. 34. The objective behind this research is to examine the merits of having a broader notion of public policy in connection with setting aside arbitral award and also to look into the possible problems that could crop up due to this, especially the effect on finality of arbitral awards.

In case where the validity of the award is challenged, there is no necessary of giving a narrower meaning to the term “public policy of India”. Om the contrary, wider meaning is required to be given so that a “patently illegal award” may set aside.

Principles lay down under Section 34 states that an award may be set aside if it is contrary to:-

• Fundamental policy of Indian law,

• The interest of India,

• Justice or morality,

• If it is patently illegal.

In Renusagar Power Plant Co. Ltd. v. General Electric Co. the court in view of the absence of a workable definition of “international public policy” found it difficult to construe the expression “public policy”. In the Renusagar case, while giving narrow meaning to the expression ‘public policy of India’ the Apex Court observed that “It is obvious that since the Act is calculated and designed to subserve the cause of facilitating international trade and promotion thereof by providing for speedy settlement of disputes arising in such trade through arbitration, any expression or phrase occurring therein should receive, consisting with its literal and grammatical sense, a liberal construction.”

The court further declared “patent illegality” to mean that the award is contrary to the substantive provisions of law or the provisions of the 1996 Arbitration Act or against the terms of the contract. Thus “error of law” was now included as a ground to set aside the award, thereby making the provision of S. 34 an appellate provision rather than one to be used as an application to set aside the award. In order to justify adding “error of law” as a ground to set aside the award, in light of a contrary precedent in place, the court distinguished between the two cases on the ground that while Renusagar was dealing with a foreign arbitral award, the award in the instant case is a domestic one and thus “error of law” could be used as a ground to set it aside. In light of this reasoning, it can be safely assumed that the court did not intend S. 34 to apply to foreign arbitral awards and the separate provision provided in the Act i.e. S. 48 was to apply in these circumstances

The Supreme Court distinguished Oil & Natural Gas Corporation Ltd v. Saw Pipes Ltd. from that of Renusagar Power Co. Ltd v. General Electric Co. on the ground that the Renusagar judgment was in context of a foreign award, while the ratio of SAW Pipes would be confined to domestic awards only.

The most recent decision of the Supreme Court on the subject of setting aside an award on the ground of public policy under Section 34 is Venture Global Engineering Vs. Satyam Computer Services Ltd. Based on the earlier judgment in Bhatia International v. Bulk Trading S.A. and Anr., the Supreme Court in this case held that it is open to the parties to exclude the application of the provisions of part I by express and implied agreement, failing which the whole of part I would apply.

The Supreme Court in its judgment of ONGC v. Saw Pipes Ltd has ruled that an arbitral award can be challenged under Section 34 of the 1996 Act on the ground that it violates the public policy of India, inter alia, because it is contrary to the fundamental policy of Indian Law, justice and morality or is ‘patently illegal’.

The arguments against setting aside awards based on an expansive reading of “public policy” turn on questions of the importance of party-autonomy and minimal judicial interference. It is on this basis that the decision in ONGC v. Saw Pipes has been heavily criticized. However, a refusal to set aside an illegal award under the guise of party autonomy effectively mean that parties are allowed to do indirectly what they cannot do directly.

This was in contrast to the Apex court’s observations in Narayan Prasad Lohia v. Nikunj Kumar Lohia wherein it was held that if an award was in accordance with the agreement of the parties, it may not be set aside by the court. But, as per the ONGC case, the award must be in accordance with the agreement of the parties and the agreement of the parties must lie within the parameters prescribed by the non-derogable provisions of Part I. If the award does not meet the said criteria, it may be set aside, via Section 34(2)(a)(v) read with Section 28(1)(a) of the Act.

Renusagar was a case of private international law involving enforcement of a New York Convention foreign arbitral award governed by the Foreign Awards (Recognition and Enforcement) Act, 1961 of India which was based on the principle of speedy enforcement of arbitral awards with minimum court interference..

The court in Venture Global Engineering vs. Satyam Computer Services Ltd. wherein the court held that it is permissible to set aside a foreign award in India by applying the provisions of S. 34 of Part I of the Act i.e. it held that unless otherwise agreed upon by the parties, Part I of the act also applies to foreign awards which could thus be set aside for violating Indian statutory provisions and for being contrary to Indian public policy.

 

 

 Conclusion

The scheme of the Arbitration and Conciliation Act, 1996 is very clear- to minimize court interference in the arbitral process and to ensure speedy enforcement of arbitral awards without the intervention of courts on unlimited grounds and aforementioned judgments have adopted a very strained interpretation of the Act. In such a situation to allow an expansive reading of ‘public policy’ would nullify the entire purpose. Finality being the most attractive and unique feature of arbitration has been struck at its very roots by the expansive interpretation of the term ‘public policy’ by the ONGC court, as a result of which arbitration as it now stands in India is just another step in the appeal process.

Further, the challenging of International awards and their setting aside on the ground of them being against the public policy and by applicability of Part I of the Act posses a potential threat to the basic foundation of International Commercial Arbitration. However, there are two legislative proposals before the Indian Parliament which indicate that the legislature did not intend to include “error of law” as a public policy ground under S.34 (2) (b) (ii) of the Act. Both the April 2001 Bill and December 2003 Bill, have proposed amendments to the 1996 Act as follows:

“34 A (1) In the case of an arbitral award made in an arbitration other than an international arbitration (whether commercial or not), recourse to the following additional grounds can be had in an application for setting aside an award referred to in sub-section (1) of section 34, namely–(a) that there is an error which is apparent on the face of the arbitral award giving rise to a substantial question of law …”

To sum up, it can be said: “Public Policy can be a ‘double-edged sword’ in arbitration- ‘helpful as a tool, dangerous as a weapon’.”

ENFORCEMENT OF IPR WITH REFERENCE TO BORDER SECURITY MEASURES

VIVEK KERKETTA

INTRODUCTION

The recognition of the need to protect of intellectual property especially with regard to counterfeit trademark and pirated copyrighted goods, the enforcement of intellectual property rights at the borders has emerged as a significant issue in recent times. In view of this, the scheme of border measures has been discussed internationally at various flora including the World Trade Organization, the World Customs Organization, and the World Intellectual Property Organization as well as during negotiations of many multilateral and bilateral free trade agreements.

India too, sought to enable right holders to enforce intellectual property rights at the border and, thereby, enhance border protection of intellectual property rights. In this regard, the Government of India notified the Intellectual Property Rights (Imported Goods) Rules, 2007 in May 2007. The Rules, based on the model legislation by the World Customs Organization, seek to empower the Customs authorities to suspend the clearance of goods suspected to be infringing intellectual property in India. Further, they empower the Customs authorities to adjudicate on the issue of infringement and seize or dispose the goods on finding in favour of the right holder. The Rules, however, present a major source of concern for importers. They fail to strike a balance between the rights of the right holders and the safeguards provided to the importers or the obligations of the right holders. In view of this, they present immense potential for abuse and their implementation has had a chequered history. The controversy surrounding the dual–SIM patent, presently being argued before various Indian flora, highlights the issues raised by the implementation of these rules, and presents a case for their re-evaluation.

 

 

ENFORCEMENT LAWS IN INDIA :

The general laws in relation to Intellectual Property Enforcement in India are mainly the following:

• Code of Civil Procedure

• Indian Penal Code

• The Civil and Criminal Rules of Practice.

While Civil Procedure Code provides for the civil remedies and enforcement through civil courts, the Indian Penal Code provides for penal remedies. The rules of practice of the trail courts, High Courts and the Supreme Court of India set the finalities of the enforcement procedure. India follows common law tradition and judicial precedents do have binding force.

ENFORCEMENT MECHCANISM AVAILABLE UNDER THE INDIAN LAW:

 Civil remedies

Under civil remedy Protection for Design is there against infringement of Copyright in a design area

-an injunction,

-damages or

Compensation and delivery up of infringing articles. No Provision for criminal proceedings against piracy of designs. Unregistered design can be protected under Copyrights Act.

 

Civil remedies for enforcement of the Copyright including injunction, damages, account of profits, delivery of infringing marks and damages for conversion can be invoked by owner of copyright or in certain cases, publisher of the trademark label.

 

Suit for damages: Damages can be claimed – (1) as an amount of loss sustained by the holder of copyright by reason of infringement. (2) as an amount representing the profits made by the infringer and (3) as an amount representing the value of infringing copies.

 

Whenever a registered Tardemark is violated or infringed, to the detriment of its proprietor or user, the aggrieved person can make use of the remedies available in a civil court. The most common remedy for infringement of a registered trademark is to file a suit in a civil court, to restrain the defendant from using the registered trade mark of the plaintiffs. The issues arising in a passing off action are:-

• Whether the plaintiff has established a goodwill or reputation in connection with a business, profession, service or any other activity, among the general public or among a particular class of people prior to the first use of the defendant.

• Whether the defendant’s activities or proposed activities amount to a misrepresentation which is likely to injure the business or goodwill of the plaintiff and cause damage or likely to cause damage to his business or goodwill.

• Whether the defendant succeeds in one or more of the defenses set up by him.

For Patent civil remedy is not there.

 Criminal remedies

Protection for Patents: Criminal liability: penalties available under Section 118. Contravention of Secrecy provisions relating to certain inventions in cases relating to infringement of Patents. Failure to comply with Section 35, is punishable with imprisonment for a term which may extend to two years or with fine or both.

A suit for the infringement of a patent can be instituted only after the sealing of the patent. Damages caused of infringement during the period between the dates of advertisement of acceptance and the date of the sealing may be cleared in the suit. In an action for infringement of a patent a defendant may plead any of the following defenses:-

• Denial of infringement.

• Plaintiff is not entitled sue for infringement.

• License to use the invention expresses or implied.

• Estoppel

• Existence of an unlawful contract.

• Claims invalid on account of lack of novelty and non- obviousness.

• Innocent infringement in cases against a claim for damages or account of profit.

The procedure concerning infringement action must confine to the Civil Procedure Code, if the suit is filed before a District Court and if the matter is before the High Court the rule of practice of the court also shall apply. The main reason for a possible delay in getting orders in a patent infringement suit is the provision for preferring appeals from interim order of trial courts.

Protection for Trade Marks Act, 1999 provides for a comprehensive scheme whereby those persons who un-authorized deal with the trade marks can be punished for various offences. The offences includes:- Falsifying and falsely applying trade marks, Selling goods or providing services to which false trademark or false trade description is applied.

Removing piece goods etc. contrary to Sec. 81 which deals with stamping of piece goods, cotton yarn and threads. Falsely representing a trade mark as registered. Falsification of entries in the register; and Abetment in India, of acts done outside India etc.

The punishment of these offences includes a minimum imprisonment of 6 months and minimum of Rs.50, 000 which may extent to a maximum of 3 years and Rs.20, 000 respectively. Section 105 of the Act provides for enhance penalty on second or subsequent conviction.

Protection for Copyright :The owner of the copyright and also any person can initiate criminal proceedings, by filing a complaint before the competent First Class Magistrate within whose jurisdiction, the plaintiff resides or the infringement takes place or deemed to have taken place. The procedure prescribed under Criminal Procedure Code applies to the proceedings before the criminal court.

On conviction, the Criminal Court can sentence the accused to an imprisonment upto 3 years and a fine extending upto Rs.2 lakhs. Recent amendment have made the imposition of punishment to a minimum term of 6 months and a fine of Rs.50,000 mandatory unless for special reasons to be recorded if the magistrate awards lesser punishment than the minimum.

For Protection of Design act, no criminal remedies is there.

 

 Administrative remedies

For Protection of Trademark: The Act vests certain powers in the various administrative authorities to relief and remedies to the aggrieved persons. It is the Registrar who mostly exercises these powers under the guidance of the Central Government.

For Copyright Protection: An application can be made by the owner of the copyright in any work or by his duly authorized agent, to the Registrar of Copyright to ban the import of infringing copies of trade mark label which were earlier confiscated from infringer to the owner of the copyright.

And for Patent and Design Act, no administrative remedies is there.

 

 

 

BOARD ENFORCEMENT MECHANISM IN INDIA:

 

In India border measure are enforced by Customs Department. Department of Revenue/Central Board of Excise and custom has issued the notification/Rules/Circular for enforcement of IPR border measure:-

A. Customs Notification No. 49/2007- custom (NT) dated 8-5-2007.

B. Intellectual Property Right (Imported Goods) Enforcement, 2007 dated 8-5-2007

C. Custom Circular No. 41/2007 dated 29-10-2007.

Legal Provision:

• In section 2 (n) of custom Act, 1962 empowers the Central Government to prohibit importation and exportation of any goods for the protection of Patents Trademarks and Copyrights by Issuing of Notification.

• Section 11 (2) (u) of Customs Act, 1962 empowers the Central Government to prohibit importation and exportation of any goods for the protection of any other law for the time being force by issuing of notification.

 

 Customs Notification to Prohibit Import of infringing goods:

 

• Department of revenue issued Notification No 49/2007- Customs (N.T) dated 8-5-2007 which prohibits imports:-

 Of goods having a false trade mark and false trade description.

 Of goods made or produced beyond the limits if India and intended for sale and having in which copyright exists under the Designs Act.

 Of product made or protected beyond the limits of India and intended for sale of which patents is in for which patent is force under the Patents Act, 1970.

 Of the product obtained directly by the process beyond the limits of India and intended for sale for which patent is force under the patents Act, 1970.

 Of goods having false geographical indications.

 Of goods prohibited to be imported by issuance of order issued by Registrar of Copyrights under section 53 if Copyright Act, 1957.

 

 

 

 Intellectual Property Rights (Imported Goods) Enforcement Rules, 2007

 

• Import of infringing goods are prohibited under Notification No. 49/2007- Customs (NT) subjects to following conditions and procedures laid down in Intellectual Property Rights (Imported Goods) Enforcement Rules, 2007.

• Department of Revenue notifies the Intellectual Property Rights (Imported Goods) Enforcement Rules, 2007 on 8th of May 2007.

• The rules have been framed in the line of TRIPS and WCO (world Customs Organization) model.

 

Salient Features of the Rules:

 

• The rules inter alia provide for:-

• Filing of a notice by the right holder.

• Registration of said notice by the Customs.

• Time limit for right holder to join proceedings.

• Single point for registration of the notice filed by the right holder.

• Fees of Rs. 2000/- for every notice.

• Adequate protection to the rightful importer.

• Adequate protection to the Customs for bonafide act.

• Suo-moto action by the Customs in specific circumstances

• Disposal of the confiscated goods.

• No action against goods of non commercial nature contained in personal baggage or sent in small consignments intended for personal use of the importer.

 

 

 

 

 

INFRINGEMENT OF INTELLECTUAL PROPERTY RIGHT WITH THE CUSTOMS ACT, 1962 AND PROCEDURE UNDER INTELLECTUAL PROPERTY RIGHTS (IMPORTED GOODS) ENFORCEMENT RULE, 2007

A.Defination:-

1. Categories of Intellectual Property within the Scope of the Rules:

The Rule 2 of the rules provides definitions. It is borrowed from the model legislation by the Geneva based World Customs Organization, Rule 2(b) and 2(c), defining the term “intellectual property” and “intellectual property law” respectively, indicate that the Rules are applicable to those imported goods suspected to be infringing rights either in a trademark, copyright, geographical indication or patent. It bears noting that the Article 51 of the TRIPS mandates to introduce provisions only with respect to counterfeit trademark or pirated copyright goods. India is not obligated to introduce border measures with respect to other categories of intellectual property such as patents or geographical indications. The extension of border measures to other categories of intellectual property, especially to patents becomes significant in view of the institutional incompetence of the customs authorities to deal with complex matters relating to patent law.

 

2. Institutional incompetence of Customs Administration to Deal with Patent Related Issues:

The TRIPS does not require members to introduce provisions with respect to all categories of intellectual property and the mandate to introduce border measures under TRIPS extends only to copyright and trademark related matters. In relation to patents, the most relevant argument against introduction of border measures is that the patent infringements are difficult to assess at first sight. This difficulty arises from the technical complexity of products to which patents are attached and the complex nature of patent law itself.

 

The field of intellectual property law is a specialized field, requiring both legal and technical expertise. The Courts have been divested of their authority to hear such matters which are now heard by a specialized Intellectual Property Appellate Board. The High Court of Delhi with respect to the power of the Drug Controller General of India to decide on matters relating to patent infringement, wherein the Court opined that the Drug Controller lacks the technical expertise to deal with matters relating to patentability and patent infringement.

 

Patent law requires the understanding of complex technology for the purposes of claim construction, and customs administration lacks the infrastructure to undertake such a process. It is, therefore, suggested that the Customs administration must establish a specialized cell for intellectual property matters comprising of specialized members possessing both technical and legal expertise in such matters.

 

Definition of Right Holder:

 

Rule 2 (d) defines right holders to mean a natural person or a legal entity, which according to the laws in force is to be regarded as the owner of protected intellectual property right, its successors in title, or its duly authorized exclusive licensee as well as an individual, a corporation or an association authorized by any of the aforesaid persons to protect its rights. This provision indicates that the owners of intellectual property rights as well as their assignees and licensees are entitled to seek protection under the Rules.

 

3. Definition of “Goods Infringing Intellectual Property” – A Conundrum

 

Sub-Rule (a) of definitional Rule defines the term “goods infringing intellectual property” to mean “goods which are made, reproduced, put into circulation or otherwise used in breach of the intellectual property laws in India or outside India and without the consent of the right holder or a person duly authorized to do so by the right holder”. On reading of Rule, the language of confusing, two interpretations may arise The first interpretation, which the author proposes, is that the term “goods infringing intellectual property” means the goods which are made, reproduced, put into circulation or otherwise used in India or outside in breach of intellectual property laws. (the term intellectual property laws shall be interpreted as per Rule 2(c), and shall mean the Copyright Act, 1957, the Trade Marks Act, 1999, the Patents Act, 1970, the Designs Act, 2000 or the Geographical Indications of Goods (Registration and Protection) Act, 1999).

 

Interpretation, the term “in India or outside India” qualifies the place where the infringing act takes place. The question whether goods made, reproduced, put into circulation or otherwise used outside India can breach the intellectual property laws above mentioned? The simple answer is no. The Patent Act, 1970 under S. 48 provides that the patentee has the exclusive rights mentioned therein in India. Similarly, Section 13(1)28 of the Copyright Act, 1957 provides that copyright shall subsist throughout the territory of India. Further, trademark law in India is territorial in nature and requires that the infringing activity must take place within the territorial limits of registration, i.e., within India. The Model Law, under Article 1, includes a that clause “if such making, reproduction, use or putting into circulation of the goods took place outside the country the goods are deemed to be infringing if the acts would have constituted an infringement in the country had they been undertaken in the country”.

 

The alternative interpretation of the Rule 2(a) involves reading the terms “in India or outside India” as qualifying the term “intellectual property law”, rather than defining the place where the infringing acts occur whether the acts are infringing as per the Indian intellectual property laws or the intellectual property laws outside India, the goods shall be considered as goods infringing intellectual property. It is conclude that those goods which are made, reproduced, put into circulation or otherwise used in breach of intellectual property laws of countries other than India shall be considered to be “goods infringing intellectual property”.

 

The Rules, under such an interpretation, in effect allow the right holder to rely on rights which are available under intellectual property laws outside India, even where such rights are not available under the Indian laws. Such an interpretation would render the provision arbitrary and in discord (without a “reasonable nexus”) with the object of the legislation, thereby making them susceptible to being struck down as unconstitutional.

 

B. Procedure for Registration:

 

The Rules provide an elaborate procedure for the enforcement of intellectual property rights of the right holders by customs authorities. The Rules envisage the provision of notice by the right holder to the Commissioner of Customs (or any officer authorized on his behalf) requesting for the suspension of clearance of goods suspected to be infringing intellectual property.

 

The Right holder is required to give the notice in a specified format (provided in the Annexure) along with the payment of Rs. 2000 as application fee. Whether his notice has been registered or rejected within a period of 30 days.41 The registration of notice is subject to two conditions, namely: the execution of a bond by the right holder with the Commissioner of Customs undertaking to protect the importer, consignee and the owner of the goods and the competent authorities against all liabilities and to bear the costs towards destruction, demurrage and detention charges incurred till the time of destruction or disposal. Further, the right holder is required to execute an indemnity bond with the Commissioner of Customs indemnifying the customs authorities against all liabilities and expenses on account of suspension of the release of allegedly infringing goods.

 

On the registration of the notice, the Commissioner is required to communicate to the right holder the validity period of the registration during which the assistance by the customs authority shall be rendered, with the minimum period being one year. Rule 4(3) of the Rules provides that all customs offices shall render assistance to the right holder.

 

C. Scope of the Power of the Customs to Detain and Seize Goods Under the Rules:

 

1. Rules 6 and 7: Enabling Provisions-

 

Rules 6 and 7 are the enabling provisions which empower the customs administration to suspend the clearance of goods infringing intellectual property rights. Rule 6 provides that after the grant of the registration of the notice the import of allegedly infringing goods into India shall be deemed as prohibited within the meaning of Section 11 of the Customs Act, 1962. Rule 7(1)(a) of the Rules empowers the customs authority to suspend the clearance of goods on the basis of the notice given by the right holder to suspend the clearance of goods if he has reason to believe that the imported goods are suspected to be goods infringing intellectual property rights. The rules further provide for communication of the order of suspension of clearance to both the importer and the right holder, stating the reasons for such suspension. From the date of such communication, the right holder is required to join the proceedings before the customs administration within a period of ten working days (extendable to twenty working days) failing which the goods shall be released provided that all other conditions of import of such goods have been complied with. Rule 7(1) (b) empowers the customs authority to suspend the clearance of goods suo motu if it has prima facie evidence or has reasonable grounds to believe that the imported goods are goods infringing intellectual property.

 

In case of suo motu action, Rule 7(4) of the Rules requires the right holders to give notice under Rule 3 and to fulfil obligations (such as execution of bond under Rule 5) within a period of 5 days from the date of suspension of clearance, failing which the goods shall be released by the customs administration. If the right holder complies with the above mentioned provisions (both in case of prior notice or for suo motu action), the Deputy Commissioner of Customs or the Assistant Commissioner of Customs is empowered to seize the goods under Section 110 of the Customs Act, 1962 if he has reason to believe that the goods are“goods infringing intellectual property rights” and are liable for confiscation under Section 111(d) of the Customs Act, 1962.

 

2. Rule 7 and Audi Alteram Partem:

 

Rule 7 of the Rules is the enabling provision empowering the Customs administration to suspend the clearance of goods. The order for suspension of clearance of goods under Rule 7(1) is made on the basis of the notice given by the right holder, and this forms the basis for the suspension of clearance. Therefore, the right holder is entitled to make a prima facie case for infringement by virtue of the notice. However, the importer is not provided an opportunity to be heard and he is entitled to seek the clearance of the goods only after he receives the communication from the customs authority under Rule 7(2).

The very nature of the order is such that the rule of audi alteram partem must be excluded. That being said, it is imperative that the post-decisional hearing shall take place “as soon as” the order for suspension of clearance is made. The requirement under the Rules is that the order of suspension must be communicated to the right holder “immediately”. Therefore, the importer’s right may be prejudiced for an unreasonable period of time with his goods being detained at the ports without a decision being reached by the customs authority. Once the right holder has joined the proceedings, the proceedings may prolong for an unreasonable period of time, as is often the case in India given the administrative delays.

 

The requirements laid down in the case of Maneka Gandhi v. Union of India, is that in cases of post decisional hearing, a fair opportunity of being heard must be “given immediately” after the impugned order. If the post-decisional hearing is commenced immediately but is unreasonably or unduly delayed, the purpose of giving the post-decisional hearing “immediately” would be defeated. Such a reading shall enable importers to seek an appropriate writ in cases where there is an unreasonable delay in the reaching its conclusion, with the reasonableness being tested on a case by case basis.

 

3. No Need for prima facie Evidence: Undue Burden on Customs Administration:

 

The format of notice provided in the Annexure indicates that the right holder is not required to provide evidence to establish that the goods are infringing in cases where he does not seek to prevent the import of a specific consignment. The right holder is required to give prima facie proof of infringement only where the infringement by goods in a specific consignment is alleged at the time when the notice for registration is given. A situation where at the time when the right holder gives the notice of registration there is no specific consignment which infringes the rights of the applicant. The right holder in such circumstances shall be granted the registration of the notice without submitting any proof concerning infringement regarding a specific consignment. On the basis of this notice, the customs administration is required to determine the scope of his intellectual property rights and detain goods which they suspect to be infringing.

 

Under the TRIPS Agreement, the right holder making an application for suspension of clearance of the goods to the Customs administration is required to provide “adequate evidence” to satisfy the customs administration that there is prima facie an infringement of the intellectual property right.

 

D. Right to Examination of Goods and Supply of Information:

 

Rules 8, 9 and 10 contain provisions for examination of goods by the right holder, supply of information to the right holder and supply of information to the importer, respectively. Rule 8 empowers the Commissioner to allow the right holder/importer to examine the goods, the clearance of which has been suspended, and to provide representative samples for examination, testing and analysis to assist in determining whether the goods are pirated, counterfeit or otherwise infringe an intellectual property right. Rule 9 enables the right holder to seek information such as the name and address of the importer and such additional relevant information regarding the consignment which has been suspended. Similarly, Rule 10 enables the importer to seek information relating to the right holder. However, these provisions are to be applied without prejudice to the protection of confidential information, thereby ensuring that sensitive information regarding the importer or the right holder is not disclosed.

 

E. Disposal of Infringing Goods:

 

Rule 11 provides for the disposal of infringing goods. This rule is applicable where upon determination by the Deputy Commissioner of Customs/Assistant Commissioner of Customs, it is found that the goods detained or seized have infringed intellectual property rights, and have been confiscated under Section 111(d) of the Customs Act, 1962 and no legal proceedings are pending in relation to such determination. The said authority in such cases can destroy the goods under official supervision or dispose them outside the normal channels of commerce after obtaining ‘no objection’ or concurrence of the right holder. Rule 11 raises major concerns for the importer since the disposal of goods by the Customs authority amounts to a final determination of the rights, and the only remedy is to seek monetary compensation from the right holder.

 

 Customs Circular 41/2007:

 

Central Board of Excise and Customs has issued a circular No. 41/2007 dated 29-10-2007 which apart from explaining various provisions of Intellectual Property Rights (Imported Goods) Enforcement Rules, 2007, in border security measure, place detailed procedure for electronic registration of the notice by the Right Holders. Salient features of the Circular 41/2007:-

• On- line recordation as a trade facilitation measure.

• 110% of value of goods Bond amount and 25% of bond value as BG- uniformity.

• Recordation valid for 5 years (extendable thereafter on payment of fees).

 

 

ISSUES RAISED BY THE IMPLEMENTATION OF THE RULES: A CASE STUDY:-

A. The Ram Kumar Patent Saga

 

This litigation involves a patent granted to Mr. Soma Sundaram Ram Kumar on a “Mobile telephone with a plurality of SIM cards allocated to different communication networks”. Mr. Ram Kumar sought to enforce the patent rights against a number of multinational and national importers including Hansum India, Samsung and Micromax.

 

Mr. Ram Kumar filed an application in the Chennai Patent office on March 4, 2002 containing 4 claims and 12 drawings and was allotted Patent Application No. 161/MAS/2002 which was granted in 2008. Mr. Ram Kumar, then filed an application under Rule 3 of the Intellectual Property Rights Intellectual Property Rights (Imported Goods) Enforcement Rules, 2007. Mr. Ram Kumar filed an application on December 8, 2008 with the Officer of Commissioner of Customs under the Customs Notification No. 47/2000 read with Circular No. 41/2007 Customs Circular dated 29.10.2007 called the Instructions for Implementation of Intellectual Property (Imported Goods) Enforcement Rules, 2007.

 

The first course of litigation before the Indian Courts was with respect to the constitutionality of the Rules. In this petition, Samsung raised the issue of lack of expertise of the Customs authorities. However, the petition had to be subsequently withdrawn for the lack of territorial jurisdiction.

 

The second course of litigation was before the Madras High Court, wherein Mr. Ram Kumar sought a restraining order against manufacturers such as Samsung, Mirco Electronics and Spice Mobile, restraining them from manufacturing and selling multiple SIM holding mobile phones.

 

The third course of litigation was before the customs authorities and highlights the concerns on behalf of the importers. The claims related to dual SIM which allowed simultaneous communication multiple headsets

 

The Chennai customs authority upheld the contentions of Hansum India Ltd. Holding that the claim 1 of Mr. Ram Kumar patent had limited scope. The claims, therefore, were held not to be infringed by the cell phones manufactured by Hansum since these cell phones used a single headphone/earphone jack. Similarly, the New Delhi customs authority, in an order dated 8th June, 2009, by J.P. Kundu, the Assistant Commissioner of Customs, found that claim made by Mr. Ram Kumar was vexatious and the impugned goods were covered by the prior art declared by him.

 

Against the orders of customs authorities, Mr. Ram Kumar filed writ petition in the Madras High Court, dismissing the petition, held that the proper forum for the redressal was the Customs Appellate Tribunal, an authority envisaged as the appellate authority under the Customs Act, 1962. Therefore, at present, the orders of the Customs administration allowing the clearance of the goods from the Mumbai, Chennai and Delhi ports stand affirmed and, the stand of the importers has been upheld.

The case involving parallel imports and trademarks in India, Cisco Techonology Vs Shrikhant the plaintiff’s employed sec. 29(6) (c) of custom act read with sec 140 defense and were successful in getting an exparte order directing the customs authorities to notify all ports to bar imports of defendant goods and also appointing a local commissioner to seize all goods bearing the mark in issue and inventory the same.

In the judgement of the Delhi High Court in Electronics Company Ltd. & Anr. vs G.Choudlhary & Anr defendants, who were the parallel importers were held liable for infringement of Trademark. The registered owner of the Trademark “Samsung” filed a suit against the defendants for importing from China and selling in cartridges and toners branded “Samsung” manufactured by the plaintiff itself in China. The plaintiff argued that although the products are genuine, they were not meant for Indian markets. The reasons by the plaintiff included that the descriptions that accompanied the products were in Chinese, there was no warranty offered and that the use of these products were likely to constitute a breach of warranty of other legally purchased machinery.

Bangalore Aug 10, 2003: Banashankari police arrested three software engineers for illegally copying software from a company they were working for. The accused enginners, who were working with the Ishoni Networks India Private Limited, had started a new company called Ample Wave Communication Network in Koramangala. They had illegally copied code of the company’s software and were using at their company, police said Ishoni Director Antonio Mario Alvares had lodged the complaint with Banashankari police. Police have seized four computers, four CPUs, four keyboards, one server and one laptop from the accused.

New Delhi Aug 28, 2002: Central Bureau of Investigation officials in New Delhi nabbed Shekhar Verma, a former employee of Mumbai-based Geometric Software Solutions Company and a computer engineer from the Indian Institute of Technology, Kharagpur. It turned out that Verma was accused of stealing $60 million worth of source code of a software product of Geometric Software’s US-based client, Solid Works, and trying to sell them to other companies for a fortune. The American firm has the exclusive rights over the software.

 

 

 

 

 

 

Summary of Indian Government Initiatives to Protect IPR :-

The Indian government has initiated various steps towards Intellectual Properties Rights Protection. Indian enforcement agencies are working effectively and there is a decline in the levels of piracy in India. In addition to intensifying raids against copyright violators, the Government has taken a number of measures to strengthen the enforcement of copyright law. A summary of these measures is given below:-

• The Government has brought out A Handbook of Copyright Law to create awareness of copyright laws amongst the stakeholders, enforcement agencies, professional users like the scientific and academic communities and members of the public. Copies of the Handbook have been circulated free-of-cost to the state and central government officials.

• National Police Academy, Hyderabad and National Academy of Customs, Excise and Narcotics conducted several training programs on copyright laws for the police and customs officers. Modules on copyright infringement have been included in their regular training programs.

• The Department of Education, Ministry of Human Resource Development, Government of India has initiated several measures in the past for strengthening the enforcement of copyrights that include constitution of a Copyright Enforcement Advisory Council (CEAC), creation of separate cells in state police headquarters, encouraging setting up of collective administration societies and organization of seminars.

• The Government also initiates a number of seminars/workshops on copyright issues. The participants in these seminars include enforcement personnel as well as representatives of industry organizations.

As a consequence of the number of measures initiated by the government, there has been more activity in the enforcement of copyright laws in the country. Over the last few years, the number of cases registered has gone up consistently.

 

 

Conclusion:-

As a laws concerning intellectual property are already in place, the need of the hour is a specialized and tactful judiciary, which can deal with intellectual property rights issues with aptness keeping the national interest in mind and ensure effectiveness of enforcement system. Rights holder should be encouraged to participate in enforcement actions. The quantum of damages awarded by the court should be such that they not only compensate the right holder for the losses suffered, but should also act as a deterrent for infringers form engaging in illegal activities. Infringers can also be directed to take corrective advertising to indemnify the loss caused to the good will of the right holder.

 

 

 

 

 

 

 

 

 

 

 

 

TORTIOUS LIABILITY OF ADMINISTRATION IN MODERN TIMES

Public AccountabilityVivek Kerketta

Introduction

Wrongful, conduct of such character as to subject the actor to civil liability under tort law.

 

In order to establish that a particular act was tortious, a plaintiff must prove that an actionable wrong existed and that damages ensued from that wrong. The state is a legal entity and not a living entity; it has to act through human agency through its servants. The liability of the state for the tortious acts of its servant that has to be considered. In other words, it refers to when the state can be held vicarious liable for the wrongs committed by its servants.

 

The Vicarious Liability refers to a situation where one person is held liable for act or omission of other person. Winfield explains the doctrine of vicarious liability thus. The expression ‘vicarious liability’ signifies the liability which A may incur to C for damages caused to C by the negligence or the tort of B. It is not necessary that A shall not have participated in any way in the commission of the tort nor that duty owed in law by A to C shall have been broken. The master may be held liable for the torts committed by his servant in the course of employment.

 

The doctrine of vicarious liability is base on two maxims:

(i) Respondent superior (let the principal be liable) and

(ii) Qui facit per alium facit per se (he who does an act through another does it himself).

As early as in 1839 , Lord Brougham observed: “The reason that I am liable is this, by employing him I set the whole thing in motion and what he does, being done before my benefit and under my direction, I am responsible for the consequences of doing it.”

 

The Doctrine of Vicarious Liability is based on ‘social convenience and rough justice’.

English law: – in England, under common law, absolute immunity of the Crown was accepted could not be sued in tort for wrongs committed by its servants in their employment. The rule was based upon the well known maxim “the King can do no wrong”. In 1863, in Tobin v. R. the court observed “if the Crown were liable in tort, the principle (the King can do no wrong) would have seemed meaningless”. But with the increase of governmental functions, the immunity afforded to the Crown in tortuous liability proved to be incompatible with the demands of justice.

In Adams v. Naylor the Dicey gave an absurd example. “If the Queen were herself to shoot the P.M through the head, no court in England could take cognizance of act”. The meaning of maxim would mean “king has no legal power to do wrongs.” But the English Law never succeeded in distinguishing between the King’s two capacities- personal political. The time had come to abolish the general immunity of the crown in tort and in 1947 the Crown Proceeding Act was enacted. This Act placed the Government in the same position as a private individual.

Indian Law:

a. General

So far as Indian law is concerned, the maxim ‘the king can do no wrong’ was never fully accepted. Absolute immunity of the Government was not recognised in the Indian legal system prior to the commencement of Constitution and in a number of cases the Government was held liable for tortuous acts of its servants.

 

b. Constitutional Provision

Under Article 294 (4) of the constitution, the liability of Union Government or a state Government may arise ‘out of any contract or otherwise. The word otherwise suggests that the said liability may arise in respects of tortuous acts also. Under article 300 (1), the extent of such liability is fixed. It provides that the liability of the Union of India or State Government will be same as that of Dominion of India and the Provision before the commencement of the Constitution.

c. Sovereign and Non-sovereign functions

(a) Before commencement of Constitution

The English law with regard to immunity of the Government for tortuous acts of its servants is partly accepted in India. The High Court observed: as a general rule this is true, for it is an attribute of sovereignty and universal law that a state cannot be used in its own courts without its consent.’ Thus a distinction is sought to be made between ‘sovereign functions’ and ‘non-sovereign functions’ of the state. The State is not liable in tort.

 

d. After commencement of Constitution

In state of Rajasthan v. Vidhyawati , a jeep was owned by the Rajasthan for the official use of the collector of a district. The jeep driver bringing back the workshop after repairs. By negligent driving of jeep a pedestrian was knocked down. He died and his wife sued the driver and the state for damages. A constitution Bench of Supreme Court held the State vicarious liable for the rash and negligent act of the driver.

The court held that the rule of immunity based on the English law had no validity in India. After the establishment of the Republican form of Government under the Constitution there was no justification in principle or in public interests that the state should not held liable for vicariously for the tortuous acts of its servants.

In Kasturi lal v. State of U.P. a certainly of gold and silver was attached by police authorities from one R on suspicion that was stolen property. It was kept in Government malkhana which was in the custody of Head Constable. The Head constable misappropriated the court. A suit for damages was filed by R against the state for the loss caused to him by the negligence of police authorities of the state. The Supreme Court held that the state was not liable police authorities were exercising ‘sovereign functions’. The Constitution Bench of court, Gajendragadkar, C.J observed:

“If a tortuous act is committed by the public servant and it gives rise to claim for damages, the question to ask is: Was the tortuous act committed by the Public servant in discharge of stuatory functions or the delegation of sovereign powers of the state to such public servant? If the answer is in the affirmative, the action for damages for loss caused by such tortuous act will not lie. On the other hand, if tortuous act has been committed by a public servant in discharging of duties assigned to him not by virtue of the delegation of any sovereign power an action for damages would lie.”

Distinguishing Vidyawati, the court held that: ‘the employment of a driver to drive the jeep car for the use of a civil servant is itself an activity which is not connected in any manner with the sovereign power of state at all. It appears that the Supreme Court itself was satisfied that kasturi lal did not lay down correct proposition of law and in these circumstances, in subsequent case either the court did not refer Kasturi lal at all or describing it as ‘not relevant’.

The Court also stated that distinction between sovereign and non-sovereign power no more exists. It all depends on the nature of the power and manner of its exercise. No civilized system can permit an executive to play with the people of its country and claim that it is entitled to act in any manner as it is sovereign. The functions state as “sovereign and non-sovereign” or ‘governmental and non-governmental’ is not sound. It is contrary to modern jurisprudence thinking. Since the doctrine has become outdated and sovereignty now vests in the people, the state cannot claim any immunity and if a suit is maintainable against the officer personally, there is no reason to hold that it would not be maintainable against the state.

 

 

Whether State Is Bound By Statute:

General:

State performs not only the ‘law and order’ functions, but as a ‘Welfare State’, it performs many non-sovereign and commercial activities. The important question therefore arises, whether the state is subject to same rights and liabilities which the statute has imposed on other individuals. In others words whether the state is bound by a statute and if it is, to what extent the provision of statute can be enforced against the state.

English law:

The general principles of common law, ‘no statute binds the Crown unless the Crown was expressly named. In England the Crown enjoys the common law privilege and it is not bound by a statute, unless ‘a clear intention from statute itself or from the express terms of the Crown Proceedings Act, 1947. The maxim ‘King can do no wrong’. In theory, it is inconvincible that the statute made by the crown for its subjects could bind the Crown itself.

Indian law:

The principle of common law was accepted in India and applied in some cases. In Provinces of Bombay v. Municipal Corp. of the city Bombay is the leading case before independence. The Corporation of Bombay wanted to lay water mains through land which belonged to the Government. The land was acquired by the Crown under the provision of Municipal Act. The municipality had power ‘to carry water mains within or without the city.’ The question was whether the Crown was bound by the statute held that the Government was not bound by the statute.

 

In Superintendent and Remembrance of Legal affairs W.B v. Corp. Of Calcutta (Corporation of Calcutta II) , the state was carrying on the trade of a daily market without obtaining a license as required by the relevant statute. The Corporation filed a complaint against the state. The Supreme Court was called to decide the correctness or aforesaid decision in Corporation of Calcutta I. By a majority of 8:1, the decision in Corporation of Calcutta I was overruled and it was held that the state was bound by the Statute.

Article 300 of India Constitution :

(1) The Government of India may sue or be sued by the name of the Union of India and the Government of a State may sue or be sued by the name of the State any may, subject to any provision which may be made by Act of Parliament or of the Legislature of such State enacted by virtue of powers conferred by this Constitution, sue or be sued in relation to their respective affairs in the like cases as the Dominion of India and the corresponding provinces or the corresponding Indian States might have sued or been sued if this Constitution had not been enacted.

 

(2) If at the commencement of this Constitution any legal proceedings are pending to which the Dominion of India is party, the Union of India shall be deemed to be substitute for the Dominion in those proceedings.

Any legal proceedings are pending to which a Province or an Indian State is a party, the corresponding State shall be deemed to be substituted for the province or the Indian State in those proceedings.

An overview of Article 300 provides that first part of the Article relates to the way in which suits and proceedings by or against Government may be instituted. It enacts that a State may sue and be sued by the name of the Union of India a State may sue and be sued by the name of the State.

The Second part provides, inter alia, that the Union of India or a State may sue or be sued if relation to its affairs in cases on the same line as that of Dominion of India or a corresponding Indian State as the case may be, might have sued or been sued of the Constitution had not been enacted. The Third part provides that it would be competent to the Parliament or the legislature of State to make appropriate provisions in regard to the topic covered by Article 300(1).

The first case, which seriously discussed the question of Sovereign Immunity, is the Pand O Navigation Company V. Secretary of State for India , in this case a piece of iron funnel carried by some workmen for conducting repairs of Government steamer hit the plaintiff horse-driven carriage and got injured. The Plaintiffs sued for damage. The plaintiff filed a suit against the Secretary of State for India- in council for the negligence of the servants employed by the Government of India. The Supreme Court delivered a very learned judgment through the Chief Justice. The Supreme Court at Calcutta, CJ held that “the Government will be liable for the actions done by its servants while doing non-sovereign functions but it won’t be liable for injuries caused while pursuing sovereign functions.

Similarly in Nobin Chunder Dey V. Secretary of State , the Calcutta High Court gave full effect to the remarks in rejecting the plaintiff’s plea for damage against wrongful refusal to him of a license to sell certain excisable liquors and drugs resulting in the closure of his business on the ground that grant or refusal of a license was a sovereign function lying beyond the reach of the tortuous liability of the State. Since then, the distinction between the sovereign and non-sovereign functions of the State has been the basis of a number of judicial pronouncements.

On the other hand, in Secretary of State V. Hari Bhanji, the court has denied any distinction between sovereign and non-sovereign functions and held that where an act is done under the sanction of municipal law and in the exercise of powers conferred by that law, the fact that it is done in the exercise of sovereign function and is not an act which could possibly be done by a private individual does not oust its justifiability. In this state of affairs, the Rajasthan High Court after holding the State of Rajasthan liable in tort certified the case fit to be taken to the Supreme Court in State of Rajasthan V. Ms. Vidyawati. In this case, a Government Jeep knocked down a pedestrian who died in consequence of accident. Rejecting the appeal by the State of Rajasthan on the ground of Sovereign Immunity, the Court ruled that the State is liable for the tort or wrongs committed by its officials. In this case distinction between sovereign and non-sovereign functions was disregarded, but the court observed that the State would not be responsible for the ‘Act of State’ under Article 300 of the Constitution. The Supreme Court, in this case, added that in modern times, the State has welfare and socialistic functions and the defence of State immunity based on the old feudalistic notions of justice cannot be sustained.

Again, in Kasturi Lal V. State of U.P, the Apex court has adopted a pro-people approach. In this case the Police seized some suspected stolen gold from Plaintiff. Later, it was misappropriated by Head Constable of the Police Station who reportedly fled to Pakistan with the Gold. The Supreme Court held that the State is not liable as impugned act is a sovereign activity. Thus, the court not only reversed what appeared to be the legal position after Vidyawati case but also reinforced an additional qualification to the State liability by referring to the statutory powers; in a way holding that State is not liable for any torts committed by its servants in the exercise of statutory powers.

Doctrine of Public Accountability:

The concept of public accountability is a matter of vital public concern. All the three organs of the government- legislature, executive and judiciary are subject to public accountability.

a. Doctrine Explained:

It is settled law that all discretionary powers must be exercised reasonably and in larger public interest. In Henley v. Lyme Corporation Best C.J stated: – “Now I take it to be perfectly clear, that if a public officer, abuses his office, either by an act of omission or commission and the consequence of that is an injury to an individual an action may be maintained against such public officer.”

 

In various cases, the Supreme Court has applied the above principle by granting appropriate relief to aggrieved parties or by directing the defaulter to pay damages, compensation or costs to the person who has suffered. Very recently in Arvind datttaraya v. State of Maharashtra, the Supreme Court set aside order of transfer of a public officer observing that the action was not taken in public interests but was a case of victimized of an honest officer. ‘it is most unfortunate that the Government demoralize the officers who discharge their honestly and diligently and brings the persons indulging in black marketing and contra banding liquor.”

 

b. Personal liability: -A breach of duty gives rise in public law to liability which is known as “misfeasance in public office”. Exercise of power by minister and public officers must be for public goods and to achieve welfare of public at large. Wherever there is abuse of power by an individual, he can be held liable.

In Common Cause, a Registred Society v. Union of India the petroleum Minister made allotment of petrol pumps arbitrarily in favour of his relatives and friends. Quashing the action, the Supreme Court directed the Minister to fifty lakh rupees as exemplary damages to public exchequer and fifty thousand rupees towards costs.

In is submitted that in Lucknow development Authority v. M.K Gupta, the Supreme Court rightly stated: – When the court directs the payment of damages or compensation against the state the ultimate sufferer is the common man. It is the ‘tax payers’ money which is paid for inaction of those who are entrusted under the act to discharge those who are under the act to discharge their duties in accordance with law. It is therefore necessary that the Commission when it is satisfied that a complaint is entitled to compensation mental agony or oppression, which finding should be recorded carefully on material and convincing circumstance and not lightly, it further direct the department concerned to pay the amount to the complaint from the public fund immediately. But at the same time, personal liability should be imposed on erring officers only after giving notice and affording reasonable opportunity of hearing.

C. Judicial accountability:

The doctrine of public accountability applies to judiciary as well. An essential requirement of justice is that justice is that it should be dispensed as quickly as possible. It has been rightly said: “Justice delayed is justice is justice denied.” Delay in disposal of cases can be recommended. Whereas comments and criticism of judicial functioning on matters of principles, healthy aids for interpretation and improvement, the functioning of the court in relation to a particular proceeding is not permissible.

Conclusion: All actions of state and its instrumentalities must be toward the objectives set out in the constitution. Every step of government should be in the direction of democratic traditions, social and economic development and public welfare. The constitutional court exercises power of judicial review with constraint to ensure that the authorities on whom such power is entrusted under the rule of law exercise is honestly, objectively and for the purpose for which it is intended to be exercised.

 

Doctrine of Estoppels:

a. Meaning:-

The doctrine of promissory or equitable estoppels is well settled in administrative law. Wade states that: “The basic principle of estoppels is that a person who by some statement or representation of facts causes another to act his detriment in reliance on the earth of it is not allowed to deny, even though it is wrong. “Justices here prevails over truth.” Garner states that: “A person may be precluded (estoppel) in legal proceedings from denying the existence of some state of facts the existence of which he has previously asserted, intending the other party to the proceedings to rely on the assertion.

b. Nature and Scope:-

Estoppel is often described a rule of evidence, but more correctly it is a principle of law. Though commonly named as promissory estoppels, it is neither in the realm of contract nor in the realm of estoppel. The basis of this doctrine is equity. It is invoked and applied to aid the law in administration of justice. But for it great many injustices may have been perpetrated.

c. Illustration:-

The above principle is embodied in section 115 of the Indian Evidence Act, 1872. It provides: “when one person by his declaration, act or omission, intentionally caused or permitted another person to believe a thing to be true and to act upon such belief, neither he nor his representative shall be allowed in any suit or proceeding between himself and such person or his representative, to deny the truth of that thing.” The illustration section read as under:

 

“A, intentionally and falsely leads B to believe that certain lands belong to A, and thereby induces B to buy and pay for it. The land afterwards becomes the property of A, and A seeks to set aside the sale on the ground that at time of sale he had no title. He must not allow prove his want of his title.”

d. Leading Cases

In Robertson v. Minister of Pension, R, army officer claimed a disablement on account of war injury. The War Officer accepted his disability as attributable to military service. Relying on this assurance R did not take any steps which otherwise he would have taken to support his claim. The Ministry refused to grant the pension. The court held the Ministry liable.

 

In Union of India v. Anglo Afghan Agencies, the historic case, ‘Export Promotion Scheme was published by7 the Textile Commissioner. It was provided in the said scheme that the exporters will be entitled to import raw material up to 100 percent of the value of goods the exports. Relying on this representation, the petitioner exported goods rupees 5 lakhs. The Textile commissioner did not grant the import certificate for the full amount of goods exported. No opportunity of being heard was given to the petitioner. The Supreme Court held that the Government was bound to carry out the obligations undertaken in the Scheme. Even though the scheme was merely executive in nature and even though the scheme was executive in nature and even though the promise was not recorded in the form of formal contract a required by the article 299(1) of the Constitution, still it was open to a party who had acted on a representation made by the Government to claim that the Government was bound to carry out the promise made by it.

 

In Motilal Padampat Sugar Mills v. State of U.P in that case, the Government of Uttar Pradesh announced that new industrial units in the State would be granted exemption from payment of sales tax for period of three years. The petitioner approached to the High Court but failed. Applying the Supreme Court said, Bhagwati, J sated:-

“It is elementary that in a republic governed by the rule of law, no one high or low, is above law. Every one is the subjects to the law as fully and completely any other or the Government is no exception. It indeed the pride of constitutional democracy and rule of law is concerned: the former is equally bound as the latter. It is indeed difficult to see on what principle can a Government, committed to the rule of law claim immunity from the doctrine of promissory estoppel.”

 

In Jit Ram v. State of Haryana the Municipal Committee of Bahadurgarh had established a mandi at fateh. It was resolved by the municipality in 1916 that purchase of the plot in the mandi. The municipality decided to levy octori duty and the said action challenged inter alia on the ground of estoppel. Virtually dissenting with Motilal Sugar Mills, the court rejected the contention holding that the doctrine of estoppel could not be invoked.

Regarding Jit Ram, Bhagwati, and C.J. rightly observed: “we find it difficult to understand how a Bench of two Judges in Jit Ram Case could possibly overturn or disagree with what was said by another bench of two judges in Motilal Sugar Mills case. If two judges in Jit Ram case found themselves unable to agree with the law laid down in Motilal Sugar case, they could have referred Jit Ram case to a larger Bench, but we do not think it was right on their part to express their disagreement with enunciation of the law by a coordinate Bench of the same court in Motilal Sugar Mills.”

The court further observed that the law laid down in Motilal Sugar Mills was correct and did not approve the observations of Jit Ram to the extent that they were contrary to earlier decision.

e. Estoppel against statute:-

The doctrine cannot be used against or in favour of the administration so as to give de facto validity to ultra vires administrative acts.

In Howell v. Falmouth Boat Construction Co. the relevant statute required a license to do ship repair work. An assurance was given by the designated official that no such license was necessary. The plaintiff sued for payment of work done by him. It was argued that the workdays illegal as no written license was obtained by him. The Court of Appeal decided in favour of the plaintiff on the basis of the doctrine estoppels. Reversing the judgment of Lord Denning and dismissing the claim of the plaintiff, the House of Lords pronounced:

“It is certain that neither a Minister nor any subordinate officer of the Crown can by any conduct or representation bar the Crown from enforcing a statutory prohibition or from prosecuting for its breach.”

In Exercise Commissioner v. Ram kumar, the Supreme Court held that held sale of country liquor which had been exempted from sales tax at the time auction license could not operate as estoppels against the Government. The Supreme Court observed:

“It is now well settled by a certain catena of decision that there can be no question of estoppels against the Government in the exercise of its legislative, sovereign or executive powers.”

f. Estoppel and public policy:-

The doctrine is equitable and, therefore, it must yield to equity and can be invoked in the larger public interest. If a promise or agreement is opposed to public policy, it cannot be enforced. Example, a right to reservation to promote interests of certain backward classes. If a person who does not belong to that class obtains false certificate and gets an employment, and on coming to know about the true facts, has been removed from service, he cannot invoke this doctrine.

g. Estoppel and Public Interest:-

The doctrine of promissory estoppel is equitable and it cannot be invoked against public interest. It does not apply if the results to be achieved are against public goods. The doctrine must yield to equity.

In Kasinka Trading Co. v. Union of India, a notification was issued under the Customs Act, 1962 granting exemption from payment of customs duty on certain raw material imported from foreign country. The notification was issued in public interest and it was to remain in force for two years. However, the exemption was withdrawn before the expiry of period again in public interest. The Supreme Court upheld the action.

 

The principle lay down in above the Shrijee Sales Corpn. v. Union of India, the Supreme Court stated: “Once public interest is accepted as the superior equity which can override individual equity, the principle should be applicable even in cases a period has been indicated.”

 

 

NEED FOR LEGISLATION :

 

The present state of the law-

The present state of the law relating to liability of the State in tort in India, it is apparent that the law is neither just in its substance, nor satisfactory in its form. It denies relief to citizens injured by a wrongful act of the State, on the basis of the exercise of sovereign functions – a concept which itself carries a flavour of autocracy and high-handedness. One would have thought that if the State exists for the people, this ought not to be the position in law. A political organisation which is set up to protect its citizens and to promote their welfare, should, as a rule, accept legal liability for its wrongful acts, rather them denounce such liability. Exceptions can be made for exceptional cases – but the exceptions should be confined to genuinely extraordinary situations.

 

Article 300, a weak foundation-

Keeping aside the injustice, in point of substance, of the existing law, there are several other serious defects in the present position. The foundation of the present law is article 300 of the Constitution. Its language necessarily takes one, through successive steps of (what may be called) tracing back of the genealogy of the law, to a moment of time residing in the 19th Century – that to a moment when the country was governed or dominated by alien rulers. The law is, in effect, based upon archaic provisions. In this sense, article 300 has turned out to be a weak foundation, on which to build up an edifice of the law on the subject.

 

The test of corresponding state or province-

In another respect also, a test resting on article 300 has become unworkable. In so far as the article incorporates the test of the law of “corresponding Province” or “corresponding Indian State”, the test has become practically unworkable, for the following reasons.

 

(a) The political map of India, as drawn in 1950, has been re-drawn again and again in the post – 1950 period. The process began in 1953. It assumed greater importance in 1956, as a result of the enactment of the States Reorganisation Act. It was continued when the (erstwhile) State of Bombay was bifurcated. And the process of re-drawing the boundaries has not yet ended. A time will come, when only an assiduous historical researcher will be able to locate the “corresponding Province” or Indian State. The power of the President under article 366(7) of the Constitution (to determine the corresponding State) will itself be difficult to exercise.

 

(b) The areas comprised within the princely States of India present yet another difficulty. These States (as is well known) had varying grades of political development. While some of them had well-established systems of law reporting, the same could not be said of the rest. Thus, in the absence of availability of satisfactory material, having its source either in statute or in case law, it is difficult to find out what was the legal position in a particular Indian State, on the subject under consideration.

 

Take, for example, the picturesque city of Udaipur. Before 1950, it formed part of the Rajasthan Union, which had acceded to the Indian Dominion. But the Rajasthan was structured (through the process of “Covenant) out of the Covenanting States of (former) Rajasthan, Jaipur, Jodhpur Bikaner, Matsya, Union etc. The former Rajasthan Union itself had been formed, through a similar process of Covenant, out of the merger of several Rajput States (Mewar, Kotah, Dungarpur etc.). Hence, if a tort is committed today, in Udaipur, by a State Government officer, and the question arises of the liability of the State Government for the same, it would become necessary to examine the constitutional law governing the (erstwhile) State of Mewar (with Udaipur as its capital). Incidentally, for a short while, that State (Mewar) happened to have a written Constitution – happily, a Constitution guaranteeing fundamental rights. But very few persons can, at the present day, manage to have access to a copy of that Constitution or to the rulings of the High Court of Mewar on that Constitution.

 

(c) Thus, the law in the areas concerned becomes inaccessible, not only to the common man, but (perhaps) also to an ordinary lawyer, who does not have an army of research scholars under his command.

Post Constitution decisions –

It keeps one’s researches limited strictly to post-Constitution decisions, the picture is equally confusing. There is a manifest conflict of judicial decisions. In theory, the dividing line between sovereign and non-sovereign functions is the criterion of liability. But there are serious disparities in the stance adopted by various courts in this regard. Courts themselves have expressed their uneasiness about this test and about the difficulties in its practical application particularly in Kasturi Lal case and N. Nagendra Rao case.

 

Need for certainty and codification –

The Commission is strongly of the view, that this is one area of the law where the need for a clear statement of the law in a statutory form is urgent and undeniable Jurists may hold different views as to the relative merits of codified and un-codified law. But this is definitely an area where a statutory formulation is badly needed, in the light of the considerations set out in the preceding paragraphs. We consider it desirable that the general should be reduced to particular. Abstract doctrines must be converted into concrete propositions; and the law should present itself in legislation that is at least easily accessible and conveniently readable. So far as the subject under consideration is concerned, the legal maxim. Ubi jus incertum, ibi jus nullum (where the law is uncertain, there is no law), can be applied, with great force.

Role of the State tort law :

Role of the State tort law in any modern society, interactions between the State and the citizens are large in their number, frequent in their periodicity and important from the point of view of their effect on the lives and fortunes of citizens. A large number of the problems so arising fall within the area of the law of torts. This is because, where relief through a civil court is desired, the tort law figures much more frequently, than any other branch of law.

 

In the modern sense, the distinction between sovereign or non-sovereign power thus does not exist. It all depends on the nature of the power and manner of its exercise. Legislative supremacy under the Constitution arises out of constitutional provisions. The legislature is free to legislate on topics and subjects carved out for it. Similarly, the executive is free to implement and administer the law. A law made by a legislature may be bad or may be ultra vires, but, since it is an exercise of legislative power, a person affected by it may challenge its validity but he cannot approach a court of law for negligence in making the law. It is in (the) public interest for acts performed by the State, either in its legislative or executive capacity, it should not be answerable in torts. It would be in conflict with even modern notions of sovereignty.

 

The modern thinking of progressive societies and the judicial approach is to do away with archaic State protection and place the State or the Government on any other juristic legal entity. It is contrary to modern jurisprudential thinking. The need of State to have extraordinary powers cannot be doubted. But with the conceptual change of statutory power being statutory duty for (the) sake of society, the people, the claim of a common man or ordinary citizen cannot be thrown out merely because it was done by an officer of the State; duty of its officials and right of the citizens are required to be reconciled, so that the rule of law in a Welfare State is not shaken”.

 

The Court linked together the State and the officers: “The determination of vicarious liability of the State being linked with (the) negligence of its officers, if they can be sued personally for which there is no dearth of authority and the law of misfeasance in discharge of public duty having marched ahead, there is no rationale for the proposition that even if the officer is liable, the State cannot be sued.”

 

Protection Clauses :

The proposal to deal with what can be called “protection clauses” – that is to say, statutory provisions which, in substance, provide that a suit etc. shall not lie against the Government for anything which is done or intended to be done under a particular enactment. In order to deal with the relevance of such protection clauses to the subject matter of the present Report, we would, like to quote a sample. This is how section 84 of the Information Technology Act, 2000 (21 of 2000), reads:

“84. Protection of action taken in good faith

No suit, prosecution or legal proceeding shall lie against the Central Government, the Controller or any person acting on behalf of him, the presiding officer, adjudicating officers and staff o the Cyber Appellate Tribunal, for anything which is in good faith done or intended to be done in pursuance of this Act or any rule or regulation or order made thereunder”.

 

Another model – a simpler one – is supplied by section 37 of the Drugs and Cosmetics Act, 1940, in these terms: “37. Protection of taken in good faith

No suit, prosecution or other legal proceeding shall lie against any person for anything which is on good faith done or intended done under this Act.

 

Thus, section 88 of the Chit Funds Act, 1982, provides as under: “88. Protection of action taken under the Act

No suit, prosecution or other legal proceeding shall lie against the State Government, the Registrar or other officers of the State Government or the Reserve Bank or any of its officers exercising any powers or discharging any functions under this Act in respect of anything which is in good faith done or intended to be done in pursuance of this Act or the rules made thereunder”.

 

Section 28, Consumer Protection Act, 1986, provides as under: “28. Protection of action taken in good faith

No suit, prosecution or other legal proceeding shall lie against the members of the District Forum, or the State Commission or the National Commission or any officer or person acting under the direction of the District Forum, the State Commission or the National Commission or executing any order made by it or in respect of anything which is in good faith done or intended to be done by such member, officer or person under this Act or under any rule or order made thereunder”.

 

Section 22 of the Insurance (Regulation and Development) Act, 1999 (41 of 1999), provides as under: “22. Protection of action taken in good faith

No suit, prosecution or other legal proceedings shall lie against the Central Government or any officer of the Central Government or any member, officer or other employee of the Authority for anything which is in good faith done or intended to be done under this Act or rules or regulations made thereunder”.

 

Section 68 of the Narcotic Drugs and Psychotropic Substances Act, 1985 (61 of 1985), provides as under: “69. Protection of action taken in good faith

No suit, prosecution or other legal proceeding shall lie against the Central Government or a State Government or any officer of the Central Government or of the State Government or any person exercing any powers or discharging any functions or performing any duties under this Act, for anything in good faith done or intended to be done under this Act or any rule or order made thereunder”

 

Section 38 of Protection of Human Right Act, 1993 (10 of 1993) provides as under:

“38. Protection of action taken in good faith

No suit or other legal proceedings shall lie against the Central Government, State Government, State Commission or any member thereof or any person acting under the direction either of the Central Government, State Government, Commission or the State Commission, in respect of anything which is in good faith done or intended to be done in pursuance of this Act or of any rules or any order made there under or in respect of the publication, by or under the authority of the Central Government, State Government, the Commission or the State Commission, of any report, paper or proceedings”.

Remedies:

The usual remedies are damages and/or an injunction. In some instances, the tort may be waived, and the defendant required accounting for profits gained through the wrong. The law of tort, as well as protecting individual rights to property damage and personal injury caused by negligence, also protects other interests, such as reputation (defamation), title to property (trespass), enjoyment to property (nuisance), and commercial interests (conspiracy).

 

The landmark judgement was Nilabati Behra V. State of Orissa awarding compensation to the petitioner for the death of her son in police custody, the court held that a claim in public law for compensation for contravention of human rights and fundamental freedoms, the protection remedy for enforcement and protection of such rights and such a claim based on strict liability made by resorting to constitutional remedy provided for the enforcement of fundamental right is distinct from and in addition to the remedy in private law damages for tort.

 

The court expressly held that principle of sovereign immunity does not apply to the public law remedies under Article 32 and Article 226 of Indian Constitution for the enforcement of fundamental rights. Kasturi Lal is confined to private law remedies only.

 

In Registered Society V. Union of India and Chairman, Railway Board V. Chandrima Das cases. It was held “where public functionaries are involved and the matter relates to the violation of fundamental rights or the enforcement of public duties, the remedy would still be available under the public law notwithstanding that a suit could be filed for damages under private law.” It opens up the possibility of development of public law torts which requires different considerations than the private law torts and which is more suitable for State liability in torts.

 

Crown Privilege: In every democratic society, it is importance that citizens get sufficient information and knowledge about the functioning of the Government. Democracy cannot survive without accountability to public. The very integrity of judicial system and public confidence depend on full disclosure of the facts.

(a) England: – In England, the Crown has the special previlege of withholding discloure of documents, referred to as “Crown Previlege”. It can refuse to disclose a document or to answer would be injurious to the public interests.

(b) India:

Statutory Provision: In India the basic principle is incorporated in section 123 of the Evidence Act, 1872, which read as-

“No one shall be permitted to give any evidence derived from unpublished official records relating to any affairs of State, except with the permission of the officer at the head of the department concerned who shall give or withhold such permission as he thinks fit.”

 

The section 123 confers a great advantage on the Government as inspite of non-production of relevant evidence before the court, no adverse interference can be drawn against it if the claim of privilege is upheld by the court.

 

Miscellanoeus Privileges of Government:

 

a. Under section 80 of the Code of Civil Procedure, 1908, no suit can be instituted against the government until the expiration of two months after a notice in writing has been given.

b. Under section 82 of the Code of Civil Procedure, 1908, when a decree is passed against the Union of India or a State, it shall not be executed unless it remains unsatisfied for a period of three months from the date of such decree.

c. Under article 112 of the Limitation Act, 1963, any suit by or on behalf of the Central Government or any State Government can be instituted within the period of 30 years.

 Conclusion:

In the light of above, it would be mention the observation of Apex court in N.Nagendra Rao Company V. State of AP . The honourable court noted the recommendations of the Law Commission first Report for statutory recognising the liability of the State as had been done in England through the Crown Proceedings Act, 1947 and in the USA through the Federal Torts Claims Act, 1946. It therefore, held that the doctrine of sovereign immunity has no relevance in the present day.

It is unfortunate that the recommendation of the Law Commission made long back in 1956 and the suggestions made by the Supreme Court, have not yet been given effect to. The unsatisfactory state of affairs in this regard is against social justice in a welfare state. In absence of State Liability Legislation, it will be in consonance with social justice demanded by the changed conditions and the concept of welfare state that the courts will follow the recent decision of the Supreme Court rather than Kasturi Lal.