India Legal 30 October 2017

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October30, 2017
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HE Indian penal system does not dis-
play the same speed in releasing pris-
oners after they have served their
terms or been found not guilty by the
courts after their detention as it does
in locking them up. The recent, most glaring,
example of this was the three-day delay in
releasing from behind bars Nupur and Rajesh
Talwar who were ordered to be set free by the
Allahabad High Court which found them inno-
cent of the crime of having slain their daughter
Aarushi. To someone who has not experienced
the loss of freedom and mobility during periods
of incarceration, three days or so may not sound
like a big deal. But for people like the Talwars
who spent over four years of their original life
sentence in Dasna Jail, every day of freedom,
starting from the moment the judge freed them,
is a new lease of life.
The delay was caused by glitches in the
labyrinthine mesh of rules and regulations that
govern the administration of India’s network of
prisons which often vary from state to state, jail
to jail. This set of laws, often contained in anti-
quated manuals, unrevised since the days of the
British Raj, continue to bedevil the prison-based
system of deterrence with which the legal sys-
tem tries to punish and prevent crime. The
biggest evil of this system is that while it is
designed to punish proven wrongdoers, it also
winds up oppressing thousands upon thou-
sands of innocent Indians who have
nowhere to turn to for relief.
The Rule of Law is based on a car-
dinal precept of natural justice
under which you are held innocent
unless proven guilty in court. What
is horrifying in India is that as of
now, close to three lakh people still
awaiting trial are languishing in jail. The
majority of them is poor, illiterate, and bel-
ongs to the Adivasi, minority, and Dalit com-
munities, according to statistics published
by Delhi’s National Law University (NLU).
A significant number of them has not even
met a lawyer or been allowed to appear at
a bail hearing or even had court charges framed
against them. They have been confined only on
the strength of FIRs and police reports and
charges. Shockingly, these detenues or “under-
trials”, as they are called, account for two out of
three prisoners in India’s penitentiary system—
about 67 percent—a number way higher than
other democracies in the world. According to a
2017 Amnesty International report, India has
the third highest undertrial population in Asia.
Arguably, it is India’s most ignored problem. In
other words, there are twice as many undertrials
in India’s prisons as there are convicts.
And these undertrials—really a misnomer
because a large proportion of them has yet to
even appear in a trial court—are subjected to
harsh, inhuman or sub-human conditions and
bureaucratic tyranny prescribed in jail manuals.
It is not as if the Government of India is not
aware of this ugly reality. Ever since
Independence, “successive governments have
acknowledged the problem of excessive under-
trial detention, but have not done enough to
address it”, reports Amnesty International.
But as the Supreme Court observed in Thana
Singh vs the Bureau of Narcotics in 2013: “The
laxity with which we throw citizens into prison
reflects our lack of appreciation for the tribula-
tions of incarceration; the callousness with
which we leave them there reflects our lack of
deference for humanity.” This observation came
from a bench comprising Justices DK Jain and
JS Khehar.
The Justices added: “It also reflects our
imprudence when our prisons are bursting at
their seams. For the prisoner himself, imprison-
ment for the purposes of trial is as ignoble as
imprisonment on conviction for an offence,
since the damning finger and opprobrious eyes
of society draw no difference between the two.”
In a sharp rebuke aimed squarely at the attitude
of the state, they added: “The plight of the un-
dertrials seems to gain focus only on a solicitous
inquiry by this court, and soon after, quickly
fades into the backdrop.” The Court made these
remarks following a grant of bail to Thana Singh
SHAMELESSCONTEMPTInderjit Badhwar
Letter from the Editor
T
4 October 30, 2017

who had been rotting in prison for more than 12
years, awaiting trial under the narcotics law.
A recent study named “Prison Reforms in
India”, prepared for legislators by the Lok Sabha
Secretariat, notes that shortly after the Consti-
tution was framed, India’s leaders were aware of
the need for humanitarian steps in this field. It
notes that in 1951, the Government of India
invited the United Nations expert on correction-
al work, Dr WC Reckless, to undertake a study
on prison administration and to suggest policy
reforms. His report titled, “Jail Administration
in India”, made a plea for transforming jails into
reformation centres. He also recommended the
revision of outdated jail manuals.
Highlights of the Lok Sabha report:
In 1952, the Eighth Conference of the
Inspectors General of Prisons also supported the
recommendations of Dr Reckless regarding
prison reform. Accordingly, the Government of
India appointed the All India Jail Manual
Committee in 1957 to prepare a model prison
manual. The committee submitted its report in
1960. The Model Prison Manual 1960 is the
guiding principle for prison management in
India. Accordingly, the Home Ministry, in 1972,
appointed a working group on prisons. It
brought out in its report the need for a national
policy on prisons. It also made an important
recommendation with regard to the classifica-
tion and treatment of offenders and laid down
certain principles.
The Mulla Committee (1980), chaired by
Justice AN Mulla, recommended making avail-
able proper food, clothing, sanitation; proper
training and cadre organisation for prison staff;
establishing an all-India service called the
Indian Prisons & Correctional Service; after-
care, rehabilitation and probation to be an inte-
gral part of prison service; the press and public
to be allowed inside prisons and allied correc-
tional institutions periodically, so that the public
may have first-hand information about the con-
ditions of prisons and be willing to co-operate in
rehabilitation work; undertrials in jails to be
reduced to a bare minimum and kept away
from convicts.
Following a Supreme Court direction (1996)
in Ramamurthy vs State of Karnataka to bring
about uniformity of prison laws, a committee
was set up in the Bureau of Police Research and
Development (BPR&D). In 1999, a draft Model
Prison Management Bill (Prison
Administration and Treatment of Prisoners
Accordingtoa2017
AmnestyInternational
report,Indiahasthe
thirdhighestundertrial
populationinAsia.
Arguably,itisIndia’s
mostignoredproblem.
Inotherwords,there
aretwiceasmany
undertrialsinIndia’s
prisonsasthere
areconvicts.
COSTLY DELAY
The Talwars walk out of
Dasna Jail on October 16,
three days after they were
scheduled to be released
from imprisonment
| INDIA LEGAL | October 30, 2017 5
Anil Shakya

AccordingtoSection
436A,CrPC,wherean
undertrialprisoner
otherthanoneaccused
ofanoffenceforwhich
deathhasbeen
prescribedhasbeen
underdetentionfora
periodextendingto
one-halfofthe
maximumperiodof
imprisonment,he
shouldbereleasedon
hispersonalbond,with
orwithoutsureties.
Bill, 1998) was circulated to replace the Prisons
Act of 1894. Meanwhile, a Model Prison Manual
was prepared in 2003 and circulated to all
state governments.
In response to several directions by the
Supreme Court, a Home Ministry-appointed
expert committee designed another Model
Prison Manual in 2016 and circulated it to all
state governments. Its key features include an
emphasis on prison computerisation, special
provisions for women prisoners, focus on after-
care services, prison inspections, rights of pris-
oners sentenced to death, repatriation of foreign
prisoners and enhanced focus on prison correc-
tional staff.
Despite Home Ministry advisories emanating
from the Fifth National Conference of Heads of
Prisons of States and Union Territories (2016),
there has been little or no headway in unclog-
ging and modernising the prison system. As the
Lok Sabha Secretariat report bluntly concludes:
“Though various bodies have studied the prob-
lems of prisons in India and laws are made for
improving jail conditions, it is a fact that many
problems plague our prisons. In many cases,
prisoners come out of jails as hardened crimi-
nals more than as reformed wrongdoers willing
to join the mainstream social processes. The
emphasis on correctional aspect needs to be
strengthened through counseling programmes
by experts. The mindset of the prison staff must
change. The management of prisons must be
marked by discipline and due regard to the
human rights of prisoners. Prison reform is not
just about prison buildings, but what goes on
inside them that needs to be changed. The focus
must be on the human rights of prisoners
besides improving their amenities.”
A few months back, Amnesty International
hosted a seminar called “Bail Not Jail”, which
included eminent panellists like filmmaker
Vetrimaaran; renowned expert on police
reforms Dr Murali Karnam and former
Karnataka Inspector General of Prisons
Kuchanna Srinivasan. One key recommendation
was implementation of Section 436A of the
Code of Criminal Procedure (CrPC).
This was a key reform measure undertaken
by parliament in 2005. It reads: “There have
been widespread reports that undertrial
prisoners were detained in jail for periods
beyond the maximum period of imprisonment
provided for the alleged offence. As remedial
measures Section 436A has been inserted to
provide that where an undertrial prisoner other
than the one accused of an offence for which
death has been prescribed as one of the
punishments has been under detention for a
period extending to one-half of the maximum
period of imprisonment provided for the
alleged offence, he should be released on his
personal bond, with or without sureties. It has
Letter from the Editor
6 October 30, 2017
BURSTING AT ITS SEAMS
Prisoners being shifted to
a newly constructed jail
complex. India has close
to three lakh undertrials
UNI

also been provided that in no case will an under-
trial prisoner be detained beyond the maximum
period of imprisonment for which he can be
convicted for the alleged offence.”
Unfortunately, as the Lok Sabha report right-
ly observed, notwithstanding high-level commit-
tees and Supreme Court admonitions, there has
been little or no movement on prison reform
and the right of detenues to free and speedy
legal services. This is an egregious and continu-
ing violation of human rights and a breach of
international treaties to which India is a party.
The International Covenant on Civil and
Political Rights (ICCPR) remains the core global
accord on the safeguarding of the rights of pris-
oners. India ratified the Covenant in 1979 and
has to incorporate them into domestic laws. The
International Covenant on Economic, Social and
Cultural Rights (ICESR) states that prisoners
have a right to the highest attainable standards
of physical and mental health.
“Apart from civil and political rights,” says
the Lok Sabha Secretariat report, “the so called
second generation economic, social and human
rights as set down in the ICESR also apply to
the prisoners. The UN Standard Minimum Rule
also made it mandatory to provide a separate
residence for young and juvenile delinquents
away from adult prisoners. Subsequent UN
directives have been the Basic Principles for the
Treatment of Prisoners (United Nations 1990)
and the Body of Principles for the Protection of
All Persons under Any Form of Detention or
Imprisonment (United Nations 1988).”
One reason the reforms are not implemented
is that prisoners, alas, are not a vote bank. Also,
in the state subjects under List-II of the Seventh
Schedule in the Constitution, the management
and administration of prisons falls exclusively in
the domain of state governments, and is govern-
ed by the Prisons Act, 1894, and Prison Manuals
of the respective state governments—all creat-
ures of the oppressive British colonial system.
In 2013, RC Lahoti, a former Chief Justice of
India, made an impassioned written plea to
Chief Justice Altamas Kabir, about “inhuman
condition of prisoners in 1,382 prisons across
the country”. The apex court suo motu treated
this as a public interest writ petition and passed
an interim order which stated: “Unfortunately,
even though Article 21 of the Constitution
requires a life of dignity for all persons, little
appears to have changed on the ground as far as
prisoners are concerned and we are once again
required to deal with issues relating to prisons
in the country and their reform.”
Nothing, it seems, will change unless we
truly heed Gandhiji’s advice that "crime is the
outcome of a diseased mind and jail must have
an environment of hospital for treatment and
care”. And the Supreme Court, in its wisdom,
must find it fit to hold in contempt all authori-
ties who have treated with contempt its repeated
admonitions and prescriptions to correct one of
this country’s most shameless displays of disre-
gard for basic human rights.
Twitter: @indialegalmedia
Website: www.indialegallive.com
Contact: editor@indialegallive.com
“Thelaxitywithwhichwethrowcitizensintoprisonreflectsour
lackofappreciationforthetribulationsofincarceration,thecal-
lousnesswithwhichweleavethemthereourlackofdeferencefor
humanity,”abenchofJusticesDKJain(left)andJSKheharsaid.
In2013,RCLahoti,aformer
ChiefJusticeofIndia,made
animpassionedwrittenplea
toChiefJusticeAltamas
Kabirabout“inhuman
conditionofprisonersin
1,382prisonsacrossthe
country”.Theapexcourtsuo
motu treatedthisasa
publicinterestwritpetition.

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Legal Weapon
Defamation laws are mostly used to muzzle critics and intimidate the press. The courts have
to decide where the line must be drawn to balance free speech with protecting reputations
14
LEAD
8 October 30, 2017
A Scandal in Waiting
An audit by the civil aviation ministry has found that the Delhi International Airport Limited
has not paid `655 crore to CISF for airport security despite having collected it from fliers
AVIATION
18
Promoting Virtue
The government wishes to count pro bono legal aid by advocates while elevating them as
judges, but there are practical difficulties, such as an absence of record
LEGALEYE
22

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Ringside .........................10
Delhi Durbar ...................11
Courts.............................12
National Briefs .........24, 33
International Briefs..........47
Media Watch ..................48
Satire ..............................50
Cover Illustustration & Design:
ANTHONY LAWRENCE
Seed of Mischief
With governments playing politics over intellectual property rights, the unapproved
Herbicide-Tolerant cotton variety has flooded the market, almost monopolising it
37
AGRICULTURE
Reform, to Accelerate
A new take on reducing pendency factoring in non-application of
court pronouncements and the system of appealing all judgments
26
MYSPACE
As China bids for the mantle of
superpower, its efforts could
be stymied by a belligerent
North Korea whose nuclear
tests are threatening the US
and other nations
44Game of Thrones
Illusion of Autonomy
An analysis of the Companies Act, 2013, and Clause 49 of SEBI’s
Listing Agreement shows independent directors lack independence
OPINION
34
The Case for Impeachment
Despite US President Donald Trump’s erratic conduct, the 25th Amendment which
deals with removal will be hard to implement
40
GLOBALTRENDS
Watchdog under Watch
Has the Election Commission compromised its integrity by defer-
ring the Gujarat polls and thereby invited accusations of bias?
FOCUS
30
Hope for Harassed Brides
Decades of activism were undone when the apex court in July
diluted Section 498A. Now the Court will revisit the order
28
LAWS&BILLS

10 October 30, 2017
“
RINGSIDE
“The Congress is an equal partner in GST decision
and it should not spread lies about GST. The deci-
sion was not taken by Parliament or Narendra
Modi. The decision was made by governments of all
political parties, including the Congress govern-
ments of Punjab, Karnataka, and Meghalaya,”
—PM Narendra Modi, while addressing a rally of BJP
workers at Gandhinagar in poll-bound Gujarat
“Later on I found that it
was my misjudgement. I
should not have done it. I
told them, and I have no
hesitation to tell it right
now. Sometimes we
make mistakes.”
—Former president Pranab
Mukherjee referring to his
meeting with Baba Ramdev
at Delhi Airport in June
2011, when he was the FM, in
order to persuade him not to
launch a protest against the
UPA-II government
"Now, Rahul baba is visit-
ing Gujarat often because
elections are near. He is
also offering prayers at var-
ious temples…(a person)
who has never lifted a puja
ki thali is applying a big
tilak and wearing big gar-
lands, without having
knowledge about the great
culture of this country, oth-
erwise he would not have
commented on (no)
women (in the RSS).”
—MP CM Shivraj Singh
Chouhan in Bharuch
“It’s so easy for people to
say play here but only those
who went through that
experience can understand
that. I can understand that.
But my request to them is
that the situation is better:
army is with you, our peo-
ple are with you, and you
will be safe.”
—Meher Muhammad
Khaleel, while speaking to
The Indian Express. He
drove the bus to Lahore's
Gaddafi Stadium on March
3, 2009, when the Sri
Lankan cricket team was
attacked by terrorists.
“I too was sexually
harassed and molested by
known and unknown
men, as a child, an ado-
lescent and as an adult.
So it can’t be just
Weinstein who is a sexual
predator. There are many
more men, men holding
high positions, talented
men, super smart men,
men who are our
friends, relatives and
acquaintances.”
—Lawyer Vrinda Grover
posting her update on the
online women’s campaign
‘Me Too’
"I didn’t want to go there
feeling important, and
feeling Oh my God, now I
have done 508 films... I
wanted to go there as a
humble student.”
—Anupam Kher, who
made a surprise visit to
FTII after being appointed
chairperson
“Despite all these dirty
tricks and attempts for com-
munal polarisation, the BJP
has been relegated to the
fourth position with a much
reduced vote share. This is a
pointer and a stern warning
to the BJP that they cannot
mess with Kerala.”
—Kerala Chief Minister
Pinarayi Vijayan on the
Vengara bypoll result

An inside track on
happenings in Lutyens’ Delhi
Delhi
Durbar
SPLIT OVER
STIMULUS
There are clear signs the gov-
ernment is suddenly develop-
ing cold feet to the extent that
it is nervous about the upco-
ming elections in Gujarat, the
prime minister’s home state.
First was the much-criticised
connection between the Elec-
tion Commission delaying
announcing a date for the Guj-
arat polls and the deluge of
sops by the state and the cen-
tre. More telling was the state-
ment by the prime minister
while campaigning in Gujarat
that GST “was a collective de-
cision’’ by all state governmen-
ts in which the centre had a
“small role’’ to play and that
the Congress was “an equal
partner”. It came across that
he was disowning GST and the
disruption it has caused for lar-
ge sections of the business
community. It is no coinciden-
ce that Gujarat’s large trading
community has been adversely
affected. Modi has not been
seen in this apologetic mode
since he became PM.
His elevation as president of the Congress
in a few days could not have had a better
prelude. In the past six weeks, his image
and strategy have undergone a remarkable
change. Part of that is to do with his effec-
tive use of social media, an area he
shunned till fairly recently. He is no longer
trolled on the scale he was before, largely
due to a more positive view of him by non-
BJP supporters, and his enhanced traction
on social media is reflected in the fact that
he is now more retweeted than Narendra
Modi. His tweets are a mix of the serious
and the witty. For example: After Donald
Trump spoke glowingly about Pakistan,
Rahul tweeted: “Modiji quick; looks like
President Trump needs another hug.’’ It was
retweeted over 19,700 times. Much of the
credit goes to Divya Spandana, better known
as Ramya, a former theatre and film actress
from the south who has been part of Rahul’s
team for some time. She was elevated as
head of the party’s social media unit last July
and it shows.
GUJARAT BLUES
RAHUL’S RISING GRAPH
The escalation in tension between the US
and North Korea harbours the threat of war,
with both sides having launched one stage
in the form of cyber attacks. The US has
accused North Korea of having hacked into
government sites along with cyber attacks on
private sector infrastructure. North Korea has
also experienced attacks on sensitive sys-
tems originating in the US and South Korea.
According to The New York Times, many of
the attacks on US targets originated in India.
A report says North Korea never launches
cyber attacks from its own soil but uses for-
eign-based computers. The paper quotes a
report by a security firm, Recorded Future,
which claims hackers from India are target-
ing US sites on behalf of Pyongyang. That
seems odd as India has downgraded ties
with Pyongyang and supported a UN resolu-
tion banning all trade with North Korea. But,
if the hackers are private players doing it for
money, it is a different story.
THE PYONGYANG
CONNECTION
There seems to be a division
of opinion between the fina-
nce ministry and its prestigi-
ous think tank. While Finance
Minister Arun Jaitley has been
rubbishing talk of the need
for a financial stimulus pack-
age to boost slowing growth
in the economy, Niti Aayog
Vice-chairman Rajiv Kumar
feels that such a move is
urgently required. While in
Washington recently, Jaitley
said the media was talking
about it but he had not used
the phrase (fiscal stimulus).
Barely a day later, Kumar
gave an interview to PTI
where he pitched the idea,
saying: “I do see a case for
stimulus.’’ He said it knowing
fully well what Jaitley had said
a day earlier which may be
why he added the line—“any
additional expenditure should
be used judiciously’’. It is co-
incidental that Niti Aayog’s
former vice-chairman, Bibek
Debroy, was moved last
month as head of the PM’s
Economic Advisory Council,
reportedly over differences he
had with the finance ministry.

Adivision bench of the Calcutta High Court
comprising Justices Harish Tandon and
Debangsu Basak stayed the centre’s decision
to partially withdraw paramilitary forces from
Darjeeling until October 27, rejecting the
argument that they were required to be
deployed elsewhere for elections. While issu-
ing an interim stay on the move, the Court
said the centre had failed to provide enough
reasons for the decision.
The High Court noted that there were
compelling reasons for the deployment of
central paramilitary forces in Darjeeling and
that similarly strong reasons should have
been cited to withdraw them.
The West Bengal government had called
in central forces when the unrest in
Darjeeling was at its peak in June and the
police were unable to contain the violence.
Earlier, on June 14, while hearing a public
interest litigation petition, the High Court had
directed the centre to deploy additional com-
panies of central forces in the hills. The court
asked the state and the centre to file affi-
davits the next week, explaining their stands.
The next hearing is on October 27.
The Hyderabad HC has
asked the Telangana
government to ensure
that around 200 Adivasis,
evicted from the
Eturnagaram Wildlife
Sanctuary on September
16 this year, be provided
access to water for drink-
ing and other needs. A
PIL filed by the Civil
Liberties Committee chal-
lenging the government’s
action stated that over 30
dwellings, a borewell and
a school had been
demolished in the area.
The evictees have moved
back into the sanctuary.
The court also asked the
government not to take
coercive action for three
weeks, and file a counter
affidavit in two weeks.
Courts
12 October 30, 2017
Give water to displaced Adivasis: Hyderabad HC
In a special sitting on a Sunday, the Jhar-
khand High Court allowed the medical
termination of a 23-week foetus of a
15-year-old rape victim from East Singhbhum
district in the state. The court relied on the
opinion given by a medical board of Rajendra
Institute of Medical Sciences (RIMS), Ranchi.
The RIMS board said that the risk to the life
of the girl was not grave in case the pregnan-
cy is terminated.
The High Court said that the girl had suf-
fered mental pain, being a victim of sexual
abuse, and her agony was further intensified
by the pregnancy. It also ruled that the girl be
brought to RIMS for tests and MTP and
asked the state government to bear all costs,
including medical, food and stay.
Jharkhand HC allows
MTP for 23-week foetus
—Compiled by Saurav Datta
Stay on
force
pullout
from
Darjeeling
Kerala HC
reimposes life
ban on Sreesanth
Adivision bench comprising
Chief Justice Navaniti Prasad
Singh and Justice Raja
Vijayaraghavan of the Kerala High
Court reimposed the life ban on
cricket activities by fast bowler
S Sreesanth in the wake of the
2013 IPL spot-fixing scandal. The
division bench’s verdict on
October 17 was in response to a
BCCI petition against the decision
to revoke the ban by a single
bench of the Kerala High Court.
The Court held that scrutiny
of disciplinary proceedings can
only be on limited grounds under
writ jurisdiction. The writ court
cannot examine the merits of the
decision, and can only examine if
the decision-making process had
been fair and proper. However,
the single-judge bench had sub-
stituted its own findings as if it
had appellate power over the
BCCI. This was termed improper
and exceeding the boundaries of
judicial review.
In August, a single-judge
bench ordered the BCCI to lift the
life ban on Sreesanth. The order
was issued after he had moved
the court challenging
the BCCI’s deci-
sion to not lift
the ban despite
his being cleared
by a Delhi Patiala
House court
in 2015.

RVIND Kejriwal versus
Arun Jaitley, Subramanian
Swamy against Rahul
Gandhi and now Jay Shah
and The Wire’s editors.
They all reflect the reality
behind defamation cases in India—a
majority are to do with political rivalry
or an attempt to curb freedom of the
press and free speech. Last May, Justice
Dipak Misra (who is now the Chief
Justice of India) headed a bench which
delivered a judgment upholding the
constitutional validity of Section 499 of
the IPC which criminalises defamation
and provides for a jail term of upto two
years. Yet, as the latest defamation suit
announced, not by the litigant, but on
his behalf by Union Minister Piyush
Goyal shows, the issue has many
grey areas.
In legal and media circles, “chilling
Civilandcriminaldefamation
lawsaremainlyusedto
silencecriticismand
intimidatethepress.They
needurgentreview
By Neeraj Mishra
in Raipur
A
Lead/ Defamation Suits
14 October 30, 2017
The Chilling
Anthony Lawrence

effect” is the term used to describe the
impact criminal defamation cases have
on freedom of expression. Jay Shah’s
threat of a `100-crore suit against a
fledging, non-profit news organisation
certainly falls in that category, never
mind the fact that his father, BJP
President Amit Shah, is the second most
powerful person in the country.
“Defamation cases are, subject to rare
exceptions, almost always a form of
legal intimidation,” says senior lawyer
Vivekanand Bhoi of the Bilaspur High
Court. The Jay Shah story is illustrative
because only one or two media outlets
carried the story which was buried by
the rest of the mainstream media. The
`100-crore liability case filed by Jay
Shah in the Ahmedabad district court,
in Mirzapur, against the news portal
was clearly intimidatory.
Here’s the question begging to be
asked. In a democracy with an appar-
ently free press, where is the reason not
to question a 16,000-time increase in
returns of a company registered in
2004, lying idle and then suddenly rak-
ing in it after the owner’s father comes
into political power in 2016? Moreover,
the story by Rohini Singh, a veteran
reporter, was based on public records.
The writer merely pointed out the facts
and made no personal observations.
India is not the only country where
defamation is used to silence critics. The
UN and OSCE (Organization for
Security and Co-operation in Europe)
have clearly stated on various occasions
how defamation laws are a danger to
freedom of expression and are used by
suppressive regimes to intimidate oppo-
nents and vigilant media into silence.
That is why defamation cases in both
forms—criminal and civil—are increas-
ingly getting outdated in most countries
primarily because of their rampant
misuse by politicians and powerful cor-
porations against individuals and their
own employees.
There are other factors involved.
Courts are often influenced by the domi-
nant ideology of the time or by the gov-
ernment of the day but most progressive
regimes worldwide now view this as
mostly a civil matter and have decrimi-
nalised it. The underlying rationale is
that reputation is a matter of individual
interest and the State’s resources should
not be wasted on pursuing such filings.
SPIKE IN CIVIL SUITS
In India, though Section 499 of the IPC
stands, the focus is now turning to
Effect
TheDipakMisraverdictinthe
SubramanianSwamyandothers
vsUnionsaidthatjudgesmustbe
carefulinadmittingdefamation
casesandissuingsummons.
DDCAauditcould
weakenJaitley’scase
An internal audit of the Delhi and
District Cricket Association’s
(DDCA) finances could weaken
Arun Jaitley’s defamation suit
against Arvind Kejriwal. The Aam
Aadmi Party and Kejriwal had
accused Jaitley of indulging in cor-
ruption relating to the DDCA’s
funds while he was at the helm.
Carried out on the orders of the
Delhi High Court, the audit has reg-
istered financial embezzlement of
several crores of rupees in the
DDCA between 2012 and 2015.
Jaitley was DDCA president from
1999 to December 2013.
According to the report, there
was embezzlement of funds in the
purchase of tickets worth `2.31
crore. DDCA apparently purchased
the tickets for ”distribution to gov-
ernment officials”. It spent `1.76
crore on purchase of tickets. An
unauthorised amount of `65.74 lakh
was paid to staff for the purchase
of tickets, conveyance and lunch
during the matches. Along with
that, a surplus entertainment tax of
`2.78 crore was wasted because
DDCA did not claim a refund of
unsold and surrendered tickets. The
Association suffered a loss of
`83.05 lakh as a result of mishan-
dling of a property tax case. In
January 2014, DDCA issued an
unauthorised loan worth `1.56 crore
to three private parties, namely,
Maple Infrareality Pvt Ltd, Shri Ram
Tradecom Pvt Ltd and Vidhan
Infrastructure Pvt Ltd. This was
done to defraud the DDCA, the
report says. Auditors also detected
“suspicious transactions” to differ-
ent contractors, vendors and sup-
pliers for `2.84 lakh.
Jaitley had refuted all of
Kejriwal’s accusations and charged
him with lying, but this audit report
might throw a spanner in his works.
—Saurav Datta

intimidation through high denomina-
tion civil claims primarily because
Section 499 has six exceptions and has
rarely led to noteworthy convictions.
The sentences rarely exceed six months
and with a limit of two years means it is
immediately bailable under appeal. It is
also compoundable. Even this stage may
be reached after 10-15 years of using the
court’s time.
Petitioners have realised that filing a
civil claim—though they may stretch the
court’s time for longer—has a far greater
chilling effect. It is so chilling as to be
muzzling. Shah may be on to a similar
platform. The `100-crore figure is
intimidating enough to silence those
anxious to pursue the matter further.
“It is worth recalling that he (Amit
Shah) had filed no such case against The
Hindu when it had alleged in 2010 that
he was a beneficiary of the `1053-crore
Ketan Parikh scam as a director of coop-
erative bank which settled the case with
Parikh in which the latter did not have
to pay a single penny despite being
found guilty by the Ahmedabad HC,”
says a former Solicitor General. Shah
had by that time already become Home
Minister of Gujarat and thus a man
whose reputation had to be protected.
Arindam Chaudhuri of IIPM filed a
`100-crore case against Outlook maga-
zine which took years to settle. As added
pressure on the magazine, the case was
filed by Chaudhuri in distant Guwahati.
Jay Shah has opted to file his case in
Ahmedabad, a state where the family
wields great influence. The courts may
be neutral but it means an extra finan-
cial outlay for the editors of The Wire.
The fact is that once a case is filed, it has
to be contested and that requires a huge
investment of resources and time, some-
times more than the value of the suit
itself. Media organisations and indi-
viduals faced with the extra financial
burden are often forced to go in for
a settlement.
JUDICIAL DUTY
The Dipak Misra judgment in the
Subramanian Swamy and others vs
Knowyourfactsondefamation
Criminal defamation: To be filed in
the magistrate’s court under Section
499, IPC, which has six exceptions.
Punishable under Section 500 with
imprisonment upto two years and fine.
Civil defamation: To be filed in district
magistrate’s court or HC depending on
the claim under uncodified law of torts.
Eleven percent of the claimed amount
to be deposited as court fees. The
court may admit the case based
on merit.
India has a place among the top 10
countries of the world in cases related
to defamation. Defamation was held as
constitutionally valid by the SC in 2016
in the face of progressive argument
that it is detrimental to free speech.
Civil cases are usually meant as legal
intimidation. But factual or not, the
cases entail a complex and expensive
legal procedure that can involve both
parties for the next decade or more.
The UN has often espoused the
cause of freedom of speech over
defamation.
Civil defamation cases are often
intended to silence media houses.
Also used to deter employees from
expressing discontent on social
media platforms.
Cases are compoundable under
Section 320, CrPC—parties can reach
a compromise and withdraw the case.
Lead/Defamation Suits
FIGHTING FOR HONOUR?
Outlook magazine too was slapped with a
`100-crore defamation suit by Arindam
Chaudhuri of IIPM
16 October 30, 2017

Union, though, has a very important
facet to be kept in mind by judges when
tackling defamation cases in civil or
criminal form even though the judg-
ment per se dealt with the criminal side.
Judges have to be very careful in admit-
ting cases and need to examine all sides
before issuing summons, the apex court
said. In the Jay Shah case, the
Ahmedabad court may have erred in
allowing the deputy Advocate General to
file the case on behalf of the petitioner.
Not illegal but certainly irregular. “The
least it could have considered was how
could a company with a turnover of `80
crore have a reputation of `100 crore to
protect?” asks senior lawyer Ajay Gupta
who has appeared in several high-profile
defamation cases involving Digvijay
Singh, Uma Bharti and Sunderlal Patwa.
“India’s laws are being crafted under
dysfunctional institutions,” writes Pratap
Bhanu Mehta, a noted columnist.
Motivations behind every filing have to
be examined by courts before they
decide to admit cases in the first place.
Section 66A of the IT Act was struck
down for exactly the same reason—its
rampant misuse by the police and oppo-
nents. Anything and everything pertain-
ing to an individual’s reputation cannot
become a matter of court or punitive
proceedings, particularly when it comes
to public figures. Courts have to perhaps
accept this as a standing exception—
that individuals will be scrutinised for
their personal probity and that of their
family members. Any slight has to be
contested publicly and not through
intimidatory summons.
ECONOMIC RATIONALE
The final argument that should demol-
ish both defamation laws in India is eco-
nomic. In a worldwide survey sponsored
by the Norwegian government it was
found that India ranks amongst the top
10 in number of defamation cases. It
ranks absolutely at the top alongwith
Pakistan when it comes to awarding
punitive damages in civil cases when
compared to per capita GDP. The aver-
age GDP was calculated at $12,000 and
Indian courts were found to be award-
ing 10 times this figure on an average in
defamation cases. It stands to reason
that monetary claims for an individual
reputation should be seen in GDP
terms. An individual’s reputation cannot
overly outweigh a country’s production
capacity and similarly an accused
(whether an individual or a media
house) cannot be expected to pay bewil-
deringly astronomical sums just so that
it is a deterrent for others.
As things stand today—with both
Section 499 and civil law in place—it is
really upto the courts to settle the issue
in defamation cases. An individual cer-
tainly has the right to his reputation and
it is even guaranteed under Article 21
but where the line has to be drawn is for
the courts to decide.
Courts will have to recall that free-
dom of speech too is a fundamental
right and they are the custodians.
REPUTATIONS AT STAKE
Union Finance Minister Arun Jaitley (left)
has filed two defamation suits against
Delhi CM Arvind Kejriwal and AAP
JayShah’sthreatofa`100-crore
suitagainstTheWire fallsinthe
“chillingeffect”category,never
mindthathisfather,AmitShah,is
thesecondmostpowerfulperson
inthecountry.
UNI

Aviation/ GMR Group
18 October 30, 2017
S had been pointed out in
more than one expose by
India Legal, there is much
that is rotten in the joint
venture (JV) that Airports
Authority of India (AAI)
had with GMR Infrastructure’s sub-
sidiary, GMR Airports Ltd (GAL). The
JV created Delhi International Airport
Limited (DIAL), with GAL holding 64
percent, Germany’s Fraport, 10 percent
and AAI, 26 percent.
The deal, heavily undervalued to suit
the private sector infrastructure giant,
has come back to haunt the venture as
well as Indira Gandhi International
Airport, once declared the best airport
in the world. It has been revealed that
the JV has been bled to such an extent
that the intrinsic value of its equity has
heavily eroded. It has also been alleged
that charges have been levied where not
legally permissible and have been hiked
to almost unrealistic proportions in
other cases.
MINISTRY AUDIT
How that erosion happened was
revealed when a team of officers of the
Internal Audit Wing of the Principal
Accounts Office, Ministry of Civil
Aviation (MoCA) conducted an audit of
the accounts of DIAL in March 2016.
Several anomalies came to the surface,
including the fact that DIAL had not
paid `655 crore due as Cost of
Deployment (CoD) to the Central
DIAL’s Dubious Deal?
Anauditbythecivilaviationministryhadfoundthatthe
companyhasnotpaid`655croretoCISFforairportsecurity
despitehavingcollecteditfrompassengers.
By Sujit Bhar
A
Rajeev Tyagi

Industrial Security Force (CISF) which
guards the airport. That amount had, as
on September 11, 2017, reached approxi-
mately `697 crore, together with penal
interest on delay in payment as per
the contract.
In July 2017, as per media reports,
CISF chief OP Singh wrote a letter to
civil aviation secretary RN Choubey,
complaining that huge amounts were
outstanding from the 59 airports where
the CISF operates. He wrote: “A review
of the outstanding dues against various
airports shows that an amount of
`735.33 crore is outstanding against 59
airports. Out of the total pending dues
of `735.33 crore, an amount of 655.40
crore relates to Delhi International
Airport Limited (DIAL) alone (that
amount has now gone up).” Singh had
requested the central government to
intervene and recover its dues from the
private operator.
India Legal has learnt of another dis-
concerting detail. The DIAL manage-
ment had diverted `486.06 crore of the
amount due to CISF as CoD to paying
electricity bills, maintenance of machin-
ery and equipment and even on capital
expenditure (litigation regarding this is
pending in the Delhi High Court),
deployment of private security (this too
is the subject of pending litigation) and
payment of interest on loan.
These have come up in the MoCA
audit. The audit report says:
“On scrutiny of expenditure booked
against the Passenger Service Fee (PSF)
(Security Component, or SC), it is
observed that certain unauthorized
expenditure is booked by DIAL against
PSF (SC). Such unauthorized transac-
tion and amount involved in these
transactions till March 31, 2014 is listed
below:
Capital Expenditure (Case pending in
Delhi HC)—`299.048 crore
Expenditure on deployment of
Private Security (pending in court)—
`22.48 crore
Expenditure on Maintenance of
Machinery & Equipment—`42.02 crore
Insurance premium on Terrorism
Insurance Policy—`11.41 crore
Expenditure on Electricity Charges on
Air Side perimeter lights—`1.28 crore
Payment of Interest on Loan—`107.39
crore
The Total Unauthorised payments
comes to `486.06 crore.”
A source, who was a senior official in
AAI, explained to India Legal that of the
nearly `500 crore diverted, capital
expenditure and payment of interest on
loan components cannot be used from
the security component of what DIAL
had collected from passengers.
PASSENGER FEES
At IGI Airport, DIAL collects PSF at the
rate of `294 per passenger. This in-
cludes `130 as SC. Payment of CISF’s
cost of deployment is met out of the
amount collected as PSF.
While the legality of many of these
expenses has been challenged in several
courts, it has now come to light that
GMR Airports Ltd is possibly on its last
financial leg, with demand for cash from
its parent company, GMR Infrastruc-
ture, growing day by day. GMR
Infrastructure is one of the most highly
indebted infrastructure companies in
the country and there are allegations
that it has been squeezing the only cash
cow in its stable—GMR
Airports Ltd—to feed its
own demand.
GMR’s excuse is that it has
not been able to pay the CoD
because of a cash crunch but
that is difficult to believe. A
Bloomberg research and com-
pany overview of DIAL shows
healthy growth in profit and
EBITDA (earnings before
interest, tax, depreciation and
amortization). This figure
measures a company’s operat-
ing performance away from
the tax environment, over
which the company has
no control.
Bloomberg’s report is as fol-
lows: “Delhi International
FINANCIAL BUNGLING?
(Facing page) The IGI Airport at New Delhi;
(Below) the CISF has been exploited by DIAL
TheDIALmanagementhadalso
diverted`486.06croreoftheamount
duetoCISFtopayingelectricitybills,
maintenanceofmachineryand
equipment,capitalexpenditure,
deploymentofprivatesecurityand
paymentofinterestonloan.
Youtube

“Anamountof`735.33croreis
outstandingagainst59airports.Out
ofthetotalpendingduesof`735.33
crore,anamountof`655.40crore
relatestoDelhiInternationalAirport
Limitedalone(ithasnowgoneup).”
--OPSingh,CISFchief,inalettertocivil
aviationsecretaryRNChoubey.
20 October 30, 2017
Airport Limited reported unaudited
standalone earnings results for the first
quarter ended June 30, 2017. For the
quarter, revenue from operations was
INR 14,402.7 million against INR
13,087.9 million a year ago. EBITDA
was INR 5,734.7 million against INR
4,410.7 million a year ago. Profit before
tax was INR 2,801.7 million against INR
1,491.0 million a year ago. Profit for the
period was INR 1,221.7 million against
INR 1,415.3 million a year ago... Net
cash from operating activities was INR
4,889.3 million against INR 5,221.5 mil-
lion a year ago. Purchase of property,
plant and equipment was INR 347.3
million against INR 340.9 million a
year ago.”
It is also clear that the earnings from
the security component (a fixed amount
which cannot be offset against other
expenses) have seen healthy growth.
WRONG FIGURES
On the basis of passenger data of IGI
Airport on AAI’s website, a calculation
sheet on PSF (SC) collection month-
wise by DIAL from January 2011 to July
2017 was prepared by the audit team.
The total CoD booked by CISF, the pay-
ment made by DIAL and outstanding
amount due from January 2011 to
September 2017 was shown in a calcula-
tion sheet.
It is clear from the details that DIAL
had collected a sum of `27.91 crore as
PSF (SC) in January 2016, but it did not
clear the monthly CoD of CISF of
`24.95 crore. Also, while DIAL did not
pay CoD from February 2016 to June
2017, it kept on collecting a sum ranging
from `27.58 crore to `37.30 crore every
month during that period.
Total PSF (SC) collection by DIAL
from January 2011 to July 2017 is
`18,40,02,79,430 (around `18,400
crore) and the total cost of deployment
booked by CISF from January 2011 to
September 2017 is `1765,44,42,484
(around `17,654 crore). This clearly
shows that though the total amount of
funds collected in PSF (SC) by DIAL
was higher than the total CoD booked
by CSF, DIAL’s management did not
clear the CoD bills of CISF.
MORE AREAS OF CONCERN
There are some other areas of concern
regarding how DIAL has been handling
finances at IGI Airport. While DIAL has
not paid CoD to CISF, it has charged
this security force for accommodation in
the barracks at Mahipalpur which are
above market rates. This excess rent
comes to `81.26 crore from 2006-07 to
2015-16. Interestingly, DIAL has also
charged `20.27 crore as rent for the
open space attached to this accommoda-
tion. The CISF has calculated that even
if one excludes the rent for accommoda-
tion, the rates currently applicable do
not cover its basic expenses.
Charging for the open space has cre-
ated a lot of heartburn. Calculations
show that from 2014-15, DIAL has
charged CISF a licence fee for opera-
tions of `581.11 per square metre per
annum. The CISF rejected this.
DIAL has also been charging `150
per vehicle in the parking lot, while this
amount can only go to AAI. There has
been huge criticism of the AAI’s role in
this entire episode, and why it is a mute
spectator to all this.
This clearly shows how a private
operator had been allowed to access
prime property for 60 years (30 years,
plus renewable by another 30), leading
to dubious commercial exploitation and
under-valuation. Initially, Malaysia
Airports Holdings Berhad (MAHB) was
also a stakeholder in DIAL. It had
invested $40 million between 2006 and
2008 to buy 10 percent stake in DIAL.
This meant that the entire property at
that time was valued at a mere $400
million. How was property valued at
such a meagre amount?
A
ccording to reports, Paris
Aeroport, which manages 14 pri-
vate and public airports in and
around Paris, including the Charles de
Gaulle Airport, is close to inking a deal
with GAL. It is believed that it will be
allowed to pick up 40 percent stake in
DIAL, thereby becoming the lead stake-
holder. A 40 percent stake would be
around `4,000 crore, which means DIAL
will be valued at `10,000 crore, approxi-
mately $1.5 billion, the value it has set
on itself.
That, however, presents a slew of
problems. With GMR set to exit, or at
least accept a minority stakeholder posi-
tion, the future of DIAL would lie in
aggressive expansion by the lead opera-
tor, which will be the French company. If
debt is decided as a funding source,
then this valuation (`10,000 crore) would
raise peanuts for big projects. And an
IPO might run into security concerns.
Secondly, the government has
capped foreign equity holding in this
sector at 49 percent. Technically, Paris
Aeroport qualifies on this count with a 40
percent stake. But the prime reason for
the 49 percent limit was to not allow a
NewBidder?
Aviation/ GMR Group

THROWAWAY PRICE
A CAG report, quoted in an earlier India
Legal expose, said: “The total land area
initially leased out to DIAL for develop-
ment of the airport was 4,608.9 acres.
A further 190.19 acres was demanded
by the company which was duly award-
ed for a one-time fee of `6.19 crore.
Then the entire land, adding up to
4,799.09 acres, was leased out... at a
throwaway price.
“Article 2.2.4 of Operation
Management Development Agreement
(OMDA) permitted DIAL to utilise 5
percent of the total land area of
4,799.09 acres for commercial purposes.
This worked out to 239.95 acres. This
land for business exploitation was esti-
mated to be worth `24,000 crore by
the Airport Economic Regulatory
Authority (AERA).”
However, all this was made available
on a down payment of `31 lakh and a
lease amount of `100 per annum!
What happened to the valuation
thereafter? In March 2015, MAHB
found the going tough and exited the
consortium selling its 10 percent stake
in DIAL to GAL for $79 million (245
million shares). While it was a $39 mil-
lion gain for MHAB, the valuation of
the huge project had risen by only $390
million to $790 million in seven years.
Meanwhile, as per one calculation,
while in FY16, revenues of GMR Infra
from its airport business (including
Hyderabad and other airports)
increased by 20.92 percent to `6,556.12
crore with DIAL providing the main
component, its gross debt at the end of
FY16 stood at roughly `35,000 crore.
The parent company was desperate
for cash, with creditors threatening to
sue. In June 2016, GMR, through GAL,
wanted to raise around $500-700 mil-
lion through partial (30 to 33 percent)
sale of its stake and set the enterprise
value at around $1.5 billion. Bidders
refused to buy that valuation. A compa-
ny that was valued at a mere $790 mil-
lion in 2015 could not double its price in
a year. Talks with global private equity
majors KKR and Fairfax Financial
Holdings of Canada failed. This was the
fallout of having purchased a valuable
property at a throw-
away price.
This desperation by
the parent company
led to DIAL, its cash
cow, being squeezed.
The source said: “I
wonder why the avia-
tion secretary is not
acting on the CISF
chief’s letter. It is also a
wonder why AAI, a 26 percent stake-
holder, is sitting quietly through this
turmoil.”
The responsibility of AAI, which has
26 percent stake in the JV, was also to
certify valuations. Over-invoicing also
implicates this government agency and
in the case of a full-fledged investiga-
tion, AAI will be added as a party in the
issue. Ironically, in the CISF rent matter,
it will then be one government agency
(AAI) over-invoicing another govern-
ment agency (CISF).
It is time the landmark IGI Airport
is not allowed to perish because of poor
management and greed.
THE NEXT
DOUBTFUL DEAL?
Charles de Gaulle Airport,
controlled by Paris Aeroport
foreign company full authority to decide
the fate of a national airport. With Paris
Aeroport emerging as the largest
stakeholder, that end might not
be achieved.
The third is the huge debt that GAL
will leave behind in DIAL. Who will serv-
ice this, especially the nearly `500
crore that has been diverted in an
unauthorised manner?
Fourth, of course, is security. IGI
Airport is a high security zone. Will the
ministry of home affairs agree to the
main and secure operating areas of the
airport being handed over to a foreign
company?
MUTE SPECTATOR?
Rajiv Gandhi Bhawan, the
headquarters of AAI
Eric Salard/Wikimedia

Legal Eye/ Pro Bono Work
22 October 30, 2017
HE legal profession is one of
the most noble. Nobility is
not a narrow concept. There
are limitless possibilities for
noble behaviour by a lawyer.
Truthfulness, honesty and correct guid-
ance to the court about a legal position
are well-known.
A good lawyer is not expected to
refuse a brief merely on account of the
inability of a client to pay him adequate
fees. Even some busy, senior lawyers do
accept briefs without any professional
remuneration. The reasons may be var-
ied—he may be convinced about the
merit of the case, the inability of the
client to pay or have some other con-
vincing reason. Some doctors also give
services free.
FUNDAMENTAL RIGHT
However, this charity is not advertised
and there would be no record of it.
Right to life under Article 21 was given
an expanded meaning by the Supreme
Court in various pronouncements. In
Unnikrishnan’s case (AIR 1993 SC2178),
the apex court listed such rights and this
includes the right to legal aid, a funda-
mental right. This recognition was fol-
lowed by various acts, which constituted
authorities and committees for comply-
ing with the State's “obligation” to pro-
vide legal aid. This institutional aid
makes a record of those providing legal
aid. Legal aid schemes were doubtless
started with good intentions, but it is
also undeniable that the best possible
advice and assistance from experienced
lawyers cannot be made available in
many cases.
Another occasion when an advocate
has the opportunity to do pro bono
work is when he is asked by the court to
assist in a matter. If the case at hand is
such that further research is necessary
and any of the parties are unable to do it
or it is felt that expertise is required, the
court requests a senior or suitable advo-
cate to do so. The person so appointed is
unconnected with the parties who are in
dispute. He does not expect any remu-
neration. Assisting the court at its
request is a matter of honour.
There are reports that the govern-
ment is considering looking into the pro
bono work done by an advocate as a cri-
terion for becoming a judge of a high
court or the Supreme Court. Law
Minister Ravi Shankar Prasad reported-
ly said: “Our government is keenly pro-
moting pro bono lawyering. Exposure to
pro bono lends its own weight.”
However, implementation of such a
proposal may face practical difficulties.
For example, legal assistance in a trial
court cannot be put on the same footing
as it involves basic legal work such as
drafting, making lists and so forth.
In support of this proposal, govern-
ment sources are relying on a recent
order of the Supreme Court.
Designating a senior advocate is at
present a matter of discretion of the full
house of the judges. They can be pre-
sumed to have knowledge of the merits
of the applicant. In a motion challeng-
ing this procedure, the Supreme Court
has indicated pro bono work as one of
the factors to be taken into account for
designating a senior advocate. The
law ministry wants to follow this sug-
gestion when considering a judge's
elevation too.
When a high court considers the
suitability of a person for elevation, his
work in that court is the main consider-
ation. If he has assisted the court pro
bono, his knowledge of law, research
and approach are certainly noted. It
remains to be seen as to what more the
law ministry wants to bring in. If the
government asks for a record of the
legal aid committees and counts the
number of briefs assigned and worked
out by an advocate, the exercise is not
likely to help in finding meritorious
persons for selection. This is because
their record will not be known to them
that far back.
The system of legal aid itself needs
reforms that would make expert advice
available to the needy. This can hardly
be achieved just by statutory rules. It
needs the active participation of lawyers
and bar associations.
While there are senior lawyers and
doctors who are alive to the financial
difficulties of some of their clients and
serve them without charging any
fees, the record of such goodness is
scarcely available.
—The writer is a former judge
of the Bombay High Court.
Charity Begins in Court
Whilethegovernmentmayconsidersuchaidbyadvocatesin
ordertoelevatethemasjudges,itsimplementationistough
By Justice Narendra Chapalgaonkar
T
Anthony Lawrence

24 October 30, 2017
Briefs
According to a report by the
NGOs, Association for
Democratic Reforms (ADR) and
Election Watch, the BJP’s
assets have increased by 627
percent from `122.93 crore in
2004-05 to `893.88 crore in
2015-16. The Congress’s
assets have increased by 353
percent. The report, titled
“Analysis of Assets and
Liabilities of National Parties —
FY 2004-05 to 2015-16”, is
based on the declarations
made by parties before the
Election Commission. The
assets of other parties such as
the Trinamool Congress, the
BSP, the NCP and the CPI also
rose considerably during the
period, with Mayawati’s party
recording a 1,100 percent hike.
BJP’s assets
increase by 627
percent in 10 years
—Compiled by Lilly Paul
Yuvrajnamedindomesticabusecase
Office of profit case: EC to start hearing against 20 AAP MLAs
To rescue Delhiites
from the post-Diwali
pollution disaster, meas-
ures to combat pollution
were taken under the
Graded Response Action
Plan (GRAP) of the
Supreme Court-appoint-
ed Environment
Pollution Prevention and
Control Authority
(EPCA). EPCA is
incharge of tackling pol-
lution in the capital.
Under GRAP, diesel gen-
erators have been
banned, the Badarpur
power plant has been
closed down and
hundreds of brick kilns
have been ordered to halt
work. The measures
came into effect on
October 18, and will
remain in force till March
15 next year.
Indian cricketer Yuvraj Singh
and his family have been
named in a domestic violence
complaint filed by his younger
brother Zoravar’s wife, Akansha
Singh. The petition was filed in
August, and has now gone to a
Gurgaon court. The case filed by
Akansha names Yuvraj, his
mother Shabnam Singh and his
brother Zoravar. Akansha has
reportedly accused Zoravar and
his mother Shabnam of causing
her “mental and financial tor-
ture”. Yuvraj’s name features in
the complaint because he was a
“mute spectator” to the torture.
The first hearing of the case
will be on October 21 and the
court has given Zoravar and his
family time till that date to file a
response to the complaint.
Pollution regulations roll out in Delhi
The Election Comm-
ission will soon hear
arguments in the office of
profit case against 20 Aam
Aadmi Party MLAs.
Election Commissioner OP
Rawat, who had earlier
recused himself from all EC
cases related to AAP after
Chief Minister Arvind
Kejriwal questioned his
neutrality, has agreed to
join the proceedings on
Chief Election Commiss-
ioner AK Joti’s request. The
proceedings are related to a
disqualification petition
filed by a Delhi lawyer,
Prashant Patel, against the
AAP MLAs for allegedly
holding offices of profit as
parliamentary secretaries.
The offices were held des-
pite the Delhi High Court
setting aside their appoint-
ment, ordered without the
lieutenant governor’s nod.
The National Green
Tribunal has slammed
the government for delay in
the Yamuna cleaning proj-
ect. A bench headed by
Justice Swatanter Kumar
directed the vice-chairman
of Delhi Development
Authority, CEO of Delhi Jal
Board and a top officer of
L&T, which is the project
proponent, along with the
chief secretary, to
explain why no action
should be taken
against them for the
delay. The NGT on
January 13, 2015, had
passed an order on
clearing of encroach-
ers on the floodplains
of the Yamuna. The
Tribunal had granted two
months to the government
for completing the work.
NGT slams govt for
delay over Yamuna
cleaning project

26 October 30, 2017
HY are so many cases
pending in Indian
courts, given that
Indians are not a par-
ticularly litigious
people? It takes sever-
al years before a case comes up for hear-
ing and, sometimes, 20 years or more
before it is finally disposed of. In order
to find out the real reasons for penden-
cy, we have to first look at the genesis of
the court cases and the implementation
of judgments.
A case can arise if the wording of a
statute or government order is ambigu-
ous and a person is affected adversely
because of its interpretation. In the
process of disposal of cases, the correct
interpretation of the statute is deter-
mined. If the final judgment is in favour
of the affected person, he gets relief.
But as a statute or order affects many
people, what happens to people other
than the litigant who have also been
adversely affected by the incorrect inter-
pretation construed by government offi-
cials? If the government does nothing
about the others, each one of them will
be forced to file a case. Thus, a large
number of cases will be filed in courts
notwithstanding that the legal issue in
the matter has already been decided by
the court.
Just by issuing a circular about how
the order is to be interpreted in view of
the court decision and what follow-up
action is to be taken, the government
can prevent the filing of many unneces-
sary cases, some of which go right up to
the Supreme Court. Not only are such
circulars not issued, but decisions in
favour of citizens are invariably
appealed against.
Needless to say, unnecessary litiga-
tion involves an enormous waste of
national resources and injustice and
harassment to ordinary citizens.
INEPT SYSTEM
So why do we have such a peculiar sys-
tem? Why do government officials not
issue appropriate circulars after defini-
tive court judgments? There are three
interrelated reasons for this—rampant
corruption, high levels of incompetence
and almost complete lack of accounta-
bility of the concerned officials.
Corruption in India is many-faceted.
A large number of appointments are
made in exchange for money or other
considerations. When a person is
appointed to an office for which he is
unfit, wrong decisions abound. If offi-
cials in charge of applying laws and
orders do not have the requisite level of
competence, then even if there is no
ambiguity in them, their misapplication
can give rise to court cases.
While learning for a job takes place
by trying to do it properly, officials
whose actions are primarily determined
by corrupt considerations (even if they
were appointed on merit) do not acquire
the required expertise. Thus, corruption
invariably leads to some incompetence
and when it becomes rampant, so does
incompetence. There is no denying that
Indian bureaucracy is seriously afflicted
by shockingly high levels of corruption
and incompetence. While a large num-
ber of court cases arise because of mis-
interpretation of rules, many are also
due to misapplication of the relevant
orders either because of incompetence
or corruption.
Nothing exemplifies the system of
government officials appealing every
case currently in vogue better than the
Caught in a Logjam
The largenumberofcasesisduetonon-applicationofcourtpronouncementsandthe
systemofappealingagainstalljudgments.Isittimetohavealawtotacklethismenace?
My Space Satish K Jain/ Pendency of Cases
W
Anthony Lawrence

case of DTC conductor Ranvir Singh
who in 1973 allegedly charged a passen-
ger 10 paise instead of the correct
amount of 15 paise. A departmental
inquiry found him guilty of causing a
loss of 5 paise to the public exchequer.
Litigation started after his dismissal in
1976. The labour court in 1990 decided
in his favour. DTC appealed in the high
court, which dismissed it in 2008. DTC
again moved the high court through a
review petition in 2008.
BUREAUCRACY’S ROLE
There is one aspect of Indian bureaucra-
cy which just does not make any sense
in the context of a democracy governed
by the rule of law. When a person is
adversely affected by an act of omission
or commission by a bureaucrat, all the
costs are borne by the victim. The
bureaucrat’s action or non-action could
be contrary to the law, a misapplication
of it or dereliction of duty. But the offi-
cial will not have to pay the price for it.
It is for the victim to decide whether to
accept the injustice and loss or file a
court case and wait for several years for
justice to be delivered.
Everyone knows that it takes many
years to get any relief through the legal
route in India, so most individuals have
no alternative but to put up with the
injustice. Closing of the legal route for
all practical purposes has turned even
petty bureaucrats into minor despots.
One implication of the rule of law is
that anyone who transgresses it will be
held accountable. Also, everyone is pro-
tected by law and has legal recourse for
relief. Due to the peculiar bureaucratic
system in the country, neither of these
two fundamental aspects of the rule of
law hold uniformly. Bureaucrats can and
do act against the law of the land and
victimise those with little economic or
political clout for monetary gains, or
because of incompetence or a perverse
sense of power. Violations of law by
bureaucrats against ordinary citizens
invariably go unpunished. Thus, with
respect to such violations, Indian
bureaucrats for all practical purposes
are above the law. And because courts
have a large number of pending cases,
for those with little political or economic
clout, there is no protection of law.
This state of affairs has a deleterious
effect on the country. Due to such a
large quantum of litigation, there is an
enormous wastage of national resources,
which if freed, can be used for wealth
creation. Also, a large number of cases
signify too many cases of injustice. Too
much injustice can seriously hamper
nation-building. Thus, it is of utmost
importance that this problem be solved
on an urgent basis.
MAKE THEM ACCOUNTABLE
As the genesis of this problem lies in the
corruption and incompetence of a large
section of the bureaucracy, a permanent
solution would have to involve a mecha-
nism by which the competence levels of
bureaucrats are raised and corruption
decreased. A dent in the situation can be
made if there is a law which makes
bureaucrats personally accountable for
acts of omission and commission.
Under RTI, anyone can seek infor-
mation regarding any public matter
regardless of whether the person has a
locus standi in it or not. A similar law is
needed for filing cases against bureau-
crats in courts especially created for the
purpose. Anyone should be able to file a
case against a bureaucrat for acts of
omission and commission. This will
enable public interest lawyers to file
cases against bureaucrats who do not
conform to laws and regulations. This is
essential as most victims of bureaucratic
violations of laws happen to be people
whose circumstances make it difficult
for them to litigate. The erring bureau-
crats should be made responsible and
monetary penalties structured in such a
way that there is a substantial decrease
in such bureaucratic acts.
Central and state governments can
set up departments for examining court
judgments and issuing the requisite cir-
culars whenever any judgment applies
to a class of persons rather than just the
litigant. When the litigation is regarding
the meaning and interpretation of a law
and the court has made a definitive pro-
nouncement, it can also direct the gov-
ernment to issue relevant circulars.
The writer is ICSSR National
Fellow and ex-professor, JNU
TOUGH MEASURES
Reforming the bureaucracy will lead to
unclogging of courts with needless litigation
UNI

Laws & Bills/ Section 498A
28 October 30, 2017
T is an order that has brought
hope. On October 13, the Supreme
Court observed that it disagreed
with its earlier order diluting
Section 498A of the Indian Penal
Code, a statute often invoked in
dowry-related domestic abuse cases.
Responding to the writ petition filed
by NGO Nyayadhar, the Court’s three-
judge bench of Chief Justice Dipak
Misra, and Justices AM Khanwilkar and
DY Chandrachud announced that the
July 27 order rendered in the Rajesh
Sharma vs State of UP case by the divi-
sion bench of Justices AK Goel and UU
Lalit “really curtails the rights of the
women who are harassed” and prima
facie, the guidelines issued by it lay “in
the legislative sphere”.
Advocate-on-record Manju Jaitley
confirmed that though the Maharash-
tra-based NGO had raised a limited
issue, the apex court departed from tra-
dition and decided to revisit the judg-
ment. The NGO’s prayer was for the
inclusion of women in family welfare
committees sought to be formed by dis-
trict legal service authorities so as to
achieve at least a 2:1 sex ratio. The
Court also issued notices to the min-
istries of home affairs, and women and
child development and the National
Commission for Women to revert with
their views. Senior advocates Indu
The Last Resort
DecadesofactivismwereundonewhentheapexcourtinJulydilutedthisstatute.Butina
reassuringmove,theCourthasnowpromisedtorevisitit
By Sucheta Dasgupta
I
NEED FOR REVERSAL
(Top) Women protesting
against the dilution of Section
498A in Delhi; (inset) Chief
Justice of India Dipak Misra
K.M Vasudevan/lawyerscollective.org

from personal appearance during trial
which would be conducted as far as pos-
sible via video-conferencing.
As critics have pointed out, these
directions are faulty on three counts.
Untrained in law and without well-
defined qualifications, family welfare
committees would bring in their own
biases while evaluating a case and very
likely function as non-State vigilante
groups just like landlords, resident wel-
fare associations and gau rakshaks. The
culprit would be given a long rope and
every chance to flee. And the victim,
with no one by her side and already
under tremendous pressure to withdraw
her police complaint, would probably
end up being coerced to do the same,
ironically giving power to the false
notion that most such complaints are
frivolous ones over “trivial” issues.
Contrary to the common mispercep-
tion among law enforcement agencies
that this statute is being widely misused
by “mendacious”, privileged and vindic-
tive women to get back at their aged and
infirm in-laws, Section 498A is an
underused law, said Kavita Krishnan,
secretary, All India Progressive Women’s
Association. “The court did not consider
facts and solid studies on it and was
driven by misconceptions and stereo-
types. In its present form, Section 498A
is a virtual dead letter, rendered unus-
able,” she told India Legal.
MYTH OF MISUSE
Truly enough, National Commission for
Women data shows only 0.03 percent of
women filed a case under Section 498A
annually. It also shows the numbers of
false cases filed for other crimes such as
cheating, criminal breach of trust and
abductions are significantly higher, pro-
ving that all laws are open to misuse.
And low conviction rates, which often
happens due to shoddy police investiga-
tion, exist across the board for all crim-
es. Hence, the argument that this meant
women were filing false cases is wrong.
The Nyayadhar petition, too, states:
“Sec 498A is most helpful instrument in
the hands of victim women [sic] to get
immediate relief from law and police
station, but guidelines issued that [sic]
no immediate arrest to accused person
and his family. As the result, the fear of
law is totally vanished... we may say that
‘the soul of Section 498A is now dead
and now Sec 498A is valueless’.”
Ritwik Bisaria of the Men Welfare
Trust raises the point that in October
2010, Section 41A was modified to rule
out direct arrest for any offence with
less than seven years’ jail term, so the
no-automatic arrest directive is not a
new development. He mentions the
2014 Arnesh Kumar vs State of Bihar
and the 1994 Joginder Kumar vs State
of UP judgments to rest his case. But
the shocking fact remains that accord-
ing to the National Crime Records
Bureau, statistics from which were heav-
ily cited in the July order, 21 dowry
deaths still take place in India daily.
Also, the argument of gender neut-
rality of laws put forward by opponents
of an effective Section 498A is defeated
by the very existence of the custom of
dowry. Hopefully, the few strong laws
that years of struggle have earned us will
bring justice to the victims.
“Thecourtdidnotconsiderfactsand
solidstudiesonit.Initspresentform,
Section498Aisavirtualdeadletter,
renderedunusable.”
—KavitaKrishnan,secretary,AllIndia
ProgressiveWomen’sAssociation
Malhotra and V Shekhar have been
appointed amici curiae to assist it.
Pertinently, a group of 16 women’s
rights organisations, including Lawyers
Collective, Jagori and the All India
Women’s Democratic Association, had
earlier sent a memorandum to then CJI
JS Khehar to review the July 27 judg-
ment. Former additional solicitor gener-
al and senior advocate Indira Jaising
had said: “The sooner it is overturned,
the better it is for the rule of law.”
DEAD LETTER
The Supreme Court’s July 27 order has
been widely criticised for having undone
decades of achievements of women’s
rights movements. After a spate of
bride-burning incidents and harassment
by in-laws for dowry, Section 498A was
instituted in 1983 to protect the victims.
It states: “Whoever, being the husband
or the relative of the husband of a
woman, subjects such woman to cruelty
shall be punished with imprisonment
for a term which may extend to three
years and shall also be liable to fine.”
The term “cruelty” is explained as any
conduct that amounts to dowry harass-
ment or that may drive the wife to com-
mit suicide.
However, the top court in July
thought it fit to issue a set of directions
to “prevent the misuse of Section 498A
of the IPC”. It asked for the constitution
of family welfare committees to look
into cases before any FIR is filed. The
committees, which will comprise para-
legal volunteers, social workers, retirees
and housewives, must submit a report to
the police station within a month of
receipt of the police complaint, based on
which action would be initiated. Thus
there would be no immediate arrest of
the culprits. Yet their bail application,
post-arrest, would be decided “as far as
possible on the same day”. Recovery of
disputed dowry items from the accused
would not be ground for denial of bail.
In the case of NRIs, their passports
would not be impounded and a red cor-
ner notice would not be issued. Family
members of the accused are exempted

Focus/ Election Commission Controversy
30 October 30, 2017
HE Constitution, which is
India’s charter of gover-
nance, not only provides
for the legislative, execu-
tive and judicial organs of
the government (central
and state), but also establishes certain
independent and autonomous bodies to
perform specific tasks. The Election
Commission of India (EC) is the most
prominent of them.
The Constitution mandates the EC
with preparing, supervising and control-
ling all elections to the parliament and
state legislatures as well as those of the
president and vice-president. In
Mohinder Singh Gill vs Chief Election
Commissioner, the Supreme Court ruled
that Article 324 is a reservoir of power
to act for the avowed purpose of push-
ing forward a free and fair election with
expedition. It said: “The Commission
Who is
Watching the
Watchdog?
Hasthisimportantinstitutioncompromiseditselfby
deferringtheGujaratpollsandtherebyopeneditselfto
thechargeofbeingpartisan?
By MG Devasahayam
T
WOOING VOTERS
Prime Minister
Narendra Modi (centre), BJP
president Amit Shah (second
from left) and others at the
Gujarat Gaurav Maha
Sammelan in Gandhinagar
UNI

shall be responsible for the rule of law,
act bona fide and be amenable to the
norms of natural justice in so far as con-
formance to such canons can reasonably
and realistically be required of it as fair
play-in-action in a most important area
of constitutional order, viz, elections.” In
a catena of cases, the apex court
observed that fair and free elections are
a basic feature of the Constitution.
In order to perform this exalted role,
the EC has been given the same status
as that of the Supreme Court. To pre-
vent arbitrary and autocratic function-
ing, the EC was made a three-member
body first in 1989 and again in 1993,
this time to subdue Chief Election
Commissioner (CEC) TN Seshan, who
knew and asserted the constitutional
authority of his office, making politi-
cians see red. This arrangement contin-
ues till date and Election Commission-
ers are on a par with apex court judges
with the CEC enjoying the same consti-
tutional protection. It is, therefore,
imperative on the part of the EC to
ensure electoral integrity by all means
and not be influenced by the govern-
ment of the day.
Yet, this is what the EC seems to have
done when it broke convention on
October 12, 2017, by not announcing
polls in Gujarat along with Himachal
Pradesh, even though the terms of both
assemblies expired within two weeks of
each other.
NO FAIR PLAY?
Stating that this raised some serious
questions, former CEC SY Quraishi
wondered why the Commission should
wait to announce dates for Gujarat
when the terms of both the assemblies
are almost coinciding.
Incumbent CEC AK Joti, defending
the decision, said this was done to avoid
an unreasonably long imposition of the
Model Code of Conduct (MCC) in the
state. The election timetable, Joti said,
should ideally not exceed 46 days.
Another factor that influenced the deci-
sion, according to him, was the Gujarat
chief secretary’s letter seeking more time
before the election announcement as
the MCC would disrupt flood relief in
the state.
Quraishi retorted: “CEC has already
clarified that voting in Gujarat will wind
up before Himachal results are announ-
ced. If that’s the case, then Gujarat votes
will be counted within a week of
Himachal, if not on the same day. So
how many days of MCC have you spared
Gujarat? A week, maybe? What does
that really achieve?” Joti had no answer.
EC’S SHALLOW CLAIMS
Though Joti has denied that there is any
relation between the Commission’s deci-
sion to defer the announcement of the
Gujarat polls and Prime Minister
Narendra Modi’s election visit to
Gujarat on October 16, it seems shallow.
This is reflected in the hectic activities
in the state soon after the EC’s contro-
versial decision. On the same day, the
BJP-ruled Ahmedabad Municipal
Corporation (AMC) cleared proposals
worth `530 crore in just 10 minutes.
The AMC also concluded the ninth
Shahri Garib Kalyan Mela where 3,262
beneficiaries were distributed kits,
including cheques, funds and bonds
under the Manav Garima Yojana.
There have been many other events
in Gujarat wherein pre-election largesse
was dished out. The BJP-ruled Vado-
dara Municipal Corporation organised a
mega event on October 15 where Chief
Minister Vijay Rupani inaugurated
development works worth `780 crore.
It also approved extending free logisti-
cal services to Sri Sri Ravishankar’s
Diwali event.
As scheduled, Modi visited Gujarat
on October 16 and addressed a massive
rally on the conclusion of the two-leg
Gujarat Gaurav Yatra (march for
Gujarat’s honour). This yatra is part of
the pre-election campaigning and senior
party leaders participated in the 15-day
march, covering a distance of around
DOLING OUT LARGESSE
Prime Minister Modi at the Shahri Garib
Kalyan Mela in Ahmedabad
ElectionCommissionersareonaparwith
apexcourtjudgeswiththeCECenjoying
thesameconstitutionalprotection.Itis,
therefore,imperativeonthepartofthe
ECtoensureelectoralintegritybyall.
static.amitshah.co.in

Focus/ Election Commission Controversy
32 October 30, 2017
4,471 km spread over 149 of the 182
assembly constituencies in the state. He
also addressed a gathering at the
Gujarat Gaurav Mahasammelan organ-
ised by the state BJP.
Modi will again visit the state to ded-
icate the Ghogha-Dahej ferry service
connecting the Saurashtra and south
Gujarat regions over the sea ahead of
the assembly elections. All this is hap-
pening because party functionaries as
well as state officials are confident that
the Gujarat poll dates will not be
announced before October 23.
Incidentally, Joti belongs to the
Gujarat cadre of the IAS, and has held
several coveted positions in the state
including chief secretary during Modi’s
chief ministership. It looks as if the EC
has opened itself to the charge of “fence
eating the crops”.
ARBITRARY FUNCTIONING
Even otherwise, for some time now, one
could discern a certain arbitrary way of
functioning in this watchdog of India’s
democracy. It all started when com-
plaints of tampering with EVMs sur-
faced during the recent assembly elec-
tions in UP and Uttarakhand. The EC
dismissed the allegations as baseless,
speculative and wild. To drive home the
point, the Commission challenged polit-
ical parties to prove that EVMs are tam-
perable and set the date as June 3, 2017.
This came to be known as EVM
“hackathon”.
The EC held the “challenge'” with
only two small political parties—the
NCP and the CPI(M)—attending the
event. It got 14 EVMs for use during the
challenge but refused to give the access
code and share the memory and battery
numbers of the machines. In the event,
the much-hyped “challenge” turned out
to be a damp squib.
Even then, the EC had armed itself
with a stringent mandamus in favour of
EVMs and a gag order against its criti-
cism from the Uttarakhand High Court.
This order verbatim reproduced the
press release issued by the EC on May
20, 2017, soon after the controversy
arose. Certifying that EVMs are not
hackable and tamperable, the High
Court order went on to say that EVMs
use some of the most sophisticated
technological features. The judges
barred all political parties, individuals,
media and even social media networks
from criticising the use of EVMs.
The EC claimed a one-sided victory
in the non-event and declared that the
issue of tamperability “stands closed”. It
invoked the Uttarakhand HC order and
warned that in the event of any party
violating it, the “EC will take an appro-
priate decision”.
EVM CASE
Strangely enough, the EC has been con-
sistently refusing to even consider the
“democracy principles” as laid down by
the German Federal Court against
which EVMs were to be tested: (1) All
essential steps in the elections are sub-
ject to public examinability (2) Ordinary
citizens should be able to check the
essential steps in the election act and in
the ascertainment of the results reliably
and without special expert knowledge.
On these counts, EVMs fail. Given
their fallibility, advanced democracies
have abandoned them and returned to
the paper ballot. By sticking to these
machines, the EC is giving out a disturb-
ing message—that “technology” prevails
over “democracy”.
This is akin to Prime Minister Indira
Gandhi proclaiming during Emergency:
“Bread is more important than freedom”!
Anticipating strident criticism on
many fronts, the EC wants to arm itself
with contempt powers to send critics
to jail. For that purpose, it wrote to the
Union Law Ministry seeking amend-
ments to the Contempt of Courts Act,
1971, to empower it to punish anyone
questioning or criticising it or disobey-
ing its authority. In support, the EC
cited the example of Pakistan’s Election
Commission which is stated to have
such powers!
What a fall, my countrymen!
The writer is a former Army
and IAS officer
FormerCECSYQuraishi
wonderswhytheECdid
notannouncethepollsin
Gujaratalongwith
Himachal,whentheterms
ofboththeassembliesare
almostcoinciding.
Topreventarbitraryand
autocraticfunctioning,
theECwasmadeathree-
memberbodyagainin
1993,tosubdueCECTN
Seshan,whomade
politiciansseered.
CECAKJotihasdenied
thatthereisanyrelation
betweenthedecisionto
defertheannouncement
oftheGujaratpollsand
PrimeMinisterModi’s
visittoGujaratonOct16.

Briefs
The Lucknow zone of the
Enforcement Directorate,
while investigating a ponzi
scheme, has dug out links
between Bollywood actor
Nawazuddin Siddiqui and the
directors of Webwork Trade
Links Private Limited. The actor
received a sum of `1.15 crore
from the firm for his “services”.
The directors of the firm—
Anurag Garg and Sandesh
Verma—were cornered this year
for making over `250 crore
through fraudulent schemes.
Siddiqui, along with another
star, was hired by the firm for
endorsing an online portal pro-
moting social media marketing
of products through which the
schemes were launched. The
ED has sought an explanation
from Siddiqui.
Nawazuddin Siddiqui
summoned by ED
—Compiled by Lilly Paul
and Usha Rani Das
Oxygencylindersontrains
GST may reduce to 12 percent
in restaurants
Suite number 345 of the Leela Palace,
where Congress leader Shashi Tharoor’s
wife was found dead in 2014, has been
desealed, the Delhi police informed a Delhi
court. According to The Times of India, the
hotel has suffered an approximate revenue
loss of `3.6 crore, given its tariff is between
`55,000-`60,000 per night and assuming
50 per cent room occupancy.
The court had asked the Delhi police to
inform it about the status on the desealing
by October 16.
It had previously disposed of the hotel's
plea seeking desealing of the room.
The Railways will
have to keep oxygen
cylinders that shall be
provided to travellers
suffering from respirato-
ry diseases, the Supreme
Court has directed.
A bench of Chief
Justice Dipak Misra and
Justices AM Khanwilkar
and DY Chandrachud
said: “If any passenger
complains to the ticket
collector or the atten-
dant that he has some
medical problem and
immediate attention is
required, it shall be the
duty of the said officials
to intimate the next
railway station so that
he/she can be given nec-
essary medical assis-
tance at the next
railway station with
a hospital.”
The bench has
directed the railways to
work with doctors from
AIIMS to find a system
to provide medical
treatment to travellers
caught in an emergency
on a moving train.
Hotel suite where Pushkar died desealed
The GST Council is likely to reduce the
levy on restaurants from 18 percent
to 12 percent and withdraw the input tax
credit facility available to them. This was
proposed following complaints that
restaurants were pocketing the benefit of
input tax credit for taxes paid by suppliers
which subsequently made eating out quite
expensive for consumers. Under the new
structure, there will be two slabs—5 per-
cent for those with a turnover of upto
`1 crore that opt for the composition
scheme and 12 percent for others. The
proposal will be discussed during the
meeting of the GST Council in November.

Opinion Mukesh Kacker/ Independent Directors
34 October 30, 2017
T was L’affaire Satyam in 2009
which brought words like “corpo-
rate governance” and “independent
directors” to national prominence
though they had been part of the
corporate lexicon for some time.
When first shareholders of Satyam lost
`13,600 crore in less than a month in
December 2008 and then later, on
January 7, 2009, its chairman,
Ramalingam Raju, resigned and con-
fessed to a `7,800-crore accounting
fraud, the spotlight was firmly focused
on its high-profile independent direct-
ors who included a Harvard Busi-
ness School professor and a former
cabinet secretary.
What was till then known in corporate
India but never acknowledged openly
became an open secret—that independ-
ent directors on the boards of listed
companies were hardly independent and
just endorsed every proposal brought in
by the dominant shareholder or promot-
er without any questions or due dili-
gence. It triggered a national debate on
corporate governance standards and on
the role of independent directors. It led
to a revamped Companies Act, 2013,
which tried to enforce rigorous corpo-
rate governance standards and defined
the role of independent directors. In
order to align its own provisions with
this revamped Act and to make the cor-
porate governance framework more
effective, the Securities and Exchange
Board of India (SEBI) also amended
Clause 49 of the Equity Listing
Agreement in 2014.
Legislation has not been able to fix
either corporate governance or the inde-
pendence of independent directors and
major corporate controversies involving
these two issues are brought to the fore
from time to time—the grounding of
Kingfisher Airlines, the Tata vs Mistry
battle and the Infosys imbroglio being
the major ones. That the system is still
broken was recently admitted by Ajay
Tyagi, the new chief of SEBI, who said
in April 2017 that independent directors
were not really independent. Though
there is a clear link between the three
pillars—corporate governance norms,
role of independent directors and their
independence—I will only examine the
last issue. What constitutes “indepen-
dence” and why are independent direc-
tors not “independent” as reportedly
admitted by the SEBI chief?
Speaking of independence, first there
are traits and qualities that come within
the realm of personality and psychology
of an individual—ethics, commitment to
The
Independence
Myth
AnanalysisoftheprovisionsoftheCompaniesAct,2013,and
ofClause49ofSEBI’sListingAgreementshowsthatthese
directorsdonotreallyhavefreedom
ISUDDEN REMOVAL
Nusli Wadia (left) was an
independent director of the
Tata group, and Cyrus Mistry
(right) former chairman of
the Tata group

fairness, self-esteem and a desire of
being faithful to the post one occupies.
These cannot be legislated. Many com-
mentators have said that nothing can be
done to enforce independence because it
comes from within. But surely we are
not talking about this aspect of inde-
pendence here. We are primarily con-
cerned with what can be legislated and
enforced, namely, the independence
from the dominant shareholder or pro-
moter so that the independent director
doesn’t feel beholden to him.
It can be safely assumed that inde-
pendence of thought, action and deci-
sion-making in all positions of higher
responsibilities is a function of three
factors—process of appointment,
process of removal and monetary com-
pensation. The judiciary in India is
independent because all three factors
are largely independent of the executive.
The higher civil services in India were
also meant to be independent of the
political executive and the processes of
their appointment and removal and
their salary are insulated from the polit-
ical executive, though the same cannot
be said about their transfers and promo-
tions which have become reasons for the
loss of their independence. In the case of
independent directors in listed compa-
nies, if these three factors can be kept
insulated from the dominant sharehold-
er, then we will have a beneficial envi-
ronment for independence. Let us see
whether the Companies Act, 2013, and
SEBI’s Listing Agreement have been
able to create such an environment.
Section 149 (6) of the Companies
Act, 2013, lays down the essential
requirements for being an independent
director. It says that an independent
director means a director who, in the
opinion of the board, is a person of
integrity, possesses relevant expertise
and experience, is not related to pro-
moters or directors in the company and
who has or had no pecuniary relation-
ship with the company or with its pro-
moters and directors. It then goes on to
expand the definition of “no past or
present pecuniary relationship”. Section
49 of SEBI’s Listing Agreement also
mirrors these essential requirements.
These are pretty exhaustive and I find
them sound in terms of vetting the past
and present credentials of a prospective
independent director.
FRAUGHT PROCESS
The devil lies in the process of appoint-
ment. Clause 49 of the Listing Agree-
ment lays down that the Nomination
and Remuneration Committee of the
board will formulate “the criteria for
determining qualifications, positive
attributes and independence of a direc-
tor” and will identify and recommend to
the board their appointment. The board
then approves or disapproves the rec-
ommendations made and takes them to
a general meeting of the company for
final approval.
Section 152(2) of the Companies Act
lays down that every director shall be
appointed by the company in a general
meeting. Now, how does the Nomina-
tion and Remuneration Committee
select an independent director? The fact
is it does not! It only identifies and
“nominates” and, expectedly, it can only
nominate people known to or close to
the promoter or other directors.
Although this committee is headed by
an independent director, it is easy to see
that only those who are close to the pro-
moter and trusted by him have a chance
of first being nominated by the commit-
tee and then being approved by the
board and shareholders. Directorship in
listed companies, therefore, remains a
closed and incestuous group. It is
nobody’s case that the persons nominat-
ed are not deserving or meritorious. The
issue is that those appointed know very
well that they owe their appointment to
the promoter and will therefore hesitate
to disagree with him. It is felt that there
should be a statutory body to “select”
independent directors and the board of
a company and its shareholders should
FLIGHT HALTED
The grounding of Kingfisher Airlines showed
the cracks in the empire
WhenfirstshareholdersofSatyamlost
`13,600croreinlessthanamonthin
December2008andthenlater,on
January7,2009,itschairman,
RamalingaRaju(above),resignedand
confessedtoa`7,800-crorefraud.

36 October 30, 2017
not be able to reject the selection with-
out a grave cause.
What about removal? Is that insulat-
ed from the dominant director? Under
Section 115 of the Companies Act, 2013,
shareholders can give a special notice to
move a resolution. Under Section 100,
shareholders collectively owning 10 per-
cent of paid-up equity can call for an
EGM. Section 169 says that any director
can be removed by passing an ordinary
resolution at a general meeting. It
makes no distinction between an “inde-
pendent” or “non-independent” director.
Thus, all that it takes to remove an
independent director is to give a special
notice to move a resolution, then call for
an EGM and then pass that resolution.
Since most Indian promoters have large
shareholdings in their company (more
than 10 percent), removal of an inde-
pendent director at their behest is not
merely a possibility but a reality. This
was recently played out in the Ratan
Tata-Cyrus Mistry spat.
After Mistry’s removal as chairman
of Tata Sons, first the independent
directors at Indian Hotels Company
came out in support of Mistry.
Thereafter, independent directors at
Tata Chemicals and at Tata Steel also
came out in his support. Tata reacted by
alleging that Nusli Wadia, an independ-
ent director at these companies, was
behind these developments and moved
to have him removed from these boards.
I am not taking sides with either
Mistry/Wadia or Tata on the merits of
the spat. I am only concerned at the rel-
ative ease with which Tata was able to
orchestrate the removal of Wadia. If a
person of the stature of Wadia cannot
express his disagreement as an inde-
pendent director, what will be the fate of
ordinary independent directors?
ISSUE OF REMUNERATION
Let us now analyse the monetary com-
pensation aspect. The Act of 2013 and
Clause 49 of the Listing Agreement are
both right in prohibiting any kind of
business or pecuniary relationship
between the independent director and
the company. On remuneration,
Sections 149(9), 197(5) and 197(9) of the
Companies Act, 2013, prescribe that
independent directors can be paid a sit-
ting fee and related reimbursements for
attending the board/committee meet-
ings and profit-related commissions as
approved by the members. This is the
problematic part. It is easy to see that
for profit-related commissions, the pro-
posal has to start in the board and then
has to be taken to a general meeting for
approval by shareholders; the process
must be blessed by the dominant share-
holder and must strike at the very roots
of the “independence” of directors.
If on the other hand, an independent
director is paid yearly remuneration as
mandated by either statute or rule, then
he has no reason to feel grateful to the
promoter. At present, over 90 percent of
the companies do not pay profit-related
commissions to independent directors,
while many of the top companies pay
huge commissions. Both practices are
wrong. Independent directors have been
entrusted with huge responsibilities and
it is only fair to give them proper remu-
neration. This should be mandated by
statute or rule and should not be depen-
dent on the largesse of the promoter.
It would have been great if the panel
on corporate governance under Uday
Kotak-led SEBI panel had deliberated
on these core issues.
It is time the MCA and SEBI took
note of the issues raised in this article
and plugged the loopholes.
REFORMS NEEDED
(Above) The SEBI headquarters in Mumbai;
(right) Ajay Tyagi, the new chief of SEBI
Section149(6)oftheCompaniesAct,
2013,laysdownthatanindependent
directorisapersonofintegrity,
possessesexpertise,andisnotrelatedto
promotersordirectorsinthecompany.
Opinion/ Mukesh Kacker/ Independent Directors

India Legal 30 October 2017

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