Documenti di Didattica
Documenti di Professioni
Documenti di Cultura
April 2013
A Students Union Publication
ISSN 2321-0028
Issue I
April 2013
Editor-in-Chief
Siddharth Peter de Souza
Anu Chowdhry
Editors
Udit Rastogi
Patronin-Chief
Professor J.L. Kaul
Sumedha Sarkar
The Campus Law Centre Student Law Review (CLCSLR) seeks to publish and provide
avenues for student research and scholarship.
Published by the Students Union, Campus Law Centre, Faculty Of Law, University of
Delhi.
The publication of this Volume has been generously supported by Singh and Associates.
No reproduction, storage or transmission except via fair dealing of any part of this
publication may take place without prior written permission of the Students Union of
Campus Law Centre.
Please note that though every effort has been made to ensure that the information in
CLCSLR is accurate and appropriately cited/referenced, neither the Editorial Board nor
the Students Union shall be held liable or responsible in any manner whatsoever for any
consequences resulting from inaccuracies, errors or views taken by authors in the Journal.
Further, the views expressed by the authors are not necessarily those of the Editorial Board
or of any sponsors of Campus Law Centre Student Law Review.
Campus Law Centre Student Law Review 2013. All rights reserved.
Supported by:
Mr. Manoj K. Singh,
Managing Partner
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CONTENTS
vii
Editorial
ix
Acknowledgments
xi
Articles
1
21
47
67
87
107
133
151
iii
163
175
193
iv
A tribute to
Justice Jagdish Sharan Verma
(1933 2013)
Who inspired and believed in young people
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FOREWORD
I am pleased to introduce the inaugural issue of the Campus Law
Centre Student Law Review. An initiative of the Students Union, it is the
first ever student-edited and peer reviewed publication of the Campus Law
Centre, Faculty of Law (University of Delhi).
The Law Review has two primary goals. First, it will provide a forum
for students to discuss, debate and deliberate on contemporary legal issues.
Second, the Review will fulfil the needs of the Campus Law Centre student
community by encouraging writing, editing and research among the student
community. It will be an annual, peer reviewed publication with a student
Editorial Board committed to promoting legal scholarship.
Campus Law Centre has an outstanding tradition of producing some
of Indias most erudite legal minds and it is this culture that needs to be
preserved and nurtured by creating opportunities for law students who will
eventually take up a career at the Bar or the Bench.
The inaugural issue of the CLCSLR covers multidisciplinary issues
such as Capital Punishment in Rape statutes, developments in Indian
Competition Law, GAAR and tax avoidance, Aviation Liability and Doctrine
of Prospective Overruling amongst others.
I would like to commend the Editorial Board and Ajitesh K Kir,
President, Students Union, for this commendable effort and look forward to
the many contributions it is sure to make to legal discourse in the future.
Professor J.L. Kaul
Professor in-Charge
Campus Law Centre
April 2013
New Delhi
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EDITORIAL
In the academic session of 2012-2013, the Students Union of
Campus Law Centre, Faculty of Law, University of Delhi, resolved to start a
Student Law Review in the hope of encouraging legal research and
scholarship within the student community. The principle that the Students
Union sought to uphold was that the initiative would be entirely studentdriven in order to enable capabilities and engineer creative freedom.
The Campus Law Centre Student Law Review (CLCSLR) was
established in October, 2012 with the aim of promoting the inter-disciplinary
study of issues concerning law and society. The past year has been a
fascinating one in the legal arena, giving the Editorial Board the exciting
opportunity to select articles that are both unique and original contributions
to existing literature.
The inaugural edition of CLCSLR received an overwhelming
response with over 110 submissions from students across law colleges in
India and abroad. The quality and diversity of submissions affirmed our
belief that an innovative spirit was alive and prospering within the student
community. The task before the Editorial Board was therefore a difficult and
challenging albeit exciting one.
In an effort to ensure the highest quality of student research, the
Editorial Board invited a team of accomplished Reviewers who included
graduate students at reputed Universities across the world, Supreme Court
and High Court Law clerks and young working advocates. Their inputs and
comments greatly facilitated the process of preliminary and final selection.
The present volume of CLCSLR is interdisciplinary in nature and
covers a wide spectrum of issues. Vanya Kumar has examined the provision
of capital punishment in rape statutes to ascertain whether such punishment
is in fact antithetical to the interests of the victim. Amana Ranjan and
Susanah Naushad have researched legislative attempts in India to tackle the
menace of sexual crimes against children as well as critically examined The
Protection of Children from Sexual Offences Act, 2012. Nidhu Srivasatava
has discussed the normative implications of the use of targeted killings by
States through an analysis of the legal basis and limitations of such actions.
Two articles in this volume deal with the nascent and evolving
domain of Competition Law in India. Charu Rawat has provided an analysis
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ACKNOWLEDGMENTS
The Editorial Board would like to thank Mr. Aayush Agarwala, Mr.
Abhinav Jaganathan, Mr. Aditya Mathur, Ms. Mythili Vijay Kumar Thallam,
Ms. Preetika Mathur, Mr. Rohan Alva, South Asia Human Rights
Documentation Centre, Ms. Shivambika Sinha, Mr. Swapnil Gupta, Mr.
Utkarsh Saxena, Ms. Vindhya Srinivasamani, Ms. Vrinda Bhandari and Mr.
Zachariah Jacob for their invaluable counsel and assistance during the review
process, Mr. Abhishek Subarno for his assistance in publicity efforts and Ms.
Achala Upendran for her expert advice with the final manuscript. The
Editorial Board would also like to thank Mr. Anurag Rawal, Former
President of the Students Union for his support.
The publication of the volume would not have been possible without
the goodwill of Mr. Manoj K. Singh, Managing Partner, Singh and Associates
who supported and ensured the establishment of this Review.
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the recognised basis, as well as the primary goal, of various legal systems
across the world. Interestingly enough, India was one of the 39 countries to
vote against a recent UN General Assembly draft resolution calling for a
global moratorium on executions6 with an agenda of further abolishing the
death penalty, claiming the States non-encroachable sovereign right to
determine its own legal system. Two days after this oppositional stance,
Kasab was executed.
The demand for capital punishment for rape has overwhelmingly
echoed from all strata of civil existence, including noted politicians like the
Leader of Opposition in the Lok Sabha Sushma Swaraj7, Punjab Chief
Minister Parkash Singh Badal8, AIADMKs V. Maitreyan and DMKs
Vasanthi Stanley9. In this context, it is noteworthy that within the scope of
the individual case of the Delhi gang-rape victim, no separate law need be
enacted in order to facilitate the application of the legal provision of the
death penalty to the alleged perpetrators of this particular crime. The accused
had initially been booked under sections 307 (attempt to murder), 201
(destruction of evidence), 365 (kidnapping or abducting), 376 (2)(g) (gang
rape), 377 (unnatural sexual offences), 394 (voluntarily causing hurt in
committing robbery) and 34 (common intention) of the Indian Penal Code.10
However, the unfortunate death of the victim ensured that section 302 of the
Indian Penal Code, the legal provision for murder, could be added alongside
the other offences listed under the Act.
II. CAPITAL PUNISHMENT IN INDIA AND THE RAREST OF RARE
DOCTRINE.
A. JUDICIAL PRONOUNCEMENTS
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Court in the 1980 case, Bachan Singh v. State of Punjab11, which restricted the
application of the death penalty to cases wherein the alternative option is
unquestionably foreclosed. The reasoning behind the ruling highlighted that
a real and abiding concern for the dignity of human life postulates resistance
to taking a life through law's instrumentality. In Rajendra Prasad v. State of
U.P12 it had earlier been held that the imposition of the death penalty must
relate not to the crime but to the criminal and that it was to be awarded only
when security of state or public order was threatened. In Machhi Singh v. State
of Punjab13 the Apex Court established that the distinguishing factors of a
rarest of rare case are:
1. Is there something uncommon about the crime which renders the
sentence of imprisonment for life inadequate and calls for a death
sentence?
2. Is the crime such that there is no alternative but to impose a death
sentence even after according maximum weightage to the mitigating
circumstances which speak in favour of the offenders?
In other judicial pronouncements, including Swamy Shraddananda v.
State of Karnataka14, the Supreme Court further restricted the grounds for
capital punishment by stating that the measurement of the rarest of rare
criterion is not only qualitative, that is, according to the subjective nature of
the crime, but also quantitative. In Santosh Bariyar v. State of Maharashtra15 the
Apex Court stated that the burden is on the prosecution to prove that there
is no possibility of rehabilitation and life imprisonment will be futile. It is
understood that the demand for death penalty in cases of rape wherein the
victim dies would be irrelevant, as Section 302 of the IPC and the Criminal
Law (Amendment) Ordinance, 2013 incorporate the same. The call for the
death sentence therefore, in order to create a distinction from what the law
already provides for, must pertain to non-homicidal rape. That is, through the
public discourse, rape in itself is sought to be made a capital crime. It is
noteworthy that Section 8 of the Criminal Law (Amendment) Ordinance,
2013 has sought to contain the demand, by creating an aggravated category
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of rape contingent upon the condition of the victim, without including nonhomicidal rape per se within its ambit.
B. GLOBAL SCENARIO
World Day Against the Death Penalty: Ten Years of Progress: Amnesty International: ACT
50/009/2012
17 Constitutional Appeal no.3 of 2006, Uganda.
18Imposing Restrictions on Women like Dress Code Ensures More Violence against them,
Economic Times.N.p., 9th Jan. 2013.
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entails; that is, what precisely it serves as a symbol of. Significantly enough,
most of the recent debate and scholarship on capital punishment for rape
has centred on capital punishment in itself, with the advocates and
opponents propounding the pros and cons and efficacy of such a
punishment and the largely humanitarian concerns that it brings to the fore,
without interrogating the specificity of the demand or the more important
question that is implicit within it what distinguishes rape from other nonhomicide crimes and makes it an offence deserving of the death penalty in
the eyes of society?
B. LEGAL DEVELOPMENTS IN THE UNITED STATES
40
41
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Pratiksha. Rape, Retribution, State: on Whose Bodies? Economic and Political Weekly,
Vol. 35, No. 14 (Apr. 1-7, 2000), pp. 1196-1200
51 Moolchand Daga, Lok Sabha Debates,1983: 431, 21 November
52Agnes, Flavia. No Shortcuts on Rape: Make the Legal System Work. Economic and
Political Weekly, Vol XLVIII No. 2
53 George Fernandes joins death-for-rapist chorus, Sunday Observer, 1 Dec 2002.
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societal comment not on the rapist, but on the position of the rape
survivor.
B. IMPLICATIONS OF THE MARITAL RAPE EXEMPTION
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This concept has been examined by Ann Cahill wherein she notes64 it is in
the specific moments and movements of this [feminine] body [that] the
defence of the sexual offender [is written]: she was somewhere she should
not have been, moving her body in ways that she should not have. These
factors are often viewed as extenuating rape, as society places the burden of
self-surveillance on the woman, to be able to either avoid being raped or,
at the very least, function as an ideal victim and ask for justice in case of a
sexual offence against her.
This oratorical construction has real implications in the context of
legal credibility of rape victims, which is one of the essential elements in
eliminating the need for corroboration of their testimony. The fringe
minorities, including wives, sex workers, etc., do not form a part of this
central discourse, as they are often seen as deserving of the violence they
experience, or at the very least, outside the domain of the law. Corollaries
to the discourse of capital punishment are often added, which place the
burden of receiving justice on the victims themselves; the district
government pleader in the matter of the aforementioned 2002 gang rape
case stressed that capital punishment for rape should be awarded only if
the victim is not in a position to fight back and defend herself.65This
derives from archaic notions of feminine selfhood as being defined through
chastity wherein it is popularly believed that a good woman, applying an
absolute moral categorization, would rather die than be raped. This
interpretation of femininity not only adds to the notion of rape as worse
than death, but also plays a role in socially shaming the rape survivors, who
are them understood as not placing the same valuation on their sexual
integrity, as the rational conclusion of the above premise is that a decent
woman would have resisted the rapist, even to the point of death. A
relatively greater burden of proof is imposed on the conduct of the victim.
In the United States, this was typified in Mills v. United States, wherein it was
made explicit that in the ordinary case where the woman is awake, of
mature years, of sound mind and not in fear, a failure to oppose the carnal
act is consent; and though she object verbally, if she make no outcry and no
resistance, she by her conduct consents, and the act is not rape.66 While the
same perspective is no longer made explicit, the judgment in Tukaram v.
Cahill, Ann J. Foucault, Rape, and the Construction of the Feminine Body. Hypatia, Vol.
15, No. 1
65 Legal experts split over death rap for rapists - TNN 28th Nov, 2002, 09.36pm IST
66 164 U.S. 644 (1897)
64
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VII. CONCLUSION
The rationale of the early laws which provided for death sentence
for rape dealt not with concerns of the bodily autonomy of women, but
rather, was understood as property crimes against the sexual exclusivity of a
man to his wife. Even today, in societies that increasingly aim for
egalitarianism as the fundamental base of Constitutional authorities, the
patriarchal foundation of the statutes, as well as societal demands for
further amendments, expose the same attitudes couched in pleasing,
postmodern legal terms. Revealingly, most of the countries that currently
authorize the death penalty for rape69 are also the ones that historically and
globally have been condemned as being the most restrictive and indifferent
to the rights of women in general. The death rhetoric legitimises victim
blaming and normalizes the need for sexual surveillance and moral policing
of the body of the woman; in a State of the Nation survey on the safety of
women as part of CNN-IBN's Agenda for Change, the majority said that a
rape victim is ruined for life and that women should abide by a certain dress
code in public.70 The recent suggestions for the prevention of rape have
focused on gendered separation in public life and curbing the subversive
sexuality of women, which has historically been viewed as a threat to
masculine domination. However, following the Delhi gang-rape case and
the consequent public outrage and outpourings, many hitherto marginalized
victim narratives have, for the first time, made their way into the fold of the
mainstream, wherein the survivors have elucidated that they may have been
raped but are not dead, and refuse to let themselves be defined by a single
act of violence.71
That the death penalty, even if provided for within statute, will
neither act as a deterrent to rape itself or actually be implemented in a court
of law for non-homicide cases of rape is practically indisputable. However,
it is not only the legal changes envisioned, but the cultural discourse that
informs those changes which provides a glimpse into the legal system; as,
law after all, primarily serves as a means of regulating social interaction.
Theories of deterrence and retribution are based on the hypothesis of disincentivization of offences, as the practical origin of the theoretical models
Some examples include Iran, Egypt, Pakistan, Saudi Arabia, Vietnam, etc.
Rape victims are ruined for life, women should abide by a dress code in public, feels
India: CNN-IBN. 24 Jan 2013.
71 Abdulali, Sohaila. I Was Wounded; My Honor Wasnt. The New York Times.7 Jan 2013.
69
70
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is that if the punishments meted out were equivalent, the offender would
have no incentive to commit the lesser crime than the greater. In this
context, if the heated demand for capital punishment is any indication, it is
unfortunate that even today, in the rape-murder scenario; the greater of the
two crimes is believed to be rape and the rape survivors socially informed
that they would have been better off dead.
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* IVth and IIIrd year students of West Bengal National University of Juridical Sciences,
Kolkata.
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I. INTRODUCTION
It is an undisputed fact that child sexual abuse in India is increasing at
an alarming rate. Children form the majority of the country's population; they
are pegged as the future of the country. They carry with them hopes and
dreams to achieve greatness. However, the stark reality remains that fifty
three per cent of Indian children have been subjected to some form of sexual
abuse.1 While tackling the numerous issues plaguing society, the safety and
security of children have been grossly side lined. The Legislature has shown
an extreme nonchalance towards taking any steps to protect the most
vulnerable section of society. The inadequacy of punishment is one such
instance of legislative oversight and as a result, children have become victims
of brutal instances of sexual abuse. Years of legislative neglect have taken
material form with growing instances of sex tourism, pornography, child
rape, child trafficking, etc.
Indian culture is historically replete with evils like the devadasi system,
incest and forced prostitution. Even courts have a diminished record wherein
the Mathura rape case judgement acquitted two policemen who raped a
sixteen year old, claiming that she was habituated to sexual intercourse.2
Cases of such abuse usually go unreported in order to maintain the honour
and reputation of the family in society. Thus there is urgency for a specific
legislation that will be mindful of this unique social reality in India. We need
to realize that the primary reason for not bringing the perpetrators to court is
entrenched in the traditional family structure in which a large number of
children are raised. In India and other Asian countries like China and Japan,
children are taught from a tender age that the elders in the family hold
absolute authority and are to be respected and obeyed. The fear of
challenging their authority, reprimand and shame only escalate instances in
which the reporting of instances of these crimes is stalled. In 2007, 38
children were reported missing in Nithari, a village located on the outskirts of
Study undertaken by the Ministry of Women and Child Development on Child Abuse in
collaboration with UNICEF, Save the Child and Prayas NGO, (9 April 2007),
http://pib.nic.in/newsite/erelease.aspx?relid=26737(last visited 17 March 2013).
2 Tuka Ram v. State of Maharashtra, AIR 1979 SC 185.
1
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Delhi.3 These children were allegedly raped and murdered, causing a huge
public outcry which brought out the lackadaisical attitude of the government
towards rampant child abuse. This pressurized the Ministry of Women and
Child Development to expeditiously draft the Offences from Children
(Prevention) Bill, 2005 and lobby hard for its passage. In 2012, the
Parliament finally passed the Protection of Children from Sexual Offences
Act which has been hailed as a bold step towards protecting the children of
our country.
II. PROVISIONS HITHERTO
Indian children, who account for an overwhelming forty per cent 4 of
the entire population of the country, have, until recently, been placed in a
state of extreme vulnerability due to the indifference of the Legislature. The
lack of legal framework protecting children has only encouraged sexual
predators. One of the problems is that under the Indian legal system the
definition of 'a child' differs from law to law. Irrespective of the various
definitions however, there lies a mandatory obligation of Centre and State to
provide for and protect children. The Constitution of India under Article
21A says that States must provide free and compulsory education to all
children between the ages of six and fourteen in such manner as the State
may by law determine. Article 45 of the Constitution specifies that the State
shall endeavour to provide early childhood care and education for all children
until they complete the age of six. Article 51(k) lays down a duty that parents
or guardians provide opportunities for education to their child/ward between
the age of six and fourteen years.
The Indian Penal Code states that nothing is an offence done by a
child under seven years, and further, under twelve years, till he has attained
sufficient maturity of understanding as regards the nature of the Act and the
consequences of his conduct thereof.5 However, while punishing the
perpetrators of rape, the Code defines the age of consent to be below sixteen
Neelam Raaj, Children at Risk (14 Jan 2007), http://articles.timesofindia.indiatimes.com
/2007-01-14/special-report/27872204_1_nithari-migrants-crime-stats (last visited on 1
Sep 2012).
4 Government of India, Ministry of Home Affairs, Office of the Registrar General & Census
Commissioner, India, 2001 Census Data, Age Structure and Martial Status,
http://censusindia.gov.in/Census_And_You/age_structure_and_marital_status.aspx (last
visited on 17 March 2013)
5 PEN.CODE. 82 and 83.
3
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penetration, its high bench mark of the word 'penetration' leaves several
forms of abuse like molestation and penetration with objects unaddressed.
Unfortunately, such grave and rampant form of abuse can only be
prosecuted in the case of girls under the provision of the Code dealing with
outraging the modesty of women.11 However, the Supreme Courts
interpretation of what constitutes modesty of women has rendered this
provision inadequate as it states that children may find themselves incapable
of possessing this modesty.12 Furthermore, in cases of child abuse prosecuted
under section 354, the quantum of punishment is reduced to two years as
opposed to a minimum of seven years in the case of rape. Therefore, sexual
abuse in cases of boys and girls can only be prosecuted under simple or
grievous hurt13 which is extremely ineffective to address the offences of such
nature. The law treats instances of obscene gestures14 with relatively less
gravity, even though it may affect the child's psyche as severely as rape.
Similarly, the law is ill equipped to deal with instances of repeated abuse
against children.
In spite of the absence of legal mechanisms, the Supreme Court was
able to deliver justice in the Anchorage case.15 Anchorage Shelter was a home
for street children run by two retired British Navy Officers in Mumbai. In
2001, Childline India Foundation16, an emergency outreach service for
children in need of protection, received a call regarding abuse of children at
the shelter.17 After investigating the matter it was found that Duncan Grant,
Allan Waters and William D'Souza and the manager of the shelter were
inflicting chronic abuse upon their charges. After further investigation, the
three accused were charged when Waters and Duncan were found to be
absconding. To commence the trial, Grant had to be extradited from Africa
and Waters from the United States. The Sessions Court, after depositions
were made by four prime witnesses, convicted DSouza, Duncan and Waters
PEN.CODE. 354.
State of Punjab v. Major Singh, AIR 1967 SC 63 (The judges of the Supreme Court decided
that a seven and a half year old girl did not possess the modesty that could be outraged).
13 PEN.CODE. 319, 320.
14 PEN.CODE. 509.
15 Childline India Foundation v. Allan John Waters & Ors, (2011) 6 SCC 261
16 Childline India, Anchorage Case History, http://www.childlineindia.org.in/anchoragecase-history-updated.htm(last visited Oct. 27, 2012).
17 Childline India Foundation v. Allan John Waters & Ors, (2011) 6 SCC 261.
11
12
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Mumbai. In the present case, the Social Service Branch raided a brothel
where four persons identified as brothel keepers were arrested and 24 twenty
four girls were rescued. The four arrested were charged for allowing the use
of the premises as a brothel30, for living on earnings from prostitution31 and,
permitting prostitution on the premises for the purpose of trade32 while the
twenty four females girls that were taken into custody pursuant to the
provisions33 of the Immoral Traffic (Prevention) Act, 1956 to ascertain their
age and family background. The results of the ossification test showed that
fourteen of the girls were adults while the rest of them were minors. The
court released the adults and directed the minors to appear in the Juvenile
Court. The Magistrate finally discharged the minor girls on the grounds that
they had not committed any offence, but and they were in custody for over a
month. It is pertinent to note here that firstly, minor girls who were forced
into the flesh trade were treated as the accused in spite of there being no
fault of their own. Under the Juvenile Justice Act, a juvenile who is found
soliciting can be classified as a juvenile in conflict with law34 as well as a
child in need of care and protection35 and thus cannot be treated as the
accused. Secondly, since they were children in conflict with the law, they
should have ideally been produced before the Child Welfare Committee and
not the Juvenile Board. And thirdly, the Juvenile Board committed a serious
error by releasing the minors; as the provisions of the Juvenile Justice Act
clearly state that minors must be sent to protective homes in the absence of
parents or guardians. By releasing them, the Juvenile Board has driven them
back to the flesh trade. In the Anchorage Case36, the Court relied on the
Constitutional obligations and the Directive Principles to emphasize that
children have to be protected and have a right to a free, healthy and an
abuse- free childhood.
The first legislation for the protection of children against abuse came
in the form of the Goa Childrens Act of 2003. It adhered to the United
Nations Conventions on the Rights of the Child. The Act criminalized child
abuse and meted out punishments for sexual assault, grave sexual assault and
Immoral Traffic (Prevention) Act, 1956, 3.
Immoral Traffic (Prevention) Act, 1956, 4.
32 Immoral Traffic (Prevention) Act, 1956, 7(2)(a).
33 Immoral Traffic (Prevention) Act, 1956, 15, 17.
34 Juvenile Justice (Care and Protection of Children) Act, 2000, 2(1).
35 Juvenile Justice (Care and Protection of Children) Act, 2000, 2(d)(vi).
36 Supra note 16.
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31
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There has been extensive debate on whether the Indian Penal code
should be amended to include perpetrators or whether a separate law should
be drawn up to specifically address child sexual abuse. Child rights activists
have been pushing for a separate law to combat child sexual abuse, insisting
that it is the need of the hour`. In the case of Sakshi v Union of India45, a step
forward was taken to examine shortcomings of the Indian Penal Code when
dealing with cases of this nature. However, the Court did not adequately
address the entire breadth of issues, thereby failing yet again to effectively
insulate children in India from sexual abuse.
The Supreme Courts timely acknowledgement of the prevalence of
child sexual abuse in India and its alarming increase only increases the
necessity of creating and enforcing laws that protect children. In 2005, a bill
specifically protecting the rights of children against this menace was drawn
up while drafting the Offences Against Children Bill. This bill was drafted
and approved by the National Commission for Women (NCW) and the
Ministry of Women and Child Development. The bill sought to deal with a
spectrum of offences against children including sale/transfer sexual assault,
sexual/physical/emotional abuse, commercial sexual exploitation, child
pornography, grooming for sexual purpose, incest, corporal punishment,
bullying and economic exploitation.46 Furthermore, the bill made it clear that
these provisions were formulated to supplement the provisions and address
the shortcomings of the Indian Penal Code and the Juvenile Justice Act.
However, in 2007 the Ministry of Law rejected the Bill, stating that there was
no need for a separate legislation and that it would be repetitive of the
provisions of the Penal Code, Code of Criminal Procedure and the Indian
N.D. Shiva Kumar, Times of India (23 Jan 2009) http://articles.timesofindia.indiatimes.com
/2009-01-23/hubli/28030078_1_devadasi-system-ddpos-project-officer (last visited on 5
Sept 2012).
45 Sakshi v Union of India, [2004] 3 LRI 242.
46 Offences Against Children (Prevention) Bill, 2005.
44
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Evidence Act.47 This was primarily due to the lack of sufficient conclusive data
reporting instances of child abuse.48 While the National Crime Records
Bureau reported a significant increase in sexual offences against children that
included rape and trafficking of minor girls, it constituted only a negligent
percentage of the total crimes committed against children.49 However, it did
acknowledge the requirement of laws protecting children.50 It is extremely
unfortunate how legislative lethargy is becoming the root cause51 of the
under-reported nature of crimes against children and cognisance not being
taken thereof. The Ministry of Women and Child Development in 2007
initiated a National Study on Child Abuse to understand the extent and
magnitude of the problem. In 2009 the Ministry of Law prepared a tentative
draft of the Protection of Children from Sexual Assault Bill, 2010. This Bill
was unique as it stated that the onus of proving their innocence rested on the
accused, unlike the existing legislation where the onus lay on the
prosecutions ability to prove guilt. The Ministry of Law simultaneously
worked on the draft of the Prevention of Offences Against the Child Bill,
2009, which sought to address all offences against children, including sexual
offences. However, after several delays and complications in 2011, a specific
bill for prevention of sexual abuse against children was drafted
comprehensively and exhaustively under the initiation of the TULIR Centre
for the Prevention and Healing of Child Sexual Abuse which was finally
passed by the Rajya Sabha in 2011.52 This bill is now known as the Protection
of Children from Sexual Offences Act, 2012 (Hereinafter referred to as the
Act).
47Chetan
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Ministry of Women and Child Development, The Protection of Children from Sexual
Offences Act, 2012 (22 May 2012), http://pib.nic.in/newsite/erelease.aspx?relid=84409
(last visited on 21 Aug 2012)
54 The Protection of Children from Sexual Offences Act, 2012, 2 (1) (d).
55 The Protection of Children from Sexual Offences Act, 2012, 4, 6, 8, 10, 12, 14, 18, 21,
22, 23.
56 The Protection of Children from Sexual Offences Act, 2012, 16, 17, 18.
57 The Protection of Children from Sexual Offences Act, 2012, 7, 9.
58 Ministry of Women and Child Development, The Protection of Children from Sexual
Offences Act, 2012 (22 May 2012), http://pib.nic.in/newsite/erelease.aspx?relid=84409
(last visited on 5 Aug 2012)
59 Id.
53
31
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intent.60 However, the degree of punishment has been kept relatively low (six
months) to encourage reportage of crimes.
The Act has dropped the age of consent (16-18 years) clause and
labels any person below the age of 18 as a minor.61 This was done after a
controversial recommendation of a parliamentary committee on the pretext
of uniformity of laws (under the IPC and the Prohibition of Child Marriage
Act, a person below 18 is considered a minor).62 This effectively means that
any sexual interaction with a person below 18 years of age would constitute
an offence if a complaint is filed, or if it is discovered.
The Act specifies the establishment of Special Courts for trial of the
listed offences, keeping the interest of the child paramount at every stage of
the process by incorporating child-friendly procedures for reporting,
recording of evidence, investigation and trial of offences.63 The evidence of
the child has to be recorded within 30 days of reporting and as far as
possible; the trial has to conclude within a year. It also makes provisions for
the relief and rehabilitation of the child. Once a complaint is lodged at the
nearest Special Juvenile Police Unit (SJPU) or local police, the police is
required to make special arrangements for the child such as admitting the
child into a shelter home or to the nearest hospital within twenty-four hours.
They also have to report the matter to the Child Welfare Committee within
the same time frame. While reporting, the media cannot disclose the identity
of the child without taking prior permission from the Special Court.64
The National Commission for the Protection of Child Rights
(NCPCR) and State Commissions for the Protection of Child Rights
(SCPCRs) have been made the designated authorities to monitor the
implementation of the Act.65
32
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V. A CRITIQUE
The IPC does not take into account the range of sexual offences
committed on children and does not differentiate effectively between an
adult and a child. Also, it does not address sexual violence against the male
child except under Section 377 that criminalizes homosexual behaviour. The
present Act has the potential to instil hope in many child victims of abuse
who have been denied justice due to the loose ends in penal laws. The Act is
progressive in its approach. It is gender-neutral and lays down stringent
punishments for a range of sexual offences. It has introduced several
measures to prevent the re-victimization of children at every step of the
judicial process. It sets out provisions for the rehabilitation of these children.
However, there are several provisions in the Act that continue to serve as
causes for concern.
A. NO PREVENTIVE MEASURES
Overall, the Act does a fine job in dealing with cases of child sexual
abuse. However, nowhere does the Act mention provisions to prevent
abuse.66 The Act only lays down measures to be taken after the child has
suffered sexual abuse. It should certainly include provisions for prevention as
well, since punishment should never be the sole deterrent.67 In cases of child
abuse, prevention is certainly the best cure. Preventive measures should see
efforts from both family members and the state machinery.
A possible preventive measure can be the setting up of a website
which has details of first time offenders.68 Studies indicate that in most cases,
a perpetrator does not stop after abusing one child.69 This website will ensure
that such deviants are not hired by any school, universities, hospitals and
places where children traditionally assemble in large numbers.70
66Jose
Parapully,
Questions
of
Protection
(14
August
2012),
http://www.telegraphindia.com/1120814/jsp/opinion/story_15851586.jsp#.UIazp2CpSn
M (last visited on 6 Sep 2012).
67 Id.
68Pinky
Virani,
Child
Sex
Abuse
and
the
Law
(23
Jul
2011),
http://www.openthemagazine.com/article/nation/child-sex-abuse-and-the-law
(last
visited on 6 Sept 2012).
69 Id.
70 Id.
33
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Id.
Id.
73Geeta
Ramaseshan, Law and the Age of Innocence (19 June 2012),
http://www.thehindu.com/opinion/op-ed/article3543940.ece (last visited on 6 Sept
2012).
74Id.
75 Flavia Agnes, Consent and Controversy (22 June 2012), http://m.indianexpress.com
/news/consent-and-controversy/948277/ (last visited on 6 Sept 2012).
71
72
34
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35
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three years or less.83 A similar position is reflected in the law of Israel, where
sexual intercourse with a child of fourteen is considered rape (consent is
immaterial). However, when one of the parties is between fourteen to sixteen
years and the age difference between both the parties is less than two years,
sexual intercourse is considered legal if it is consensual.84 Such a flexible
stance ensures that while sexual intercourse between adults and children
remains illegal, teenagers are not harassed by the law if they engage in
consensual sex.
Moreover, there might be some borderline cases in which the age
difference of the involved patties rests on the margins of the permissible
level. In such cases, the Courts must adopt a lenient stand and refer these
children to counselling and classes on safe sex, pregnancies, sexually
transmitted diseases and other fallouts of intercourse rather than sentence
them to imprisonment.85 It is important to ensure that the law of the country
strikes a healthy balance between protecting its children from abuse on the
one hand and protecting the sexual freedom of young adults on the other.86
It is one thing to believe that it is too early for teenagers between
sixteen and eighteen to engage in sexual activity. However, criminalizing all
consensual sexual activity in the belief that everyone below eighteen is a child
and that too in a divergent society where child marriages persist on the
one hand and teenagers are increasingly becoming conscious of their
sexuality on the other can have dreadful consequences. Given the ground
reality of violence perpetuated by Khap and caste panchayats against young
couples, raising the age from sixteen to eighteen years for consensual sexual
behaviour will give them greater leeway to socially ostracize and discriminate
against couples engaging in such acts as the concerned couples are now also
stripped of legal protection.87The Delhi High Court had also only recently
described the move to raise the age of consent from sixteen to eighteen as
36
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89Sujata
37
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38
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also deny the accused a chance of fair trial, thus infringing his basic rights. 101
Therefore, there should certainly be some delineation of on-going or recent
abuse and abuse which happened a long time ago.
4. Protection from adverse consequences
A vital issue vis--vis the reporting of abuse that is absent from the
Act is the protection of those who report the abuse.102 If a teacher, for
example, reports that a student is being abused by his/her family member, he
or she may face adverse consequences, including loss of job and threat to life,
especially if the offender is in a powerful position. The child, too, may suffer.
Although the Act provides for the care and protection of the victim,103 there
is no provision for the protection of the person who has reported such
abuse. Obligation to report, without providing protection for the same,
makes little sense.
5. Provision for In-camera trial
This Act explicitly provides for in-camera trials.104 The requirement
for the same can be traced back to the case of Sakshi v. Union of India105, in
which an eight-year-old girl had been penetrated in three orifices by her
father. The Delhi High Court, in a preposterous judgment found the accused
guilty for the lesser offences of outraging the modesty of women and hurt,
instead of rape. The Supreme Court, however, widened the scope of sections
375 and 376(dealing with rape) to include other forms of sexual abuse
intended to humiliate, violate or degrade a woman or a child sexually.
Moreover, taking cognisance of the sensitivity of children in sexual abuse
cases, the Court made in-camera trials mandatory (earlier reserved only for
cases of rape) for cases of abuse without penile penetration. It is heartening
to see that this widely hailed directive of the Supreme Court was cemented
by the Act.
Id.
Supra Note 66.
103 The Protection of Children from Sexual Offences Act, 2012, 19(5) and (6).
104 The Protection of Children from Sexual Offences Act, 2012, 37.
105 [2004] 3 LRI 242.
101
102
39
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VI.
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106Kendall-Tacket
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kept close within.112 Even outsiders are unwilling to interfere with the
problems of other families.113 Similarly, many countries in Asia, Africa and
South America have developed laws against the sexual abuse of children.
However, there is a widely accepted belief in these countries that child
rearing is a private family matter and should not be interfered with.114 Thus
these laws exist mostly on paper and are not properly implemented.
However, the approach towards identification and reporting of child sex
abuse in these countries is slowly undergoing a change, which is a positive
step in the direction of solving this persisting menace.115
Today child sexual abuse is a criminal offence in nearly all countries
and is generally punished by severe penalties.116 The United States recognised
child sexual abuse as a type of maltreatment in the U.S. Federal law for the
first time in 1973.117 Child sexual abuse is illegal under federal law118 and
under every state in the United States,119 although the specifics of the law
varies with each state.
The process of reporting child sexual abuse in the United States is
fairly simple and prompt. Any person can make an anonymous report of
abuse to Child Protective Services (CPS), or the Department of Children
and Family Services (DCFS).120 Most states also have a toll-free hotline
112John
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operated by trained call screeners, who either open the case for investigation
or record the report. After that, a children's social worker or a caseworker is
sent to investigate the case. If the worker is satisfied that the charges are true,
the child is sent to Child Protective Services, and the accused is tried for the
offence.121
The State also designates certain individuals to observe and report
child maltreatment. Such individuals often include health-care workers,
school personnel, child-care providers, social workers, law enforcement
officers and mental health professionals.122 Even in the United States, an
adult who is in charge of a child and possesses knowledge of child sexual
abuse (for example, he/she knows that a stranger, a friend, or a family
member is abusing the child) and fails to report the abuse can be charged
with one or more crimes under the law.123
The United Kingdom still does not have a specific legislation dealing
with child sexual abuse and the Sexual Offences Act of 2003 is attacked every
time a crime of this sort is committed.124 This Act lays down definitions and
penalties for child sexual abuse offences, and applies to England, Wales and
Northern Ireland (with respect to offences). The Scottish Law Commission
came up with its evaluation of rape and sexual offences in December 2007,
which includes a similar consolidation and codification. The same is referred
09 (last visited on 17 Oct 2012); Department of Children and Families, State of New
Jersey,How and When to Report Child Abuse and Neglect, http://www.nj.gov /dcf
/reporting/how/index.html (last visited on 17 Oct 2012); Department of Health and
Human Services, State of North Carolina, About Child Abuse and Neglect, http://
www.ncdhhs.gov/dss /cps/about.htm#Reporting (last visited on 17 Oct 2012);
Department of Social Services, State of California, Report Abuse, http://
www.dss.cahwnet.gov /cdssweb /PG20.htm (last visited on 17 Oct 2012); Anne Reiniger,
Mandated Training of Professionals: A Means of Improving Reporting of Suspected
Child Abuse, Child Abuse and Neglect, 19(1), 63-69 (1995).
121Id.
122 Department of Children and Family Services, State of Louisiana, Reporting Child Abuse
orNeglect, http://www.dcfs.louisiana.gov/index.cfm?md=pagebuilder&tmp=home&pid
=109 (last visited on 17 Oct 2012)
123National Centre for Prosecution of Child Abuse National District Attorneys Association,
Mandatory
Reporting
of
Child
Abuse
and
Neglect
(Nov.
2011),
http://www.ndaa.org/pdf/Mandatory%20Reporting%20of%20Child%20Abuse%20and
%20Neglect-Nov2011.pdf(last visited on 17 Oct 2012).
124 Patricia J. Mrazek, Sexual Abuse of Children in the United Kingdom, Child Abuse and
Neglect, 7(2), 147-153 (1983).
42
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CONCLUSION
Id.
126London
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of children does raise many concerns.130 The problem in India is acute owing
to its conservative social environment. For instance, incest will usually go
unreported due to the fear of social disgrace. Within a family, children will
feel victimized, as the crime would be suppressed and not subjected to the
usual criminal complaint procedure. This may have severe psychological
effects in the form of guilt, shame and depression in the child which deeply
affects their personality.131 It is difficult to assure ourselves that these
children will ever be able to get past the social opprobrium and fear.
Effective penalization is a means toward that much desired end.
The lack of a legal mechanism exclusively directed at curbing such
offences is the prime reason behind the breeding of sexual predators. The
IPC has never addressed crimes perpetrated against children and yet
legislature has continuously impeded several attempts at drafting a separate
and robust legislative instrument to this end. In the guise of this loophole,
which dilutes the sentences of offenders, it appears that the judiciary, along
with the reluctant legislature and ignorant executive, has also turned a blind
eye to the severity of the offence.
If art imitates life, the popular media has been doing a decent job in
painting the true picture of child abuse in India. The dismal state of
protection against child abuse has found mention in numerous popular
culture references such as television shows in the league of We the People and
Aamir Khan's Satyameva Jayate.
However, drafting a specific legislation targeting child sexual abuse is
only half the battle won. The next major impediment is compelling people to
come forward and report such offences. Additionally, due to the nature of
the crime and the victims being children, a higher onus is imposed on
investigation as it must be handled with adequate sensitivity. Therefore, the
legislation must make provisions ensuring that the child is not traumatised
further by the police, investigating agencies, court and components of the
legal system while seeking justice. Usually in cases of sexual abuse there is
http://censusindia.gov.in/Census_And_You/age_structure_and_marital_status.aspx (last
visited on 5 Oct 2012).
130 Supra note 105.
131Neeta Lal, Hidden Darkness: Child Sexual Abuse in India (2 May 2007),
http://www.asiasentinel.com/index.php?option=com_content&task=view&id=476&Item
id=34 (last visited on 5 Oct 2012).
44
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132Supra
133Supra
45
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INTRODUCTION
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note1, 8.
note1, 8.
7Supra note1, 10.
82 BYMAN, D, Do Targeted Killings Work?, Foreign Affairs, vol. 85, at 96, March-April 2006;
[hereinafter, Byman].
9 WALDRON, J.J., Violation of jus ad bellum- Can Targeted Killing Work as a Neutral
Principle?, (2011), NYU, Public Law and Legal Theory, Working Paper - 267, at 4-5, available at:
http://lsr.nellco.org/nyu_plltwp/267 (Last visited: 25 March 2012) [hereinafter Waldron].
10Byman, supra note 8, at 96.
11Byman, supra note 8, at 96.
12There are also conflicts over question whether terrorism is a criminal act or an act of war, if
terrorism is a criminal act, then targeted killings are an illegal method of law enforcement;
whilst if terrorism is an act of war, then targeted killings is simply a military tactic
6Supra
48
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II.
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By 2011, more than three Iranian nuclear scientists were killed either
by bombing or shooting. It was rather surprising that these killings did not
invite outrage or condemnation by the international community. Instead, as
Hasan13 puts it,14 these acts were considered as an expression of undisguised glee.
However the question remains, were these scientists the lawful targets of
such killing or not? The answer suffers from a lack of clarity.
Targeted killings come within the ambit of non-international armed
conflict, for which the rules regarding lawful targets are ambiguous. 15 In the
absence of any term such as combatant,16 States are allowed to attack the
civilians who directly participate in hostilities (DPH)17.18 However, the
definition of DPH has been left open to the States own interpretation.19
What is direct participation has not been universally accepted. Is it only the
membership in an organised armed group or the duration of participation
that is crucial in order to decide whether an individual is to be attacked or
not?20
If we assume that DPH only includes conduct close to that of a
fighter or what seems to be directly supporting combat, it would follow that
civilians providing financial support, advocacy, or other non-combat aid,
would not be liable to be attacked.21 However the ICRC Guidance22 describes
Mehdi Hasan is a British Political Editor at the Huffington Post United Kingdom. He is
also the presenter of al-Jazeera Englishs The Caf. He was a senior editor at the New
Statesman and a news and current affairs editor at Channel 4. He is co-author of Ed: the
Milibands and the Making of a Labour Leader. He has expressed strong views on
Diplomacy, Islam, Muslims and American Rhetoric expressed in his writing for The New
Statesman.
14HASAN, M., Iran's nuclear scientists are not being assassinated. They are being murdered, Jan, 16, 2012,
guardian.co.uk,
http://www.guardian.co.uk/commentisfree/2012/jan/16/iran-scientists-state-sponsoredmurder (Last visited: 26 March 2012).
15Supra note 1, 57 & 58 [Where as in international armed conflict, combatants may be
targeted at any time and any place subject to the other requirements of IHL].
16Supra note1, 58.
17Hereinafter, DPH.
18Supra note 1, 58.
19Supra note 1, 58.
20Supra note 1, 59.
21Supra note 1, 60.
22
Melzer, N., ICRC Guidance, Interpretive guidance on the Notion of Direct Participation in hostilities
under
International
Humanitarian
Law,
62,
13
49
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32Targeted
Killings were employed across Judea, Samaria, and the Gaza Strip. Statistics show
that, these operations killed close to three hundred members of terrorist organisations and
more than thirty targeted killing attempts have failed. One hundred and fifty were killed
and hundreds wounded during the acts.
33The Policy allows the security forces to kill members of terrorist organisations involved in
the planning, launching, or execution of terrorist attacks against Israel.
34 This principle is manifest in 51(3) of Protocol Additional to the Geneva Conventions, 12
August 1949, and relating to the Protection of Victims of International Armed Conflicts
(Protocol I), 8 June 1977, which states;
Civilians shall enjoy the protection afforded by this section, unless and for such time as
they take a direct part in hostilities.
35See Targeted Killings Case, 31.
36See Targeted Killings Case, 32.
37See Targeted Killings Case, 33.
38See Targeted Killings Case, 34.
39Inter-American Commission on Human Rights, Third Report on Human Rights, 1999,
53, 56.
51
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operation.40 However, what is direct and indirect has always been a question
of debate in the international circle. In such circumstances, the facts of each
case have to be decided individually to see whether there is a direct
participation or an indirect one. While interpreting grey areas like this, a
liberal interpretation is to be adopted in favour of finding direct
participation.41 Contributing to the interpretation of this disputed clause, the
court further added that direct participation is not restricted merely to the
person committing the physical act of attack, but extends to the person who
plans or plots the act.42
Finally, moving on to the last limb of 51(3): for such time, a civilian
directly participating in hostilities forfeits his immunity for such time when
he is taking part in those hostilities and once that time passes, the protection
granted to the civilian returns.43
The clause takes a direct part in hostilities is qualified by the term for
such time.44 A civilian cannot be attacked for hostilities committed in the past.
If he is involved in a chain of hostilities, with short periods of rest in
between, he is not entitled to immunity as it is a continuing act.45 However,
each and every case has to be examined separately, to see the nature of the
act and duration of involvement.46
III.
LEGAL PERMISSIONS
52
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49Article
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note 8, at 101.
note 1, 29.
56Supra, note 1, 29 Human rights law and IHL apply coextensively and simultaneously
unless there is a conflict between them. In situations that do not involve the conduct of
hostilities e.g., law enforcement operations during non-international armed conflict the
lexgeneralis of human rights law would apply.
57The Manual on the Law of Non-International Armed Conflict, Int. Ins. of Humanitarian
Law, March 2006, 30.
58 Supra, note 1, 29.
59 See Rule 14, ICRC 2005 These basic standards apply in both the cases, where the armed
conflict is between States or between a State and a non-state armed group.
55Supra,
54
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interrogated and tried, then targeted killings shall not be opted for. 60 Trial is
preferable to use of force.61 It shall be the attempt of the State to follow the ruleof-law to the greatest extent possible. In McCann v. United Kingdom62 where
three terrorists from Northern Ireland were shot to death by English agents,
the European Court of Human Rights held that Britain violated their right to
life as the use of force was disproportionate and the authorities could have
taken alternative measures to capture them alive.
However, even in cases where the due process cannot be followed
due to emergent security threats, a possibility of action other than killing
should always be considered. There cannot be specific guidelines as to when
targeted killings should be opted for, but that depends upon the facts of each
case. A thorough investigation regarding the precision of the identification of
the target and the circumstances of the attack upon him is to be performed.
The attacks must always withstand the proportionality test in order to qualify
as legal. The killing must be necessary and the force used must be
proportionate to threat anticipated or created.63 Steps necessary in preventing
harm to civilians must be taken on a priority basis.64 These standards apply to
both, an international armed conflict and to a non-international armed
conflict.65
If a targeted killing is outside the context of armed conflict, human
rights law becomes the governing law.66 This is termed as the Law
Enforcement Model.67 It only applies to police forces or in times of peace. 68
Only the government officials who exercise police powers, in contexts where
55
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69Supra,
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However, it is agreed that these rights are not absolute and may be
violated in cases of self, other, or national defence, by an innocent
aggressor.77 For value judgment on the issue of identification of an innocent
aggressor, the jus ad bellum criteria constitutes a real test. According to the
Moral Permissibility Principle, a war is morally permissible, if and only if the
act does not violate or pose a real and immediate threat to violate the right to
life of non-combatants.78 The Realist School of Moral Philosophy argues that
laws of morality must adjust to the laws of war rather than vice-versa.79
Today, this proposition cannot be supported in its strict sense, but in a
diluted one, as argued by Machon;
The Law Enforcement Model becomes insufficient in case of disturbing level of
violence inflicted, as such infliction has caused significant uncertainty about
suitability of situating criminal acts related to terrorism within the purview of law
enforcement and the terrorists operate within the territory of states either unwilling
or incapable of cooperating.80
The government carries out the killing in order to accomplish some
foreign policy goal. This goal could be victory in a war, preventing a nation
from building nuclear weapons, deposing an undesirable regime, etc. But, in a
case of use of violence where non-combatants are not afforded immunity, it
cannot be said to be just war even if the use of violence is in fact for a just
cause. Any right violated therein cannot be defended on the grounds of
national security, as is done in the case of targeted killings. It has to be
considered as homicide and not war, violating human dignity and nullifying
an individuals existence. Targeted killings present a similar picture, where in
the disguise of refuge of state, innocents are killed. These innocents are not
considered as right-bearers themselves, but as a channel of killing terrorists.
They are objectified and their right to life and liberty is annulled. Basic
humanity is put at stake for the sake of artificial values of camouflaged
operations. Is it correct to shred humanitarian values in the name of security?
77Statman,
D.,Targeted
Killing,
available
at:
http://www.ucl.ac.uk
/~uctytho
/StatmanTargetedKilling.html (Last visited on 28 March 2012); (Hereinafter Statman).
78Id.
79 Waldron, supra note 9, at 11.
80 Waldron, supra note 9, at 11.
57
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A. COST-BENEFIT ANALYSIS
Ideals of utilitarianism do justify targeted killings to a certain extent
on jurisprudential grounds. It can be argued effectively that the use of
targeted killing reduces the overall casualties, as it leads to more expedient
victories in armed conflicts.81 However, the same logic may be used to defy
targeted killings.82
No doubt targeted killings are always an alternative, but, they do
create strategic complications. They create martyrs that help a group sell itself
to its own community.83 Peace negotiations may also be complicated.84 It
often results in retaliation and vengeance. Moreover, when leaders are killed,
their followers are ready to step into their shoes. For instance, after the
Hezbollah strikes in the 1980s, fallen leaders were replaced at a great pace
and suicide attacks on Israel were accelerated.85 Further, the 1992 and 1994
bombings of Jewish and Israeli targets in Argentina came as a response to
Musawis death and kidnapping of Mustafa Dirani, a Hezbollah leader.86
These purely defensive measures impose a tremendous cost on
innocent people and also imperil civil liberties. In order to evaluate the cost a
civilian pays, Peter Bergen and Katherine Tiedemann of the American
Foundation in the report The Year of the Drone87 studied 114 drone raids.
They
concluded
that nearly
1200 people were killed, of which
between 549 and 849 were reliably reported militant fighters, the rest being
civilians.88 In the year 2012, 1,784 were killed in 1,324 incidents of targeted
killings.89 Since 1994, Karachi alone lost over 9,500 people to targeted
81Id.
82Id.
83Hezbollah
now venerates gures such as Musawi and uses them to rally the faithful and
demonstrate the groups commitment to ghting Israel. Khaled Hroub, a Cambridge
Universitybased expert on Hamas, argues that Israeli counterterrorism measures,
including targeted killings, have only increased the movements popular legitimacy
84Bymam, supra note 8 at 100.
85Byman, supra note 8 at 99.
86Byman, supra note 8 at 99.
87Bergen, Peter and Tiedemann, Katherine, The Year of the Drone: An Analysis of US Drone
Strikes in Pakistan, 2004-2010, Pak Tea House, February 24, 2010, Available at:
http://pakteahouse.wordpress.com/2010/03/02/the-year-of-the-drone-by-peter-bergenand-katherine-tiedemann/
88Id.
89Id.
58
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killings, the majority belonging to various political parties, particular sects and
sectarian groups.90
According to statistics compiled by Pakistani authorities, the
Afghanistan-based US drones killed 708 people in 44 attacks targeting the
tribal areas in 2009. 91 Statistics show that for each Al-Qaeda and Taliban
terrorist killed, over 140 innocent Pakistanis died.92 In total, it is claimed that
only 35 Al-Qaeda terrorists were killed in these strikes and while 1153
civilians died in suicide bombings in 2010 and 933 in drone strikes in the
same year.93
It is also true that heavy investment in intelligence and rapid-response
capabilities become a pre-requisite for a successful targeted killing policy.94
An efficient system of information sharing is required in order to collect data
and pass it on to the operatives. There should be a constant surveillance and
strike presence over targeted areas.95 Thus amplifying the costs involved.
On utilitarian grounds, the idea of deriving utility out of targeted
killings seems bleak. Further, is it logical to sacrifice the right to life merely
on utilitarian grounds? Dworkin argues that a fundamental right shall not be
taken away by the government, merely on utilitarian grounds. Even so, he
further provides for three limitations of this general proposition, one of
which is the idea of competing rights.96 In the event of a conflict of rights of
two individuals, the government has to make the right choice and eventually
protect the more important at the cost of the less important.97 On the face of
it, the policy of targeted killings may look like a case of tit for tat, however, it
clearly secures the rights of citizens of a state, whose right to life is violated
by terrorism and other kinds of violence.
91Ditz,
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Johnston, Patrick B., The Impact of US Drone Strikes on Terrorism in Pakistan and Afghanistan,
RAND Corporation UCLA, 3 Jan, 2013.
99 Hussain, Zahid, Drone attacks in tribal Pakistan force al-Qaeda into urban areas, The
Times, 8 Aug 2009.
100Byman, supra note 8, at 103.
101Byman, supra note 8, at 104.
102Byman, supra note 8, at 104.
103Byman, supra note 8, at 104.
104Hunter, Thomas Byron, Targeted Killing: Self-Defense, Pre-emption, and the War on
Terrorism, Journal of Strategic Security, 2009, 2 (2): 1-52, p. 31. Available at:
http://scholarcommons.usf.edu/jss/vol2/iss2/1
98
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wide member and support base. Targeted killings may be useful when
employed against a smaller group, with less membership and support. 105
B. SOVEREIGNTY QUESTIONS
Targeted killings also raise important questions on the sovereignty of
States. Under Article 2(4) of the United Nations Charter, States are forbidden
from using force in the territory of another State.106 If a State conducts
targeted killings in the territory of a second State, with which it is not in
armed conflict, the killings are legal only if the second State consents, or the
targeting State has a right under international law to use force in self-defence
under Article 51 of the United Nations Charter.107 International law permits
the use of lethal force in self-defence in response to an armed attack as long
as the force is necessary and proportionate.108 There are two issues to be
examined here; one being that of consent to conduct the targeted killing and
the other of right to self-defence.
Consent to conduct targeted killing on the territory of another State
though not legally controversial, the permission to use of such force however
does not absolve the targeting State from its duty to abide by human rights
law during use of force. Additionally, the consenting State also has the
responsibility to protect against the arbitrary deprivation of the right to life.109
The United Nations General Assembly, Resolution on the Protection of Human Rights
and Fundamental Freedoms While Countering Terrorism110 summarizes this position
in the following words;
. states must ensure that any measure taken to combat terrorism complies with
their obligations under international law, in particular international human rights,
refugee and humanitarian law.
Every State has a right to lawfully authorize targeted killing on its
land, but it it may require the targeting State to show that the person against
whom lethal force is intended to be used is a lawful target and that the
105Id.
at36.
2(4), United Nations Charter: All Members shall refrain in their international relations from
the threat or use of force against the territorial integrity or political independence of any state, or in any
other manner inconsistent with the Purposes of the United Nations.
107 See United Nations Charter, A. 2(4).
108 Nicar.v. US, ICJ Rep. (1986), 194.
109 Supra note 57, 37.
110 A/Res/51/191, March 10, 2005, 1.
106Article
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targeting State will comply with the applicable law.111 In case of wrongdoing
by the targeting State, the concerned State may seek prosecution of the
offenders and compensation for the victims.
Another argument in this regard is that of self-defence, falling within
the tenets of Article 51 of the United Nations Charter. This article permits
the exercise of self-defence only in cases of exercise of actual force and
hostilities or a continuing threat, for which terrorism does qualify.112 The
right of self-defence may be invoked by a State as justification for the
extraterritorial use of force involving targeted killings,113 provided the use of
force is necessary and proportionate.114 But, the use of force against the nonstate actors, as argued by some, would be lawful only if the attack by such
actor could be attributed to a State.115 Such attribution is not an easy task. In
Nicaragua v. United Sates116, the principle set out by ICJ was;
An act of private individuals can be considered as an act of State only if it is
possible to demonstrate that private individuals or groups of individuals have acted
as de facto organs of a State or under its direction and control.
This principle was later codified in the International Law Commission
Draft Articles of State Responsibility.117
Hence, it could be said that international law does permit the use of
force against non-state actors, but to a limited extent. Only when a State is
unable to repress terrorist organisations operating in its territory and seeks
some international intervention, is the use of such force justified.118 In cases
Supra note 57, 38.
A. 51, United Nations Charter: Nothing in the present Charter shall impair the inherent right of
individual or collective self-defence if an armed attack occurs against a Member of the United Nations,
until the Security Council has taken measures necessary to maintain international peace and security.
Measures taken by Members in the exercise of this right of self-defence shall be immediately reported to the
Security Council and shall not in any way affect the authority and responsibility of the Security Council
under the present Charter to take at any time such action as it deems necessary in order to maintain or
restore international peace and security].
113Sofaer, A.D., Terrorism, Law and the National Defense, 126 Military L.R., vol. 89 (1989),
at 103.
114See Article 51, United Nations Charter.
115 Nigro, R., International Terrorism and the Use of Force against Non-State Actors, ISPIPolicy Brief, at 1-2, available at: http://www.ispionline.it /it/documents
/PB_150_2009.pdf (Last visited on 28 March 2012) [hereinafter Nigro].
116 ICJ Rep. (1986), 194.
117Article 8 provides that an act of private individuals can be attributed to a State if these
individuals operate on the instructions of, or under the direction and control of that State
118 But these standards are much more relaxed in cases where a number of States face threats
from a single non-state actor. Take for example the threat posed by Al Qaeda.
111
112
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where a State uses force against another State, the former has to demonstrate
the involvement of the latter in a terrorist attack according to the strict
criteria identified by the ICJ and by the International Law Commission as
well.119
C. RETRIBUTION
If we say that the people targeted have committed terrible crimes,
they deserve to suffer in response; then it could be said that the targeted
killing of these terrorists is justified. Obviously the argument can be objected
to. Prima facie, such an act of targeted killings amounts to retribution, which,
ideally should be imposed only by a court of justice following the due
process of law. Moral reasons compel the involvement of courts, but in most
cases of terrorism, recourse to a legal institution is not an option.120 Also, the
fact-finding role of a court is not of much importance in the case of
terrorists, as terrorist acts are often followed by an admission from various
organisations.121
V. FADING CHANCES OF NEGOTIATIONS
Criminology does criticize the targeted killing policy, as it neglects the
entire research on crime causation. It believes the people who have suffered
the events of victimization tend to change their perspectives regarding self,
group, community or others.122 The interaction between the micro
environment, macro environment and personality of a person 123 draws our
concern to a group of terrorists which also forms a subset of the victims.
There is obviously a difference between people whose occupational choice is
terrorism and the others who are caught in the trap of terrorism.124
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125
126
127
64
in which a person may resort to an act of terrorism should also be taken into
consideration while punishing them for the act; the person who causes the harm is
usually one who is highly emotional or is unthinkingly driven by his past experiences or
social conditions. Not all terrorists fight for political gain. The disobedient behaviour of
some terrorists may be due to unpleasant past or present conditions].
Frustration, insults, peer pressure, anger, feeling of revenge, incitement further enhance
the aggressive behaviour of a person. These acts of victimization should be
psychologically analysed to bring an end to such disturbances. Such persons should be
treated as mentally ill and given treatment for psychological disturbance.]
The mental state of a person committing an offence is the essence of punishment. If a
person committing the act is not in a condition to understand the nature of the act then
punishing him in the same way as others who committed the offence voluntarily is a
failure on the part of the criminal justice system. The truth is that such people are very
easily influenced and driven to work for someone with little or no interest on their own
part. They can kill without any remorse. The psychological position of such persons
suggest that they tend to manipulate the circumstances to convince themselves that the
people whom they are killing have hurt others and they deserve to suffer.]
None of the provisions of the said acts prescribes any psychological examination and
medical help, if required, to the arrested militants. The acts merely make provisions for
trial and punishment. There is no emphasis on looking into the reasons behind the crime
and to subdue the same is a mere mechanical exercise of positive law]
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128See:
How Govt. Lost the IC-814 Hijack Deal, 8 Sept 2006, Available at:
http://ibnlive.in.com/news/govt-fumbled-ic814-taken-away/20846-3.html [One example
of this is the hijacking of the Indian Airlines Flight 814 on 24 December 1999, by Harkatul-Mujahideen, a Pakistani-based group, for the release of three militants Mushtaq Ahmed
Zargar, Ahmed Omar Saeed and Maulana Masood Azhar].
129Byman, supra note 8, at 102.
130Byman, supra note 8, at 102.
131Byman, supra note 8, at 102.
132 One popular example is Hezbollah. When Israel killed a key leader, Musawi Hezbollah,
his death became a rallying cry for the organisorganisation. Khaled Hroub, a Cambridge
University-based expert on Hamas, argues that targeted killings only increase popular
legitimacy].
133 Dworkin, Supra note 95 It may be explained by using Dworkins idea of competing rights
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government has a duty to aid and to protect the enjoyment of these rights. 134
On these grounds, targeted killings can be considered a governments duty,
provided the State acts within the purview of International Law. Blunt
exercise of violence is detested. States should follow the DPH limitations.
Also, the International Humanitarian Law and Human Rights Law should be
respected. It is agreed that targeted killing is a foreign policy tool and should
not be complicated further, provided it is exercised by States reasonably, in
urgent situations and only when there is a real threat to national security.
134
66
Shue, H., Security and Subsistence - Basic Rights: Subsistence, Affluence and US Foreign Policy, 1st
ed. 1980,at 54-55 [Subsistence can be defined as a right to the necessities of life or in
other words minimal economic security. It is as important as, and should be respected as
much as, the right to physical security, according to Shue. Security, according to Shue,
refers to Physical Security and is a basic right].
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COLLECTIVE DOMINANCE:
HOW DOES INDIA FARE?
Charu Rawat*
The Concept of Collective Dominance has received considerable thought in
Jurisdiction worldwide. This Article aims to provide an insight into how Collective
Dominance has been interpreted by the European Union. With the help of this analysis,
the article examines the viability of introducing the concept in India, based on the
hypothesis that the same is not provided for under the current Indian anti-trust legislation.
With this objective, the researcher first provides an overview of its development through
case laws, in the European Union. After establishing the requirements of proving
collective dominance, the author critically examines the concept in India, with the help of a
case law and a view to examine the way out. The author concludes the paper with
observations on how the European Union practice on the same could plug the required
loopholes.
I.
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A dominant position;
The dominant position to be held within the internal market or a
substantial part of it;
An abuse;
An effect on inter-state trade.5
Jones and Brenda Sufrin, EU Competition Law: Text, cases and Materials, 4th ed., 2010,
Oxford University Press, p. 261.
6Previously known as Article 82.
7Joined Cases T-68/89, T-77/89 and T-78/89, Societa Italiana Vetro Sp A and ors.v. Commission
[1992] ECR II- 1403.
8Joined cases C-395/96P and C-396/96P, [2000] ECR I-1365.
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needs to see the relevant market structure and the level of interaction
amongst the entities concerned.11
This was a practice more witnessed in the oligopolistic markets. Even
though competitiveness might also be a practised feature of such markets,
coordination was likely to emerge in markets where reaching a common
understanding was relatively simple and behavioural pattern of one was
likewise adopted by the others. The Commission was of the view that such
practices need not take the form of an agreement under all circumstances.
Coordination may result from practices resorted to by the entities. Such
practices may range from price coordination to limiting production, division
of market or even allocation of contract in bidding markets.12
With every case law that the Commission looked into, the concept of
collective dominance received expansive interpretation. In another case that
came up before it, Irish Sugar, the sole processor of sugar beet and the
principal supplier of sugar in Ireland were fined by the Commission.
Accepting the issue of collective dominance, the court held that a perusal of
the facts of the case left no room for doubt on the issue of Collective
Dominance. That being said, it held the entities to be collectively dominant
despite being in a vertical commercial relationship.13 Further, it was observed
that,
An abuse of collective dominance may result even if one of the entities
forming part of the collective entity took action. Therefore, the
requirement of presenting oneself as a single entity did not entail identical
conduct in every respect. It could be abusive behaviour by any one of them,
which could result in collective dominance in the relevant market.14
In the decision of Airtours plc. v. Commission15 , hailed as a landmark by
scholars, the Commission blocked a takeover by Airtours plc., a UK tour
operator and supplier of package holidays of First tours Plc., one of Airtours
competitors. Airtours is a tour operator and supplier of package holidays
based in the United Kingdom. First Choice is another UK based tour
11DG
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62.
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17Id,
63.
Case T-102/96, [1999] ECR II- 753.
19Joined cases C-395/96P and C-396/96P, [2000] ECR I-1365.
20Council Regulation (EC) No 139/2004 of 20 January 2004 on the control of
concentrations between undertakings (the EC Merger Regulation) Official Journal L 24,
29.01.2004.
21Lia Vitzilaiou & Constantinos Lambadarios, The Slippery Slope of Addressing Collective
Dominance under Article 82 EC, October 2009, Competition Policy International, available at
http://www.lambadarioslaw.gr/publications/en/2009/ vitzilaiou_oct_09_1_.pdf, (last
visited 20 Jan 2013).
18,
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Id.
25Supra
26Supra
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27Conscious
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does not deprive entities of their right to adapt themselves intelligently to the
existing and anticipated conduct of their competitors.
The EU case laws on collective dominance figure both under Article
102 and the EU Merger Regulation. The debate on whether the two could be
treated on the same page still engages scholars.35 From a legal perspective,
there are several reasons to believe that collective dominance is one and the
same thing under both Merger control and Article 102.36 Reasons for the
above conclusion are that Merger judgments of the courts and Article 102
judgments not only receive mention, but are often quoted as precedents37 in
case laws involving both. The case of Laurent Piau v. Commission38dispelled all
existing uncertainties.39 What is relevant for the purpose of the present
analysis is the interpretation of Collective dominance by European courts.
The issue of whether the same falls within the Merger Control regulations or
under Article 102 is yet another discourse, which falls outside the scope of
the present study.
Based on the case law developed concept of collective dominance,
we proceed to examine the Indian Law on collective dominance in the
context of oligopolies and how the very concept of collective dominance
finds no mention in the present Legislation, thus outlining a need for
revisiting the same.
III.
35Nicholas
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international level. It derives most of its provisions from the EU Law, which,
undoubtedly, is the most evolved till date.
The authors research focuses on the aspect of collective dominance
by independent entities and proposes that the current law is not equipped to
provide for abuses of dominant position by collectively dominant yet
independent entities. The Author examines this proposition with the help of
analysis of a Case Law.40The concept of Dominance in India as envisaged
under Section 4 of the Act41 reads
No enterprise or group shall abuse its dominant position.
From a bare reading of the provision itself, it becomes evident that
dominance in India is confined to an enterprise or a group. A look at the
definition of both enterprise and group reveals that two independent
entities or even competitors in the relevant market, cannot under any
circumstance be engaging in activities which makes one lead to the inference
that they are abusing their dominant position.
An enterprise as defined under the Act42 refers to a person or
department of the government. Therefore, who can engage in anticompetitive practices or abuse of dominant position can be a person as
given under the Act.43 The categories covered under the definition of the
term person can cover independent entities only when they form a company,
an association of persons44 or body of individuals. Similarly, the definition of
40Consumer
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Appoint more than fifty per cent. of the members of the board of directors in the
other enterprise; or
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gathered from the case law discussion on this concept is that CCI has stated,
quite often50 that, the concept of collective dominance is not present in
India.51 If at all it is present, is to the limited extent of collective dominance
by a group under Section 4 of the Act.
This proposition therefore leaves no room for any doubts on the
need for recognising the concept of collective dominance in India, especially
in context of links other than structural in nature. In this context, the
Competition Commission of India recognised the absence of such a concept
in the case of Consumer Online Foundation v. Tata Sky Limited and Ors.52It is
difficult to state with certainty why this concept received no mention when
the Act first came into being, and whether the Legislators intended it to be a
part of the Act. However, it can be stated with conviction that, as most part
of our Competition Act is based on lines of European Law, which explicitly
incorporates the concept of joint dominance, scholars have interpreted the
concept to be a part of our legislation. However, the stand of the
commission, as given in certain decided case laws should be presumed to
clarify the prevailing uncertainties over it.
IV.
50M/S
Royal Energy Ltd. v. M/S Indian Oil Corporation, MTP Ce N. 1/23 (C-97/2009/3IR),
decided on 9 May 2012, available at http://cci.gov.in /May2011 /OrderOfCommission
/MRTP1-28main.pdf, (last visited 21 Jan 2013), Consumer Online Foundation v. Tata Sky
Limited and Ors, Case no. 2 of 2009, available at http://www.cci.gov.in /menu/
MainOrderConsumer250411.pdf, decided on March 24, 2011, (last visited June 18, 2013).
51M/S Royal Energy Ltd. v. M/S Indian Oil Corporation, MTP Ce N. 1/23 (C-97/2009/3IR),
decided on 9 May 2012, available at http://cci.gov.in /May2011/ Order Of Commission
/MRTP1-28main.pdf, (last visited 21 Jan, 2013), There is no case of contravention of
provisions of Section 4 also as PSU OMCs cannot be said to be dominant jointly as
concept of collective dominance is not envisaged under the provisions of Section 4 and
since each OMCs is an independent, legal entity and no company can be said to be
exercising control over other PSU OMCs, they are not part of the group within the
meaning of 5 of the Act.
52Case
no.
2
of
2009,
available
at
http://www.cci.gov.in
/menu/
MainOrderConsumer250411. pdf, decided on March 24, 2011, (last visited 18 June 2013).
53ibid.
54Dish TV India Ltd., Tata Sky Ltd., Reliance Big TV Ltd., Sun Direct TV Pvt. Ltd.
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Section 355 and Section 456 of the Competition Act, 2002. The informant
alleged that the above mentioned players restrained competition in the
Market by preventing interoperability between hardware and DTH signals
provided by different manufacturers and DTH service providers. The
informant argued that the DTH service providers prevented inter-operability
by restricting competition amongst them because once a consumer bought
hardware to have access to services of a particular DTH service provider, he
could not avail the services of any other provider unless he bought new
hardware from another DTH provider. Further, the DTH providers
procured STB (Set top box) from their select manufacturers, thereby
restricting the consumers. This practice of the service providers is preventing
interoperability and creating barriers for entry of new enterprises which
manufacture only STBs. It was argued that even though their behaviour
could not be attributed to an explicit agreement amongst themselves, it
certainly was indicative of a tacit understanding between the existing market
players.57
Of the several issues raised by the informant, the analysis is restricted
to the issue pertaining to abuse of dominant position by the DTH service
providers. The small number of players in the relevant market, indicate
oligopolistic nature of the market. As alleged by the informant, the DTH
service providers, by restricting interoperability of the STBs and the DTH
Signals, were restricting the market for enterprises which manufacture only
STBs.58 This being a pre-requisite for grant of license for providing DTH
broadcasting services was being violated by not one but all the service
providers. They were offering services subject to the consumers taking STBs
from them, which is illegal under the present Act.59
The matter was referred to the Director General whose findings
reveal an important fact towards collusion amongst the DTH service
providers. Based on his investigation, he submitted that the DTH Segment
required huge investment and was in its nascent stage in India. Therefore, at
that point in time, they could not have been interested in poaching each
other's clients. The behaviour exhibited by them of not making their
respective CAMs available in the market other than inbuilt CAM in their
55Anti-competitive
agreements.
note 37.
57Supra note 40, 13.
58Supra note 40, 18.
59Competition Act, 2002, 4(2) (d).
56Supra
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STBs and pairing and restricting of the viewing card with a particular STB,
raised questions of anti-competitive practices. Due to existing information
asymmetry in the relevant market, coupled with the position they enjoyed in
the market60, it would not be unfair to hold, prima facie that the DTH
operators were dominant in the relevant market and either independently
or collusively abusing the position.
The findings of the commission on the issue of abuse of dominant
position revealed that allegations made were vague and inconclusive. As
Indian law does not recognise the concept of collective dominance, a group
of different and completely independent entities or enterprises would not be
covered in the scope of 'group'61 as defined under the Indian Anti-trust
legislation. As the allegations made by the informant were centred on
individual dominance of the several players exercised by them by virtue of
their respective market share, the commission held that, individually, none of
the entities was dominant in terms of the Act.62
It is a rule of interpretation that a provision must be read literally,
unless, by doing so, it goes against the legislative intent of the enabling
statute. In terms of a literal reading of Section 4(2), of the Act, it can be
inferred that the words used by the law makers were intended to confine the
scope of the provision within the four corners of the law. Therefore, the use
of the word an enterprise can be applied in a pluralistic manner only when
the same constitutes an association or persons or a body of individuals, as
given under section 2(l) of the act.63 As in the instant case, the entities clearly
fall outside the scope of an enterprise or a group; they inconsequentially fall
outside the ambit of section 4, which applies to an enterprise or a group.
2. Royal Energy Ltd. v. IOCL and others64
The Concept of collective dominance received mention in the Royal
energy case where with a view to using alternative sources of energy, the
Ministry of Petroleum and Natural Gas came out with the Bio-Diesel
Purchase Policy. Under this policy, the Bio-Diesel suppliers could supply bio60The
6 DTH operators controlled nearly 100% of the market of the DTH services, p. 23 of
order, Available at http://www.cci.gov.in/menu/MainOrderConsumer250411.pdf,
decided on 24 March 2011, (last visited 18 June 2013).
61Competition Act, 2002, Explanation (a) to 5.
62Competition Act, 2002, Explanation (a) to 4.
63Competition Act, 2002, 2(l) (v).
64
Supra n. 51.
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to. In the instant case, if we take a look at a host of factors, including the
combined market share of the entities71, the nature of the products
involved72, the size and number of undertakings and also the fact that TRAI
(Telecom Regulatory Authority of India) itself provided for interoperability,
both commercially and technically,73 changed anything. Could the
Commissions decision have been any different had the concept of collective
dominance been prevalent in India, is certainly worth a thought.
V.
CONCLUSION
The Commissions order compares the DTH Market to the Mobile phone services where
a consumer can use any hardware to access the signals of any of the mobile service
providers as long as the consumer buys the SIM card of that particular mobile service
provider, p. 11 of the order, supra note 66.
73Seep. 36 of the Order, supra note 70.
74Id.
72
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because of the wording of the Act. This amendment will bridge the
difference of opinion and confusion on the state of affairs.
What the law would address now is abuse of dominance by an
enterprise either singly or jointly or by a group either singly or jointly. The
scope of collective abuse which was earlier confined to groups only is now
extended to entities which are not groups, but can exercise collective
dominance even without the presence of agreements as exists in oligopolistic
markets. Even though the dividing line between tacit collusion and adopting
similar practices due market requirements is very thin and vague, these
practices will lead to abuse which may go unnoticed and leave the market
open to anti-competitive practices.
This move is therefore, without question, a step forward in the right
direction, towards aligning the Indian Law with the best practices worldwide,
with the possibility of mending the loopholes present in others.
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expiration. The widely accepted view held by authors grant such settlements
a per se Anti-competitive status as such agreements between the two market
players essentially restricts the generic entry leading to a creation of
competitive advantage for the manufacturer. However, the present paper
aims to challenge the above argument and attempts to bring out an
alternative understanding. It further seeks to envisage the prospects of such
settlements in the Indian paradigm and analyse the possible challenges that
the Indian legal framework might face while dealing with such claims.
Part I of the paper analyses the abuse of dominant status granted by
IPRs vis--vis the Competition policy that condemns such monopolization.
It further dwells upon the dire need for patent protection specifically to
promote innovation in the pharmaceutical sector. Part II presents the
conceptual understanding of reverse payment settlements and tries to
challenge the prevalent argument of such settlements being anti-competitive
in nature. It further gives the Federal Trade Commission (hereinafter referred
to as FTC) data on the nature of such agreements till date, provides the
landmark litigations on such settlements, discusses the tests that emerged and
were deployed by courts to deal with such litigations and lastly envisages such
a scenario in the Indian paradigm. Part III concludes the paper and makes an
attempt to reconcile such settlements with the competition policy.
II. COMPETITION POLICY: WHERE DOES
PHARMACEUTICAL SECTOR STAND?
Competition policy aims at securing consumer welfare by ensuring
fair competition in the market and avoiding undue dominance by any players.
However, the competition law of various jurisdictions does reconcile
intellectual property rights as valid for creation of dominant status in the
right holder as an incentive to the intellectual effort devoted in the
innovation. Thus, in a way both the competition policy and the IP regime
aim to foster development, research in innovation, promote public welfare
and benefit. This section highlights the interface between competition policy
and IPR. It delves into abuse of dominant position as recognised under the
competition law and the grant of dominance by IP Rights. It further narrows
down to the pharmaceutical sector and identifies the importance of
competition in the said sector.
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A. INTERPLAY OF ANTI-TRUST AND IPR
The Competition Policy envisages the idea that any firm holding a
dominant position with an exclusive right to exploit the same leads to an
appreciable adverse effect on competition in the relevant market3. There is an
inherent conflict between the patent law which grants limited monopolies to
inventors and the anti-trust laws which broadly condemn monopolies and
restrictions on competition.4
In US the corresponding term for abuse of dominant position is
monopolization or attempt to monopolize. The Sherman Act prohibits
conduct which monopolizes, or attempts to monopolize any part of trade or
commerce.5Dominant position is defined as a position of economic strength
enjoyed by an undertaking which enables it to behave to an appreciable
extent independent of its competitors, its customers and ultimately of the
consumers.6 The existence of dominant position per se does not produce anticompetitive implications. However, an abuse of such a position as described
under Section 4 of the Competition Act, 2002 bears appreciable adverse
effects on competition in India. Abuse may therefore occur if an undertaking
in a dominant position strengthens such position in such a way that the
degree of dominance reached substantially fetters competition.7
Section 19(3) of the 2002 Act visualizes the agreements that amount
to appreciable adverse effects to competition. The two broad categories of
business conduct recognised as abusive are first, the exclusionary abuse
where a firm prevents the entry of new competitors in the market8. Any
conduct that causes a principle deterrent to a new entry amounts to an abuse.
Second, exploitative abuse where a firm uses its dominant position in
disadvantage to others by charging high prices is detrimental to consumers
interest. The firm often enters into predatory pricing scheme whereby the
pricing is at a price which is below the cost, as may be determined by
regulations, of production of goods or provision of services with a
likelihood, or reasonable prospect, of later recouping the investment by
increasing prices. This practice of pricing below an appropriate measure of
Competition Act, 2002, 2 (r), (s) & (t) read with 19(5), (6) & (7) (India).
Geoffrey A. Manner, Competition Policy and Law under Uncertaintly, 498 (1st ed. 2011).
5 Sherman Act, 1890, 2 (US), see also United States v. Grinnel Corporation, 384 US 563(1966).
6 N. V. Netherlands Banden Industrie; Michelin v. Commission of the European, [1983] ECR 3451.
7 Europemballage Corporation and Continental Can Company Inc. v. Commission of the European
Communities, [1973] EUECJ C-6/72.
8 supra note 7.
3
4
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Nothing in this Agreement shall prevent members from specifying in their legislation
licensing practices or conditions that may in particular cases constitute an abuse of
intellectual property rights having an adverse effect on competition in the relevant
market.
B. IPRs-REWARDING INNOVATION EFFICIENTLY
16Valentine
Korah, Competition Law and IPR in Competition Law Today 140 (Vinod Dhall ed.
2007).
17Id, at142.
18 Dr Birgitte Andersen, Intellectual Property Right Or Intellectual Monopoly Privilege: Which One
Should
Patent
Analysts
Focus
On?,
available
at
http://redesist.ie.ufrj.br/globelics/pdfs/GLOBELICS_0050_Andersen.pdf
19 Supra note 12.
20 Supra note 17, at 503.
21 Supra note 19.
22 Patent Act, 1970, 53 (India).
23 Copyright Act, 1957, 52 (India).
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24Supra
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Patent Act, 1970 by way of Sections 2(m), 2(j) and 2(ja) provides that
the awarding of a patent is based on objective criteria of novelty, industrial
application and inventiveness of the product.38 If each of these criteria is not
met the patent is not granted.
A patent can be obtained for an initial discovery known as the
primary patent or on a new formulation of the same compound or molecule
33Id.
34Supra
36Supra
note 32.
35Id.
37Id.
38The
Patents Act, 1970, 2(m), 2(j) and 2(ja) (India); Astra Zenaeca v. Commission, (1991)
ECR-I-3356.
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94
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4 MLJ 1153.
95
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49Supra
96
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97
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98
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Supreme Court has recently refused to interfere with the Second Circuit
Courts decision so the same is held to be final. 60
In Valley Drug Co v. Geneva Pharms, Inc61 the patent holder entered into
agreements with two generic manufacturers whereby the generics would
refrain from marketing their version for a certain period in exchange for
quarterly payments of US$6 million to one generic and monthly payment of
US$4.5 million to the other. The Eleventh Circuit Court found the per se
illegality treatment of such settlements inappropriate. The court primarily
held that unless the exclusionary effects of an agreement exceeded the
exclusionary scope of the patent, the agreements would not be subject to per
se antitrust condemnation. Since the agreement contemplated generic entry
into the market prior to patent expiration, this agreement was narrower than
the patents exclusionary effect, thus it was not found to be violating any
antitrust principles. This case again depicts the divergence of the courts
opinion regarding the nature of such agreements.
In the Cephalon litigation62 the generic drug companies agreed not to
market their generic version until a certain date in exchange for payments by
Cephalon for various licensing agreements, supply agreements, and research
and development deals. The Judge adopted the prevailing scope of the
patent test, pursuant to which the court first examines if the agreements in
question exceed the exclusionary patent right granted to the patent holder. In
this case, the terms of agreement improperly granted rights that went way
beyond the scope of Cephalons patent rights. Therefore, the settlement
agreement was adjudicated as being against anti-trust principles.
In Asahi Glass Co. Ltd. v. Pentech Pharmaceuticals63, the settlement
agreement between GlaxoSmithKline, the producer of branded-Paxil and a
generic manufacturer precluded the generic manufacturer from selling its
version in the fifty states. However, the settlement did provide the generic a
license to sell a generic version in Puerto Rico. Thus, the settlement
precluded the generic manufacturer from competing in the fifty states in
exchange for a right to sell in Puerto Rico. The court recognised the fact that
Glaxo paid the generic to stay out of the domestic market (e.g., by permitting
60News
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it to sell branded-Paxil in Puerto Rico) and held that had Glaxo continued to
litigate its patent infringement claim, the generic would not have been able to
sell in Puerto Rico, and ultimately, the rest of the United States, until 2007.
According to the court, the settlement is, therefore, pro-competitive as it
enabled the generic to sell immediately in Puerto Rico.
Thus, the courts have in the recent days adopted varied approaches
and tests to determine the validity of reverse payment settlements instead of
resorting to the traditional approach or following a singular method of
determination.
E. PROMINENT TESTS TO DETERMINE THE ANTI
COMPETITIVE SETTLEMENTS
As is apparent from the above cases, courts have not tended to use
either of the traditional antitrust tests like per se or the rule of reason test,
instead evolving new tests to review competition issues raised by
pharmaceutical patent settlements. Per se test presumes reverse payment
agreements to be anticompetitive without going into their merits while the
rule of reason test starts with the assumption that such agreements are
tenable in law and then takes rebuttals against this assumption.
In re Tamoxifen Citrate Antitrust Litigation case, the Second Circuit
found that reverse payment settlements do not necessarily violate the
antitrust laws. The court enunciated a new test called the scope of the
patent test, holding that such settlements are not anticompetitive as long as
they do not block generics from entering the market after the brand-name
manufacturers patent rights expire. The Second Circuit also confirmed the
scope of the patent test in a subsequent reverse payment in Ciprofloxacin
Hydrochloride Antitrust Litigation.64 So the three-step process in the scope of
the patent test looks to:
1. The scope of the exclusionary potential of the patent;
2. The extent to which the challenged agreement exceeds that scope;
and
3. Any resulting anti-competitive effects.
64544
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The Quick look rule of reason test adopted by the Third Circuit65
starts with a presumption that a reverse-payment settlement is prima facie
evidence of an unreasonable restraint of trade, which can be rebutted by
proof showing the payment or other benefit was for a purpose other than
delayed entry or had some other pro-competitive benefit as was observed in
the Asahi Litigation.
F. REVERSE PAYMENT SETTLEMENTS- ARE THEY
REALLY ANTI-COMPETITIVE?
65Andrx
Pharms., Inc. v. Biovail Corp. Intl, 256 F.3d 799 (D.C. Cir. 2001).
Laura J. Robinson, Analysis of Recent Proposals to Reconfigure Hatch-Waxman, 11 J.
INTELL. PROP. L. 47, 47 (2003).
67Id.
68 Kent S. Bernard & Willard K. Tom, Antitrust Treatment of Pharmaceutical Patent
Settlements: The Need for Context and Fidelity to First Principles, 15 FED. CIR. B.J.
617, 624-25(2006).
69Id.
66
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CONCLUSION
Jatanis, Pay for Delay settlements: Potential threat to Indian Pharmaceutical sector, available
at http://cci.gov.in/images/media/ResearchReports/BhusanInterns010611.pdf.
82Id.
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105
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Meghna Chandra
INTRODUCTION
The income tax law of India traces its history back to 1961, but
numerous changes, additions and amendments have been made to it, making
it suitable to the needs of the people on one hand and the progressive nature
of the economy on the other. Until March 20121, there had never been a
general provision on anti-avoidance rules (GAAR) as opposed to certain
provisions in the Income Tax Act, 1961 which have specific anti-avoidance
rules. Judicial precedents have also contributed to the development of the
scope of tax avoidance in India. There is a need to understand the thin line
of distinction between various terminologies involved, like tax-avoidance, tax
evasion, tax mitigation, etc.
Tax planning, tax efficiency and tax avoidance by companies is not
equal to tax evasion. Tax evasion is the method of evading tax by dishonest
means like suppression, conscious violation of rules, etc. The prime
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JUDICIAL TRENDS
As stated earlier, India has never had GAAR and has totally relied on
the judiciary to analyze any arrangement as being legal or not. India has a
long history of judicial trends which has laid down certain principles and
doctrines, some of which are borrowed from the English law. The judicial
pronouncements have also created confusion and certain contradictions in
their application. This was also one of the reasons that a need was felt to
codify the law, and remove doubts from the minds of many.
2Roy
3Id.
4Id.
5K.
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67 ITR SC 11
154 ITR SC 148
8(1936) AC 1 (HL).
9(1985) 154 ITR SC 148
10(2003) 263 ITR SC 706
11(1936) AC 1 (HL).
12(1988) 170 ITR Mad. 238 (India).
7(1985)
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The Direct Taxes Code Bill, 2010 was referred to the Standing
Committee on Finance of Parliament on 9 September 2010 chaired by Shri
Yashwant Sinha for detailed examination and report.19 The Committee
Vodafone International Holdings BV v. Union of India, (2012) 204 Taxmann SC 408
also IX (c).
15 Direct Taxes Code 2010, Clause 117.
16Id, Clause 118.
17Id, Clause 119.
18Id,Clause 125.
19 Taxmanns Guide to Standing Committee Report on Direct Taxes Code Bill, 2010.
13
14See
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submitted its report which was introduced in Parliament on March 2012 after
inviting objections and suggestions from various stakeholders. The important
recommendations of the Standing Committee were: 20
i.
ii.
iii.
iv.
v.
vi.
of Finance, 49th Report, Standing Committee on Finance on Direct Taxes Code Bill, 2010
available at <http://www.itatonline.org/info/index.php/download-report-of-standingcommittee-on-direct-tax-code-bill-2010/.
20Ministry
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While analysing the term main purpose under Indian GAAR, the
question arises how this main purpose is to be determined? Should it be
based on intention of the parties or should other facts and circumstances be
considered? A South African discussion paper on tax avoidance21 explains
that main has generally been construed to mean the dominant purpose.
Also, mainly has been construed as a quantitative measure of more than
50%22; as conveying the idea of dominance.23
Therefore, if the motive behind individual steps is to obtain a tax
benefit,but the overall scheme is not geared towards the same, the individual
steps will nevertheless be treated as an arrangement and GAAR may be
invoked. To clear doubts and prevent abuse of the GAAR provisions by tax
authorities, it must be made clear that the purpose of a party to the
transaction may be taken into account as one of the relevant facts, but this
will not be the determining factor in making such objective determination.
B. CRITICAL TEST
African Revenue Services, Discussion paper on Tax Avoidance and Section 103 of Income
Tax Act, 1962, available at <http://www.sars.gov.za/home.asp?pid=5981>.
22 SBI v. Lourens Erasmus (Edms) Bpk, (1966) 4 SA 434 (A) (South Africa).
23 CIR v. King, (1947) 2 SA 196 (A) (South Africa).
24 Finance Bill, 2012, Section 96(1)(a).
25 Id, Section 96(1)(b).
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Section 96(1)(c).
National Seminar General Anti-Avoidance Rule (GAAR): Boon or Bane for the
Economy, (26 July 2012).
28 Finance Bill, 2012, Section 96(1)(d).
29See also IX (d).
30Gaurav Choudhary, Heres why GAAR jarrs, Hindustan Times (17th July 2012), available at
http://www.hindustantimes.com/business-news/WorldEconomy/Here-s-why-GAAR-jarrs/Article1-890763.aspx.
31 Income Tax Act, 1961, Chapter XA Section 98.
27ASSOCHAM,
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GAAR has been a part of the tax code of Canada since 1988,
Australia since 1981, South Africa from 2006 and China from 2008. Australia
and China also have SAAR in place to check abuse of tax treaties and
transfer pricing.32
B. ASSOCHAM
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from direct taxes, the judiciary and the legislature of various countries came
into action, and thereby GAAR and its allied principles followed.
There are two ways of addressing the problem of tax avoidance first,
by evolving and recognising doctrines through judicial
pronouncements and second, by enacting a statute or set of rules called
General Anti-Avoidance Rules. Economies like USA and UK have adhered to
the vigorous judicial anti-avoidance doctrines, whereas Australia, Canada,
New Zealand and South Africa have enacted statutory GAARs.37
A. UNITED STATES OF AMERICA
USA does not have a statute in the form of GAAR. However, the
courts have recognised and applied various common law doctrines for tax
avoidance over the years. These doctrines are:
i.
ii.
The doctrine of substance over form is essentially that for Federal tax
purposes, a taxpayer is bound by the economic substance of a transaction
where the economic substance varies from its legal form.
John Avery Jones et al (ed.), Comparative Perspectives on Revenue Law: Essays in Honour of John
Tiley, pp. 11-20 (2008).
38 (1935) 293 US 465
39 Id.
37
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iii.
iv.
v.
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In the early to mid-twentieth century, the courts took a fairly handsoff approach to tax avoidance and observed that No man in this country is
under the smallest obligation, moral or other, so to arrange his legal relations
to his business or to his property as to enable the Inland Revenue to put the
largest possible shovel into his stores.47 Thereafter in 1981, the Ramasay case48
laid down the seeds of anti-avoidance tax considerations by way of judicial
activism wherein the doctrine of purposive interpretation was adopted,
noting that tax legislation should be read in accordance with its purpose, then
applied to a realistic view of the facts.
The United Kingdom is now seriously considering the introduction
of a form of GAAR after having relied for years on judicial doctrines of antiavoidance as expounded in cases like WT Ramsay Ltd v. IRC49, CIR v. Burmah
Oil Co. Ltd.50, Furniss v. Dawson51, Craven v. White52, Ensign Tankers (Leasing) v.
Stokes (HMIT)53.54
The contradictory principles developed in the UK cases have
impelled an Advisory Committee consisting of a distinguished people to
advocate for a moderate rule that targets abusive arrangements, but rejects a
broad spectrum general anti-avoidance rule.55
The proposed GAAR has two primary elements i.e. abnormal
arrangement having abnormal features, and abusive tax results. To assess this
45Chisholm
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ii.
iii.
Expert Committee, Report on General Anti Avoidance Rules (GAAR) in Income-tax Act, 1961,
92-93 (2012) available at<http://finmin.nic.in/reports/report_gaar_itact1961.pdf>.
57 Her Majesty's Revenue and Customs.
58 Federal Commissioner of Taxation v. Everett, (1980) 143 CLR 440 (Australia).
59The specific splitting of income with underage children has been negated as a tax planning strategy by
Division 6AA of Part III of the Income Tax Assessment Act 1936.
60Income Tax Assessment Act, 1936 http://www.austlii.edu.au / au / legis / cth /
consol_act/itaa1936240/
56
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ii.
iii.
iv.
61Buying
and selling shares just to claim the franking credits without holding on to them long
enough to bear ownership risk.
62Diverting income that is earned through your efforts into another entity with a lower tax
rate.
63Taxpayers
Australia Inc, Tax avoidance and tax evasion, available at
http://www.taxpayersassociation.com.au/investment/tax-evasion.html.
64Income Tax Assessment Act, 1936, Section 177A -scheme means (a) any agreement,
arrangement, understanding, promise or undertaking, whether express or implied and
whether or not enforceable, or intended to be enforceable, by legal proceedings; and (b)
any scheme, plan, proposal, action, course of action or course of conduct.
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i.
ii.
The Income Tax Act, 1962 was amended in 2006 to introduce the
GAAR which applies to impermissible avoidance arrangements.75 The fourstep process of South African GAAR is:
i.
ii.
iii.
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iv.
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78Enterprise
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G. LESSONS TO BE LEARNT
Since all taxes are imposed by statute, all questions of tax are
ultimately ones that involve the interpretation and application of the statute.
The result in the Duke of Westminster case was as much a product of the literal
interpretation of taxing statutes that prevailed at the time in the UK and
Commonwealth countries as the result in the contemporary US case, Gregory
v. Helvering81, was the product of a more purposive approach to
interpretation.82
The Indian GAAR proposes that a transaction could become an
impermissible avoidance arrangement even if a step in it benefits the taxpayer. This
overarching Indian provision conveys a contrary position to the first UK
safeguard that seems to limit the scope of GAAR; and the second safeguard
is also milder than the implications of the Indian provision. Provisions
should not be such that they completely dis-incentivise the investors.
VII.
82John
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86
124
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the revenue authorities.87 After much criticism, the position was clarified by
Mr. Pranab Mukherjee in the Parliament by amending Section 96. Presently,
the burden of proof rests with the revenue authorities. This immediate step
has been received well by the stakeholders.
The question however remains as to what was the reason for this
immediate step to be taken, and whether it is justified. Presumption of
innocence is featured as one of the principles of natural justice in India, more
so in criminal cases where the burden of proof to be discharged by the
prosecution is very high.
The preamble of GAAR advocates that:
..there is a need for statutory provisions so as to codify the
doctrine of substance over form where the real intention of
the parties and the effect of transactions and purpose of an
arrangement are taken into account for determining the tax
consequences, irrespective of the legal structure that has been
superimposed to camouflage the real intent and purpose.88
The constitutionality of shifting the burden of proof has already been
upheld by the Supreme Court in the case of Collector of Customs, Madras v.
Nathella Sampathu Chetty89 wherein the Court said that Section 178A of the Sea
Customs Act, 187890 is in line with the principle underlying the structure of
the rights guaranteed by Article 19 of the Constitution of India, namely, a
balancing of the need for individual liberty in the matter inter alia of the right
to hold property or of the right to trade, with the need for social control in
order that the freedoms guaranteed to the individual sub-serve the larger
needs moral, social and economic.91
It is not unknown that tax mitigation has taken a form of tax
avoidance, and the tax authorities become armless when they have to
87K
Chellaram v. CIT Bombay, (1980) SC 125 ITR 713 (India); K G Thomas v. CIT, (1985) SC
156 ITR 412
88Sukumar Mukhopadhyay, General Anti-Avoidance Rule and the burden of proof ,
Business Standard (7 May 2012) <http://business-standard.com/results/news/general-antiavoidance-rulethe-burdenproof/473569/>.
89 Collector of Customs, Madras v. Nathella Sampathu Chetty, (1962) SCR 3 786 (India).
90In 1955, the Sea Customs Act, 1878, was amended by the introduction of Section 178A in
that Act, which provided, inter alia that where goods were seized, under that Act in the
reasonable belief that they were smuggled goods, the burden of proving that they were not
smuggled goods shall be on the person from whose possession the goods were seized.
91 Sukumar Mukhopadhyay, supra note 88.
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93(1936)
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Section 9 of Income tax Act, 1961 was challenged. The three judge Bench
stated that a look-at approach needs to be adopted for the transaction,
rather than a look through approach in interpreting the relevant tax
provisions. The Bench held that investment structures had to be respected
and it was to be determined whether an investment was made for
participation in the entity or whether it was a pre-ordained transaction aimed
at avoidance of taxes. The Bench also examined the need to review the
decision of the Supreme Court in Azadi Bachao Andolan102and concluded that
there seemed to be no reason to refer the decision for reconsideration by a
larger Bench. Finally, the Court stated that genuine strategic tax planning
could not be ruled against. The court said:
The question of providing look through in the statute or in the treaty is
a matter of policy. It is to be expressly provided for in the statute or in
the treaty. Similarly, limitation of benefits has to be expressly provided
for in the treaty. Such clauses cannot be read into the Section by
interpretation. For the foregoing reasons, Section 9(1)(i) held to be as not
a look through provision.103
It cannot be said that the Vodafone judgment was lopsided and went
against many past principles, because all the three judges based their
arguments on the special nature of the transaction between Vodafone and
HCIL. But, this judgment in fact opened the eyes of many with respect to the
distinction between avoidance which can be legal or illegal. This judgment
also triggered the need of implementing GAAR.
D. TREATY SHOPPING FAVOURABLE JUDICIAL TRENDS
note 10.
note 13.
104Supra note 10.
105Article 24 stipulates that benefits will be available if 50% of the shares of a company are
owned directly or indirectly by one or more individual residents of a controlling state.
103Supra
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128
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outcomes not intended by the Parliament.111 For dealing with such practices,
GAAR should be such that they address these loopholes and do not leave
any scope for misuse. There are certain reasons why GAAR will be an
improvement on SAAR and act as a complimentary tool to them.
B. GAAR COMPLEMENTS SAAR
111
112
SAAR
GAAR
1.
2.
3.
4.
Ralph Committee, J Ralph Review of Business TaxationA Tax System Redesigned (July 1999).
ASSOCHAM, supra note 27.
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X.
CONCLUSION
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117
Union Budget and Economic Survey, Union Budget 2013-14 (28th February 2013), available
at http://indiabudget.nic.in/ub2013-14/bh/bh1.pdf
131
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INTRODUCTION
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1992, pp.3-4, see Graham Dutfield, Intellectual Property, Biogenetic Resources and
Traditional Knowledge, p.91.
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http://herbstohealth.blogspot.in/2008/07/euphorbiaceae-plao-noi.html.
3 See: http://www.rebirth.co.za/hoodia/hoodia_xhoba.htm, for Kung Bushmen - Kalahari
Hoodia Gordonii plant known as Xhoba.
4 Ayahuasca.com Overviews Shamanism On The Origin of Ayahuasca.
5 Daniel J. Gervais, Spiritual but Not Intellectual? The Protection of Sacred Intangible
Traditional Knowledge, 11 Cardozo Journal of International and Comparative Law, 2003.A1
6 Barsh, 1999, p.73; see Graham Dutfield, Intellectual Property, Biogenetic Resources and Traditional
Knowledge, p.94.
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extent that they are studied at universities and have as high a status as
western biomedicine. In India, some commentators differentiate these
knowledge systems from local folk knowledge, which still tends to be orally
transmitted, even though they consider all these kinds of knowledge to be
traditional.7 Therefore, we have to view TK with a wider perspective in order
to understand its true nature and scope.
III.
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Although the lack of a concise and acceptable definition may not seem to be
a hurdle, defining TK also sets the boundaries and contents of TK. 11 Instead
of confining TK to one particular field or limiting it as a matter of culture,
keeping a flexible and open ended view makes sense because TK is not
frozen in time, nor can it be limited to contributions from the previous
generations. But still, a clear definition helps in identifying the protectable
subject matter and also determines the scope of protection.
There are certain other International Documents and National
Legislations which define traditional knowledge. In 2006, WIPO
Intergovernmental Committee on Intellectual Property and Genetic Resources, Traditional
Knowledge and Folklore12 provided a definition of the term which states that the
term traditional knowledge refers to the content or substance of knowledge
resulting from intellectual activity in a traditional context, and includes the
know-how, skills, innovations, practices and learning that form part of
traditional knowledge systems, and knowledge embodying traditional
lifestyles of indigenous and local communities or contained in codified
knowledge systems passed between generations. It is not limited to any
specific technical field, and may include agricultural, environmental and
medicinal knowledge, and knowledge associated with genetic resources.13
In Brazil, Traditional Knowledge is defined as associated to genetic
heritage as information or individual or collective practices of an indigenous
or local community having a real or potential value and associated with the
genetic heritage.14 Thus the Brazilian law on this point associates traditional
knowledge with genetic heritage. The use of the word heritage conveys a
different meaning and suggests that traditional knowledge is not merely a
acquired and used. In other words, the social process of learning and sharing knowledge,
which is unique to each indigenous culture, lies at the very heart of its traditionality. Much
of this knowledge is actually quite new, but it has a social meaning, and legal character,
entirely unlike the knowledge indigenous peoples acquire from settlers and industrialized
societies, Russel Barsh, Indigenous Knowledge, in Spiritual and Cultural Values of
Biodiversity (D.A. Posey ed., 1999).
11 According to Leistner, [c]onsequently, definitions based on modern conventional law with
its distinction of protected intellectual property, and cultural property, which generally falls
into the domain public may thus be perilous to the very root concepts of the development of
traditional knowledge, Matthias Leistner, Traditional Knowledge, in Indigenous Heritage
and Intellectual Property: Genetic Resources, Traditional Knowledge and Folklore (Silke von Lewinski
ed., 2004).
12 Article 3 (2) of the Annex to document WIPO/GRTKF/IC/10/5.
13
Ibid.
14Article 7 of Brazil Provisional Measure No. 2186-16 of 2001 Regulating Access to the Genetic
Heritage, Protection of and Access to Associated Traditional Knowledge.
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form of property, but is equally connected with the cultural and spiritual
beliefs of the communities. Such information and practices are transmitted
from one generation to the other as heritage. The inclusion of the word
heritage conveys the holistic and sacred nature of traditional knowledge
under the law of Brazil.
The African Model Legislation for the Protection of the Rights of Local
Communities, Farmers and Breeders, and for the Regulation of Access to Biological
Resources 2000 provides a definition of Community Knowledge. It states that
Community Knowledge or indigenous knowledge is the accumulated
knowledge that is vital for conservation and sustainable use of biological
resources and/or which is of socio-economic value, and which has been
developed over the years in indigenous/local communities.15 Community
rights have been defined as the rights held by local communities over their
biological resources or parts or derivatives thereof, and over their practices,
innovations, knowledge and technologies.
The Peruvian law uses the term Collective Knowledge instead of
traditional knowledge. Article 2 (b) states that collective knowledge means
the accumulated, trans-generational knowledge evolved by indigenous
peoples and communities concerning the properties, uses and characteristics
of biological diversity.16
The core Committee of the TK Draft Bill 200917, India, provided an
elaborate and apprehensive definition of TK18, which states that Traditional
Knowledge refers to the collective knowledge of a traditional community or
a family related to a particular subject or a skill passed down from generation
to generation for at least three generations including but not limited to:
cultural products and practices from traditional communities such as
weaving patterns, pottery, painting, poetry, folklore, music and the
like;
15African
Model Legislation for the Protection of the Rights of Local Communities, Farmers and Breeders,
and for the Regulation of Access to Biological Resources 2000, (12/03/2011), http:
www.farmersrights.org/pdf/africa/AU/AU-model law00.pdf.
16 Peru Law No 27811 (2002).
17 It is a yet unpublished document prepared by the Core Committee on TK Protection and
discussed in Round Table Meeting on 25-26 January 2010 at the National Law School of
India University, Bangalore in association with the Ministry of Human Resource and
Development.
18 Article 2.17 of Traditional Knowledge (Protection and Regulation of Access) Bill of India 2009.
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19Development
of Elements of Sui Generis Systems for the Protection of Traditional Knowledge, Innovations
and Practices to Identify Priority Elements, CBD SECRETARIAT, 16, (Sept. 20, 2012), http:
UNEP/CBD/WG8J/5/6.
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IDENTIFYING STAKEHOLDERS
Intellectual Property Needs and Expectations of Traditional knowledge WIPO report on fact-finding
missions on intellectual property and traditional Knowledge (1998-1999), p. 26.
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present state boundaries. They retain some or all of their own social,
economic, cultural and political institutions, irrespective of their legal status.
The Convention further defines tribal people as those whose social, cultural
and economic conditions distinguish them from other sections of the
national community and whose status is regulated wholly or partially by their
own customs or traditions or by special laws or regulations.
Many scholars restrict their approach to the above three as they live
in groups and form separate communities possessing knowledge about the
bio-resources around them and are governed by a separate normative system.
However, if we adopt this approach, then farmers who also have the
knowledge about the flora, soil and climate of a particular region suitable for
a particular crop may get excluded. From this perspective we also favour the
patenting of neem or haldi as we are then stopped from claiming that it is a
part of Indias traditional knowledge.
Other scholars believe that holders of traditional or indigenous
knowledge may come from a diverse range of populations and occupational
groups, such as traditional farmers, pastoralists, fishermen and nomads
whose knowledge is based on a particular place and is likely to be because of
a long period of occupancy spanning several generations. Often this
knowledge is differentiated from more generally-held knowledge and from
the knowledge of urbanized societies.
But still the issue stands as it is. Who holds Traditional Knowledge?
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TK AS COMMON PROPERTY
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note 26.
scholars obscure the distributional consequences of the commons. They presume a
landscape where every person can reap the riches found in the commons. This is the
romance of the commonsthe belief that because a resource is open to all by force of
law, it will indeed be equally exploited by all. But in practice, differing circumstances
including knowledge, wealth, power, access, and abilityrender some better able than
others to exploit a commons, Anupam Chander and Madhavi Sunder, The Romance of
the Public Domain, California Law Review, Vol. 92, 1331.
28The
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TOWARDS PRIVATISATION
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Hardin, Tragedy of Commons, SCIENCE , NEW SERIES, Vol. 162, No. 3859. (Dec.
13, 1968), 1243-1248, published by American Association for the Advancement of
Science.(15/10/2012)
http://links.jstor.org/sici?sici=00368075%2819681213%293%3A162%3A3859%3C1243
%3ATTOTC%3E2.0.CO%3B2-N.
32
Ibid.
33 Hardins solution refers to the problem discussed as Tragedy of Commons, Supra note 31.
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For example, the knowledge of how certain plants within an indigenous groups homeland
are used to treat fever would fall under IP rights. Likewise, particular understandings of the
land, ecology, or environment of a certain area may also fall under IP rights. The key point
is that IP rights refer to knowledge that otherwise would not be available. It is not
knowledge gained through scientific experimentation, nor is it knowledge gained through
empirical deductions. Rather, it is knowledge that is gained (some may say earned) through
time, place and experience.
36Kibet A. Ngetich, Indigenous Knowledge, Alternative Medicine and IP Rights Concerns in Kenya. 11th
General Assembly, Theme: Rethinking African Development: Beyond Impasse, Towards
Alternatives (Maputo, Mozambique, 6-10 December 2005), Supra note 34 at p. 293.
37 Sometimes TK is possessed by the dominant caste/clan within the communities. These
persons possess a greater control over TK resources, but basic notion remains that TK is a
shared right and the holder in the community is in position of a trustee.
35
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CONCLUSION
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Philippines model44 and the Peruvian Model45 are some of the sui generis
regimes which can be studied. It is also to be noted that these issues cannot
be resolved without taking into account the rights of communities and the
unique nature of communally held knowledge and resources. The model of
protection should ensure adequate measures of protection and schemes for
benefit sharing. However, it should also cater to the holistic nature and
requirements of the traditional knowledge societies and should not be in
conflict with the normative systems existing in the communities.
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INTRODUCTION
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activity has also seen the rise in aviation accidents resulting in death or injury
to passengers and cases of lost or damaged baggage/cargo.4 These
technological and legal realities posed pressing problems and necessitated the
establishment of a legal regime governing aviation liability internationally.
In this paper, the authors have followed a scheme where Part II
discusses the global legal regime governing the liability for international air
transportation primarily the shift from Warsaw Convention, 19295 towards
Montreal Convention, 19996. Part III deals with the liability of air carriers in
India, pre and post accession to the Montreal Convention, 1999. Part IV of
the paper further discusses the impact of Indias ratification to the Montreal
Convention on compensation, in the light of the 2010 Mangalore crash and
lastly, Part V provides the concluding remarks of the authors.
II.
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on the principle of restitution as its primary object. Under the new liability regime,
the major change brought about is the elimination of meagre and arbitrary
limits of carrier liability. A combined reading of Articles 17 and 21 of the
Convention states that air carriers will be held absolutely liable for the first
100,000 Special Drawing Rights (SDRs)17 of damages, even if damage was
caused by a third party, so long as the injury producing event meets the
conditions for liability and was not contributed to by the passenger. 18
According to Article 17 of the Convention, the carrier is liable for damage
sustained in case of death or bodily injury of a passenger upon condition that
the accident took place on board the aircraft or in the course of any of the operations of
embarking or disembarking. In case of damage sustained due to destruction or
loss of checked baggage, the carrier is liable when the event took place on board
the aircraft or during any period within which the checked baggage was in the charge of the
carrier and in the case of unchecked baggage, when the damage resulted from
its fault or that of its servants or agents. In practice, the compensation under the
Convention is computed for each case separately on the basis of proof of
loss.19 Calculation of loss suffered is based on a persons economic/net
worth, pecuniary and general damages and future prospects. 20 Some of the
determining factors include age of the person, educational qualifications,
employment status, income, dependants, loss of future income and alike.21 In
order to recover an amount exceeding 100,000 SDR, a carrier can escape
liability if it proves that (a) damage was not due to the negligence or other wrongful
17The
SDR is an international reserve asset, created by the IMF in 1969 to supplement its
member countries official reserves. Its value is based on a basket of four key international
currencies consisting of euro, Japanese yen, pound, sterling and US dollar. SDRs can be
exchanged for freely usable currencies. See, International Monetary Fund, Factsheet: Special
Drawing Rights (August 24, 2012),http://www.imf.org/external/np/exr/facts/sdr.htm.
18 Christopher R. Christensen, The Montreal Convention of 1999 (August 28, 2012),
http://www.condonlaw.com/attachments/montreal_convention_1999_CRC.pdf.
19See, Commonwealth v. Amann Aviation Pty Ltd. (1991) 174 CLR 64 at 116 and 118:
To satisfy the requirements of the principle, a plaintiff must affirmatively establish
assessable damage, that is to say, loss or injury which is capable of being measured in
monetary terms The application of that general principle ordinarily involves a
comparison, sometimes implicit, between a hypothetical and an actual state of affairs:
what relevantly represents the position in which the plaintiff would have been if the
wrongful act had not occurred and what relevantly represents the position in which the
plaintiff is or will be after the occurrence of the wrongful act.
20John Arthur, Damages and Equitable Compensation in a Commercial Setting (March 8, 2013),
http://www.gordonandjackson.com.au/uploads//documents/seminarpapers/Damages_and_Equitable_Compensation_-_John_Arthur.pdf.
21International Foundation for Aviation, Aerospace and Development, Note on Air Carrier
Liability Law in India for Ministry of Civil Aviation (December 2, 2012),
http://www.iffaadindia.org/iffaad.html.
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act or omission of the carrier or its servants or agents; or (b) such damage was solely
due to the negligence or other wrongful act or omission of a third party. Article 20 of the
Convention further provides for the exoneration defence when the carrier
proves that the damage was caused or contributed to by the negligence or other wrongful act
or omission of the person claiming compensation, or the person from whom he or she derives
his or her rights, the carrier shall be wholly or partly exonerated from its liability.
This is a significant departure from the 125,000 gold francs
(approximately $10,000) limitation placed on damages under the Warsaw
Convention.22 Thus, it can be said that the Montreal Convention is no longer
a Convention for airlines but a Convention for consumers/passengers.23
III.
In India, the rights and liabilities of air carriers are determined by the
Carriage by Air Act, 1972 (hereinafter referred to as the Act).24 It was
enacted (and amended in 2009) to implement Indias treaty obligations under
the Warsaw Convention (and later the Montreal Convention) according to
the constitutional scheme laid down in Article 253 read in the light of
Schedule VII List I Entry 14.25 It extends to the whole of India and is
applicable to Indian citizens involved in domestic carriage by air and in
international carriage by air, irrespective of the nationality of the aircraft
performing the carriage.26 According to Section 5, the Act does not bar the
applicability of acts like the Fatal Accidents Act, 1855 or any other law in
force in India.
22Gardner
23Ibid.
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Carriage by Air Act, Schedule I, Chapter III, Entry 28 (1972); Convention for the
Unification of Certain Rules Relating to International Transportation by Air, Article 28
(1929).
35 International Foundation for Aviation, Aerospace and Development, supra note 21.
36Ibid.
37See, Carriage by Air Act, Schedule III, Chapter III, Entry 17 and 21 (1972), as inserted by
the Carriage by Air (Amendment) Act (2009).
38 This amount does not reflect the minimum liability of the carrier. The Convention has left
the determination of the level of damage to the local law.
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carrier to make advance payment (which may later be off-set against final
compensation). It must be noted that this provision does not restrict the
carrier from affixing a higher rate of compensation by the terms of a
special contract executed between the carrier and claimant. Further, the
air carriers liability does not get extinguished by application of statute of
limitation.39 Mere delay on the part of claimant to approach the insurer or
to reach a settlement does not absolve the carrier of liability.
(ii) The second tier is for damages above the value of 100,000 SDR. In this
case, there is a presumption of fault of the carrier. Unless disproved by
the carrier, liability is unlimited. This applies in cases where the passenger
refuses to settle and claims higher compensation than that provided for
under the first tier by approaching a court of law on grounds of
negligence, pilot error, manufacturers defect etc. This entails
extinguishment of right to settle, even in cases where claimant withdraws
his/her case. Further, the limitation period for instituting the case is two
years from the date of accident.
Also, Section 6A permits conversion of compensation from SDR into
INR at the prevailing exchange rates.40
2. Jurisdiction
Adding to the list of four jurisdictions provided under the Warsaw
Convention for institution of claims, the Montreal Convention provides for
an additional jurisdiction,41 namely the principal and permanent residence of
the passenger, provided the carrier operating in such jurisdiction and such
territory is a signatory to the Convention. Given that the determination of
damages under the Convention is a matter of the local law, the jurisdiction
International Foundation for Aviation, Aerospace and Development, supra note 21.
Section 6A of the Carriage by Air Act, 1972 reads as follows:
6A. Conversion of Special Drawing Rights Any sum in Special Drawing Rights
mentioned in rules 21 and 22 of the Third Schedule shall, for the purpose of any action
against a carrier, be converted into rupees at the rate of exchange prevailing on the date on
which the amount of damages to be paid by the carrier is ascertained by the Court in
accordance with the provisions of rule 23 of the said Third Schedule.
41See, Carriage by Air Act, Schedule III, Chapter III, Entry 33 and 48 (1972), as inserted by
the Carriage by Air (Amendment) Act (2009).
39
40
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The Mangalore Crash case is the first case dealing with the question of
liability of the carrier as provided for under the Montreal Convention and
Carriage by Air Act (amended in 2009). The brief facts were an Air India
Express on an International flight from Dubai crashed on landing at the
Bajpe International Airport at Mangalore on 22 May 2010, killing 158 and
injuring the remaining ten people on board including the crew.43 This
triggered the provisions of the Montreal Convention. The claimants could
potentially bring action in the UAE courts (depending upon where the
contract is made), or India (principal place of business of carrier) or any third
state provided the permanent residence of such claimant is a party to the
Convention.44 However, the insurers of Air India (formerly, National
Aviation Company of India Ltd.) offered a flat interim compensation to the
next of kin of the 128 deceased passengers i.e. Rs. 10 lakhs (approximately
$22,000) to each adult deceased passenger; Rs. 5 lakhs (approximately
$11,000) to each passenger below the age of 12; with Rs. 2 lakhs
(approximately $4,400) disbursed to each injured passenger.45 Further, the
families of six deceased crew members were forced to accept a maximum
compensation of Rs. 35 lakhs under the Workmens Compensation Act,
1923.46
As a result, a petition seeking for damages according to the Montreal
Convention was instituted in the Kerala High Court. The court47, comprising
a single-judge bench, held that cabin crew fell under the category of
international passengers according to Carriage by Air Act, 1972 and should
be paid 100,000 SDR, which equates to Rs. 75 lakhs each, as stipulated by the
International Foundation for Aviation, Aerospace and Development, supra note 21.
National Aviation Company of India Ltd. v. S. Abdul Salam & Ors. WA.No. 1197 of 2011().
44 Yadava, supra note 28.
45 Press Information Bureau, Government of India, Statement by Mr. Praful Patel, Minister of
State for Civil Aviation in the Upper House of the Parliament (Rajya Sabha) (December 10, 2012),
http://pib.nic.in/release/release.asp?relid=64012.
46See, TNN, Mangalore Crash: Crews Relatives move HC for Compensation, The Times of
India, June 25, 2012.
47Abdul Salam v. Union of India, 2011 (3) KLJ 662.
42
43
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V.
CONCLUSION
note 43.
Crash: Crews relatives move HC for compensation, The Times of India , June
25, 2012; (November 27, 2012),http://articles.timesofindia.indiatimes.com/2012-0625/kochi/32408662_1_cabin-crew-montreal-convention-air-crash.
50Convention for the Unification of Certain Rules for International Carriage by Air done at Montreal on 28
May 1999 (December 4, 2012), http://legacy.icao.int/icao/en/leb/mtl99.pdf.
49Mangalore
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Air Marshal B.N. Gokhale, Government of India, Ministry of Civil Aviation, Report on
Accident to Air India Express Boeing 737-800 on May 22, 2010 at Mangalore (March 8, 2013),
http://dgca.nic.in/accident/reports/VT-AXV.pdf.
52Environment Support Group, Mangalore Air Crash Tragic Fallout of Criminal Negligence of
Planning
and
Regulatory
Authorities
(March
8,
2013),
http://www.esgindia.org/campaigns/bajpe/press/mangalore-air-crash-tragic-falloutcrimi.html.
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not more debilitating than, physical or bodily injuries. This limitation on the
scope of injuries would definitely give rise to inequities. Further, if the courts
were to step up to the task of providing a liberal interpretation to the term
bodily injury so as to encompass within it all mental injuries, it would defeat
the Conventions goal of international uniformity. Thus, it becomes
incumbent on the Government and the international community at large to
broaden the scope via requisite amendments.
Lastly, the Act only applies to international carriage and allows the
Central Government to notify the same rules for application to domestic
flights, under the provisions of Section 8(3).53However, since this power has
not yet been exercised by the Government to notify a revision in the
domestic carrier liabilities, a lacuna remains. Thus, the present difference in
compensation levels for domestic and international flights is unjustified and
is long overdue for revision.
53
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IIIrd Year, LL.B Campus Law Centre, Faculty of Law, University of Delhi
Rai Sahib Ram Jawaya Kapur and Ors. v. The State Of Punjab, AIR 1955 SC 549
2 Article 141 , Constitution of India
3See Article 13, Constitution of India
1See
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C. Golaknath & Ors v. State of Punjab & Anr. 1967 SCR (2) 762
v. D.T.C. Mazdoor Congress Union AIR 1991 SC 101
6Ibid
7Delhi Judicial Service Association Tis Hazari Court v. State Of Gujarat and Ors. 1991 SCR (3) 936
8Durga Das Basu, Shorter Constitution of India, (14th ed. 2009) Volume 1, 1034
9Union Carbide Corporation v. Union Of India (1991) 4 SCC 584
5D.T.C.
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provisions has been the subject of much academic and judicial discourse, a
general overview of these powers is adequate for subsequent analysis.
II. PROSPECTIVE OVERRULING
A.
FOREIGN ORIGINS
Supra 4
Aluminum Co. & Ors. v. Kaiser Aluminum Technical Service, Inc. & Ors. (2012) 9 SCC
11Bharat
552
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merely to declare the law which is made by the legislative functionaries. The
judge finds the law and does not make it. This theory, as was explained in the
Golaknath case, would suggest that if a subsequent decision changes the
earlier one, the latter decision does not make law but only discovers the
correct principle of law.12 Blackstone argued that it is an established rule to
abide by former precedents13, and to keep the scale of justice even and
steady, and not liable to waver with every new judges opinion.14 By this
reasoning he proceeds to hold that the judge is not delegated to pronounce a
new law, but to maintain and expound the old one.15
The theory has indeed incited much criticism. It is obvious that
Blackstones conception of the Judge follows his general conception of the
law itself. In his paper titled Found Law, Made Law and Creation:
Reconsidering Blackstones Declaratory Theory16, William S. Brewbaker gave
a holistic criticism of the theory. The most damning criticisms provided by
the author are that the theory does not have any application to cases where
there are no previous governing decisions, and that Blackstone was unable
to keep distinct the task of the judge and legislator. The author states that
Blackstone's overall picture of the judicial role is out of balance; he
emphasizes the consistency, uniformity and inherent reason of law, but only
reluctantly and indirectly acknowledges the discretion that judges enjoy.17
While a complete analysis of Blackstone is a fruitful jurisprudential inquiry, it
suffices to say that the Blackstonian conception of the Judge is not one that
has universal acceptability. It may be noted that acceptance of the
Blackstonian proposition would suggest that all rulings of the Apex Court are
by necessity merely declaratory, and therefore, must apply retrospectively.
The second theory, called prospective overruling, was developed by
various American jurists. These included Cardozo, Canfield, Freeman and
Wigmore. Their reasoning was lucid and practical. It was felt that in certain
circumstances it is important to alter the law which becomes outdated,
12Supra
4
William Blackstone, Commentaries on the Laws of England, Vol. 1 [1753], Introduction,
Section III (Available at
http://oll.libertyfund.org/index.php?option=com_staticxt&staticfile=show.php%3Ftitle=
2140&layout=html#chapter_198647)
14 Ibid
15 Ibid
16 Brewbaker, William S., Found Law, Made Law and Creation: Reconsidering Blackstone's
Declaratory Theory (2006) Journal of Law and Religion, Vol. XXII, Page 255
17 Ibid
13Sir
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ACCEPTANCE IN INDIA
19Corr,
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22(1981)
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not because the courts cannot make law, or mould relief, but because in such
cases the Court purposefully denies the application of the correct position of
legislative provisions. For whilst the Court itself concludes that legislative
intention is for a provision to be read in a certain way, it refuses to apply
such interpretation to previous transactions. It may be noted from the
previous discussion that the law-making functions of the Executive and
Judiciary are not exercised in a manner that subverts legislative intention.
III. THE DIFFICULTIES
The trouble with an uncritical acceptance of prospective overruling
may be put concisely in the following points.
A.
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B.
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The third troubling point are the limits upon the working lawyers
reasoning. It seems difficult to understand the plight of lawyers who may
well have to argue two different matters on the same day, applying different
positions of law to identical factual circumstances. Squarely dependent on
when the underlying transaction occurred, a particular view of the law will be
applied. This becomes very likely in the case of Arbitration law, as opposed
to Constitutional Law. For instance, an arbitration agreement entered into
before the date of the Bharat Aluminium judgment (previously referred) is as
likely to go into litigation as an arbitration agreement entered into after the
date of the judgment. However, different positions of law would be applied
to these cases.
In Constitutional matters on the other hand, by providing that the
altered law is to apply only to future transactions, the Court effectively
ensures that settled transactions would not be opened up on the grounds of
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the altered law. This would hardly be the case in arbitration law, as the
possibility of litigation for or in connection with such arbitration agreements
irrespective of the overruling is very high. The direct consequence, however,
would be the development of parallel jurisprudence.
D.
AUTHORS COMMENTS
v. Kaneland Community Unit District No. 302, Supreme Court of Illinois, 1959, 18
Ill.2d 11, 163 N.E.2d 89, 97
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INTRODUCTION
3rd Year, B.A., LL.B. (Hons.), W.B. National University of Juridical Sciences, Kolkata
Solomon v. Solomon & Co. Ltd. (1895-99) All ER 33 (HL).
2 Tara Gry, Dual Class Share Structure and the Best Practices in Corporate Governance,
(Aug. 18, 2005), http://www.parl.gc.ca/Content/LOP/researchpublications/prb0526e.htm
3 See, Manne, Some Theoretical Aspects of Share Voting: An Essay in Honor of Adolf A.
Berle, 64, Columbia Law Review,. 1427 (1964).
1
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as well. Subsequently, this article will critique the amending circular issued by
the Securities and Exchange Board of India in the year 2009, pointing out the
various ambiguities contained therein and thereafter present suggestions in
favour of augmenting the existing law relating to shares with
disproportionate rights.
II.
Voting rights are vested with equity shareholders who are registered
as members in the books of the company.8 Therefore, every member of a
company holding equity shares has a right to vote in respect of shares at
every resolution placed by the company.9 However, voting rights cannot be
exercised in respect of shares on which call money has not been paid by the
member10. The issue of equity shares by a company may either carry full or
proportionate voting rights or differential rights with regard to dividend or
rights to participate in the management or otherwise. The right to vote
vested with shareholders is the residuary means of participating in the
functioning of the company, not vested with the management.11 The
proportionality principle thus underlines the view that a shareholder must
be entitled to the same ratio of capital inflow and voting rights.12 In India, the
one share-one vote was the norm till the year 2000 when the Companies
Act was amended by the Indian Parliament, whereby the issuance of shares
carrying differential voting privileges were permitted with effect from 13
December 2000. The issue of equity shares with differential voting and
dividend rights has further been recognised by the Companies (Issue of
Share Capital with Differential Voting Rights) Rules, 200113.14 Shares with
differential voting rights have been defined in the amended Section 2(46A)
of the Companies Act as any share which has been issued as carrying
Sharad Doshi v. Adjudicating officer, (1998) 3 Comp LJ 145.
Life Insurance Corporation of India v. Escorts Ltd (1986) 59 Comp Cas 548 (India).
10 The Companies Act, No. 1 of 1956, 181 (India).
11 C. S. Cheung et al., Controlling Opportunistic Behavior in Corporate Governance: The
Role of Disproportionate Voting Rights and Coat-tail Provisions, Journal of Institutional and
Theoretical Economics, Vol. 145, No. 3, 438-450 (1989).
12 Lack of Proportionality Between Ownership and Control: Overview and Discussion,
OrganisOrganisation of Economic Co-operation and Development (2007).
13 It may be noted that the terms Companies (Issue of Share Capital with Differential
Voting Rights) Rules, 2001 and Rules have been used interchangeably throughout the
course of this article.
14 Vide Notification No. GSR. 167(E), Mar. 9, 2009.
8
9
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issue of all shares which impinged upon the voting rights of existing
shareholders, thereby severely restricting the companys ability to issue shares
with disproportionate voting rights. However, this move by the Securities
Exchange Commission was subjected to severe criticism from various
spheres, including the corporate community as well the Congress which
however, had extended full support to SEC in 1926 when the one share-one
vote rule was introduced for the first time.22 But the United States Court of
Appeals for the District of Columbia Circuit invalidated this new rule and
restored the status quo ante.23 It was even debated that as far as relinquishing
of voting rights were concerned, the shareholders were well within their
rights to do so.24 Thus, the companies listed at the American Stock Exchange
were required to comply with the 1:10 limitation ratio with regard to the class
of shares with superior voting rights and the holders of the class of inferior
shares were given the right to elect at least 25% of the Board of Directors. 25
Also if the issuing companys board was dominated by independent directors,
then a majority of such directors must vote for the proposition, and if the
number of such directors is less than majority then all of them must assent to
it.26 The sub-committee of the New York Stock Exchange also provided that
the rights of all the shareholders shall be equal, except for the voting
powers.27 Shares carrying subordinate voting rights are known as dual-class
shares in the United States of America.28
The evolution of differential rights shares has been somewhat similar
in English law. English law recognised the one vote per share principle
which determined the amount of control over the company by ones
investment in the company. However, gradually the courts began upholding
measures taken by companies providing additional votes in resolutions
seeking to remove the board of directors.29 The Jenkins Committee
Louis Lowenstein, Shareholder Voting Rights and A Response to SEC Rule 19c-4 and to
Professor Gilson, 89 Colum. L. Rev., 980, 979 - 1014 (June, 1989).
23 Business Roundtable v. Securities and Exchange Commission, 905 F.2d 406 (D.C. Cir. 1990).
24Louis Lowenstein, Whats Wrong with Wall Street: Short - Term Gain and the Absentee Shareholder,
188 - 90 (1988).
25 See American Stock Exchange Guide (CCH) 10,022.
26 Joel Seligman, Equal Protection in Shareholder Voting Rights: The Common One Share, One Vote
Controversy,
54 Geo. Wash. L. Rev. 687 (1986)
27 Id.
28Paul A. Gompers et al, Incentives vs. Control: An Analysis of U.S Dual- Class Companies,
http://knowledge.wharton.upenn.edu/papers/1278.pdf (last visited Jan. 19, 2013).
29 See, Bushell v. Faith, [1970] 1 All E.R.53.
22
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constituted in 1962 also made several recommendations in favour of nonvoting shares inter alia such as higher rate of return, retention of control in
favour of restricted or non-voting shares.30 The Republic of Canada also
permitted the issue of shares with differential rights around the same period
as that of United States of America.31 An approval from the minority
shareholders is required prior to the issue of such shares. 32 Similarly, shares
carrying multiple votes were popularized in France in the earlier part of the
twentieth century and were commonly used as a measure to thwart hostile
takeover bids.33 However, this category of shares has now gained immense
popularity in the country.34 Superior voting rights in shares in France are
usually in the ratio of 1:2 if they have been held for two consecutive years
and four years in case of publicly traded scrips.35 Corporate laws in New
Zealand also permit a company to issue shares with special, limited or
conditional rights as to voting, provided the same is authorized by the
Articles of Association of the Company.36 However, as of now, Singaporean
law does not permit the issue of shares with superior voting rights, 37 although
the Ministry of Finance has proposed certain changes which seek to permit
issue of shares with no or multiple voting rights provided, such an issue is
authorized by the articles of the company.38
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capital without any significant change in the controlling rights over the
company.45 At the same time, they provide an opportunity to the retail
investors to earn greater returns on their investment in lieu of their voting
rights. Shares carrying inferior voting rights generally tend to offer greater
dividends at a lower price to attract retail investors. If these shares are issued
at a lower price, then these become more attractive compared to shares with
higher voting rights, since retail investors focus more on the appreciation of
their investment rather than being involved in the management. Thus the
differential voting rights shares enjoy a greater degree of liquidity in the share
market.46
One of the foremost criticisms levelled against shares carrying greater
voting privileges is that the voting powers vested with the management are
liable to be abused, to the detriment of the retail shareholders. The minority
shareholders are left out of the decision making process, since most of the
important decisions including the appointment of directors to the board of
the company are taken by those holding the shares carrying greater voting
rights. This results in lack of transparency in the activities of the company.
These issues involving corporate governance were highlighted by the
Adelphia and the Hollinger International Inc. frauds.47 These shares have also
not found any support from institutional investors owing to the aforesaid
factors and also due to the reason that these shares provide no avenue for
having a controlling stake in the company.48 Another criticism put forward by
many is that shares with differential voting rights act as an impediment to the
working of directors appointed by institution of public shareholders or
financial organisations, since the full time directors may have greater say in
the meetings of the company.49 Differential voting rights shares have often
Michel Magnan, Dual Class Shares: Governance, Risks and Rewards, Ivey Business Journal,
http://www.iveybusinessjournal.com/topics/leadership/dual-class-shares-governancerisks-and-rewards (last visited Jan. 13, 2013).
46Forester S.R. & Porter D.C., Dual Class shares: Are there return Differences, 20(6)
Journal of Business Finance and Accounting, pp. 893-903 (1993).
47 GRY, supra note 3, See, e.g., Gompers et al, Extreme Governance: An Analysis of U.S DualClass Companies, http://www.haas.berkeley.edu/groups/finance/dualpaper.pdf (last visited
Jan. 19, 2013).
48 Kai Li, et al., Do Voting Rights affect Institutional Investment Decisions? Evidence from
Dual
Class
Firms,
Sauder
School
of
Business
(Aug.
2007),
http://finance.sauder.ubc.ca/~kaili/dualclass_FM.pdf
49 George W. Dent Jr., Dual Class Capitalization: A Reply to Professor Seligman, 54 Geo.
Wash. L. Rev. 725 (1986).
45
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The issue of differential voting rights shares in India has been sparse
compared to other countries. TATA Motors Ltd. was the first company to
issue shares with disproportionate voting rights in 2008,52 followed by
Pantaloon Retail India Limiteds bonus issue and Gujarat NRE Coke Ltd.
rights issue in 2009.53 The differential voting right shares were priced at Rs.
305 per share as opposed to Rs. 340 for ordinary equity shares and carried
five per cent higher dividend than the shares with full voting rights as a
compensatory measure against lesser voting rights.54 The issue by Gujarat
NRE Coke has been viewed as a measure taken to thwart takeover moves by
rival coking coal companies, since this issue significantly increased the
promoters stake in the company to fifty-one per cent despite their
contribution to equity being only forty-one percent. The next company in
line was Pantaloon Retail India Limited in early 2009, when it offered shares
with differential voting rights as bonus to the existing shareholders of the
company. It was decided that the bonus shares with disproportionate voting
rights will be offered in the ratio of 1:10 vis--vis existing shares with full
voting rights held by shareholders on the record date.55 These bonus shares
carried 5 per cent dividend greater than that offered by the ordinary equity
shares, but ten of these differential voting rights shares carried only one vote.
Samie Modak, Tata Motors DVR Shares Trading at 45% Discount, The Financial Express
(Mumbai), April 7, 2011.
51 Ronald W. Masulis et al, Agency Problems at Dual- Class Companie, The Journal of
Finance, Volume 64, Issue 4, 1697 - 1727 (2009).
52 Deepak Korgaonkar, DVRs Outperform Ordinary Shares, The Business Standard
(Mumbai), March 12, 2012.
53 S. Hamsini Amritha, Differential Voting Rights, The Business Line - The Hindu Financial
Daily, October 5, 2008.
54 In Govern Research Services, All You Wanted to Know About DVRs, In Govern (2011),
http://www.ingovern.com/wp-content/uploads/2011/12/DVRs-Differential-VotingRights.pdf.
55ENS Economic Bureau, Pantaloon Offers bonus DVR shares, The Indian Express
(Mumbai), July 25, 2008.
50
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The issue of shares with differential voting rights has also received
support from the judiciary in the decision of the Company law Board in
Anand Perishad Jaiswal v. Jagatjit Industries56. In the instant case, the respondent
Karamjit Jaiswal along with an unlisted company LP Jaiswal and Sons Pvt.
Ltd held 7,418,748 equity shares amounting to twenty three and a half per
cent (eight and a half per cent by the respondent and fifteen per cent by his
firm) in Jagatjit Industries Ltd. which was involved in the production of
liquor. LP Jaiswal and Sons Pvt. Ltd. agreed to acquire two and a half million
differential voting rights shares which carried twenty votes each in Jagatjit
Industries, thereby bringing its stake in the company to a little more than
nineteen per cent up from fifteen per cent. The respondent later increased
his stake to thirteen per cent from eight and a half per cent by acquiring 2.19
million shares which carried full voting rights. Therefore, the twin share
acquisitions resulted in the holdings of the respondent and LP Jaiswal
increasing to thirty two per cent stake in Jagatjit Industries Ltd altogether.
The differential voting shares now owned by L. P. Jaiswal and Sons resulted
in the consolidation of voting rights worth thirty two per cent, thereby
enabling them to make a public announcement to acquire to the extent of
twenty per cent of the voting capital of the target company as was required
under the SEBI (Substantial Acquisition of Shares & Takeover) Regulations,
1997.
This differential issue however faced an obstacle when Anand Jaiswal
and Blossom Investments Pvt. Ltd, together owning eleven and a half per
cent in the target company altogether, filed a petition before the Securities
and Exchange Board of India challenging the pricing of differential voting
shares, citing lack of transparency in the issue. It was also argued before the
regulatory body inter alia that the in-principle approval as required by Clause
24(a) of the listing agreement, from stock exchanges had not been received;
violations of the SEBI (Prevention of Fraudulent and Unfair Trade Practices
Relating to Securities Market) Regulations, 2003, inappropriate pricing of the
shares to be issued and also issues regarding oppression of shareholders and
mismanagement had been raised. SEBI stated that it was not empowered to
decide upon this issue. However it stayed the issue of the shares until the
matter was finally adjudged on merits by a competent authority.57 The
56
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powers of SEBI have been enumerated under Companies Act, 1956 as well.
It stipulates that the provisions outlined by Sections 55 to 58, 59 to 81, 108,
109, 110, 112, 113, 116, 117, 118, 119, 120, 121, 122, 206, 206A and 207 in
case of listed companies and companies intending their shares to get listed,
inasmuch as they relate to issue and transfer of securities and non-payment
of dividend shall be administered by the Securities and Exchange Board of
India.58 Therefore, it stated that Section 55A did not confer powers on SEBI
to enforce the provisions of the Securities and Exchange Board of India Act,
1992. Hence, the matter was left to be decided on merits by a competent
court. Mr. Anand Jaiswal therefore moved the Company Law Board to
declare the impugned resolution passed at the target companys
Extraordinary General Meeting on June 16, 2004 as null and void, by virtue
of which 2.5 million shares carrying differential voting rights were allotted to
LP Jaiswal & Sons, with each share being entitled to 20 votes. The Company
Law board decided in favour of the validity of the resolution passed at the
meeting, stating that issue of differential voting shares is permissible under
Section 86 of the Companies Act read with the Rules enacted by Central
Government for this purpose. However, the respondents Jagatjit Industries
were directed to buyback the entire holding of Mr. Anand Jaiswal in Jagatjit
Industries Ltd. and L.P. Jaiswal & Sons Pvt. Ltd for a value of Rs.
365,000,000 in each of the companies, as per the terms of the settlement
agreed upon by the parties.
VI.
58
59SEBI
186
34/2009/24/09,
available
at
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(b) TATA Motors Ltd., shall be entitled to further issue shares of the
same class on the same terms by way of a bonus of rights issue,
(c) Subject to compliance with the SEBI (Issue of Capital and
Disclosure Requirements) Regulations, 2009, it may issue shares of
the same class by way of a follow on public offering,
(d) The Company was also permitted to issue Employees Stock
Options if the stock options are converted into the shares of the
same class, provided they are in compliance with the SEBI
(Employees Stock Options and Stock Purchase Scheme) Guidelines,
1999,
(e) It was also permissible to issue such shares on exercise of
convertible option by holders of Convertible Alternative Reference
Securities (CARS) contingent on the compliance with other
guidelines or regulations.
One of the foremost issues is whether it was within SEBIs law
making powers to amend the listing agreement which in terms abrogated a
law that had been brought into effect vide an amendment to the Companies
Act, 1956 by the Parliament in the year 2000. Section 55 of the Companies
Act merely enumerates the provisions of the statute which shall be
implemented by SEBI inasmuch as they deal with issue and transfer of
securities and transfer of dividend. The powers and functions of the
regulatory organisation have also been codified in the Securities and
Exchange Board of India Act, 1992. The Board has only been vested with
functions which include overseeing the functioning of stock exchanges
throughout the country, regulating and registering brokers, sub-brokers,
merchant bankers, underwriters and other intermediaries involved in the
financial market, monitoring venture capital funds, checking unfair practices
including insider trading, promoting awareness about the securities market,
regulating takeovers, mergers and acquisitions and activities incidental to the
aforesaid functions.64 The scope of Section 11A is also limited to regulation
or prohibition of issue of prospectus, offer document or advertisements.
Interestingly, in a somewhat similar scenario, a court in the United States had
vacated a rule adopted by the market regulatory body on the grounds that it
64
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considered is that if a company has issued shares with superior rights in the
past, then in the event of a subsequent differential issue, it could be argued
that the class of shares carrying the greatest rights must act as the benchmark
for the current issue of shares carrying differential rights. The possibilities
mentioned above although seem attractive are not tenable. All these
arguments remain only a figment of interpretation as SEBI has not issued
any directive in this regard nor have the courts had the opportunity to deal
with this ambiguity. Therefore, the author also finds it pertinent to point out
that applying the principles of purposive construction; the interpretations
mentioned above are fallacious. The object and purpose behind introducing
this amendment was to secure the interests of the shareholders against any
possible misuse of power by members of the board. Hence, the only
plausible interpretation of this provision would be keeping in mind the object
and scope of the amendment. Taking into account the foregoing analysis, the
benchmark for the newly issued shares must be the class of shares which
carry the least rights. This is because a particular issue, despite carrying lesser
rights than some of the previous issues, may still attract the provisions of this
clause as it may be carrying greater rights vis--vis shares issued earlier but
carrying lesser rights than the immediately preceding issue. Allowing such an
issue would result in the dilution of the control vested with holders of shares
with lesser rights. Hence, only the suggested interpretation would be
consistent with the text and purpose of the amendment.
It is also interesting to note that if the interpretation suggested above
is adopted, then it may result in another practical difficulty. The company
would only be entitled to issue shares carrying rights which are lesser than
the ones issued earlier. In that case the ones being issued will constitute the
yardstick for the next issue, which in turn must be of shares having even
lesser rights and so on. This poses a practical absurdity.
VIII.
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actually meant to serve. The management could still consolidate all the
controlling power by issuing shares with inferior voting rights to the public
shareholders. Although the shares with inferior rights enjoy a greater degree
of liquidity in the market and also higher dividends thereby enjoying public
confidence,66 the blanket ban on shares with superior rights as to dividend or
voting or otherwise is not justified. The issue of superior right shares is not a
malpractice in itself like insider trading; it merely increases the probability of
the companys board resorting to such issue to grab a greater share of
control. Therefore, the regulation of such shares may be done on a case by
case basis by SEBI, instead of simply putting an end to the issuance of such
shares. SEBI may require the concerned entity to submit a report explaining
the need for such an issue and also point out the impact of such an issue on
the existing shareholders of the company. Even if such a practice is not
adopted, it must clarify all the ambiguities regarding the amendment.
Alternatively, SEBI could also take a leaf out of the New York Stock
Exchanges book, which limits the voting rights per share to the ratio of 10:1
or the French law restricting it to 2:1. Another possible alternative would be
to retain the law on the issue of shares with differential rights, but an issue of
shares carrying superior voting rights may be subjected to a vote by the
minority shareholders of the Company as is done in Canada.67 A proposal to
issue such shares must also have the assent of all the independent directors
of the company.68
On one hand, the Indian securities market is still in a nascent stage
and an unclear legal provision laden with flaws like these is an absurdity in
itself and would only compound the problem, thereby attracting greater
manipulations of the law. Excessive regulation is uncalled for, since it deters
a company from maximizing its potential by opting for a favourable capital
structure.69 The Companies Bill, 2011 also contains a provision permitting
the issue of shares with differential rights as to voting, dividend or
otherwise.70 If this Bill is passed by the Parliament without any alterations to
the concerned provisions, then it may have some serious legal ramifications.
Therefore, the need of the hour is to rethink the ban on the issue of shares
Forester, supra note 47.
Supra note 30.
68 Seligman supra note 25.
69Abhishek Nath Tripathi, Shares With Differential Voting Rights: A Legal and Economic
Analysis, 15 Student B. Rev. 74 (2003).
70 Companies Bill, Bill No. 121, 43 (2011)
66
67
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I.
INTRODUCTION
The right of publicity has been defined to mean the inherent right of
every human being to control the commercial use of his or her identity1. It was born out
of the right to privacy in the United States and has currently attained the
form of a full-fledged property right. Celebrities have traditionally used it to
prevent the use of their names, photographs, likenesses or identities in
advertisements without their permission. This has been hugely empowering
for celebrities who intend to control the exploitation of their images without
their knowledge.
At present, the right of publicity has not been statutorily recognised
in India. However, of late the courts have started to take notice of this right.
For instance, in DM Entertainment Pvt. Ltd. v. Baby Gift House2, toy
manufacturers who modelled their toys on Daler Mehndi were sued for
violation of the right of publicity. The Delhi High Court recognised publicity
rights as a sub-species of privacy rights whose violation would attract Articles
19 and 21 of the Constitution. In American law, the right of publicity is
* Vth Year, B.A., LL.B. Course, NALSAR University of Law, Hyderabad
1 5 J. Thomas McCarthy, McCarthy on Trademarks and Unfair Competition 28.1 (4th ed. 2004)
2 MANU/DE/2043/2010
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gradually growing out of a right merely associated with the right to privacy
into a distinct property right recognised on Lockean principles, much like
copyright. However, there has been a concern that the scope of this right has
been extended beyond comfortable limits. As art is becoming increasingly
commodified and deification of celebrities is becoming increasingly rampant,
it becomes important to consider whether it would be prudent to import this
concept into Indian law.
This paper examines the major problems that have arisen during the
application of the right of publicity law, whether based on common law
jurisprudence or a statutory right. It concludes that the biggest threat posed
by the right of publicity has been the undefined scope of this right which has
led to its unbridled expansion in the United States to the point that, on many
occasions, it comes dangerously close to stifling competing interests such as
the First amendment freedom of speech of speech of the alleged infringers.
In an attempt to find a common solution for problems arising out of the
undefined scope of the right of publicity, the paper tries to confine its scope
to the original purpose of its introduction by developing a trademark-like
justification for the right and rejecting the justifications finding basis in
copyright law that have been furnished for the right to publicity.
II.
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the public sphere through voluntary disclosure7 or in which the public had a
legitimate interest.8
Unfortunately, just five years after the publication of this article, the
New York Court of Appeals in the case of Roberson v. Rochester Folding Box
Co.9 refused to grant the claimant remedy on the ground that the
unauthorized use of her picture in the defendants advertisement had caused
her mental and physical distress. It reasoned that there was no precedent in
the case law for Warren and Brandeis so-called right of privacy10. However,
it recognised the need for legislation to protect the interests of persons
whose pictures or name are used without their consent for advertising11. In
response, the New York legislature enacted a statute to this effect12.
Two years later, in Pavesich v. New England Life Insurance Co.13, the
Georgia Supreme Court explicitly accepted the premise of the Warren and
Brandeis article and held that the unauthorized use of a persons photograph
in a testimonial advertisement would result in a cause of action for the
violation of the right of privacy.
However, the plaintiffs in both the aforementioned cases asserted
claims that could comfortably be founded on the right to be left alone. It
was easy for them to claim that their images were representative of their
persona and had so far, enjoyed the luxury of anonymity; and that their
sudden public disclosure had caused mental distress to them. However, the
same argument could not be made so convincingly by celebrities, who had
not only consented to, but also invested time and effort in putting their
personas within the realm of public information. The basis for violating the
right to privacy was based on the tort law concept of personal injury to
dignity and state of mind. Courts were unable to grant a remedy for any kind
of mental distress that could have been caused to a public person from the
additional publicity that would have resulted from appearing in an
Id. at 218.
Stacey Dogan and Mark A. Lemley, What the right of publicity can learn from trademark
law, 58 Stan. L. Rev. 1161, at 1168-69.
9 171 N.Y. 538, 64 N.E.442 (1902)
10 Id. at 544,547, 64 N.E. at 443, 444.
11 Id. at 545, 64 N.E. at 443.
12 1903 N.Y. LAWS CH. 132, 1-2 (codified as amended as N.Y. CIV. RIGHTS LAW 50,
51 (McKinney 1990)).
13 50 S.E. at 70, 74-77.
7
8
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advertisement.14 The best known of such cases is OBrien v. Pabst Sales Co.15,
where the Fifth Circuit Court rejected the claim of a college football player
seeking remedy against a beer company that had purchased his photograph
from the college publicity department and used it on the football calendar on
the ground that since the plaintiff had gained a reputation in the national
media and repeatedly posed for photographs for use in publicizing himself
and [his] team, he had surrendered his right to privacy. Thus, they held that
the publicity he was complaining of was the publicity that he had been
seeking all along and hence there was no cause for complaint to begin with.
It is William Prossers 1960 article titled Privacy that has the
reputation for translating Warren and Brandeis insight into terms that could
easily be adopted by the American legal system.16 He acknowledged the
appropriation of the plaintiffs name or likeness17 to be a tort that could
result in the violation of the common law privacy right. This right, as
opposed to the other rights identified by Prosser18 was to protect an interest
that was not so much mental as it was proprietary19. Action against this tort
was justified on the ground that allowing an individual to control the use of
his or her persona would help protect against the unpermitted use of
personal identity that would have the potential of causing injury to selfesteem and dignity.20
One of the first judgments to have recognised the right of publicity
was Haelan Laboratories v. Topps Chewing Gum21. In Haelan, the court held that
in addition to the New York statutory right to privacy, a man has a right
in the publicity value of his photograph, i.e., the right to grant the
O'Brien v. Pabst Sales Co., 124 F.2d 167, 169 (5th Cir. 1941), cert. denied, 315 U.S. 823
(1942); Paramount Pictures Inc. v. Leader Press, Inc., 24 F. Supp. 1004 (W.D. Okla. 1938)
(posters of movie stars), rev'd on other grounds, 106 F.2d 229 (10th Cir. 1939); Martin v.
F.I.Y. Theatre Co., 10 Ohio Op. 338 (C.P. Ct. 1938) (theater poster of actress).
15 124 F.2d 167, 169 (5th Cir. 1941), cert. denied, 315 U.S. 823 (1942).
16 Paul M. Schwartz and Karl-Nikolaus Peifer, Prossers privacy and the German right of
personality: Are four privacy torts better than one unitary concept? 98 Cal. L. Rev. 1925,
at 1942.
17 William L. Prosser, Privacy, 48 Cal. L. Rev. 383 (1960) at 389.
18 (1) Intrusion upon the plaintiffs seclusion;
(2) Public disclosure of embarrassing private facts; and
(3) Publicity which places the plaintiff in a false light in the public eye
19 William L. Prosser, Supra n. 8, at 406.
20 John R. Braatz, White v. Samsung Electronics America: The Ninth Circuit turns a new
letter in California Right of Publicity Law, Pace L. Rev., VOL. 15, ISSUE 1, FALL 1994, ART7
21 202 F.2d 866, 868 (2d Cir.), cert. denied, 346 U.S. 816 (1953).
14
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The incentive theory has often been used to justify publicity rights.36
For instance, in the case of Zacchini v. Scripps-Howard Broadcasting Co.37, where a
performer brought a publicity claim against a news broadcasting channel that
taped and aired the footage of his entire act, the United States Supreme
Court observed that:
The State's interest in permitting a right of publicity is in protecting the
proprietary interest of the individual in his act in part to encourage such
entertainment. . . . The State's interest is closely analogous to the goals of patent
and copyright law, focusing on the right of the individual to reap the reward of his
endeavours and having little to do with protecting feelings or reputation.38
However, in Zacchini, the defendant had taken not just an image or
identity, but an entire performance, making it a fit case to apply the copyright
justification. Subsequent to this judgment, courts began to apply copyright
laws fair use doctrine to balance competing interests of celebrities against
those of broadcasters who claimed a right under the First Amendment. The
zeal to justify the right of publicity based on the incentive theory has also led
the courts to selectively apply the fair use doctrine. Balancing First
Amendment based values of the copier against the incentives for celebrities
to creatively express themselves is integral to the fair use doctrine. However,
there is scarcely an opportunity for this balance to be factored into an
argument in favour of right of publicity. Thus, frequently, while concepts
such as transformative use are applied to protect a celebritys right of
publicity, American courts tend to ignore the balance between the right of
publicity and the First Amendment right of freedom of speech.39
Another reason why adopting copyright justifications in their entirety
to justify the right of publicity could be misleading and counter-intuitive40 is
that there is little to support the claim that celebrities would invest less
energy and talent in their public image (that being the work if one were to
Randall T.E. Coyne, Toward a Modified Fair Use Defense in Right of Publicity Cases,
29 Wm. & Mary L. Rev. 781, 812 (1988)
37 433 U.S. 562 (1977)
38 Ibid. at 573, 576.
39 Comedy III Prods., Inc. v. Gary Saderup, Inc., 21 P.3d 797 (Cal. 2001), cert. denied, 2002
U.S. LEXIS 212 (Jan. 7, 2002) (No. 01-368); See also Jennifer L. Koehler, Comedy III
Productions v. Gary Saderup Inc.: Finding a balance between the Right of Publicity and
the First Amendment Freedom of Speech, Santa Clara Computer and High technology law
journal,
Vol.
18,
Issue
1,
Article
6,
1-1-2002,
available
at
http://digitalcommons.law.scu.edu/cgi/viewcontent.cgi?article=1297&context=chtlj
40 Stacy L. Dogan & Mark A. Lemly, Supra n. 6 at 1187.
36
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draw an analogy to copyright law) without a publicity right. Even if that was
the case, it is almost absurd to claim that encouraging fame would further a
societal purpose. The copyright analogy would have been sufficient to
support the right if it encouraged the production of any identifiable value. In
light of the flaws in the incentive theory justification and the dangerous
trends associated with it, it seems inadvisable to incorporate the same in the
Indian jurisprudence on the Right of Publicity, if we were to have a statutory
right to that effect.
B. ALLOCATIVE EFFICIENCY JUSTIFICATIONS
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secondly, that such exploitation has had an adverse effect on the mental
association that the audience makes between the celebrity and his or her
public image.
In addition to a reason to protect publicity rights, the trademark law
justification also provides a clear idea of the scope of the right of publicity,
which as we shall see in the subsequent sections, is particularly useful. The
right of publicity is explained hereafter using four prominent prongs of
trademark law and their rationales in an attempt to understand the scope of
the right of publicity cases.
1. Likelihood of confusion
The rationale behind the use of trademarks by product manufacturers
has been to build goodwill in their products and reduce the costs of finding a
product that a consumer may have to incur. This rationale forms the basis
for trademark law. Traditionally, consumer confusion cases targeted passing
off cases involving competitors who tried to cash in on source confusion that
might have been created in the minds of the consumers. However, courts
have often found that even in cases where the infringers are not necessarily
competitors of the trademark owners, consumers might assume that the
maker of one sponsors the production of the other and blame the trademark
of the owners for any defect in the purchased good.59 Thus, frequently, even
if the consumers are not led to believe that trademark owner is the one
selling the product, the use of a similar trademark might give them an
impression that the trademark owner is still somehow affiliated with the
infringers products. Hence, the likelihood of confusion rationale draws
attention to the fact that there has been a commercial exploitation of the
celebritys image that has resulted in an undesired, if not adverse effect on
the mental association that the audience may have made between him and his
public image.
This rationale applies more to right of publicity cases because the use
of a celebritys name, image, voice or likeness of a celebrity in an
advertisement would probably give the audiences an impression that he or
she intends to endorse the advertised product60. As has already been
discussed, there is a strong chance in such cases that the celebrity does not
59
60
Robert G. Bone, Enforcement Costs and Trademark Puzzles 90 Va. L. Rev. 2099 (2004).
Grant v. Esquire, Inc. ; Hogan v. A.S. Barnes & Co ; James Treece, Commercial Exploitation
of Names, Likenesses, and Personal Histories, 51 Tex. L. Rev. 637, 647 (1973).
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even though no actual sale is finally completed as a result of the confusion.65 However
recent trends suggest discarding the initial-interest confusion doctrine66.
2. Trademark Dilution
Even in the absence of consumer confusion, trademark law does
prevent the use of a mark in some exceptional cases based on the doctrine of
trademark dilution. This doctrine allows the owners of sufficiently famous
marks to claim protection against other producers commercial exploitation
of those trademarks for their own products, even if such products were
unrelated.67 This doctrine is said to be targeted at reducing consumer search
costs.68
Dilution can take place in two ways: first, the significance of a mark
can be blurred by associating the mark with lots of different products; and
second, by associating the mark with unwholesome products. This test
intends to carve out a limited right for owners of famous marks. An instance
of the first would be one where a unique mark, for example, Philips, which is
associated with electronic household items, is being used to market
completely unrelated products like pressure cookers69. Even if the consumers
understand that the two Philips trademarks intend to market different
products, an increase in the distribution of Philips marked products would
make it difficult for the consumer to tell which producer is responsible for
any particular product.
Tarnishment occurs when the infringer uses the mark to sell goods
which are either of poor quality or of offensive nature and consequently, take
away from the goodwill that the famous trademark holder garnered with its
customer base70. As a result of this, even if consumers acknowledge the
Dr. Seuss Entrs. v. Penguin Books (9th Cir. 1997) 109 F.3d 1394, 1405.
Dwyer Instruments, Inc. v. Sensocon, Inc., 2012 WL 2049921; Lamparello v. Falwell; Bosley Med.
Inst. v. Kremer; Eric Goldman, More Evidence That the Initial Interest Confusion Doctrine
is Dying--Dwyer v. Sensocon, Technology and Marketing Law Blog, June 15, 2012, available at
http://blog.ericgoldman.org/archives/2012/06/more_evidence_t.htm
67 Bolger v. Youngs Drug Prods. Corp. ; Va. Pharmacy Bd. v. Va. Citizens Consumer Council, Inc;
Hoffman v. Capital Cities/ABC, Inc.
68 Stacey Dogan and Mark A. Lemley, Supra n. 11, at 1198.
69 SC dismisses Kunj Aluminium plea over Philips trademark row, Financial Express,201203-12, available at http://www.techzone360.com/news/2012/03/12/6181638.htm
70Britt N. Lovejoy, Tarnishing the dilution by Tarnishment cause of action: Starbucks Corp.
v. Wolfes Borough Coffee Inc. and Secret Catalogue Inc. v. Moseley compared
http://btlj.org/data/articles/26_1/Web%20PDFs/623-654_Lovejoy_090811.pdf
(Last
visited March 18th, 2013).
65
66
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71Stacey
L. Dogan & Mark A. Lemley, Trademarks and Consumer Search Costs on the
Internet, 41 HOUS. L. REV. 777, 794 (2004)
72 Britt N. Lovejoy, Supra n. 70.
73 141 F.3d 188 (5th Cir. 1998).
74 Cairns v. Franklin Mint Co., ; Joseph J. Beard, Casting Call at Forest Lawn: The Digital
Resurrection of Deceased Entertainers--A 21st Century Challenge for Intellectual Property
Law, 8 High Tech. L.J. 101, 146-70 (1993).
75 Stacey L. Dogan & Mark A. Lemley, Supra n. 11, at 1196.
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3. Merchandising rights
This theory of trademark law does not find basis in the reduction of
customer search-costs. Instead, it is based on the trademark as property
approach and is a manifestation of the assertion of the trademark holders
control over the merchandise bearing a trademark.76 Merchandising cases
thus view the trademarks as product features than as brands77. However, this
has been a very shaky justification primarily because of the absence of an
inherent right of the trademark holder to make money by trading on the
value of a trademark78. In the absence of consumer confusion, the courts
have often been hesitant to recognise the merchandising rights in themselves
and have always attempted to validate the rights of the trademark holders on
the basis of consumer expectation in the interest of competition.79
The right of publicity proponents would prefer this rationale because
it allows them to control any use of their name or image, or for that matter,
any aspect of their personality for profit, even where the desire of the alleged
infringers was to show them in an artistic, parody or news format. Based on
this rationale, Martin Luther King, Jr.s estate, claiming that the defendant
was trading on the goodwill that ought to belong to Kings family prevented
the sale of his busts80; the descendants of The Three Stooges prevented sales
of t-shirts that portrayed their likenesses81; Arnold Schwarznegger filed a suit
against the manufacturers of Schwarznegger bobble-head dolls82; and Jessica
Simpson sued a company for marketing a ring that looked like her wedding
ring83. The complaint in all these cases, much like in trademark cases with
claims regarding violation of merchandising rights, has been that the
defendants, while not having advertised something based on their names or
Ibid. at 1203.
Id.
78 Saxlehner v. Wagner; Playboy Enters. v. Netscape Communications (Berzon, J., concurring); David
J. Franklyn, Debunking Dilution Doctrine: Toward a Coherent Theory of the Anti-FreeRider Principle in American Trademark Law 56 Hastings L.J. 117 (2004); Mark A. Lemley,
What's Different About Intellectual Property, 83 Tex. L. Rev. 1097 (2005); Wendy J.
Gordon, On Owning Information: Intellectual Property and the Restitutionary Impulse,
78 Va. L. Rev. 149, 167 (1992)
79Stacey L. Dogan & Mark A. Lemley, Supra n. 11, at 1205.
80 Martin Luther King, Jr., Ctr. for Social Change, Inc. v. Am. Heritage Prods.,
81 Comedy III Prods., Inc. v. Gary Saderup, Inc
82 John Broder, Schwarzenegger Files Suit Against Bobblehead Maker, N.Y. Times, May 18,
2004, at A16.
83 Simpson v. Inspired Silver, Inc., No. SACV 05-3 (DOC (ANx) (C.D. Cal. filed Jan. 3, 2005).
76
77
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likenesses still made money using the famous name, which the plaintiffs
claim to have exclusive control over84.
Just like in trademark cases where merchandising rights are claimed
to have been violated, in all of the aforementioned cases, the celebrities claim
complete and exclusive control over their public image to the extent that any
use of the same even for purposes such as artistic expression would require
their consent. However, the use of the merchandising rights argument alone
does not satisfy the two pronged test for establishing violation of right of
publicity. One cannot rely entirely on the commercial exploitation of the
public image of the celebrity alone in order to establish the right of publicity.
It must also be established that such commercial exploitation takes away
from the public image that the celebrity seeks to maintain for his/her
audience. Hence it is suggested that the merchandising rights rationale be
used only along with the likelihood of confusion rationale.
Moreover, allowing such a right to exist would severely curtail artistic
expression. For instance, if a T-shirt used an image of a celebrity to spoof the
celebrity, it should not be considered to be violation of merchandising rights
because the T-shirt does not seek to commercially exploit the popularity of
the celebrity in any way. On the contrary, it quite evidently dispels any
assumption that the celebrity may be endorsing such a T-shirt. Thus, the
Court rightly rejected Tiger Woods claim that he owned the exclusive right
to depict his image in ETW Corp. v. Jireh Publishing Inc.85
However, the rationale of the Court in this case which considered the
competing interest of the artist who had made the painting at issue, which to
the court, was art of sufficient quality that the Court could declare to be
protectable expression in itself,86 is flawed. Such emphasis on transformative
use similar to cases of copyright would lead to the conclusion that had the Tshirt at issue merely depicted a photograph of Tiger Woods, it would be
considered to be a sufficient infringement of the right of publicity rights. The
judiciary should avoid the adoption of such reasoning. As has already been
discussed, a more appropriate reasoning would have been based on the idea
of consumer confusion. It is quite possible for a section of the consumers to
assume that Tiger Woods himself endorsed the T-shirt and that it was a part
Factors Etc., Inc. v. Pro Arts, Inc; Winterland Concessions Co. v. Sileo; Restatement (Third) of
Unfair Competition 47 cmt. b (1995).
85 332 F.3d 915, 936-38 (6th Cir. 2003)
86 Ibid at 938.
84
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of official merchandise. Such use of the T-shirts actually confuses this section
of consumers.
On the other hand, the suit in Comedy III Prods., Inc. v. Gary Saderup,
Inc was instituted subsequent to the death of the Three Stooges where there
was no scope for consumer confusion. Hence, most courts deciding on
trademark issues emphasize the need for consumer confusion to exist, rather
than relying on the naked right to control the use of any mark.88 An example
is the case of Rock and Roll Hall of Fame and Museum, Inc. v. Gentile Productions 89,
where the plaintiff obtained trademark protection for its museum and sought
to prevent the defendant, a photographer, from selling photographs that
prominently featured the museum. The Court did not attempt to analyze
whether or not the defendants photographs were sufficiently artistic.
Instead, it relied on the case of Estate of Presley v. Russen90, which held that
registering the use of one image of Elvis Presley did not justify trademark
rights over every picture of Presley and held that the plaintiff had not made
trademark use of the overall design of the museum to brand particular
goods and therefore, they could not claim protection for the same.
87
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interest in his or her public image and is entitled to assert exclusive control
over the same. However, as has already been discussed the merchandising
rights test needs to be accompanied by the test of consumer confusion. The
celebrity can also argue that the significance of his or her public image is
being blurred by associating the mark with lots of different products.
The obvious exceptions to this would be where the celebrity makes
appearances at events where he or she expects the paparazzi to be present or
where the uninvited intrusion into aspects of the celebritys life are justified
on the ground of newsworthiness as defined and limited in the Virgil and
Onassis judgments. For instance, if the celebrity is indulging in illegal activities
like embezzlement of money, then he or she, just like any ordinary being
loses protection against media probing. However, he or she would be
justified in not allowing pictures of his or her family or residence being taken
surreptitiously on the ground that such media focus would dilute his or her
public image. The test of reasonable expectation of privacy as laid down in the
California Civil Code109 can be applied in order to determine what the
celebrity could view as being outside of his public image.
The propositions put forward in this section can be summarized as
follows: A celebrity has a proprietary right in his or her public image, which
disallows only such use of the image that is likely to adversely affect the
mental connection that the celebrity would like the audience to establish
between the celebrity and his or her image. Any kind of reporting that
adversely affects this mental association would only survive if it satisfies the
test of newsworthiness. The newsworthiness exception can be satisfied only
if two requirements are met: first, the information that is sought to be
provided is needed or appropriate to enable members of society to
cope with the exigencies of life; and second, that it respects the reasonable
expectation of privacy that any person may have if he or she is performing
activities that a reasonable person may consider to be private. This test of the
right of publicity would be able to protect the privacy of a celebrity, while
allowing the press enough freedom to crackdown on instances where
celebrities may actually be indulging in activities that might adversely affect
the interests of the public.
109
Supra n. 119.
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jurisprudence. An analysis of the sparse case law on the subject reveals that
the Indian judiciary has not engaged in such an exercise. In light of the
aforementioned, India should develop a right of publicity with a justification
that is analogous to trademark justifications. It would in all probability, give
Indian celebrities a stronger crutch than the right to privacy to avoid having
pictures of themselves or their family members been taken by the paparazzi
against their will in spheres they consider private.
215