Category: Articles & Publications

09Sep

When brands cross the line: Moment marketing and athlete rights in India

When brands cross the line: Moment marketing and athlete rights in India

Arjit Benjamin

9 Sep 2024

When brands cross the line: Moment marketing and athlete rights in India

In the aftermath of the Paris Olympics, India’s celebrated pistol shooter, Manu Bhaker, found herself at the crossroads of a challenge far away from the shooting range. Having bagged two bronze medals, Manu became a sensation and the face of numerous brands eager to ride the wave of her success—with only one twist—without her permission. Reports emerged that her image had been splashed across congratulatory posts on social media, with no consent from Manu or the agency managing her.

These unauthorized endorsements didn’t sit well with her team. An Economic Times Report suggests that Sports marketing agencies like Baseline Ventures and IOS Sports & Entertainment have issued legal notices to various brands on behalf of sports personalities PR Sreejesh and Manu Bhaker. In 2021 also, Baseline Ventures, which was the marketing agency for badminton player PV Sindhu, sent legal notices to 20 brands that used her name and pictures in ads to congratulate her on winning a bronze medal at the Tokyo Olympics.

In times where digital marketing strategies evolve rapidly, brands increasingly engage in “moment marketing” – a practice of capitalizing on trending events, particularly in sports, to promote their products or services. Congratulatory posts for sports stars like Neeraj Chopra and Manu Bhakher have become common, but they also raise important questions regarding the legal boundaries of publicity and personality rights. While such posts may seem innocuous, they can potentially violate the athlete’s publicity and personality rights. In this article, the author examines whether such practices infringe on the rights of athletes.

Publicity and Personality – Rights emerging from evolving jurisprudence

The right to publicity empowers individuals, especially celebrities like athletes and sportspersons, to control how their name, image, and other personal attributes are used commercially. ‘Publicity Rights’ aren’t specifically defined in Indian laws, but over the course of the evolving jurisprudence on the subject, several courts have recognized it as an extension of the Right to Privacy. Similarly, ‘Personality Rights’ are not explicitly codified in statutes, but have been recognized by courts under the Right to Privacy and the Right to Publicity, both of which are extensions of the fundamental right to life and personal liberty under Article 21 of the Indian Constitution. Further, aspects pertaining to personality rights can also be found under the Copyright Act, 1957.

Comparison and Interplay between Publicity and Personality Rights

While publicity rights focus on the economic value of one’s persona, granting individuals the exclusive right to commercially exploit their name or persona, personality rights are more focused towards an individual’s right to dignity, privacy and reputation. However, despite catering to different aspects, both safeguard against unauthorized endorsements, the misuse of a celebrity’s image, and the commercial exploitation of a person’s identity. They empower individuals to control and profit from the commercial use of their name, image, likeness, or other identifiable aspects of their persona. These rights are particularly significant for celebrities and sports personalities, whose public image is often a valuable asset.

The Hon’ble High Court of Delhi, in the case of Titan Industries v. M/s. Ramkumar Jewellers outlined, 

“When a prominent person’s name is exploited in advertising without their consent, the objection isn’t that no one should commercialize them; rather, it’s that they should have the power to decide when and how their identity is utilized. The right to publicity is the ability to limit how one’s identification is used for commercial purposes.”

The Hon’ble Supreme Court of India in Justice KS Puttuswamy (Retd) v Union of India, recognised the concept of the ‘inviolate personality of an individual’ as an integral part of the Right to Privacy under Article 21 of the Constitution of India. The recognition of personality rights could be traced back to the famous Auto Shankar Case [R. Rajagopal v. State of Tamil Nadu], where the apex court recognized an individual’s right to control the ‘commercial use of their identity’. Laying the foundation for the emergence of personality and publicity rights, this case acknowledged that individuals who are public figures have a right to protect the commercial value of their identity and prevent its unauthorized exploitation. In particular, the Hon’ble Court observed,

“The right to privacy is implicit in the right to life and liberty guaranteed to the citizens of this country by Article 21. It is a ‘right to be let alone.’ A citizen has a right to safeguard the privacy of his own, his family, marriage, procreation, motherhood, child-bearing and education among other matters. None can publish anything concerning the above matters without his consent whether truthful or otherwise and whether laudatory or critical. If he does so, he would be violating the right to privacy of the person concerned and would be liable in an action for damages.”

Moment Marketing: A Legal Tightrope

Moment marketing, particularly seen in the context of sports, involves using the success or achievements of athletes to create marketing content. Brands often post congratulatory messages on social media platforms, leveraging the athlete’s popularity to enhance their visibility and brand value. At first, sharing a congratulatory message might seem harmless, however, in the said process, brands also often tend to project to the public at large a sort of an association with such sports personalities, let alone the use of their names and persona. In fact, in view of the above, back in 2021, the Advertising Standards Council of India (ASCI) even discouraged the featuring of Olympic winners by brands in their advertisements without the athletes’ explicit approval. In order to avoid such a situation, brands need to tread carefully to avoid potential pitfalls. There are certain aspects which are required to be considered in the ambit of moment marketing:

1. Commercial exploitation: When a brand uses a sports star’s name or image to market its products or services, it can be considered commercial exploitation. Even if the intent is to merely congratulate, the underlying objective of enhancing brand recognition cannot be ignored. This could amount to unauthorized use of the athlete’s persona, infringing on their publicity rights.

2. Consent matters: The key legal issue is whether the brand has obtained the athlete’s consent for such use. Without explicit consent, the use of an athlete’s persona for commercial gain is likely to be deemed an infringement. Consent not only legitimizes the use but also often involves financial remuneration, which is part of the athlete’s right to control and benefit from their persona. In this regard, it is worthwhile to note that Clause 1.3 of the ASCI Code on Misleading Advertisements states,

“Advertisements shall not, without permission from the person, firm or institution under reference, contain any reference to such person, firm or institution, which confers an unjustified advantage on the product advertised or tends to bring the person, firm or institution into ridicule or disrepute. If and when required to do so by The Advertising Standards Council of India, the advertiser and the advertising agency shall produce explicit permission from the person, firm or institution to which reference is made in the advertisement.”

3. Deceptive association or misrepresentation: Another concern is the potential for misleading consumers into believing that the athlete endorses the brand. This can lead to a deceptive association or misrepresentation, which not only violates the athlete’s rights but can also constitute unfair trade practices under the Consumer Protection Act, 2019.

Best practices for brands

Given the legal risks associated with moment marketing, brands should adopt best practices to avoid infringing on publicity and personality rights:

  1. Obtain consent: Always seek explicit consent from the sports personality before using their name, image, or likeness in any marketing material. This consent should be documented and, where necessary, include financial compensation.

  2. Use generic messaging: If consent is not feasible, consider using generic congratulatory messages that do not directly associate the brand with the athlete. This reduces the risk of violating publicity rights while still allowing the brand to participate in the trending conversation.

  3. Legal consultation: Before launching any campaign that may feature a sports personality, a consultation with legal experts is paramount to ensure compliance with publicity and personality rights laws. This can prevent potential legal disputes and safeguard the brand’s reputation.

  4. Transparency with consumers: Ensure that any association with a sports personality is clear and transparent to consumers. Avoid creating any misleading impressions that could lead to deceptive association claims.

Best Practices for Athletes and Celebrities

While there may be no sure-shot way or a straightforward solution to prevent misuse, trademark registration in the appropriate class may help these athletes claim ownership of their names. It will also allow them to license the names to ensure no unauthorised use of the same.

Section 2(m) of the Trademark Act, 1999 includes ‘names’ in its definition of ‘trademark’ which allows celebrities to register their names as trademarks to avoid misuse. Additionally, the Copyright Act of 1957, while protecting the rights of performers and authors, also extends its reach to sportspersons and celebrities. By granting them control over the reproduction and public dissemination of their work, the Act indirectly protects aspects of their personality tied to their public image and achievements. For athletes and celebrities, this means they have the legal backing to prevent unauthorized use of their persona in commercial ventures, ensuring that their identity and the value it holds are respected and preserved.

Conclusion

Moment marketing is an effective strategy for brands to connect with their audience, but it must be executed with a keen awareness of the legal implications. Publicity and personality rights are critical considerations, especially when leveraging the achievements of sports personalities. Brands must tread carefully, ensuring that they respect the rights of these individuals while engaging in moment marketing. Failure to do so could lead to legal repercussions, including claims for damages and injunctions against unauthorized use.

About the author: Arjit Benjamin is an Associate Partner at Prosoll Law.

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This article was first published in Bar & Bench.

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22Dec

AD-VANTAGE: The Interplay between Ad Words and Trademarks

AD-VANTAGE: The Interplay between Ad Words and Trademarks

Arjit Benjamin

22 Dec 2023

AD-VANTAGE: The Interplay between Ad Words and Trademarks

“This article discusses how modern digital marketing has given rise to new legal considerations, as businesses grapple with the delicate balance between brand protection and the freedom to advertise in the online sphere.”

The evolving nature of online platforms

In the era of online empires and click-driven commerce, the humble trademark has transcended its physical confines. No longer simply a brand stamped on a product, it has become a potent force in the digital battlefield of search engines and advertisements. Businesses now wield “ad words” – strategic keywords that trigger their ads when users hunt for specific terms – not just for visibility, but as potential weapons to claim dominance in the virtual marketplace. This potent force, however, has brewed a potent storm. The very practice that fuels reach and recognition – keyword advertising – now stands accused of trademark infringement and unfair competition. The recent tussle between Google and MakeMyTrip in India has pushed the boundaries of legal precedent and has left the courts grappling with the question: Does using another company’s trademark as an ad word constitute a malicious assault on brand identity, or a fair play tactic in the digital marketplace?

IP protection and fostering innovation in era of competition: Walking a tightrope

The interplay between ad words and trademarks requires a delicate balance to be maintained between brand protection and competitive agility as it involves the balance between the rights of trademark owners, the interests of advertisers, and the freedom of expression and competition on the internet. The key issues that arise while discussing whether the use of trademarks as ad words by competitors or third parties constitutes trademark infringement or unfair competition include:

  • The likelihood of confusion between ad words and trademarks. The use of ad words may create confusion among consumers regarding the source of goods or services.

  • Advertisements using similar or identical ad words may dilute the distinctiveness of trademarks. This can harm the reputation and value associated with a brand.

  • The concept of fair use and the descriptive nature of certain terms – whether the use of ad words is genuinely descriptive or if it is an attempt to capitalize on the goodwill of established trademarks?

  • What are the responsibilities of online advertising platforms, such as Google, in monitoring and regulating the use of ad words? These platforms may often find themselves caught between facilitating commerce and preventing trademark infringement.

Nuanced understanding of trademark issues in digital advertising: Evolving jurisprudence

In India, the courts have dealt with the issue of ad words and trademarks by adopting a case-by-case approach, taking into account the facts and circumstances of each case. One of the recent and prominent cases on this topic is Google LLC v. MakeMyTrip (India) Private Limited and Ors., which has contributed to the evolving jurisprudence on this subject.

Since its launch, the Google Ads program, formerly known as Google AdWords, stirred concerns among brand owners due to its inclusion of trademarks as bidding keywords. Under this program, advertisers can bid on keywords, including trademarks, to enhance the visibility of their goods and services by securing top positions in Google search results. This led to legal action initiated by the well-known Indian travel portal, MakeMyTrip (referred to as ‘MMT’ hereafter), against Booking.com and Google. MMT’s primary grievance revolved around the use of its registered trademarks, namely ‘MakeMyTrip,’ ‘MakeMy,’ ‘MyTrip,’ and ‘MMT,’ as keywords offered by Google to third parties, including the defendant, Booking.com. According to MMT, the utilization of these trademarks in the Google Ads program provides a significant commercial advantage, positioning the user’s attention towards them as top results in the advertising category. The legal action brought forth by MMT also sought a directive against Google, restraining them from offering MMT’s registered marks as keywords.

While granting an interim injunction in favour of the plaintiff in June 2022, a single judge of the Delhi High Court (‘DHC’) held that the use of a competitor’s registered trademark as part of the Google Ads program, is violative of the registered proprietor’s rights and would amount to trademark infringement.

Through this interim injunction, DHC restrained the defendants from using MMT’s registered trademarks as ‘keywords’ on the Google Ads Program, as this would amount to trademark infringement. Relying on the jurisprudence developed while deciding DRS Logistics (P) Ltd & Ors. v. Google India Pvt. Ltd., DHC held that a perusal of Section 29(9) (of the Trademarks Act) makes it clear that an infringement of a trademark can be by way of spoken use, which is different from printed or visual representations of the mark. That is, invisible use of the mark can also infringe a trademark. DHC also added that there is practically no difference between use of trademark as a ‘meta-tag’ or as a ‘keyword’ in Google Ads Program, in as much as even if a trademark is being used in a hidden manner, it still constitutes ‘use’ of the trademark for the purpose of advertisement and therefore is violative of Sections 29(6)(d) and 29(7) of the Trade Marks Act, 1999.

Nothing illegal in using trademarks as keywords if it did not result in any confusion or mislead internet users

According to a report by IAMAI, the active internet base in India is expected to grow to 900 million by 2025. With such a high active user base on the internet, companies keen to grow their market share online undoubtedly sought more clarity on the subject. This was perhaps one of the reasons why Google filed an against the order of the DHC single judge.

In an interesting turn of events, a division-bench of the DHC vacated the interim injunction against Google and Booking.com in the case in December, 2023. While removing the injunction, the division bench of DHC held that “there was nothing illegal in Google using the trademarks as keywords for display of advertisements if it did not result in any confusion or mislead internet users to believe that sponsored links or ads displayed were associated with the proprietors of the trademarks.”

Also Read
Booking.com using MakeMyTrip trademarks in Google Ads does not amount to infringement: Delhi High Court

The division bench of the DHC relied on its judgment in Google LLC v. DRS Logistics (P.) Ltd. and Ors., where it was held that the use of marks as keywords would not amount to use as trademarks and, therefore, use of such marks as keywords does not constitute infringement under Section 29(1) of the Trade Marks Act.

In addition, it was noted that the Court had held that the use of the trademarks as keywords is use in connection with goods and services of the advertiser. Thus, if the goods and services advertised and covered under the sponsored link and those covered under the trademark are similar, Section 29(4) of the Trademarks Act would have no application.

The Court also stated that there was nothing illegal in Google using the trademarks as keywords for the display of advertisements if it did not result in any confusion or mislead internet users to believe that sponsored links or Ads displayed were associated with the proprietors of the trademarks. Thus, the use of trademarks as keywords without there being any confusion or unfair advantage, would not infringe the trademark. The services offered by Booking.com are similar to the services covered by MIPL’s trademarks. In these circumstances Section 29(4) of the Trade Marks Act would have no application, the High Court held.

A balancing act

In summary, as the digital landscape undergoes rapid transformations, the legal frameworks and court rulings significantly shape the future of online business and intellectual property protections. This particular case serves as a valuable lesson for businesses and online platforms, urging them to address trademark considerations in advertising practices with utmost care. Balancing legal obligations and evolving consumer expectations is crucial. The case reinforces the need for robust measures to avert consumer confusion and promote transparency in online advertising.

The Delhi High Court’s decision permitting the resumption of Google and Booking.com’s use of AdWords associated with MakeMyTrip is accompanied by specific conditions aimed at preventing consumer confusion. While the use of trademarks as key words by competitors, absent any confusion or deceit, does not per se amount to infringing use, this case highlights the challenges tied to trademark protection in the digital age and stresses the importance of striking a harmonious balance between upholding IP rights and fostering equitable competition in online advertising space.

About the author: Arjit Benjamin is an Associate Partner at Prosoll Law.

This article was first published in Bar & Bench.

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20Oct

From vulnerable to virtually invincible: Digital Personal Data Protection in action

From vulnerable to virtually invincible: Digital Personal Data Protection in action

Arjit Benjamin

20 Oct 2023

From vulnerable to virtually invincible: Digital Personal Data Protection in action

“This article is an attempt to examine the recently enacted Digital Personal Data Protection Act (DPDA), 2023 and discuss how it is the guardian of our privacy.”

Earlier this year, a CNBC TV-18 news report caught the public eye when it quoted that according to Tenable, a cybersecurity company based in the US, India suffered from the second-most tech exposure breaches in 2022, with around 450 million records exposed.

The research report also found that a large number of security breaches happened due to old existing vulnerabilities and flaws that dated back to 2017. The organisations, however, had failed to apply the relevant security patches for these flaws, which led to an increased risk of breaches.

Around the same time in the first quarter of 2023, India also saw a sharp increase in cyber attacks, with over 500 million attacks blocked out of a billion globally, as per a news piece by The Economic Times which covered the State of Application Security Report by Indusface, a Security SaaS Company funded by Tata Capital Growth Fund.

These incidents exposed the personal data of millions of Indians to various risks, such as identity theft, fraud, cyberattacks, phishing, spamming, and other malicious activities. But more than that, they also violated our fundamental rights, such as freedom of expression, association, and movement, due to surveillance, profiling, targeting, or censorship based on their data. Are we aware of how these attacks infringe on our dignity and autonomy as human beings due to the commodification and manipulation of our data for commercial or political interests?

This article is an attempt to examine the recently enacted Digital Personal Data Protection Act (DPDA), 2023 (“The Act” or “DPDA, 2023”), and discuss how it is the guardian of our privacy.

What inspired the enactment of a powerful legislation?

The idea of enacting legislation like the Digital Personal Data Protection Act (DPDA), 2023, was inspired by the need to protect the privacy and rights of individuals over their digital personal data in India. Before the passing of the Act, the common man was susceptible to various risks related to their digital personal data, such as: 

  • Lack of transparency and control over how their data was collected and used by various entities, such as social media platforms, e-commerce sites, online service providers, etc.

  • Exposure to identity theft, fraud, cyberattacks, phishing, spamming, and other malicious activities that could compromise their personal information and financial security.

  • Violation of their fundamental rights, such as freedom of expression, association, and movement due to surveillance, profiling, targeting, or censorship based on their data.

  • Discrimination or exclusion from accessing essential services or opportunities based on their data attributes, such as gender, caste, religion, health status, etc.

  • Infringement of their dignity and autonomy as human beings due to the commodification and manipulation of their data for commercial or political interests.

The Supreme Court of India declared privacy as a fundamental right on August 24, 2017, in the case of Justice KS Puttaswamy (Retd) vs. Union of India. The Court held that privacy is an essential component of the right to life and personal liberty under Article 21 of the Constitution of India. The Court’s decision was a landmark moment in the history of privacy in India. It gave individuals the right to control their personal information and to challenge the collection, use, and disclosure of their data by the government and private entities.

The apex court’s decision was also based on a number of factors, including laying down the triple test for judging the permissible limits for invasion of privacy while testing the validity of any legislation. The decision was passed in view of the increasing collection and use of personal data by governments and private entities, the growing threats to privacy posed by new technologies, and the fundamental importance of privacy to human dignity. The Court held that privacy is essential for the development of the individual personality, for the ability to form relationships with others, and for the ability to participate in society. The decision also paved the way for the passing of the Digital Personal Data Protection Act (DPDA), 2023.  

The Act was also influenced by global developments in data protection laws, such as the European Union’s General Data Protection Regulation (GDPR) and the California Consumer Privacy Act (CCPA). The Act was drafted by a committee of experts headed by Justice BN Srikrishna, who submitted their report and draft bill in July 2018. The bill was then introduced in the Parliament in December 2019 and underwent several revisions and consultations before being passed on 11 August 2023. The Act aims to provide a legal framework for the protection of digital personal data in India and to enhance the trust and confidence of individuals in the digital economy and society.

The DPDA, 2023 aims to address these risks by providing a legal framework for the protection of digital personal data in India. It is expected that the Act will enhance the trust and confidence of individuals in the digital economy and society.

Privacy at the core of DPDA, 2023

The DPDA, 2023 is a landmark legislation that aims to protect the privacy and rights of individuals over their digital personal data. The Bill protects digital personal data, that is, the data by which a person may be identified. Three key areas that are addressed by DPDA, 2023, are:

  1. The rights of Data Principals, i.e., the persons to whom the data relates.

  2. The obligations of Data Fiduciaries, i.e., the persons, companies and government entities who process data by way of collection, storage or any other operation on personal data.

  3. Financial penalties for breach of rights, duties and obligations.

Empowering the Data Principals

While the Act regulates how organizations can collect, process, store, transfer, and use such data for lawful purposes, it also empowers individuals with various rights over their data, such as:

  • The right to be informed about the purpose, manner, and extent of data processing.

  • The right to access, correct, update, and erase their data.

  • The right to restrict or withdraw consent for data processing at any time.

  • The right to data portability, that is, to receive their data in a structured, commonly used, and machine-readable format and to transfer it to another data fiduciary.

  • The right to object to data processing that is likely to cause harm or discrimination.

  • The right to seek compensation for any harm caused by data breach or misuse.

The Act also establishes a Data Protection Authority (DPA) to oversee and enforce the compliance of the data fiduciaries with the provisions of the Act. The DPA has the power to issue codes of practice, conduct audits and investigations, impose penalties and compensation, and take any other action as may be necessary.

Making Data Fiduciaries accountable

The Act makes a Data Fiduciary responsible for having security safeguards to prevent personal data breach. They are required to intimate personal data breaches to the affected Data Principal and the Data Protection Board. To fix end-to-end responsibility, the Data Fiduciary is required to erase personal data when it is no longer needed for the specified purpose or upon withdrawal of consent of the Data Principal. They are also required to have in place a grievance redressal system and an officer to respond to queries from Data Principals.

Additionally, Data Fiduciaries are required to fulfill certain additional obligations if they are Significant Data Fiduciaries, such as appointing a data auditor and conducting periodic Data Protection Impact Assessment to ensure a higher degree of data protection.

With respect to the personal data of children, DPDA, 2023, casts heavier responsibilities on the Data Fiduciaries. It allows a Data Fiduciary to process the personal data of children only with parental consent and does not permit any processing detrimental to the well-being of children or if it involves their tracking, behavioral monitoring, or targeted advertising.

The two Cs of Consent andCompliance

The DPDA, 2023, empowers Data Principals with a suite of rights, from information and access to data portability and the right to seek compensation for breaches. It instils accountability in Data Fiduciaries, demanding stringent security measures, redressal systems, and heightened responsibilities for Significant Data Fiduciaries. The two Cs of Consent and Compliance are at the heart of this Act, enabling individuals to manage their data and setting high standards for organizations’ privacy practices.

Under the Act, the Data Principal may give, manage, review, or withdraw their consent to the Data Fiduciary directly or through a Consent Manager. In the case of children, consent shall be obtained from the parent or the lawful guardian. No separate consent, however, is required for “legitimate uses” recognized under the Act, which include data provided voluntarily by the Data Principal, personal data processed for any function under any law or judgment issued under law, for responding to a medical emergency involving a threat to the life of the Data Principal or other individual, for maintaining public order and ensuring safety; and lastly, for purposes related to employment.

Further, in terms of compliance by the Data Fiduciaries, they are required to design and implement privacy policies and procedures, including privacy notices to inform the Data Principals about the types of personal data collected and the purpose of the collection.

With the enactment of the DPDA, 2023, the Data Fiduciaries are required to take steps towards implementing technical and organisational measures and reasonable security safeguards to prevent data breaches. They will also be required to strictly enforce procedures to handle rights, requests and grievances of Data Principals. With respect to “Significant Data Fiduciaries”, there are some more compliances required with respect to undertaking Data Protection Impact Assessment, appointing a DPO and publishing business contact information. They are also required to perform periodic audits.

In conclusion

In conclusion, the DPDA, 2023, emerges as a formidable guardian of our digital privacy in an era where data breaches and cyber threats loom large. This legislation stands as a beacon of hope, addressing the vulnerabilities that ordinary citizens face in the digital realm. It reflects the commitment to safeguarding personal data, ensuring transparency, and empowering individuals with the right to control their information.

As we navigate the ever-evolving digital landscape, the DPDA, 2023, serves as a robust shield, transforming common individuals from being vulnerable to virtually invincible, ensuring that their digital lives are protected, their rights are respected, and their dignity is preserved. It’s not just a legal framework; it’s a promise of a safer and more secure digital future for all of us.

About the author: Arjit Benjamin is an Associate Partner at Prosoll Law.

This article was first published in Bar & Bench.

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05Oct

Unveiling the Dynamics of Section 319 of the Code of Criminal Procedure

Unveiling the Dynamics of Section 319 of the Code of Criminal Procedure

Lakshya Parasher

5 Oct 2023

Unveiling the Dynamics of Section 319 of the Code of Criminal Procedure

“As a cornerstone of India’s criminal justice system, Section 319 of the CrPC addresses the complexities that arise when the truth unfolds incrementally, compelling the court to adapt and expand its purview.”

In the realm of criminal justice, the essence of fairness and equity lies not only in the prosecution and trial of known offenders but also in the pursuit of justice against those whose involvement in an offence becomes evident during legal proceedings. Section 319 of the Code of Criminal Procedure (CrPC) stands as a legal provision that embodies this principle. It bestows upon the courts the power to extend the boundaries of justice beyond the initially accused individuals, allowing them to summon and try other individuals who, in the eyes of the court, appear to be complicit in the crime under investigation.

As a cornerstone of India’s criminal justice system, Section 319 of CrPC addresses the complexities that arise when the truth unfolds incrementally, compelling the court to adapt and expand its purview. This article delves into the multifaceted dynamics of Section 319, shedding light on its key provisions, underlying principles, judicial interpretations, and the delicate balance it strikes between protecting the rights of the accused and ensuring that justice is not truncated due to inadvertent omissions.

At its core, Section 319 embodies the fundamental principle that the search for truth should not be hindered by procedural confines. It grants the court the authority to summon individuals who have not been originally charged but whose involvement surfaces as the trial progresses. This provision prevents the inadvertent exclusion of potentially guilty parties and safeguards against the miscarriage of justice that could arise from limiting the trial to only the initially named accused.

The application of Section 319 CrPC is a delicate matter that requires a judicious assessment of the available evidence and a balanced consideration of the rights of both the accused and the society at large. Courts must meticulously weigh the necessity of summoning additional accused persons against the potential prejudice it might cause to the accused’s right to a fair trial. Furthermore, this provision also acts as a bulwark against the misuse of the legal process to harass individuals who might be tenuous in the situation.

Through a comprehensive analysis of case law and scholarly interpretations, this article elucidates the instances where Section 319 CrPC has been invoked, the threshold of evidence required, and the jurisprudential principles guiding its application. Additionally, it explores the challenges and debates surrounding the discretionary power vested in the courts, the balance between protecting the accused and ensuring justice, and the evolution of this provision in response to changing legal dynamics.

In simple words, Section 319 of the Code of Criminal Procedure pertains to the power of a court to proceed against other persons appearing to be guilty of an offense. This section allows a court to add additional accused persons to a case if it appears to the court that they are involved in the offence being tried.

Essentials of Section 319 CrPC:

Additional Accused Persons: Section 319 empowers the court to summon and try other persons, in addition to those already named as accused in the case, if it appears that they have also committed the offence being tried.

Evidence During Trial: The court can exercise this power either on its own or based on an application by the prosecution or the defense. This means that if during the trial, the court becomes aware of the involvement of other individuals, it can summon them for trial.

Sufficient Evidence: The court must have sufficient evidence against the additional accused persons to justify summoning them for trial. The provision doesn’t allow the court to act solely on suspicion; there must be some prima facie evidence connecting them to the offense.

Opportunity to be Heard: Before summoning any additional accused, the court should provide them with an opportunity to be heard. This ensures that they can present their side of the story and contest the decision to add them as accused.

Joined in the Same Trial: Once the additional accused are summoned and brought before the court, they will be tried along with the original accused in the same trial.

Separate Trial if Necessary: In case the court finds that the evidence against the additional accused requires a separate trial, it may direct such a separate trial.

Protection of Rights: The rights and safeguards available to the original accused, including the right to fair trial and legal representation, also extend to the additional accused.

Discretion of the Court: The decision to summon additional accused persons rests on the discretion of the court. The court will consider factors such as the nature of the offense, the evidence available, and the interests of justice before making a decision.

Preventing Injustice: Section 319 is aimed at preventing a miscarriage of justice by ensuring that all individuals involved in an offense are brought to trial and held accountable.

Procedure outlined in Section 319 CrPC:

During Trial: The provision can be invoked during trial by the court at any time after the trial has begun but before the judgment is pronounced.

Evidence against Another Person: If, during a trial, it appears from the evidence that any person other than the accused has committed an offense for which that person could be charged, the court may proceed against that person as if they had been accused. This means that the court can treat that person as an additional accused and include them in the trial.

Procedure: The court can take several actions under this section:

  • Summon the newly implicated person and proceed against them.

  • Re-call and re-examine any witness.

  • Assess any evidence or material produced against the newly implicated person.

  • Notice to Newly Implicated Person: Before summoning the newly implicated person, the court must give them a notice and an opportunity to be heard regarding their involvement in the offense.

Rights of the Newly Implicated Person: The newly implicated person has the same rights in the trial as an original accused, including the right to legal representation, cross-examination of witnesses, and producing evidence in their defense.

Discharge: The court can also discharge the newly implicated person if it finds that there is insufficient evidence against them to warrant a trial.

In essence, Section 319 CrPC empowers the Sessions Judge to prevent miscarriage of justice by adding individuals who might have been involved in the commission of the crime but were not initially charged. This ensures that all relevant parties are brought to trial and held accountable for their actions.

In case of Hardei vs State of Uttar Pradesh, it was held that FIR is not expected to be encyclopaedia even of facts already known and may not contain all details of occurrence or names of all accused. Details of some crimes like conspiracy, economic offences or cases not found on eye-witness accounts can be unfolded only by detailed expert investigation. Facts that Police chose not to send suspect to face trial does not affect power of trial court under Section 319 CrPC to summon such person on basis of evidence recorded during trial.

In Hardeep Singh (Supra)

“95. At the time of taking cognizance, the court has to see whether a prima facie case is made out to proceed against the accused. Under Section 319 CrPC, though the test of prima facie case is the same, the degree of satisfaction that is required is much stricter. A two-Judge Bench of this Court in Vikas v. State of Rajasthan, held that on the objective satisfaction of the court a person may be “arrested” or “summoned”, as the circumstances of the case may require, if it appears from the evidence that any such person not being the accused has committed an offence for which such person could be tried together with the already arraigned accused persons.

106. Thus, we hold that though only a prima facie case is to be established from the evidence led before the court, not necessarily tested on the anvil of cross-examination, it requires much stronger evidence than mere probability of his complicity. The test that has to be applied is one which is more than prima facie case as exercised at the time of framing of charge, but short of satisfaction to an extent that the evidence, if goes unrebutted, would lead to conviction. In the absence of such satisfaction, the court should refrain from exercising power under Section 319 CrPC. In Section 319 CrPC the purpose of providing if “it appears from the evidence that any person not being the accused has committed any offence” it is clear from the words “for which such person could be tried together with the accused”. The words used are not “for which such person could be convicted”. There is, therefore, no scope for the court acting under Section 319 CrPC to form any opinion as to the guilt of the accused.

In Conclusion

Through the intricate interplay of statutes, case precedents, and jurisprudential considerations, Section 319 has demonstrated its capacity to harmonize the rights of the accused with the overarching goal of justice. While walking the tightrope between summoning additional accused and safeguarding fair trial rights, courts have displayed discernment and deliberation, ensuring that this provision doesn’t morph into a tool of harassment, but remains a shield against miscarriage of justice.

As the legal landscape continues to evolve, Section 319 CrPC remains adaptable, responding to emerging challenges while upholding its fundamental principles. The provision underscores the importance of a holistic and dynamic approach to criminal proceedings, reminding us that the pursuit of truth is not bound by the confines of initial charges but flourishes through the illumination of emerging facts.

Lakshya Parasher is a Principal Associate and Rishabh Sharma is an Associate at Prosoll Law.

This article was first published in Bar & Bench.

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21Sep

Lines of Listening: Navigating the Legal Labyrinth and Ethical Paradox of Telephonic Surveillance

Lines of Listening: Navigating the Legal Labyrinth and Ethical Paradox of Telephonic Surveillance

Harsh K. Sharma and Vabhavi Sharma

21 Sep 2023

Lines of Listening: Navigating the Legal Labyrinth and Ethical Paradox of Telephonic Surveillance

“The article reflects upon the ongoing challenge of balancing security needs with individual rights while implementing telephonic surveillance, with reference to various judgments.”

The modern concept of surveillance encompasses a bundle of rights, including individual liberty, freedoms of speech and expression, and, most significantly, our right to privacy, as explicitly recognized by the 9 bench Puttaswamy judgment.

This pivotal legal ruling firmly established right to privacy, recognizing its crucial role in protecting the dignity and autonomy of individuals in the digital age. As a result, any form of surveillance must be balanced and constrained within the bounds of these fundamental rights to ensure a just and democratic society. Therefore, it becomes crucial to explore the reasonable restrictions the State can place and the manner in which they are executed.

Telephonic Surveillance

Telephonic surveillance, often referred to as wiretapping or phone tapping, is the practice of monitoring telephone conversations, either in real-time or recording them for later analysis. It involves intercepting and listening to conversations conducted over telephone lines or other communication networks without the knowledge or consent of the individuals being monitored.

Telephonic surveillance has been used for various purposes, including law enforcement and intelligence gathering. Here are a few key points about telephonic surveillance:

Investigations by law enforcement agencies Intelligence Gathering: Telephonic surveillance is frequently used by law enforcement agencies and by Intelligence agencies as a tool to investigate criminal activities and to gather information related to national security threats, espionage, and other sensitive matters respectively. This can include activities related to organized crime, terrorism, drug trafficking, financial fraud, and more. Law enforcement agencies typically obtain legal authorization, such as a Ministry approval, before conducting wiretaps. These agencies may operate under specific legal frameworks and oversight to ensure that the surveillance is carried out within the bounds of the law.

Legal Framework and Ethical and Privacy Concerns: In many countries, telephonic surveillance is subject to legal regulations and oversight. These regulations are designed to balance the need for surveillance with individual privacy rights. Law enforcement agencies typically need to provide evidence and obtain approval from a court before conducting wiretaps. Telephonic surveillance raises ethical and privacy concerns, as it involves the potential invasion of individuals’ private communications. Striking a balance between the legitimate need for surveillance and protecting individual rights is an ongoing challenge.

It’s important to note that advances in technology and changes in communication methods continue to shape the way surveillance is conducted and regulated.

Indian Legal Landscape of Tele-surveillance

In India, a delicate balance between surveillance and individual rights is depicted in the Indian Telegraph Act, 1885 (“ITA” hereinafter), which, despite its antiquity, continues to govern telephonic surveillance conducted by the State.

This balance is essential as it must uphold both reasonability and public safety. Section 5 of ITA, empowers the Central Government, State Government, or any authorized officer to issue interception orders for the purpose of telephone-tapping. However, such orders are subject to specific conditions, such as a public emergency or when it is in the interest of public safety, and is aimed at protecting the sovereignty, integrity, and security of the State.

The aforesaid balance is further fortified by the Indian Telegraph Rules 2007, Rule 419-A which governs the administrative procedure of such interception. The Review Committee under rule 419-A(16) examines the interception orders passed to initiate surveillance and further assesses if the continued interception is necessary or not through Sub-rule 17.

Precedential Law plays a vital role in further strengthening the legal boundaries. In a recent judgment titled Jatinder Pal Singh v. CBI (2022), the Delhi High Court examined the procedure for interception and recognised the same in light of the PUCL judgement and found that due process had not been followed, rendering intercepted call records inadmissible by observing that,

“(…)tape records of the calls intercepted in the instant case are not admissible since the due procedure for such interception as mandated by the Telegraph Act and the Rules framed thereunder has not been followed”. Similarly, the Court in Vinit Kumar v. CBI, (2019), stressed that exercise of restrictions on the fundamental right of privacy must take place within the ‘regime of law’. The Court explained the term ‘Public Safety’ as a state or condition of freedom from danger or risk for the people at large. The court further held, “Neither the occurrence of public emergency nor the interest of public safety are secretive conditions or situations. Either of the situation would be apparent to a reasonable person.”

In light of the aforementioned legal paradigm, a three-fold argument emerges against illegal telephone tapping.

Firstly, the initial order must be well-reasoned, avoiding mechanistic issuance and instead rooted in a proper case assessment. Secondly, the competent authority must promptly forward the same to the relevant Review Committee within 7 working days. And thirdly, the concerned Review Committee must scrutinize the order to ascertain whether it aligns with the provisions of the law and satisfies the necessity for such phone tapping.

Recently, Rajasthan High Court, in Shashikant Joshi v State of Rajasthan (2023) observed that an interception order which is not submitted to the review committee within the statutory period for its validation cannot be considered as valid evidence and, in doing so, would be in violation of mandatory provisions of the law. The Court stressed the importance of a well-reasoned order, which should not only guide the review committee orders when validating interception orders but must also, in accordance with Rule 419-A(3), provide reasons as to why obtaining the necessary information through other means was not feasible and thus ensuring that interception orders are not casually issued.

In as much as the reasons are well defined, that is, sovereignty, integrity, security, friendly relations with foreign states, public order, and preventing incitement to offense (K.L.D. Nagasree v. Govt. of India, MHA, N.D. & Ors 2007); establishing a robust and accountable framework for telephone-tapping is the need of the hour. Due process and oversight in the implementation of interception orders must strike a balance and when this balance falters, safeguarding individual liberty becomes paramount.

The comprehensiveness of the interception order was discussed in Santosh Kumar v. Union of India, and the surveillance order therein were upheld. Since the minutes of the meeting of the review committee did not have any ‘functional requirement’, it was therefore observed that its destruction as under Rule 18 was justified. Moreover, ‘disclosure of elaborate reasons’ would be against the public safety mechanism followed by State machinery which intends to maintain ‘secrecy, the utmost care, and precaution’.

In the aforesaid case, this interpretation, as evident from the affidavit filed by the Ministry of Home Affairs as well as the observation of Delhi High Court, aligns to mean that such destruction is permissible if the same is no longer required by the authorized agency, that is, the Review Committee.

However, this interpretation leaves room for disparity when ongoing cases against accused individuals exist. Whether pending litigation falls within the ambit of a functional requirement or not is a point that warrants clarification.  The concomitant administrative action emanating from such surveillance order is subject to scrutiny by various courts of the country and a broader conception on the subject can only be expected.

Conclusion

The landscape of telephonic surveillance reflects the ongoing challenge of balancing security needs with individual rights. Evolving legal frameworks attempt to keep pace with technological advancements while protecting privacy and due process. Ethical concerns highlight the importance of transparency and safeguards against misuse. Achieving the right equilibrium requires collaboration among policymakers, legal experts, technologists, and advocates. The intricate nature of telephonic surveillance calls for thoughtful decision-making to ensure a future where security and privacy coexist.

As we contemplate the intricate tapestry of telephonic surveillance—a weave of legal, ethical, and privacy dimensions—we must recognize that the choices we make today will reverberate through the archives of history. Only by acknowledging the multifaceted nature of this issue can we endeavor to design a future where security and liberty harmonize, fostering a society that thrives on both protection and the inherent rights of its members.

About the authors: Harsh K. Sharma is the Founder & Head of Prosoll Law. Vaibhavi Sharma is an Associate Partner and Bhumika Yadav is a Senior Associate at the Firm.

This article was first published in Bar & Bench.

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12Sep

Deciphering the Code: A Compilation of PMLA Judgments (2023) and Legal Evolution

Deciphering the Code: A Compilation of PMLA Judgments (2023) and Legal Evolution

Vabhavi Sharma

12 Sep 2023

Deciphering the Code: A Compilation of PMLA Judgments (2023) and Legal Evolution

“This article is a compilation of judgments passed by the Supreme Court of India in cases coming within the purview of the Prevention of Money Laundering Act.”

Embarking on a journey through the intricate realm of the Prevention of Money Laundering Act (PMLA) takes us into a world where financial regulations, criminal justice, and ethical considerations converge. As we delve into a collection of PMLA judgments, we gain access to a valuable repository of legal wisdom that has profoundly influenced how this crucial legislation is understood and executed. These judgments not only shed light on the complexities of money laundering and its implications but also provide invaluable guidance for legal professionals, researchers, and policymakers striving to find the equilibrium between combating financial crimes and upholding individual liberties. Within this compilation, we set out on an intellectual exploration that traces the ever-evolving landscape of PMLA legal interpretations, offering a comprehensive perspective on its development and significance within the landscape of precedential law in pursuit of justice.

A. ED initiating an investigation and issuing summons without identifying the proceeds of crime or a property, or activity related thereto (as required by Section 3 of PMLA)

Case Title: Y. Balaji v. Karthik Desari

The court dissected Section 3 of PMLA to formulate the three ‘P’s as follows:

i. Person

a. those who directly or indirectly attempt to indulge

b. those who knowingly assists

c. those who are knowingly a party

d. those who are actually involved

ii. Process or activity, which covers six different activities:  (i) concealment; (ii) possession; (iii) acquisition; (iv) use; (v) projecting; or (vi) claiming as untainted property

iii. Product:

Section 3 identifies “proceeds of crime” or the property representing the crime as the product of the process or activity.

The court noted that “in the case of an offence of corruption, the criminal activity and the generation of the proceeds of crime are like Siamese twins.” Therefore, if an intangible property is derived as a result of criminal activity relating to a scheduled offence, it becomes proceeds of crime under Section 2(1)(u).

In the present case, as the FIR was pointing towards people’s involvement in criminal activity relating to scheduled offences as well as generation and laundering of the proceeds of crime within the meaning of Section 3, therefore, the aforesaid allegations of corruption would tantamount to money-laundering.

B. Knowledge of dealing with the proceeds of crime, on part of the accused is not a sine qua non for lodging complaint under PMLA

Case Title: Anoop Bartaria v. ED

The Division bench comprising of Ajay Rastogi and Bela M Trivedi, JJ, dealt with quashing of an ECIR wherein the direct involvement of the petitioners in the activities connected with the proceeds of crime has been alleged. Against the contentions of the petitioners that knowledge of dealing with the proceeds of crime was sine qua non and essential ingredient for the offence of money laundering, the Court that Section 3 of PMLA used the words “directly or indirectly”  attempts to indulge or knowingly assists or knowingly is a party or is actually involved in any process or activity connected with the proceeds of crime including its concealment, possession, acquisition or use and projecting or claiming it as untainted property shall be guilty of offence of money laundering. Therefore, it would be a folly to hold that the knowledge of the accused that he was dealing with the proceeds of crime, would be a condition precedent or sine qua non required to be shown by the prosecution for lodging the complaint under the said Act.

The court also decided on the issue of nature of offences of Money Laundering viz-a-viz Section 45 (1) and the Explanation to Section 45, and held “there remains no shadow of doubt that all the offences under the PMLA were, are and shall be “cognizable and non-bailable offences” notwithstanding anything to the contrary contained in the Code of Criminal Procedure Code, 1973.”

C. Courts must consider the rigours of Section 45 of the PML Act as well as the status of investigation for the scheduled offences as well, while enlarging the accused on bail 

Case Title: Directorate of Enforcement v. Aditya Tripathi

While setting aside the order of High Court grating bail to the respondent, the Division bench of MR Shah and CT Ravikumar, JJ, observed that even though the investigation qua the predicate offences might be complete but the Court must also notice and appreciate the status of the investigation with respect to the scheduled offences under the PML Act, 2002. Here, same was still being investigated by the Enforcement Directorate.

Investigation for the predicated offences and the investigation by the Enforcement Directorate for the scheduled offences under the PML Act are different and distinct. Merely because, for the predicated offences the chargesheet might have been filed, cannot be a ground to release the accused on bail in connection with the scheduled offences under the PML Act, 2002.

The Court also stressed on the rigors of Section 45 that must be considered by the Court while dealing with the bail applications under PMLA.

D. Violation of mandates under Section 19 of PML Act, 2002 vitiate arrest made by officials of ED; Plea can only be raised before Magistrate

Case Title: V Senthil Balaji vs the State represented by Deputy Director and Ors.

The Division Bench of AS Bopanna and MM Sundresh, JJ., reiterated that the PMLA, 2002 is a sui generis legislation and it has its own mechanism in dealing with arrest in the light of its objectives i.e., to prevent money laundering, make adequate recovery and punish the offender. For the same purpose, the statute clearly stipulates comprehensive procedure for summons, searches, and seizures etc., and arrest shall only be made after due compliance of the relevant provisions including Section 19 of the PMLA, 2002. The Court added that Section 19 is in compliance with Article 21 and 22(2) of the Constitution of India and for any non-compliance thereof, the competent Court shall have the power to initiate action under Section 62 of the PMLA, 2002. Therefore, there is absolutely no need to follow and adopt Section 41A of the CrPC, 1973 especially in the teeth of Section 65 of the PMLA, 2002,

The Court noted that the power of arrest under Section 19 of the PMLA, 2002 is meant for investigation alone and it is well open to the authority to file a closure report  under  section 44 before the Special Court after conclusion, if it finds that there are no sufficient materials to proceed further.

The court clarified that though there is no express provision  for authorised officers under the PMLA, 2002 to seek custody, nevertheless since Section 19 (1) of the PMLA, 2002 and Section 167 of the CrPC, 1973, are pari materia and the benefits conferred under Section 167(2) must be afforded to the arrestee, therefore, these sections should be read in  consonance. The words “such custody” occurring in Section 167(2) of the CrPC, 1973 would include not only a police custody but also that of other investigating agencies. While making a remand to of an accused person to an authority under the PMLA, 2002, it is the bounden duty of the Magistrate to see to it that Section 19 of the PMLA, 2002 is duly complied with and any failure would entitle the arrestee to get released. Further, since the custody becomes judicial in nature, any plea of illegal arrest is to be made before such Magistrate. Conclusively, the writ of Habeas Corpus in the present petition was not maintainable.  The Court did observe that where the mandate of Section 167 of the CrPC and Section 19 of the PMLA are totally ignored by a cryptic order, a writ of Habeas Corpus may be entertained, provided a challenge is specifically made.

Finally, in dealing issue of frequency and occurrence of 15 days period of remand to police custody, the Bench dissented with the view taken in CBI v. Anupam J Kulkarni, that police custody shall only be within the first 15 days of remand.  While referring the issue to a larger bench, the Court recorded its own finding that the maximum period of 15 days of police custody is meant to be applied to the entire period of investigation – 60 or 90 days, as a whole.

E. Lack of jurisdiction to entertain a complaint under PMLA cannot be a ground to seek transfer of the case

Case title: KA Rauf Sherif v. Directorate of Enforcement

A Divisional Bench comprising of Justice V Ramasubramanian and Justice Pankaj Mithal, dismissed the transfer petition finding it legally invalid and justifiable grounds to order the transfer. Lack of jurisdiction of a Court to entertain a complaint can be no ground to order the transfer of the case. Such a congenital defect of lack of jurisdiction even if it exists, enures to the benefit of the accused and hence it need not be cured at the instance of the accused to his detriment. Moreover, irrespective of where the FIR relating to the scheduled offence was filed and irrespective of which Court took cognizance of the scheduled offence, the question of territorial jurisdiction of a Special Court to take cognizance of a compliant under PMLA should be decided with reference to the place/places where anyone of the activities/processes which constitute the offence under Section 3 took place.

In the present case one of the FIR was registered in Lucknow, therefore, the Special Court, PMLA, Lucknow cannot be said to be lacking in territorial jurisdiction to entertain the complaint. Further, ground that 7 out of 10 accused persons and majority of witnesses are also from Kerala/ South India is also not a valid ground for ordering the transfer of investigation.

Referred: Rana Ayyub v. Directorate of Enforcement

F. Supreme court clarifies territorial Jurisdiction of Special court constituted under the PMLA and jurisdiction to try Schedule offences

Case Title: Rana Ayyub v. Directorate of Enforcement

A Divisional Bench of Supreme Court comprising of Justice V Ramasubramanian and Justice JB Pardiwala, examined the question of territorial jurisdiction of Special courts constituted under PML Act, 2002. The constitution of Special Courts under the Act are constituted under Section 43(1) whereas clause 2 of Section 43 confers additional jurisdictions upon Special Courts to try any other offence with which the accused may be charged at the same trial.

The Court clarified that Section 44(1) takes note of two different contingencies, namely –

(i) cases where the scheduled offence as well as the offence of money-laundering are committed within the territorial jurisdiction of the same Special Court constituted under Section 43(1); and

(ii) cases where the Court which has taken cognizance of the scheduled offence, is other than the Special Court which has taken cognizance of the complaint of the offence of money laundering.

The Court concluded the petition by observing that the issue of territorial jurisdiction should be raised by the petitioner before the Special Court, since an answer to the same would depend upon evidence as to the places where any one or more of the processes or activities mentioned in Section 3 were carried out.

G. Legislative act nullifying the effect of judgement is a permissible exercise only after removing the basic defects of the said judgement. Extension to the tenure of the Sanjay Kumar Mishra was declared illegal.

Case title: Jaya Thakur v. Union of India

A constitutional bench comprising of Justice BR Gavai, Justice Vikram Nath and Justice Sanjay Koral, held that nullification of Mandamus by an enactment would be impermissible legislative exercise. The transgression of constitutional limitations and intrusion into the judicial power by the legislature is violative of the principle of separation of powers, the rule of law and of Article 14 of the Constitution of India.

Earlier in the case titled Common Cause (A Registered Society) v. Union of India & Ors, Court issued a specific mandamus that no further extension shall be granted to the Principal Special Director, Enforcement Directorate, Sanjay Kumar Mishra. Undisputedly, the Union of India as well as Sanjay Kumar Mishra were parties to the said proceedings. Therefore, the act of granting extensions to the tenure of the Sanjay Kumar Mishra for a period of one year each are held to be illegal.

This court cited Madras Bar Association Vs. Union of India and other to observe that even though effect of the judgments of this court can be nullified by a legislative act removing the basis of the judgment however, such a retrospective amendment should be reasonable and not arbitrary and must not be violative of the fundamental rights guaranteed under the Constitution.

Finally, the court allowed Sanjay Kumar Mishra, to continue to hold office only till 31th July, 2023.

Reiterates Medical Council of India vs State of Kerala and other (2019) 13 SCC 185

H. Presumption under Section 3 of PML Act, 2002 would not sustain if no case is made out in predicate offence registered by CBI 

Case title: M/s Prakash Industries LTD. Vs Union of India & Anr AND Prakash Thermal power LTD vs Union of India & Anr

A single bench of Justice Yashwant Varma, interpreted the expressions ― “as a result of” and “derived or obtained” in Section 2(1)(u) of the PML Act to mean that for a property in order to be recognised even prima facie as being proceeds of crime must necessarily be preceded by criminal activity relating to a scheduled offence. The evidence of criminal activity would be either a First Information Report, a complaint or a chargesheet as envisaged under various statutes. However, in absence thereof it would be wholly impermissible for the ED to itself become the arbiter of whether a scheduled offense stands committed.

Relying on the findings in Vijay Madan Lal Case, the Court reiterated that Enforcement Directorate is empowered under PMLA to try offences related to money laundering arising out of the scheduled offences as mentioned under the PLMA 2002.  However, prosecution under the PMLA would be impermissible to be initiated or continued either on a notional basis or an assumption that a scheduled offence has been committed.

In light of the principles of the case as above, that where a person comes to be finally discharged or acquitted of the scheduled offence or where the case pertaining to the predicate offence comes to be quashed, no offence of money laundering would sustain, this Court quashed the PAO dated November 29, 2018 in ECIR/03/CDZO/2014 as well as the Complaint No.1068 of 2018 instituted in terms of Section 5(5) of the Act.

I. Rigors bail conditions of section 45 PML Act, 2002 shall be applicable to provision of Anticipatory bail under Section 438 of CrPC

Case Title: Directorate of Enforcement v. M. Gopal Reddy

A Divisional Bench consisting of Justice MR Shah and Justice CT Ravikumar, overturned the decision of High Court of Telangana which granted anticipatory bail to the Respondent by placing reliance on the decision of Nikesh Tarachand Shah v. Unoin of India. This Court, however, reiterated the decision of Director Enforcement Directorate v. Dr. VC Mohan to rectify the High Court’s decision.

The Court observed that although the application is under Section 438 CrPC, however, once the prayer for anticipatory bail is made in connection with offence under the PML Act, 2002, the underlying principles and rigors of Section 45 of the Act must get triggered.  The Court also took note of the seriousness of the offences in the instant case and quashed the order of High Court in light of P Chidambaram v. Directorate of Enforcement wherein it was observed that economic offences have an impact on the society and the Court must be very slow in exercising the discretion under Section 438 of CrPC.

Conclusion

In the realm of the Prevention of Money Laundering Act, the compilation of judgments stands as a testament to the evolving intricacies of financial law, crime prevention, and the pursuit of justice. Each judgment makes a mark in the ongoing narrative of interpreting and applying the law. As we bring this compilation to a close, we are reminded that the synergy between legal principles, ethical considerations, and practical implementation must harmonize. These judgments illuminate the path forward, offering valuable insights to legal practitioners, scholars, and policymakers as they navigate the complex terrain of financial crimes and safeguard the foundations of a just society.

Vaibhavi Sharma is an Associate Partner and Rishabh Sharma is an Associate at Prosoll Law.

This article was first published in Bar & Bench.

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28Aug

India’s IP Laws Need To Adapt To AI Creativity

India’s IP Laws Need To Adapt To AI Creativity

Arjit Benjamin

28 Aug 2023

India’s IP Laws Need To Adapt To AI Creativity

“This article explores the multifaceted challenges that Generative AI presents to IP protection within the framework of Indian statutes, with a specific focus on copyrights and trademarks.”

Generative Artificial Intelligence (AI) is a technological marvel that has ushered in a new era of creativity and innovation. It refers to the utilization of algorithms and models that empower machines to independently generate content with limited human intervention. These algorithms often simulate human creativity by drawing knowledge from extensive datasets of pre-existing content. Generative AI has the remarkable ability to autonomously create content across various domains, including art, music, literature, and software.

However, this technological advancement has also brought forth a unique set of challenges to the realm of Intellectual Property Rights (IPR), particularly in the areas of copyrights and trademarks. In India, as in many other parts of the world, this is perhaps the time to revisit the existing IPR laws and bring the necessary legislative changes to effectively address the intricacies posed by Generative AI while ensuring fair protection for creators and innovators. This article explores the multifaceted challenges that Generative AI presents to IP protection within the framework of Indian statutes, with a specific focus on copyrights and trademarks. It also considers the necessary legal adaptations and reforms required to strike a balance between fostering innovation and safeguarding the rights of creators and inventors.

Why is Generative AI Relevant For IP Protection?

Generative AI has become extremely relevant for IP protection because it can create unique and original works of art, music, literature, design, and other forms of expression that may have economic and cultural value. These works may be eligible for IP protection and may require new legal frameworks to address the specific features of generative AI.

IP protection aims to encourage innovation and creativity by granting exclusive rights to the creators or owners of intellectual works. These rights include the right to reproduce, distribute, perform, display, modify, or license the works. IP protection also aims to prevent unauthorized use or exploitation of intellectual works by others.

The emergence of generative AI raises important questions and challenges for IP protection, such as:

  • Who is the author or owner of the works created by generative AI?

  • How can the originality or novelty of the works created by generative AI be determined?

  • How can the rights and responsibilities of the human developers, users, or beneficiaries of generative AI be defined?

  • How can the infringement or plagiarism of the works created by generative AI be detected or prevented?

While Generative AI is the future, due to the current position of our statutory laws, there is a vacuum which requires to be filled especially with the growing trend. Due to the above said, there have been situations where judicial authorities and quasi-judicial authorities have declined to accept AI generated IP protection worthy owing to them not being a result of human creativity.

Generative AI and Copyright Protection

The Copyright Act, 1957, forms the legal foundation for copyright protection in India. This Act primarily caters to creative works authored by humans. However, the advent of Generative AI has complicated the landscape of copyright protection in several ways, outlined herein below. While there has been some respite for significant reforms that the Copyright Act of 1957 should undergo, to effectively address the challenges posed by Generative AI, have also been mentioned.

Authorship and Ownership: The fundamental concept of copyright revolves around authorship. The Copyright Act defines an author as the person who creates the work. With Generative AI, determining authorship becomes ambiguous. Is it the AI developer who created the algorithm, the user who initiated the AI to generate content, or the AI system itself? The Copyright Act does not explicitly address this. The Act should be amended to explicitly define authorship and ownership of AI-generated works. This could involve recognizing the AI developer as the author, attributing authorship to the user, or considering joint authorship between the AI system and its developer or user, depending on the circumstances.

Originality: Copyright protection is contingent on the originality of a work. AI generates content by learning from vast datasets, leading to concerns about the originality of AI-generated works. The Copyright Act lacks clarity on whether these works meet the originality criterion. The Act should be revised to specify criteria for originality in AI-generated works. This might entail considering the extent of AI’s creative input and independence when determining copyright eligibility.

Infringement in the Digital Age: The digital realm allows for widespread dissemination and reproduction of content, making instances of copyright infringement more prevalent. The Copyright Act does not provide explicit guidelines for addressing infringement involving AI-generated content, leading to legal ambiguities. Clear guidelines should be established for determining liability in copyright infringement cases involving AI-generated content. These guidelines should differentiate between intentional human infringement and unintentional or algorithmic infringement.

Fair Use and Transformative Works: The Copyright Act includes provisions for fair use, allowing limited use of copyrighted material without permission for purposes such as criticism, commentary, and education. However, defining “fair use” becomes intricate in the context of AI-generated content, and the Act does not offer specific guidance on this matter. The Copyright Act should offer more clarity and guidance on fair use of AI-generated content. This could involve creating a framework to assess whether AI-generated content qualifies as transformative use of existing material.

Generative AI And Trademark Protection

Trademark protection in India is governed by the Trade Marks Act, 1999. Trademarks are critical for brand recognition and protection in the marketplace. However, as Generative AI becomes more capable, it presents challenges within the trademark framework:

Possible Infringement: Trademarks protect words, phrases, symbols, and designs that are used to identify the source of goods or services. Generative AI can be used to create new trademarks that are very similar to existing trademarks. This could potentially mislead consumers into believing that the new products or services are associated with the owner of the original trademark. For example, a generative AI model could be used to create a new logo that is very similar to the logo of a well-known company. This could potentially infringe on the trademark rights of the company.

Distinctiveness and Protectability: The Trade Marks Act requires that trademarks be distinctive and capable of distinguishing goods and services. As AI generates trademarks autonomously, determining the distinctiveness and protectability of these trademarks becomes a unique challenge. There needs to be a requirement for explicit guidelines on the distinctiveness and protectability of AI-generated trademarks. This would help trademark authorities assess the uniqueness and appropriateness of such trademarks.

Human Involvement Requirement: The Act currently necessitates that a trademark application be filed by any person claiming to be the proprietor of a trade mark. Akin to the issues as discussed in the realm of copyright laws, with AI-generated trademarks, there can be serious concerns qua ownership as well. There needs to be clarity on the same as well as role of AI in trademark registration and the procedural requirements are when AI generates trademarks autonomously.

What’s Happening across the Globe?

To cope with the complexity of AI-generated content, lawmakers and policymakers need to engage actively with the issues and implications. To strike a balance between promoting innovation and protecting IP rights, collaboration between technology experts, legal professionals and creative communities is crucial. Effective and forward-looking regulation can support the growth of a generative AI ecosystem, while respecting the rights of creators.

For instance, the European Parliament has proposed a draft Artificial Intelligence Act that aims to regulate the safe and transparent use of AI, imposing obligations on generative AI systems to comply with transparency requirements and ensure safeguards against generating illegal content, among other things. In the United States, the US Patent and Trademark Office (USPTO) issued a report on the public views on artificial intelligence and intellectual property policy, which covers topics such as patent eligibility, inventorship, disclosure, ownership, enforcement, and data protection of AI-related inventions. The report also discusses the implications of generative AI for trademark and copyright law. The USPTO is focused on incentivizing more innovation, inclusively and in key technology areas such as artificial intelligence (AI) and other emerging technologies (ET) through AI/ET Partnership. In China, the National Intellectual Property Administration (CNIPA) issued a draft guideline on patent examination of artificial intelligence inventions, which clarifies the patentability criteria, disclosure requirements, novelty assessment, and inventive step evaluation of AI-related inventions. The guideline also addressed the issues of generative AI for design patents.

In India, the Ministry of Electronics and Information Technology (MeitY) released a national strategy for artificial intelligence, which outlines the vision, mission, objectives, principles, and challenges of developing and deploying AI in India. The strategy also identifies IP as one of the key enablers for AI innovation and recommends strengthening the IP regime and creating an IP facilitation centre for AI.

Summing Up

Generative AI has irrevocably altered the landscape of creativity, innovation, and intellectual property. In India, as in many other nations, the existing IPR framework, particularly in copyrights and trademarks, faces new complexities and challenges that require immediate attention and adaptation. While protecting the rights of creators and innovators remains paramount, it is equally essential to foster a conducive environment for AI-driven innovation.

Reforms within India’s Copyright and Trade Mark framework should aim to explicitly define authorship and ownership of AI-generated works, address the originality criteria for such works, establish clear guidelines for copyright infringement involving AI, and provide guidance on fair use in the AI context within the Copyright Act of 1957. Simultaneously, the Trade Marks Act, 1999, should provide clarity on the distinctiveness and protectability of AI-generated trademarks and define the role of AI in trademark registration.

In striking this delicate balance between protection and innovation, India can position itself as a leader in the global AI landscape, encouraging creativity, entrepreneurship, and economic growth while safeguarding the rights and interests of its creators and inventors. As Generative AI continues to shape our world, an adaptive IPR regime will be the linchpin of India’s continued success in the ever-evolving intellectual property landscape.

Arjit Benjamin is an Associate Partner at Prosoll Law.

This article was first published in Bar & Bench.

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21Aug

Prevention of Corruption Act, 1988 – Judgment Compilation 2023

Prevention of Corruption Act, 1988 – Judgment Compilation 2023

Vabhavi Sharma

21 Aug 2023

Prevention of Corruption Act, 1988 – Judgment Compilation 2023

“This article is a compilation of judgments passed by the Supreme Court of India in cases coming within the purview of the Prevention of Corruption Act, 1988.”

1. When the Special Court chooses to take cognizance, the question of the approver being examined as a witness in the Court of the Magistrate as required by Section 306 (4)(a) does not arise: Supreme Court of India

A. Srinivasulu v. State Represented By Inspector of Police

A Division Bench of Justices V Ramasubramanian and Pankaj Mithal ruled that this Court has previously recognised in Arul Kumar two types of cases, namely

(i) those which come through the committal route; and

(ii) those where cognizance is taken directly by the Special Judge under Section 5(1) of the PC Act.

In the second category of cases, the Court held that Section 306 of the Code would get by-passed. The Supreme Court observed that therefore, when the Special Court chooses to take cognizance, the question of the approver being examined as a witness in the Court of the Magistrate as required by Section 306 (4)(a) does not arise.

Hence, it is not violative of the procedure prescribed by Section 306(4)(a) of the Code.

2. Filing of charge-sheet in a piece-meal manner defeats the right of the applicant to default bail and goes against the mandate of Article 21.

Avinash Jain v. CBI (DHC)

Justice Amit Sharma allowed the application for default bail under Section 167(2) and observed that it is not the case of the CBI that at the time of filing of the chargesheet, investigation with respect to the offences under the PC Act, 1988 was complete and therefore, the chargesheet was filed with respect to the other offences mentioned in the FIR.

Here, the CBI had not completed the investigation with respect to offences under Section 13(2) read with Section 13(1)(d) of the PC Act, 1988 for which the applicant was arrested and filed the chargesheet while keeping the investigation for offences under Section 13(2) read with Section 13(1)(d) of the PC Act, 1988 open. This resulted in defeating the right of the applicant to default bail and is against the mandate of Article 21 of the Constitution.

3. Further investigation as per Section 173 (8) CrPC is permitted, even after the Magistrate has accepted a final report (closure report).

State v. Hemendhra Reddy

The Divisional Bench comprising of Justice Surya Kant and Justice JB Pardiwala, decided that even after the final report is laid before the Magistrate and is accepted, it is permissible for the investigating agency to carry out further investigation in the case. Further, it is not necessary that the order accepting the final report should be reviewed, recalled or quashed before to carrying out further investigation.

The Court held that further investigation cannot be equated with prosecution and punishment and does not fall within the ambit of double jeopardy under Article 20(2). Moreover, there is no obligation to hear the accused while considering an application for further investigation under Section 173(8) of the CrPC. The Courts also observed that before directing such investigation as mentioned under Section 17 of the PC Act, 1988, the Superintendent of Police or an officer superior to him is required to apply his mind to the information and come to an opinion that the investigation on such allegations is necessary.

A word of caution was also extended in cases where contradicting views are taken by the learned judges. While  a learned Judge may differs with a view of a Co-ordinate Bench, however, same is required to make a reference to a larger Bench on papers being placed before the learned Chief Justice. Referring to Official Liquidator v. Dayanand further emphasised the adherence to basics of judicial discipline and the need for predictability and a certainty in law.

4. Right of the accused for default bail cannot be taken away by way of filing incomplete chargesheet and conducting the investigation in a piece-meal manner.

Ritu Chhabaria v. Union of India

Justice Krishna Murari and Justice CT Ravikumar, while placing reliance upon M. Ravindran v. Directorate of Revenue Intelligence and Satendar Kumar Antil v. CBI interpreted the right of default bail under Section 167(2) CrPC to be a fundamental right that flows from Article 21 of the Constitution of India. Therefore, it becomes essential to place certain checks and balances upon the Investigation Agency in order to prevent the harassment of accused persons at their hands.

In case such a chargesheet is filed by an investigating authority without first completing the investigation, it would not extinguish the right to default bail under Section 167(2) CrPC. Moreover,  trial court, in such cases, cannot continue to remand an arrested person beyond the maximum stipulated time without offering the arrested person default bail.

5. Right to appeal includes an opportunity for the person filing an appeal to question the conclusions drawn by the trial court. Thus, the mandates of Section 385 of the CrPC can only be followed when the record lower court is available with the Court of Appeal.

Jitendra Kumar Rode v. Union of India

The Divisional Bench of Justice Krishna Murari and Sanjay Karol, J., considered whether the High Court upholding the conviction despite non-availability of trial court records  infringes the right of life and liberty of the accused enshrined under Article 21 of the Constitution of India. The court held that if a right of production of documents at the trial stage exists, it is a natural corollary that the High Court, sitting in appeal, must benefit from those documents. In this case, the impugned judgment of the High Court records the statement of the CBI that the records have “got lost”. The “reconstructed” record /documents undoubtedly need to include the essential documents necessary to properly appreciate the appeal on its merits.

Relying on Bani Singh v. State of U.P., the court decided that in order to decide the appeal on merits including the question of sentencing the accused, it was erroneous for the lower court to have decided the cases without the complete records.

The court also emphasised the digitization of records and observed that had there been properly preserved records of the Trial Court, the issue in the present appeal as to whether the High Court could uphold a conviction having not perused the complete Trial Court record, would not have arisen. Further directions were also given to the Registrar General of the High Courts to ensure appropriate steps towards such digitization to be duly undertaken with promptitude at all District Courts.

6. Unless both demand and acceptance are established, the offence of obtaining pecuniary advantage by corrupt means covered by Section 13(1)(d)(i) and (ii) (Old PC Act) cannot be proved.

Soundarajan v. State

The Divisional Bench of Justice Abhay S Oka and Rajesh Bindal, J., observed that shadow witness did not say that the appellant made a specific demand of gratification in his presence to complainant. To attract Section 7 of the PC Act (as existed before 26th July 2018), the demand for gratification has to be proved by the prosecution beyond a reasonable doubt. Further, if the factum of demand of gratification and acceptance thereof is proved, then the presumption under Section 20 can be invoked, and the Court can presume that the demand must be as a motive or reward for doing any official act.

The Bench also noted that Trial Courts ought to be very meticulous and even the public prosecutor has a duty to be vigilant at the stage of framing of charges. In the present case, even though proper charge for demand and acceptance allegedly made by the appellant on 6th and 13th August 2004 and acceptance thereof on 13th August 2004 were not framed, however, the accused was not prejudiced insofar as his right to defend is concerned. Therefore, such an omission did not prove to be fatal.

7. The period of police custody does not lapse if due to certain exigencies the police was unable to exercise the right of interrogation for the full period of police custody remand.

CBI v. Vikas Mishra

In the present case, the Special Judge allowed police custody of the respondent accused for seven days. However,  respondent-accused got himself admitted in the hospital during the period of police custody, and therefore the CBI could not interrogate the accused in the police custody though having a valid order in its favour.

The division bench of Justice MR Shah and CT Ravikumar, observed that no accused can be permitted to play with the investigation and/or the court’s process. No accused can be permitted to frustrate the judicial process by his conduct. It cannot be disputed that the right of custodial interrogation/investigation is also a very important right in favour of the investigating agency to unearth the truth, which the accused has purposely and successfully tried to frustrate. Therefore, by not permitting the CBI to have the police custody interrogation for the remainder period of seven days, it will be giving a premium to an accused who has been successful in frustrating the judicial process.

The court also noted that the view taken by this Court in CBI v. Anupam J. Kulkarni, that there cannot be any police custody beyond 15 days from the date of arrest requires reconsideration.

8. Allegation of demand of gratification and acceptance made by public servant must be proved to sustain conviction under PC Act, 1988. Mere recovery is not sufficient to hold public servant guilty of the offence.

Jagtar Singh v. State of Punjab

A divisional bench comprising of Justice Abhay S Oka and Justice Rajesh Bindal ruled in the light of law laid down by Constitutional Bench of this Court in Neeraj Dutta v. State (Govt. of N.C.T of Delhi), the demand and recovery both must be proved to sustain conviction under the Act. The trial court had specifically held that there is no evidence produced on record to prove the demand of illegal gratification.

The High Court has passed its impugned judgment on the assumption that there was demand of illegal gratification as money was recovered from the appellant. This is not a case if there was circumstantial evidence to prove the demand. After perusal of evidence produced on record by prosecution is examined in this light, the conviction and sentence of the appellant cannot be legally sustained.

9. Supreme court questions the practice followed by courts to remand the accused to custody as soon as they appear in response to the summoning order.

Mahdoom Bava v. CBI

A Divisional bench comprising of Justice V Ramasubramanian and Justice Pankaj Mithal held in some parts of the country, there seems to be a practice followed by Courts to remand the accused to custody, the moment they appear in response to the summoning order.

The Supreme Court thus decided that appellants remanded to custody are entitled to be released on bail, subject to such terms and conditions as may be imposed by the Special Court, including the condition for the surrender of the passport, in the event of the Court choosing to remand them to custody, when they appear in response to the summoning order.

The Court also observed that the correctness of such a practice has to be tested in an appropriate case.

10. Allegation of demand of gratification and acceptance made by public servant must be established beyond reasonable doubt, if essential ingredient under Section 7 of PC Act, 1988 are not proven then offence under section 13 (1)(d).

Neeraj Dutta v. State (NCT of Delhi)

A divisional bench comprising of Justice Abhay S Oka and Justice Rajesh Bindal in the light of law laid down by another bench in the case of N Vijayakumar v. State of Tamil Nadu 2021, dealt with the issue of presumption under Section 20 and the degree of proof required to establish the offences punishable under Section 7 and clauses (i) and (ii) Section 13(1)(d) read with Section 13(2) of PC Act, 1988.

The allegation of demand of gratification and acceptance made by a public servant has to be established beyond a reasonable doubt. The decision of the Constitution Bench in Neeraj Dutta v. State (NCT of Delhi), does not dilute this elementary requirement of proof beyond a reasonable doubt. There, the Constitution Bench was dealing with the issue of the modes by which the demand can be proved. The Constitution Bench has laid down that the proof need not be only by direct oral or documentary evidence, but it can be by way of other evidence including circumstantial evidence. When reliance is placed on circumstantial evidence to prove the demand for gratification, the prosecution must establish each and every circumstance from which the prosecution wants the Court to draw a conclusion of guilt. The facts so established must be consistent with only one hypothesis that there was a demand made for gratification by the accused.

In the present case, there were no circumstances brought on record to prove the demand for gratification. Therefore, the ingredients of the offence under Section 7 of the PC Act were not established and consequently, the offence under Section 13(1)(d) will not be attracted.

11. Supreme court suggests that High courts must maintain distance from quashing FIR at the stage of investigation, even on ground of mala fide.

State of Chhattisgarh v. Aman Kumar Singh

A divisional bench comprising of Justice S Ravindra Bhat and Justice Dipankar Datta ruled that it is the settled principle of law that when an investigation is yet to start, there should be no scrutiny to what extent the allegations in a first information report are probable, reliable or genuine.  A first information report can be registered merely on suspicion.

Viewed through the prism of gravity of allegations, a first information report based on “probability” of a crime having been committed would obviously be of a higher degree as compared to a first information report lodged on a “mere suspicion” that a crime has been committed. The High Court was not justified in its interference with the investigative process and committed an error of law in quashing the FIR on the grounds of mala fide intention.

The Court observed that whether the first information report is the outcome of mala fide would be of secondary importance and the same would be lose significance if sufficient materials are gathered for sending the accused up for a trial. Hence, the plea of mala fide may not per se form the basis for quashing the first information report/complaint.

12. Factum of demand should be established through direct or circumstantial evidence in order to presume the commission of offences under Section 13(1)(d)(i)(ii) under Section 20, PC Act, 1988.

Shankarlal Sharma v. State of Madhya Pradesh

A divisional bench comprising of Justice Abhay S Oka and Justice Rajesh Bindal, while deciding the present appeal by relying on a Constitution Bench in Neeraj Dutta v. State (NCT of Delhi), that when the complainant does not support the prosecution, the demand made by the accused can be otherwise proved by the prosecution even on the basis of circumstantial evidence. While saying so, the Constitution Bench has reiterated that the offer by the bribe giver and the demand by the public servant have to be proved by the prosecution as a fact in issue. The Constitution Bench reiterated that mere acceptance or receipt of illegal gratification without anything more would not make it an offence under Section 7 or Section 13(d) of the PC Act.

The Constitution Bench also held that only when a proper demand is made by a public servant and is accepted by the bribe giver and in turn, the amount tendered by the bribe giver is received by the public servant, it would be an offence under Section 13(1)(d) and in particular Clauses (i) and (ii) thereof. The Constitution Bench reiterated the well settled law that presumption under Section 20 does not apply to Clauses (i) and (ii) of Section 13(1)(d) of the PC Act.

Therefore, divisional bench is of the considered opinion that in the present case, the factum of demand was not established by the prosecution. Hence, the judgment of the High Court could not be sustained.

13. Special courts/magistrate shall not order an investigation under Section 156(3) CrPC against public servant in absence of prior sanction under Section 19 of PC Act.

C.V Balan vs State of Kerala

A single bench of Justice Dr. Kauser Edappagath, sanction under Section 19 of the PC Act, 1988 is a pre-requisite for presenting a private complaint against a public servant alleging the commission of an offence specified in sections 7, 11, 13 and 15 of the PC Act, 1988.

The single bench is of the considering view that the court below could not have forwarded the complaints under section 156(3) of CrPC for investigation without obtaining any sanction from complainant under Section 19(1) of the PC Act, 1988. Hence, the impugned order cannot be sustained, and accordingly, it is set aside. The court below shall proceed with the complaints in accordance with law only after the production of prosecution sanction order under section 19 of the PC Act.

The Court reiterated law as laid down in Anil Kumar v. M.K. Aiyappa and L.Narayana Swamy v. State of Karnataka.

14. Default bail granted under Section 167(2) CrPC to an accused may be cancelled on merits after filing of chargesheet and not by mere filling of chargesheet.

State v. T. Gangi Reddy

A Divisional bench comprising of Justice MR Shah and Justice CT Ravikumar  held that considering Section 437(5) and Section 439(2) CrPC, the bail in favour of a person released on default bail under Section 167(2) CrPC can be cancelled only when special reasons/grounds are being made out from the chargesheet and the chargesheet reveals the commission of a non-bailable crime.

If a person is released on default bail under Section 167(2) CrPC., such a bail can be cancelled on merits or on other general grounds like tampering with the evidence/witnesses, not cooperating with the investigating agency and/or not cooperating with the concerned Trial Court etc. The courts have the power to cancel the bail and to examine the merits of the case in a case where the accused is released on default bail and released not on merits earlier. Such an interpretation would be in furtherance to the administration of justice.

15. Appellant is entitled to benefit of doubt, if prosecution is unable to prove demand and acceptance of illegal gratification.  

Aditya Kumar v. State of Rajasthan

A divisional bench comprising of Justice BR Gavai and Justice Vikram Nath, observed that after perusing the evidence on record that the independent witness (PW-2) clearly admits that neither the appellant had made any demand nor was any amount given in his presence to the appellant herein. The evidence of Dy .S.P. (PW-6) would also cast a doubt about the credential of the complainant.  Apart from that, his evidence would reveal that the appellant herein was not a competent person to do the work for which the amount was alleged to have been given.

In view of the matter, Supreme Court held that appellant was entitled to benefit of doubt.

Vaibhavi Sharma is an Associate Partner and Bhumika Yadav is a Senior Associate at Prosoll Law.

This article was first published in Bar & Bench.

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31Jul

Intricacies of grant of status of an ‘Approver’, according to Prevention of Corruption Act

Intricacies of grant of status of an ‘Approver’, according to Prevention of Corruption Act

Harsh K. Sharma and Lakshya Parasher

31 Jul 2023

Intricacies of grant of status of an ‘Approver’, according to Prevention of Corruption Act

“The article discusses the grant of “approver” status with respect to the Code of Criminal Procedure, 1973, and the Prevention of Corruption Act, 1988 (as amended in 2018).”

The concept of ‘approver’ was introduced in India by virtue of Sections 337 and 338 of the Code of Criminal Procedure, 1898. The same concept, post the recommendations of the Law Commission of India and after considering judicial pronouncements, was crystallised in the present Code of Criminal Procedure, 1973 (CrPC), and made a part of Chapter XXIV, in Sections 306 to 308.

A bare perusal of Sections 306 to 308, CrPC, enumerates the procedure to acquire the status of ‘approver.’ This process commences when a magistrate of First class, after considering the factual matrix, is convinced that the person to whom the status of ‘approver’ has to be bestowed upon, by tendering pardon, has made a full and true disclosure of facts within his knowledge about himself and every other person involved in the subject offence.

On the basis of legal provisions and judicial precedents, namely CBI v. Ashok Kumar Aggarwal & Anr; Jasbir Singh v. Vipin Kumar Jagi & Ors.; Prabhjot Ranjan Sarkar & Ors. V. The State of Bihar; State of UP v. Kailash Nath Agarwal & Ors; M.M. Kochhar v. State; and Randhir Basu v. State of West Bengal; the following principles of law emerge: –

1. The power of the court in granting pardon must be with an intention to obtain evidence that is directly or indirectly connected with the offence(s).

2. At any stage, a court of competent jurisdiction may decide to grant pardon. However, prior to issuing pardon, the court should be aware of the type of evidence the individual requesting a pardon is likely to offer, as well as the nature of his complicity and his role in the offence committed.

3. The court should unquestionably approve the tendering of pardon if the prosecution believes that the conviction of other offenders would be difficult without the approver’s evidence.

4. The court may also consider an accused person’s offer to serve as an approver, but typically the prosecution is the one that submits the request. The court should only utilise the authority when the prosecution joins the request, as the State may not require the testimony of the approver and may not want to grant pardon to any accused who may be the worst offender.

5. Pardons are always granted subject to complete and truthful disclosure of the entire set of events with the required specifics related to the events constituting the crime. Otherwise, separate legal proceedings under Section 308, CrPC must be started.

6. Once the proposed approver is given immunity and is designated as an approver, he is discharged, ceases to be an accused, and can only be questioned as a witness by the co-accused, unless the immunity is revoked for failing to disclose the whole truth.

Hence, while granting pardon, the main considerations are the character, antecedents, and culpability of the proposed approver, whether the testimony of the proposed approver is likely to advance the interest of justice and at what cost. However, the main objective remains to seek complete information about the crime, involvement of different persons, to collect evidence and to prove material facts to bring home the guilt of other culprits.

But when this concept is reviewed with respect to cases under Prevention of Corruption Act, 1988 (PC Act), as amended in 2018, a deeper contemplation is required.

To assess the credibility of the proposed approver in a case of PC Act, 1988 (as amended in 2018), Section 8 of the Act is of utmost relevance.

With the promulgation of the PC (Amendment) Act, 2018, a special provision has been created with respect to those who are bribe givers and claim to have extended bribes under duress but later repent. Section 8 clearly provides that if a person knowingly gives undue advantage to another person under compelling circumstances, then he shall report the matter to the investigating agency within 7 days from the date of giving such undue advantage.

Before 26.07.2018, Section 24 was in existence in the erstwhile PC Act 1988, which provided that a statement made by a person against a public servant for offences under Sections 7 to 11, 13, 15, (that he had offered or agreed to offer any gratification) shall not subject him to prosecution under Section 12 of the erstwhile PC Act 1988. But with the amendment becoming operative, Section 24 stood repealed from the statute book.

The PC Act, 1988 is a Special Act. Accordingly, its provisions would supersede the General Laws (CrPC). The Hon’ble Supreme Court in Ratan Babulal Lath v. State of Karnataka (SLP (Crl) No. 2987/2021) held that the PC Act is a complete Code. Consequently, at present, any bribe giver, as contemplated under Section 10 of PC Act, can claim statutory immunity of getting a pardon or getting his name erased from the errata of accused only if he reports the crime within 7 days from the date of offence.

Conclusion

In our opinion, and after going through various precedents, it is only in exceptional cases that the prosecution should move or the Magistrate should exercise the power of tendering pardon to an accomplice, especially if it is otherwise not possible to bring home the guilt of the other accused. However, in granting pardon, real culprits should not be left out in the hope of obtaining evidence against the other accused.  

Any other interpretation of Section 306 to Section 308 of the CrPC, 1973, would render the entire corresponding amendment redundant. As per a cardinal principle of interpretation, each word appearing in a statute should be given its ordinary meaning and it must be to facilitate the object and reasons of its inclusion in the statute.

In the matters relating to the PC Act, time is of the essence and the status of an approver is granted to the bribe giver only if the offence is reported within 7 days. Any contrary practice would be a violation of Section 8 of the Statute (PC Act) and would rather render the deliberate and conscious act of legislature to repeal Section 24 of the erstwhile PC Act, 1988 as ‘otiose’.

Harsh K Sharma is the Founder and Head of Prosoll Law. Lakshya Parasher is a Principal Associate at Prosoll Law.

This article was first published in Bar & Bench.

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16Mar

PC (Amendment) Act 2018: Retrospective or Prospective – Part 2

PC (Amendment) Act 2018: Retrospective or Prospective – Part 2

Harsh K. Sharma

16 Mar 2023

PC (Amendment) Act 2018: Retrospective or Prospective – Part 2

QUESTION OF RETROSPECTIVITY

By virtue of Section 19 of PC Act (Pre-amendment) Special Judge cannot take cognizance of the offence, under Section 7, 10, 11, 13 & 15 (Pre-amended Act) except with Previous Sanction. However, an exception existed to the effect that in case, the public servant is no more in employment, then Sanction was not required. However, now by virtue of Section 19 of PC Act (Post Amendment), in Section 19 (1) of the Principal Act, “Words & Figure 7, 10, 11, 13 & 15 had been substituted with Section 7, 11, 13, 15 and for the word in Clause (a) & (b) of Section 19(1) of Principal Act for the words “who is employed” had been substituted with words “who is employed or as the case may be was at the time of commission of the alleged offence employed”. 

          Significantly, Section 14 of the Prevention of Corruption (Amendment) Act, had substituted, the previously existing Section 19 (1) of the Principal Act, then the ordinary rule of interpretation, w.r.t. word “Substitution” would be as follows:-

  1. Language/ terminology which the legislature had used while inserting new provision is to the effect that the section /provision in the Principal Act stood substituted with the new section /provision. 
  2. The word “substitute” ordinarily would mean “to put (one) in place of another”; or “to replace”. In Black’s Law Dictionary, 5th Edn., at p. 1281, the word “substitute” has been defined to mean “to put in the place of another person or thing”, or “to exchange”. In Collins English Dictionary, the word “substitute” has been defined to mean “to serve or cause to serve in place of another person or thing”; “to replace (an atom or group in a molecule) with (another atom or group)”; or “a person or thing that serves in place of another, such as a player in a game who takes the place of an injured colleague”.
  3. The substitution of one text for the other pre-existing text is one of the known and well-recognised practices employed in legislative drafting. “Substitution” has to be distinguished from “supersession” or a mere repeal of an existing provision.
  4. Ordinarily wherever the word ‘substitute’ or ‘substitution’ is used by the legislature, it has the effect of deleting the old provision and make the new provision operative. The process of substitution consists of two steps: first, the old rule is made to cease to exist and, next, the new rule is brought into existence in its place. The rule is that when a subsequent Act amends an earlier one in such a way as to incorporate itself, or a part of itself, into the earlier, then the earlier Act must thereafter be read and construed as if the altered words had been written into the earlier Act with pen and ink and the old words scored out so that thereafter there is no need to refer to the amending Act at all. 
  5. It is not a Universal Rule that the word “Substitution” necessarily or always connotes two severable steps, that is to say, one of repeal and another of a fresh enactment even if it implies two steps. However, the aforesaid general meaning is to be given effect to, unless it is found that legislature intended otherwise.

Accordingly, Section 4 & 7 of Prevention of Corruption (Amendment) Act, 2018, which had amended Section 7, 8, 9 & 10; alongwith Section 13 respectively of Principal Act by substituting new Provisions in the corresponding Sections of the Principal Act, thus obliterating the erstwhile section of the Principal Act as if, they never existed on the Statute Book. 

For instance it is interpreted that the substituted provisions of Prevention of Corruption Act would take effect only post 26.07.2018, then a presumption has to be drawn to the effect that the legislature had legislated in Prevention of Corruption (Amendment) Act, 2018 that the amendments being made would be operated only after the date of publication of the said Amendment Act in the Gazette. However, since there is no such averment in the Prevention of Corruption (Amendment) Act, 2018 and the language of the legislature is clear, therefore, treating the amendments only prospective in nature, would be fallacious.   

Material Question of Law arises because Criminal Procedure Code, 1973 was amended by the Criminal Procedure Code Amendment Act, 1978 (45 of 1978) dated 18.12.1978 a number of times, however when an Amendment was carried out in Criminal Procedure Code, w.r.t. Section 428 of the Principal Act. The said amendment was given retrospective effect because there was nothing in the said clause which suggest either expressly or by necessary implication that the conviction and sentence which were subject matter of the said provision must be after coming into force the respective amendment. 

Relevant Precedents

The Hon’ble Supreme Court in case titled Boucher Pierre Andre V. Superintendent, Central Jail held:-

“Para 2. The question which arises for determination in this petition is a narrow one and it rests on the true interpretation of Section 428. In this section confined in its application only to cases where a person is convicted after the coming into force of the new code of Criminal Procedure, or does it also embrace cases where a person has been convicted before but his sentence is still running at the date when the new CrPC came into force? It is only if the latter interpretation is accepted that the petitioner would be entitled to claim the benefit of the section and hence it becomes necessary to arrive at its proper construction. Section 428 reads as follows :

Where an accused person has, on conviction, been sentenced to imprisonment for a term, the period of detention, if any, undergone by him during the investigation, inquiry or trial of the same case and before the date of such conviction, shall be set off against the term of imprisonment imposed on him on such conviction, and the liability of such person to undergo imprisonment on such conviction shall be restricted to the remainder, if any, of the term of imprisonment imposed on him. 

Para 3. This section, on a plain natural construction of its language, posits for its applicability a fact situation which is described by the clause “where accused person has, on conviction, been sentenced to imprisonment for a term.” There is nothing in this clause which suggests, either expressly or by necessary implication that the conviction and sentence must be after the coming into force of the new Cr PC. The language of the clause is neutral. It does not refer to any particular point of time 

Section 428 merely indicates a fact situation which must exist in order to attract the applicability of the section and this fact situation would be satisfied equally whether an accused person has been convicted and sentenced before or after the coming into force of the new CrPC. Even where an accused person has been convicted and sentenced prior to the coming into force of the new CrPC but his sentence is still running, it would not be inappropriate to say that the “accused person has, on conviction, been sentenced to imprisonment for a term”. Therefore, where an accused person has been convicted and he is still serving his sentence at the date when the new CrPC came into force, Section 428 would apply and he would be entitled to claim that the period of detention undergone by him during the investigation, inquiry or trial of the case should be set off against the term of imprisonment imposed on him and he should be required to undergo only the remainder of the terms of course, if the term of the sentence has already run out, no question of set off can arise. It is only where the sentence is still running that the section can operate to restrict the term. This construction of the section does not offend against the principle which requires that unless the legislative intend is clear and comulsive, no retrospective operation should be given to a statute On this interpretation, the section is not given any retrospective effect. It does not seek to set at nought the conviction already recorded against the accused person. The conviction remains intact and unaffected and so does the sentence already undergone. It is only the sentence, in so far as it yet remains to be undergone, that is reduced. The section operates prospectively on the sentence which yet remains to be served and curtails it by setting off the period of detention undergone by the accused person during the investigation, inquiry or trial of the case. Any argument based on the objection against giving retrospective operation is, therefore, irrelevant. 

Para 6. ………….having regard to this object of Section 428, any differentiation can be made between a substantive sentence of imprisonment and a sentence of imprisonment in default of payment of fine. The nature of the mischief arising by reason of the accused person being made to suffer jail life “for a period out of all proportion to the gravity of the offence or even to the punishment provided in the statute” would be the same in the both cases and it is impossible to imagine that the legislature should have sought to remedy this mischief in one case and leave it untouched in the other. Therefore, even if two constructions of Section 428 were possible, we should adopt that which suppresses the mischief and advance the remedy and carries out the subject of the legislature as fully and effectually as possible.

We accordingly take the view that Section 428 applies not only in relation to a substantive sentence of imprisonment but also in relation to a sentence of imprisonment in default of payment of fine. The period for which an accused person has been detained during investigation, inquiry are trial of the case is liable to be set off not only against a term of substantive imprisonment but also against the term of imprisonment in default of payment of fine. The set off, however, does not absolve the accused person from the liability to pay the fine imposed on him. Section 421 of the new Code provides that even if the accused person has undergone the whole of the imprisonment in default of payment of fine, the Court passing the sentence can issue a warrant for the recovery of the fine if, for special reasons to be recorded in writing, it considers it necessary so to do or it has made an order for payment of expenses or compensation out of the fine under Section 357.”

Accordingly the legit inference that can be drawn from the aforesaid precedent is that Section 4 & 7 of Prevention of Corruption (Amendment) Act, 2018, which had amended Sections 7, 8, 9 & 10; alongwith Section 13 respectively of Principal Act by substituting new Provisions in the corresponding Sections of the Principal Act, thus obliterating the erstwhile section of the Principal Act as if, they never existed on the Statute Book. 

Hence, in accordance with the Law of interpretation, the substituted provisions of Prevention of Corruption Act would take effect only post 26.07.2018 then a presumption has to be drawn to the effect that the legislature had legislated in Prevention of Corruption (Amendment) Act, 2018 that the amendments being made would be operated only after the date of publication of the said Amendment Act in the Gazette. Since, there is no such averment in the Prevention of Corruption (Amendment) Act, 2018 and the language of the legislature is clear, therefore, treating the amendments only prospective in nature, would be fallacious.   

            Further, Decision laid down by the Apex Court in Income Tax-I, Ahmedabad v. Gold Coin Health Food Pvt. Ltd., S. B. Bharracharjee v. S. D. Majumdar , Commissioner of Income Tax, Bombay v. M/s. Podar Cement Pvt. Ltd., Zile Singh v. State of Haryana  and Union of India v. Sukumar Pyne analyses the Question of Law in detail.

                     It is a settled principle of law that when there is a dispute with regard to applicability of Act, whether retrospective or prospective, and when the provision is explanatory in nature or clarificatory in nature, the Court shall make an endeavour to interpret the provision keeping in mind the internal aids for construction/interpretation of any law or provision which brought into existence.

Parting Note

Assessment of such a pure Question of Law i.e. ‘Whether PC (Amendment) Act 2018 has Retrospective operation or is only Prospective in Nature’; goes to the root of jurisdiction of the Trial Court proceeding must be expedited for the interest of justice, more so because the issues relating to jurisdiction and application of the respective Penal Provisions of Prevention of Corruption Act, are dependent on such adjudication.

Further. it will not be out of place to mention herein that adjudication of such issues of law would not only save valuable Judicial time but also would facilitate a fair adjudication of the ‘lis’ involved in the concerned cases as if, the adjudication of this issue is being deferred for any reason and is adjudicated at a later stage, then one of the possibility would be a pure waste of judicial time.

Read Part 1 of this Article, Click here or visit: https://prosolllaw.com/pc-amendment-act-2018-retrospective-or-prospective-part-1/

Advocate Mr. Harsh K. Sharma

With 32 years of Standing at the bar, he is the Founder of Prosoll Law Inc. 

He is a Standing Counsel for Bar Council of India and has been the Ex-Member of Special Committee of Bar Council of Delhi

This article was first published in Legal Desire.

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