Personal Guarantees and IBC: A Complex Web of Struggles

The concept of personal guarantees seems straightforward: entrepreneurs vouch for their company’s loan repayment. However, when the company faces insolvency and enters the jurisdiction of National Company Law Tribunal (NCLT), these personal guarantees morph into a nightmare. Most companies undergoing insolvency proceedings are labeled as fraudulent by banks, leading to legal action against entrepreneurs. The entrepreneurs are then put under intense scrutiny, often having to account for financial decisions made years ago.

Despite the Supreme Court of India overturning some of these declarations, the damage to entrepreneurs’ reputation is often irreparable. The ongoing legal disputes, coupled with reputational erosion, force entrepreneurs into a corner with limited options. The consequences are vast, affecting not only the entrepreneurs but also employees, suppliers, and the overall business ecosystem.

The Veil over Valuation: Entrepreneurs’ Exclusion and Flawed Process

The valuation process under the IBC is a crucial determinant of a company’s fate during insolvency. However, entrepreneurs who have nurtured and built their businesses are excluded from this process, as the company’s assets are handed over to new entities for evaluation. This exclusion contradicts the principles of natural justice and transparency.

The IBC introduces two types of valuations: the going concern value and the liquidation value. The disparity between these values and the actual sale price is evident in cases like Su-kam, where a company valued at Rs300 Crore was sold at a mere 49Cr. The process raises pertinent questions about the fairness and effectiveness of these valuations.

Entrepreneurial Plight and Future Prospects

Entrepreneurs, who are often the driving force behind a company’s success, find themselves marginalized during the insolvency process. This treatment contrasts sharply with the more balanced approach taken towards investors who acquire distressed companies. Entrepreneurs are treated as criminals, leading to depression, personal struggles, and even tragic outcomes.

The IBC’s approach to ‘interest’ burdens further exacerbates the situation. Entrepreneurs are burdened with interest payments even when they no longer have control over the company. The continuous accrual of interest, often out of their control, hampers their ability to resolve financial matters and move forward.

Conclusion: A Call for Reform and Empathy

The personal guarantee saga under the IBC raises profound ethical and systemic questions. Entrepreneurs who have invested their lives, energy, and resources into building businesses are left battling legal complexities, financial woes, and reputational damage. The valuation process, skewed and lacking transparency, further compounds their struggles.

It is imperative to create an environment that respects entrepreneurs’ contributions and provides them with a fair chance to rebuild and recover. Reforms to the IBC should focus on balanced valuations, empathetic treatment, and a more supportive ecosystem for entrepreneurs. As society, we must recognize that entrepreneurial journeys are not just about profits and losses but about innovation, growth, and economic progress.

By sharing the untold stories of entrepreneurs like these, we open the door to a more nuanced and compassionate discussion surrounding personal guarantees, insolvency, and the overall business landscape.

The post IBC v. Startups: Entrepreneurs’ Struggles and Unjust Valuations appeared first on LexForti .

In the last couple of years, interest in NFTs has exploded.  Every day multiple NFT projects are being launched, and prospective NFT buyers are hoping theirs is the one to “go to the moon.”  There are several factors that can make an NFT valuable, although none of these alone can guarantee that an NFT will become the next Cryptopunk.

Content and Identity of the Artist – NFT value is initially dictated by its quality and look.  Like with any piece of art, it’s the first thing people see.  A related and important factor is the identity of the artist, which plays a key role in dictating value.  NFTs including art created by well-known artists, like Banksy for example, are immediately valued much higher than those of an unknown artist. 

Hype and Endorsements – the success and initial value of an NFT project is dictated by the hype generated leading up to the initial NFT sale.  Many celebrities are associating themselves and promoting NFT projects, with one of the latest celebrities being Snoop Dogg.  These endorsements add appeal, as well as credibility.

Exclusivity/Rarity – NFT creators decide how many NFTs to mint.  The law of supply and demand is very applicable here.  A one of a kind NFT is generally more valuable than 1,000 editions of the same image or media.  Even with projects that create thousands of NFTs with the same theme (e.g. Bored Apes, CryptoKitties), value is dictated by the rarity among the characteristics of each particular NFT.  For example, only a small percentage of Bored Apes were minted with gold fur.  Thus, those are seen as more exclusive and valuable than those with the more common gray fur.

Community and Brand – NFTs can gain value over time by building a reputable brand and supportive community.  The Bored Ape Yacht Club is a prime example.  Bored Apes initially sold for less than $200 and now regularly trade for six-figures.  In addition to the initial hype surrounding the project (10,000 NFTs sold out in just hours), the Bored Ape community has been able to curate their brand such that they are one of the most well-known NFT projects in the space.  Many celebrities, including Eminem, Jimmy Fallon, and Mark Cuban have bought Bored Apes, further adding to the value of the brand.  

Early & Original Collections – Over the last year or so, we’ve seen the value of early NFT projects explode.  Larva Labs’ Cryptopunks was one of the first NFT projects on Ethereum, and they are some of the most valuable NFTs today.  There is something to be said for being a holder of an early NFT work.  Just as original and historical artwork has more value in the real world, more “original and historical” NFT collections are seen as more valuable.

Rewards/Access Given –  Some NFTs will entitle their holders to special privileges, rewards, or royalties.  These NFTs are inherently considered to be valuable because there are direct benefits that holders can benefit from and can even be seen as investment products.

The way NFT’s get their value is due to them being a “piece” of the blockchain that hosts it. So for example, an NFT hosted on the Ethereum blockchain is interpreted by the network as several “blocks” that make up that NFT and who the owner is. However, NFT’s also benefit from their aesthetics and utility in either the real world or in the metaverse. Some NFT’s allow you to play games and earn, such as Axie Infinity or Nest Arcade. Others provide just aesthetic value, similar to collecting a piece of art, except you hold it “virtually”.

What causes a particular NFT to be more valuable than another depends on various factors, some which are intangible like social media hype. Some NFT’s carry their value from hype alone, even when the project is still under development and promises no guarantee on your ROI. So it’s always important to do your own research and understand the fundamentals, white paper and roadmap of any NFT project that you decide to invest on. After, you can dig into their social networks to gain a better perspective on how hyped the project is and if it’s trending.

Interesting Read: Expert Corner: Key areas while drafting an Artist Agreement

The post Expert Corner – How NFTs get their value? appeared first on LexForti .

Spoiler Alert!

Do not read this, if you haven’t completed Season 3 of the Attack on Titan!

Go back!

Now let’s call it AOT for brevity and begin!

How AOT started?

AOT started with the narrative that the world is full of human-eating humongous humanoid creatures called Titans. Titan devours humans and there are some thousands of humans left; who have built tall and strong walls to protect themselves from the Titans. It was narrated that the humanity has perished beyond the walls! There are three rings of walls, within which the remaining humanity exists.

1. (Inner most wall) Wall Sina
2. (Middle wall) Wall Rose
3. (Outer most wall) Wall Maria

So as of now this seems simple. Right?

Titans eat humans and humans either fight titans or stay away from them! Cliché anime stuff. Right?

A Big NO!

Tragedy Begins!

For 100s of years, humans were safe from the Titans, all thanks to the walls!

Most of the titans used to be of 20 metres tall, while the walls were 50 metres tall!

However one day, a giant Titan appears (6o metres tall!). It appeared beyond the third outer wall (wall maria) and broke it.

All Titan entered into the outer territory and devoured most of the humans in that zone.

The protagonist of the show is Eren Yeager. Her mom was picked by a titan and devoured her, right before his eyes.

He takes the vow that, He will kill all the titans from the world!

Seems like the story has begun! Right?

A Big NO!

1st Plot Twist

Naturally, Eren inducted himself in the Scout Regiment. Scout Regiment directly deals and combat with the Titans! It was the only way Eren could ever combat the Titans.

Consequently, an opportunity arose and Eren had an opportunity to combat the Titans. During the combat, something happened and Eren transformed himself into a freaking TITAN! He transformed into a titan and started to kill other Titans.

Mind you that Titans do not have thinking capacity. The titan, Eren transformed into; had Eren’s intelligence. Let’s call Eren a Titan Shifter!

In order for a Titan shifter to become a Titan, he/she would need to inflict a bodily damages on themselves. In this case, Eren simply bite his hand, causing damage and transforming himself into a Titan.

A lot of drama happened afterward. However, lets jump to the other relevant information!

Moving Forward

Now its clear that in some case a human can transform into a titan and such titans are different from average mindless titan, thanks of its intelligence. However, as the story progress, we get to know that there are more titan shifters. In fact the titans who broke the outer wall leading to the tragedy were titan shifters.

Why humans would want to extinct the human race?

Whether can all humans transform into a titan?

At this stage we are full of questions.

Revelation of Truth

In the beginning of story; it was told that, all the secrets to Titans could be unveiled if one explore Eren’s house basement of the outer territory (Wall Maria).

However, Titans had their territory within Wall Maria. Eren and his comrades fought titans and went straight to his basement. There they found a diary and it had everything in it.

We came to know that, humans didn’t perish beyond the walls. The humans living within the walls are called as Eldians. The Edlians who are living within the walls resides in the mid of a small island called Paradis. They couldn’t go outside of wall because of roaming Titans. Therefore, they never knew the existence of outside world.

The people of Paradis never knew about Oceans, Mountains, Desert, etc!

It is then unveiled that, Eldians are of special race. Once injected by a special fluid, they transform into a mindless titan, who eats human. Additionally, there are other nine titan shifters as well, who have human intelligence. Most powerful titan shifter is the Founding Titan. Founding titan has the power to control all the Titans and people of Eldian race.

For 2000 years, Eldians ruled the world and terrorized humanity with their power. However, after certain time, one ruler of Eldian empire decided to give up on world domination and leave with other Eldians to the Paradis island. He left 8 Titan Shifters in the hand of Marley (Neighbouring country). He created three walls with huge mindless titans and with his power to manipulate eldians, he made them forget the past and manipulated them that, humanity perished beyond the walls.

However, Marley ended up having control on 7 Titan Shifters. One who couldn’t be controlled was the Attack Titan. He was Eren’s father who sneaked into the Paradis island and later gave his power to his son Eren Yeager.

What happened after the Eldian empire’s withdrawal?

King Fritz left Marley and took almost all Eldians to the Paradis Island. However, a few Eldians resided back in the Marley. Marley started the narrative that, it was the Marleyan force, which drove Eldian empire back to its place. The State created Intermittent Zone for remaining Eldians and made law that, they can’t leave the zone without prior permission.

The majoritarian population and the State started to abuse the remaining Eldians. Moreover, with the power of seven titan-shifters, the Marley started to dominate in various wars against different countries. Marley started to exploit the remaining Eldians.

1. They used Titan Shifters to take lead in War on behalf of Marley
2. They used to punish Edlians by injecting them with special fluid and transforming them into a mindless titan. Leaving them in the Paradis island. After 100s of years, the Paradis Island was full of mindless Titans (beyond walls).
3. They used Eldians as suicide squad, where they used to inject dozens to hundreds of Eldians with special fluid and using them as a bait in the war.

However, after 100s of years of exploiting Eldians in war; Marley realized that, it relied too much on Eldians. While other nation started to develop technology to counter the Titans.

In order to counter the power of Technology, it started to contemplate on attacking the Paradis Island and claim the Founding Titan. By claiming the Founding Titan, the Marley would be able to summon millions of mindless huge titans. Consequently, Marley sent three titan shifters to Paradis to breach the wall and claim the Founding Titan.

Laws for the Crimes that Marley committed!

Let’s assume that Marley is signatory of the below mentioned International laws:

Using Eldians as a suicide-squad in Wars

Let’s get this straight. The Titan shifters can go back to human form; however, once an Eldian is transformed into a mindless titan, he/she remains in that form till eternity or until someone chop off the titan’s neck! Therefore, calling them Suicide Squad makes sense. Right?

As can be seen in this picture; the Eldian soldiers are wearing the serum belt. Upon approaching the enemy bunker, they were supposed to get hit by a bullet and consequently, getting those serum in their blood. Upon transformation, there will be no going back. They will be titan till someone chops of their neck.

This comes under the extreme torture, which is inhumane and it is part and parcel of a biological experiments. As a result it causes great suffering! Considering all of these, it can said that, Marley breached the Geneva Conventions of 12 August 1949.

Grave breaches of the Geneva Conventions of 12 August 1949, namely, any of the following acts against persons or property protected under the provisions of the relevant Geneva Convention:

(b) torture or inhuman treatment, including biological experiments;
(c) wilfully causing great suffering, or serious injury to body or health;

Attacking the Paradis

Marley sent three titan shifters to breach the walls of Paradis Island and retrieve the founding titan. They were

1. Armored Titan, aka Reiner Braun
2. Colossal Titan, aka Boruto Hoover
3. Female Titan, aka Annie Leonhart

They breached the walls and consequently, a vast population was devoured by the mindless titans.

It was an intentional attacks against the civilian population. The walls were walls to protect the Eldians from the mindless titans. These walls were deliberately destroyed. This caused incidental loss of life and damage to civilian objects.

This act was a serious violations of the laws and customs applicable in international armed conflict within the established framework of international law, namely, any of the following acts:

(a) intentionally directing attacks against the civilian population as such, as well as individual civilians not taking direct part in hostilities;
(b) intentionally launching an attack in the knowledge that such attack will cause incidental loss of life or injury to civilians or damage to civilian
objects [or widespread, long-term and severe damage to the natural environment which is not justified by military necessity;
(c) attacking or bombarding, by whatever means, towns, villages, dwellings or buildings which are undefended;

Consequence of breaching the Geneva Convention

Marley clearly broke the Geneva Convention.

Now what would be the consequences?

Nothing, according to Carroll Bogert of Human Rights Watch. The Geneva Convention is a standard by which prisoners and civilians should be treated during a time of war. The document has no provisions for punishment, but violations can bring moral outrage and lead to trade sanctions or other kinds of economic reprisals against the offending government.

Conclusion

Hear me, all Subjects of Ymir. My name is Eren Yeager. I now speak to all the Subjects of Ymir, by way of the Founding Titan‘s power. Every wall on the island of Paradis has been unhardened. the Titans buried within them have begun to walk. My goal…is to protect the people of Paradis, who bore, and raised me. But the world desires the extinction of the people of Paradis. Over countless years, their hatred has grown beyond this island. They surely will not stop until they have killed every last one of our people. I reject their desire. The Titans of the Walls will trample and rumble all the lands beyond this island. Until the lives there… are eliminated from this world!

Eren Yeager (Founding Titan)

Interesting Read: How the present laws would have dealt with the Uchiha Massacre

The post How the present laws would have dealt with the Marley of Attack on Titan appeared first on LexForti .

With the rise in trade and commerce across the world, countries are more and more looking forward towards a trade barrier free world, where imports and exports can help every possible nation to grow with revenue and resources. Analysing the present issue, Adam Smith, the father of modern economics, emphasized the importance of free trade and stated that if countries remove the trade barriers and allowed free flow of goods from one nation to another that would invite greater prosperity to the countries and fulfil the interest of its citizens.[1]

But, free flow of goods can somewhere down the line infringe the rights of owner of an original product, as counterfeiting and forgery of the products are the unwanted evils that haunt the idea of free trade and commerce. Thus, rights of the owner of a product needs to be protected to ensure that the products are not counterfeited and thereby sold, harming the rights and revenue of the owner, and putting a threat to new and noble ideas.

The process of selling a product across borders via registered or unregistered trade channels, but without the consent of the owner of the product is known as parallel importation. For instance, a book shall be sold for say Rs. 500 only in India as per the wish and fancy of the owner of the book. But, the author wants the same book to be sold in Bangladesh at a relatively lower price of Rs. 250.

Now, the book sold in Bangladesh can be easily bought and imported in India by traders and as a result sold for price relatively lesser than 500. Thus, the following can infringe the rights of the author as though the books were same, but they were meant to be sold in two different jurisdictions. But, due to parallel importation of goods, the traders can create a grey market which results in infringing the intellectual property rights of the owners and denting massive revenues from them.

But, the owner cannot enjoy absolute autonomy over its rights as this would again be detrimental to trade and business. As for instance, a car manufacturing company exhausts its rights over its product immediately after the car is sold from the factory. Later, it cannot claim rights and revenue after every sale of the car in the market. Thus, after being sold from the factory, the car may be sold to the retailer, then to the customer, who may thereby use it for some years and then sell to another person, but the company cannot claim infringement of rights after every sale, as the rights get exhausted after the first sale.

Following from above, there are majorly three kinds of exhaustion of rights, i.e. Regional Exhaustion wherein the following system restricts the circulation of a product to a specific region or area. If the owner circumscribes the circulation and sale of its product within the territory of a particular nation, restricting imports and exports of the product, then the following system is known as National Exhaustion. Lastly, in International Exhaustion the owner cannot restrict the trade and sale of its goods once it is circulated or introduced anywhere across the world.

Regional system of exhaustion follows the most restrictive approach, whereas international exhaustion system follows the least restrictive measures. Different countries across the world follow different pattern while dealing with the present issue. Several African countries such as Ghana, Liberia and Tunisia, while Philippines in Asia, follow the system of National Exhaustion of Rights. It is only the European Union that follows the Regional Exhaustion of Rights prominently while countries such as China, India and Malaysia follow a system of International Exhaustion.[2]

In India, Section 29(1) of the Trademark states that-“A registered trademark is infringed by a person who, not being a registered proprietor or a person using by way of permitted use, uses in course of trade, a mark which is identical with, or deceptively similar to, the trademark in relation to goods or services in respect of which the trade mark is registered and in such manner as to render the use of mark likely to be taken as being used as a trademark.” Further, a person uses a registered mark if:-

1. –
2. –
3. Imports or exports goods under the mark;

So, importation and exportation of trademark is considered as use of a mark. Now, this use is done by any person authorized or unauthorized, i.e. if a person imports or exports goods which are similar to the trademark without prior consent of owner, it shall be considered as infringement of trademark as per Section 29(1) read with Section 29(6)(c). For instance, A in Bangladesh sells printers at a price of Rs. 2,000. B, a trader in India, buys the printer and sells it in India at Rs. 5,000. In the present situation there is no infringement of trademark, but, if the printer is solely for sale in Bangladesh, then the same is infringement of trademark.[3]

Section 30(3) on the other hand mentions about exception to infringement of trademark. It states that “where the goods bearing a registered trademark are lawfully acquired by a person, the sale of the goods in the market or otherwise dealing in those goods by that person or by a person claiming under or through him is not infringement of a trade by reason only if:-

1. –
2. The goods having been put on the market under the registered trademark by the proprietor or with his consent.”

Thus, there shall be no infringement of the trademark, if by prior consent of the owner the goods are circulated in the market and thereafter the goods are sold further to another person. For instance, a company certifies A as the proprietor of goods in the market. Now, A sells it to a retailer B who thereby sells the product to the customer. Now, B shall cannot be sued by the company for infringement of trademark as the rights of the company got exhausted the moment it sold its product to A.[4]

The position of the present situation has been simplified in India through case laws such as Kapil Wadhwa v Samsung Electronics[5], and Western Digital Technologies v Ashish Kumar, wherein the Court stated that after analyzing the communication of India in the Uruguay rounds of WTO in 1985, and report of the Standing Committee on the Copyright (Amendment) Bill, 2010, it is explicit that India follows the concept of International Exhaustion of Rights. Further, the Court stated that it cannot prohibit parallel importation in the country, as firstly it follows the system of international exhaustion of rights, and secondly, parallel importation would help in creating a competitive market which ultimately would benefit the consumer.

But, while doing so the trader should provide a message while selling the product that the owner of the product shall not be liable for any discrepancy in the product. For instance, if Samsung printers are being sold through parallel importation, then the seller shall provide a message while selling the printer that in case of any discrepancy in the product, Samsung shall not be liable for the faulty product. This, shall withhold the reputation of the owner of the product, and shall further absolve them of any liability which might arise during sale through parallel importation.

Though the stand of judiciary is crystal clear in the present situation but the government should introduce more regulations and policies which could deter the import of counterfeited products in the market. Strengthening the custom security and tracking of counterfeited product should be undertaken to protect the rights of the innocent and diligent companies.    

[1] Adam Smith, “The Wealth of Nations”, Oxford, England, 2002.

[2] Christopher Heath, “Parallel Imports and International Trades”, WIPO Journal,

[3] Shyamolima Sengupta and N V Saisunder, “Concept of Parallel Imports and the Principle of Territorial Exhaustion of Rights under the Indian Trademarks Act, 1999”, Lexology, March 30, 2020.

[4] “Legality of Parallel Imports vis-a-vis Trade Marks Law”, August 21, 2018.

[5] 2013 (53) PTC 112 (Del) (DB).

The post Understanding the Parallel Importation in India appeared first on LexForti .

Concept of Litigation Finance

Third-Party Litigation Funding (TPLF) is a mechanism wherein a third person or entity provides financial assistance to a litigant during the pendency of the process of litigation for a predetermined return, contingent on the outcome of the litigation. In other words, the third party has a vested interest in the outcome of judicial or arbitral adjudication but is a stranger to the litigant’s claim itself. The litigant remains unfettered with the litigation risks of losing a claim or damages imposed as TPLF operates on a non-recourse basis wherein the third party bears a considerable chunk of that burden. However, the litigant has to undergo a stringent process of due diligence to avail funding.

TPLF Heyday

It has gained immense traction as a funding regime not only to abate liquidity concerns of small enterprises which are up against resource-abundant corporate giants; but also as a cost-effective means of a risk markdown for stable enterprises. It also seems to be an effective alternative for investments in economic slumps as it remains ingenuous of market turbulence. TPLF is mainly of two types namely ‘pure funding’ and ‘commercial funding’. Where pure funding is purely motivated by financial encouragement to support the claims of a party, commercial funding takes on a more brutal connotation wherein substantial control is exercised on the litigation process by the funder to derive maximum profit. Regardless of the type, the yield is high for a relatively low investment although the cost and time frame of such return on investment may be uncertain.

Legal Evolution of Third Party Litigation Funding in India

The international scenario for Litigation Funding can be sourced to common law jurisdictions of the United States, United Kingdom, and Australia. Countries like Germany, Hong Kong, and Singapore have also removed hurdles vis-à-vis TPLF for easier access to natural justice.

The concept of TPLF is not novel but is gaining momentum in India triggered by the COVID-19 pandemic due to considerable obliteration of business and resources alike. TPLF does not have an explicit legislative regulatory backing in India though the legal pronouncements seem to unanimously uphold the validity of such bargains as long as they are not unconscionable, extortionate, or against public policy.

The recent case of Bar Council of India v. AK Balaji clarifies that there is no bar on non-lawyers to engage in legal financing agreements. However, advocates are expressly barred from participating in similar agreements inferred by a conjoint reading of Rule 18, 20, 21, & 22 of the Bar Council of India Rules.

States like Madhya Pradesh, Maharashtra, Gujarat, and Uttar Pradesh have amended the provisions[1] of the Civil procedure Code 1908 to expressly account for cases financed by third parties. Inversely, however, in Maniankutty v. Venkiteswaran[2], the Court ruled out the contention that the court has no power to award costs against persons who are third-party to a suit.

Third Party Litigation Funding: The Recent Trend in India

The recent legislative incumbent of Insolvency and Bankruptcy Code (IBC) has shoved TPLF into the mainstream particularly considering the arbitration award monetization in Hindustan Construction Company and Patel Engineering. In March 2019, a third-party finance deal was sealed between a group of investors and Hindustan Construction Co. Ltd (HCC) led by Blackrock, an investment management firm wherein HCC assigned its rights in arbitration claims and awards for INR 1750 crores. Similarly, Patel Engineering Ltd. conveyed its interest in litigation claims to Eight Capital Group for INR 2,168.5 crores.

Moreover, the Delhi-based startup LegalPay set on a course to democratize such third-party financing as an alternative asset class that has a short investment cycle. This week itself, LegalPay launched its off-the-beaten-track interim finance healthcare-focused fund for retail investors wishing to invest in legal and debt financing asset classes. Interim Finance under the IBC is short-term finance (for 6-12 months) granted to companies that are undergoing the Corporate Insolvency Resolution Process (CIRP) under the IBC. The startup targets MSMEs undergoing CIRP. The introduction of the fund could hail a trend where small retail investors could participate and invest in alternative asset classes which were traditionally monopolized by ultra-high net worth individuals. 

The Way Forward

The Engineering, Procurement, and Construction (EPC) sector seems to be in the spotlight of TPLF. It is not erroneous to say that TPLF seems to dwindle the scales towards the weighty claims and resourceful litigants. A third-party funder does not invest its time and resources unless a feasible and viable opportunity presents itself.

However, with the compounding effect of COVID-19 on economic activity, TPLF presents investors with novel avenues for retail investors to consider TPLF as an investment option that is not tethered to market fluctuations. As per the Report of ILC[3], the legal framework in India does not prohibit TPLF, and such funding may be left for the market forces to be determined.

Self-regulation and legislation are prerequisites for TPLF to find legitimacy and traction in India. The Indian Association for Litigation Financing (a consortium of law firms, individual practitioners, and third-party financers) is one such step towards the self-regulation of TPLF in India. Recently incorporated on February 11, 2021, it aims to expand on the premise of TPLF and to disseminate information thereof. This may be considered as the pioneering regulatory framework for litigation finance, particularly for MSMEs.

As for legislation, TPLF demands a robust legislative backbone that considers disclosures, compliances, and judicial scrutiny over code of ethics and public policy. TPLF is still stumbling in finding a jurisprudential foundation in India.

Conclusion

Extensive and proper dissemination of information will become a crucial factor to invoke a sense of trust owing to the high-risk profile of litigation claims. The litigation process is characterized by delays in judicial process and uncertainty. The high rate of turndowns of prospective litigants post due diligence due to lack of credibility or feasibility of return on investment also remains one of the many factors that MSMEs have to consider and counter.

There remains no inkling of a doubt that TPLF has cemented its existence in Indian jurisprudence. TPLF opens a consortium of opportunities to make justice increasingly accessible without the imposition of a financial burden on the litigant. By extension, it could well be considered as an incubator for investment opportunities to channel retail investors in the game of trading much on the lines of Real Estate Investment Trust Funds in India. India has only recently embarked on the long journey of litigation funding where regulatory and legislative enactments are indispensable to realize its full potential in India. TPLF finds relevance in the current COVID-19 era which has witnessed unprecedented economic disruptions leading to a dearth of funds to contest murky litigation. The Government should proactively mold and regulate the TPLF ecosystem and take advantage of the opportunity that TPLF provides.

[1] Order XXV Rule 1 & Rule 3

[2] Para 7

[3] Insolvency Law Committee, February 2020, p-20.

The post Litigation Finance: The Indian Scenario appeared first on LexForti .

Who is Itachi Uchiha?

Itachi Uchiha is one of a prominent character in an anime “Naruto”. He has been portrayed as a villain, who slaughtered his entire clan; sparing only his younger brother “Sasuke” to exploit him, once he gets older. The anime begins with Sasuke taking vow to avenge his clan by killing his elder brother Itachi.

Why Itachi slaughtered his clan?

Itachi belonged to “Uchiha” clan. The member of Uchiha clan possess a special eye called “Sharingan”. Once sharingan is activated, such person would react very fast and read opponent’s attack very quickly. If an Uchiha member suffers high degree of emotional trauma, their Sharingan evolves; making them even more powerful. This made the Uchiha clan fearsome.

Even with all the powers; the clan was side-lined and none of the members were ever given any higher administrative position, in the village. The higher administration of village believed that assimilating Uchihas in village administration, could hamper the internal peace. Meanwhile, the Uchiha clan started to secretly meet and plan to execute coup d’etat. Itachi being the member of Uchiha clan, was also a spy working for the village administration.

One of a prominent member of village administration gave a TOP SECRET mission to Itachi. He was assigned to slaughter his entire clan. Consequently, stopping any possibility of Coup d’etat. The slaughter would include everyone, including woman and child!

The reason implied was that, it would make sure that there is no future cycle of hatred against the village. In return, the village administration would protect ‘Sasuke’ from any adversary. Additionally, the blame of slaughter would fall over Itachi and he will have to leave the village as an International terrorist.

Itachi loved his younger brother Sasuke. In order to make sure, that peace is maintained in the village; he slaughtered his entire clan within one night.

He confronted sasuke and told him, that in order to evolve his sharingan, he slaughtered his own clan.

Who was responsible for the Genocide (Village or Itachi)?

Post the Genocide, the State (village) [Main decision makers] were aware of the whole plan.

The State internally legitimize the act of Genocide and kept using Itachi as a spy to deal with the Foreign threats.

[Village ~ The State]

Who do you think committed the Genocide? The State or Itachi? Logically, the charge falls on the State! Itachi was an accomplice and not the main conspirator.

In this plot, Itachi volunteered and associated himself to the State to commit the Genocide. Hence, making him an accomplice.

It was still the ‘State’, which legitimized and directed Itachi to carry out the Genocide plan.

One who associates with offenders in the commission of a crime

Who is an accomplice? (Chandan v. Emperor)

The mission to commit Uchiha massacre was given by DANZO to Itachi. According to him, it was the only way to maintain the internal peace in the village. Whatever the mens-rea may be, the actus-reus was the total elimination of a clan. It makes Danzo the main conspirator of committing the Genocide.

What International Law says?

According to the Genocide Convention Article I, the contracting State shall prevent and punish the culprit of Genocide. And let’s consider that all the villages were the signatories and ratified the Genocide Convention.

The Convention on the Prevention and Punishment of the Crime of Genocide

Genocide Convention

Did Konoha (The name of village) prevent the Genocide?

Hiruzen the third Hokage (The Head of the Village) tried to evade the situation. However, Danzo went ahead with the plan and made the plot to massacre the whole clan.

The State was supposed to identify Danzo and others as the main culprit, and consequently, they should have been punished. However, he was still bestowed with the highest position in the village. While Itachi was used as an scape goat!

Where the culprit should be punished?

According to Article VI of the Convention, a person charged with the offence of committing Genocide, shall be tried by the court that has the territorial Jurisdiction over the place, where the act happened.

Technically, the culprit should be tried and be punished before the Judicial body which in present case, would be in the Konoha.

In case, the offender is beyond the territory of the State, the hosting state, based upon their present law and enforceable treaties; should grant the extradition.

According to the convention, The State hosting Itachi would had to initiate extradition and had to handover him to the Konoha.

The Domestic Laws would have been invoked against Itachi; including Murder, Culpable Homicide, Criminal Trespass, Terror charges, Affray, etc.

While it is clear that Itachi committed the offence of Genocide; it is imperative that State appeared to have instigated Itachi to commit this offence. Apart from Itachi being the accomplice; the State is the culprit of Genocide.

Whether Konoha was obliged to not commit Genocide?

Article I of the Genocide Convention states:

The Contracting Parties confirm that genocide, whether committed in time of peace or in
time of war, is a crime under international law which they undertake to prevent and to
punish.

If we see, it states “The State shall undertake to Prevent and Punish”. On plain reading, it infers that the State has a duty to prevent it. It doesn’t seem that, State has been obligated to not commit the genocide.

The Answer seems to be NO! However, International Court of Justice interpreted it otherwise!

International Court of Justice held that, obligation to prevent Genocide, also includes, prohibition to commit it! (Para 166 of Judgment). This Judgment has its own criticism; however, this Judgment implies that, Konoha was OBLIGED to not commit the Genocide!

Whether the Danzo could be Penalized?

It is clear that, Danzo and other higher ups of the village committed the Genocide and hence breached the Convention. So whether, Danzo and other higher ups could had been penalized for this offence?

Article IV of the Convention states that, whoever commit the following offences, be it ruler, public official or private individual; will be punished:

Considering Konoha to be signatory of this Convention, Danzo and other higher ups would be tried based on the laws of Konoha.

To make sure, that everyone is legally protected; they made sure that, the Uchiha Clan massacre would be classified as a TOP SECRET MISSION.

Conclusion

The post How the present Laws would have dealt with the Uchiha Massacre? appeared first on LexForti .

INTRODUCTION

Advertising as a mode of marketing has a strong influence in our lives. Advertisement refers to any announcement or notice in public domain in order to promote any service, product or event. It is a method through which companies encourage the audience to buy their products or services.

Anything which draws the attention of the public towards these things can be referred to as advertisement. The decision to buy these products are more or less dependent on these advertisements by the companies. Sometimes, these commercials create such an impact that the consumer buys the products or services though there was no necessity of either, at the first place.

There is a need to regularise these commercials in order to prevent any negative implications in the society. This is the reason Indian Government has always laid down curbs or at least restricted the ads of unhealthy products such as liquor and tobacco through appropriate legislations and directives.[1]

India has been quite strict regarding the advertisements on the sale of liquor and tobacco. There has been a blanket ban on commercials selling liquor or tobacco products since 1995. This ban was enforced by the Indian Ministry of Health after a thorough research which found out that how liquor and cigarettes have adverse effect on a man’s health.

The combination of various mental and physical hazards which these products have on man’s body led to the government laying down an injunction on advertisements of such products on any media platform.

The advent of such ban can be traced back to 1975, when under the Cigarette Advertising Act[2], the government of India ordered the tobacco companies to display health warnings on the cigarette packets. The ministry continued to push for stronger regulations and stringent restrictions, until a complete ban in 1995. The Cigarettes and other Tobacco Products Act, 2003, and The Cable Television Network Regulation Act[3], 1995, put on complete censorship on any kind of advertisement whether print or electronic of tobacco or liquor products.

This led to an urge in the companies to seek certain alternate remedial measures, which eventually lead to the birth of surrogate advertisements. The objective of such ads is to make up for the loss incurred by the ban and still have their brand’s recall value in the minds of the viewers. Through such advertisements, the companies can state that the orders of the government are being implemented, but in reality, it is not so. These kinds of commercials, in fact, defeat the purpose of the Government through these laws. It’s like a weapon for Proxy War.[4]

MEANING: SURROGATE ADVERTISEMENT

Surrogate refers to ‘substitute’. Surrogate advertisements are just that. It can be referred to as an Ad which duplicates the brand image of one product with the intention to promote some other product of the same brand. Now the product advertised may or may not resemble the actual product, but it is promoted under the same brand name. This sought of substituted brand promotion is usually done when the original product is banned from being advertised on the mass media.[5]

Surrogate advertisement saw its advent in India in the mid-90s, when Cable Television Network Act, 1995 read with Cable Television Rules, 1994 put in a complete ban on the liquor, tobacco and cigarette endorsements. Prohibiting such commercials was the government’s step to curb the menace of such products on the viewer’s mind as well as their health.

But surrogate Ads defeats the intention of the government. Launching of different products under the same brand name is also known as brand extension and is pretty much a common phenomenon, but the problem arises when such extension is done in response to the categories of products which are banned.[6]

Some examples of these would be commercials of soda, packaged water or completely unrelated products such as music CDs by liquor companies under their brand name.

EXAMPLES: SURROGATE ADVERTISEMENTS

Surrogate Advertisements in Liquor Industry

Today, the liquor industry has blurred the lines between products by endorsing everything from soda bottles to fruit juices and cocktail mixers just to stay in the limelight. A major example of this would be Imperial Blues advertisement series promoting a whiskey brand under the veil of music CDs. Bagpiper soda, cassettes and CDs, kingfisher mineral water, royal challenge golf accessories, Teacher’s achievement awards, White mischief holidays are some examples amongst many others.[7]

Surrogate Advertisements in Tobacco Industry

The brands of tobacco industry are targeting the audience by selling tobacco-based products in the name of pan masala and substitutes of hookah. The list of celebrities participating in such Ads is numerous. Different products are endorsed by these public figures which have the same packaging as the banned product, so as to create a state of confusion amongst the viewers. This indirectly promotes the tobacco product of the brand because what influences the audience at first is the packaging. Wills lifestyle, Red and White bravery awards, four-square white-water rafting are some examples.[8]

Surrogate Advertisement in Cannabis Industry

The cannabis advertisement industry stream is accelerating. Most cannabis brands are selling off their products by labelling them as medicine. Brands like GW pharmaceuticals and ArcView fall under this category.[9]

STRATEGIES OF SURROGATE ADVERTISEMENT

With governments ban on direct advertisement, brands indulge in several other forms to gain rapid publicity. These are discussed below.

Promotion by Association

This kind of advertisement focuses on the value proposition of the brand and intends to create an impression of a certain kind in the mind of the viewers. This is done to generate relativity. For instance, selling the product by stating that it is for brave people, or it makes you look cool or maybe it makes you royal. Generally, such endorsements are done by celebrities because they help portray the values which the brand is seeking to sell.

For example, Shatrugan Sinha featuring in bagpiper soda or Akshay Kumar endorsing Red and White cigarette brand.[10]

Promotion by Extension

Brand extension is relatively a new form of advertisement. It formally refers to the expansion of the company into a venture which they previously did not sell. Promoting a new product with familiar brand name.[11]

For example, Kingfisher has sold everything from water to soda, calendar to even an airline company of the same name.

Promotion through Events and Sponsorship

With government now getting stringent on surrogate advertisements, the brands are turning towards event organisation, event sponsorships and corporate films. In this, the company places its logo somewhere around the peri free of the event which in return creates a buzz around the brand in the minds of the visitors.[12]

For example, Royal stag sponsored the coke studio performances and even owned an IPL team.

Promotion through TV Commercials

Tv commercials are the most common form of brand promotion with a mass audience viewership. The mentioned products were advertised highly in tv ads and movies, but since the governments abstaining these, they are taking a different route. Now, these brands promote their product under the veil of another product which is outside their realm, but still enough to create brand’s recall value.[13]

For example, Kamla Pasand, Pan Parag, Rajnigandha etc are promoting silver coated cardamom under the same brand name and similar packaging under which they sell tobacco products.

Promotion through Public Service Announcements (PSA)

Liquor, tobacco and cigarette companies which have been typically banned from advertising on media or print, have started to promote in disguise of public service announcement. Lately, this has been a very prevalent formula of advertising. The brands bring awareness regarding the ill effects of smoking, tobacco on the body, the legal age to drink alcohol or not to drink and drive.[14]

For example, public awareness warnings by cigarette companies on the cigarette packets that smoking causes cancer.

NATIONAL REGULATIONS

Cigarettes and Other Tobacco Products (Prohibition of Advertisement and Regulation of Trade and Commerce, Production, Supply and Distribution) Act, 2003 (“COTPA”)

Section 5 of the Act, prohibits not only persons who are engaged either in the production, supply, or distribution of cigarettes from advertising but also prohibit people from media having control over the system to allow such advertisements. It also corresponds a ban on people not to participate in such advertisements which either directly or indirectly promotes the use of cigarette or any tobacco products.[15]

Programme and Advertising Codes prescribed under the Cable Television Network Rules, 1994

Rule 7(2)(viii) of the rules lays down the code of advertising for brands selling tobacco, cigarettes, liquor, wine, alcohol, or any other intoxicants. Though it puts a complete ban on advertising any afore mentioned product, but still leaves a window open. It states that a brand can advertise under some conditions, any other product which it produces under the same brand name or logo. This window has led to cause the advent of surrogate advertisements in India.[16]

The Advertising Standards Council of India (“ASCI”)

ASCI is a self-regulatory and voluntary council, which is registered under the Companies Act. It aims to keep a check over companies to avoid advertising products which are hazardous or unacceptable to the society. Section 6 of the rules of the ASCI code states that the advertisement of products which are prohibited by the government should not go ultra vires the law by purporting to be products which are not restricted or prohibited by the law. to judge what advertisements shall come under such radar, shall be scrutinised in the following ways.

It shall check upon the visual content of the Ad and make sure that it does not promote products which are restricted either directly or indirectly by making any references or nuances to those particular products. This section specifically prohibits surrogate advertisements by laying down criteria to judge whether or not the commercial is indirectly promoting the banned products.[17]

INTERNATIONAL REGULATIONS

Framework Convention on Tobacco Control (FCTC).

World Health Organization’s FCTC is the world’s first international Treaty.  It has been adopted by 181 countries until now. It was adopted on 21^st of May, 2003 by the World Health Assembly and came into force on 27^th of February, 2005. It has been enacted by nations who are keen to make strict anti-tobacco rules. Article 13 of the Treaty talks about tobacco advertising, promotion and sponsorships. This article asserts the idea that a comprehensive ban is necessary. It gives out the freedom to the parties to formulate regulations to ban tobacco, even if the constitution does not permit the same. The countries can resort to ways like prohibiting advertisements which create a negative impact on the viewers, restrict any sought of direct or indirect incentives which encourages tobacco use, restrict advertisement in media and any kind of event sponsorships and organisations by tobacco companies.[18][19]

ALCOHOL ADVERTISEMENTS IN DIGITAL MEDIA

The advent of social media has taken the world by storm. These sites not only make it easier for you to connect with other people and have a fun virtual life, but it is also becoming a space for alcohol companies to promote their brand. It is becoming more and more affable for such brands for marketing most likely due to negligible rules regarding social media marketing.[20]

The brands are getting attracted towards promoting their alcohol on social media platforms such as Instagram as it garners them a great viewer engagement rate. With Ad placements in stories, feeds, posts a number of varied approaches of alcohol advertisements on social media have cropped up. One of them which is gaining huge popularity is alcohol influencer marketing.[21]

ASCI meticulously have given out their guidelines regarding influencer advertising in digital media. The guidelines define terms such as influencer, virtual influencer, material connection and digital media. The preamble talks about the recent blow up of digital platforms for advertisements.

It focuses on to define the blurry lines between brand promotions for influencing the opinion of the viewers or for changing their behaviour for monetary gains. It seeks to safeguard the consumers from such commercials which are either misleading or abuse the trust of the consumers and exploit them because of their lack of awareness and knowledge.[22]

It asserts about the rule of “disclosure” by the influencers about their brand collaborations and endorsements on these digital platforms. All post about such brand collaborations should have a label of Advertisement/Ad/Sponsership/Partnership/Collaboration/Employee/Free Gift. It mandates that the disclosure should be upfront and prominent.[23]

It also elaborates upon the ground rules to be followed while endorsing any product which is restricted or prohibited by law from advertisement. The guidelines state that the brand extension product or services should be registered with the appropriate government authority. For brands which are present in the market for more than 2 years should have a turnover of 5 crore per year or 1 crore per annum per state where such distribution has been established.

They also should produce a valid certificate from an independent institution and CA firm to prove the above stated criteria. For the brand who have been in the market for less than 2 years should achieve a turnover of 20 lakhs per month from launch. It should demonstrate a fixed asset investment under the name of advertised brand of not less than 10 crores.

The brand also requires to submit evidence of turnover greater than 10 percent of the turnover of the same brand in the restricted category. All of the above requirements should be certified by an independent and reputed CA firm.[24]

Great influence is followed by great responsibility. While many big brands are coming up to take advantage of the social media market and partnering up with influencers on Instagram is an easy path for latter to earn money. But these ads have a huge impact on the users of such sites which are mostly young people in their adolescence and teens. Users of such site are in an impressionable age and should be influenced carefully. High exposure to alcohol advertisement on media platform can risk the lives of such individuals causing them alcohol related disorders.[25]

STEPS TO COMBAT SURROGATE ADVERTISEMENT

1. Amending the existing laws and making them unambiguous by clearly banning product advertisement of brand extension products.
2. Conducting programmes for consumer awareness and organising surveys to acquire knowledge about the negative impact of such endorsements.
3. Providing a system for effective implementations of national laws and international treaties.
4. Investing more powers in ASCI to take stronger actions against advertisements which are false or misleading, rather than just issuing notice.
5. Several NGOs such as HRIDAY (Health related information dissemination amongst youth), SHAN (Student Health Action Network) etc have led campaigns appealing the Government of India for a comprehensive ban on tobacco advertising. The role of NGOs in combating the menace of surrogate advertising should be recognized and they should be given more authority to work on such issues.[26]

[1] Available at, https://www.legalserviceindia.com/article/l346-Surrogate-Advertisements.html. (Last accessed on 30^th November, 2021).

[2] The Cigarettes and Other Tobacco (Prohibition of Advertisement and Regulation of Trade and Commerce, Production, Supply and Distribution) Act, 2003.

[3] The Cable Television Network (Regulation) Act, 1995.

[4] Supra Note 1.

[5] Available at, https://www.mondaq.com/india/advertising-marketing-branding/606974/surrogate-advertisements-in-india. (Last accessed on 3^rd December, 2021).

[6] Ibid.

[7] Available at, https://www.feedough.com/what-is-surrogate-advertising-why-is-it-used/. (Last accessed on 6^th December, 2021).

[8] Ibid.

[9] Ibid.

[10] Supra Note 7.

[11] Ibid.

[12] Ibid.

[13] Ibid.

[14] Ibid.

[15]Available at,  https://odishapolice.gov.in/sites/default/files/PDF/COTPA.pdf. (Last accessed on 16^th December, 2021).

[16]Available at,  https://mib.gov.in/sites/default/files/pac1.pdf. (Last accessed on 16^th December, 2021).

[17] Available at, https://ascionline.in/. (Last accessed on 16^th December, 2021).

[18] Supra Note 1.

[19] Available at, https://www.nhm.gov.in/index1.php?lang=1&level=3&sublinkid=1126&lid=636. (Last accessed on 20^th December, 2021.)

[20] https://vertavahealthohio.com/blog/social-media-alcohol-advertising/. (Last accessed on 22^nd December, 2021).

[21] Ibid.

[22] https://ascionline.in/images/pdf/guidelines-for-influencer-advertising-in-digital-media-final.pdf. (Last accessed on 22^nd December, 2021).

[23] Ibid.

[24]Available4 at, ( https://ascionline.in/images/pdf/final%2018.03.2021-%20guidelines%20for%20qualification%20of%20brand%20extension%20rev.pdf.) Last accessed on 23^rd December, 2021.)

[25] Supra Note 15.

[26] Supra Note 5.

The post The Legality of Surrogate Advertisements in India appeared first on LexForti .

Navya Dubey is presently associated with the Institute of Law, Nirma University. Her area of interest is Intellectual Property laws and Human rights. Aditi Insaa is presently associated with the Institute of Law, Nirma University. Her area of interest is Intellectual Property laws and International Laws. Apart from this, she engages herself in reading current affairs and key issues affecting society.

Summary

The Prohibition of Child Marriage (Amendment) Bill, 2021 created a huge stir among the legal stakeholders and various experts. This article pursues to examine the deliberations, debates and flipside and majorly the shortfalls of the proposed amendment. What are the key issues involved and how the act blots the agency of women are the things to be deeply cerebrated?

Keywords: Agency, Rights, Marriage, Child Marriage, Bill

Introduction

2021 witnessed the presentation of the Prohibition of Child Marriage (Amendment) Bill, which increased the marriageable age of women from 18 to 21 years. It was done as per the recommendations of Task Force report headed by Ms. Jaya Jaitly, former President of the Samata Party, so appointed by the Ministry of Child & Women Development. The bill containing six segments was presented in the Lok Sabha by Union Minister for Women and Child Development Smriti Irani. It additionally proposed to correct seven individual laws — the Indian Christian Marriage Act; the Parsi Marriage and Divorce Act; the Muslim Personal Law (Shariat) Application Act; the Special Marriage Act; the Hindu Marriage Act; and the Foreign Marriage Act. The bill indeed tries to paint a rosy picture under the garb of women empowerment and gender equality. 

The avowed objective of the bill is to make the age of marriage even across all religions, regardless of contrary laws, customs, or ingrained practices. This article aims to put forth the claim that the proposed amendment will translate into gender equality when other factors like patriarchal mindset, early child marriage across religious communities are addressed.

Object and Reasons of the Bill

The object and reasons of the bill underscore that it seeks to “address the issues of women in a comprehensive way, as an action for bolstering the position of women. The bill prima facie seeks to increase the agency of women “as stated by the Parliamentary Standing Committee. However, the moot question which looms here is whether increasing the marriageable age will stop the underage marriages happening across the country. Many scholars, academicians like Zakia Soman (who fought the battle against Triple Talaq) have opined that these legal reforms alone are not sufficient enough to enable a just and safe environment for women. Experts have opposed the decision on the ground that the law to end child marriage won’t materialize as the decline in number of child marriages is marginal. Furthermore, they pointed out that cases of girls dropping out of school owing to early marriage reveal that many girls are often devoid of primary education.

 Notwithstanding, pundits have since brought up a large number of hidden issues — social disgrace, poverty, raised demand for dowries – that pushes ladies into an early marriage. They have likewise said that the law up to this point has not been sufficiently effective in forestalling child marriages. Consequently, there may be a possibility that this may very well be a handy solution for a complex issue that requires a more granular perspective, beginning from changes in the mindset and notions of the general public and society.

Specialists have additionally highlighted that in a nation where inter-caste and inter-religious marriages could be proven fatal, this law could become a tool that can be used by daughters to claim their rights. Regardless of the advantages the bill seeks to offer on the platter, it remains unclear whether this new lawful period of marriage will bring about the sea changes as stated or whether 21 would end up being simply a number.

Paradox

A major downside of increasing the age of marriage of women from 18 to 21 years is that it downplays the decision-making capabilities of marriage of both women and men. Back in 2008, The Law Commission Report which was published proffered a suggestion of reducing the marriageable age of men to 18 years assuming this step would further the parity between the legal marriageable ages of women and men.

An individual is considered to be an adult after attaining 18 years of age. This essentially means she is legally capable of buying property, voting and entering into contracts. The looming question here is why is this freedom curtailed with regards to deciding the age of marriage. Doesn’t the fact that a woman is exercising her own will to vote rationally suffice to conclude that she has attained the wisdom to rationally decide when she wants to get married?

Tarnishing the Agency of Women

We live in a society that is to date grappling with issues of child marriages and female foeticide. A daughter is treated as a parayadhan and a liability that needs to be handed over as soon as possible. People still have deeply- rooted beliefs that defy the agency and empowerment of women. India is already riddled with gender inequalities. The primary and the most fundamental thing which is required to eliminate these evils involve cultivating a value system that thrives on mutual respect between men and women. Recognition of women is sine qua non to create this value system.

Freedom of Choice which is available to women as a right gets truncated and reduced under the societal mores and pressures. For instance, choosing a partner becomes a task for young adults because the choice is enmeshed with barriers of caste, creed, religion, language, etc. These restrictions foisted upon the individuals are so stringent that violation of the same often leads to the murder of their daughter by families (Honor Killing) under the garb of protecting the caste. Instead of recognizing the rights of women and protecting the agency of women where she is able to choose a life partner, State Governments are riding on love-jihad laws, leaving no room for inter- religion marriages.

Families often abuse these laws to validate their social perceptions by simply annulling inter- religion or inter- caste marriages. The laws so abused include seeking repeal under the Prohibition of Child Marriage Act, making false charges of kidnapping and rape under the Protection of Children from Sexual Offences Act and IPC. The present bill also stands chances of being subjected to similar patterns of misuse and abuse by parents disapproving of their daughter’s choice of partner.

Conclusion

Age of 18 is considered to be a maximum breaking point as far as the physical and reproductive development of ladies is concerned. Hence, the proposed move will limit and constraint the privileges of grown-up ladies, an issue that needs to be reconsidered by concerned stakeholders.  Statistics reveal that India breeds every third child bride in the world and the proposed step which increases the marriageable age give a cue that around 34% of women would get married before attaining the marriageable age. Therefore, there are slim chances that raising the bar of marriageable age would result in sea changes in our society.

The bill seems more like a posturing attempt of pleasing and tokenism rather than a genuine step to eliminate issues of gender inequality, child marriages, maternal mortality, safety of women, etc. The stakeholders and the Government should proactively implement schemes to alleviate the situation. Ensuring easy access to education will go a long way to address the social evils that are deeply entrenched in our society.

The post The Prohobition of Child Marriage (Amendment) Bill 2021 – A double-edged Sword? appeared first on LexForti .

Abstract

Keywords- Amendment of Pleadings, Civil Procedure Code 1908

Introduction

The principle followed in Civil Procedural Law is that the Court procedures and rules are designed to achieve substantial justice. Order VI Rule 17 is an example of such procedural law that is designed to serve justice to the parties by giving them a chance to amend their pleadings where it appears to be necessary.

The word ‘pleading’ in ‘amendment of pleadings’ can be understood by Order VI Rule 1 of the Civil Procedure Code(CPC), 1908. It defines a Pleading broadly `as a plaint or a written statement.[1] While a Plaint is a formal statement filed by a Plaintiff to substantiate his claim, similarly a Written Statement as per Order VIII Rule 1 is provided by a Defendant from his side of the argument in that trial within thirty days of the summons being issued.[2]

Pleadings play an important role is determining the outcome of a case by enabling the plaintiff to establish the justification for legal action and for the defendant to prove his defense accordingly in a civil suit. They cannot be changed except for the Judge’s discretion and the trial proceeds only within the pleadings made.

This is the reason the Civil Jurisprudence emphasizes that a pleading must be carefully drafted and therefore, must contain only relevant material facts with no application of law, must not include the evidence provided to further substantiate the claim and must be in a concise form.

On certain occasions it may be imperative for a party to modify such pleadings before a trial begins or even during the course of a trial in order to reshape their arguments for determination of rights in question. This can happen when some new information comes to the knowledge of Court or parties, or when a party is not adequately prepared for the concrete objections raised by other party. Order VI Rule 17 applies to such situations.

This rule was removed from CPC to ensure speedy disposal of suits following the recommendations of Justice Malimath Committee and the Law Commission, however, its need was comprehended and was consequently reinstated.[3] It is needed because the Court expects each side to present their argument in the way they wish to. Since there can be no civil action if there are no pleadings, an amendment of such a pleading has the huge impact on the rights in the matter of question of the parties.

Civil Procedure for Amending Pleadings

The history of common law suggests that the process making amendments to pleadings was very rigid such that even the changes to minor details were not entertained by the Court of Law.[4]

However with the case Cropper v. Smith the importance of amending pleadings in conducting a fair trial was realised. It was observed in the case that purpose of Courts is to determine the parties’ rights, not to condemn them for mistakes in conduct and diligence made while framing the pleading.[5]

The Court may at any stage of the proceedings allow either party to alter or amend his pleadings in such manner and on such terms as may be just, and all such amendments shall be made as may be necessary for the purpose of determining the real questions in controversy between the parties”.[6]

Order VI Rule 17

Provided that no application for amendment shall be allowed acter trial has commenced, unless the Court comes to the conclusion that in spite of due diligence, the party could not have raised the matter before commencement of trial.

Proviso added in the 2002 Amendment

” A plain reading suggests that the word “may” in the first part means it is complete discretion of the civil court to decide whether or not to allow a particular amendment in a proceeding where it deems to be just.[7]

Hence, a party cannot demand an amendment to a pleading as his right. The word “shall” such discretion by the courts must be used liberally and judicially in accordance to certain principles.[8]

For instance, if a party could not raise a particular issue in the initial pleading despite due diligence, the court has to accept an application for amending pleading in such a case so as to determine the matter in question between the parties. The proviso acts as a caveat in preventing applications aimed to delay the proceedings after the trial commences.

The process of amending a pleading starts with writing an application to the deciding Civil Court stating the purpose for such modification. The Civil Judge will grant Order VI Rule 17 if he finds that such amendments may be instrumental for determining the matter in question. After this party must ensure to file the altered pleadings by the prescribed time.

Other provisions related to amendment of pleadings are Order VI Rules 16,18, 28 and 29.  Order VI Rule 16 grants the Court power to strike or amend pleadings which it deems to be scandalous, unnecessary against a fair trial or abuses the Court’s process.[9]

As per Order VI Rule 18 of the Civil Procedure Code, 1908 prescribes a limitation where a party files for an amendment of pleading in response to which the court grants it, but the party fails to amend it within 14 days or as specified, then such party shall be barred from doing so.[10]

Additionally Order VI Rule 28 requires an application to be made by a party which seeks to amend its pleadings along with a prayer and Order VI Rule 29 requires a note to be made by the legal heirs of a deceased party for a consequential amending. In cases regarding denial of amendment seeking ancillary relief like a financial relief in a divorce settlement, such a party may have the option of raising the issue in a subsequent suit.

However, when a party seeks an amendment of pleading regarding constructive res judicata, the Civil Court must reject such application.[11] This rule is not confined to regular civil proceeding but can be ordered even by a presiding judge in execution, insolvency, arbitration and matrimonial proceedings.[12] 

Judicial Interpretation of Amending of Pleadings under Order VI Rule 17

The Apex Court on an instance declared that an amendment to a pleading should be permitted by a Court of Law if it does not add any disadvantage to the opposing party, despite such party seeking amendment displayed some lapse.[13] Order VI Rule 17, CPC guarantees that both parties are not at a disadvantage merely because of some minor omission on their part.

By providing a chance to amend their pleadings, Courts can adjudicate the case on its merits which are necessary for determining the matter in controversy. However, the provision does not specify such a chance to amend their pleadings may be allowed. Therefore, such guidelines have been interpreted by the Courts in various cases.

When Amending Pleadings Allowed

An application to amend pleadings is allowed when the Courts finds it necessary to determine the real question in controversy and when it does no injustice towards the opposite party. Both these conditions have to be fulfilled.[14]

In general, in a pre-trial situation an amendment to a pleading may be allowed when such application is for granting a consequential relief, for prevent more proceedings on the same case, when certain events take place after filing the pleading, when such amendment clarifies the previously filed pleadings, when parties are incorrectly described, where there is a misstatement of cause of action or any other bonafide omission that are necessary to determine the rights of the parties involved.[15]

As stated before, a pleading can be both plaint and written statements.

The Apex Court in Usha Balashaheb Swami and Ors. v. Kiran Appaso Swami and Ors provided that both are considered differently when it comes to amending. The reason was stated as

The general principle that amendment of pleadings cannot be allowed so as to alter materially or substitute cause of action or the nature of claim applies to amendments to plaint. It has no counterpart in the principles relating to amendment of the written statement[16]

Usha Balashaheb Swami and Ors. v. Kiran Appaso Swami and Ors

When Amending Pleadings Rejected

On most circumstances an application to amend pleadings by a party is rejected by a judge because either they do not satisfy the two condition or the omission made was made recklessly or the altered pleadings changes the basic nature of the pleading initially filed.

In Modi Spg. & Weaving Mills Co. Ltd. v. Ladha Ram & Co., the Allahabad High Court contended that certain cases where altered pleadings are inconsistent or introduces a new and different case, the leave shall be refused.[17]

According to the ‘Doctrine Of Relation Back’,  for securing justice to the parties, the Court has the power to instruct when an amending to a pleading does not relate back to the date of application, especially in cases regarding misdescription in suit.[18]

The proviso implies that an application seeking amendment to a pleading may not be raised after commencement of a trial unless there is due diligence.

The Supreme Court clarified as what exactly is commencement of trial in Baldev Singh v. Manohar Singh, that

Commencement of trial as used in proviso to Order 6 Rule 17 in the Code of Civil Procedure must be understood in the limited sense as meaning the final hearing of the suit, examination of witnesses, filing of documents and addressing of arguments.[19]

Baldev Singh v. Manohar Singh

Law of Limitation

Date of application for seeking amendment of pleading is of utmost importance in litigation, even though the words of the provision say “at any stage of the proceedings”. An early case called Charan Das v. Amir Khan observes that despite an amendment to a pleading may be necessary to determine the real question in controversy, at times law of limitation may be a valid defense to refuse it.[20]

Further, in South Konkan Distilleries & Anr v. Prabhakar Gajanan Naik & Ors it was stated  in para 11 that

“It is also equally well settled that there is no absolute rule that in every case where a relief is barred because of limitation, amendment should not be allowed. It is always open to the court to allow an amendment if it is of the view that allowing of an amendment shall really sub serve the ultimate cause of justice and avoid further litigation.[21]

Paragraph 11 of the Judgement

Problems associated with Amending Pleadings in a Civil Suit

It has been observed in the history of law that when there is a more discretion granted, more will be the potential for abuse. Similarly, though Order VI Rule 17 is definitely not a right of the parties and can be granted only at the discretion of the Court, it has still been used arbitrarily with a malicious intention to delay civil proceedings so as to make the cause of action time-barred under the Limitation Act.

Litigation is such that the facts of a case may change materially between filing of a pleading and trial which may necessitate amending pleadings to reflect these changes. However, a frivolous overuse of this provision may hamper speedy disposal of cases and is against the principle of ‘Justice delayed is Justice denied’.

The 222^nd Law Commission Report indirectly suggests that every effort has been made to avoid using provisions like Order VI Rule 17.[22] The opposite parties are seldom compensated for the delays caused by amending pleadings. This necessitates a re-examination because it is being used in nearly all instances to make unnecessary amendments. In some cases, like these the Civil Courts in India have refused to entertain an application seeking amendment even though they may have qualified for the same.

As India is facing the problem of huge backlog of cases, the frivolous applications to amend their pleadings is only adding burden to the that. It is estimated that around 80% of applications seeking amendment of pleadings may not be genuine and are in fact applied for the purpose for hampering civil proceedings.[23]

Apart from the problem of delayed justice and pending cases, Order VI Rule is also responsible for serving as a mechanism to infringing rights of opposing parties since in certain circumstances it may hard to identify the matter in controversy and even the malicious purpose to amend.

Although it is suggested that Courts must take a liberal approach while granting leave for amending pleadings under Order VI Rule 17, it is observed that in situation when one party is allowed to amend his pleading and when other party is disallowed to meet the former’s altered pleading it causes grave injustice to the rights of these parties.

Conclusion

Any legal action begins with the filing of a pleading, which should be done with great care by the parties. If the facts of the case change, the party must file a motion with the court to have the pleadings changed. The Court usually allows a motion to alter the pleadings, but it must keep in mind that doing so would not change the case’s original substance.

A request to amend a pleading must be allowed in court until the case begins. The court may approve such an application to avert a flood of litigation. At the same time, the court finds that granting the other party’s motion to change these pleadings will not cause a disadvantage. If it does, the court may deny the request to amend his pleadings.

Overall, it is understood that Order VI Rule 17 is instrumental in securing justice, reducing the amount of litigation and its incurred costs, and also to avoid having a lot many suits. The scope of this provision suggests that rules are subordinate to justice in Civil procedure and hence the Courts have so far been liberal in ordering for amending pleadings.

In case law, a set of grounds for granting or refusing leave has been developed. It is well knowledge that one of the Indian judiciary’s fundamental flaws is the slowness with which justice is delivered, and that changing pleadings is a significant factor. Although pleadings amendment is not a right that may be exercised at any time or in any circumstance, courts should not evaluate such petitions in a mechanical manner.

When the opposing party is entitled to reimbursement for expenditures and delays, the court should be more lenient. The 27^th Law Commission Report has suggested that a statutory clarification regarding whether a civil court can allow an amendment to a plaint when such amendment results in rendering that court incompetent to try the suit is required, which has so far not been implemented.[24]

This must be rectified by ensuring that Civil Courts allow amendment to pleadings only for those made with a bonafide intention since it provides a good mechanism for eliminating errors in pleadings.

References

1 A. Mohan, Justice, Courts and Delays (2009).

2 William Searle Holdsworth et al. , A history of English law (3 ed. 1923).

Baldev Singh v. Manohar Singh, AIR 2006 SC 2832.

C.K. Takwani, Civil Procedure Code (1987).

Charan Das v. Amir Khan, AIR 1921 PC 50.

Cropper v. Smith, [1884] 29 Ch D 700.

Dr. Justice AR. Lakshmanan, The 222nd Law Commission Report on Need for Justice-dispensation through ADR (2009).

Haridas Girdhardas v. Vasadaraja Pillai, AIR 1971 SC 2336.

J L Kaput, The 27th Law Commission Report on The Code of Civil Procedure, 1908 28 (1964).

Syam Kumar (JCJ Korutla), Paper Presentation on Amendment of Pleadings, https://districts.ecourts.gov.in/sites/default/files/Paper%20Prensentation%20on%20Amendment%20of%20Pleadings%20-%20J%20Syam%20Kumar%2C%20JCJ%2C%20Korutla.pdf.

J Syam Kumar, supra note 10.

Modi Spg. & Weaving Mills Co. Ltd. v. Ladha Ram & Co., (1976) 4 SCC 320.

Rajesh Kumar Aggarwal and Ors. v. K.K. Modi and Ors., (2002) 2 SCC 445.

Rajkumar Gurawara (Dead) Thr. L.Rs. v. S.K. Sarawagi And Co. Pvt. Ltd. And Anr, AIR 2008 SC 2303.

Scope and Extent of Amendment of Pleadings, https://www.lawctopus.com/academike/scope-and-extent-of-amendment-of-pleadings/ (last visited Oct 10, 2021).

South Konkan Distilleries & Anr v. Prabhakar Gajanan Naik & Ors, (2008) 14 SCC 632.

The Code of Civil Procedure, 1908, Order VI Rule 1.

The Code of Civil Procedure, 1908, Order VI Rule 16.

The Code of Civil Procedure, 1908, Order VI Rule 17.

The Code of Civil Procedure, 1908, Order VI Rule 18.

The Code of Civil Procedure, 1908, Order VIII Rule 1.

The Code of Civil Procedure (Amendment) Act, 2002, No. 22.

Usha Balashaheb Swami and Ors. v. Kiran Appaso Swami and Ors., AIR 2006 SC 1663.

[1] The Code of Civil Procedure, 1908, Order VI Rule 1.

[2] The Code of Civil Procedure, 1908, Order VIII Rule 1.

[3] The Code of Civil Procedure (Amendment) Act, 2002, No. 22.

[4] 2 William Searle Holdsworth et al. , A history of English law (3 ed. 1923).

[5] Cropper v. Smith, [1884] 29 Ch D 700.

[6] The Code of Civil Procedure, 1908, Order VI Rule 17.

[7] Rajesh Kumar Aggarwal and Ors. v. K.K. Modi and Ors., (2002) 2 SCC 445.

[8] Rajesh Kumar Aggarwal and Ors. v. K.K. Modi and Ors., (2002) 2 SCC 445.

[9] The Code of Civil Procedure, 1908, Order VI Rule 16.

[10] The Code of Civil Procedure, 1908, Order VI Rule 18.

[11] Scope and Extent of Amendment of Pleadings, https://www.lawctopus.com/academike/scope-and-extent-of-amendment-of-pleadings/ (last visited Oct 10, 2021).

[12] J Syam Kumar (JCJ Korutla), Paper Presentation on Amendment of Pleadings, https://districts.ecourts.gov.in/sites/default/files/Paper%20Prensentation%20on%20Amendment%20of%20Pleadings%20-%20J%20Syam%20Kumar%2C%20JCJ%2C%20Korutla.pdf.

[13] Haridas Girdhardas v. Vasadaraja Pillai, AIR 1971 SC 2336.

[14] C.K. Takwani, Civil Procedure Code (1987).

[15] Rajkumar Gurawara (Dead) Thr. L.Rs. v. S.K. Sarawagi And Co. Pvt. Ltd. And Anr, AIR 2008 SC 2303.

[16] Usha Balashaheb Swami and Ors. v. Kiran Appaso Swami and Ors., AIR 2006 SC 1663.

[17] Modi Spg. & Weaving Mills Co. Ltd. v. Ladha Ram & Co., (1976) 4 SCC 320.

[18] J Syam Kumar, supra note 10.

[19] Baldev Singh v. Manohar Singh, AIR 2006 SC 2832.

[20] Charan Das v. Amir Khan, AIR 1921 PC 50.

[21] South Konkan Distilleries & Anr v. Prabhakar Gajanan Naik & Ors, (2008) 14 SCC 632.

[22] Dr. Justice AR. Lakshmanan, The 222nd Law Commission Report on Need for Justice-dispensation through ADR (2009).

[23] 1 A. Mohan, Justice, Courts and Delays (2009).

[24] J L Kaput, The 27th Law Commission Report on The Code of Civil Procedure, 1908 28 (1964).

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What is a Stamp Paper?

It is a piece of paper which bears a pre-printed revenue stamp. Any transaction gets legal validity, once being executed on a stamp paper of proper value. It brings legal authenticity to any valid agreement.

What documents need to be executed on the Stamp Paper?

Be it an agreement or a documented business transaction; if legal sanctity need to be added, one should execute it on the legal stamp paper.

Documents like Lease Agreement, Sale deed, Loan Agreement, Affidavits, Memorandum of Association or Article of Association; need to be executed on the stamp paper.

However, all documents are not to be executed post payment of Stamp Duty. A few documents are exempt from it. One can have a look into the Schedule I of the Stamp Duty Act, to understand the same.

Can you invoke Arbitration, if the Stamp Duty is not paid?

Watch this video on YouTube.

Types of Stamp Papers:

1. Judicial Stamp Papers
2. Non Judicial Stamp Papers

Judicial Stamp Papers:

Judicial stamp papers are used for legal purposes. If any legal document need to be submitted for the purpose of legal procedure; then, applicant execute the same in Judicial Stamp Papers.

These are often called as, Court Fee Stamp Papers. These Stamp Papers are used to avoid Cash Transactions in the Court. A case might not get admitted, if court fees is not paid properly.

Non Judicial Stamp Papers:

Whenever someone enters into a transaction and intends it to give legal sanctity; then such transaction are documented in the stamp papers of proper value.

State Government charges tax for any of such transaction. Hence, State Governments decide the rates of stamp duty to be paid. Therefore, every states have its own rates.

Validity of a Stamp Paper

What is the validity of a Stamp Paper?

Is it 6 months or 3 years; from the date of buying such documents? There is an ambiguity, when it comes to this question.

The answer is, there is no expiry date / limited validity of a Stamp Paper. Once you buy a Stamp Paper; it remains valid till perpetuity.

Stamp Act is silent upon the expiration of a Stamp Paper.

The Indian Stamp Act, 1899

What is the 6 Months Rule in the Stamp Act?

Section 54 of the Stamp Act provide, that if a person has an unused Stamp Paper; he/she can return it to the Collector within 6 months of buying it and seek refund.

Such Stamp Paper shall not be spoilt, rendered unfit or useless while returning the same.

Such person will get the refund with 10% deduction.

The stipulation of period of six months prescribed in Section 54 is only for the purpose of seeking refund of the value of the unused stamp paper, and not for use of the stamp paper

Thiruvengada Pillai v. Navaneethamal

What will happen if return is made after 6 Months?

In such situation. There will be no refund. Section 54 provides for the timeline, in which any of such person could seek refund; on return of the papers.

Can Spoilt Stamps be returned?

Not all spoilt stamps are redundant. There are many such stamp papers; which could be returned and refund could be sought.

Section 49 provides for such instances.

Following are such instances:

1. If the paper is spoiled by a writing error or any other means rendered unfit for the purpose intended before it is executed by any person.
2. If it is written out wholly or in part; but which is not signed or executed by any party

For other such instances. Refer Section 49 of the Act.

What if refund is sought after 6 months?

In many cases, applicant fails to apply for refund within 6 months of buying/spoiling of the Stamp Papers. In such situation party argues in Court that, there was inevitable situation due to which; they could not approach the authority for the refund.

However in many cases, parties relies on Delhi High Court Judgment of Dr. Poornima Advani v. Government of Delhi.

Court here permitted a refund of a lost stamp paper. Court relied on the rationale, that, State cannot adopt the principle of retention and receive undue enrichment. The issue here though was not regarding the limitation under Section 50. The issue here was, Whether the case of lost stamp, not covered under Section 49 be construed as a spoilt stamp?

The Courts have been looking into the facts and circumstances, before granting the relief. It is advisable that the parties stick to the to the strict deadline under Section 50 the Act.

Are Courts lenient toward the State Government or Parties?

Supreme Court in the case of Govt. of Andhra Pradesh v. P. Laxmi Devi; was dealing with the Constitutional validity of Section 47A of the Indian Stamp Act.

Court in that case relied on RK Garg v. Union of India. It held that

Laws relating to economic activities should be viewed with greater latitude than laws touching civil rights such as freedom of speech, religion etc. 

RK Garg v. Union of India

It is clear that the court exercise Judicial restraint in dealing with such case and leaves it to the State’s wisdom.

Fiscal / taxation statutes must be interpreted strictly and literally; reasons of hardship given for belated applications do not warrant any relaxation.

ALD Automative Pvt. Ltd. v. The Commercial Tax Officer

Conclusion

A stamp paper should be returned within 6 months, if remained unused. There are circumstances, in which refunds are not made. For example, the stamp paper gets spoiled or limitation period crosses.

Even in such cases, sometimes, the limitation or adverse conditions are condoned. However, the laws are interpreted in literal / strict sense and Court restrains from undue interference with the economic legislation.

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